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755 A.2d 115 (2000)
Richard BROOKS, Appellant,
v.
CIVIL SERVICE COMMISSION OF SHALER TOWNSHIP.
Commonwealth Court of Pennsylvania.
Argued June 8, 2000.
Decided July 7, 2000.
Charles R. LoPresti, Pittsburgh, for appellant.
Robert E. Durrant, Pittsburgh, for appellee.
Before COLINS, J., PELLEGRINI, J., and JIULIANTE, Senior Judge.
COLINS, Judge.
Richard Brooks appeals the order of the Court of Common Pleas of Allegheny County affirming the termination of his employment as Shaler Township patrol officer pursuant to Section 644(2) and (4) of The First Class Township Code,[1] which in pertinent part authorizes dismissal of a police officer for "neglect or violation of any official duty" and "inefficiency, neglect, intemperance, disobedience of orders, or conduct unbecoming an officer."
In September 1997, the Township specified charges against patrol officer Brooks and recommended termination of his employment. At the time the charges were filed, Brooks had just returned to work after recovering from injuries sustained in a September 1996 automobile accident that occurred in Arizona while Brooks was on vacation. The charges detailed Brooks' *116 history of thirteen on-duty automobile accidents from 1975 through 1993, including one instance of striking a pedestrian and the pedestrian's dog in 1991 and failing to report the incident until the end of his shift.[2]
Over the course of his nearly 23-year career as a patrol officer with the Township, Brooks was warned of the eventual consequences of his careless driving and was repeatedly disciplined. For example, Brooks was warned about his driving in 1977 after his first four accidents; he was suspended for one day in 1977 for his failure to report damage to his police vehicle and his attempt to cover up the damage; in connection with pushing the disabled vehicle with his patrol car, he received a warning that his behavior was in conflict with police procedure, exhibited poor judgment, and was extremely hazardous; and he was suspended for five days in 1979 for damaging police vehicles. A Public Safety Committee considered dismissing Brooks in 1979 after finding him to have been negligent in connection with his many on-duty automobile accidents. Brooks was suspended for sixty days in 1984 for conduct unbecoming a police officer for engaging in sexual activity in his police vehicle while on duty. Township police officials repeatedly urged and advised Brooks to use caution and to drive defensively, and they sent him to driver training courses for police officers in March-April 1989 and in September 1996, just before Brooks was involved in the off-duty accident in Arizona.
After hearings, the Civil Service Commission credited the testimony of police chief Jeffrey Gally and township manager Timothy Rogers, who detailed Brooks' history of automobile accidents and the instance of on-duty sexual activity for which he was charged with conduct unbecoming a police officer. In addition to the documented accidents, Rogers testified that he had on more than one occasion witnessed Brooks tailgating and driving at excessive speeds. (Notes of Testimony, p. 123.) Rogers also testified as to the Township's concerns about liability, public safety, and the efficiency of, and public perceptions of, its police department in connection with Officer Brooks' driving skills.
The Commission concluded that Brooks' history of on-duty automobile accidents, together with the Arizona accident, demonstrated a pattern of poor judgment that rose to the level of violation of official duty, inefficiency, neglect, intemperance, disobedience, and conduct unbecoming an officer. The Commission noted that while it considered the off-duty Arizona accident in making its disciplinary determination, its decision did not rely on that accident except to the extent that it contributed to the number, seriousness, pattern and nature of the overall history of automobile accidents. It concluded that the Township had a legitimate interest in avoiding uninsurable liability, protecting its insurability, protecting the public, and preserving public confidence in its police department. The court of common pleas affirmed.
On appeal to this Court,[3] Brooks argues that the Commission abused its discretion *117 in terminating Brooks, which termination, it asserts, was based solely on the off-duty accident that occurred in Arizona. In support of that argument, Brooks reasons that he was a 23-year veteran of the Township police force, who was disciplined for his prior driving infractions and whose professional record was incident-free from 1993 to 1996. He argues that he did not neglect his official duty when he became involved in an accident in Arizona, nor did that accident constitute inefficiency, neglect, intemperance, disobedience of orders, or conduct unbecoming an officer. In making this argument, he also argues that the Township's decision to terminate his employment on the basis or one or more motor vehicle incidents is clearly disproportionate in light of this Court's decision in Appeal of Leis, 72 Pa.Cmwlth. 104, 455 A.2d 1277 (1983).
We begin by noting that in reviewing disciplinary actions against police officers, a civil service commission must determine whether the charges brought against the officer are supported by the evidence, whether the penalty imposed is not otherwise prohibited, and whether the penalty is not arbitrary, discriminatory, or an abuse of discretion. Batty, 694 A.2d at 397. Our review of the record convinces us that the Commission properly determined that the evidence supported the charges against Brooks.
Brooks acknowledged all of the on-duty accidents to which Gally and Rogers testified; he prepared the incident reports from which they testified, and he acknowledged the incidents in his testimony before the Commission. In his own testimony, Brooks disputed only the Township's characterization of some of the incidents. Brooks testified that many of the incidents occurred during inclement weather, during emergency calls, or were otherwise unavoidable. The Commission, while not discrediting Brooks' testimony about the on-duty accidents, found that is was not corroborated by any other evidence. In our view, even if many of the accidents occurred during inclement weather and/or when Brooks was responding to emergency calls, the Township has a legitimate expectation that its patrol officers should be able to exercise the requisite discretion when responding to calls, even in inclement weather, such that the calls are handled efficiently and without resulting in injury or damage to the Township's patrol vehicles.
Nothing in the record supports Brooks' contention that his termination was based solely on the 1996 off-duty accident that occurred in Arizona. The Commission specifically stated that it considered that accident but did not make it the basis for its decision. Gally and Rogers explained the timing of the Township's decision to bring charges after Brooks recovered from injuries sustained in that accident. The record establishes that the Township expressed on-going concern with Brooks' driving record; Brooks last attended a police driving course in September 1996, just before the Arizona accident; and Township officials believed that Brooks would not be able to return to duty owing to the injuries he sustained in that accident. The evidence supports the charges brought against Brooks, and it is irrelevant that Brooks had no accidents between December 1993 and September 1996.
Brooks' argument based on Appeal of Leis is misplaced. The officer in Leis was suspended for three days without pay on a charge of conduct unbecoming a police officer based on a single motor vehicle accident that occurred when he ran a red light when responding to an emergency call using lights but no siren. This Court reversed the suspension on appeal on the grounds that a police vehicle responding to an emergency is entitled to go through a red signal and is exempt from the highway *118 right-of-way rules when using emergency lights and sirens. In that case, the police department rules made use of sirens a judgment call, and the officer adequately explained his decision to proceed without sirens.
Brooks was not terminated for a single lapse in judgment as was the officer in Leis. Brooks' history reveals that most if not all of the accidents resulted from his following too close to another vehicle, his inability to anticipate obstacles, his consistent failure to exercise good judgment, and his lack of awareness of surrounding conditions. Brooks' failure to improve his driving and his inability to respond to emergencies without endangering himself, the public, and his patrol car at the very least constitute neglect, inefficiency, and conduct unbecoming a police officer, which has been defined to include conduct that adversely affects the morale and efficiency of the police force or tends to destroy public respect for, and confidence in, the police force. Kazmarek v. New Bethlehem Borough Council, 84 Pa.Cmwlth. 19, 478 A.2d 514 (1984). Moreover, the Township was justified in terminating Brooks' employment given his lengthy history of such accidents and its legitimate concerns about liability, public safety, and the efficiency and public perception of its police department.
Accordingly, the order of the trial court is affirmed.
ORDER
AND NOW, this 7th day of July 2000, the order of the Court of Common Pleas of Allegheny County in the above-captioned matter is affirmed.
NOTES
[1] Act of June 24, 1931, P.L. 1206, added by Section 20 of the Act of May 27, 1949, P.L. 1955, as amended, 53 P.S. § 55644(2) and (4).
[2] The thirteen on-duty accidents charged were as follows: June 1975, lost control of patrol car and struck a pole; November 1975, struck the rear bumper of another vehicle leaving a parking lot; January 1977, slid off the roadway in order to avoid hitting a stalled vehicle; March 1997, struck a large rock at an intersection while turning; August 20, 1997, damaged patrol car while pushing a disabled vehicle from the highway in violation of police procedures; August 31, 1997, hit a metal stake while backing out of a driveway; December 1978, slid on an icy roadway, crossing into the opposite lane, severely damaging another vehicle and injuring the other driver; May 1984, struck a vehicle perpendicular to his patrol car while both attempted a left turn; January 1989, slid into a private yard; January 17, 1991, struck a pedestrian and his dog; January 28, 1991, struck another vehicle at intersection; March 1992, ran over a storm drain and struck a stone wall; December 1993, struck another vehicle while backing out of a driveway and hit a tree.
[3] Our review, where the trial court has taken no additional evidence, is limited to determining whether the civil service commission abused its discretion or committed an error of law. York Township Board of Commissioners v. Batty, 694 A.2d 395 (Pa.Cmwlth.), petition for allowance of appeal denied, 550 Pa. 695, 704 A.2d 1384 (1997).
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933 S.W.2d 719 (1996)
Candace Waggoner WOODS, Appellant,
v.
The STATE of Texas, Appellee.
No. 03-95-00491-CR.
Court of Appeals of Texas, Austin.
October 16, 1996.
*721 Keith S. Hampton, Austin, for appellant.
Ronald Earle, District Attorney, Matthew B. Devlin, Assistant District Attorney, Austin, for appellee.
Before POWERS, JONES and B.A. SMITH, JJ.
JONES, Justice.
Our opinion and judgment dated September 18, 1996 are withdrawn.
Appellant was indicted for carrying a firearm in a court. Tex. Penal Code Ann. § 46.03(a)(3) (West Supp.1996). After her pretrial motion to suppress evidence was overruled, appellant pleaded guilty to the lesser offense of unlawfully carrying a weapon. Tex. Penal Code Ann. § 46.02(a) (West 1994). The district court adjudged appellant guilty and, pursuant to a plea bargain, assessed punishment at incarceration for one year, suspended imposition of sentence, and placed appellant on community supervision.[1] Appellant preserved her right to appeal the court's ruling on the motion to suppress. Tex.R.App. P. 40(b)(1). We will reverse.
Background
On the day in question, appellant entered the Travis County Courthouse through the east, or main, entrance, passing as she did so a sign stating, "You are entering a security screening area. All persons and baggage are subject to a search." Inside the courthouse and a few feet from the entrance, appellant was confronted by a metal detector and an X-ray machine. Operating these machines were Kevin McCullen, a private security guard employed by the Travis County Sheriff's Department, and Billy Richardson, a deputy sheriff and McCullen's supervisor. McCullen testified that appellant had a "real surprised look, a scared look" when she saw the machines. Appellant "turned to her left and started to enterand tried to go towards Room 112, which is the JP Five courtroom," the entrance to which was apparently outside the security devices but bore a sign *722 advising that all persons must be screened before entering. Then "she turned around and started to go back out the doors...."
McCullen stopped appellant before she could leave the building and asked if he could help her. She told him that she was trying to get to the fifth floor. McCullen informed appellant that she would have to pass through the metal detectors to reach the elevators. Appellant told McCullen that she first had to go back to her car. According to McCullen, appellant seemed "real nervous." McCullen, who had been working at this job for over two years, became suspicious and told appellant that she could not leave the building without first running her purse through the X-ray device. Appellant disregarded McCullen's instruction and exited the courthouse. McCullen followed and stopped her outside. McCullen testified, "Basically I told her that we were still going to need to run her purse through, and at this point it wasn'tshe didn't really have a choice in the matter." By this time, McCullen had been joined by Richardson. Appellant agreed to reenter the courthouse with the officers, telling McCullen that "it was going to set off the metal detector." When appellant's purse passed through the X-ray device, the officers could see the image of a pistol. Richardson opened the purse and seized a loaded .22 caliber pistol.
At a second hearing one month later, McCullen testified that appellant's actions led him to believe that there was a "good possibility" she was armed. Asked to describe these actions, McCullen answered:
A. It was that when she came in, she got a very surprised and scared expression on her face, and then tried to go around the security like she was entering through the JP Five door.
Q. And then what did she do?
A. Then she turned around and started to leave. When we asked her where she needed to go, she said she needed to go to the fifth floor.
. . . . .
A. We told her how to get to the fifth floor, and at that point she said, "No, I need to go back out to my car first," and this is something that we have seen a lot of other times. That's when we know somebody usually has something in their purse.
McCullen testified that on approximately fifty occasions, he had seen a similar expression on the face of a person before discovering a weapon or drugs. He acknowledged on cross-examination, however, that he had seen the same expression on persons who did not prove to have a weapon or contraband.
Richardson also testified at the second hearing. He stated that appellant was stopped because, "We wanted to run [the purse] through the x-ray machine and see if there was a weapon or contraband in it."
Discussion
It is undisputed that appellant was seized when she was stopped and made to reenter the courthouse. See California v. Hodari D., 499 U.S. 621, 626, 111 S. Ct. 1547, 1550-51, 113 L. Ed. 2d 690 (1991) (person is seized for purpose of Fourth Amendment when she yields to officer's show of authority); Johnson v. State, 912 S.W.2d 227, 235 (Tex.Crim.App.1995) (adopting Hodari D. for purposes of article I, section 9). It is also undisputed that passing appellant's purse through the X-ray device was a search. See United States v. Jacobsen, 466 U.S. 109, 113, 104 S. Ct. 1652, 1656, 80 L. Ed. 2d 85 (1984) ("search" occurs when reasonable expectation of privacy is infringed); Cullen v. State, 832 S.W.2d 788, 793 (Tex.App.Austin 1992, pet. ref'd) (same); and see 4 Wayne R. LaFave, Search and Seizure, § 10.6(e) (4th ed. 1996) (hereafter cited as "LaFave"). In her motion to suppress, appellant complained that she was seized and searched in violation of the constitutions of Texas and the United States. U.S. Const. amend. IV; Tex. Const. art. I, § 9; Tex.Code Crim. Proc. Ann. art. 38.23(a) (West Supp.1996).[2] The district court overruled the motion and made written *723 findings and conclusions. The court concluded that appellant's purse was lawfully searched pursuant to a valid administrative scheme to secure the courthouse and, alternatively, that appellant was lawfully detained and searched because the officers had a reasonable suspicion that appellant was armed. Our review of the court's findings and conclusions, both factual and legal, is limited to determining whether the court abused its discretion. DuBose v. State, 915 S.W.2d 493, 496-97 (Tex.Crim.App.1996).
1. Administrative search.
The use of metal detectors and X-ray machines to screen the persons and immediate possessions of those boarding commercial aircraft or entering government buildings has been upheld as a form of administrative search. See 4 LaFave, §§ 10.6(c), 10.7(a) (discussing cases). In her first point of error, however, appellant contends the district court erred by upholding her detention and search on this basis. Appellant urges, among other things, that the actions of McCullen and Richardson exceeded the lawful scope of a limited security screening. The State concedes this point.
Because administrative searches are conducted without warrant or probable cause, they must be carefully limited in time, place, and scope. New York v. Burger, 482 U.S. 691, 703, 107 S. Ct. 2636, 2644, 96 L. Ed. 2d 601 (1987); Santikos v. State, 836 S.W.2d 631, 633 (Tex.Crim.App.1992). To meet the test of reasonableness, an administrative screening search must be as limited in its intrusiveness as is consistent with satisfaction of the administrative need that justifies it. United States v. Davis, 482 F.2d 893, 910 (9th Cir.1973). When a limited check for weapons becomes a general search for evidence of crime, it can no longer be justified as an administrative search but must satisfy the warrant and probable cause requirements of the Fourth Amendment. United States v. $124,570 U.S. Currency, 873 F.2d 1240, 1247 (9th Cir.1989); Davis, 482 F.2d at 911-12.
It has been held that an airport screening search of the persons and immediate possessions of persons boarding aircraft is reasonable under the Fourth Amendment only if each prospective boarder retains the right to leave rather than submit to the search. Davis, 482 F.2d at 912. This is because the need to prevent weapons or explosives from being carried aboard aircraft cannot justify the search of a person who elects not to board. Id. at 911-12. The same reasoning applies to a screening search of persons entering a public building. The need to exclude weapons that justifies the administrative search cannot justify the compelled search of a person who elects not to enter the building.
The district court found that the screening of persons entering the Travis County Courthouse serves "a very strong governmental interest, which is preserving the peace and sanctity of the courthouse where citizens can come and take care of important business unfettered and unworried about being shot or intimidated or harassed by armed people."[3] Preserving the peace and sanctity of the courthouse cannot justify pursuing appellant after she left the building, stopping her, and compelling her to return and submit to an X-ray of her purse. The officers' actions transformed the screening process into a general search for evidence of crime. In fact, McCullen and Richardson testified that they were looking for drugs as well as a weapon. We agree with appellant and the State that the officers' actions, however well-intentioned, cannot be upheld constitutionally under the administrative search rubric, and hold that the district court abused its discretion by doing so. Point of error one is sustained.
2. Waiver of rights.
At the suppression hearing, the State argued that appellant waived her Fourth Amendment rights and consented to a search of her person and belongings when she entered the courthouse. Although the district court did not rely on this waiver theory in *724 overruling the motion to suppress, appellant challenges this theory in her second point of error. In reply, the State again concedes that the search cannot be justified on this basis.
A person's consent to a warrantless search must be voluntary to be constitutionally valid. Schneckloth v. Bustamonte, 412 U.S. 218, 222, 93 S. Ct. 2041, 2045, 36 L. Ed. 2d 854 (1973); DuBose, 915 S.W.2d at 496. Appellant did not voluntarily submit to the search of her purse. If the search is to be upheld on a waiver theory, it must be held that she impliedly and irrevocably waived her Fourth Amendment rights when she walked past the warning sign and entered the courthouse. We decline to so hold.
Some courts have upheld security searches on an implied consent theory, but not without criticism. 4 LaFave, § 10.6(g). Under this theory, the consent given for a security search cannot exceed the rationale of the search. $124,570 U.S. Currency, 873 F.2d at 1247. If appellant impliedly waived her Fourth Amendment rights by entering the courthouse, she did so only to the extent necessary to effect the lawful purpose of the administrative security scheme. We have held that the search of appellant's purse exceeded that purpose. Thus, the search was not within the scope of the alleged waiver of rights. Point of error two is sustained.
3. Investigative detention.
The district court's alternative basis for overruling appellant's motion to suppress was that the incident giving rise to the discovery of the pistol was a lawful "stop and frisk" under Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968). An officer may detain a person for investigatory purposes (a "Terry stop") if, based on the totality of the circumstances, the officer has a particularized and objective basis for suspecting the person detained of criminal activity. United States v. Cortez, 449 U.S. 411, 417-18, 101 S. Ct. 690, 694-95, 66 L. Ed. 2d 621 (1981); Giossi v. State, 831 S.W.2d 887, 889 (Tex.App.Austin 1992, pet. ref'd). If the circumstances give the officer reason to believe that the person detained is armed and dangerous, he may conduct a limited search of the outer clothing of the person to discover weapons. Terry, 392 U.S. at 26-27, 30-31, 88 S.Ct. at 1882-83, 1884-85; Spillman v. State, 824 S.W.2d 806, 811 (Tex.App.Austin 1992, pet. ref'd). This frisk for weapons may be extended to a purse under the appropriate circumstances. Worthey v. State, 805 S.W.2d 435, 439 (Tex.Crim.App.1991).
In her third point of error, appellant contends that McCullen was not authorized to detain her for investigation because he was a private citizen and not a peace officer. Garner v. State, 779 S.W.2d 498, 501 (Tex.App. Fort Worth 1989), pet. ref'd, 785 S.W.2d 158 (Tex.Crim.App.1990). Appellant also argues that under the Texas Constitution, an officer may make a Terry stop only when the suspected crime involves imminent danger of violence. Because of our disposition of point of error four, we do not reach these contentions. For the purposes of this opinion, we assume that McCullen was acting as an agent of the State and that his actions were therefore governed by the Fourth Amendment and article I, section 9. Coolidge v. New Hampshire, 403 U.S. 443, 487, 91 S. Ct. 2022, 2048-49, 29 L. Ed. 2d 564 (1971); State v. Comeaux, 818 S.W.2d 46, 49 (Tex.Crim.App. 1991).
By her fourth point of error, appellant contends that McCullen did not have a constitutionally adequate basis for detaining her. To justify an investigatory detention, an officer must have specific articulable facts which, in light of the officer's experience and personal knowledge, together with other inferences from those facts, reasonably warrant the intrusion on the freedom of the person detained. Johnson v. State, 658 S.W.2d 623, 626 (Tex.Crim.App.1983); Giossi, 831 S.W.2d at 889. When the facts are as consistent with innocent activity as with criminal activity, a detention based on those facts is unlawful. Johnson, 658 S.W.2d at 626; Giossi, 831 S.W.2d at 889.
The State cites five factors that it contends gave McCullen reasonable suspicion to believe that appellant was unlawfully carrying a weapon:
1. Appellant "reacted in a surprised and fearful manner upon seeing the security *725 machines." In addition, appellant seemed "real nervous" when McCullen spoke to her.
2. Appellant "surreptitiously attempted to enter" the justice of the peace courtroom "without passing through security."
3. Appellant "curiously informed McCullen that she needed to get to the 5th floor while seemingly ignoring her obligation to pass through security."
4. When told by McCullen that she would have to pass through the security devices, appellant "abruptly expressed the need to leave the courthouse."
5. When McCullen asked appellant to permission to inspect her purse, she "tersely refused and walked out of the courthouse."
With respect to the first of these factors, McCullen acknowledged that a person who unexpectedly encountered the security machines might be surprised. Moreover, it is not necessarily indicative of guilt that a person is nervous or looks around at her surroundings. Montano v. State, 843 S.W.2d 579, 582 (Tex.Crim.App.1992). Nervousness when confronted by a police officer is as indicative of innocence as of guilt. Daniels v. State, 718 S.W.2d 702, 707 (Tex. Crim.App.1986).
There is no evidence that appellant attempted to enter the justice of the peace courtroom surreptitiously or to support the State's implied assertion that appellant sought to reach the fifth floor without being screened. The State does not explain why it was "curious" for appellant to answer McCullen when he asked her where she was going.
We also find no evidence to support the claim made by the State in its fourth and fifth factors that appellant was "terse" and "abrupt" in her manner. In any event, appellant had every right to walk away from McCullen and return to her car unless McCullen had adequate grounds to detain her. Florida v. Royer, 460 U.S. 491, 497-98, 103 S. Ct. 1319, 1323-24, 75 L. Ed. 2d 229 (1983); Gurrola v. State, 877 S.W.2d 300, 302 (Tex.Crim.App.1994). It would annul the constitutional guarantee against unreasonable searches and seizures to hold that McCullen was entitled to detain appellant and search her purse merely because she did not want him to.
In its written findings and conclusions, the district court cited Terry, Worthey, and Holladay v. State, 805 S.W.2d 464 (Tex.Crim. App.1991), as supporting its conclusion that appellant was lawfully detained. In Terry, a police officer watched Terry and another man stand on a street corner for ten to twelve minutes. The two men would alternately leave the corner and walk along an identical route, pausing to stare into the window of a particular store. They did this approximately twenty-four times. After each completion of this route, the men conferred on the corner. At one conference, they were joined by a third man who quickly left. Terry and his companion soon followed, joining the third man a few blocks away. The Supreme Court concluded that this behavior warranted stopping Terry for further investigation. 392 U.S. at 23, 88 S.Ct. at 1881.
In Worthey, San Antonio police officers were executing a search warrant at 3:00 a.m. when a vehicle stopped at the residence being searched. Worthy and a companion got out of the vehicle and walked to the front porch, where they encountered two officers who identified themselves and told them to keep their hands where they were. Worthy immediately clutched the purse she was carrying and turned so that the purse and her right hand were away from the officers. One of the officers took the purse from her and felt it for weapons. The Court of Criminal Appeals held that the facts and circumstances warranted this "frisk" of the purse. 805 S.W.2d at 439.
Holladay was an airport drug search case. Two Houston police officers with extensive experience on the "airport detail" saw Holladay deplane, with another man, from a flight from Miami, a known drug source city. The two men scanned the lounge area and appeared to be nervous. One of the officers engaged Holladay in conversation, during which he lied about arriving on a flight from Miami and about traveling with the other man. Holladay was nervous when he produced his driver's license at the officer's request. *726 The Court of Criminal Appeals concluded that while none of these facts alone supported a finding of reasonable suspicion warranting an investigatory detention, they did so when considered together. 805 S.W.2d at 473.
Unlike Worthey, appellant's encounter with McCullen did not occur in a place and under circumstances that were inherently suspicious. Appellant was not at the residence of a suspected drug dealer in the middle of the night, but in the entryway of a public building during regular business hours. McCullen testified that appellant made no sudden movements or furtive gestures. Unlike the suspect in Terry, appellant did not loiter inside the courthouse doors or give signs of "casing" the building for some criminal purpose. Unlike the officer in Holladay, McCullen had no reason to suspect appellant based on her whereabouts or associates, and appellant did not tell McCullen a lie. All McCullen knew was that appellant wanted to return to her car before passing through security and going about her business in the courthouse.
McCullen and Richardson testified that they suspected that appellant had a weapon or contraband in her purse. But even in the absence of bad faith, a detention based on a mere hunch or unparticularized suspicion is unconstitutional. Gurrola, 877 S.W.2d at 302; Holladay, 805 S.W.2d at 469. To justify a finding of reasonable suspicion adequate to warrant an investigative detention, the suspect's conduct must be sufficiently distinguishable from that of innocent people as to clearly set her apart. Montano, 843 S.W.2d at 582; Crockett v. State, 803 S.W.2d 308, 311 (Tex.Crim.App.1991). Appellant entered the courthouse, appeared surprised or flustered when she encountered the security checkpoint, then turned to leave. When the security guard asked if he could help her, she seemed nervous and told him that she was going to the fifth floor but wanted to return to her car before she did so. There was nothing in appellant's words or conduct as described in this record that clearly set her apart from persons engaged in innocent activity.
A trial court's ruling on a motion to suppress evidence is an abuse of its discretion when no reasonable view of the record could support the court's conclusion under the correct law and the facts viewed in the light most favorable to its legal conclusion. DuBose, 915 S.W.2d at 497-98. Applying this test to the record before us, the district court's conclusion that the officers had a particularized and objective basis for suspecting appellant of criminal activity was an abuse of its discretion. Point of error four is sustained.
4. Probable cause and self-incrimination.
In points of error five and six, appellant contends that McCullen did not have probable cause to arrest and search her. In point of error seven, she contends that her privilege against self-incrimination was violated when she was forced to pass her purse through the X-ray machine. Because of our disposition of point of error four, we do not reach these contentions.
Conclusion
We do not hold that it is unconstitutional to screen persons entering a courthouse for weapons. We do not hold that it is unconstitutional for a security officer to detain or frisk a person entering a courthouse when he has a reasonable suspicion that the person is armed. We hold only that the detention and search of appellant in this cause was not shown to be justified by the need for courthouse security or by a reasonable suspicion of criminality.
The judgment of conviction is reversed and the cause is remanded to the district court for new trial.
POWERS, Justice, dissenting.
When reviewing a ruling on a motion to suppress evidence, we must view the evidence in the light most favorable to the trial court's legal conclusion. DuBose v. State, 915 S.W.2d 493, 497-98 (Tex.Crim.App.1996). We may reverse the court's ruling as an abuse of discretion only if no reasonable view of the record supports it. Id. In my opinion, the majority fails to accord the district court the deference to which it is entitled.
*727 At the second hearing on appellant's motion to suppress, McCullen testified that appellant "tried to go around the security like she was entering through the JP Five door." I believe this testimony may reasonably be understood to mean that appellant attempted to evade the security screening devices by pretending to enter the hallway from the door of the justice of the peace courtroom. Such a deliberate effort to avoid the security checkpoint was a reasonable and articulable basis for suspecting that appellant had a weapon in her purse. I therefore cannot hold that the district court abused its discretion in concluding that the officers were legally justified in detaining appellant and "frisking" her purse.
NOTES
[1] In the district court, appellant acknowledged that she was the person named in the indictment but stated that her name was Candace Waggoner Woods Mattox. The court's judgment does not reflect the name change.
[2] With an exception that is not relevant to our disposition of this appeal, appellant does not argue that the guarantee against unreasonable searches and seizures found in article I, section 9 is broader than that of the Fourth Amendment. See Morehead v. State, 807 S.W.2d 577, 579 n. 1 (Tex.Crim.App.1991).
[3] Appellant complains that neither the purpose nor the need for the courthouse security system is shown by the record. We will assume, however, that the district court's finding, which appears self-evident, was accurate.
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848 S.W.2d 291 (1993)
STATE of Texas and Texas Department of Highways and Public Transportation, Appellants,
v.
John H. BIGGAR, Terrence Kendall, David Helfert, and Edmund J. Fleming, Jr., Appellees.
No. 3-92-076-CV.
Court of Appeals of Texas, Austin.
February 3, 1993.
Rehearing Overruled March 31, 1993.
*293 Dan Morales, Atty. Gen, Mark Heidenheimer, Asst. Atty. Gen, Austin, for appellants.
Stephen I. Adler, Austin, for appellees.
Before POWERS, ABOUSSIE and B.A. SMITH, JJ.
BEA ANN SMITH, Justice.
John H. Biggar, Terrence Kendall, David Helfert, and Edmund J. Fleming, Jr. (collectively, "the landowners"), sued the State of Texas and the Texas Department of Highways and Public Transportation[1] (collectively, "the State"), and Travis County ("the County") alleging (1) inverse condemnation; (2) violations of the Fifth and Fourteenth Amendments to the United States Constitution; and (3) causes of action under 42 U.S.C.A. §§ 1983, 1985 (West 1981). The landowners settled with the County before trial. The trial court rendered judgment on a jury verdict awarding the landowners $1.5 million in damages plus attorney's fees for $150,000. The State appeals. We will affirm that portion of the judgment awarding damages and reverse as to the award of attorney's fees.
THE CONTROVERSY
The landowners own a tract of land abutting Ranch to Market Road 2222 in Austin, Texas. In 1985, the landowners secured from the City of Austin an ordinance authorizing construction of up to 210,000 square feet of office space on the tract, contingent upon a City-approved site development plan ("SDP"). The development potential embodied in the SDP greatly enhanced the tract's value. Without the SDP, the tract had little development potential due to restrictive development and zoning ordinances passed by the City after its approval of the landowners' SDP. Hence, the tract's market value depended on the SDP.
The SDP was scheduled to expire in May 1989 unless the landowners met certain conditions. One of these required the landowners to secure an exchange of easements with the State.[2] The SDP as approved showed a building placed atop a segment of the State's existing channel easement on the tract. Although the channel easement was simply an unimproved portion of the tract intended to provide natural drainage and handle runoff from R.M. 2222, the landowners were not free to build on the State's property interest. To surmount this obstacle, the landowners entered into negotiations with the State to exchange an equivalent portion of the tract for the part of the State's easement on which the proposed building intruded. State law and Department of Highways and Public Transportation rules provided a mechanism for such an exchange. The exchange process entailed review and approval by a number of entities, including various engineers from the district level of the Department of Highways and Public Transportation, the County, the Federal Highway Administration, and the Office of the Attorney General. In December 1988, after extensive interaction between the State's engineers (at the district level) and the landowners' engineers to ensure that the exchanged portion would serve the drainage needs as satisfactorily as the existing easement, the State gave its initial technical approval for the exchange.
*294 Concurrently with the easement-exchange negotiations, the State was undertaking a project to straighten the tortuous R.M. 2222. This effort required condemnation of rights-of-way along R.M. 2222. Because R.M. 2222 is a county road, the County was to pay for the land acquisition while the State would bear the costs for designing and constructing the highway. The new highway's design necessitated condemnation of part of the landowners' tract. The County bid on the needed land, but the landowners refused its offers as too low. Apparently, the County failed to account for the tract's commercial worth due to the office buildings approved in the SDP and the deleterious effect the condemnation would have on the remainder's suitability for this development.
Indeed, when the County's appraisers investigated further, they discovered that the SDP significantly increased the value of the landowners' tract proposed for the right-of-way. In a handwritten memorandum to a County attorney, one of the appraisers indicated that the County must substantially increase the landowners' compensation because of the SDP; the appraiser also observed that the SDP would expire in May 1989. To avoid this expiration, the landowners had to exchange easements with the State before that date; the exchange never occurred. On January 24, 1989, soon after its engineers had approved the technical elements of the exchange, the State informed the landowners that it had reassessed the proposed exchange and found it no longer in the State's best interest to proceed. The State refused to reconsider its position. The City of Austin rejected the landowners' request to extend the May 1989 deadline, and the SDP expired. Without the development potential represented by the SDP, the tract's value plummeted.
The landowners brought suit alleging that their property was taken or damaged as a result of the State's refusal to proceed with the easement exchange. The landowners claimed that the State, either on its own or at the request ot the County, had ceased processing their exchange application in order to reduce the value of their tract. They alleged that the State and the County had thus violated their rights under the state and federal constitutions by failing to grant the easement exchange and thereby devaluing not only the property to be condemned for the right-of-way, but the remainder of the tract on which the office buildings were planned. After settling with the County, the landowners proceeded to trial and secured a jury verdict awarding damages against the State for its violation of the landowners' constitutional rights. The trial court denied the State's motion for judgment non obstante veredicto (n.o.v.). Having perfected its appeal, the State now advances three points of error, the first two challenging the trial court's denial of its motion for judgment n.o.v. and the third urging that the court erred in failing to dismiss the case based on the State's governmental immunity.
DISCUSSION
Governmental Immunity
By its third point of error, the State claims that governmental immunity bars the landowners' constitutional and statutory causes of action against it.[3] Governmental immunity consists of two basic principles of law. First, the state as sovereign cannot be sued without its permission. E.g., Hosner v. DeYoung, 1 Tex. 764, 769 (1847); Dillard v. Austin Indep. Sch. Dist, 806 S.W.2d 589, 592 (Tex.App.Austin 1991, writ denied). The doctrine bars a suit against the State unless the State has expressly given its consent to be sued. See, e.g., Missouri Pac. R.R. v. Brownsville Navigation Dist, 453 S.W.2d 812, 814 (Tex. 1970). Second, the State has immunity from liability even though the State has consented to be sued. Id. at 813; Dillard, 806 S.W.2d at 592.
The State maintains that the landowners never obtained legislative permission to bring their suit. We disagree. The
*295 Texas supreme Court has held that governmental immunity offers no shield against a claim for inverse condemnation brought pursuant to article I, section 17 of the Texas Constitution.[4]Steele v. City of Houston, 603 S.W.2d 786, 791 (Tex.1980). Rather the constitution, by authorizing compensation for the taking, damaging or destruction of property, waives a governmental entity's immunity from suit and immunity from liability. Id.; Dillard, 806 S.W.2d at 596. Were it otherwise, article I, section 17 could be nullified at the whim of the legislature. The landowners thus had permission to bring their inverse condemnation claim. Because we will hold that the landowners stated a claim for inverse condemnation sufficient to support the damages award, we need not reach the question whether their claims of federal constitutional violations override the State's governmental immunity. We hold that governmental immunity did not bar the landowners' inverse condemnation claim.
The State also argues that the landowners have not stated a claim on their statutory causes of action brought pursuant to 42 U.S.C.A. §§ 1983, 1985 (West 1981). Section 1983 creates a cause of action against a "person" who, under color of law, deprives the civil rights of "any citizen of the United States or other person within the jurisdiction thereof." Similarly, section 1985 creates a cause of action against "two or more persons" who conspire to interfere with a citizen's civil rights. The United States Supreme Court recently held that a state is not a person within the meaning of section 1983. Will v. Michigan Dep't of State Police, 491 U.S. 58, 66-67, 109 S. Ct. 2304, 2309-10, 105 L. Ed. 2d 45 (1989). Although Congress has the power to override state immunity, section 1983 is not an exercise of that authority. Id. If the State is not a person for purposes of section 1983, it is likewise not a person for purposes of section 1985 and, therefore, the landowners are unable to state a claim against the State under either statute. We sustain that portion of the State's third point of error as it relates to the landowners' statutory claims, but overrule it as to the constitutional claims.
The Constitutional Claims
By its first and second points of error, the State alleges the trial court erred in denying its motion for judgment n.o.v. because (1) the State had no legal duty to exchange easements with the landowners, and (2) the landowners had no more than an "expectancy" that the exchange would occur.
The Scope of Review
Before addressing the substance of these arguments, we pause to discuss the scope of review. A motion for judgment n.o.v. will be sustained only if a directed verdict would have been proper. Tex.R.Civ.P. 301; Dodd v. Texas Farm Prods. Co., 576 S.W.2d 812, 815 (Tex.1979). A party is entitled to a directed verdict when reasonable minds can draw only one conclusion from the evidence. Collora v. Navarro, 574 S.W.2d 65, 68 (Tex. 1978). To sustain a judgment n.o.v. on appeal, the court must determine that no evidence exists upon which the jury could have made the findings. Fenwal, Inc. v. Mencio Sec, Inc., 686 S.W.2d 660, 663 (Tex.App.San Antonio 1985, writ ref'd n.r.e.). All evidence will be considered in the light most favorable to the party against whom the motion is sought, and every reasonable intendment deducible from the evidence will be indulged in that party's favor. Douglass v. Panama, Inc., 504 S.W.2d 776, 777 (Tex. 1974).
As the above authorities indicate, the State's first and second points of error constitute "no evidence" points. The State, while acknowledging as much in its appellate briefs, does not directly challenge the evidence supporting the jury's findings. Rather, the State maintains that the trial court was barred by rules of law from giving weight to any of the evidence offered. *296 See Robert W. Calvert, No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex.L.Rev. 361, 362 (1960). As the State summarizes its position, "Unless the Appellees have a constitutionally protected property interest that entitles them to this exchange of easements, all evidence presented by the Appellees at trial may be given no probative force at all to sustain the verdict and judgment." The State's argument is essentially that the landowners failed to state a claim necessary to support the damages awarded. Because the State assails neither the evidence nor the jury findings based thereon, we shall focus our analysis on the question of whether the landowners stated a claim under any of their constitutional causes of action.
Inverse Condemnation
We turn first to the landowners' inversecondemnation claim. The landowners alleged that the State, by refusing to process the exchange, drastically reduced their tract's value and precluded development that would have been allowed pursuant to the SDP. The State maintains that because the decision to grant an exchange was discretionary, it had no legal duty to do so and, therefore, it cannot be liable.
For purposes of inverse condemnation, "property" susceptible of legal injury and a corresponding right to compensation includes incorporeal property as well as tangible property. State v. Schmidt, 805 S.W.2d 25, 29-30 (Tex.App. Austin 1991, writ granted). One such incorporeal right is that of lawful development. See City of Austin v. Teague, 570 S.W.2d 389, 394 (Tex.1978). In Teague, plaintiff-developers owned unimproved land zoned as a retail business district. In seeking to develop the property, plaintiffs applied to the Austin Department of Public Works for certain permits needed before development could occur. Due to public pressure that the land be preserved as a "scenic easement," the City repeatedly denied plaintiffs' permit applications, despite plaintiffs' compliance with all engineering, drainage, and structural requirements. Id. at 390-91. The trial court found that the City's denial of the permits was unauthorized, unreasonable, and arbitrary because it was intended (1) to prevent all development of the plaintiffs' property and (2) to preserve the property as a scenic easement for the benefit of the public. Id. at 391. Although this finding was not before the supreme court because the City did not appeal it, we think it manifest that a governmental entity may not arbitrarily withhold benefits from particular citizens to serve the government's own ends.
The Teague court acknowledged as much, observing that a property owner may recover damages "when the government's action against an economic interest of an owner is for [the government's] own advantage." Id. at 393. The court then cited with approval another Texas case presenting facts and issues closely resembling those of the instant case. See San Antonio River Auth. v. Garrett Bros., 528 S.W.2d 266 (Tex.Civ.App.San Antonio 1975, writ ref'd n.r.e.). In Garrett Bros., the City of San Antonio denied utility permits for a proposed residential subdivision because the City intended, sometime in the future, to acquire a portion of the subdivision land by eminent domain for a dam site and a lake for recreation purposes. By suppressing development of the property, the City sought to reduce its acquisition costs when it exercised its eminent-domain powers. The court of appeals condemned this behavior, explaining:
[W]here the purpose of the governmental action is the prevention of development of land that would increase the cost of a planned future acquisition of such land by government ... [the government] can no longer pretend to be acting as a neutral arbiter. It is no longer an impartial weigher of the merits of competing interests] among its citizens. Instead, it has placed a heavy governmental thumb on the scales to insure that in the forthcoming dispute between it and one, or more, of its citizens, the scales will tip in its own favor.... To permit government, as a prospective purchaser of land, to give itself such an advantage is clearly inconsistent with the doctrine that the cost of community benefits should be *297 distributed impartially among members of the community.
Id. at 274. The appellate court affirmed the trial-court judgment awarding Garrett Brothers actual damages for the taking. Id. at 280.
On the authority of Teague and Garrett Bros., we hold that the landowners stated a claim for inverse condemnation when they pleaded facts alleging that they had a right to lawfully develop their property and the State sought to suppress that right in order to secure an economic advantage at the landowners' expense. The State nevertheless argues that Teague and Garrett Bros, do not control this case because they dealt with the denial of permits, whereas this case involves the State's refusal to exchange its real-property interest for a different one. We believe the State draws too fine a distinction. All three cases concern the grant or denial of a government benefit. In both Teague and Garrett Bros., the cities were obligated to allow property development and to issue permits if the person desiring development and applying for the necessary permits complied with applicable rules and regulations. We see no justification for adopting the State's position merely because the discretionary benefit sought by the landowners can be characterized as a real-property interest.
Indeed, the State's contention that its easement, as a property interest, bears no similarity to a permit does not withstand scrutiny. State law and agency rules create a system whereby the State can dispose of its surplus property and petitioners can request property sales and exchanges. The State, specifically the Texas Highway and Public Transportation Commission (the "Commission"), is authorized by law to recommend to the Governor the sale of any real property or interest therein, when that property is no longer needed for highway purposes. Tex.Rev.Civ.Stat.Ann. art. 6673a, § 1(a) (West Supp.1993). Further, the Governor may, upon recommendation of the Commission, execute a deed exchanging any real property or interest therein for any other real property or interest needed by the btate tor highway purposes. Id. § 1(c). The Commission may adopt rules as reasonably necessary to implement these provisions. Id. § 5. The Commission has adopted such rules, providing a specific mechanism whereby the State can sell and exchange its real property. See State Dep't of High. & Pub. Transp., Right-of-Way Manual §§ 421.07-.08 (bk. 1, ed. 6 n.d.). The State insists that the particular easement in question was not subject to exchange because it was not surplus but was being used and would continue to be used for a public purpose. Given that the Commission's rules expressly provide for an exchange even when the easement sought is not yet surplus, see Right-of-Way Manual § 421.08, this contention lacks merit.
The State also asserts that, because the exchange provisions in both article 6673a and the Commission Rules are couched in discretionary language, the State had no duty to exchange easements. The State's discretion in granting an exchange is not, however, dispositive of the issue before us. As shown by Teague and Garrett Bros., a governmental entity may not arbitrarily deny to one applicant a benefit it grants to another. Record testimony from several witnesses, including Charles Muery, the State's Right-of-Way Director for District 14, indicates that the State routinely grants these exchanges. Indeed, none of the witnesses were aware of any previous instance in which the State had denied an exchange once the applicant had secured initial technical approval, as the landowners had. This testimony constitutes some evidence indicating that the State routinely granted exchanges when those seeking them had satisfied the necessary technical requirements. Just as the cities in Teague and Garrett Bros., the State was obligated to allow the development of the landowners' tract if they met those technical requirements. The State cannot be permitted to avoid the result of those authorities simply by denying the landowners the opportunity to go through the exchange process.
*298 We hold, therefore, that the landowners stated a cause of action sufficient to support the damages award for inverse condemnation.
Attorney's Fees Award
There remains only the question of whether that portion of the judgment awarding attorney's fees was proper. We are able to discern no basis for such an award. Although the landowners expressly pleaded for the recovery of attorney's fees, they cited no statute authorizing such an award. Under the "American Rule," attorney's fees may not be recovered unless provided for by statute or contract between the parties. Dallas Cent. Appraisal Dist. v. Seven Inv. Co., 835 S.W.2d 75, 77 (1992); New Amsterdam Casualty Co. v. Texas Indus., Inc., 414 S.W.2d 914, 915 (Tex.1967).
We believe that the landowners could have sought attorney's fees pursuant to their section 1983 and 1985 claims. Under 42 U.S.C.A. § 1988(b) (West Supp. 1992), a court is authorized to award reasonable attorney's fees to a party prevailing in an action under sections 1983 and 1985. However, because we have ruled that the landowners were unable to assert a claim against the State under either statute, section 1988 provides no basis for an attorney's fees award in this case. We are aware of no other legal basis justifying an award of attorney's fees on any of the landowners' other claims, and the landowners offer none.
We, therefore, overrule the State's first and second points of error insofar as they challenge the award of damages to the landowners, but sustain them as they bear on the award of attorney's fees.
CONCLUSION
For the foregoing reasons, we affirm the trial court's judgment awarding damages, but we reverse that portion of the judgment awarding attorney's fees and render judgment that the landowners are entitled to no attorney's fees.
NOTES
[1] The Department has subsequently been renamed the Texas Department of Transportation. Tex.Rev.Civ.Stat.Ann. art. 6663(b) (West Supp. 1993).
[2] Besides the exchange, the conditions included, for example, permits for wastewater-treatment hookups, water lines, and final subdivision approval. There seems to be no dispute that the landowners would have been able to satisfy these remaining conditions.
[3] The State raised the defense of governmental immunity in an affirmative pleading. See Davis v. City of San Antonio, 752 S.W.2d 518, 520 (Tex.1988); Tex.R.Civ.P. 94.
[4] Article I, section 17 provides in pertinent part, "No person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person."
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733 F. Supp. 755 (1990)
DIRECTORS GUILD OF AMERICA, INC., Petitioner,
v.
GARRISON PRODUCTIONS, INC., Morton L. Ginsberg, and MLG Properties, Inc., Respondents.
No. 88 Civ. 0784 (RPP).
United States District Court, S.D. New York.
March 30, 1990.
Vladeck, Waldman, Elias & Engelhard, P.C., New York City, Julian R. Birnbaum, for petitioner.
Hahn & Hessen, New York City, Steven J. Mandelsberg, for respondents Morton L. Ginsberg and MLG Properties, Inc.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND DECISION
ROBERT P. PATTERSON, Jr., District Judge.
This proceeding is brought pursuant to Section 9 of the United States Arbitration Act of 1925 as amended (the "Arbitration Act"), 9 U.S.C. § 9, and Section 301(a) of the Labor Management Relations Act of 1947, as amended ("LMRA"), 29 U.S.C. 185(a), by petitioner Directors Guild of America, Inc. ("DGA"), a labor organization, to confirm a labor arbitrator's award enforcing the provisions of a collective bargaining agreement against respondent Garrison Productions, Inc. ("Productions"), a motion picture production company. Productions failed to defend this action and on January 12, 1990, the Court signed a default judgment submitted by the petitioner against Productions. The remainder of this case, then, involves DGA's attempt to pierce the corporate veil of Productions to recover from respondents Morton L. Ginsberg ("Ginsberg") and MLG Properties Inc. ("MLG").
Jurisdiction lies pursuant to Section 301(a) of the LMRA, 29 U.S.C. § 185(a) and 28 U.S.C. § 1331. Venue is proper in this district pursuant to Section 9 of the Arbitration Act, 9 U.S.C. § 9 and Section 301(a) of the LMRA, 29 U.S.C. § 185(a).
*756 The action was tried before this Court without a jury from July 5, 1989 through July 7, 1989. Proposed findings of fact and conclusions of law were submitted by the parties on January 2, 1990. This opinion constitutes the Court's findings of fact and conclusions of law.
I. FACTS
DGA is an incorporated labor organization within the meaning of Section 301(a) of the LMRA. Its members are motion picture and television directors and related personnel. DGA maintains an office at 110 West 57th Street, New York City.
Productions is a New Jersey corporation which, at times relevant hereto, maintained its business in Guttenberg, New Jersey. It was incorporated in early September 1985 by Sandye Garrison and her attorney, Charles Chehebar. Its business purpose was to acquire and produce motion pictures. On September 19, 1985, shortly after the formation of Productions, a shareholders' agreement was entered into by the founding shareholders. That agreement reflects that the principal investor, Ginsberg, acquired 50% of the stock in return for providing $140,000 of Productions' initial capitalization of $141,000. Garrison invested $500 and Louis R. and Eileen M. Capone invested $500.[1] The shareholders' agreement provides that $50,000 of Ginsberg's contribution was to be held in escrow pending acquisition of the rights to produce a movie entitled "Single Room".
The Shareholders' Agreement sets forth a division of functions as follows:
Functions. Morton L. Ginsberg will be the principal investor in the Company and will advise it in all financial matters. Sandye Garrison will administer and execute all production projects undertaken by the Company, which functions will involve the preparation of a budget for each production, the negotiation of co-production agreements, casting the production and negotiation of all contracts pertaining thereto. Louis R. Capone will direct the sale and marketing of all projects and arrange for the music for all productions and will also negotiate and acquire rights to original musical scores and other related properties. Eileen M. Capone will be principally in charge of developing and obtaining properties for feature films.
Ginsberg, an attorney, is the sole owner of respondent MLG, Inc., a New York corporation used by Ginsberg to transact real estate business. Before he became involved in Productions, Ginsberg had no experience or skill in film production. Ginsberg was approached by Garrison, who needed financing in the form of "seed capital" from investors to acquire the rights to and thereafter to produce "Single Room." Garrison represented to Ginsberg that "Single Room" would attract a cast of well known movie stars and that the cast would in turn attract additional capital through a pre-sale of "Single Room" to a major studio.
In addition to interesting Ginsberg in "Single Room," Garrison also induced Ginsberg to advance additional moneys to Productions for the acquisition and production of a second film, "Hawken." From October 1985 to mid-1986, Ginsberg contributed approximately $1.8 million to Productions for the production and distribution of "Hawken." In the spring of 1986 final editing of "Hawken" had still not been completed. At that point Productions conveyed all its rights in "Hawken" to Ginsberg. No proof was adduced showing that there was consideration for this transfer.
In the meantime, Productions was attempting to gain the rights to, and thereafter produce, "Single Room," a German stage play by Johannes Reben. In March 1985 a German director, Wolfgang Panzer, who had been associated with European productions of "Single Room," obtained with Felix Bloch Erben the exclusive rights to an English language version of the play. In March of 1986, Garrison, on behalf of Productions, entered into a contract with *757 Pantom Productions, S.A. ("Pantom"), a company controlled by Panzer, under which Panzer was to direct an English language production of "Single Room." The contract called for arbitration of all disputes under the rules and regulations of DGA. In June 1986 Productions entered into a contract with Pantom which provided that an assignment of all rights in "Single Room" would be received from Panzer and Erben upon receipt of payment in full of 250,000 Deutsche Marks. Pursuant to this contract, Productions paid $20,000 as an initial payment and agreed to pay Panzer for Erben a final payment of about $120,000 ten days before it started shooting "Single Room."
At about the same time, in June of 1986, the Capones resigned from and relinquished their 25% stock interest in Productions. In connection with this agreement, the Capones received a promise to pay $25,000 secured by a confession of judgment in that amount from Productions, from Garrison individually, from MLG and from Ginsberg personally.[2] After this buy-out of the Capones, Ginsberg was the holder of 75 percent of Productions' stock.[3]
Productions, as producer of "Single Room", signed the DGA Basic Agreement on July 26, 1986 (Pt. Ex. 9). The Basic Agreement obligated Productions to pay the salaries of DGA members and to make contributions to certain DGA pension and health and welfare plans.[4]
On September 2, 1986, after an arbitration hearing requested by DGA, the arbitrator, Walter Gellhorn, Esq., ordered Productions to post an escrow deposit of $50,000 pursuant to the DGA Basic Agreement to secure the salaries and health and welfare benefits of DGA members employed by Productions to produce "Single Room." The $50,000 received by DGA for security was paid directly by MLG. MLG posted this deposit (on behalf of Productions) on September 4, 1986. Thereafter, in September 1986, Productions began active film production of "Single Room" with funds advanced by MLG. In September 1986 Panzer started filming "Single Room." After approximately one week Garrison and William C. Gerrity, Unit Production Manager, decided a new cinematographer should be hired. Ginsberg was so advised and approved the additional budgetary expenditure.
On September 24, 1986, after approximately one-third of the scenes had been filmed, Panzer refused to proceed further with the filming of "Single Room." Respondents claim that a number of disputes had arisen with Panzer. No testimony was offered to support this general charge. Accordingly, the Court finds the principal reasons for his refusal were (1) that Productions' post-dated September 17, 1986 check to Pantom Productions in the sum of $124,100 in final payment for the rights to "Single Room" (received on September 11, 1986, some days after it was due) had failed to clear due to insufficient funds, and (2) that Productions had failed to pay two installments of Panzer's salary. After September 24, 1986, the film-making ceased entirely. Panzer's differences with Productions were never resolved, and, pursuant to the terms of the licensing agreement, the rights to "Single Room" reverted to Felix Bloch Erben.
Ginsberg, acting for MLG and not Productions, attempted to renegotiate rights to "Single Room" in correspondence with Felix Bloch Erben in November and December 1986 (Pt. Exs. 23, 24, 26, 27), but was unsuccessful.[5] In those letters Ginsberg, *758 not Productions, sought to obtain the rights to film "Single Room." The letters are written on MLG stationery using the phrases, "We demand that you immediately withdraw Mr. Panzer's option ... arrange a payment schedule ... with the understanding we will `Americanize the story'" and "We would thus acquire the same rights as ... Pantom ... We are of the opinion Wolfgang Panzer ... is not a proper director for this project and that the script must be revised by a writer of our choice, which is an absolute precondition of any new deal we make" (emphasis added).
Throughout the entire period prior to September 24, 1986, Ginsberg provided all the financing for the operations of Productions, other than the two $500 contributions to capital by Garrison and the Capones. After the exhaustion of Productions' initial capitalization, which had been provided almost entirely by Ginsberg, funds were advanced at such times as Garrison advised Joseph Kazarnovsky of MLG of the necessity of specific expenses incurred by Productions. Upon receipt of the funds, Productions would then make the payment of those expenses. Usually the MLG checks were signed by Kazarnovsky, an attorney in Ginsberg's office. On occasion, Productions' bills were paid directly by MLG or from the escrow account of Ginsberg's law firm after clearance with Ginsberg. Between October 1985 and October 1986 MLG had paid Productions over $1.8 million for expenses in connection with "Single Room." (Tr. 224, Pt. Ex. 29).[6]
Because of this unusual procedure, Ginsberg had final approval of virtually all corporate decisions, financial and artistic. His power over the corporation is exemplified by the fact that he delayed the financing of and the acquisition of the rights to "Single Room" until the "Hawken" shooting was complete and Garrison had signed Geraldine Page for the new picture, (Pt. Ex. 37 at 52) and by his action in having "Hawken" transferred to him without consideration before Productions started "Single Room."
On November 3, 1986, DGA filed a demand for arbitration on behalf of those of its members, Panzer, W.C. Gerrity, C.J. Gerrity, L. Jacobs and A. Merins, who were on the production crew of "Single Room," seeking from Productions unpaid salaries for services performed by those members, as well as related payments to the DGA-Producer Pension, Health and Welfare Trust Plans.[7] At the arbitration hearings in December 1986 and January and April 1987, Productions was represented by Garrison and Kazarnovsky. Kazarnovsky testified in the present action that he relied totally on Garrison in defending the arbitration as she was the only person with knowledge of the facts. Ginsberg and MLG were not parties to the arbitration proceeding. The arbitrator issued a written award dated August 31, 1987, awarding DGA full relief.
In January 1987 Ginsberg, acting as an attorney, instituted a suit against Panzer and Pantom Production on behalf of Productions. It was dismissed.
Thereafter, in May 1987, Garrison entered into an agreement with Ginsberg whereby she turned over her stock to Ginsberg, resigned as an officer of Productions, and quitclaimed to Ginsberg any residual *759 rights she may have had in "Hawken" (Pl. Exh. 32).[8] Under the agreement, Productions' creditors were notified of Garrison's resignation and were instructed to contact MLG to arrange for payment. Also, under the agreement Ginsberg agreed (1) to use his best efforts to complete post production work on "Hawken" in order to distribute the work, and (2) to indemnify Garrison against personal liabilities to Productions' listed creditors. The agreement called for Garrison to be paid the amount of her producer's fee from profits from "Hawken" if profits occurred.
The only remaining asset of Productions after the May 1987 agreement between Garrison and Ginsberg were the partially completed prints of "Single Room" and related materials. Thereafter, Ginsberg obtained personal custody of the "Single Room" prints and related materials by paying the film laboratory, through MLG. Thus, after the May 1987 agreement with Garrison, Ginsberg was the sole owner of Productions and had custody of its only asset.
Ginsberg, through MLG, paid about $50,000 to five creditors of Productions whom he alleges could have made personal claims against Garrison. Ginsberg intended that these payments would thereby relieve Productions of liabilities incurred through Garrison. Before or shortly after production on "Single Room" had stopped, certain other creditors of Productions also received payment from MLG or Ginsberg. Thereafter, Ginsberg himself decided which of Productions' obligations he would honor and which he would not. Among those that were not honored was the arbitrator's award to DGA at issue in this case.
After Productions failed to pay the arbitration award, DGA commenced this proceeding in February 1988 by filing a petition against Productions, Ginsberg and MLG for the amount of the arbitration award and for attorneys' fees and costs. Productions did not answer the petition. Ginsberg and MLG deny any and all liability.
II. DISCUSSION
Petitioner argues that Ginsberg, both personally and through MLG, exerted de facto control of Productions on all decisions ranging from the financial to the artistic and creative, and that liability therefore should be imposed beyond Productions' corporate identity on Ginsberg personally and MLG as the parent corporation. Plaintiffs argue that the facts satisfy the standard under New York law for piercing the corporate veil. Alternatively, petitioners argue that the corporate veil should be pierced for equitable reasons.
Under New York law there is a strong presumption in favor of corporate separateness. See William Wrigley Jr. Co. v. Waters, 890 F.2d 594, 600 (2d Cir.1989) ("It is well settled that New York courts are reluctant to disregard the corporate entity"; citing cases); Port Chester Elec. Const. Co. v. Atlas, 40 N.Y.2d 652, 389 N.Y.S.2d 327, 331, 357 N.E.2d 983, 987 (1976) ("Ordinarily [corporations'] separate personalities cannot be disregarded.").
Under the New York standard for piercing the corporate veil, as initially set forth in Lowendahl v. Baltimore & O.R. Co., 247 A.D. 144, 287 N.Y.S. 62, 76, aff'd, 272 N.Y. 360, 6 N.E.2d 56 (1936), a shareholder may be liable for the acts of a corporation if there exists:
1. Control, not mere majority or complete stock control, but complete domination, not only of the finances but of policy and business practice in respect to the transaction attacked [emphasis added] so that the corporate entity as to this transaction had at the time [emphasis in original] no separate mind, will or existence of its own; and
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of plaintiff's legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
*760 Gorrill v. Icelandair/Flugleidir, 761 F.2d 847, 853 (2d Cir.1985) (quoting Lowendahl) (emphasis in Lowendahl). See also Fisser v. International Bank, 282 F.2d 231 (2d Cir.1960) (adopting the Lowendahl standard).
The Second Circuit recently reiterated the applicable test to pierce the corporate veil. In William Wrigley Jr. Co. v. Waters, 890 F.2d 594, 600 (2d Cir.1989), the court described New York law as follows:
[T]he corporate veil will be pierced only when it can be demonstrated that the `[corporate] form has been used to achieve fraud, or when the corporation has been so dominated by an individual ... and its separate identity so disregarded, that it primarily transacted the dominator's business rather than its own and can be called the other's alter ego.' (quoting Gartner v. Snyder, 607 F.2d 582, 586 (2d Cir.1979)).
See also A/S Domino Mobler v. Braverman, 669 F. Supp. 592, 594 (S.D.N.Y.1987) ("The essential inquiry on a claim to pierce the corporate veil is whether the corporate form has been abused; i.e., whether the shareholder used his control of the corporation to further his own, rather than the corporation's, business or whether the shareholder used the corporate vehicle to achieve a fraud.").
In making this determination, courts consider several factors, including the intermingling of corporate and personal funds, undercapitalization of the corporation, failure to maintain separate books and records or other formal legal requirements for the corporation, and siphoning of corporate funds by the dominant shareholder. William Wrigley, 890 F.2d at 600-01. Finally, the court is to be guided by the general principle that "liability is imposed when doing so would achieve an equitable result." Id., 890 F.2d at 601, quoting A/S Domino Mobler v. Braverman, 669 F.Supp. at 594, citing Brunswick Corp. v. Waxman, 599 F.2d 34, 35 (2d Cir.1979).
The Second Circuit in William Wrigley further reminded that, in cases involving small privately-held corporations, preoccupation with strict corporate formality as followed in "sophisticated corporate life" is inappropriate, finding that in general courts have not disregarded the corporate form absent "an abuse of that form either through on-going fraudulent activities of a principal, or a pronounced and intimate commingling of identities of the corporation and its principal or principals, which prompted the reviewing courts, driven by equity, to disregard the corporate form." William Wrigley, 890 F.2d at 601.
The evidence demonstrates, and the Court finds, that Ginsberg so dominated and controlled Productions and the "Single Room" project that the DGA members who are claimants here regarded him as in control of the financing of the "Single Room" production and performed their services for Productions in reliance on his continued activity; and that he used his control to unjustly deprive plaintiffs of the back salary and benefits which are the subject of the arbitration award.
First, the evidence demonstrates that Ginsberg was in control of the corporation. He was a 50% shareholder from the beginning, a 75% shareholder in June 1986, and by May, 1987, he was able, by utilizing his financial control over the corporation, to become its sole shareholder. From the beginning, he was the principal investor providing over 99% of the cash contributions for capital of the corporation. From the beginning, Ginsberg was also a director on a Board which required unanimous consent for any action taken. Thus, he had veto power. The shareholders' agreement of September 19, 1985 was drafted to permit him greater control of the corporation than any ordinary "angel" would have.
Furthermore, the unusual manner in which Ginsberg and MLG transmitted funds to Productions gave Ginsberg financial control over the corporation. Thus, although Garrison was president of Productions, signed all contracts, hired and fired all actors and employees, and made the necessary arrangements for the acquisition of the properties Productions sought to produce, all such arrangements were subject to the funds being advanced and authorized to be advanced by Ginsberg. *761 The funds were advanced on an as needed basis initially once or twice a month, increasing to twice a week and even daily in September 1986. Thus Ginsberg controlled the ability of Productions to meet its obligations and a strong inference is created that those obligations were undertaken by Productions with his explicit or implicit approval.[9] The separation agreement with the Capones in June 1986 implicitly acknowledges the parties' understanding that Ginsberg controlled the ability of Productions to meet its obligations.
While Ginsberg's domination of the corporation, as described above, may not have been "complete as to every detail," it is well established that the corporate veil may be pierced where the domination is "`complete ... in respect to the transaction attacked.'" Gorrill v. Icelandair/Flugleidir, 761 F.2d at 853. It is clear that Ginsberg dominated and controlled the specific transaction at issue herethe payment of wages with respect to the production of "Single Room." Ginsberg's decision not to pay DGA's members for their work on "Single Room" and later not to pay the arbitration award, coupled with the manner in which Ginsberg controlled the company's finances and assets, effectively eliminated the possibility that DGA's members would get paid for their work. Ginsberg certainly was "the ultimate arbiter of the extent to which performance was to be discharged." Data Probe, Inc. v. 575 Computer Services, Inc., 72 Misc. 2d 602, 340 N.Y.S.2d 56, 61 (N.Y.City Civ.Ct.1972), cited in David v. Glemby Co., 717 F. Supp. 162, 168 (S.D.N. Y.1989).
Furthermore, that Ginsberg regarded himself as in control of Productions and the "Single Room" project is exemplified by his subsequent efforts to renegotiate the rights to that project through correspondence with Felix Bloch Erben. That correspondence makes clear that Ginsberg did not regard Productions and MLG as two separate and distinct corporations, and that he considered "Single Room" to be as much a project of MLG as Productions.
Ginsberg's claim that he had only expected to provide seed money for "Single Room" and thereafter was forced to infuse the corporation with additional capital when Garrison argued that "otherwise what you have in will go down the drain," is not consistent with the other evidence. $50,000 of his contribution was to be held in escrow pending the acquisition of the rights to "Single Room," while in the meantime, Ginsberg spent significant sums on "Hawken" before the rights to "Single Room" were acquired. Not until March 1986, during the "Hawken" project, was Panzer hired to direct "Single Room" and it was June 1986 when the rights were finally acquired. Prior to that time no substantial investment by Ginsberg would have "gone down the drain" had he stopped supporting the "Single Room" production. After that time, having spent $1.5 million on filming "Hawken", Ginsberg knew what kind of investment would be required for "Single Room." Furthermore, the total costs for "Single Room" were all outlined in the budget, which was over $3 million. Ginsberg was also aware that a pre-sale of "Single Room" might not be arranged, since "Hawken" had not been able to be pre-sold during production. Thus, Ginsberg was clearly aware of the financial requirements for going forward with "Single Room."
Furthermore, Ginsberg and MLG operated Productions with little regard for corporate formalities. Ginsberg and MLG often by-passed Productions to pay creditors directly. Productions has no minutes or records of corporate meetings or records of directors authorizing significant events, such as transfers of assets to Ginsberg and the buy-out of Garrison, which were completed with virtually no evidence of corporate meetings or formal actions. While the Second Circuit has cautioned against "preoccupation with questions of structure, financial and accounting sophistication or dividend policy or history" in small privately-held corporations, William Wrigley, 890 F.2d at 601, in this case very basic concepts of corporate formality, such as payment by *762 the corporation rather than shareholders to creditors, were largely ignored.
Here, Ginsberg manipulated the corporate form in such a way that he controlled every asset, made all major decisions with respect to the funding of the corporation, and treated the corporation as his own instrumentality, while at the same time hiding behind the corporate form when creditors, especially DGA, demanded their rightful payments pursuant to contract. This course of conduct amounts to an unjust act such that disregarding the corporate form is warranted. Gorrill v. Icelandair/Flugleidir, 761 F.2d at 853; David v. Glemby Co., 717 F.Supp. at 166, citing Data Probe, Inc. v. 575 Computer Services, Inc., supra.
Petitioner also established that, by having Productions transfer "Hawken" to him, with little or no consideration, apparently for tax reasons, and by obtaining personal custody and control over the "Single Room" materials, Ginsberg used his domination of Productions for his personal interests. Also, the clear inference is that Ginsberg and MLG deliberately undercapitalized Productions. Carrying on a business without substantial capital and leaving the corporation without substantial assets to meet its debts can justify piercing the corporate veil. DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 685-86 (4th Cir.1976); see also Coleman v. Corning Glass Works, 619 F. Supp. 950, 956 (W.D.N.Y.1985), aff'd, 818 F.2d 874 (Fed.Cir.1987). Ginsberg operated Productions in such a way that the corporation was constantly without cash and was required to seek funding from him for all major disbursements. Thus, when Ginsberg decided not to pay a creditor, the corporation itself was unable to make the payment.
Under such circumstances the equities favor an employee who has performed services over the person who has undertaken steady financial support of the film-making venture, whether formally in the shareholders' agreement or by the course of action he has consistently pursued over a lengthy period of time. Thus, piercing the corporate veil in this case, and thereby allowing petitioner to recover from Ginsberg and MLG, would achieve an equitable result. See Brunswick Corp. v. Waxman, 599 F.2d at 36.
Viewing the evidence as a whole, the Court finds that Ginsberg as sole investor and as the sole director in control of the corporation's finances was in a control position as to Productions; that he failed to observe corporate formalities adequately between MLG and Productions; that he used his control over the company to further his personal interests; that he operated the company in such a way that it was often undercapitalized; that this manner of operating the company amounted to an unjust act with respect to DGA's members; and that Ginsberg's conduct is not consonant with fair dealing with employees. Accordingly, the Court holds that it is appropriate to pierce the corporate veil of Productions to hold Ginsberg and MLG jointly and severally liable to petitioner with respect to the arbitration award.
As an alternative holding, the Court finds that Ginsberg is liable pursuant to § 17-203 of the DGA Basic Agreement, which states that the agreement is binding upon those who are assigned or purchase "a substantial part of the business of the employer." On this basis, the assignment to Ginsberg of "Hawken," which was one of the only assets of Productions, renders him liable under the DGA Basic Agreement to pay the arbitration award to plaintiff.
III. CONCLUSION
The Court therefore orders that judgment be entered for plaintiff. Plaintiff shall submit a proposed judgment on 5 days notice to defendants within ten days of the date of entry of this decision.
SO ORDERED.
NOTES
[1] Garrison was elected president and chief executive officer of Productions, Louis R. Capone, its treasurer, and Eileen M. Capone, its secretary. A Board of Directors consisting of all four founding shareholders was elected and unanimous action was required of the Board.
[2] Under the agreement, the payments were to be guaranteed by MLG and the checks endorsed by Ginsberg, Garrison and MLG. (Pt. Ex. 10).
[3] It is unclear how Ginsberg obtained the Capone's 25% interest in Productions. In any event, the arbitrator below found that, at the time of the arbitration, Ginsberg owned 75% of Productions' stock. No evidence in conflict with that finding was adduced before this Court.
[4] It is noted that the DGA Basic Agreement is binding on parties assigned a substantial part of the business of the employer. (Pt. Ex. 1 p. 165).
[5] In this correspondence, Ginsberg wrote on MLG stationery as "President of MLG Properties, Inc., the principal investor, through Garrison Productions, Inc." In the arbitration proceeding below, the arbitrator determined that the letters were between Erben and MLG, not Productions. (Pt. Ex. 3 at 7 n. 1).
[6] Prior to September 24, 1986 Ginsberg made or authorized direct payments to creditors of Productions as follows: (1) check drawn on Kazarnovsky's escrow account in the amount of $52,200, payable to Sir John Gielgud, an actor in "Single Room"; (2) check of MLG for $50,000 dated 7/25/86 payable to Kazarnovsky to reimburse him for Productions' expenses; (3) check of MLG for $14,000 dated 8/12/86 to New Jersey State Treasurer for license for shooting film at Ridgewood Park; (4) check of MLG for $42,000 dated 8/15/86 payable to Productions for payroll; (5) check of MLG for $50,000 dated 9/5/86 payable to DGA for $50,000 for performance bond pursuant to arbitration; (6) check of MLG for $125,000 dated 9/5/86 payable to Don Ameche, an actor in "Single Room". After film-making ceased and while other creditors were not paid, MLG paid Film World Security $8,658 and Sandye Garrison $15,855 on 10/10/86 and $15,000 on 10/17/86. In addition, during depositions it was admitted by MLG that other payments to creditors of Productions were made after September 24, 1986 and that payments were made to get the "Single Room" film prints.
[7] Both the DGA Basic Agreement and Productions' agreement with Panzer provided for disputes to be resolved by arbitration.
[8] "Hawken" has since been released as "Morton Ginsberg presents Hawken's Breed."
[9] The record does not contain any testimony from Garrison to the contrary.
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848 S.W.2d 951 (1993)
41 Ark.App. 33
HENDERSON STATE UNIVERSITY, Appellant,
v.
Joe SPADONI, Appellee.
No. CA 92-423.
Court of Appeals of Arkansas, Division II.
February 24, 1993.
*952 Ed McCorkle, Arkadelphia, for appellant.
William Travis Mathis, Arkadelphia, for appellee.
JENNINGS, Chief Judge.
This is a school discipline case. The Clark County Chancery Court enjoined Henderson State University from suspending Joe Spadoni for the 1991-92 school year, holding that the university had denied Spadoni procedural due process. We reverse the chancellor's decision.
On September 22, 1991, Joe Spadoni struck a fellow student, Bobby Cullen, in the face with a beer bottle. The bottle broke and Cullen was cut rather severely on the nose and the arm. The injury to the arm required twenty-four staples; the injury to the nose required twelve stitches and a subsequent skin graft.
The incident took place in the street between the Henderson State University campus and the Phi Sigma Kappa fraternity house, of which Spadoni was a member. Bobby Cullen was a member of Sigma Phi Epsilon Fraternity: the quarrel appears to have had its origin in inter-fraternity rivalry. There was conflicting evidence on whether Cullen struck Spadoni before the former was hit in the face with a bottle.
On October 1, 1991, Spadoni was notified by Associate Dean Robert Neal that he had been suspended from school. In accordance with school procedure, Spadoni immediately exercised his right to appeal to the university disciplinary committee.
A hearing was set for October 15, and before the hearing Spadoni was provided with the full text of all witnesses' statements. The committee was composed of four students and four faculty members. During the October 15 hearing, at which Spadoni was represented by an attorney, the committee heard the testimony of fourteen witnesses. After the four-hour hearing the committee voted six to zero with two abstentions to uphold the one year suspension.
*953 Mr. Spadoni promptly filed suit in Clark County Chancery Court seeking an injunction to prohibit the suspension. After a hearing held on December 10, 1991, the chancellor held that Spadoni had been denied his rights to procedural due process and permanently enjoined Henderson State from suspending him.
There is no question but that the Due Process Clause of the Fourteenth Amendment to the United States Constitution gives rights to a student who faces expulsion for misconduct at a tax-supported college or university. Dixon v. Alabama State Bd. ofEduc., 294 F.2d 150 (5th Cir.1961); see also Goss v. Lopez, 419 U.S. 565, 95 S. Ct. 729, 42 L. Ed. 2d 725 (1975). Once it is determined that due process applies, the question remains what process is due. Morrissey v. Brewer, 408 U.S. 471, 481, 92 S. Ct. 2593, 2600, 33 L. Ed. 2d 484 (1972). There is a general policy against intervention by the courts in matters best left to school authorities. "Judicial interposition in the operation of the public school system of the Nation raises problems requiring care and restraint.... By and large, public education in our Nation is committed to the control of state and local authorities." Goss v. Lopez, 419 U.S. at 578, 95 S.Ct. at 738, citing Epperson v. Arkansas, 393 U.S. 97, 89 S. Ct. 266, 21 L. Ed. 2d 228 (1968). The courts have been reluctant to interfere with the authority of local school boards to handle local problems. Fortman v. Texarkana Sch. Dist. No. 7, 257 Ark. 130, 514 S.W.2d 720 (1974). A chancery court has no power to interfere with school district boards in the exercise of their discretion when directing the operation of the schools unless the boards clearly abuse their discretion. Springdale Bd. of Educ. v. Bowman, 294 Ark. 66, 740 S.W.2d 909 (1987). The burden is upon those charging such an abuse to prove it by clear and convincing evidence. Bowman, 294 Ark. at 71, 740 S.W.2d 909. Undoubtedly these general principles apply to disciplinary hearings for students at state supported universities and colleges.
What procedural safeguards then are required in this context by the Due Process Clause? In Goss the Court said, "[T]he very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation." 419 U.S. at 578, 95 S.Ct. at 738; Boykins v. Fairfield Bd. of Educ., 492 F.2d 697 (5th Cir.1974), cert, denied, 420 U.S. 962, 95 S. Ct. 1350, 43 L. Ed. 2d 438 (1975). Flexibility and elbow room are to be preferred over specificity. Esteban v. Central Missouri State College, 415 F.2d 1077 (8th Cir.1969), cert, denied, 398 U.S. 965, 90 S. Ct. 2169, 26 L. Ed. 2d 548 (1970). Again in Goss, the Court said that a student facing suspension is entitled to, at the very minimum, "some kind of notice and... some kind of hearing." 419 U.S. at 579, 95 S.Ct. at 738. See also University of Houston v. Sabeti, 676 S.W.2d 685 (Tex. Ct.App.1984) (holding basic elements of due process are notice and a right to be heard). A full-dress judicial hearing is not required. See Dixon v. Alabama State Bd. of Educ, 294 F.2d at 159.
The court's order states in part:
(3) That the Defendant, Henderson State University, failed to provide the Plaintiff due process in this case, and therefore, the preliminary injunction should be permanent and the University should allow the Plaintiff to continue his education at the University for the Fall term of 1991 and Spring term of 1992;
(4) The Court, in finding that the Plaintiff was not afforded due process, makes the following specific findings:
(a) That the hearing before the Disciplinary Committee did not afford the Plaintiff nor his witness the opportunity to give their entire testimony but was restricted to questions asked by the chairman;
(b) That the committee met behind closed doors with Dean Neal for approximately forty-five minutes prior to the hearing. In effect, the prosecutor met with the judges behind closed doors which smacks with impropriety;
(c) That George Staples, a member of Sigma Phi Epsilon Fraternity, served as an official member of the Disciplinary Committee. The committee as *954 well as Mr. Staples, knew that the prosecuting witness, Bobby Cullen, was a member of Sigma Phi Epsilon and that Mr. Staples had a conflict of interest and should have disqualified from hearing the case;
(d) That Exhibit 14, a letter from faculty member Dr. John Crawford addressed to Dr. Charles Dunn dated October 16, 1991, is further evidence that he observed the injustice that took place at the committee hearing and reported this to Dr. Dunn prior to his decision;
(e) That the suspension was not based upon the facts as set forth in this finding by the Court;
(f) That the University investigation was incomplete and one sided which clearly indicates that due process was not afforded;
(g) The University's action in this case and their actions involving athletic students indicates that the University has two standards that they apply in the same type of off campus activities.
IT IS, THEREFORE, CONSIDERED AND ORDERED that the preliminary injunction is made permanent in that due process was denied to the Plaintiff and the University shall allow the Plaintiff to continue his education for the Fall term of 1991 and Spring term of 1992.
The chancellor's first finding, that the hearing unduly restricted Mr. Spadoni from presenting his side of the case, is clearly against a preponderance of the evidence. At the hearing in chancery court Spadoni admitted that the faculty did not prohibit him from presenting any evidence he wanted them to hear. The finding is apparently based on testimony that Spadoni's witnesses were required to testify in response to questions instead of being permitted to tell whatever they wanted to say, but this is normal procedure even in a judicial proceeding.
Similarly, the chancellor's finding that the suspension was "not based upon the facts" was clearly erroneous. The appellee admitted striking Bobby Cullen in the face with the beer bottle. His argument before the chancellor was that he was justified in doing so because Cullen hit him first. As stated previously, the evidence on this point was in conflict, but in any event this was a question of fact to be decided by the disciplinary committee. Likewise the court's findings that the investigation was "one sided and incomplete" and that "the University has two standards that they apply in the same type of off campus activities" are simply not supported by the record.
The finding by the court that the disciplinary committee met with Dean Neal prior to the beginning of the hearing itself finds support in the evidence, but it is undisputed that the purpose of the meeting was to decide whether the hearing would be open or closed and whether the "Buckley Amendment" applied. In any event we cannot agree that the meeting resulted in a deprivation of the student's right to procedural due process. The chancellor's finding that committee member George Staples was a member of the same fraternity as Bobby Cullen is supported by the evidence, but again, we do not agree that this fact in and of itself constituted a denial of due process.
The chancellor also found that a letter from Dr. John Crawford, the faculty advisor for Mr. Spadoni's fraternity, "Is further evidence that he [Crawford] observed the injustice that took place at the committee hearing." In the letter, Dr. Crawford objected to the closing of the hearing, expressed dissatisfaction with the "attitude" of the committee, and expressed the opinion that both Cullen and Spadoni should be punished equally. The letter will not support a finding of a denial of procedural due process.
In the case at bar, Mr. Spadoni was provided reasonable notice of the specific charges against him. Before the disciplinary hearing he was provided with copies of the statements of witnesses. He was represented by counsel at the hearing. He was permitted to ask questions of the witnesses against him. He was permitted to speak in his own defense and to call *955 witnesses, including character witnesses, in his own behalf.
We conclude that Mr. Spadoni was provided more than the "rudimentary elements of fair play" required by the Due Process Clause. See Dixon v. Alabama State Bd. of Educ, 294 F.2d at 159. We therefore reverse the chancellor's decision to the contrary.
Reversed.
PITTMAN and COOPER, JJ., agree.
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23 Md. App. 530 (1974)
328 A.2d 69
POTOMAC ELECTRIC POWER COMPANY
v.
LESTER F. LYTLE ET AL.
No. 233, September Term, 1974.
Court of Special Appeals of Maryland.
Decided November 22, 1974.
*531 The cause was argued before THOMPSON, MOORE and LOWE, JJ.
Thomas F. Mudd for appellant.
Marvin H. Schein for appellees.
LOWE, J., delivered the opinion of the Court.
Around the turn of the century William Arthur Dunkerley said that "To every man there openeth a way, and ways and a way...." Over sixty years later the Potomac Electric Power Company (Pepco) said to Lester, Paul and Margaret Lytle that the way to their property, used for more than half century, was no longer open to them. Pepco's action left the Lytles with no access to their retreat on the Paskahansa Creek, except by water.
Appellees Lester F., Paul E. and Margaret Lytle are the owners as tenants in common of a one-half interest in a three acre point of land, known as "Jones Point," which protrudes into Paskahansa Creek. Their interest was derived in 1957 from Noah Lytle who was the father-in-law of Margaret and the father of Lester and Paul. Noah Lytle had acquired the property as a tenant in common with a "Mr. Menguel."
The property is improved by a house and, with the exception of the riparian boundaries, is surrounded by a four hundred and fifty-three acre farm. Since at least 1919, ingress and egress from the nearest public way (which is now Route #301) to the dominant "Jones Point" was over a dirt or gravel road crossing the servient farm then owned by John Matthews, known as "Laidloes Ferry" (more recently renamed "Rosedale"). No difficulties ever arose regarding that use for at least fifty-five years, during which Lester and Paul Lytle remembered regularly using the road. In their youth, on nearly every weekend they were taken to "Jones Point" by their parents, and after their maturity they reciprocated by taking their parents, or they journeyed alone. Until approximately five years *532 ago, these trips occurred every year throughout "[p]ractically the entire year, off and on, one or the other of us, either hunting, fishing or vacationing," would traverse the right-of-way to the bucolic sanctuary. The appellees with or on behalf of their father maintained the right-of-way to the point. There occurred one incident when Mr. Matthews who then owned the Laidloes Ferry farm "... tore it [the right-of-way] up hauling crops in. He repaired it, apologized, and repaired the road."
In 1957 appellant Pepco, as an undisclosed principal, purchased the "Laidloes Ferry" farm. Sometime soon thereafter it also acquired the one-half interest in "Jones Point" from Mr. Menguel.
In 1963 Pepco sought to barricade the right-of-way with a chain. Lester Lytle "sawed the lock off" and "continued to use it [the right-of-way] clean up to about five years ago." The erection of a chain link fence at that time foreclosed any further use of the access road. With the exception of one entry, made through another road built by Pepco, the Lytles have been reduced to occasional visits to their property by boat. During the interim their boats and furniture have been stolen and their home has deteriorated.
Appellees sought to enjoin Pepco from obstructing their right-of-way. The case was heard by the Honorable Joseph A. Mattingly presiding as Chancellor in the Circuit Court for Charles County. Judge Mattingly found:
"... that this piece of land down there had a right-of-way to it and the right-of-way came out through Pepco's property and Pepco can't come in here and deny a right-of-way to that property nor depress the value of this property.
Now Pepco has had some fifteen years, as has been pointed out by counsel, has had fifteen years in which to file a petition [partition] proceeding, to file a condemnation proceeding, and has done neither.
And the Court feels that it certainly would be a grave injustice to the Plaintiffs here to deny them *533 that they have a right to this property in there and deny them this right naturally would depress the value of the land to a great extent."
After reviewing the record we agree with the Chancellor that appellees met their burden of proving "an adverse, exclusive and uninterrupted use of the way for twenty years." Zehner v. Fink, 19 Md. App. 338, citing Condry v. Laurie, 184 Md. 317.
Burden of Proof
Appellant questions the specificity of description of the way in question, and argues that the appellees failed to meet their burden by omitting "center line descriptions or metes and bounds references to the boundaries thereof...." Having never questioned the physical presence or location of the right-of-way at the trial below, the issue is not before us. Md. Rule 1085. Even assuming the necessary foundation, however, we find the way adequately described.
Appellees introduced three plats all of which had the way clearly marked upon them. One was the tax assessor's record [Planimetric Manuscript T-10915], one was a survey plat of the farm prepared by a registered surveyor in 1957 (apparently pursuant to Pepco's purchase) and the third was a plat prepared for Pepco pursuant to a proposed "Dolphins and Barge Unloading Dock in The Potomac River." These plats clearly indicate the existence of the way. Appellees are not required to introduce a precise metes and bounds description of the way, as long as its location is ascertainable. The way was shown with considerable precision on the plats. On one plat, a portion even showed locations and directions marked by surveyor's stakes as well as metes and bounds descriptions. That the remainder was drawn by the surveyor without the metes and bounds set forth does not mean it lacked the specificity necessary to determine its location.
Appellant's further argument that appellees failed to submit sufficient proof, focused upon an alleged discrepancy between the Lytle brothers' testimony as to where each left *534 the public road to enter upon the way which crossed the servient farm. The plat markings indicated the way was Y-shaped with the base terminating at Jones Point, and each prong of the fork intersecting Route #301. On cross-examination Paul marked a different point of ingress than had Lester; however, the record shows that the matter was clarified on redirect when Paul's recollection was refreshed and he recalled that upon entering the premises they had:
"... passed ... to the, actually it would be to the north of [the cemetery].
Q. Now, do you find the cemetery on this map?
A. Yes, here is the cemetery.
Q. Does that line up the way you recall it?
The cemetery would be to the right of the
A. To the left of the road, well, to the right of the road as you come in."
Appellant relies on nothing else for its argument that plat references without markings made the testimony utterly incomprehensible on review.
As Judge Thompson stated in Zehner, supra, "While the testimony is not as clear as desirable, it is sufficient for us to decide the issues as presented." Id. at 339. When we consider that memories of events occurring on land as much as fifty years ago were being tested by use of maps and plats, we find the evidence reasonably clear certainly not "utterly incomprehensible" as described by appellant.
The Presumption of Adverse Use
Having found that appellees met their responsibility by proving all the necessary elements of prescription, we need hardly note that in doing so they proved inter alia that they had "... used a roadway over the land of another openly and continuously and without objection for twenty years." By doing so, a presumption of adverse use under claim of right arose in their favor. Zehner, 19 Md. App. at 344. This presumption of adverse use is rebuttable by evidence of *535 permission or license inconsistent with a claim of right. Wilson v. Waters, 192 Md. 221, 227. That it rebutted that presumption is projected as appellant's second contention, a contention with which we do not agree.
Louise Matthews, daughter of John Matthews, the former owner of Laidloes Ferry, deposed before trial that she knew of no arrangements made between her father and Mr. Lytle relative to the use of the road. However, she did say that:
"They have discussed it lots of times and laughed about it, and he [John Matthews] said, `You can always come through my property.' He was very fond of him, [Noah Lytle] and he never expected to pass on at that time, and I don't imagine Mr. Lytle did, and it was a verbal understanding that he was to be able to come through the property always."
Appellant complains that the Chancellor stated that in determining whether the reference to a "verbal understanding" meant permission or an expressed understanding of Mr. Lytle's right to use the way, the testimony should be viewed "in light most favorable to the Plaintiff." Though not technically correct, the result thus obtained is not dissimilar to that achieved with the proper interpretive standard. Since appellant now had the burden of proving permissive use, the Chancellor's statement merely indicated that he would favor appellee unless persuaded contrarily by appellant's affirmative showing. Although Miss Matthews' statement might have allowed an inference of permissive use, the Chancellor evidently thought that mere "possibility" inadequate to overcome the presumption of adverse use. This testimony might as easily have been reflective of a prior undertaking by the owner of the farm to confer upon Mr. Lytle a perpetual right of use in the way. Although unenforceable under the Statute of Frauds, Mr. Lytle's assumption of irrevocability and use of the way thereafter would have been indicative of a claim of right, and thus adverse to Matthews and his successors in interest. "An oral permission, believed to be irrevocable but unenforceable by reason of the Statute of Frauds, may *536 evidence a claim of right and indicate that user was adverse and not permissive." Lichtenberg v. Sachs, 200 Md. 145, 154. Tiffany, Real Property, § 1196, p. 562 (3d ed.). Other testimony of the same witness supports the view that there was no oral permission granted.
"Q So if, in fact, Mr. Lytle did use that road, he used it without your permission; is that correct?
A Which road?
Q The dotted line from Route 301.
A He may have. I'm quite sure father wouldn't have objected.
Q Do you recall whether or not your father gave him explicit permission to use that road?
A No, because I don't remember his coming through there, especially. I remember distinctly when he came from here (indicating), from the Newburg road, and his family.
Q Did you ever give him permission?
A I never felt that I had to.
Q Since 1951, when you were responsible for management of the property
A I never felt that I had to.
Q as far as you were concerned, it was all right for him
A Yes.
Q You never explicitly gave him permission?
A No.
Q But you did know he used it?
A Yes.
Q As far as you know, he used it back to the time when it was originally built?
A You mean until 301 was built?
Q Until you sold the property to PEPCO.
A I'm quite sure he did."
Appellant, having offered no more than testimony *537 amenable to competing inferences, did not meet its burden of clearly convincing the Chancellor that the use of the way was inconsistent with a claim of right.
Laches
Appellant's final argument is that appellees were guilty of laches and having "slept upon their rights must be remitted to the repose from which they should not have been aroused." Ripple v. Kuehne, 100 Md. 672, 677. The short answer to this is found in uncontradicted testimony at trial.
Pepco purchased its farm in 1957 and the tenancy in common with the Lytles soon thereafter. It has been negotiating with the Lytles "off and on" since that time, attempting to obtain their interest in "Jones Point." Mr. Alvin Turner, "the principal real estate representative" of Pepco testified:
"Q. You have been negotiating with them since 1957?
A. Off and on, yes. Them and their attorney, right.
Q. Is it true that you were attempting to locate similar waterfront property to try to locate a switch with them?
A. We made this offer to Messrs. Lytle, Mr. Lytle said he wanted a place back in the woods where it was quiet, similar to what he said he had now and we said if we could find something for them, so I contacted all the local real estate brokers and one day he came down and we looked at, I don't know, four or five pieces, as recently as I guess in the last few months, that you are aware of, he has also looked at some other property that some local brokers have had, but nothing has suited him."
Mr. Lester Lytle's testimony also acknowledged the negotiations:
"Q. When and how frequently did you meet with him and for what purpose?
*538 A. I met with him one time when he wanted to borrow the property, another time on, several times he was to acquire us a comparative piece of property, which he never came up with, he wanted us to look for something and then tell him what it was and he being in the real estate line, we referred it to him, to do the bird dogging and he came up with, oh, I would say four or five pieces of what I would call junk land up until recently, showed us a piece on Nanjemoy Creek, but all he had showed us prior to that was nothing but junk.
Q. Over what period of time was that?
A. That was over the last five years, since the fence run up."
Thus, the five year period of negotiations coincides with the five year period following Pepco's erection of a fence foreclosing access. Prior to that time the appellees continued to assert their rights to the point of cutting the lock on the chain gate erected by Pepco.
In any case, it is difficult to see how laches could apply to failure to assert a prescriptive right for a period less than that necessary to acquire it. The easement was perfected only after the twenty year prescriptive period and could have been "abandoned" by non-use only after an equal period, Allori v. Dinenna, 188 Md. 1, 4. The doctrine of abandonment applicable to rights-of-way, would appear a more appropriate guide to what constitutes laches in these cases than the three year limitation period appellant suggests. Using similar reasoning-by-analogy, the Court of Appeals compared an equitable lien obtained as owelty on a purpart to a mortgage lien in determining that a lapse of twenty years was necessary to raise the presumption that such lien had been satisfied. Balto. and Ohio R.R. Co. v. Trimble, 51 Md. 99.
Finally, the Court of Appeals has held that prejudice or injury to the party asserting laches is an essential element. Simpers v. Clark, 239 Md. 395, 403. The record is barren of any attempt to show prejudice or injury as a result of the *539 alleged delay. Stretching as far as possible to find any evidence construable as prejudice, the appellant points only to testimony elicited to provide the reasons why Pepco sought the common interest they acquired in the 3 acre "Jones Point" and presumably why they sought appellees' interest:
"Well, we have constructed an electric generating station on this large portion of property, and the security necessary around one of these generating stations, I think is obvious. The power generated at this station is used by the Capital of the United States and the reliability of this power to the Capital of the United States is a very significant part.
The property is fenced, and we have a guard force that controls access, even, most of our own employees are not permitted on this property without a special pass, unless they are employed at that facility or are there for a special purpose, so the purpose of acquiring this was to have the entire property that lay between Paskahansa Creek and the highway."
In its latest attempt to congeal the mercurial doctrine of laches, the Court of Appeals, through Judge O'Donnell, specially assigned from the Supreme Bench of Baltimore in the case of Salisbury Beauty Schools v. State Board, 268 Md. 32, 63 said:
"As was held in Lipsitz v. Parr, 164 Md. 222, 164 A. 743 (1933), laches is an inexcusable delay, without necessary reference to duration, in the assertion of a right, and, unless mounting to the statutory period of limitations, mere delay is not sufficient to constitute laches, if the delay has not worked a disadvantage to another. See Bradford v. Futrell, 225 Md. 512, 525, 171 A.2d 493, 500 (1961). `The doctrine of laches is an application of the general principles of estoppel.' Oak Lawn Cemetery *540 v. Baltimore County, 174 Md. 280, 291, 198 A. 600, 605 (1938), citing Pomeroy's Eq. Juris. Vol. 4, § 1440. See also Boehm v. Boehm, 182 Md. 254, 269, 34 A.2d 447, 454 (1943). Prejudice or injury to the party raising `laches' is an essential element. Simpers v. Clark, 239 Md. 395, 403, 211 A.2d 753, 757 (1965). So long as the position of the parties is not changed and there is no prejudice from the delay laches are inapplicable. Oak Lawn Cemetery v. Baltimore County, supra."
Appellant has provided us neither indicia of prejudice nor justification for denying appellees the access to their property which they had used for over half century.
Judgment affirmed.
Costs to be paid by appellant.
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733 F. Supp. 465 (1990)
David W. CONNELL
v.
TOWN OF HUDSON; Albert Brackett.
Civ. No. 89-100-D.
United States District Court, D. New Hampshire.
February 23, 1990.
Sabin Willett, Boston, Mass., for plaintiff.
Craig L. Staples, Concord, N.H., for defendants.
*466 OPINION AND ORDER
DEVINE, Chief Judge.
In this civil action, David W. ("Nick") Connell claims that officials of the Town of Hudson, New Hampshire, violated his constitutional rights by ordering him away from the scene of an accident and threatening to arrest him if he persisted in taking pictures.[1] Presently before the Court are cross-motions for summary judgment.
Background
Shortly after noon on July 9, 1987, two cars collided on Ferry Street in Nashua, New Hampshire. Police officers from the nearby town of Hudson, firemen, and emergency medical personnel responded. The driver of one car was seriously injured, but alive. The other driver, Mrs. Donna Cote, was killed.
David Connell, a Ferry Street resident and freelance reporter for the Hudson News, heard the collision, grabbed his camera, and rushed to the scene. From a distance of approximately twenty-five feet, Connell took a few preliminary pictures. A police officer asked him to move farther away.[2] Connell left the scene to get a telephoto lens, then returned to another area farther from the accident, as the officer had instructed. After taking a few pictures from that spot, Connell moved to a closer position, approximately thirty yards away from the cars. As Connell explains,
At point No. 3 I'm not certain now, but my first next [sic] encounter with the law was a lady who came, and I don't know whether she was with the ambulance or with the police, I'm not sure to this day, but she came over and made a statement that we are about to move the body from the vehicle to the ambulance and that she would prefer I not photograph. It was left on an optional basis. There was no show of force or insistence. She said we would prefer. She was very ladylike.
Deposition of David W. Connell at 36 (Exhibit 2 of Defendants' Submission in Support of Motion for Summary Judgment). Connell moved to take pictures from another location. "I wanted to record the moment of transference as something in the sequence of the happenings that were taking place. I was not interested in photographing the body." Id. at 37. A vehicle was moved so that it blocked Connell's view of Donna Cote's car. Connell moved again and set up a tripod on a neighbor's lawn about forty yards from the accident. Another officer approached, and the following exchange took place.
[The officer c]ame over to me and his words were, as I recall: We've been patient with you long enough and you'll have to take your camera and go down and he indicated a point about where they had the barrier was. You'll have to go down there. You can photograph there if you want.
And I says: I believe I have a right to photograph from here. (Indicating.)
And he says: You do not. And he says: If you don't move, I'll put you in handcuffs and take you toput you in jail.
Id. at 46. Connell moved "under protest." Id. at 57. He then got permission to enter a nearby house where he had seen people watching from a second-story window. As he prepared to take pictures from that window, an officer told him to stop photographing and leave the building. When Connell refused to leave, the officer went to police chief Albert Brackett.
I went toback to myto the window and recommenced trying to set my camera up. And then Police Chief Brackett, being briefed that I had been not exactly cooperative, came to the window and reiterated all of the preceding demands that I stop photographing, that I come down *467 out of the building, that they did not need a warrant.
And I asked him whyunder what pretext he would arrest me, what had I done wrong. And he says the charge would be for disturbing the peace.
I says: That can't be. I says: I'm not disturbing anybody's peace. I says: I'm just photographing through a telephoto lens.
And he insisted that he was right, that what he was doing was legal and that I had to do it.
So I says, well, I says: I recognize who you are and your position. You're acting chief of police. And I says: In deference to that, I will come down and desist from photographing but I want you to understand that it's under protest and it is not the end of it.
Id. at 68-69.[3]
Connell contends that the police violated his constitutional rights. Originally, he was interested in no more than an apology and a promise that the police would not again prevent individuals "from lawfully photographing whatever they choose." Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment, at 18. As explained in a letter from plaintiff's counsel to Alice Monchamp, the Town of Hudson's acting administrator,
We believe that the principle that the police must not be permitted to interfere with lawful news-gathering activities is significant enough to warrant bringing an action, even where money damages may not be great. However, neither Mr. Connell nor I would pursue that remedy if we felt that we could obtain the town's recognition of the important principles discussed. Thus, I propose the following. If you, on behalf of the town and the police department, will write a letter to Mr. Connell, apologizing to Mr. Connell for the police department's error, acknowledging that the actions of certain police officers on July 9, 1987 violated Mr. Connell's first and fourth amendment rights, acknowledging that the police department recognizes that it is improper for it to attempt to dictate matters of taste in news gathering, and acknowledging that the police department will not, in future, exceed its lawful function with respect to press coverage of accident scenes, we will agree to release the Town and the Department from all rights Mr. Connell has against the town or the police department on the basis of the events described.
October 6, 1988, letter at 3 (plaintiff's Exhibit 4, attached to plaintiff's Motion for Summary Judgment). The requested letter was sent by Ms. Monchamp on December 6, 1988; the apology is quoted below.
[S]ince the stated intent of Mr. Connell is not to seek monetary compensation or retribution, I believe I can satisfactorily reply to your letter of October 16, 1988 as follows. I have discussed this matter with Chief Brackett who has consulted with the County Attorney and with Town Attorney Dicola. He acknowledges that a citizen, in particular a news reporter or photographer, has the right to cover accident or crime scenes and investigations in public places, including the right to take photographs of the scene, as long as they do not directly interfere with the police investigation or disturb or remove evidence from the crime or accident scene. Chief Brackett has informed me that it is and will continue to be the policy of the Hudson Police Department to respect the right of citizens to cover accident or crime scenes in public places barring direct interference with an investigation or the disturbance or removal of evidence from the scene.
I hope this letter allays your concerns on the policy affecting Mr. Connell and other similarly situated citizens. *468 Plaintiff's Motion for Summary Judgment, Exhibit 5. Plaintiff found this apology unsatisfactory, and a few months later he filed the instant lawsuit.
Discussion
Plaintiff asserts that the events described above violated rights guaranteed him by the First and Fourth Amendments to the United States Constitution. Plaintiff's Fourth Amendment argument is not persuasive. The Fourth Amendment reads as follows:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
Plaintiff argues that a Fourth Amendment "seizure" occurs "when one acting under color of state law, by means of physical force or show of authority, in some way restrains a citizen's liberty." Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment at 15. The Court declines to adopt such an expansive view of a "seizure". A more precise definition is provided in United States v. Mendenhall, 446 U.S. 544, 553-54, 100 S. Ct. 1870, 1876-77, 64 L. Ed. 2d 497 (1980).
[A] person is "seized" only when, by means of physical force or a show of authority, his freedom of movement is restrained. Only when such restraint is imposed is there any foundation whatever for invoking constitutional safeguards. The purpose of the Fourth Amendment is not to eliminate all contact between the police and the citizenry, but "to prevent arbitrary and oppressive interference by enforcement officials with the privacy and personal security of individuals. United States v. Martinez-Fuerte, 428 U.S. 543, 554 [96 S. Ct. 3074, 3081, 49 L. Ed. 2d 1116 (1976)]. As long as the person to whom questions are put remains free to disregard the questions and walk away, there has been no intrusion upon that person's liberty or privacy as would under the Constitution require some particularized and objective justification.
Nothing in the record suggests that Connell was prevented from leaving the scene at any time. The Court therefore rejects his Fourth Amendment claim. The Court does, however, find merit in plaintiff's First Amendment claim.
News gathering is protected by the First Amendment, but the protection is not absolute. For example, the court in Garrett v. Estelle, 556 F.2d 1274 (5th Cir.1977), cert. denied, 438 U.S. 914, 98 S. Ct. 3142, 57 L. Ed. 2d 1159 (1978), held that the First Amendment did not require the State of Texas to allow a news cameraman to film executions in state prison; in Seymour v. United States, 373 F.2d 629 (5th Cir.1967), it was held that the First Amendment did not prohibit a court from assessing a fine against a television news cameraman for filming outside the courtroom in violation of a standing court order; and in Galella v. Onassis, 353 F. Supp. 196 (S.D.N.Y.1972), modified, 487 F.2d 986 (2d Cir.1973), the court held that a "paparazzi's" harassing conduct was not protected by the First Amendment, but rather violated the subject's common law, statutory, and constitutional rights.[4]
General principles governing the relation between the media's First Amendment right to gather news and government's power to regulate require a balancing of the two interests involved. "The right to speak and publish does not carry with it the unrestrained right to gather information." Zemel v. Rusk, 381 U.S. 1, 16-17, 85 S. Ct. 1271, 1280-81, 14 L. Ed. 2d 179 (1965). At the same time, "a right to gather news, of some dimension, must exist." Branzburg v. Hayes, 408 U.S. 665, 728, 92 S. Ct. 2646, 2673, 33 L. Ed. 2d 626 (1972) (Stewart, J., dissenting) (emphasis in original). And, as the court majority in the Branzburg decision noted, "newsgathering is not without *469 its First Amendment protections," id. at 707, 92 S.Ct. at 2669, "for without some protection for seeking out the news, freedom of press could be eviscerated." Id. at 681, 92 S.Ct. at 2656. See also, Houchins v. KQED, Inc., 438 U.S. 1, 32, 98 S. Ct. 2588, 2605, 57 L. Ed. 2d 553 (1978) (Stevens, J., dissenting) ("information gathering is entitled to some measure of court protection").
The Court is aware of three cases in which other courts have measured the degree of protection to which a photographer is entitled. Each case considered the balance between a newsman's right to take pictures and the government's power to limit the exercise of that right.
In Channel 10, Inc. v. Gunnarson, 337 F. Supp. 634 (D.Minn.1972), that balance was struck in the newsman's favor. Dennis Anderson, a news cameraman for Channel 10 in Duluth, Minnesota, rushed to the scene of a burglary. He stood on a public sidewalk, filmed through a store window and, for about five seconds, turned on his light. Two police officers told Anderson to stop filming. They confiscated his camera, and one of the policemen told Anderson "he would give the camera back to him on the condition that Anderson check with the Detective Bureau on whether the film contained information detrimental to the prosecution of the subjects and whether or not the subjects filmed were juveniles." Id. at 636. The court found these restrictions unlawful.
The stipulated facts clearly indicate that the general public was present and, in fact, an affidavit shows one member of the public was standing beside plaintiff Anderson. Defendants have made no claim before this court that Anderson was in an improper place and it seems clear that employees of the news media have a right to be in public places and on public property to gather information photographically or otherwise.
Id. at 638. Underlying the Gunnarson decision is the proposition that those who gather news "have a constitutional right not to be interfered with" by the police so long as they "do not unreasonably obstruct or interfere with the defendant's official investigations of physical evidence or gain access to any place from which the general public is prohibited for essential safety purposes." Id. (quoting Gazette Publishing Co. v. Cox, Cause No. IP 65-C-528 (S.D. Ind. May 2, 1967)).
In Mazzetti v. United States, 518 F.2d 781 (10th Cir.1975), and State v. Lashinsky, 81 N.J. 1, 404 A.2d 1121 (1979), the balance was struck in the government's favor. The Mazzetti opinion affirmed a decision to jail a news photographer who violated a court rule which prohibited photography within the court "environs". "[T]he threat to the judicial process portended by Mazzetti's activity was sufficiently immediate to justify the rule as a reasonable, before-the-fact measure against interference with the court and its functions." Mazzetti, supra, at 782-783.[5] And in Lashinsky, the New Jersey Supreme Court upheld a news photographer's arrest on charges of disorderly conduct for refusing to move back from the scene of a gory fatal car accident, thus impeding the performance of a trooper's duties in securing the area.
To resolve the issue raised in the instant case, the Court must determine whether the restrictions placed on Nick Connell were reasonably justified. The Court finds that they were not.
*470 The undisputed facts demonstrate that Connell followed all instructions reasonably designed to prevent interference with police and emergency activities. Although he may have crossed a police perimeter, that perimeter was not clearly delineated, and, when asked to move, he moved. He left the scene to retrieve a telephoto lens that would enable him to take the pictures he needed from a distance. And he did not thereafter improperly approach the accident area. It is hard to imagine how Connell could have interfered with police or emergency activities by taking pictures from the second floor of a house that others were using to view the accident.
Defendants' most persuasive argument is that emergency personnel refused to remove Mrs. Cote's body until Connell stopped taking pictures. But even that fact does not provide the justification necessary to withstand judicial scrutiny. Although the emergency personnel and police may have thought it wrong for Connell to photograph the accident, it is not for them to protect "the privacy rights of the victim Mrs. Cote and the sensibilities of her family," Defendants' Motion at 3, even in an attempt to curtail what they thought were the voyeuristic interests of a freelance photographer.[6] As made clear by the United States Supreme Court, such are the dangers intrinsic to our notion of a free press.
We are aware that the press has, on occasion, grossly abused the freedom it is given by the Constitution. All must deplore such excesses. In an ideal world, the responsibility of the press would match the freedom and public trust given it. But from the earliest days of our history, this free society, dependent as it is for its survival upon a vigorous free press, has tolerated some abuse. In 1799, James Madison made the point in quoting (and adopting) John Marshall's answer to Talleyrand's complaints about American newspapers, American State Papers, 2 Foreign Relations 196 (U.S.Cong.1832):
"`Among those principles deemed sacred in America, among those sacred rights considered as forming the bulwark of their liberty, which the Government contemplates with awful reverence and would approach only with the most cautious circumspection, there is no one of which the importance is more deeply impressed on the public mind than the liberty of the press. That this liberty is often carried to excess; that it has sometimes degenerated into licentiousness, is seen and lamented, but the remedy has not yet been discovered. Perhaps it is an evil inseparable from the good with which it is allied; perhaps it is a shoot which cannot be stripped from the stalk without wounding vitally the plant from which it is torn. However desirable those measures might be which might correct without enslaving the press, they have never yet been devised in America.'" 6 Writings of James Madison, 1790-1802, p. 336 (G. Hunt ed. 1906) (emphasis in original).
Rosenbloom v. Metromedia, 403 U.S. 29, 51, 91 S. Ct. 1811, 1823, 29 L. Ed. 2d 296 (1971). According to principles of jurisprudence long respected in this nation, Chief Brackett could not lawfully interfere with Nick Connell's picture-taking activities unless *471 Connell unreasonably interfered with police and emergency functions.
Defendants make much of their argument that the limitation placed on Nick Connell's picture taking were reasonable because Connell's action invaded Donna Cote's right to privacy. The Court does not accept defendants' paternalistic view of police authority.
It is beyond dispute that government has, in extraordinary circumstances, a responsibility to protect highly sensitive information against public dissemination. But the principles enunciated in The Florida Star v. B.J.F., ___ U.S. ___, 109 S. Ct. 2603, 105 L. Ed. 2d 443 (1989), do not apply as defendants contend they do. In Florida Star, the Supreme Court refused to allow a rape victim to collect a $100,000 jury award from a newspaper for publishing the victim's name. Although Florida statute § 794.03 (1987) made such publication unlawful, the Supreme Court held that the First Amendment protected it from punishment by state officials.
Our holding today is limited. We do not hold that truthful publication is automatically constitutionally protected, or that there is no zone of personal privacy within which the State may protect the individual from intrusion by the press, or even that a State may never punish publication of the name of a victim of a sexual offense. We hold only that where a newspaper publishes truthful information which it has lawfully obtained, punishment may lawfully be imposed, if at all, only when narrowly tailored to a state interest of the highest order, and that no such interest is satisfactorily served by imposing liability under § 794.03 to appellant under the facts of this case.
Florida Star, supra, 109 S.Ct. at 2613.
The case at bar does not invoke "information entrusted to the government." Defendants' Memorandum at 10 (quoting Florida Star, supra, 109 S.Ct. at 2609). Logically extended, defendants' position would permit police to "protect" access to any public place which they felt was sufficiently sensitive to involve some citizens' "zone of privacy." Defendants' Memorandum at 12. Defendants' attempt to bootstrap an expanding common-law tort doctrine onto the exercise of police power cannot prevail. Contrary to defendants' contention, it is not Mrs. Cote's right to privacy, protected by the police, which must be weighed against plaintiff's right to gather news. The appropriate analysis balances plaintiff's rights against police authority to secure an accident scene. Under the facts presented here, that balance plainly favors the plaintiff.
The Court also rejects defendants' assertion that Chief Brackett is protected by qualified immunity. In federal civil rights actions, government officials are entitled to qualified immunity for their discretionary acts. Anderson v. Creighton, 483 U.S. 635, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987). To determine if an official is immune from liability, the Court looks at the "`objective reasonableness'" of the official's conduct and determines whether that conduct violated "clearly established statutory or constitutional rights." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396 (1982). "The contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson, supra, 483 U.S. at 640, 107 S.Ct. at 3039. See also Rodriguez v. Comas, 875 F.2d 979 (1st Cir.1989).
Reasonable police officers understand that their authority has well-defined limits. Albert Brackett, at the time of this incident the acting chief of Hudson's police department, can be fairly held to the understanding that he could not chase a photographer away from an accident unless that photographer was unreasonably interfering with police activity. The record in the instant case suggests no such interference.
Moreover, it appears that Chief Brackett well understood the parameters of his lawful authority. Alice Monchamp, acting town administrator, noted that Chief Brackett "acknowledges that a citizen, in particular a news reporter or photographer, has the right to cover accident or crime scenes and investigations in public places, *472 including the right to take photographs of the scene, as long as they do not directly interfere with the police investigation or disturb or remove evidence from the crime or accident scene." Dec. 6, 1988, letter (Plaintiff's Motion for Summary Judgment, Exhibit 5). Chief Brackett's assertion of qualified immunity therefore must fail.
Defendants also argue that this suit may not be maintained against the Town of Hudson because plaintiff has not demonstrated that the actions about which he complains result from Town "policy" or "custom". Defendants' argument derives from Monell v. New York City Dept. of Social Services, 436 U.S. 658, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978). In Monell, the United States Supreme Court declared that municipalities could be held liable for damages in an action based on 42 U.S.C. § 1983 only if the violation of civil rights was caused by the municipality's policy or custom. Following Monell, courts have struggled to define the terms "policy" and "custom". See generally Annotation, What Constitutes Policy or Custom for Purposes of Determining Liability of Local Gov't Unit Under 42 U.S.C.S. § 1983Modern Cases, 81 A.L.R.Fed. 549 (1987).
The Monell formulation has recently been clarified.
Monell is a case about responsibility. In the first part of the opinion, we held that local government units could be made liable under § 1983 for deprivations of federal rights, overruling a contrary holding in Monroe v. Pape, 365 U.S. 167 [81 S. Ct. 473, 5 L. Ed. 2d 492] (1971). In the second part of the opinion, we recognized a limitation on this liability and concluded that a municipality cannot be made liable by application of the doctrine of respondeat superior.
Pembaur v. Cincinnati, 475 U.S. 469, 478, 106 S. Ct. 1292, 1297, 89 L. Ed. 2d 452 (1986). The Pembaur majority thought it "plain that municipal liability may be imposed for a single decision by municipal policymakers under appropriate circumstances." Id. at 480, 106 S.Ct. at 1298.
But the power to establish policy is no more the exclusive province of the legislature at the local level than at the state or national level. Monell's language makes clear that it expressly envisioned other officials "whose acts or edicts may fairly be said to represent official policy," Monell, supra, [436 U.S.] at 694 [98 S.Ct. at 2037], and whose decisions therefore may give rise to municipal liability under § 1983.
Id.
Identification of policymaking officials for this purpose is a question of state law. St. Louis v. Praprotnik, 485 U.S. 112, 124, 108 S. Ct. 915, 924, 99 L. Ed. 2d 107 (1988). Under New Hampshire law, a police chief has "authority to direct and control all employees of his department in their normal course of duty." New Hampshire Revised Statutes Annotated chapter 105:2-a (1973). The Court has little difficulty concluding that Chief Brackett's conduct during the July 9, 1987, confrontation represented Town of Hudson policy.
Moreover, the letter from town administrator Alice Monchamp manifests the Town's support for Chief Brackett's action. And, as plaintiff points out, defendants have admitted that "at all relevant times defendant Brackett and other police officers present at the accident scene described in plaintiff's Complaint were carrying out the lawful policy, practices and custom of the defendant Town of Hudson." Answer at ¶ 14.
Town of Hudson policymakers provided more than "after-the-fact approval of alleged police misconduct," as defendants contend. Defendants' Memorandum at 22 (quoting Ramirez de Arellano v. Municipality of San Juan, 685 F. Supp. 309, 313 (D.P.R.1988)). Under the facts, the Town cannot avoid liability. Compare Voutour v. Vitale, 761 F.2d 812, 820 (1st Cir.1985), cert. denied, 474 U.S. 1100, 106 S. Ct. 879, 88 L. Ed. 2d 916 (1986) (municipality may be liable if official's actions were carried out with "supervisory encouragement, condonation, or even acquiescence").
The Court also rejects defendants' assertion that this action presents no "case or *473 controversy" justifying judicial resolution. A similar contention was rejected in Gunnarson, supra, 337 F.Supp. at 637. Moreover, as stated by a respected commentator,
There is little difficulty in finding an actual controversy if all of the acts that are alleged to create liability already have occurred. The Court is then merely asked, as in any litigation, to determine the legal consequences of past events and it is immaterial that it may be the one allegedly liable, rather than the person to whom he would be liable, who asks for the judicial determination.
10a Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2757, at 585 (1983).
Defendants' contention that they are entitled to judgment because plaintiff has not demonstrated actual damages is no more compelling. Nominal damages are available under section 1983. See, e.g., Carey v. Piphus, 435 U.S. 247, 266, 98 S. Ct. 1042, 1053, 55 L. Ed. 2d 252 (1978); Bradley v. Coughlin, 671 F.2d 686, 690 (2d Cir.1982); Joseph v. Rowlen, 425 F.2d 1010 (7th Cir.1970); Rogers v. Kelly, 674 F. Supp. 1372, 1374 (E.D.Ark.1987), aff'd, 866 F.2d 997 (1989); Katris v. City of Waukegan, 498 F. Supp. 48, 54 n. 4 (D.Ill.1980).
When presented with cross-motions for summary judgment, the Court reviews the record presented, and if it "finds that some genuine factual issue remains in the case, where resolution one way or another could affect its outcome," the motions must be denied. Lipsett v. University of Puerto Rico, 864 F.2d 881, 895 (1st Cir.1988). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The Court here finds no genuine issue of material fact, but instead finds that the record presented requires judgment in plaintiff's favor. That record persuades the Court that Connell did not interfere with the work of police and emergency medical personnel. Thus, Connell's motion for summary judgment (document no. 11) must be and herewith is granted; defendants' motion for summary judgment (document no. 10) is denied.
Accordingly, for the reasons stated hereinabove, the Court declares that David Connell's rights, protected from government intrusion by the First Amendment to the United States Constitution, were violated by Town of Hudson police when they ordered him to stop taking pictures from positions that did not interfere with police activity. As plaintiff has identified only speculative "actual" damages,[7] the Court finds that he is entitled to recover no more than nominal damages. Thus, defendants are herewith ordered to provide payment in the amount of one dollar ($1.00).
As a prevailing party, 42 U.S.C. § 1988 permits plaintiff to recover attorney's fees, and upon submission of appropriate documentation, see Local Rule 39, the Court will consider plaintiff's request for such fees.
SO ORDERED.
NOTES
[1] Jurisdiction in this civil rights case is founded on 28 U.S.C. § 1343(a). Plaintiff seeks declaratory relief under authority of 28 U.S.C. § 2201.
[2] Police were enforcing a perimeter to the north of the accident. They would ask onlookers to move away if they approached the sidewalk on that side. Deposition of David W. Connell at ¶¶ 40, 54. According to Connell, another photographer from a local newspaper was allowed to take pictures from within the police perimeter. Id. at 71.
[3] Chief Brackett generally agrees with the account of events given by David Connell, with two notable exceptions. Chief Brackett states that he and his officers only asked Connell to do two things: (1) stay outside the area of the accident, and (2) refrain from photographing Mrs. Cote's uncovered body. Affidavit of Albert M. Brackett at ¶ 8. According to Chief Brackett, the confrontations only occurred because Connell "repeatedly intruded beyond the established police perimeter," id. at ¶ 6, and because Brackett was told "that the paramedics would refuse to remove the body until Connell was stopped in his efforts to photograph it." Id. at ¶ 7.
[4] The terms "paparazzi" or "paparazzo" have been defined as "literally a kind of annoying insect, perhaps roughly equivalent to the English `gadfly'." Galella, supra, 487 F.2d at 991-92.
[5] Mazzetti had entered the parking lot of a federal courthouse in Leavenworth, Kansas, in spite of express instructions from the marshal that he not do so. He began to photograph prisoners being led to a bus. The marshals told Mazzetti to leave, and then escorted him to the public sidewalk. But when the marshals turned, Mazzetti went back, again taking pictures. Mazzetti was then arrested and placed in a holding cell (where he continued to take pictures).
Of special significance in determining the propriety of Mazzetti's incarceration was the fact that the prisoners "were orderly when they were put aboard the bus. As the recited incident occurred, they became noisy and hostile, yelling obscenities and climaxing the event by throwing parts of their clothing through the windows as the bus departed." Mazzetti, supra, at 782.
[6] As evidenced by this exchange, Connell contends that he wasn't interested in getting a picture of Mrs. Cote's body.
Q. All right. You did not intend to photograph the body uncovered; is that correct?
A. Never had any such intention. I would never want to.
Q. And you were going toyou assumed that the body would be covered during that process?
A. That's right.
Q. And that was what you intended to photograph?
A. That's right.
Q. Did you explain that to either the paramedics or any police officer?
MR. WILLETT: Objection. You may answer.
A. I did not explain it. I was given no opportunity to explain it. The officer identified came over to me and he said, and his words were: We've been patient with you long enough. He says: You either move down here (indicating) and photograph from there or I'll put you in handcuffs and take you to jail.
Connell Deposition at 56-57.
[7] At his deposition, Connell testified that there was no guarantee that his pictures would be used or that he would receive payment even if they were used. "There was no specifics on that. I justI was kind of more interested in getting credit for it, that they usually pay five or ten dollars for a photograph or something like that, but it would be nice just to get a credit in the Telegraph." Connell Deposition at 70.
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848 S.W.2d 176 (1992)
Jackie JORDAN, Appellant,
v.
GEIGY PHARMACEUTICALS and Geigy Pharmaceuticals, Division of Ciba-Geigy Corp, and Robert R. Dickey, M.D, Appellees.
No. 2-92-012-CV.
Court of Appeals of Texas, Fort Worth.
December 8, 1992.
Rehearing Overruled March 31, 1993.
*177 Timothy E. Kelley, A.P.C., Dallas, for appellant.
Strasburger & Price and James K. Peden, III, P.C., Sheree L. McCall, Dallas, for appellees Geigy Pharmaceuticals and Geigy Pharmaceuticals, Div. of Ciba-Geigy Corp.
Cantey & Hanger, L.L.P. and John F. Gray, Evelyn R. Leopold, Fort Worth, for appellee Robert R. Dickey, M.D.
Before FARRIS, MEYERS and DAY, JJ.
OPINION
DAY, Justice.
Jackie Jordan (Jordan), plaintiff below, appeals from motions for summary judgment granted in favor of Geigy Pharmaceuticals and Geigy Pharmaceuticals, Division of Ciba-Geigy Corporation (Ciba) and Robert R. Dickey, M.D. (Dickey), defendants below, in a combined medical malpractice, product liability, and DTPA action.
We affirm in part and reverse in part.
In September 1988 Jordan sought treatment from Dickey for acute lower back pain. Dickey diagnosed Jordan's injury as a lumbar strain and prescribed a two-week supply of Voltaren. Voltaren is a nonsteroidal anti-inflammatory prescription drug, which is manufactured by Ciba. Shortly after Jordan began taking Voltaren, she became acutely ill and was hospitalized. Doctors at the hospital diagnosed Jordan as suffering from total kidney failure.
Jordan subsequently sued Ciba and Dickey, jointly and severally, on multiple theories. Jordan alleged that Dickey was negligent in prescribing Voltaren, in failing to advise Jordan that kidney failure could remonitor *178 Jordan's reaction to Voltaren. She asserted that this alleged negligence caused her damages. Jordan sought recovery from Ciba on theories of strict liability and products liability for the manufacture and sale of a defective, unsafe, and dangerous drug and for breach of implied warranty of fitness for intended use. In addition, Jordan asserted that Ciba had violated the Texas Deceptive Trade Practices Act by negligently marketing the drug as safe and effective without warning of the possibility of dangerous side effects.
Dickey and Ciba filed separate motions for summary judgment pursuant to Tex. R.Civ.P. 166a. Jordan supported her response to the motions for summary judgment with affidavits by Saul Boyarsky, M.D. (Boyarsky) and her attorney, Timothy E. Kelley (Kelley). Both Dickey and Ciba objected to Boyarsky's affidavits.
The trial court sustained the objections to Boyarsky's affidavits and granted summary judgment in favor of both Dickey and Ciba. In three points of error, Jordan complains that the trial court improperly granted the summary judgments.
In a summary judgment case the issue on appeal is whether the movant met his burden for summary judgment by establishing that there exists no genuine issue of material fact and that he is entitled to judgment as a matter of law. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979); Tex.R.Civ.P. 166a. The burden of proof is on the movant, and all doubts as to the existence of a genuine issue as to a material fact are resolved against him. Great American Reserve Ins. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). Therefore, we must view the evidence in the light most favorable to the nonmovant. See id. In deciding whether there is a material fact issue precluding summary judgment all conflicts in the evidence will be disregarded and the evidence favorable to the nonmovant will be accepted as true. Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984); Farley v. Prudential Ins., 480 S.W.2d 176, 178 (Tex.1972). Every reabe indulged in favor of the nonmovant and any doubts resolved in his favor. Montgomery, 669 S.W.2d at 311. Evidence that favors the movant's position will not be considered unless it is uncontroverted. Great American, 391 S.W.2d at 47. The summary judgment will be affirmed only if the record establishes that the movant has conclusively proved all essential elements of his cause of action or defense as a matter of law. City of Houston, 589 S.W.2d at 678.
A defendant is entitled to summary judgment if the summary judgment evidence demonstrates, as a matter of law, that at least one element of a plaintiff's cause of action cannot be established. Rosas v. Buddies Food Store, 518 S.W.2d 534, 537 (Tex. 1975). To accomplish this objective, the defendant, as movant, must present summary judgment evidence that negates an element of the plaintiff's claim. Once this evidence is presented, the burden shifts to the plaintiff to put on competent controverting evidence that proves the existence of a genuine issue of material fact with regard to the element challenged by the defendant. Garza v. Levin, 769 S.W.2d 644, 645 (Tex.App.Corpus Christi 1989, writ denied); Pinckley v. Gallegos, 740 S.W.2d 529, 531 (Tex.App.San Antonio 1987, writ denied).
Because Jordan sued Dickey and Ciba on different theories, we will address separately whether the trial court properly granted the summary judgments.
DICKEY'S MOTION FOR SUMMARY JUDGMENT
In his motion for summary judgment, Dickey contended that he did not breach the standard of care he owed to Jordan. Dickey also asserted that there was no causal connection between his prescribing Voltaren for Jordan and her kidney failure.
Ordinarily, we would be required to decide whether Dickey, as defendant-movant, conclusively negated either of these elements of Jordan's cause of action against *179 him. James v. Brown, 637 S.W.2d 914, 918 (Tex.1982); Rosas, 518 S.W.2d at 537. Jordan does not dispute the sufficiency of Dickey's summary judgment proof, however, and thus we need not address it, either.
In contrast, Dickey did object to Jordan's summary judgment proof on both standard of care and causation, and the trial court sustained Dickey's objections. We must therefore consider whether Jordan's summary judgment proof was admissible and whether it controverted Dickey's evidence, thereby establishing the existence of a genuine issue of material fact. Garza, 769 S.W.2d at 645; Pinckley, 740 S.W.2d at 531.
In his affidavit in support of his motion for summary judgment, Dickey testified as to the standard of care in 1988 applicable to prescribing drugs similar to Voltaren, providing patients information about such drugs, and monitoring patients during use of the drugs. According to Dickey, the prescription should be consistent with the usage and dosage indicated in information available to the physician at the time, including information given in the package insert and information then generally available to the medical community. Additionally, the physician must provide the patient with information about the risks and hazards of which the physician is aware, sufficient to influence a reasonable person in deciding whether to give or withhold consent to the prescription. Dickey also testified that the physician is not required to monitor the effects of nonsteroidal, antiinflammatory drugs, including effects on the patient's kidney function, during a twoweek therapy, unless the physician knows of physical conditions peculiar to the patient that could predispose the patient to potentially debilitating or life-threatening consequences as a result of taking the drug.
Dickey testified that he prescribed for Jordan a two-week supply of 50-milligram Voltaren, to be taken twice daily after meals, based on the package insert and other medical literature available to him. Dickey further testified that, in anticipation of the two-week therapy period, he did not advise Jordan that the prescribed dosage of Voltaren could cause acute, irreversible renal failure. Dickey asserted that he did not violate the care owed to Jordan in failing to give such advice because neither Ciba nor the medical literature available to him at the time of the prescription indicated that use of Voltaren, as prescribed, could cause irreversible cortical necrosis. Finally, Dickey testified that he did not monitor the Voltaren therapy because Jordan's physical condition did not indicate the necessity for monitoring during the twoweek period.
In an attempt to controvert Dickey's summary judgment evidence, Jordan attached Boyarsky's affidavits to her response to motion for summary judgment. In his affidavits Boyarsky stated:
I am familiar with the standard of care in 1988 applicable to the renal hazards of non-steroidal anti-inflammatory drugs such as Voltaren, it's [sic] use and consequences, adverse reactions and side effects.... Insofar as the conduct of Dr. Dickey is concerned, the unsupervised use of a newly released non-steroidal anti-inflammatory drug for two to three weeks without renal monitoring can be criticized insofar as the standard of care is concerned because the risk and mechanism of acute renal failure for the class of drug were already known to the medical profession and literature. Informed consent doctrine and practice requires that all benefits and material risks for each therapeutic option (including no therapy) be reviewed with patients so that they can make the therapeutic decision for themselves.... [Emphasis supplied.]
We are unable to ascertain whether Boyarsky's testimony is an attempt to show that Dickey breached the standard of care he set forth in his own affidavit or an attempt to show that Dickey breached some different standard of care that Boyarsky measured him against. In either case, Boyarsky's affidavits are not competent summary judgment evidence against Dickey because they are only conclusionary. Mere general statements and opinions by *180 movant's properly presented affidavit. Duncan v. Horning, 587 S.W.2d 471, 474 (Tex.Civ.App.Dallas 1979, no writ).
Boyarsky's affidavit is conclusionary because the package insert and Physician's Desk Reference (PDR) on record fail to recommend renal monitoring for short-term therapy. If Boyarsky relied on other medical literature in forming his opinion, copies of these documents should have been attached to his original or supplemental affidavits or otherwise identified as being in the record in sworn or certified form. Tex. R.Civ.P. 166a(f). See Perkins v. Crittenden, 462 S.W.2d 565, 567 (Tex.1970); Faour v. Koenig, 662 S.W.2d 751, 751 (Tex. App.Houston [14th Dist.] 1983, writ ref'd n.r.e.); Armstrong v. Rice, 556 S.W.2d 620, 622 (Tex.Civ.App.Texarkana 1977) (papers referred to in affidavit in support of summary judgment must "be attached thereto or served therewith"), writ dism'd, 616 S.W.2d 415 (Tex.1981).
Boyarsky's testimony regarding what the informed consent doctrine and practice require is likewise a mere conclusion because it, too, is unsupported by any evidence.[1] As Dickey pointed out in his objections, Boyarsky made only vague and indefinite references to evidence not before ceeding and thus did not provide the proper predicate for his opinion.[2]See Perkins, 462 S.W.2d at 567-68 (affidavits that do not meet Rule 166a requirements are not entitled to evidentiary consideration). We therefore find that Boyarsky's affidavits, as they pertain to Dickey, are not competent summary judgment evidence because they state mere conclusions and fail to meet the requirements of Tex.R.Civ.P. 166a(f).
Because Jordan failed to meet Dickey's summary judgment proof with competent controverting evidence, we overrule Jordan's second point of error and her third point of error as it pertains to Dickey.
CIBA'S MOTION FOR SUMMARY JUDGMENT
In its motion for summary judgment and other documents in evidence at the summary judgment proceeding, Ciba, as defendant-movant, attempted to negate an element of each of Jordan's causes of action against Ciba. Jordan does not question the sufficiency of Ciba's summary judgment proof, so we will not address it here.
*181 Jordan supported her response to Ciba's motion for summary judgment with affidavits by Boyarsky and Kelley. Jordan complains that the trial court improperly granted Ciba's motion to strike Boyarsky's affidavits. Ciba objected to Boyarsky's original affidavit because, among other things, it failed to state that it was made on personal knowledge, as required by Tex. R.Civ.P. 166a(f).
An affidavit must state that the facts alleged in the affidavit are within the affiant's personal knowledge. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984); Tex.R.Civ.P. 166a(f). In addition, the affidavit must show how the affiant became familiar with these facts. Fair Woman, Inc. v. Transland Management, 766 S.W.2d 323, 323 (Tex.App.Dallas 1989, no writ); Ramirez v. Gordon's Jewelry Co., 763 S.W.2d 34, 37 (Tex.App.Corpus Christi 1988, no writ).
Jordan filed a supplemental affidavit in which Boyarsky testified that the facts in the affidavit were within his personal knowledge. Additionally, both the original and supplemental affidavits showed that Boyarsky acquired knowledge of the facts by familiarizing himself with Jordan's medical records, Dickey's May 23, 1991 deposition, the PDR, and the package insert that accompanied Voltaren in 1988.
Ciba also objected to the Boyarsky affidavits on the basis that Boyarsky referred to documents that were not attached to the affidavit, allegedly in contravention of Rule 166a(f). We find this argument to be without merit. Boyarsky testified that he had examined Jordan's medical records, Dickey's deposition of May 23, 1991, and the PDR, and inferred that he had also relied on the 1988 package insert for Voltaren in forming his opinion. It was unnecessary for Jordan to attach copies of these documents to Boyarsky's affidavits because the documents were already in evidence.[3] A nonmovant may use a movant's exhibit to establish the existence of a fact question. Keever v. Hall & Northway Adertising, Inc., 727 S.W.2d 704, 706 (Tex. App.Dallas 1987, no writ) (movant's exhibit can create a fact question); Tex. R.Civ.P. 166a(c). Ciba points us to no cases that hold otherwise.
Because Boyarsky based his opinions concerning Ciba on personal knowledge and on documents that were in evidence and thus before the court at the summary judgment proceeding, we find that the trial court erred in granting Ciba's motion to strike Boyarsky's affidavits. Jordan's first point of error is sustained.
We must now consider whether Boyarsky's affidavits establish the existence of a genuine issue of material fact. In her pleadings Jordan alleged, among other things, that Ciba negligently failed to warn physicians and others "of the dangers of acute kidney failure as a result of the use of" Voltaren.
Ciba asserted in its motion for summary judgment that it satisfied its duty to adequately warn of the hazards associated with Voltaren by warning Dickey through the package insert that accompanied the drug. In addition, Ciba contended that, because Dickey prescribed Voltaren with knowledge of the drug's attendant risks, the adequacy of Ciba's warning was not a producing cause of Jordan's injury. Boyarsky testified to the contrary in his affidavits, stating that the 1988 package insert and PDR "were not suitably modified to inform physicians ... against the risk of acute renal failure...."
The portion of the package insert in the record on appeal warns:
As a class, nonsteroidal anti-inflammatory drugs have been associated with renal papillary necrosis and other abnormal renal pathology in long-term administration to animals....
[In certain patients] administration of a nonsteroidal anti-inflammatory drug results in ... a reduction of renal blood *182 flow, which may precipitate over renal failure. Patients at greatest risk of this reaction are those with impaired renal function, heart failure, liver dysfunction, those taking diuretics, and the elderly. Discontinuation of nonsteroidal antiinflammatory drug therapy is typically followed by recovery to the pretreatment state. [Emphasis supplied.]
Cases of significant renal failure in patients receiving Voltaren have been reported from postmarketing experience, but were not observed in over 4,000 patients in controlled clinical trials.... It is not yet clear whether this low incidence of renal impairment in clinical trials, plus the observation of less renal toxicity than is usual in rodents, will translate into a significant reduction of the risk of renal failure in susceptible patients in widespread use.
At his deposition Dickey testified that the medical press warned that impairment of renal function was one side effect of Voltaren. Dickey also testified that he had familiarized himself with the package insert accompanying Voltaren before prescribing the drug for Jordan. Dickey could not identify the document provided him at the deposition, however, and testified that he could only assume from its date that it would have been the package insert available at the time he prescribed Voltaren for Jordan. Dickey also testified that he could only assume that the package insert for Voltaren gave the same warnings about the possibility of renal toxicity or renal problems as did inserts for other nonsteroidal drugs. Moreover, as we have previously noted, Dickey testified in his affidavit in support of his motion for summary judgment that neither Ciba nor the medical literature available to him at the time he prescribed Voltaren for Jordan advised of the possibility that Voltaren could cause irreversible cortical necrosis.
Certainly, Ciba's summary judgment evidence shows that it warned of some of the dangers attendant to Voltaren. The record does not indicate, however, that Ciba warned of the possibility of irreversible renal failure, or even of acute renal failure.[4] We therefore find that a genuine issue of material fact exists as to whether Ciba's warnings about the dangers associated with Voltaren were adequate.
Because Boyarsky's affidavits controvert Ciba's summary judgment evidence on the adequacy of the warnings regarding the use of Voltaren, we sustain Jordan's third point of error as it relates to Ciba. We deem it unnecessary to consider whether Kelley's affidavit establishes the existence of a fact issue.
We affirm the trial court's granting of Dickey's motion for summary judgment. We reverse the trial court's granting of summary judgment in favor of Ciba and remand the cause for a trial on the merits.
Jordan and Ciba shall each pay one-half of the cost of this appeal.
NOTES
[1] Notably, Dickey testified in his affidavit that the very hazards Jordan complains Dickey failed to warn her ofacute, irreversible renal failure, or irreversible cortical necrosiswere unknown to him at the time he prescribed Voltaren for Jordan. Jordan herself concedes as much in her brief on appeal. In her brief Jordan quotes from Dickey's affidavit, in which Dickey testified in part: "Plainly stated, I could not warn or advise Jackie Jordan of a risk of which I was not aware and which was not made known in the medical community at the time...." Jordan then uses this statement to show how Ciba's warnings were inadequate when she says "[T]he manufacturer did not give the warnings and the doctor even to the day that he sign[ed] his Affidavit was not aware of the fact that Voltaren could ... cause cortical necrosis to Jackie Jordan...." [Emphasis supplied.]
[2] Although her argument is inartfully drafted, Jordan seems to assert on appeal that the Texas Rules of Civil Evidence do not require an expert to testify to all the information upon which he has relied for his conclusions, in order to give an expert opinion. Tex.R.Civ.Evid. 705 provides:
The expert may testify in terms of opinion or inference and give his reasons therefor without prior disclosure of the underlying facts or data, unless the court requires otherwise. The expert may in any event disclose on direct examination, or be required to disclose on cross-examination, the underlying facts or data.
Id.
Jordan also contends that Boyarsky clearly stated the facts and data upon which he gave his opinion. As we have previously noted, the portions of Boyarsky's affidavits that pertain to Dickey do not state facts, but mere conclusions, and any data on which Boyarsky purported to rely is either inapplicable or not in evidence.
Additionally, in his objections to Jordan's response to motion for summary judgment, which are as close to cross-examination as possible in a summary judgment proceeding, Dickey objected to Boyarsky's original affidavit as containing vague and indefinite references not before the court. Even when allowed to supplement his affidavit, Boyarsky failed to provide any of the additional data upon which it was allegedly based. We therefore find this argument by Jordan unpersuasive.
[3] Copies of the PDR and part of the package insert were attached to Ciba's brief in support of its motion for summary judgment. A copy of Dickey's deposition is attached to Ciba's motion for summary judgment. Copies of part of Jordan's medical records were attached to Dickey's affidavit in support of his motion for summary judgment.
[4] Ciba asserts that it warned of acute renal failure in the package insert. Although this assertion may be true, the portion of the package insert before us on appeal does not contain such a warning. We therefore cannot consider that possibility in our review of the trial court's decision.
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755 A.2d 1032 (2000)
MEDLANTIC HEALTH CARE GROUP, INC., Appellant,
v.
Mignon CUNNINGHAM, Appellee.
No. 98-CV-1175.
District of Columbia Court of Appeals.
Argued May 2, 2000.
Decided July 6, 2000.
Stuart N. Herschfeld, Annapolis, MD, with whom Brian J. Nash and Leonard W. Dooren, were on the brief, for appellant.
James W. Taglieri, for appellee.
Before STEADMAN and FARRELL, Associate Judges, and PRYOR, Senior Judge.
PER CURIAM:
As a consequence of a medical procedure undergone by appellee, Mignon Cunningham, at Washington Hospital Center on June 7, 1994, appellee filed a complaint on June 6, 1997 in the Superior Court, alleging negligence on the part of appellant, Medlantic Health Care Group, Inc., its agents, the hospital, and other parties.[1] In response to appellant's request, the trial judge certified the question to this court. D.C.Code § 11-721(d) (1995). A motions division of the court granted the application for allowance of interlocutory appeal. Upon consideration of the question *1033 certified, we dismiss the appeal as improvidently granted.
I.
On August 8, 1997, appellee filed a motion to extend the time to effect service of process, as the original summons issued by the trial court had already expired.[2] The trial court granted the motion and appellee was afforded an additional thirty days to effect service. In response to the subsequent service of the summons and complaint, appellant filed a motion to quash summons and complaint on August 28, 1997, challenging the validity of the service of process relied upon by appellee. Specifically, appellant Medlantic Health Care Group, Inc. claimed that service of process was made upon the Washington Hospital Center, instead of CT Corporation System, its resident agent. Concluding that proper service had been accomplished, the trial court denied this motion. Following the denial of appellant's motion, appellant sought certification of the matter to this court. On March 19, 1998, the trial court denied appellant's motion, but also dismissed appellee's cause of action, without prejudice, for failure to obtain proper service in a timely manner. Contemporaneously, the court vacated the dismissal and granted appellee thirty additional days to effect service. Appellant again filed a motion for certification to the Court of Appeals, and the trial court granted that motion on July 2, 1998.
II.
D.C.Code § 11-721(a) (1995) establishes in this court jurisdiction over appeals from final orders and judgments of the Superior Court. In the interest of avoiding "piecemeal appeals" and "refrain[ing] from deciding issues which may eventually be mooted by final judgment," Crown Oil & Wax Co. v. Safeco Ins. Co. of America, 429 A.2d 1376, 1379 (D.C.1981), this court will not review trial court rulings which are not final. See also Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) ("The effect of the statute [28 U.S.C. § 1291] is to disallow appeal from any decision which is tentative, informal or incomplete."). Id. at 546, 69 S.Ct. 1221. The present appeal relies on an exception to the general prohibition stated in § 11-721(a) and Cohen, which has been carved out to allow for expressly limited certification of questions to this court, even though these matters fall short of being final orders or judgments. Section 11-721(d) states in part:
When a judge of the Superior Court of the District of Columbia in making in a civil case . . . a ruling or order not otherwise appealable under this section, shall be of the opinion that the ruling or order involves a controlling question of law as to which there is a substantial ground for a difference of opinion and that an immediate appeal . . . may materially advance the ultimate termination of the litigation or case, the judge shall so state. . . . The District of Columbia Court of Appeals may thereupon, in its discretion, permit an appeal to be taken from that ruling or order. . . .
Another section of our Code, § 11-723(a), similarly permits questions of law to be certified to this court by the Supreme Court of the United States, or by a federal court of appeals, or by the highest court of any state, if the question certified is likely to be determinative in a pending case in the absence of controlling precedent. It is also noteworthy that there is a statutory basis in federal courts, see 28 U.S.C. § 1292(b), for certification of questions to a higher court where there is a difference of opinion, on a controlling question, that is likely to advance the ultimate termination of the case. See Paschall v. Kansas City Star Co., 605 F.2d 403, 406 (8th Cir.1979). In sum, it is fair to conclude *1034 that courts, bearing in mind the dangers associated with piecemeal appellate review, have been stringent in exercising review by means of certification except for controlling questions, without much precedent, which are likely to end the litigation.
III.
In this instance, appellant, relying primarily on a premise of judicial economy, argues that a resolution of the question of service of process, if adverse to appellee, will eliminate for the court and the parties further consideration of this aspect of the case. While we understand that this approach to the matter is convenient and therefore attractive to appellant, we conclude it is not in harmony with the stated purposes of an appeal by certification. Simply stated, the question of process with respect to one of several parties in this case is not an issue, lacking in precedent, which can be deemed a controlling question likely to resolve the overall litigation. As we recently reiterated in In re J.A.P., 749 A.2d 715, 718 (D.C.2000), review by certification is intended to be exceptional and not merely a means of accelerated review for what may appear to be a difficult issue. Thus the question of process presented here fails to meet the standard which the statute sets forth. Similarly, we are not persuaded that appellate intervention in a question of this kind constitutes efficiency. Indeed, over the long term, the kind of appellate review sought here would lead to disruption, delay, and an erosion of judicial economy.
Accordingly, we dismiss this appeal as improvidently granted. The mandate of the court shall be issued appropriately. See D.C.App. R. 41(a).
So ordered.
NOTES
[1] The original complaint named nine defendants. Ultimately several parties were dismissed, leaving two defendants in addition to appellant in the case as of the time of this appeal. Only Medlantic actually filed an application for permission to appeal in this court and therefore is the only appellant now before us.
[2] Pursuant to Superior Court Rules of Civil Procedure 4(m), the original summons expired sixty days following the filing of the complaint on June 6, 1997.
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755 A.2d 795 (2000)
Barbara OGDEN as next friend of Brittany Chace Rath-Roth
v.
Sharolyn Lee RATH et al.
No. 99-149-Appeal.
Supreme Court of Rhode Island.
July 10, 2000.
*796 Present WEISBERGER, C.J., LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.
Gregory A. Carrara, Providence, Cherrie R. Perkins, Cynthia M. Gifford, for plaintiff.
Arthur M. Read, III, North Scituate, for defendant.
OPINION
PER CURIAM.
On December 22, 1994, a justice of the Rhode Island Family Court awarded temporary custody of Brittany Chase Rath-Roth (Brittany) to Barbara Ogden, the child's grandmother and the petitioner in this matter. No appeal was taken from that order. Subsequently, pursuant to the Uniform Child Custody Jurisdiction Act (UCCJA), the child's biological father, Alan Jay Roth, challenged the Family Court's jurisdiction to award custody. He additionally sought custody of the child. His motion to vacate the temporary custody order was denied, and he now appeals that issue following entry of an order, pursuant to Rule 54(b) of the Family Court Rules of Procedure for Domestic Relations.
The case came before a single justice of this Court, who directed the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. After reviewing thememoranda submitted by the parties and hearing the arguments of counsel, we are of the opinion that no such cause has been shown, and we proceed to resolve the appeal at this time.
On December 15, 1989, Brittany was born in Colorado to Sharolyn Lee Rath (the mother) and Alan Jay Roth (the father).[1] After establishing his paternity, the father sought and was given temporary visitation rights with the child in Colorado. The record discloses that, although she had a severe drug and alcohol abuse problem, the mother was granted temporary custody of Brittany. In August 1993, when it was learned that the mother might be planning to leave Colorado, the Colorado Juvenile Court entered an order requiring her to give the father adequate notice before removing Brittany from the state for more than six weeks.
On March 12, 1994, the mother brought Brittany to Rhode Island. Not long thereafter, she abandoned Brittany, leaving her in the care of the child's maternal grandmother and the petitioner in this case, Barbara Ogden (the grandmother). On September 16, 1994, the Colorado Juvenile Court became aware that Brittany was in Rhode Island and that the mother had failed to give the father adequate notice as required by the earlier Colorado court order. After a hearing, the Colorado Juvenile Court found that the father had: *797 "diminished capacity to care for Brittany; he's not ready to be a full time father to her. He lives in a motel and has neither an employment record nor a stable history of child support payments. If Brittany returns to Colorado, the Court will want to have a parent/child interactional done between the child and her father." (Emphasis added.)
The Colorado Juvenile Court granted temporary legal custody of Brittany to Janice Grimm (Ms. Grimm) in Colorado and appointed Jan Tazelaar (Ms. Tazelaar), a Colorado attorney, as guardian ad litem. It then granted the father weekly telephone contact with Brittany at the grandmother's home in RhodeIsland, and directed him "not to say anything bad about the grandparents or [the mother] to the child, nor to discuss the current custody situation with the child." The Colorado Juvenile Court also issued a bench warrant for the mother's arrest. Meanwhile, Brittany was left without the benefit of a legal custodian in Rhode Island.
On October 13, 1994, the grandmother filed an ex parte motion and a miscellaneous petition in the Rhode Island Family Court, seeking temporary custody of Brittany in Rhode Island. The miscellaneous petition named the mother and Ms. Grimm as respondents. Although the father was not named as a party, he was served with a summons and copy of the ex parte order, returnable December 14, 1994. However, he failed to respond to the summons by answer, special or general appearance, or to attend the hearing on December 14, 1994.
In support of her miscellaneous petition, the grandmother acknowledged that the Colorado Juvenile Court had granted temporary legal custody of Brittany to Ms. Grimm, had appointed Ms. Tazelaar as guardian ad litem and had granted telephonic visitation rights to the father. In her Family Court petition, the grandmother alleged that the mother had abused and neglected Brittany, and that the child did not have a legal guardian in Rhode Island because the mother no longer had legal custody of her. Meanwhile, on October 27, 1994, the Colorado Juvenile Court rescinded Ms. Grimm's legal custody of Brittany, stating that "it was the court's intent that it should occur only when the child was in this court's jurisdiction." The court declined "to consider remaining issues in view of pending judicial review."
On December 22, 1994, the Rhode Island Family Court awarded temporary legal custody to the grandmother "until such further times [sic] as this court shall determine that re-unification with the minor child's parents can lawfully be accomplished, if at all." The court granted the mother reasonable rights of supervised visitation and granted the father the same telephone visitation rights as previously had been granted by the Colorado Juvenile Court.
On January 18, 1996, Ms. Tazelaar moved in the Colorado Juvenile Court to withdraw as guardian ad litem for Brittany because of the long period of inactivity in the case. Ms. Tazelaar informed Brittany, through the grandmother, of her intent to withdraw as legal guardian. On February 5, 1996, the Colorado Juvenile Court granted Ms. Tazelaar's motion after finding that no party would be prejudiced by her withdrawal. Thus, the grandmother was left as Brittany's sole legal guardian.
On April 2, 1998, the Colorado Juvenile Court declared that it had jurisdiction over Brittany and ordered that she be returned to the State of Colorado immediately. Subsequently, on April 29, 1998, the father filed a motion for custody and other relief in the Rhode Island Family Court. In his motion, he asserted that the Family Court had illegally granted temporary legal custody to the grandmother in violation of the UCCJA, and requested the court to vacate its order of December 22, 1994. He also sought by his motion to have Colorado declared as Brittany's home state, and for Rhode Island to give full faith and credit and accord comity to the Colorado proceedings. He additionally requested that *798 he be permitted to return Brittany to Colorado so that the Colorado Juvenile Court could take further appropriate action. Alternatively, in the event that the Family Court determined Rhode Island to be Brittany's home state, he sought sole custody and permanent placement of her.
Citing lack of timeliness for the motion, pursuant to Rule 60(b) of the Family Court Rules of Procedure for Domestic Relations, on October 19, 1998, a trial justice of the Rhode Island Family Court denied the father's motion to vacate. He additionally found that Rhode Island was Brittany's home state at the time of the December 22, 1994, order, because Brittany had been in Rhode Island for more than six months and Rhode Island had been in the best position to determine the best interests ofthe child. The father's subsequent motion to reconsider that decision was denied. In order to file an immediate appeal from the order denying his motion to vacate the December 22, 1994, order, the father sought and was granted an entry of final judgment pursuant to Rule 54(b) of the Family Court Rules of Procedure for Domestic Relations. His appeal is now before us.
The father raises six issues on appeal, but we discern no need to address each of them individually. Essentially he contends that the trial justice erred in not vacating the December 22, 1994, order because Colorado was the home state and was entitled to full faith and credit and comity. He maintains that the temporary custody award of December 22, 1994, never was final; consequently, he asserts, the trial justice erred in denying his motion to vacate by applying, sua sponte, Rule 60(b).
General Laws 1956 § 15-14-4(a)(3)(i) of the Rhode Island permits the Family Court to assume emergency jurisdiction in cases in which a child is physically present in Rhode Island and has been abandoned. "Emergency jurisdiction confers authority to make temporary orders, including temporary custody for a limited period of time, pending proceedings in the state with regular jurisdiction under the Act." Nadeau v. Nadeau, 716 A.2d 717, 723-24 (R.I.1998) (quoting Benda v. Benda, 565 A.2d 1121, 1124 (N.J. Super. 1989)). "Emergencies, however, by definition do not last. Once the exigency has abated and the proper protective measures have been employed, the basis upon which jurisdiction was established ceases to exist." Nadeau, 716 A.2d at 724. Thus, emergency jurisdiction is merely temporary jurisdiction. Id. at 725.
In the present case, it is clear that Brittany had resided without a legal guardian in Rhode Island for at least six months before the grandmother's miscellaneous petition for temporary custody. It is equally clear that an emergency existed at the time the miscellaneous petition was filed. The mother abandoned Brittany at the grandmother's home and disappeared without a trace. Not having any legalrights to care for and protect the child, the grandmother was left with no option but to seek temporary legal custody pursuant to the UCCJA. The Family Court properly exercised its emergency jurisdiction over the matter and, after reviewing the best interests of the child, granted the grandmother's miscellaneous petition. We cannot say that the Family Court trial justice erred when he entered the order on December 22, 1994.
However, because the Family Court could exercise emergency jurisdiction to issue the temporary custody order, we conclude that the trial justice erred when, acting pursuant to Rule 60(b), he denied the father's motion to vacate. Rule 60(b) applies only to relief from "a final judgment, order, or proceeding" and not to an interlocutory matter such as this. Nevertheless, this Court previously has exercised its prerogative to affirm a determination of a trial justice "on grounds different from those enunciated in his or her decision." State v. Pena Lora, 746 A.2d 113, 118 (R.I.2000). See also Doe v. Gelineau, 732 A.2d 43, 45 (R.I.1999) (upholding grant *799 of summary judgment on different grounds); Ahlburn v. Clark, 728 A.2d 449, 450 (R.I.1999) (same).
Since the order of December 22, 1994, was entered, the mother still remains missing; consequently, the grandmother has retained temporary custody of the child. Although the Colorado Juvenile Court has issued various orders demanding the return of Brittany to that state, at no time were any provisions for her care and transportation made to facilitate such orders. Thus, it is not clear that the Rhode Island Family Court's emergency jurisdiction ever has abated. Moreover, even if the emergency situation had abated, the father, by filing his concurrent motion for legal custody of Brittany here in Rhode Island, has conferred personal jurisdiction in the Family Court over his petition seeking legal custody. See Houtchens v. Houtchens, 488 A.2d 726, 728 (R.I.1985) (filing a motion fortemporary support and custody conferred personal jurisdiction on the Family Court in spite of the concurrent filing of a motion to dismiss on jurisdictional grounds pursuant to the UCCJA).
Consequently, we affirm the trial justice's denial of the father's motion to vacate, but for reasons other than as relied upon by the trial justice, and we remand the case to the Family Court, where that court shall proceed to conduct an expedited trial on the merits on the outstanding custody matter.[2] Recognizing, as we must, this state's preference for keeping children with their parents (see Carr v. Prader, 725 A.2d 291, 294 (R.I.1999)), and to assist the Family Court in determining the best interests of the child, we direct the trial justice to communicate with the judge presiding over the case in the Colorado Juvenile Court to request his or her input on the custody issue.
For the foregoing reasons, the father's appeal is sustained concerning the Rule 60(b) issue; however, because the Family Court properly exercised its emergency jurisdiction over Brittany under the UCCJA and because that emergency has yet to abate, his appeal is denied. The order appealed from is affirmed. The papers are remanded to that court for a determination of the father's motion for custody in accordance with this decision.
NOTES
[1] Brittany's parents never have been married to each other.
[2] We note at this juncture that by requesting a final judgment pursuant to Rule 54(b) of the Family Court Rules of Procedure for Domestic Relations and appealing therefrom, the father further delayed final resolution of the legal custody issue.
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755 A.2d 531 (2000)
2000 ME 141
MUNJOY SPORTING & ATHLETIC CLUB
v.
Malcolm DOW, Chief of the Maine State Police.
Supreme Judicial Court of Maine.
Argued January 6, 2000.
Decided July 21, 2000.
*534 Marshall J. Tinkle, Esq., (orally), David M. Hirshon, Esq., Tompkins, Clough, Hirshon & Langer, P.A., Portland, for plaintiff.
Andrew Ketterer, Attorney General, Donald Macomber, Asst. A.G. (orally), Augusta, for defendant.
Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, and ALEXANDER, JJ.
WATHEN, C.J.
[¶ 1] Munjoy Social and Athletic Club (Munjoy) appeals from the judgment entered in the Superior Court (Cumberland County, Crowley, J.) denying its 80C appeal from the State Police denial in January of 1998 of Munjoy's application for beano and games of chance licenses pursuant to 17 M.R.S.A. §§ 312,[1] 331[2] (1983 & Supp.1999). On appeal, Munjoy argues that the State Police violated Munjoy's statutory and due process rights when it denied Munjoy's applications without a hearing, and that, even if it was not entitled to a hearing, there was insufficient evidence to support denial of the applications. Because we conclude that the State Police erred by failing to hold a hearing before denying Munjoy's applications on the basis that it is not a bona fide nonprofit organization, we vacate and remand for a hearing. Munjoy also appeals from the *535 court's (Calkins, J.) dismissal of its 42 U.S.C. § 1983 claim against Malcolm Dow personally. Munjoy contends that the court improperly based its dismissal upon Dow's assertion of immunity, and that, even if immunity were properly raised, Dow did not enjoy immunity on the facts before the court. We disagree and affirm the dismissal.
[¶ 2] Because of the procedural posture of this case, it comes before us on the investigative record created by the State Police prior to its denial of Munjoy's license applications. It appears that Munjoy is a social club that has been in existence since 1949. The club was both a fraternal and charitable organization, meeting informally at social gatherings while also contributing money and services to charities. Membership had been on the decline until 1993, when the club experienced a resurgence, growing to at least 58 members in that year. In February of that year, the club rented facilities in Portland and applied for licenses to run beano and games of chance.[3] As part of the initial application process, the State Police required Munjoy to provide minutes from two years of membership meetings, a members list, affidavits of members, and two years of bank statements for any club accounts, along with a copy of its by-laws, and its certificate of incorporation. Munjoy's applications were granted, and it was required to send a representative to a workshop that reviewed the rules and regulations governing beano and games of chance.
[¶ 3] The club ran its beano operation from its Portland location until 1995, when it expanded and leased a hall of approximately 9,600 square feet in Scarborough. Over the course of the next two years, the gaming operation grew quite large; in the first six months of 1997 alone, Munjoy grossed over a million dollars on this operation. Throughout this time, Munjoy applied for and was granted licenses by the State Police. Although it is not clear from the record before us, Munjoy appears to have been granted monthly licenses in six month blocks. The application process for these subsequent licenses differed from the initial application. Instead of providing affidavits and other documents, Munjoy was assigned a number and ordered to use that number in all subsequent applications. Again, it is not clear from the record before us, but it appears that the decisions to grant the licenses from 1993 to 1997 were based upon the information Munjoy initially submitted, along with any other evidence later added to their file.[4]
[¶ 4] In mid-1997, the State Police began an investigation into whether Munjoy was a "bona fide nonprofit organization." This investigation concluded in December of that year. Approximately a month later, the State Police denied Munjoy's applications. The State Police informed Munjoy that their investigation indicated that Munjoy "does not meet the requisite qualification of being a `bona fide nonprofit organization.'" Munjoy protested this decision and was allowed to file additional documents to supplement the State Police's investigatory record. The police issued *536 a license for the month of February while they reviewed Munjoy's filing, but again concluded that Munjoy was not a "bona fide nonprofit organization" and therefore did not qualify for the licenses. At no point did the State Police hold a hearing on Munjoy's applications.
[¶ 5] Following the denial of its licenses, Munjoy filed the present action in Superior Court. In addition to an 80C appeal of the denial of its license applications, Munjoy also included a request for injunctive relief, a claim for the violation of Maine civil rights law, and a section 1983 claim against Chief Malcolm Dow in his personal capacity. The State Police and Dow answered the complaint, asserted qualified immunity as an affirmative defense, and moved for dismissal on Munjoy's claims for section 1983 damages and for relief under Maine civil rights law. The court granted the motion. Shortly thereafter, the court, finding that the license denials were clearly supported by substantial evidence in the record, also denied the 80C appeal and upheld the State Police determination that Munjoy was not a bona fide nonprofit corporation. Munjoy appeals from the judgment.
[¶ 6] We consider Munjoy's 80C appeal first. When the Superior Court acts in its appellate capacity pursuant to M.R. Civ. P. 80C, we review the administrative decision directly. See Maine Bankers Ass'n v. Bureau of Banking, 684 A.2d 1304, 1305-06 (Me.1996). "The standard of review is limited to whether the [governmental agency] abused its discretion, committed an error of law, or made findings not supported by substantial evidence in the record." Davric Maine Corp. v. Maine Harness Racing Comm'n, 1999 ME 99, ¶ 7, 732 A.2d 289, 293. We will vacate a decision only if
The administrative findings, inferences, or conclusions are: (1) In violation of constitutional or statutory provisions; (2) In excess of the statutory authority of the agency; (3) Made upon unlawful procedure; (4) Affected by bias or error of law; (5) Unsupported by substantial evidence on the whole record; or (6) Arbitrary or capricious or characterized by abuse of discretion.
Hale-Rice v. Maine State Retirement Sys., 1997 ME 64, ¶ 8, 691 A.2d 1232, 1235.
[¶ 7] Munjoy argues that both Maine law and the United States Constitution entitle it to a hearing on its license applications. We address Munjoy's state law contentions first. Munjoy argues that its applications were renewals of existing licenses and therefore a hearing was required by the Administrative Procedures Act. Whether the Munjoy applications sought the renewal of existing licenses is a matter of statutory interpretation and therefore a question of law. See Cook v. Lisbon Sch. Comm., 682 A.2d 672, 676 (Me.1996). We review questions of law de novo. See Collins v. Trius, Inc., 663 A.2d 570, 572 (Me.1995).
[¶ 8] Munjoy is correct in its argument that if its applications are for a renewal of its licenses, then it is entitled to an administrative hearing. See 5 M.R.S.A. § 10003(1) (1989). A hearing would also be required under the beano and games of chance statutes if we were to find that the denial of Munjoy's applications were a revocation of existing licenses. See 17 M.R.S.A. §§ 317-A, 343-A (Supp.1999). No hearing is required, however, if Munjoy's applications are, as the State Police contend, applications for new licenses rather than for the renewal of old licenses. The State Police have been given authority by the Legislature to administer the beano and games of chance statutes. "When the dispute involves an agency's interpretation of a statute administered by it, the agency's interpretation, although not binding on the Court, is accorded great deference and will be upheld unless the statute plainly compels a contrary result." Maine Bankers Association, 684 A.2d at 1306; Davric Maine Corp., 1999 ME 99, ¶ 7, 732 A.2d at 293. Munjoy argues that the State Police have not been consistent in their *537 interpretation of the statutes. Although, the police have consistently stated that all applications are new, Munjoy argues that the State Police practice in this areai.e., basing its subsequent grants of licenses upon information garnered as part of Munjoy's initial applicationindicates that even the State Police considered Munjoy's application a renewal.
[¶ 9] Although we agree there is a superficial inconsistency between the actions and words of the State Police, we are unable to agree that it should affect our analysis of the statute. Administrative practice cannot alter statutory language. Even if we were to accept Munjoy's contentions regarding the State Police interpretation, the statutes compel the contrary reading. In stark contrast to other statutes that explicitly mention renewal licenses,[5] the beano and games of chance statutes make no provision for either the renewal or the reissuance of old licenses, which instead simply expire upon the completion of their term. Therefore, when the State Police denied Munjoy's applications, they neither refused to renew nor revoked an old license. Munjoy has no statutory right to a hearing under Maine law.
[¶ 10] Munjoy next argues that the failure to provide a hearing was a violation of its procedural due process rights under the United States Constitution. "The requirements of procedural due process [protect citizens against] the deprivation of interests encompassed by the Fourteenth Amendment's protection of liberty and property." Board of Regents v. Roth, 408 U.S. 564, 569, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Though the Constitution protects property interests, it does not create such interests, nor does the Constitution protect those interests that are nothing more than a unilateral and abstract expectation of a future benefit. See id. at 577, 92 S.Ct. 2701. To determine whether Munjoy has an interest in these licenses, we turn to "existing rules or understandings that stem from an independent source such as state lawrules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Id. Thus, we look to the beano and games of chance statutes to determine if Munjoy has a "legitimate claim of entitlement" to a new license. Id. If Munjoy does have such a protected interest in the licenses it applied for, "the right to some kind of prior hearing is paramount." Id. at 569-70, 92 S.Ct. 2701.
[¶ 11] Generally, licenses do not create a protected property interest when broad discretion is vested in a state official or agency to deny or approve the application. See Gonzales v. Commissioner, Dep't of Pub. Safety, 665 A.2d 681, 683 (Me.1995). In such cases, an applicant has little more than an abstract or unilateral expectation in that license. See id.; Paron v. City of Shakopee, 226 Minn. 222, 32 N.W.2d 603, 609 (1948) (noting that Minnesota courts are without power to control the decision of agencies issuing liquor licenses beyond preventing arbitrary or capricious decisions), Movers Warehouse, Inc. v. City of Little Canada, 71 F.3d 716 (8th Cir.1995) (noting that state authority could not issue bingo license without approval of municipality and that municipality had unfettered discretion in deciding whether to issue its approval). Cf. Gregory v. Town of Pittsfield, 479 A.2d 1304, 1307-08 (Me.1984) (holding that statutorily mandated de novo review of need eliminated anything more than an abstract expectancy in Maine general assistance benefits). On the other hand, "[i]f a benefit is a matter of statutory entitlement for persons qualified to receive them, then the government has created a property interest in that benefit." Federal Lands Legal Consortium ex rel. Robart Estate v. United States, 195 F.3d 1190, 1197 (10th Cir.1999); *538 see also Zeus Corp. v. City of Decorah, Iowa, 957 F.Supp. 1093, 1096 (N.D.Iowa 1996) (noting that licenses create property rights "where state law mandated renewal upon satisfaction of certain substantive prerequisites"). Although the licensing statutes grant a degree of discretion to the State Police, the scope of that discretion does not include the legal and factual determination whether an organization is a bona fide nonprofit organization of the appropriate type
[¶ 12] The beano statute provides that the "Chief of the State Police may issue licenses to operate beano or bingo games to any ... bona fide nonprofit charitable, educational, political, civic, recreational, fraternal, patriotic, religious or veterans' organization ...." 17 M.R.S.A. § 314 (Supp.1999) (emphasis added).[6] At a minimum, the statute grants the State Police discretionary authority to withhold all licenses, and arguably discretionary authority, for example, to issue licenses to some or all of the types of organizations listed within the statute, or to limit the total number of licenses issued in a given period of time. Munjoy's applications were not denied on the basis of such discretionary authority. Munjoy was excluded as an eligible applicant because of a factual and legal determination that it is not a bona fide nonprofit organization. Whatever range of discretion is granted under the statutes, whether a particular organization is an eligible applicant is not a matter of discretion.
[¶ 13] Because the Chief of the State Police has not exercised his discretion to limit those organizations who are eligible for a license, once applicants make a threshold showing that they are a bona fide nonprofit organization of the particular type generally issued licenses, they have a legitimate expectation that the license will issue. Munjoy made this showing through the materials it submitted with its first application.[7] Munjoy therefore has a protected property interest in the license; the State Police must afford Munjoy a hearing before the State Police may deny Munjoy's application on the basis that it is not a bona fide nonprofit organization.
[¶ 14] Because the definition of a "bona fide nonprofit ... organization" is sure to arise on remand, we briefly address that question now in the interest of judicial economy. This term is not defined in the statute, and, though the Legislature has authorized "the State Police Chief to adopt rules to ensure that licenses are issued only to bona fide nonprofit organizations," L.D. 2325, Statement of Fact at 7 (111th Legis.1984), no such rules have been called to our attention. Munjoy argues that the term merely indicates that the organization must satisfy the requirements of Title 13-B, Maine's nonprofit corporation statute.[8] We disagree. As the above discussion illustrates, the demonstration that an organization complies with Title 13-B is relevant primarily as part of that organization's threshold proffer that it is an eligible applicant. The statute itself, however, indicates that a further demonstration than simple nonprofit statute is required. Section 343(7) declares that "[t]he establishment of organizations which exist primarily to operate games of chance and do not have a bona fide nonprofit charitable, educational, political, civic, recreational, fraternal, *539 patriotic, religious or public safety purpose" is considered undesirable. 17 M.R.S.A. § 343(7) (Supp.1999).
[¶ 15] There is much diversity within the community of nonprofit organizations holding licenses.[9] We conclude, however, that the term is placed within the statute to deal with the problem of "shell nonprofit organizations." See GOVERNOR'S ADVISORY COMMITTEE ON GAMBLING, WIN, LOSE OR DRAW: GAMBLING IN MAINE 12 (1997) (defining shell nonprofit organizations as a "dead organization is reactivated and used as a front for a Beano license"). The key to identifying a bona fide nonprofit organization therefore does not revolve solely around its legal existence as a nonprofit corporation. The licensing statutes focus also upon the organization's primary purpose. If, at the time of application, the organization exists primarily to provide employment to its officers, directors, or employees through the operation of beano and games of chance, then it is not a bona fide nonprofit organization. Thus, it is not enough for an organization to have some charitable, fraternal, etc. goals if the bulk of an organization's reason for being is not the furtherance of those goals, but instead is the organization's gaming operations. The beano and games of chance statutes are not meant to regulate a gambling industry, but instead to provide specified types of socially desirable nonprofit organizations with a fund raising tool.
[¶ 16] Finally, we turn to Munjoy's contention that the Superior Court erred when it dismissed Munjoy's section 1983 claim. "A motion to dismiss tests the legal sufficiency of the complaint[;] ... we examine the complaint in the light most favorable to the plaintiff to determine whether it sets forth ... facts that would entitle the plaintiff to relief ...." See McAfee v. Cole, 637 A.2d 463, 465 (Me. 1994). A complaint "should not be dismissed unless it is beyond doubt that no relief can be granted under any facts that might be proved to support the plaintiff's claim." Webb v. Haas, 665 A.2d 1005, 1009 (Me.1995). Munjoy alleged that Dow's actions denied it equal protection, that Dow infringed upon Munjoy's liberty interests, and that Dow infringed upon Munjoy's procedural due process rights. Dismissal was proper as to the first two of these claims because Munjoy failed to plead facts that would support recovery under either theory.
[¶ 17] As to the third of Munjoy's claims, Dow asserted, as an affirmative defense, that he enjoyed qualified immunity. Contrary to Munjoy's contentions, immunities and other affirmative defenses "may be raised by a motion to dismiss if facts giving rise to the defense appear on the face of the complaint." Shaw v. Southern Aroostook Community Sch. Dist., 683 A.2d 502, 504 (Me.1996). Because Munjoy specifically sued Dow for "monetary damages pursuant to section 1983" arising from Dow's official actions, Dow's motion to dismiss may raise the immunity issue. See Andrews v. Department of Environmental Protection, 1998 ME 198, ¶ 11, 716 A.2d 212, 217.
[¶ 18] Qualified immunity "shield[s] governmental employees from law suits and liability for their discretionary actions." Webb, 665 A.2d at 1010, Andrews, 1998 ME 198, ¶ 11, 716 A.2d at *540 217. "A public official claiming qualified immunity ... must establish either that he or she did not violate the plaintiff's rights or that given the state of the law a reasonable official would not have understood that he [or she] was doing so." Andrews, 1998 ME 198, ¶ 11, 716 A.2d at 217 (internal quotations omitted). A right is clearly established if "the contours of the right [are] sufficiently clear that a reasonable official would understand that what he is doing violates that right. The unlawfulness must be apparent in light of preexisting law." Id. ¶ 12, 716 A.2d at 217. Although we now conclude that Munjoy had a right to a hearing, our discussion amply illustrates that this right was not so clearly established that Dow would have understood that his actions violated Munjoy's rights.
The entry is:
The judgment on Munjoy's 80C appeal is vacated. Remanded to the Superior Court with instructions to remand to the State Police for further proceedings consistent with the opinion herein. In all other respects, the judgment is affirmed.
NOTES
[1] The statute provides, in pertinent part: "No person, firm, association or corporation shall hold, conduct or operate the amusement commonly known as `Beano' or `Bingo' for the entertainment of the public within the State unless a license therefor is obtained from the Chief of the State Police." 17 M.R.S.A. § 312 (Supp.1999).
[2] The statute provides, in pertinent part: "No person, firm, corporation, association or organization shall hold, conduct or operate a game of chance within the State unless a license therefor is obtained from the Chief of the State Police." 17 M.R.S.A. § 331(1) (1983).
[3] Munjoy has operated what is commonly referred to as low stakes beano. "Low stakes Beano is commonly conducted in churches or other non-profit groups." GOVERNOR'S ADVISORY COMMITTEE ON GAMBLING, WIN, LOSE OR DRAW: GAMBLING IN MAINE 12 (1997). Prizes are strictly limited in low stakes beano: "[N]o single prize may exceed $400 in value and ... no more than $1,400 in total prizes may be awarded on any one occasion." 17 M.R.S.A. § 317 (Supp.1999). High stakes beano, on the other hand, may only be conducted by "any federally recognized Indian tribe." 17 M.R.S.A. § 314-A(1) (Supp.1999). There are no limits upon the prizes that may be awarded in a high stakes beano game. See id. § 314-A(2).
[4] From time to time, the State Police requested additional information about Munjoy and its gaming operations. Though the results from these requests appear to have been placed in Munjoy's file, those requests were not made in connection with Munjoy applications or decisions to be made on those applications.
[5] See, e.g., 7 M.R.S.A. § 1015 (1989); 8 M.R.S.A. § 271 (Supp.1999); 22 M.R.S.A. § 2494 (1992); 28-A M.R.S.A. § 652(3) (Supp.1999).
[6] The games of chance statute is substantially similar: "Notwithstanding other provisions of law, the Chief of the State Police may issue a license to operate a game of chance ... to a bona fide nonprofit charitable, educational, political, civic, recreational, fraternal, patriotic or religious organization ... any of which must be founded, chartered or organized in this State before applying for a license." 17 M.R.S.A. § 332(1) (Supp.1999).
[7] We stress that Munjoy's interest in the license is not dependent upon the conduct of the State Police in issuing prior licenses.
[8] According to that statute, "`[n]onprofit corporation' means a corporation, no part of the income or profit of which is distributable to its members, directors or officers." 13-B M.R.S.A. § 102(9) (1981).
[9] The Governor's Committee on Gambling has listed three categories of organizations offering beano and games of chance:
(1) non-profit charities that have an IRS designation (e.g. the Catholic church). These organizations donate most or all of their revenue to charity; (2) Non-profit groups without an IRS designation that donate some of the revenues to charitable organizations and (3) non-profit organizations without IRS designation that use the majority, if not all, of the revenues for their own organization's benefit with only a small amount going to charitable causes. All three types of organizations are operating within the scope of the law.
GOVERNOR'S ADVISORY COMMITTEE ON GAMBLING, WIN, LOSE OR DRAW: GAMBLING IN MAINE 40 (1997). Munjoy would fall within either the second or their category.
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733 F.Supp. 1205 (1990)
John Wesley YOUNG III, et al., Plaintiffs,
v.
Michael P. LANE, Director, Department of Corrections, State of Illinois, et al., Defendants.
Nos. 85 C 20019, 85 C 20020, 85 C 20022 to 85 C 20024 and 86 C 20398.
United States District Court, N.D. Illinois, W.D.
March 26, 1990.
*1206 Mary Gorman and Karl Winkler, Rockford, Ill., for plaintiffs.
William Frazier, Asst. Atty. Gen., Chicago, Ill., for defendants.
ORDER
ROSZKOWSKI, District Judge.
BACKGROUND
Several plaintiffs filed complaints in the United States District Court for the Northern District of Illinois alleging deprivations of their constitutional rights in regard to religious freedom. Suit was brought under *1207 42 U.S.C. § 1983 seeking injunctive/declaratory relief and damages. Jurisdiction of this court is based upon 28 U.S.C. § 1343. The complaints were consolidated for trial. Defendants moved for summary judgment on May 2, 1988. This motion was taken with the proofs at trial. Trial was held on May 12, 13 and 19, 1988. The following findings of fact and conclusions of law are a result of that trial.
FINDINGS OF FACT
Plaintiffs consist of a group of prisoners incarcerated at the Dixon Correctional Center in Dixon, Illinois. Dixon Correctional Center is a part of the Department of Corrections of the State of Illinois and is a medium security prison. Defendants consist of Mr. Michael P. Lane, Director of the Department of Corrections of the State of Illinois; Mr. Leo L. Meyers, Assistant Director of the Adult Division of the Department of Corrections; Mr. Richard B. Gramley,[1] Warden at Dixon Correctional Center; Mr. Larry E. Sachs, Assistant Warden for Programs at Dixon Correctional Center; and Mr. William D. O'Sullivan,[2] Assistant Warden of Operations at Dixon Correctional Center.
Plaintiffs are Jewish inmates who desire to practice their religion during their period of incarceration at Dixon Correctional Center. Approximately 20,000 persons are incarcerated within the Illinois Department of Corrections statewide. Of these persons, approximately 110 are of the Jewish faith. At the time of trial, Dixon Correctional Center housed 890 inmates. Seven of these were Jewish.
Several requirements exist in relation to the practice of Judaism. The necessary garments include: a tzitzes, which is a fringed garment that is worn all day and may be worn underneath a shirt so that only the fringes are visible; a yarmulke, which is a skull cap that is also worn at all times; a tephillin, which is best described as an arm "wrap" that is worn during morning prayers; and a talus, which is a prayer shawl that is also worn during morning prayers. Daily prayer, for the Jew, occurs three times a day: once in the morning, once in the afternoon and then once again after sundown. During prayer, prayer books are used. The Jewish Bible is used for study as are the Torah and the Talmud containing language, philosophy and Jewish law.
Numerous Jewish holidays exist throughout the year. On these holidays, Jewish law requires the Jew to do no work. The holidays (and the dates on which they occurred in 1988) are: Pesach or Passover (April 2-9);[3] Shavuot (May 21 and 22); Rosh Hashana (September 12 and 13); Yom Kippur (September 21); Succot (September 26-October 2);[4] and Simhat Torrah (October 3 and 4). Three "post-Biblical" holidays are also observed: Purim (one month before Passover); Hanukkah (December 4); and Tisha B'av.[5] Finally, Jews are not allowed by Jewish law to work on their Sabbath.
Religious articles are used on the various Jewish holidays. A ram's horn is used on Rosh Hashana. Special holiday prayer books are required. Candles are used on holidays and on every Sabbath, staying lit until the Sabbath is over. The Sabbath also requires a cup of wine or grape juice and challus rolls. Passover calls for a "festive" meal and unleavened bread.
*1208 A Jew also has special dietary requirements. Persons of the Jewish faith may eat anything that grows out of the earth. They may also eat fish having scales and fins. Jews may not, however, eat meat from an animal with a cloven hoof or an animal that chews its cud. Dairy products and meat may not be eaten at the same meal. All food must be prepared using kosher implements and a kosher stove. The food must also be served in a kosher manner. This means that the kosher food must not be exposed to non-kosher items.
The Illinois Department of Corrections has not published any specific statewide policies instructing the various Illinois Correctional Centers on how to deal with Jewish inmates who desire to practice their religion. As such, Dixon Correctional Center officials have been inconsistent and slow in responding to Jewish inmates' requests for diet, garments, articles and services in line with their Jewish faith. Prior to June 1987, Jewish inmates at Dixon Correctional Center were permitted to wear yarmulkes all day long. At present, however, inmates are allowed to wear yarmulkes only in their cells and during religious services.
Dixon Correctional Center does provide prayer books for inmates' use. The books are kept in the chaplain's office, not in the Jewish prisoner's cell. As such, an inmate must ask the chaplain or a guard to obtain a prayer book for him every time the inmate desires to pray.
No rules exist regarding the provision of religious services to Jewish inmates. A general rule, promulgated by the Illinois Department of Corrections, does require a Correctional Center to provide religious services. Dixon Correctional Center is serviced by volunteer rabbis who provide religious services for Jewish inmates on some holidays and on some Sabbaths. Over a three and one-half year period, volunteer rabbis visited Dixon Correctional Center approximately forty-three times. When a rabbi is not present, Dixon Correctional Center allows inmates to gather for prayer and/or services only when a staff supervisor is present.
Beginning in December of 1985, a kosher diet was available at Dixon Correctional Center. Some breaks in the availability of kosher meals did occur during this time due to depletion of supplies and delays in receiving new deliveries of kosher meals. Special Passover meals also were served to Jewish inmates.
CONCLUSIONS OF LAW
Imprisonment deprives prisoners of many rights. Courts do recognize, however, that prison inmates retain limited constitutional rights including the First Amendment's guarantee of free exercise of religion. The right is limited in that a prisoner's religious exercises may be regulated by prison authorities. The regulation, in turn, is valid as long as it is "reasonably related to legitimate penological interests." Turner v. Safely, 482 U.S. 78, 107 S.Ct. 2254, 96 L.Ed.2d 64 (1987); Reed v. Faulkner, 842 F.2d 960, 962 (7th Cir. 1988). Prison officials may not arbitrarily place obstacles in the way of inmates who seek to participate in their religion's tenets. Johnson-Bey v. Lane, 863 F.2d 1308, 1311 (7th Cir.1988). Accordingly, a prisoner's right to exercise his religion under the First Amendment must be balanced against the legitimate goals of the penal institute. Hadi v. Horn, 830 F.2d 779, 783 (7th Cir. 1987).
The Supreme Court has set forth factors to be used in applying the reasonableness standard when reviewing prisoners' constitutional claims. The factors are:
1. whether a valid, rational connection exists between the regulation and a legitimate government interest behind the rule;
2. whether there are alternative means of exercising the right in question that remain available to prisoners;
3. the impact accommodation of the asserted constitutional right would have on guards and other inmates and on the allocation of prison resources; and
4. although the regulation need not satisfy a least restrictive alternative test, the existence of obvious, easy *1209 alternatives may be evidence that the regulation is not reasonable.
Turner v. Safely, 482 U.S. 78, 107 S.Ct. 2254, 96 L.Ed.2d 64 (1987).
Defendants argue that Plaintiffs in this case are insincere in their quest for religious freedom. Rather, Plaintiffs are bringing suit merely to gain financially in regard to damages. Defendants cite instances where some Plaintiffs were seen eating non-kosher food when kosher food was available. The Seventh Circuit has recognized, however, that a person need not steadfastly adhere to every tenet of his religious faith in order to be found to be sincere in his beliefs. In Reed v. Faulkner, 842 F.2d 960 (1988), the Seventh Circuit found that some religions place unrealistic demands on their adherents. The court held that "it would be bizarre for prisons to undertake in effect to promote strict orthodoxy, by forfeiting the religious rights of any inmate observed backsliding, thus placing guards and fellow inmates in the role of religious police." 842 F.2d at 963. The fact that some Plaintiffs, in this case, were observed eating non-kosher food is not conclusive evidence of insincerity. The court finds, rather, Plaintiffs' beliefs and Plaintiffs' desires to exercise their beliefs are sincerely held. The key issue, therefore, is whether Defendants unreasonably restrained Plaintiffs in practicing Judaism.
Plaintiffs desire to wear their yarmulkes all day, both inside and outside their cell. Defendants, however, only allow yarmulkes to be worn inside the cell and during religious services. Defendants state that this policy is rationally related to security concerns in preventing contraband from being hidden under the yarmulkes and in preventing gang warfare. Defendants argue that because yarmulkes are available in different colors, Plaintiffs may use the skull caps to show their affiliation to various gangs.
Applying the Supreme Court's factors to the wearing of yarmulkes, the court concludes that Defendants' policy does deprive Plaintiffs of their free exercise rights. The court does not see where a valid, rational connection exists between the policy regarding yarmulkes and the prison's interest. The Illinois Department of Corrections permits inmates to wear baseball caps at anytime. Unlike baseball caps, yarmulkes fit very tightly on one's head making it much more difficult, than in the case of baseball caps, to hide contraband. Moreover, Defendants' Exhibit 1 shows that the allowed baseball caps are available in seven colors, thereby making the distinction from yarmulkes in terms of gang warfare non-existent. Prior to 1987, Plaintiffs had been allowed to wear their yarmulkes all day. Defendants submitted no evidence that security was impaired during that time. The regulation in regard to the wearing of yarmulkes is, therefore, not reasonably related to legitimate penological interests.
Plaintiffs also claim that Dixon Correctional Center's failure to reimburse visiting rabbis for travel expenses prior to 1986 violates their constitutional rights. Plaintiffs point out that other religious leaders (e.g., Catholic priests) were reimbursed for such expenses. The fact that Jewish rabbis were not reimbursed resulted in fewer opportunities available for inmates to be counseled regarding religious matters.
A prison is not required to employ chaplains representing every faith with at least one adherent among the prison population. Cruz v. Beto, 405 U.S. 319, 322 n. 2, 92 S.Ct. 1079, 1081 n. 2, 31 L.Ed.2d 263 (1972); Johnson-Bey v. Lane, 863 F.2d 1308, 1312 (7th Cir.1988). However, as recognized by the Seventh Circuit in Johnson-Bey v. Lane, the fact that prison authorities hire and compensate full-time chaplains for Catholic and Protestant prisoners and do not hire or sufficiently compensate full-time chaplains for Jewish inmates is "troubling." Id. This court recognizes, as did the Seventh Circuit in Johnson-Bey, that a State can get into trouble in relation to the establishment clause under the First Amendment when it hires or funds chaplains. However, Defendants do not argue that funding Jewish rabbis would violate the establishment clause. The armed forces similarly funds religious chaplains *1210 and such a funding has been constitutionally upheld. See, e.g., Katcoff v. Marsh, 755 F.2d 223 (2nd Cir.1985).
Paying the traveling expenses of a Jewish rabbi is more of a precondition to the free exercise of religion than the establishment of a religion. As the Seventh Circuit stated in Johnson-Bey:
The religious establishments that result are minor and seem consistent with, and indeed required by, the overall purpose of the First Amendment's religious clauses, which is to promote religious liberty. Prisons are entitled to employ chaplains and need not employ chaplains of each and every faith to which prisoners might happen to subscribe, but may not discriminate against minority faiths except to the extent required by the exigencies of prison administration.
863 F.2d 1308, 1312 (7th Cir.1988). The court holds, therefore, that Defendants' failure to reimburse Jewish rabbis for traveling expenses at the time this case was filed, also violated Plaintiffs' First Amendment rights. No legitimate government interest for this failure can be found by the court upon applying the Turner factors.
Plaintiffs also contend that their First Amendment rights were violated because Defendants refused to allow Plaintiffs to hold inmate-led religious services in the absence of a rabbi. The Seventh Circuit has held that the policy of no inmateled services is a legitimate security concern that is applied to all religious groups. Security is threatened in these instances due to the conflicts that may occur when inmates lack the requisite religious experience to resolve issues that arise during religious meetings. Security may also be threatened due to the danger that religious services may be used for gang meetings in order to disseminate information that may interfere with prison goals. Hadi v. Horn, 830 F.2d 779, 784 (7th Cir.1987). The Seventh Circuit has also recognized, however, that the reasonableness of the no inmateled services policy is related to the availability of chaplains to conduct the services. Johnson-Bey v. Lane, 863 F.2d 1308, 1311 (7th Cir.1988).
This court believes that the policy of no inmate-led services is a legitimate regulation not infringing on Plaintiffs' First Amendment rights. Under the fourth Turner factor, however, the court believes a satisfactory alternative would be to allow inmates to gather for prayer and worship without a rabbi present when a staff supervisor is present to prevent any adverse effects. Apparently this is currently allowed at Dixon Correctional Center. This alternative would seem, to the court, to be less restrictive on a prisoner's religious exercise rights.
Finally, Plaintiffs' religious beliefs require a kosher diet. Dixon Correctional Center has accommodated these beliefs by providing kosher food to Jewish inmates since December of 1985. Accordingly, Plaintiffs' First Amendment rights have been observed by Defendants in this regard.
The next issue before the court, then, is the relief to be granted Plaintiffs for the deprivations of their constitutional rights. The relief granted coincides with the capacity in which Defendants are sued. Plaintiffs have brought this action against Defendants in their individual and official capacities. In an individual capacity action, personal liability is sought to be imposed on the defendant official. Any recovery to the plaintiff must be satisfied by the defendant official out of his personal assets. Relevant personal immunity defenses, such as the defendant reasonably relied on existing law, may be raised by the official. The official, in other words, may have qualified immunity from suit. Kentucky v. Graham, 473 U.S. 159, 165-67, 105 S.Ct. 3099, 3104-05, 87 L.Ed.2d 114 (1985); Hadi v. Horn, 830 F.2d 779, 782 (7th Cir.1987).
The Supreme Court has established an objective test to be used in determining whether an official should be allowed to claim the defense of qualified immunity. The test shields officials performing discretionary functions from liability if they did not violate clearly established statutory or constitutional rights of which a reasonable person would have known. Defendants have the burden of *1211 proof in regard to claiming the qualified immunity defense. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982).
Defendants argue that they are immune from liability in their individual capacities because prisoners are not entitled to an absolute freedom to practice their faith. While this is true because religious freedoms may be regulated in line with reasonable penological interests, as stated above, this argument does not satisfy Defendants' burden of proving qualified immunity. The court finds Plaintiffs' right to exercise religious beliefs was sufficiently clear in light of prior decisional law. See, e.g., Cruz v. Beto, 405 U.S. 319, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). Accordingly, Defendants' qualified immunity defense must fail.
The issue then becomes one of damages to be assessed against Defendants in their individual capacities. Section 1983 actions are intended to be "a species of tort liability." Imbler v. Pachtmann, 424 U.S. 409, 417, 96 S.Ct. 984, 988, 47 L.Ed.2d 128 (1976). In Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978), the Supreme Court held that a Section 1983 plaintiff is entitled to recover only nominal damages absent proof of actual injury. Section 1983 plaintiffs must, therefore, prove "real" injury in the denial of their constitutional rights. The Court went on to state in Carey that if plaintiffs cannot prove actual injury, they are only entitled to nominal damages not to exceed one dollar. 435 U.S. at 266-67, 98 S.Ct. at 1053-54.
Plaintiffs in the present action have not submitted any evidence of actual injury resulting from their being prevented from exercising their religious beliefs. Plaintiffs have not, for example, alleged that they suffered any mental or emotional distress by being prevented from wearing their yarmulkes all day. The court, therefore, assesses damages against Defendants in the amount of one dollar consistent with the Supreme Court's decision in Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978).
In contrast to an individual capacity suit, when an official capacity suit is brought, the action is essentially against the governmental entity of which the defendant is an official. Any damage award must be satisfied by the entity itself. To bring an official capacity action, the plaintiff must show that the entity's policy or custom played a part in the alleged violation of law. Personal immunity defenses are unavailable in official capacity actions. The Eleventh Amendment restricts the type of relief the plaintiff may recover. The Eleventh Amendment prohibits an order of damages against a State where the State would satisfy the damages award from its own funds.[6] Injunctive or declaratory relief that requires an official to conform his behavior to the requirements of the law in the future is not barred, however. Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908); Quern v. Jordan, 440 U.S. 332, 337, 99 S.Ct. 1139, 1143, 59 L.Ed.2d 358 (1979); Hadi v. Horn, 830 F.2d 779, 783 (7th Cir.1987).
The problems giving rise to the cause of action in this case are similar to problems arising all over the State of Illinois in its Department of Corrections facilities. This court believes that many of these problems, and the resulting lawsuits, can be prevented if the State would develop statewide policies, in writing, dealing with the reasonable accommodation of Jewish inmates who desire to practice Judaism during their period of incarceration. As things stand now, policies, if one can label them "policies," are either non-existent or vague and are arbitrarily enforced in the Illinois prison system. Accordingly, Defendants are hereby ordered to submit to this court written guidelines concerning the accommodation of the exercise of Judaism among prison inmates. The guidelines are to be submitted within sixty days of this decision. The guidelines should be formulated *1212 so as to substantially meet the following goals:
1. A Jewish rabbi shall be paid by the prison authority travel expenses and other expenses comparable to that paid to chaplains of other faiths.
2. Jewish inmates shall be permitted to wear yarmulkes and other religious garments required by their law, at the appropriate times as required by Jewish law.
3. Religious articles used for services, including daily prayer, shall be available to Jewish inmates, upon request, for use by them in a facility at the prison.
4. Jewish religious holidays and the Sabbath shall be scheduled on the regular prison calendar.
5. A kosher diet will be available at all times, except in cases of major disturbances or calamities, but not administrative delay, and will be appropriately varied.
6. Jewish inmates may meet on their Sabbath with appropriate supervision by a staff member(s) or by a rabbi.
7. Jewish prisoners may not be required to work under the following standard: The more central the religious activity required by Jewish law is to their religious faith, the greater the presumption will be for the prison officials to relieve the inmate of any institutional program or assignment.
The court believes that this type of written guideline will prevent any continuing deprivation of an inmate's constitutional rights. Such a granting of relief was found to be appropriate in Williams v. Lane, 851 F.2d 867, 885 (7th Cir.1988), cert. denied, ___ U.S. ___, 109 S.Ct. 879, 102 L.Ed.2d 1001 (1989).
Finally, Congress has allowed prevailing plaintiffs in Section 1983 actions to recover reasonable attorney's fees under 42 U.S.C. § 1988. Accordingly, Plaintiffs' counsel are to submit to this court a statement of attorney's fees along with supporting affidavits.
CONCLUSION
For the reasons set forth above, the court awards Plaintiffs damages against Defendants in their individual capacities in the amount of one dollar. Defendants are given sixty days to submit to this court written guidelines concerning the accommodation of the exercise of Judaism among prison inmates formulated consistent with this decision. In addition, the court awards Plaintiffs costs and attorney's fees. Plaintiffs' counsel shall have until April 3, 1989 to file their bill of costs and fees.
NOTES
[1] Plaintiffs' original complaint named Ms. Linda A. Giesen as a defendant in the lawsuit. Ms. Giesen was the warden at Dixon Correctional Center when the case was filed. Mr. Gramley is the present warden at Dixon Correctional Center. The court substituted Mr. Gramley for Ms. Giesen for purposes of official acts of the Warden at Dixon Correctional Center and for purposes of appropriate relief by order of May 12, 1988.
[2] Mr. O'Sullivan was named as a defendant only in Plaintiff John Phillips' complaint. However, since the prisoners' complaints were consolidated for trial, Mr. O'Sullivan remains a defendant for purposes of this order.
[3] Jewish law requires a Jew not to work on the first two days and last two days of Passover.
[4] Jewish law requires a Jew not to work for two days during Succot.
[5] No evidence was submitted to the court as to the date Tisha B'av was observed in 1988.
[6] Accordingly, an order by this court to give "backpay" to rabbis in order to reimburse them for previous traveling expenses would be inappropriate.
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755 A.2d 1036 (2000)
Cheryl LEVANT, Appellant,
v.
Warren R. WHITLEY, Appellee.
No. 99-CV-639.
District of Columbia Court of Appeals.
Argued May 25, 2000.
Decided July 20, 2000.
*1038 Theodore S. Allison, Washington, DC, for appellant.
Christopher G. Hoge, Washington, DC, for appellee.
Before STEADMAN, REID and GLICKMAN, Associate Judges.
REID, Associate Judge:
This case involves an intense dispute between Cheryl G. Levant,[1] former Grand Worthy Matron ("Ms. Levant" or "GWM") of the Georgiana Thomas Grand Chapter of the Order of the Eastern Star, Prince Hall Affiliation ("the GT Grand Chapter" or "the Eastern Star, D.C.") and Warren R. Whitley, the Most Worshipful Grand Master ("Mr. Whitley" or "MWGM") of the Most Worshipful Prince Hall Grand Lodge of Free and Accepted Masons, Prince Hall Affiliation of the District of Columbia, Inc. ("Prince Hall, D.C." or "the Grand Lodge")[2] over a request that the Eastern Star, D.C. pay rent for space used in the Prince Hall, D.C. building, and over disagreements regarding a conference and the proper relationship between the MWGM and the GWM. The dispute culminated in Ms. Levant's removal as GWM on June 2, 1998. After her removal, Ms. Levant filed a complaint against Mr. Whitley seeking declaratory and injunctive relief; and damages, in part, for "publicly placing person in false light," and defamation. In addition, one of the counts of Ms. Levant's complaint consisted of a "derivative action by corporate stockholders and members" relating to the handling of a fund known as the Jurisdictional Account.
The trial court granted summary judgment in Mr. Whitley's favor. Ms. Levant *1039 filed a timely appeal contending, in part, that: (1) she is entitled to a judicial remedy in connection with her alleged wrongful expulsion from office, the allegedly unfair procedures followed by Prince Hall, D.C., and the breach of her alleged contractual rights; (2) she established a prima facie case of defamation; and (3) the trial court erred in dismissing her derivative action claim. We affirm in part and reverse in part.
We conclude that Ms. Levant has failed to establish an appropriate basis for judicial intervention in the dispute over her removal as GWM, which involves the internal affairs and leadership of a private voluntary organization. Hence, we affirm the trial court's judgment with respect to Ms. Levant's removal. We also conclude that, as a matter of law, Ms. Levant cannot prevail on her defamation and false light claims. Finally, because the trial court erroneously determined that no derivative action could be brought by Ms. Levant, and because the derivative action alleges that the MWGM acted in a manner inconsistent with operating procedures pertaining to the Jurisdictional Account, which contains contributions by members of both Prince Hall, D.C. and Eastern Star, D.C., we remand Ms. Levant's derivative action claim to the trial court for factual findings and conclusions, under Super. Ct. Civ. Rule 23.1, with instructions to address two issues: (1) whether Ms. Levant fairly and adequately represents similarly situated members of the GT Grand Chapter, an unincorporated association; and (2) whether it would have been futile for Ms. Levant to make a demand for relief, with respect to the Jurisdictional Account, on the appropriate authority within the structure of the masonic organizations. In all other respects, we affirm the judgment of the trial court.
FACTUAL SUMMARY
On June 2, 1998, by letter, Mr. Whitley, in his capacity as MWGM of Prince Hall, D.C., informed Ms. Levant that she had been removed from her position as GWM of the Eastern Star, D.C. On that same day, the MWGM sent another written communication to Most Worshipful Grand Masters, Grand Worthy Matrons, and Leaders of all Masonic National Bodies, indicating that Ms. Levant had been removed as GWM and should now be called Past Matron, but that the GT Chapter could bestow on her the title of Past Grand Worthy Matron, if its members voted to do so.[3]
In his letter to Ms. Levant, Mr. Whitley generally accused her of insubordinate and disrespectful acts. He stated, in part: "I informed you . . . that I was unhappy with your attitude, your combativeness, confrontational nature and actions, and your total disrespect for the Office of Grand Master." In support of this accusation, Mr. Whitley referenced Ms. Levant's alleged behavior in meetings with him; her contact with a Prince Hall, D.C. officer whom she allegedly "chewed out"; an open meeting on May 14, 1998, to discuss payment of rent for space in the Prince Hall, D.C. building; and a May 13, 1998 planning meeting with hotel staff in preparation for the Seventy-Ninth Conference of Grand Masters and the Fiftieth Anniversary Conference of Grand Chapters. Ms. Levant's behavior during these meetings was alleged to have been "combative" and "negative," and she was accused of ignoring or disputing the directives of the MWGM. In addition, she was criticized for failing to attend certain meetings.
Mr. Whitley's letter also cited a decision by Ms. Levant to purchase glasses for gifts to persons attending the Conference, even though she was aware that the Conference *1040 Committee would be selling glasses; and her attempt to place an unsolicited article and picture in a new Masonic Journal. The MWGM informed Ms. Levant that persons in other jurisdictions had become aware of her behavior and that her "actions were also bringing shame to the Office of the Grand Worthy Matron." He reminded Ms. Levant that Prince Hall, D.C. had created the Eastern Star, D.C.,[4] and that "[Prince Hall, D.C.] is the supreme authority in this Masonic Jurisdiction." He added that: "The Grand Master may arrest [remove] the Jewel of Office of any officer, grand or subordinate, and censure, reprimand or suspend any member of the Craft for improper or unmasonic conduct."
Ms. Levant sent a June 5, 1998 letter to Mr. Whitley expressing a desire to appeal her removal and to be reinstated to her position as GWM. She also filed a complaint in the Superior Court on June 15, 1998. Furthermore, in response to a June 18, 1998 letter from the Prince Hall Committee on Grievances and Appeals ("the Grievance Committee") requesting specific documentation of the reasons for her appeal, Ms. Levant submitted a letter dated July 13, 1998, denying "any breach or violation of any of the Landmarks, Articles and Rules of the Constitution and By-Laws applicable to this Masonic Jurisdiction," or "any written and/or oral order as well as directive issued by the [MWGM]." She referred to Mr. Whitley's accusations of combativeness and disrespect as "subjective assessments." Moreover, she maintained that she personally attended scheduled meetings relating to the work of the GT Grand Chapter, and sent representatives to special meetings when they conflicted with her "vocational commitments."
Furthermore, Ms. Levant explained that she did not "chew out" a Prince Hall officer, and that, in that case, "[t]he issue was an outgrowth of communication, protocol and due respect as well as recognition of a chain of authority through the Office of the Grand Worthy Matron." She defended her actions with respect to the payment of rent issue, detailing the process that the GT Grand Chapter used to study the matter; and discussed the meeting with the hotel representatives, denying "any intent to have the last word or present a confrontational aspect." Her purchase of glasses for the Conference of Grand Chapters was not intended as competition with the Conference Committee, but as "tokens of love to the visiting Grand Worthy Matrons and Grand Worthy Patrons." Furthermore, the article and picture were submitted to the Masonic Journal in response to a solicitation of ads for the Journal. Finally, she reiterated her desire to appeal her removal as GWM, and pointed out that "Rules 74 and 75 of the [ ]Prince Hall[ ] Corpus Juris do[ ] not address appeals for the Sisters of the Order of the Eastern Star."
Between August 3 and 12, 1998, the Prince Hall Grievance Committee interviewed Ms. Levant and Mr. Whitley, as well as twenty-three witnesses identified by them. The report of the Grievance Committee, notes taken on each interview, and various other documents were sent to the MWGM on September 5, 1998. The report concluded that Mr. Whitley violated no "Masonic statutes or Masonic laws written or unwritten" in removing Ms. Levant from office, and that he acted within his authority as MWGM. A letter was also sent to Ms. Levant advising her of the Grievance Committee's decision.
The Grievance Committee presented its report at a special session of the Grand Lodge, open only to Master Masons. Following a motion to accept the report of the Grievance Committee, Mr. Emory Levant made a substitute motion to reinstate Ms. Levant as GWM. After discussion, the motion "to accept the Committee's report with no further action by the Grand Lodge" passed. Mr. Levant's second motion to reinstate Ms. Levant was rebuffed. Then, the MWGM quoted from the Ancient *1041 Regulations and accused Ms. Levant of violating the regulations by filing a lawsuit. Thereupon, a motion was made to suspend Ms. Levant. After discussion, the motion was withdrawn. Subsequently, however, on September 24, 1998, Mr. Whitley suspended Ms. Levant from the Eastern Star, D.C., until "notifi[cation] to the contrary," because the filing of her lawsuit was deemed in violation of Prince Hall, D.C.'s Ancient Regulation on Behavior.[5] The suspension directive, sent to "all owing allegiance" to Prince Hall, D.C., further advised that those who in the future give support to Ms. Levant's lawsuit also would be suspended.
After September 1998, focus on the controversy involving Ms. Levant shifted to the trial court. On February 17, 1999, Mr. Whitley moved for summary judgment, and a few weeks later Ms. Levant filed an opposition. In an order docketed on April 16, 1999, the trial court granted Mr. Whitley's motion.
ANALYSIS
Generally, Ms. Levant challenges the order of the trial court granting summary judgment in this case to Mr. Whitley. "To prevail upon a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law." Potts v. District of Columbia, 697 A.2d 1249, 1251 (D.C.1997) (citing Super. Ct. Civ. R. 56(c); Young v. Delaney, 647 A.2d 784, 788 (D.C.1994)). "The party opposing a properly supported motion for summary judgment may not rest upon the mere allegations contained in its pleadings, but must set forth `specific facts showing that there is a genuine issue for trial.'" Id. (citing Super. Ct. Civ. R. 56(e); Smith v. Washington Metro. Area Transit Auth., 631 A.2d 387, 390 (D.C. 1993) ("requiring the non-moving party to `produce enough evidence to make out a prima facie case in support of her claim'")). "We review the grant or denial of a summary judgment motion de novo." See Kitt v. Capital Concerts, Inc., 742 A.2d 856, 858 (D.C.1999) (citing Walton v. District of Columbia, 670 A.2d 1346, 1353 (D.C.1996)). The grant of a summary judgment motion is proper "`if (1) taking all reasonable inferences in the light most favorable to the nonmoving party, (2) a reasonable juror, acting reasonably, could not find for the nonmoving party, (3) under the appropriate burden of proof.'" Id. (quoting Kendrick v. Fox Television, 659 A.2d 814, 818 (D.C.1995)) (other citation omitted).
Specifically, Ms. Levant first contends that she was "entitled to a judicial remedy for [her] wrongful expulsion from her office," and that in addressing her demand for declaratory and injunctive relief, the trial court should not have invoked "the maxim that trial courts are `loathe' to become involved in the internal affairs of privately founded social organizations. . . ." The trial court stressed that Prince Hall, D.C. is "a private philanthropic organization dedicated to charitable causes and a strong belief in God. . . ." Consequently, the court concluded that Ms. Levant's "loss is not sufficiently serious enough to merit judicial interference." Ms. Levant takes issue with the conclusion that her injury resulting from her removal as GWM was not serious enough to merit judicial intervention, and further argues that "[a] factual dispute existed concerning the application of the procedural rules of the organizations involved," and thus, summary judgment was inappropriate. She *1042 also challenges the trial court's grant of summary judgment with respect to her defamation and derivative action claims. We turn first to the appropriateness of judicial intervention in the dispute between the GWM of the Eastern Star, D.C. and the MWGM of Prince Hall, D.C.
General Nature, Structure and Power of Prince Hall, D.C. and Eastern Star, D.C.
To ascertain the principles applicable in this case regarding the appropriateness of judicial intervention, we will first engage in a general review of the undisputed facts regarding the general nature, structure and power of the Prince Hall, D.C. and the Eastern Star, D.C. organizations. Mr. Whitley suggests that Prince Hall, D.C. is a quasi-religious and a private, incorporated fraternal organization. Thus, its dispute with Ms. Levant, the GWM of the GT Grand Chapter, should be treated in the same manner as the church in Kelsey v. Ray, 719 A.2d 1248 (D.C.1998), or the proprietary educational institution in Marjorie Webster Junior College, Inc. v. Middle States Ass'n of Colleges & Secondary Sch., Inc., 139 U.S.App.D.C. 217, 432 F.2d 650 (D.C.Cir.1969), and consequently, the judiciary should not intervene in this matter. Ms. Levant describes Prince Hall, D.C. variously as a private fraternal organization and a private voluntary organization, and the Eastern Star, D.C. as an historic fraternal organization affiliated with Prince Hall, D.C. Both parties agreed during oral argument, however, that Prince Hall, D.C. and the Eastern Star, D.C. properly may be characterized as private voluntary membership organizations. Prince Hall, D.C. is an incorporated private voluntary organization or association and Eastern Star, D.C. appears to be an unincorporated private voluntary association. While there are overtones of a religious orientation in the governing documents of Prince Hall, D.C. and Eastern Star, D.C., we conclude that both groups may best be called private voluntary membership associations, not religious or professional organizations akin to the Bible Way Church[6] or the Middle States Association of Colleges and Secondary Schools.[7]
With respect to the structure and power of the organizations, it is clear that while the GT Grand Chapter of the Eastern Star, D.C. and its GWM have extensive executive, legislative and judicial powers resembling those accorded to the Grand Lodge of Prince Hall, D.C. and its MWGM, the Grand Lodge and the MWGM have greater powers.[8] Under the Prince Hall, D.C. Constitution, the GT Chapter of the Eastern Star, D.C. is an "appendant" or subordinate organization.[9] Thus, Prince Hall, D.C.'s legislative, executive and judicial powers, and the prerogatives of its MWGM surpass and impact those of the Eastern Star, D.C. and its GWM. Indeed, the Constitution of Prince Hall, D.C. specifies, in Article XIII, § 2, that: "[E]very Grand Lodge is the supreme authority in its jurisdiction. . . ." The Grand Lodge has the authority to "prescribe . . . regulations for the administration of its lodges. . ., as well as Appendant Bodies empowered to work [within its jurisdiction]." Id. *1043 The Prince Hall, D.C. Constitution calls for "faithful allegiance and implicit obedience" from lodges, masons and "Appendant Bodies." Id. Moreover, the Grand Lodge has authority over appeals from aggrieved parties. CONST. OF PRINCE HALL, D.C., art. XIII, § 3. "In its legislative capacity, [Prince Hall, D.C.] makes the laws; in its judicial capacity, it applies them; and in its executive capacity, it enforces them." CONST. OF PRINCE HALL, D.C., art. XIII, § 2. The only restrictions on the actions of Prince Hall, D.C., its Grand Lodge and MWGM, are found in a document known as the "Ancient Landmarks," and "there is no appeal" from the decisions of the Grand Lodge. Id.
Specifically included in Section 5 of Article XIV of the Prince Hall, D.C. Constitution is the power to "arrest [remove] the Jewel of office of any officer, grand or subordinate . . ., pending the next session of the Grand Lodge or masonic trial by a commission of Master Masons assembled for that purpose, whichever is earlier." In addition, under Article VII, § 2, of the Eastern Star, D.C.'s By-Laws, the Grand Worthy Patron, who is an official representative of Prince Hall, D.C.'s MWGM, is assigned specific duties in relation to the GT Grand Chapter. For example, he must "preside at the annual election and installation of officers" of the GT Grand Chapter. The position of the Grand Worthy Patron is further evidence that the powers of the GT Grand Chapter and its GWM are limited by those of Prince Hall, D.C. and its officers.
Having determined the nature, structure and powers of Prince Hall, D.C. and Eastern Star, D.C., we turn now to an examination of the legal principles applicable to a private incorporated voluntary membership association (Prince Hall, D.C.), and a private unincorporated voluntary membership association (Eastern Star, D.C.). "[C]ourts ordinarily will not interfere with the management and internal affairs of a voluntary association." Avin v. Verta, 106 A.2d 145, 147 (D.C.1954) (citing Fish v. Huddell, 60 App.D.C. 263, 51 F.2d 319 (1931)); see also National Ass'n for the Advancement of Colored People v. Golding, 342 Md. 663, 679 A.2d 554, 558 (1996) ("as a general rule, courts will not interfere in the internal affairs of a voluntary membership organization"). Nonetheless, and notwithstanding Prince Hall, D.C.'s status, and that of the Eastern Star, D.C. as private voluntary membership associations, and the general rule against interference in the internal affairs of such organizations, Ms. Levant asserts that where voluntary membership organizations fail to follow their own procedures, the courts should intervene.[10]
The circumstances under which the courts are justified in ruling on disputes involving voluntary membership organizations are not entirely settled.[11] For purposes *1044 of this appeal, we simply assume, without deciding, as Ms. Levant argues, that intervention would be appropriate when an organization failed to follow its own rules. We turn now to an examination of that question.
The Removal of the GWM of the Eastern Star, D.C. From Office
The only provision directly relating to the removal of a GWM by a MWGM appears in Article XIV, § 5 of Prince Hall, *1045 D.C.'s Constitution. This section gives the MWGM the power to "arrest [remove] the Jewel of Office of any officer, grand or subordinate . . ., pending the next session of the Grand Lodge or a Masonic trial by a commission of Master Masons assembled for that purpose, which ever is earlier." Article VII of the GT Chapter's By-Laws, relating to the powers and duties of the GWM, contains no power to remove a grand officer.[12] Despite Ms. Levant's insistence that she was entitled to a masonic trial, Article XIV, § 5, specifies that the removal of a grand officer may be considered at the earlier of either "the next session of the Grand Lodge" or "a masonic trial." In that regard, Ms. Levant's appeal of her removal by the MWGM ultimately was considered by the next session of the Grand Lodge. We see nothing in the record to suggest that there was a purposeful effort to avoid a masonic trial. Moreover, an examination of the procedures followed before her case was considered by the Grand Lodge reveals no procedural unfairness.
In the case before us, the MWGM's letter of June 2, 1998 provided detailed notice of the charges against the GWM, and the reasons for her removal from office. When the Prince Hall, D.C. Grievance Committee asked Ms. Levant to specify the reasons for her appeal, she was given her first opportunity to be heard with respect to her removal. Her response came in the form of a detailed letter of July 13, 1998 to the Grievance Committee. Ms. Levant was afforded a second opportunity to be heard when she was interviewed by the Grievance Committee. Not only did the Grievance Committee's procedures include an interview with Ms. Levant, but also one with Mr. Whitley, as well as twenty-three other persons, prior to rendering its decision concluding that the MWGM violated no written or unwritten Masonic law, and acted within his authority in removing the GWM. Ms. Levant complains that she was not allowed to have an attorney present during her interview, but we are unable to find anything in the masonic documents, that are part of the record, mandating the presence of an attorney when a person is interviewed by the Grievance Committee.
The final decision on Ms. Levant's removal as GWM was taken by Prince Hall, D.C. through its Grand Lodge which, under Article XIII, § 2 of its Constitution, "is the supreme authority in its jurisdiction" with the power not only to "prescribe. . . regulations for the administration of. . . Appendant Bodies [such as the GT Grand Chapter]," but also to hear "appeals from aggrieved parties." In addition, under this article and section of the Prince Hall, D.C. Constitution, the GT Grand Chapter owes "faithful allegiance and implicit obedience" to Prince Hall, D.C.'s Grand Lodge. Therefore, by accepting the report of the Grievance Committee, the Grand Lodge implicitly rejected Ms. Levant's appeal from the MWGM's decision to remove her as GWM.
Assuming that judicial inquiry is appropriate here, we conclude that the process accorded Ms. Levant, with regard to her challenge of the MWGM's removal decision, was fundamentally fair and not in conflict with designated procedures, and tainted neither by fraud, nor bad faith, nor arbitrary action by Prince Hall, D.C. and its MWGM. See Golding, supra. This conclusion also is consistent with a case involving the expulsion of a member of a Maryland chapter of the Order of the Eastern Star by its own Grand Chapter. As the court concluded in that case: "The judgment of the tribunal created by the laws of the [O]rder [of the Eastern Star] should be regarded as final and conclusive in the absence of any suggestion that the right of the appellee to a fair and regular hearing was not duly protected." Grand Chapter, Order of Eastern Star v. Klutch, 144 Md. 491, 125 A. 72, 74 (1924). See also *1046 Moran, supra, determining that the procedures used by the Order of the Eastern Star to expel a member "were substantially in accordance with the Constitution and By-Laws of the [organization] and me[ ]t the requirements of substantial fairness." Id. at 870.
Furthermore, the case before us is different from that in Universal Lodge No. 14 Free and Accepted Masons v. Valentine, 134 Md. 505, 107 A. 531 (1919) where the appellant, who was expelled, learned on the day of his scheduled trial that charges had been filed against him and that a masonic committee would convene on that same day to investigate the charges. There, the Court of Appeals of Maryland declared that: "[A] member charged with such a serious offense as to warrant his expulsion from the [O]rder should be given some notice of the charge and a reasonable opportunity to defend himself before the tribunal appointed to try him." Id. at 535. Ms. Levant was given ample time to respond to Mr. Whitley's June 2, 1998 letter. Accordingly, for the reasons stated, we conclude that judicial intervention in this dispute between the leaders of two private voluntary membership associations is inappropriate, and we affirm the judgment of the trial court insofar as it concerns Ms. Levant's removal as GWM. We turn now to Ms. Levant's other arguments on appeal.
Ms. Levant's Other Arguments On Appeal Relating To Defamation and Derivative Action
Ms. Levant maintains that her "expulsion from office, suspension from membership and denunciation of [her by Mr. Whitley] constitute defamation," because "the predicate for her removal from office that she was unfit for the office . . . is false." Specifically, she appears to claim on appeal that both Mr. Whitley's June 2, 1998 letter, and the June 1998 article in the Afro-American regarding her "suspension," constituted defamatory publications. Mr. Whitley contends that Ms. Levant has identified no published defamatory statement. The trial court concluded that Ms. Levant's "claims for defamation and false light [] fail[ed],"[13] because she did not "identify any specific defamatory statement made about her by the defendant that would warrant such a claim."
Under our case law, a publication is defamatory "`if it tends to injure [a person] in [her] trade, profession or community standing, or lower [her] in the estimation of the community.'" Howard Univ. v. Best, 484 A.2d 958, 988 (D.C.1984) (quoting McBride v. Merrell Dow and Pharm., Inc., 540 F.Supp. 1252, 1254 (D.D.C.1982)) (other quotation omitted). Furthermore, "an allegedly defamatory remark must be more than unpleasant or offensive; the language must make the plaintiff appear odious, infamous, or ridiculous." Id. (quotation and internal quotation omitted). In addition, the burden is on the plaintiff, in this case Ms. Levant, to prove the defamatory nature of the publication. We agree with the trial court that Ms. Levant failed to sustain her burden. At most, the June 2, 1998 letter reflects an assertion that Ms. Levant and Ms. Whitley had an intense disagreement over certain masonic issues, and that Ms. Levant, acting in her capacity as GWM, did not follow certain directives of Mr. Whitley, given in his role as MWGM. Therefore, on the record before us, we conclude that the assertions set forth in Mr. Whitley's letter, including the bare accusation that Ms. Levant's "actions were . . . bringing shame to the Office of [GWM]," do not rise to the level of defamation. See Best, supra, 484 A.2d at 988.
In addition, the article published in the Afro-American newspaper, which reported Ms. Levant's suspension, contains no statement from Mr. Whitley or Ms. Levant, and accurately points out that: "Mr. Whitley is over the men and women *1047 who participate in Prince Hall Masonry in Washington, D.C." Nothing in this article makes Ms. Levant "appear odious, infamous, or ridiculous." Best, supra, 484 A.2d at 988. Therefore, we see no reason to disturb the trial court's conclusion that Ms. Levant "fail[ed] to identify any specific defamatory statement made about her by [Mr. Whitley]. . . ."
Finally, Ms. Levant argues that she is "entitled to maintain a derivative action," under Super. Ct. Civ. R. 23.1, and that she "was able to prove a derivative claim for breach of official duties by Grand Master Whitley." Mr. Whitley contends that Ms. Levant may not maintain a derivative action because she did not meet the requirements of Rule 23.1. Rule 23.1 permits a shareholder of a corporation or a member of an unincorporated association to file a derivative action to enforce a right of the organization.[14] In her complaint, Ms. Levant alleges, in paragraph 38, that her "action to enjoin [Mr. Whitley] from extracting any further disbursements from the Grand Lodge Jurisdictional Fund is an action in the best interest of Grand Lodge financial management." Moreover, she alleged, in paragraph 39, that her "wish to delay a decision on the proposed lease agreement until the Grand Lodge annual session is a reasonable alternative which she had every right to suggest and was in the best interest of the Grand Lodge management of its finances." In addition, she asserted that she "has made all efforts [as] Grand Worthy Matron and as a member to propose alternative solutions regarding the proposed lease agreement and to alert the membership about the misuse of the Jurisdiction Account but has been censured in this matter due to her removal from office." Two paragraphs of her affidavit accompanying her complaint appear to concern the derivative action. Both paragraphs relate to the Jurisdictional Account:
15. I have been denied the opportunity to fulfill my duties as part of shared governance in the withdrawal and expenditure of monies from the Jurisdictional Account, thus the integrity of the operation and mechanics related to the Jurisdiction Account as voted by the membership of the Jurisdiction has been violated.
16. I was denied the performance of my duty to sign as Grand Worthy Matron on specific checks which were processed to withdraw funds from the Jurisdictional Account.
Mr. Levant also filed an affidavit on June 15, 1998, specifying his status as a member of Prince Hall, D.C. and setting forth his past offices. With respect to the Jurisdictional *1048 Account he stated the following in paragraphs 7 and 9 of his affidavit:
7. I am aware that an appropriation of the Jurisdictional Fund without the co-signature of the Grand Worthy Matron and by the approval of the Jurisdiction by vote is in violation of the Funds disbursement process.
9. That the June 2, 1998 removal of the Grand Worthy Matron and the appropriation of the Jurisdictional Fund without proper authorization violate the spirit of the Craft's Landmark and Constitution and may fatally impact on the integrity of our organization.
A third affidavit was filed on June 15, 1998 by Yvonne D. Baskerville, a member of the GT Grand Chapter, a past officer of the Chapter, and the then Vice President of the Prince Hall Charitable Foundation. She claimed "first hand knowledge and familiarity with the . . . procedure regarding the Organizations Jurisdictional Fund." She also stated that the disbursement of funds from the Jurisdictional Account without the GWM's co-signature and a vote of the Jurisdiction violates "the Funds disbursement process." Ms. Baskerville also asserted that "the removal of [the GWM] . . . denies her of the opportunity to report on the unauthorized disbursement of Jurisdictional Funds during the Jurisdictional meeting held on June 18, 1998."
In his answer to Ms. Levant's complaint, Mr. Whitley admitted that "disbursement of funds from [the Jurisdictional] [A]ccount may only be authorized by Jurisdictional vote," but denied that such disbursement required the signature of both the MWGM and the GWM, and that he had made disbursements without the required vote. He also denied Ms. Levant's allegation that she "continued to voice her concern to [him] about the potential misuse of the Jurisdictional Fund."
The record on appeal shows that during her June 12, 1999 deposition, Ms. Levant described the Jurisdictional Account as follows:
The [J]urisdictional [F]und has moneys that have been placed there by both the sisters and brothers, and it has been voted on and accepted that both the Grand Master and the Grand Worthy Matron ha[ve] to have their signature on each check. It does not matter which Grand Treasurer, but the Grand Master and the Grand Worthy Matron's signatures must appear on each check. And the Grand Worthy Matron's signature was not on these checks. . . .
At her deposition, Ms. Levant was shown a document listing certain checks and asked: "What . . . indicates to you that there were improper disbursements from the [J]urisdictional [F]und?" She responded: "The check numbers of the checks that did not have my signature."
In his statement of undisputed facts, accompanying his motion for summary judgment, Mr. Whitley included paragraphs 18 and 19, relating to the Jurisdictional Account:
18. Plaintiff has made no allegation that there were improper expenditures from the [Prince Hall, D.C.] Jurisdictional Account by Defendant.
19. MWPGM Levant acknowledged, when confronted with checks written on the Jurisdictional Account during his tenure, that 16 out of 25 checks did not have the joint signature of the Grand Worthy Matron.
Ms. Levant's statement of undisputed material facts, filed with her opposition to Mr. Whitley's motion for summary judgment, contained paragraph 5 regarding the Jurisdictional account: "Defendant improperly disbursed funds from the Jurisdictional Account[,] an account collectively owned by the [GT Grand Chapter] and the [Prince Hall, D.C. Grand Lodge]."
In moving for summary judgment on Ms. Levant's derivative action claim, Mr. Whitley stated: "Plaintiff alleges that `[T]he Prince Hall Grand Lodge is a membership corporation without stockholders.' Thus, by definition there can be no derivative action by corporate stockholders. Defendant *1049 is unaware of any authority for a derivative suit by members of a `membership corporation' (presumably referring to a not for profit corporation)." In response to Mr. Whitley's summary judgment motion on this point, Ms. Levant stated in her Opposition, "Plaintiff concedes that this cause may require additional testimony to show that the Grand Lodge has some stockholders."
The parties and the trial court proceeded under the assumption that a Rule 23.1 derivative action may only be brought by a shareholder. It is true that Prince Hall, D.C. is a corporation without shareholders, but Eastern Star, D.C. is an unincorporated[15] association. Under the plain words of Rule 23.1, a member of an unincorporated association may bring a derivative action. From the record before us, it appears that Ms. Levant's derivative action claim is brought in her capacity as a member of the GT Grand Chapter and as a past high officer of that Chapter. Moreover, she is alleging disbursements from a Jurisdictional Fund, which includes funds contributed by the Eastern Star, D.C., without use of the proper disbursement procedures, specifically the co-signature of the GWM and the vote of the Jurisdiction. As such, she appears to be asserting an injury to the unincorporated association, that is, deprivation of a say as to how the monies it contributed to the Jurisdictional Account should be expended, or an opportunity to approve such expenditures. Thus, in our de novo review of this matter, we must determine whether Ms. Levant satisfied the requirements of a Rule 23.1 derivative action.
Rule 23.1 requires that: (1) the complaint be verified; (2) the complaint allege or plead: (a) that the action is not collusive; (b) that the plaintiff was a member "at the time of the transaction or occurrence that is the basis for the complaint;" and (c) "with particularity [any] efforts . . . made by the plaintiff" to get the unincorporated association to take the desired action, or the reasons "for not making the effort;" and (3) "the plaintiff . . . fairly and adequately represent[s] the interests of. . . members similarly situated. . . ." Mr. Whitley focuses on the requirement that a plaintiff adequately represent the interests of the members of the unincorporated association. He asserts that: "Appellant has not even made an allegation that in the litigation she `fairly and adequately represents the interests of the shareholders or members similarly situated.'" Further, he argues, "No other `similarly situated members' have been identified by Appellant, and it is clear that she is pursuing this litigation to advance her own personal interests."
Mr. Whitley ignores the burden of proof with respect to the "fairly and adequately represents" requirement of Rule 23.1. "[U]nlike in class actions under Rule 23, in which the burden of proving adequacy is generally on the plaintiff, the defendant in a derivative action has the burden of demonstrating that the plaintiff is an inadequate representative." MOORE'S FEDERAL PRACTICE § 23.1.09[2] (3d ed., 2000) (footnote omitted). Moreover, "unlike the procedure of Rule 23, the [trial] court need not make a preliminary affirmative determination that the plaintiffs will fairly and adequately represent the interest of people similarly situated." Id. (footnote omitted). However, when that determination is made, the trial court must consider whether Ms. Levant represents the interests of "members similarly situated," and whether there are factors, such as economic antagonism and "use of the derivative action as leverage in a corporate [or associational] struggle," which would make her an inappropriate representative. Id. at § 23.1.09[5][a] and [b] (footnote omitted). Moreover, the trial court's determination will be "reviewed only for an *1050 abuse of discretion." Id. at § 23.1.09[2] (footnote omitted).
With respect to the other procedural requirements of Rule 23.1, Ms. Levant filed an affidavit which can satisfy the verification requirement. Id. at § 23.1.05. She also alleged in her complaint that the action was not collusive for the purpose of conferring jurisdiction on the court, and that she was a member of the association at the time of the check transactions on the Jurisdictional Account which took place without her signature. Ms. Levant's complaint contains a general allegation that she "has made all efforts [as] Grand Worthy Matron and as a member to propose alternative solutions regarding the proposed lease agreement and to alert the membership about the misuse of the Jurisdiction account but has been censured in this matter due to her removal from office." This general allegation does not meet the requirement that "[t]he complaint allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority. . . ." Rule 23.1. However, Rule 23.1 permits a plaintiff to plead futility in making the demand on the board of directors or other comparable authority. See MOORE, supra, § 23.1.08[2][g][iv]; see also Flocco v. State Farm Mutual Automobile Ins. Co., 752 A.2d 147, 156 (D.C.2000); In re Mortgage and Realty Trust Securities Litigation, 787 F.Supp. 84, 87 (E.D.Pa.1991) ("Maryland. . . recognize[s] an exception to the demand requirement where such a demand would be futile"); Smith v. Gordon, 668 F.Supp. 520, 522, 523 (E.D.Va.1987) (stating the majority rule that: "director approval of alleged misdeeds, without specific allegations of bias or self-dealing, is insufficient to render demand futile," and the minority rule that: "plaintiff's allegations of board approval of the alleged wrong [are] sufficient to excuse demand") (citations omitted). Whether Ms. Levant's pleadings contain sufficient particularized facts to satisfy the futility rule is a matter which the trial court has not addressed. Hence, there are no factual findings on which we may make a reasoned determination.
Accordingly, we are constrained to remand this matter to the trial court solely for the purpose of determining whether Ms. Levant has satisfied, or can satisfy through amendment of her complaint, two requirements imposed by Rule 23.1:(1) fair and adequate representation of similarly situated members; and (2) the allegation of particularized facts showing the futility of making a demand on the appropriate authority[16] with respect to the alleged wrongful act of disbursing funds from the Jurisdictional Fund without the co-signature of the GWM and a Jurisdiction vote and the harm resulting to the association.[17] In all other respects, we affirm the judgment of the trial court.
NOTES
[1] When this case began, Ms. Levant was known as Cheryl G. Williams. Subsequently, she married Emory M. Levant, Past Most Worshipful Grand Master of the Prince Hall Grand Lodge.
[2] The history of Prince Hall lodges was summarized in International Free and Accepted Modern Masons v. Most Worshipful Prince Hall Grand Lodge, Free & Accepted Masons of Kentucky, 318 S.W.2d 46 (Ky.1958):
Prince Hall, a free Negro, a native of Barbados, West Indies, became a worthy resident of Massachusetts. He knocked and the door of Masonry was opened to him by a British Military Lodge in Boston in the year 1775. He was the first man of African descent to become a Master Manson in America. Hall became a Revolutionary War patriot, receiving recognition from General Washington and other leaders. After the war, Hall and his brethren were refused a charter by the Provincial Grand Lodge of Massachusetts because of their race. Upon their application, the Grand Lodge of England, "under authority of his Royal Highness, Frederick Duke of Cumberland, Grand Master of the Most Ancient and Honorable Society of Free and Accepted Ancient Masons," granted them a charter on September 29, 1784, under the name of African Lodge No. 459, to be opened in Boston. That was done in May 1787. Later, African Lodge No. 459 declared itself to be a Grand Lodge with jurisdiction throughout the United States, and the Grand Lodge of England granted a patent or provincial powers to the African lodge as such. After the death of Prince Hall in 1807, the colored Masonic grand lodges changed their names in his honor and many succeeding lodges have adopted it.
As time went along, Prince Hall Grand and subordinate lodges of colored Masons were chartered and organized throughout the United States, Canada and other countries, all of them springing from African Lodge No. 459.
Id. at 48-49 (citations omitted).
[3] The Afro-American newspaper for June 6, 1998 to June 12, 1998, published a short, two-paragraph article indicating that the GWM had been "suspended" by the MWGM, that the GWM "would not comment" and that the MWGM "could not be reached for comment." The last sentence of the article read: "Mr. Whitley is over the men and women who participate in Prince Hall Masonry in Washington, D.C."
[4] The GT Grand Chapter was created in May 1892.
[5] During the September 5 special session of the Grand Lodge, Mr. Whitley quoted the following passage from the Ancient Regulations:
If any complaint be brought, the Brother found guilty shall stand to the award and determination of the Lodge, which is the proper and competent judge of all such controversies (unless . . . appeal[ed] to the Grand Lodge . . .). . . but you must never go to the law about what concerneth Masonry.
In our disposition of this matter, we do not address this passage from the Ancient Regulations.
[6] See The Bible Way Church of Our Lord Jesus Christ of the Apostolic Faith of Washington, D.C. v. Beards, 680 A.2d 419 (D.C.1996).
[7] See Marjorie Webster Junior College, Inc., supra.
[8] See Prince Hall, D.C. Constitution, Article XIII, §§ 1 through 6, concerning powers of the Grand Lodge and Article XIV, §§ 1 through 28 pertaining to the prerogatives and duties of the MWGM; see also GT Grand Chapter, Constitution, Article II, regarding governmental powers, and GT Grand Chapter, By-Laws, Article VII, §§ 1 and 2, relating to the duties of the GWM and the Grand Worthy Patron who is "the official representative of the Grand Master and Grand Lodge to the . . . Eastern Star[, D.C.]."
[9] Neither Ms. Levant nor Mr. Whitley designated the entire constitution and bylaws of their respective organizations as part of the record on appeal. Only certain excerpts from those documents are included in the record. Ms. Levant attached to her brief provisions of the Eastern Star, D.C.'s Constitution and By-Laws pertaining to the powers of the GT Grand Chapter and its GWM.
[10] Ms. Levant belatedly argues on appeal that Prince Hall, D.C. breached its contractual agreement with her as a member of the Eastern Star, D.C. This argument was not made to the trial court and we decline to consider it on appeal. See Miller v. Avirom, 127 U.S.App.D.C. 367, 369-70, 384 F.2d 319, 321-22 (1967).
Furthermore, Ms. Levant asserts in her brief that she will not receive certain pecuniary benefits due to her removal as GWM prior to the end of her term; the record before us shows no evidence supporting this assertion. However, Ms. Levant attached to her brief By-Laws of the GT Grand Chapter showing, in Article VII, § 1, ¶ 20, that she would receive a "donation of $800.00 at the close of the year for meritorious services." Since she did not raise any question concerning an alleged economic interest in the trial court, we decline to consider it on appeal. See Miller, supra.
[11] In Golding, supra, the Court of Appeals of Maryland summarized various principles which have been applied by the courts to support judicial intervention in cases pertaining to an unincorporated private voluntary membership association. Intervention may occur where: (1) "property rights or a pecuniary interest is at stake;" (2) "economic necessity" exists; (3) "either property rights or civil rights are at stake;" (4) contractual rights are implicated; (5) "officers [of the association] acted fraudulently or in bad faith;" (6) the association has breached its fiduciary duty to its members; (7) "the seriousness of the injury to the individual [outweighs] the association's interest in autonomy and freedom from judicial oversight." 679 A.2d at 560.
Relatively early decisions in this jurisdiction focused on the fifth category of intervention, listed above, and relied on concepts of fraud, bad or good faith, and fairness. In U.S. ex rel. De Yturbide v. Metropolitan Club of the City of Washington, 11 App.D.C. 180, 201(1897), the court stated that in the absence of: "fraud or bad faith or want of fairness on the part of the board of governors in passing [a] resolution of expulsion," the courts will not interfere in the affairs of a social club or corporate entity. In Berrien v. Pollitzer, 83 U.S.App.D.C. 23, 25, 165 F.2d 21, 23 (1947), a case involving the exclusion of a woman from the National Women's Party, the court focused on the concept of a "judgment arrived at [ ] in good faith." This jurisdiction's early approach to judicial intervention in the affairs of social clubs was summarized in Angland v. Doe, 105 U.S.App.D.C. 16, 18, 263 F.2d 266, 268 (1958) ("This jurisdiction long since recognized that courts may not interfere unless a determination by the club's constitutional authorities is ultra vires, fraudulent, or made contrary to good faith."). A later case concerning a private professional association, Marjorie Webster Junior College, Inc., supra, appeared to emphasize the second and seventh categories of intervention, determining that judicial intervention "must be related to the necessity for intervention," and that: "[T]he extent to which deference is due to the professional judgment of the association will vary both with the subject matter at issue and with the degree of harm resulting from the association's action." 139 U.S.App.D.C. at 222-23, 432 F.2d at 655-56 (footnotes omitted).
Currently, for incorporated private voluntary membership associations, Maryland follows "the business judgment rule" in matters relating to "the corporation's management." Golding, supra, 679 A.2d at 559. "The business judgment rule insulates business decisions from judicial review absent a showing that the officers acted fraudulently or in bad faith." Id. (citing Black v. Fox Hills, 90 Md. App. 75, 599 A.2d 1228, 1231 (1992) (other citation omitted)). Moreover, Maryland follows "a narrow rule" to "determin[e] whether [its] courts should intervene in the disputes of [private unincorporated] voluntary membership organizations": "[W]hen the tribunals of the order have power to decide a disputed question, their jurisdiction is exclusive, whether there is a bylaw stating such decision to be final, or not, and . . . the Courts cannot be invoked to review their decisions of questions coming properly before them, except in cases of fraud." Id. at 561 (citing Donnelly v. Supreme Council, 106 Md. 425, 67 A. 276, 278 (1907)) (other citations omitted). Under Maryland law, fraud "include[s] `action unsupported by facts or otherwise arbitrary.'" Id. (quoting Martin v. United Slate Etc. Ass'n, 196 Md. 428, 77 A.2d 136, 141 (1950)).
For other cases, see Anderson v. Enterprise Lodge No. 2, Independent Order of Odd Fellows, 80 Wash.App. 41, 906 P.2d 962, 966 (1995) ("[D]isputes [which] are judicially cognizable" include those "(1) involving property rights of members . . ., and (2) involving whether the organization's proceedings were regular, in good faith, and not in violation of the laws of the order or the laws of the state."); Reed v. Quatkemeyer, 647 So.2d 172, 173 (Fla.Ct.App.1994) ("Absent a property interest, the governing body of a social organization is the final arbiter of the sufficiency of cause for expulsion," and "the courts will not interfere with the decisions of fraternal organizations with regard to its grievances absent fraud or bad faith."); Putka v. First Catholic Slovak Union of the United States and Canada, 75 Ohio App.3d 741, 600 N.E.2d 797, 802 (1991) ("In the absence of mistake, fraud or management activity in excess of its corporate powers, a decision by [a voluntary] association in accord with its own charter and rules made by the governing body must be accepted by courts of law."); Rutledge v. Gulian, 93 N.J. 113, 459 A.2d 680, 683, 686 (1983) ("[T]he [associational] member's valuable personal relationship to the organization [is] the true basis for judicial relief against wrongful expulsion," but "judicial intrusion should be confined to procedures that are fundamentally unfair."); Moran v. Vincent, Worthy Grand Matron of the Grand Chapter of the Order of the Eastern Star, 588 S.W.2d 867, 870 (Tenn. Ct.App.1979) (where no property rights are affected by an expulsion from membership, "courts may intervene where the procedures of the [organization] were not followed or where its officers acted in an arbitrary, oppressive, or unlawful manner").
[12] The GWM has the power, under Article VII, § 1, ¶¶ 11 and 12, to "`suspend for good cause' a member of the Grand Chapter, or an officer of a Subordinate Chapter."
[13] Ms. Levant appears not to have pursued her false light claim on appeal. At any rate, we find nothing in the record to support such a claim. See Kitt, supra.
[14] The trial court mistakenly granted summary judgment in favor of Mr. Whitley because Ms. Levant "concedes that she has been unable to provide any evidence that [Prince Hall, D.C.] has stockholders. . . ." Rule 23.1 provides:
In a derivative action brought by 1 or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege, (1) that the plaintiff was a shareholder or member at the time of the transaction of which the plaintiff complains or that the plaintiff's share or membership thereafter devolved on the plaintiff by operation of law, and (2) that the action is not a collusive one to confer jurisdiction on the Court which it would not otherwise have. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for the plaintiff's failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the Court, and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the Court directs.
Rule 23.1 is virtually identical to Fed.R.Civ.P. 23.1.
[15] Although Rule 23.1 appears to allow a member of a corporation without shareholders to bring a derivative suit, we need not address that issue under the circumstances of this appeal.
[16] "Rule [ ] 23.1 requires that the complaint allege any demand made on an authority comparable to the board of directors." MOORE, supra, at § 23.1.08[2][d]. "Any person or entity, other than the board, that has the full legal authority to manage the corporation's [or the association's] affairs meets this standard." Id. A factual question may exist as to whom Ms. Levant could have made the required demand since she was the highest ranking officer of the GT Grand Chapter and had been removed from office, and because, presumably, Mr. Whitley, who removed her as GWM, had full legal authority, at least as a co-signator, to manage the Jurisdictional Account.
[17] Depending upon the trial court's resolution of these requirements, it may need to determine whether Prince Hall, D.C. and Eastern Star, D.C. are required parties to the derivative action. See Flocco, supra, 752 A.2d at 154 (applying Illinois law to a double derivative action involving a corporate entity).
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933 S.W.2d 648 (1996)
Bernabe HUERTA, Appellant,
v.
The STATE of Texas, Appellee.
No. 04-96-00346-CR.
Court of Appeals of Texas, San Antonio.
September 25, 1996.
*649 Arden A. Specia, San Antonio, for Appellant.
Anton Hackebeil, District Attorney, Uvalde, Jim Vollers, Austin, for Appellee.
Before CHAPA, C.J., and STONE and GREEN, JJ.
CHAPA, Chief Justice.
This is an appeal from a conviction of assault. Appellant was indicted for aggravated assault upon a police officer under Tex. Penal Code Ann. § 22.02(b)(2)(Vernon 1994). Following a plea of not guilty in a trial on the merits, a jury found appellant guilty of the lesser included offense of assault as defined by TEX.PENAL CODE ANN. § 22.02(a)(1) (Vernon 1994). Appellant was sentenced to one year in the Medina County jail and a fine of $4,000. In four points of error, appellant contends that 1) the trial court erred in denying his motion for directed verdict; 2) the evidence adduced at trial is factually insufficient to support the verdict; 3) the trial court erred in allowing an instruction on voluntary intoxication; and 4) appellant's sentence was greater than that allowed by law. We affirm.
FACTS
On August 7, 1995, Officer Joseph Hall of the Natalia Police Department went to Prieta's Bar to investigate a theft case. During his investigation, an altercation broke out between the bar owner, Concepcion Gutierrez, and a patron, Norah Henderson. Officer Hall was in the process of arresting both Gutierrez and Henderson when appellant struck Officer Hall from behind. Hall testified to feeling a blow on his, "lower left back, behind the kidney." Hall then attempted to arrest appellant and a struggle ensued. As appellant resisted arrest, he hit and kicked Hall in the groin area. Other officers arrived at the scene and assisted Officer Hall in subduing and arresting appellant. Officer Hall testified that as a result of the injuries he incurred in the struggle with appellant, he urinated blood and was unable to return to work for several days.
ARGUMENTS ON APPEAL
A. Directed Verdict
In his first point of error, appellant alleges that the trial court erred in denying his motion for a directed verdict because the evidence is legally insufficient to support a guilty verdict. Specifically, appellant alleges that there was no evidence to support a finding of "serious bodily injury," a necessary element of aggravated assault.
In reviewing the denial of a directed verdict, we will uphold the trial court's decision if, "we find that the State introduced some evidence to support each element of the offense." Billey v. State, 895 S.W.2d 417, 419-20 (Tex.App.Amarillo 1995, pet. ref'd). The Texas Penal Code defines the element of "serious bodily injury" as:
bodily injury that creates a substantial risk of death or that causes death, serious permanent disfigurement, or protracted loss or impairment of the function of any bodily member or organ.
TEX.PENAL CODE ANN. § 1.07(a)(46)(Vernon 1994).
In this case, Officer Hall testified that he urinated blood and visited an emergency room after appellant's arrest. Without objection, Hall testified that the emergency room doctor stated that there was a hemorrhage in either Hall's groin area or his kidney. Hall further testified that he could not work for four days due to the injuries sustained while arresting appellant.
We find that the testimony of Officer Hall was sufficient to raise the factual issue regarding whether Officer Hall sustained, "protracted loss or impairment of the function of *650 any bodily member or organ." As such, the trial court did not err in denying appellant's motion for directed verdict. Appellant's first point of error is overruled.
B. Sufficiency of the Evidence
In his second point of error, appellant alleges that the evidence adduced at trial is factually insufficient to support his conviction. Appellant, without supporting case law or citations to the record, requests this court to make an independent factual sufficiency analysis pursuant to Clewis v. State, 922 S.W.2d 126 (Tex.Crim.App.1996).
The Texas Rules of Appellate Procedure require that argument and authority be offered in support of each point of error in order for the issue to be properly before the court. Thomas v. State, No. 04-95-00376-CR, 1996 WL 269186 (Tex.App.San Antonio May 22, 1996, no pet. h.); Tex.R.App.P. 74. In addition, appellant must direct the court to the specific portion of the record supporting the complained of error. Lape v. State, 893 S.W.2d 949, 953 (Tex.App.Houston [14th Dist.] 1994, pet. ref'd).
In the present case, appellant offers no argument, authority, or references to the record in support his contention of factual insufficiency. As such, we find that appellant has waived this issue on appeal by failing to adequately brief his point of error. Maldonado v. State, 902 S.W.2d 708, 711 (Tex. App.El Paso 1995, no pet.).
However, if we were to consider appellant's contention, the sufficiency challenge fails. The standard for reviewing a factual sufficiency challenge requires this court to view all the evidence and set aside the verdict only if it is so against the great weight and preponderance of the evidence as to be manifestly unjust. Clewis, 922 S.W.2d at 132.
Officer Hall testified regarding the facts surrounding the assault and his resulting injuries. Norah Henderson corroborated Officer Hall's testimony. Further, appellant's own witnesses testified to seeing the altercation between Officer Hall and appellant. We find that the evidence is factually sufficient to support appellant's conviction. Appellant's second point of error is overruled.
C. Instruction on Voluntary Intoxication
In his third point of error, appellant alleges that the trial court erred in including an instruction on voluntary intoxication in the jury charge. Specifically, appellant argues that there was only "scant evidence" that appellant was under the influence of alcohol when the incident in question occurred. This complaint is inconsistent with appellant's trial objection.
At trial, appellant objected to the instruction because intoxication had not been raised as a defense. There was no objection made in reference to the sufficiency of the evidence regarding intoxication. When trial objections do not comport with the complaints on appeal, nothing is preserved for review. Ybarra v. State, 890 S.W.2d 98, 114 (Tex.App.San Antonio 1994, pet. ref'd). As such, appellant may not raise a claim of insufficient evidence of intoxication for the first time on appeal.
In the event that appellant had properly preserved the question, there was sufficient evidence of intoxication to warrant the complained of instruction. Witnesses for both the State and the defense testified that appellant had either been drinking or was intoxicated. Where there is evidence of intoxication, it is appropriate for the trial court to instruct the jury that voluntary intoxication is not a defense to the commission of a crime. Taylor v. State, 885 S.W.2d 154, 158 (Tex.Crim.App.1994). Further, intoxication need not be raised as a defense in order to justify the court's instruction. Id.
Therefore, the trial court was within its discretion in including an instruction on voluntary intoxication in the jury charge. Appellant's third point of error is overruled.
D. Severity of Punishment
In his fourth point of error, appellant alleges that the trial court erred in assessing punishment in excess of that allowed by law. Appellant was found guilty of assault, a class A misdemeanor. TEX.PENAL CODE ANN. § 22.01(b) (Vernon 1994). The punishment *651 imposed by the trial court conformed with the punishment range for a class A misdemeanor provided by the Texas Penal Code. TEX.PENAL CODE ANN. § 12.21 (Vernon 1994) (establishing punishment for class A misdemeanor as fine not to exceed $4,000; confinement in jail for term not to exceed one year; or both). Accordingly, appellant's punishment is within the boundaries established by the penal code. Appellant's fourth point of error is overruled.
The judgment of the trial court is affirmed.
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755 A.2d 1267 (2000)
Franklin E. SKEPTON, Joseph Bozzelli, Individually and t/a J.B. Plumbing Company and Dual Temp Co., Inc.,
v.
BOROUGH OF WILSON.
Appeal of Franklin E. Skepton, Joseph Bozzelli, Individually and t/a J.B. Plumbing Company (at 230 M.D. Appeal Dkt.1999).
Appeal of Dual Temp Co., Inc. (at 231 M.D. Appeal Docket, 1999).
Supreme Court of Pennsylvania.
Submitted January 31, 2000.
Decided July 20, 2000.
*1268 Joseph F. Leeson, Jr., Leeson Leeson & Leeson, Bethlehem, for Franklin E. Skepton and Joseph Bozzelli.
Dennis A. DeEsch, Minotti & DeEsch, Easton, for Borough of Wilson.
Robert A. Alpert, McCarthy Anewalt & Alpert, Allentown, for Dual Temp Co., Inc.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.
OPINION
CAPPY, Justice.[1]
Franklin E. Skepton ("Skepton"), Joseph Bozzelli, t/a J.B. Plumbing Company ("Bozzelli") and Dual Temp. Co. Inc. ("Dual Temp") (collectively, the "Contractors") appeal from the order of the Commonwealth Court. The Commonwealth Court concluded that the Contractors were not entitled to a refund of construction *1269 permit fees paid to the Borough of Wilson ("Borough") even though the ordinances and resolution pursuant to which the permit fees were collected were found to be unlawful and unenforceable. For the reasons that follow, we reverse the order of the Commonwealth Court.
The Contractors entered into contracts with the Wilson Area School District ("School District") for the construction of a new high school. In order to begin their work, three local ordinances and a resolution imposed upon the Contractors permit fees, ostensibly for the purpose of regulating and inspecting the construction of the high school. These fees are designed for the purpose of reimbursing the municipality for the necessary expense of enforcing and administering oversight or control of the construction project. In this case, the fees amounted to approximately ten percent of each Contractor's bid or contract price with the School District to the Borough. The Contractors paid the permit fees, but did so under protest.
On May 27, 1992, Skepton, as general contractor, had applied to the Borough for the issuance of a building permit to construct the school. The Borough notified Skepton that the cost of a construction permit, under the applicable Borough ordinance and resolution, totaled $88,838.00, based on Skepton's estimated construction cost of $8,883,375.00 for the project. Likewise, Dual Temp, as the supplier and installer of the heating, ventilation, and cooling equipment, entered into a contract for its work in the amount of $2,201,621.00. Pursuant to the applicable ordinance and resolution, Dual Temp paid a permit fee of $22,021.00 based on its contract price of $2,201,621.00. Finally, Bozzelli, as the plumbing contractor, and pursuant to the applicable ordinance and resolution, paid a permit fee of $9,120.00 based on its contract price of $890,000.00.
While it was the Contractors that paid the permit fees to the Borough, the cost of the permit fees were incorporated into their bids or their contracts with the School District. Thus, at least indirectly, it was the School District that was the ultimate source of the permit fee monies paid to the Borough.
The Contractors each filed a complaint in the Court of Common Pleas of Northhampton County to pursue their contention that the ordinances and resolution, which authorized the permit fees, were invalid. The matters were consolidated and proceeded on a stipulation of facts pursuant to Pennsylvania Rule of Civil Procedure 1038.1 and on submitted briefs. On August 6, 1997, the trial court issued findings of facts and conclusions of law finding for the Contractors. Specifically, the trial court concluded that the ordinances and the resolution violated the Borough Code, 53 P.S. § 46202, because the fees imposed were primarily for the purpose of raising revenue and were grossly disproportionate to any costs incurred by the Borough. In fact, the documented expenses incurred by the Borough in enforcing the ordinances for the construction project totaled only $1,234.00, or approximately 1/100 th of the fees imposed by the Borough. Accordingly, the trial court found that the ordinances and resolution could not be enforced and the Contractors were entitled to a full refund of the monies paid to the Borough.
On appeal, the Commonwealth Court affirmed that part of the trial court's order which found that the ordinances and resolution were void and unenforceable. However, contrary to the trial court, the Commonwealth Court determined that the Contractors were not entitled to a refund of the improperly collected fees.
We granted allocatur to review the sole issue of whether a municipality must refund permit fees paid to it pursuant to ordinances that are subsequently held to be invalid and unenforceable.[2],[3]
*1270 The Commonwealth Court in addressing this issue first determined that the Contractors were not entitled to a refund because they failed to file a written complaint and verified claim pursuant to section 5566 of the Local Tax Collection Law. 72 P.S. §§ 5566b-5566c. Furthermore, the Commonwealth Court found that because the Contractors had included the relevant fee expenditures in their bids and had been reimbursed this amount by the School District, the Contractors had suffered no injury, and to order a refund would be to grant them a windfall. We will address these bases for denying a refund seriatim.
Review of the record in this case makes clear that during the litigation of this matter the Borough never raised the validity of the vehicle by which the Contractors sought a refund. The Borough failed to object to the type of claim made at any stage of the proceedings. Furthermore, the Borough made no argument on this issue either at trial or before the Commonwealth Court. Finally, there were no findings of fact on the type of claim asserted and whether it satisfied the mandates of § 5566b. Thus, because the Borough never contested the validity of the Contractors' refund claim, we find that the Commonwealth Court inappropriately injected this issue into the matter sub judice and reject this as a basis to deny the Contractors a refund. Knarr v. Erie Insurance Exchange, 555 Pa. 211, 723 A.2d 664, 666 (1999); Department of Transportation v. Boros, 533 Pa. 214, 620 A.2d 1139, 1142-43 (1993).
We turn now to the issue of whether the Commonwealth Court erred in finding that the Contractors were not entitled to a refund because they would have received a windfall. At its core, resolution of this issue is a matter of statutory construction.
It is a cardinal rule of statutory construction that if the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit. 1 Pa. C.S. § 1921. Moreover, provisions of a statute dealing with the imposition of taxes shall be strictly construed. 1 Pa.C.S. § 1928. "[A] taxing statute must be construed most strongly and strictly against the government, and if there is a reasonable doubt as to its construction or application to a particular case, the doubt must be resolved in favor of the taxpayer." Commonwealth v. High Welding Co., 428 Pa. 545, 239 A.2d 377, 379 (1968) (citations omitted). Thus, it is in light of these controlling principles that we must view this matter.
As noted by the Commonwealth Court, the Local Tax Collection Law provides the statutory remedy by which an individual may obtain a refund of monies paid to a political subdivision to which that entity is not entitled. As this case directly implicates the Local Tax Collection Law, our analysis naturally centers on the words of the statute.
The Local Tax Collection Law provides, in relevant part, that:
(a) Whenever any person or corporation of this Commonwealth has paid or caused to be paid, or hereafter pays or causes to be paid, into the treasury of any political subdivision, directly or indirectly, voluntarily or under protest, any taxes of any sort, license fees, penalties, fines or any other moneys to which the political subdivision is not legally entitled; then in such cases, the proper authorities of the political subdivision, *1271 upon the filing with them of a written and verified claim for the refund of payment, are hereby directed to make, out of budget appropriations of public funds, refund of such taxes, license fees, penalties, fines or other moneys to which the political subdivision is not legally entitled. Refunds of said moneys shall not be made, unless a written claim therefor is filed, with the political subdivision involved, within three years of payment thereof.
72 P.S. § 5566b.
The Commonwealth Court, without citation to statutory or case law, determined that because the Contractors had received money from the School District to cover the permit fees, they had been compensated for the fees paid to the Borough, and thus, they were not entitled to a refund from the Borough.
We believe that this analysis is at odds with the clear language of the statute and the rule of statutory construction that mandates that taxing statutes must be strictly construed against the government. Here, the Borough imposed upon the Contractors fees to which the Borough was not legally entitled. Pursuant to the plain and unambiguous terms of the Local Tax Collection Law, the Contractors are entitled to a refund. In its analysis, the Commonwealth Court has stymied the statutory mandate of a refund and instead has engrafted upon the clear language of the statute a pre-condition, viz., the wronged taxpayer is entitled to a refund only if the taxpayer has not recouped its loss from some other entity. If so, the governmental unit does not have to return its improperly collected taxes. Simply stated, there is no pre-condition contained in the statute which denies a taxpayer a refund of wrongfully imposed taxes if that taxpayer has somehow mitigated or recovered its loss from another source. The Commonwealth Court erred in constructing such a statutory overlay.
This court's decision in Girard Trust Co. v. Philadelphia City & County, 359 Pa. 319, 59 A.2d 124, 127 (1948) strongly supports our interpretation of the statute. In Girard, personal property taxes were paid by the Girard Trust Company to the City of Philadelphia on money and securities held in a trust that was created for a Scottish insurance company. Part of the tax was levied upon bonds of corporations that, in the trust indentures creating the bond issue, agreed to reimburse any taxes imposed on the bonds. The trust company made a claim for a refund after it was determined that the trust was not subject to the tax. As to the refund, our court construed the very statute before us now and determined that the governmental unit which had illegally collected the tax was not entitled to a reduction in the amount of the refund because the taxpayer was reimbursed by the corporations which had issued the bonds. Rather, it was the full amount of the tax paid to which the aggrieved taxpayer was entitled as a refund.
Thus, our court soundly rejected the same position taken by the Commonwealth Court, and urged by the Borough, in this case. Nor do we believe that the fact that this case involves a total reimbursement rather than a partial recovery of monies or that this case involves a contract providing services rather than a trust agreement is of distinguishing legal significance. In sum, if a taxpayer establishes that it paid taxes or fees to which the government is not entitled, the taxpayer is entitled to a refund.
Our decision today reflects the reality that in the normal course of doing business, a commercial enterprise will pass costs, such as permit fees, on to its customers. To preclude these commercial enterprises from the protection that a refund provides from illegal taxation because of its ability to pass that burden onto other shoulders is illogical. Such a policy would only encourage illegal taxing schemes aimed at commercial enterprises. This is because there will be no incentive for commercial enterprises to challenge the wrongfully collected taxes, and thus, no *1272 incentive for a municipality to discontinue abusive tax and fee collecting practices.
Finally, we also do not find persuasive the Borough's policy argument that equity demands a different result. Even assuming, arguendo, that equitable concerns would alter the plain meaning of the statute, it is not apparent that equity is on the side of the Borough. Even if the Contractors receive a complete windfall, the return of the illegally appropriated funds to the Contractors, rather than to the Borough, will be the lesser of two evils. The equities lie with such a result because the Borough should not be rewarded for the collection of revenues to which it was not entitled.[4]
Thus, we hold that pursuant to the Local Tax Collection Law, a taxpayer that establishes that it is entitled to a refund of monies paid to a political subdivision to which that entity was not legally entitled, is to receive a refund, regardless of whether the taxpayer was able to pass on the costs of the illegally collected taxes. The order of the Commonwealth Court is reversed, in part, and the case is remanded for proceedings consistent with this decision.
Justice NEWMAN files a dissenting opinion joined by Chief Justice FLAHERTY and Justice NIGRO.
NEWMAN, Justice, dissenting.
I join the Majority's Opinion to the extent that it holds that the Commonwealth Court erred in finding that the Contractors failed to submit a written claim to the Borough requesting a refund. During the litigation of this matter the parties at all times assumed that Contractors had filed a claim and the Borough was on notice of the Contractors' request for a refund. There were no findings of fact on this issue and no presentation of argument in either the trial court or Commonwealth Court. The Borough does not even raise this issue in its briefs before this Court. I thus agree that the Commonwealth Court inappropriately injected the issue into this matter. However, I dissent from the Majority's disposition because I agree with the Commonwealth Court that Contractors are not entitled to a refund since in reality, the School District, not Contractors, paid the excessive permit fees. Therefore, the Contractors are not really the person "aggrieved" and are not entitled to a refund pursuant to 72 P.S. § 5566b and 72 P.S. § 5566c.
While I am mindful of the arguments of the Majority, I reject the notion that such arguments lead to the conclusion that Contractors are entitled to a refund. At the outset, Girard Trust Co., 359 Pa. 319, 59 A.2d 124 (Pa.1948) is inapposite to this case. It did not involve the situation where a commercial enterprise passed on the entire tax to its consumer, with the specific intent to make the consumer the actual taxpayer. The trustee did not pass the entire amount of the tax to a consumer and had suffered significant financial detriment in the payment of the erroneous tax. Thus, the Girard Trust was an aggrieved person entitled to a refund.
As set forth by the United States Supreme Court in upholding the propriety of an Internal Revenue Code provision that required a party to show that it had not passed a tax on to a consumer before issuing a refund:
if (the party) has shifted the burden to the purchasers, they and not he have been the actual sufferers and are the real parties in interest...
United States v. Jefferson Electric Mfg. Co., 291 U.S. 386, 54 S.Ct. 443, 78 L.Ed. 859 (1934). Consequently, a commercial *1273 enterprise that has passed on the cost of the tax to its consumers would not be entitled to a refund for its coffers. See also, McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 47, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990)(Supreme Court recognized continuing validity of Jefferson Electric in tax assessment matters that are based on actions in assumpsit.)
While the record shows that the Contractors wrote the actual check to the Borough, the School District paid the fees. In essence, it was the School District who was the taxpayer, not the Contractors. Accordingly, the Contractors are not the proper party to receive the refund. While this concept of disallowing a refund to a commercial entity where the de facto taxpayer is an end consumer appears to be one of first impression in this Court, the Commonwealth Court has applied it in several contexts.
For instance in Eglin's 30th Street Garage Corporation v. Tax Review Board of Philadelphia, 11 Pa.Cmwlth. 365, 314 A.2d 543 (1974) the City of Philadelphia had enacted an ordinance that imposed a tax of ten percent on the gross receipts of all transactions in public parking lots within the City of Philadelphia. Eglin, an owner and operator of a parking lot adjacent to a train station, challenged the taxes as applied to him because the lot did not meet the definition of a public parking lot. He thus requested a refund of the taxes paid. The Commonwealth Court refused to award a refund to Eglin because:
every cent of the $67,464.34 which Eglin now seeks to have refunded to it was paid to Eglin by its parking patrons specifically for taxes. Eglin gives no indication here of any intent to right the alleged wrong which has been done to its customers by arranging for returning any refund obtained from the City to them. Eglin simply seeks a windfall for itself. As between Eglin and the City of Philadelphia, the equity of Eglin is no greater than that of the City, and we will not accede to Eglin's claim for the money since it was only a conduit for collecting money for the City from those members of the public using Eglin's facilities.
314 A.2d at 544 (citing Travel Industries of Kansas, Inc. v. United States of America, 425 F.2d 1297 (10th Cir.1970))(emphasis added). Also in Tredyffrin-Easttown School District v. Valley Forge Music Fair, 156 Pa.Cmwlth. 178, 627 A.2d 814 (1993) the Commonwealth Court held that where Valley Forge Music Fair (Music Fair), a producer of an amusement facility, collected and was responsible for remitting a tax imposed on patrons of the Music Fair, the "taxpayer" eligible for any refund was the patron, not the amusement producer. 627 A.2d at 819. Thus, while the Commonwealth Court found that the municipality had violated equal protection for selectively enforcing the tax on Music Fair patrons, it affirmed the trial court's refusal to grant the refund directly to the Music Fair because it would receive a windfall since it was the patrons, not the Music Fair, who had paid the tax. 627 A.2d at 822.[1]See also, Tillis v. City of Branson, 975 S.W.2d 949 (Mo.Ct.App.1998) (amusement owner not entitled to refund where she passed the tax on to patrons; any refund would act as windfall to owner); United States v. State of Colorado, 666 F.Supp. 1479 (D.Colo.1987)(applying principles of restitution, district court refused to award refund of gas taxes where tax had been passed on to consumers.)
I find these authorities persuasive. Contractors have made no showing that they intend to return the refund to the School District, who actually paid the fee. Instead, they seek a windfall for themselves. Accordingly, I would hold that Contractors have suffered no injury in *1274 fact, are not the proper parties to receive the refund and are not a person aggrieved pursuant to 72 P.S. § 5566c. I would therefore affirm the Order of the Commonwealth Court.
Chief Justice FLAHERTY and Justice NIGRO join this Dissenting Opinion.
NOTES
[1] This opinion was reassigned to this author.
[2] We note that the issue of whether the lower courts properly determined that the fees were disproportionate, and thus, invalid, is not before us. Thus, for purposes of this opinion we assume, arguendo, that the ordinances and resolution are invalid.
[3] Our standard of review of in this matter is whether the trial court abused its discretion, committed an error of law, or rendered a decision unsupported by the evidence. Glenn Johnston, Inc. v. Department of Revenue, 556 Pa. 22, 726 A.2d 384, 385 n. 1 (1999). As our inquiry regarding the Contractors' right to a refund deals with an error of law, our scope of review is plenary. Phillips v. A-Best Products Co., 542 Pa. 124, 665 A.2d 1167, 1170 (1995).
[4] In fact, the determination that the Contractors in this case will receive a windfall is not necessarily a foregone conclusion. Upon the Contractors receipt of a refund, the School District might very well initiate an action against the Contractors asserting, perhaps, a restitution interest in the funds. Thus, any purported windfall might very well be short lived.
[1] The trial court ordered the refund to be placed in trust to be used for children's education at the Music Fair.
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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/1517353/
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733 F.Supp. 1334 (1990)
Maurice Oscar BYRD, Petitioner,
v.
Paul DELO, etc, et al., Respondents.
No. 90-507C(1).
United States District Court, E.D. Missouri, E.D.
March 26, 1990.
*1335 *1336 Burton Shostak, Deborah Kerns, Moline, Oettsen, Mauze, Leggat & Shostak, Clayton, Mo., for petitioner.
John Morris, Stephen Hawke, Asst. Atty. Gen., Jefferson City, Mo., for respondent.
MEMORANDUM
NANGLE, Chief Judge.
Petitioner brings the instant habeas petition seeking a stay of execution and a hearing on the merits of his petition. Because, however, this is petitioner's second federal habeas petition[1], the Court must first determine whether petitioner is procedurally or equitably barred from pursuing the claims in this petition. See Mercer v. Armontrout, 864 F.2d 1429, 1433 (8th Cir. 1988).
Federal Habeas Corpus Rule 9(b) provides:
Successive petitions. A second or successive petition may be dismissed if the judge finds that it fails to allege new or different grounds for relief and the prior determination was on the merits, or, if new and different grounds are alleged, the judge finds that the failure of the petitioner to assert those grounds in a prior petition constituted an abuse of the writ.
In Sanders v. United States, 373 U.S. 1, 83 S.Ct. 1068, 10 L.Ed.2d 148 (1963), the United States Supreme Court distinguished successive petitions that rely on grounds previously heard ("repetitive claims") from second petitions containing new claims ("new claims"). Id. 373 U.S. at 15-19, 83 S.Ct. at 1077-79. Different principles govern the disposition of repetitive claims and new claims. Id. Petitioner's successive petition asserts eight separate alleged bases for relief (Grounds A-H).[2] Of these claims, three are conceded to be "repetitive" and the remaining five are allegedly "new". Because petitioner's successive petition contains both types of claims, the Court will address petitioner's repetitive claims and the standard for their disposition separately from petitioner's new claims.
I. Repetitive Claims
In Sanders v. United States the Supreme Court held that a court must give *1337 controlling weight to the denial of a prior application for federal habeas corpus if:
(1) the same ground presented in the subsequent application was determined adversely to the applicant on the prior application;
(2) the prior determination was on the merits; and
(3) the ends of justice would not be served by reaching the merits of the subsequent application.
Id. at 15, 83 S.Ct. at 1077. It is petitioner's burden to show that, "although the ground of the new application was determined against him on the merits on a prior application, the ends of justice would be served by a redetermination of the ground." Id. at 17, 83 S.Ct. at 1078. If a purely legal question is involved, an intervening change in the law may justify a new hearing. Id. A petitioner must, however, show something more than mere disagreement with the prior disposition. Walker v. Lockhart, 726 F.2d 1238, 1250 (8th Cir.1984) (en banc) (Arnold J., concurring). Finally, in Kuhlmann v. Wilson, 477 U.S. 436, 106 S.Ct. 2616, 91 L.Ed.2d 364 (1986), a plurality of the Supreme Court held that "ends of justice" requires the petitioner ultimately to supplement his claim with "a colorable showing of factual innocence." Id. 477 U.S. at 454, 106 S.Ct. at 26. Because of the split among the justices deciding Kuhlman, courts have interpreted Kuhlman to mean, at the very least, that "a colorable showing of factual innocence" is a factor to be weighed in determining whether a petitioner has met his burden of proof. See Sulie v. Duckworth, 864 F.2d 1348, 1353 (7th Cir.1988), cert. denied, ___ U.S. ___, 110 S.Ct. 93, 107 L.Ed.2d 58 (1989); Williams v. Lockhart, 862 F.2d 155, 158 (8th Cir.1988). But see, McDonald v. Blackburn, 806 F.2d 613, 622 n. 9 (5th Cir.1986) (following plurality in Kuhlman), cert. denied, 481 U.S. 1070, 107 S.Ct. 2465, 95 L.Ed.2d 874 (1987); Branion v. Gramly, 855 F.2d 1256, 1260 (7th Cir.1988) (petitioner must make "colorable showing"), cert. denied, ___ U.S. ___, 109 S.Ct. 1645, 104 L.Ed.2d 160 (1989).
Petitioner concedes that Grounds E, F and H were raised in one form or another in his initial habeas petition and that the first two Sanders inquiries must be answered in the affirmative. Thus, this Court will limit its discussion of each of petitioner's repetitive claims to whether the "ends of justice" would be served by reaching the merits of these claims.
A. GROUND "E"
Ground E of petitioner's successive application alleges that petitioner's trial counsel was ineffective under Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), because he called Oscar Ford to testify on behalf of petitioner at trial. An identical claim was raised in petitioner's original federal habeas corpus petition. Petitioner argues, however, that he does not merely disagree with the prior disposition of this Court and the Eighth Circuit regarding this issue. Rather, petitioner argues that this Court and every other court that has considered this instance of alleged ineffective assistance of counsel has focused on rationale for trial counsel's actions that was not offered by trial counsel himself, but, rather, proffered by the court as an explanation for trial counsel's action. Petitioner insists that this Court must look only to the reasons proffered by trial counsel in determining "reasonableness" under Strickland.
Despite petitioner's protestations, this Court cannot characterize petitioner's argument as anything other than a disagreement with this Court's prior disposition of petitioner's claim as well as the disposition of every court that has heard this claim. Furthermore, this Court is not satisfied that petitioner has supplemented this claim with "a colorable showing of factual innocence." Finally, this Court would note that in his first petition as well as the instant application, petitioner challenges decisions of trial counsel that were purely strategic in nature. An attorney who makes a decision in the heat of a trial in order to salvage a faltering criminal defense cannot be said to have performed "deficiently" solely on the basis of hindsight that the decision MAY have backfired; this Court has yet to see the perfectly tried case, be it civil or *1338 criminal. When trial counsel ultimately succeeds by a calculated trial tactic, his decision is heralded as a stroke of genius. His innovation is laudable. When, however, his last ditch attempts fail, his actions are viewed as "improvident" and he becomes a scapegoat. Under either scenario, hindsight is twenty-twenty. Hindsight, however, can play no role in determining the reasonableness of an attorney's actions for our purposes.[3]See Strickland v. Washington, 466 U.S. at 687-691, 104 S.Ct. at 2064-67. Ground E will be dismissed.
B. GROUND "F"
In Ground F petitioner seeks again to raise a challenge to the jury on the basis that he is a black man and that he was tried by an all white jury. In his first application, petitioner raised a claim under Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986), and sought discovery of statistical evidence to establish a claim under Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965). This Court held that Batson could not be applied retroactively to petitioner and that petitioner did not adequately allege a Swain violation. Byrd v. Armontrout, 686 F.Supp. 743, 776-777 (E.D.Mo.1988). This Court further held that, in any event, petitioner was procedurally barred from pursuing a Swain claim. Id. Nonetheless, petitioner now asserts that the Missouri Court of Appeals did rule on the merits of a Swain challenge, see Byrd v. State, 723 S.W.2d 37, 42 (Mo.App.1986), and that this Court, therefore, should not have resolved this point against petitioner on the basis of procedural default.
Again, this Court can only characterize petitioner's argument as a disagreement with this Court's prior disposition of petitioner's claim. Petitioner alleges no new factual evidence. He does not allude to some intervening change in the law. He simply disagrees with this Court's determination that a Swain claim was procedurally barred. Furthermore, this Court disposed of petitioner's claim on the basis of procedural default, as well as on the basis that petitioner failed to state a claim under Swain. Finally, the Court again notes that petitioner has failed to supplement his claim with "a colorable showing of factual innocence." Accordingly, Ground F will be dismissed.
C. GROUND H
In Ground H petitioner claims that he was constructively denied the right to offer mitigating evidence of good character, which the jury could have considered during the sentencing phase of petitioner's trial. Although it is not clear from petitioner's brief, petitioner indicated during oral argument that at trial, he wished to offer evidence that one month before the crime in question he had aided police in solving a burglary. Petitioner objects to the trial court's ruling that if petitioner attempted to introduce such evidence of good character, the state would be entitled to offer evidence of bad character. Petitioner argues that this ruling left him with a "Hobson's choice", and constructively denied him the opportunity to present all mitigating evidence in violation of Penry v. Lynaugh, ___ U.S. ___, 109 S.Ct. 2934, 106 L.Ed.2d 256 (1989).
As a threshold matter, this Court must note that acceptance of petitioner's argument would mark such a departure from existing law that it would certainly create a "new rule" within the meaning of Teague v. Lane, ___ U.S. ___, 109 S.Ct. 1060, 103 *1339 L.Ed.2d 334 (1989).[4] New rules cannot be announced or applied on collateral review except under certain exceptional circumstances, which do not appear in the instant case. Id. See also Butler v. McKellar, ___ U.S. ___, 110 S.Ct. 1212, 108 L.Ed.2d 347 (1990); Penry v. Lynaugh, ___ U.S. ___, 109 S.Ct. 2934, 106 L.Ed.2d 256. Insofar as petitioner suggests that Penry v. Lynaugh constitutes an intervening change in the law that justifies this new approach to an argument raised in previous federal habeas corpus proceedings[5], petitioner cannot succeed. Even if Penry stood as clear authority for petitioner's argument regarding mitigating circumstances, which it does not, Penry simply applies, as petitioner recognizes, the principles announced in 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), and Woodson v. North Carolina, 428 U.S. 280, 96 S.Ct. 2978, 49 L.Ed.2d 944 (1976), all of which were decided in advance of petitioner's direct appeal and well before petitioner's first federal habeas corpus application. Thus, the principles from Penry that petitioner relies upon could hardly be characterized as "intervening changes in the law." Finally, petitioner has failed to suggest "a colorable showing of factual innocence". Accordingly, Ground H of petitioner's successive petition will be dismissed.
I. New Claims
When a second federal habeas petition raises claims that were not raised in the original petition but could or should have been raised, a court must examine the claims for "abuse of the writ". Sanders v. United States, 373 U.S. at 17, 83 S.Ct. at 1078; Smith v. Armontrout, 888 F.2d 530, 540 (8th Cir.1989). It is the government's burden to plead abuse of the writ. Sanders, 373 U.S. at 17, 83 S.Ct. at 1078. Once pleaded, the burden then shifts to the petitioner to show that no abuse of the writ has occurred. Williams v. Lockhart, 862 F.2d at 159. If a petitioner deliberately withholds a claim on his first application, and the claim then appears on a successive application, it will be dismissed as an abuse of the writ. Id. 373 U.S. at 18, 83 S.Ct. at 1078. In cases that do not involve a deliberate withholding, petitioner must make the same showing required to avoid procedural default under Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977). Smith, 888 F.2d at 541. That is, petitioner must show "cause" excusing the procedural default and "prejudice" resulting from the omission. Id. If petitioner is unable to show "cause", Murray v. Carrier 477 U.S. 478, 106 S.Ct. 2639, 91 L.Ed.2d 397 (1986), holds that he can still avoid a procedural bar to the new claim if he shows that the "constitutional violation [claimed] has probably resulted in the conviction of one who is actually innocent...." Id. See also Smith v. Armontrout, 888 F.2d at 541; Harper v. Nix, 867 F.2d 455, 457 (8th Cir.1989).
"Cause" requires a showing that "some objective factors external to the defense impeded counsel's efforts to comply with the state procedural rule." Harper v. Nix, 867 F.2d at 456. "[A]ttorney error or inadvertence short of ineffective assistance of counsel does not constitute `cause'". Id. Ineffective assistance of counsel, however, can establish cause. Mercer v. Armontrout, 864 F.2d 1429, 1434 (8th Cir.1988). With respect to "prejudice", petitioner must show actual prejudice.[6]Id. "Actual prejudice" with respect to a conviction arises when absent the errors, the factfinder would have had a reasonable doubt respecting guilt. Strickland, *1340 466 U.S. at 695, 104 S.Ct. at 2068. With respect to an allegedly infirm death sentence, actual prejudice exists when absent the errors, there is a reasonable probability that the sentencer would have concluded that the balance of aggravating and mitigating circumstances did not warrant death. Id.
The approach of Wainwright v. Sykes and Murray v. Carrier, however, does not apply when claims were not available at the time of the original petition. Smith v. Armontrout, 888 F.2d at 541. Where an intervening change in the law has occurred or new facts that were not reasonably discoverable at an earlier time come to light, a court must consider other factors. Id. For newly discovered evidence to warrant federal habeas corpus relief, the petitioner must show that such evidence "would probably produce an acquittal on retrial." Mastrian v. McManus, 554 F.2d 813, 822-823 (8th Cir.1977). With respect to intervening changes in the law, however, the petitioner must first overcome the retroactivity bar of Teague v. Lane and its progeny. In Teague v. Lane, 109 S.Ct. 1060, the Supreme Court severely limited the announcement and application of "new rules" on collateral review. "[A] case announces a new rule when it breaks new ground or imposes a new obligation on the States or the Federal Government," or "if the result was not dictated by precedent existing at the time the defendant's conviction became final." Id. 109 S.Ct. at 1070. Thus, when a state court makes a reasonable, good-faith interpretation of existing precedents that is shown to be contrary to later decisions, those later decisions cannot be applied on collateral review. Butler v. McKellar, 110 S.Ct. at ___. There are two exceptions to Teague's retroactivity rule: (1) the new rule "places certain kinds of primary, private individual conduct beyond the power of the criminal law-making authority to proscribe"; and (2) the new rule "requires the observance of those procedures that are implicit in the concept of ordered liberty." Teague, 109 S.Ct. at 1073. If either circumstance exists, the rule must be applied retroactively. Although a petitioner may rely on a recent decision on collateral review if the decision does not announce a new rule, it is doubtful that any case that fails to announce a "new rule" within the meaning of Teague could qualify as an "intervening change in the law".[7]
In response to each of petitioner's new claims in the instant case, the government pleads that these claims constitute an abuse of the writ and that they are procedurally barred. Thus, petitioner bears the burden of showing that no abuse of the writ has occurred. Of petitioner's new claims, only Grounds A and G could arguably be based upon intervening changes in the law. Grounds B, C and D are based upon constitutional principles that were established well in advance of petitioner's appeals. Therefore, the Court will address first Grounds B, C and D of petitoner's successive application before considering Grounds A and G.
A. GROUND "B"
In Ground B petitioner alleges that the government relied on testimony obtained in violation of Massiah v. United States, 377 U.S. 201, 84 S.Ct. 1199, 12 L.Ed.2d 246 (1964) in obtaining his conviction. Specifically, petitioner alleges that the testimony of O.C. Green and James Mydell with reference to petitioner's confessions should have been excluded under *1341 Massiah because Green and Mydell were government "plants" in petitioner's prison cell in Georgia. Petitioner fails to offer any justification for his failure to raise these claims at some earlier juncture. He does not allege the discovery of any new facts. Thus, petitioner has failed to make any showing of "cause" excusing his failure to raise this argument at an earlier point in his appeals. Furthermore, plaintiff has failed to show that this alleged constitutional violation has probably resulted in the conviction of one who is actually innocent. Indeed, even without the testimony of Green and Mydell, petitioner's confession to his second wife as well as significant circumstantial evidence, see Byrd v. Armontrout, 686 F.Supp. 743, 755 n. 5 and 761 n. 14, provide an adequate basis for establishing petitioner's guilt. Finally, the Court must conclude that petitioner's claim is without merit. Petitioner has failed to offer any fact establishing that either Mydell or Green was a "government plant" or working on behalf of the "government". Ground B will be dismissed.
B. GROUND "C"
Ground C alleges prosecutorial misconduct. Specifically, petitioner notes that the state denied that it had made a deal with O.C. Green in return for his testimony. The state also represented that it had no knowledge of any deal between Green and the State of Georgia, where Green faced serious criminal charges, in return for his testimony. Furthermore, the state asked Green in the presence of the jury whether any promise had been made to him with respect to the charges pending against him in Georgia, and Green responded that no promises had been made. Petitioner notes, however, that three days after petitioner's jury recommended a sentence of death, authorities in Georgia entered an agreement with Green wherein they agreed to drop pending armed robbery and murder charges against Green in return for Green's testimony with respect to charges pending against petitioner in Georgia. Petitioner argues that this development indicates that the state withheld and/or concealed information that would have enabled petitioner to cast doubt on Green's credibility.
Petitioner claims that he failed to raise this argument in his previous petitions because appointed counsel only recently received documents revealing O.C. Green's plea agreement from petitioner's other attorneys. Even assuming that petitioner's explanation for the belatedness of his claim rises above attorney error or inadvertence, petitioner cannot show prejudice. Indeed, the Court notes above that absent the testimony of Green and Mydell, the state presented sufficient evidence of petitioner's guilt. This Court cannot conclude that the factfinder would have a reasonable doubt respecting guilt absent the testimony of Green. Furthermore, even accepting petitioner's allegations as true, petitioner's claim does not suggest that an innocent man has been wrongly convicted. Finally, petitioner's claim is based entirely upon speculation. Petitioner does not offer any evidence that the prosecutor even knew that such a deal was in the making, much less that the prosecutor withheld or concealed evidence of a deal between Green and the State of Georgia. Ground C will be dismissed.
C. GROUND "D"
Ground D alleges that the state failed to disclose exculpatory evidence in violation of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). Specifically, petitioner refers to police reports indicating that specific individuals other than petitioner had admitted to the crime. These reports also indicate that fingerprints were found at the scenes of the crime, but do not indicate to whom the prints belonged or where they were found. Furthermore, the reports indicate that keys were found at the scene of the crime, which did not belong to Byrd.
Petitioner utterly fails to offer an explanation as to why these arguments were not raised in earlier petitions. As such, he has failed to meet his burden of showing cause for his omission. Furthermore, even assuming that the "evidence" to which petitioner *1342 refers had been presented at trial, this Court cannot conclude that the factfinder would have a reasonable doubt with respect to guilt, particularly in light of the testimony relating petitioner's confessions and other evidence that the Court references above. Petitioner cannot show prejudice. Nor can he show that the alleged constitutional violation has probably resulted in the conviction of one who is actually innocent. Accordingly, Ground D will be dismissed.
D. JURY INSTRUCTIONS
Grounds A and G raise, for the first time, objections to the jury instructions employed during the sentencing phase of petitioner's trial. Both grounds refer to the same group of instructions:
Instruction 54
In determining the punishment to be assessed under Count IV against the defendant for the murder of Judy Cazaco, you must first unanimously determine:
1. Whether the murder of Judy Cazaco was committed while the defendant was engaged in the commission of the capital murders of James Wood, Edna Ince and Carolyn Turner.
2. Whether the defendant murdered Judy Cazaco for the purpose of receiving money or anything of monetary value.
You are further instructed that the burden rests upon the state to prove beyond a reasonable doubt at least one of the foregoing circumstances, and that it is an aggravating circumstance. The defendant is not required to prove or disprove anything.
Therefore, if you do not unanimously find from the evidence beyond a reasonable doubt that at least one of the foregoing circumstances exist and that it is an aggravating circumstance, you must return a verdict fixing the punishment of the defendant at imprisonment for life by the Division of Corrections without eligibility for probation or parole until he has served a minimum of fifty years of his sentence.
Instruction 55
If you find and believe from the evidence beyond a reasonable doubt that one or more of the circumstances submitted in Instruction Nos. 51, 52, 53, 54 exists and that at least one of them is an aggravating circumstance, it will then become your duty to decide whether a sufficient aggravating circumstance or circumstances exist to warrant the imposition of death as punishment of defendant. In deciding that question you may consider all of the evidence relating to the murders of James Wood, Edna R. Ince, Carolyn Turner and Judy Cazaco.
You may also consider any of the aggravating circumstances referred to in Instruction No. 51, 52, 53, 54 which you found beyond a reasonable doubt.
If you do not unanimously find from the evidence beyond a reasonable doubt that a sufficient aggravating circumstance or circumstances exists to warrant the imposition of death as defendant's punishment, you must return a verdict fixing his punishment at imprisonment for life by the Division of Corrections without eligibility for probation or parole until he has served a minimum of fifty years of his sentence.
Instructions 56-59[8]
If you decide that a sufficient aggravating circumstance or circumstances exist to warrant the imposition of death, as submitted in Instruction No. 51, it will then become your duty to determine whether a sufficient mitigating circumstance or circumstances exist which outweigh such aggravating circumstance or circumstances so found to exist. In deciding that question you may consider all of the evidence relating to the murder of James Wood.
You may also consider:
1. Whether the defendant has no significant or prior criminal activity.
*1343 2. The age of the defendant at the time of the offense.
You may also consider any circumstances which you find from the evidence in extenuation or mitigation of punishment. If you unanimously decide that a sufficient mitigating circumstance or circumstances exist which outweigh the aggravating circumstance or circumstances found by you to exist, then you must return a verdict fixing defendant's punishment at imprisonment for life by the Division of Corrections without eligibility for probation or parole until he has served a minimum of fifty years of his sentence under Count I.
Instruction 60
Even if you decide that a sufficient mitigating circumstance or circumstances do not exist which outweigh the aggravating circumstance or circumstances found to exist, you are not compelled to fix death as the punishment. Whether that is to be your final decision rests with you.
1. GROUND "A"
In Ground A petitioner argues that Instructions 56-59 prohibited the jury from considering mitigating evidence unless such circumstances were unanimously found to exist. Petitioner argues that this instruction prevents the jury from giving full consideration and effect to all mitigating circumstances in violation of McKoy v. North Carolina, ___ U.S. ___, 110 S.Ct. 1227, 108 L.Ed.2d 369 (1990), Mills v. Maryland, 486 U.S. 367, 108 S.Ct. 1860, 100 L.Ed.2d 384 (1988), Eddings v. Oklahoma, 455 U.S. 104, 102 S.Ct. 869, 71 L.Ed.2d 1 (1982), and Woodson v. North Carolina, 428 U.S. 280, 96 S.Ct. 2978, 49 L.Ed.2d 944 (1976).
The only justification that petitioner offers for failing to raise this claim at an earlier date is that it was omitted through "simple, excusable inadvertence". The Court notes above, however, that attorney error or inadvertence short of ineffective assistance of counsel does not constitute "cause". Although petitioner does not expressly argue that some intervening change in the law justifies the belated nature of this claim, he does offer two recent Supreme Court decisions, McKoy and Mills, in support of his argument. Insofar as petitioner implies that these cases break new ground or depart from prior precedent, this Court must respond that they do not. The requirement that juries in capital cases be permitted to consider all mitigating factors and aspects of a defendant's character and to give effect to that evidence was firmly established in Eddings and Lockett. Mills and McKoy are based upon this principle and both rely on the Eddings and Lockett line of cases; they represent a clear application of existing law. See Penry v. Lynaugh, 109 S.Ct. at 2944-47 (rule that jury be given instructions allowing it to consider mitigating evidence and give effect to such evidence is not new rule, but is dictated by Eddings and Lockett). Thus, although petitioner is not prevented from relying on Mills and McKoy under the retroactivity bar of Teague v. Lane, he cannot show cause for his failure to raise the argument contained in Ground A in an earlier petition. Because Mills and McKoy are based upon decisions that preceded petitioner's trial and initial appeal, petitioner cannot argue that he "lacked the tools" to construct his arguments and that "cause", therefore, existed which excuses his procedural default. See Leggins v. Lockhart, 822 F.2d 764, 768 (8th Cir.1987).
Furthermore, even if petitioner were not procedurally barred from raising this claim, his claim is without merit. In Mills v. Maryland the United States Supreme Court held that the jury instructions in that case could reasonably be read to require that unless all twelve jurors unanimously agreed that a particular mitigating circumstance existed, no juror could consider that mitigating evidence. The Court found the imposition of the death penalty unconstitutional. Likewise, in McKoy v. North Carolina, the Supreme Court held that an instruction that allowed a jury to consider only mitigating circumstances that it unanimously found to exist was constitutionally infirm. This result was reached despite *1344 the presence of an instruction that permitted the jury to recommend life imprisonment even if the jury found several aggravating circumstances and no mitigating circumstances.
At no point were the jurors in the instant case instructed that they must unanimously find that mitigating circumstances exist before considering such circumstances. They were instructed that they must unanimously find beyond a reasonable doubt that aggravating circumstances existed. They were instructed that they must unanimously find beyond a reasonable doubt that such aggravating circumstances warranted the imposition of death. They were told that if they unanimously decided that mitigating circumstances outweighed aggravating circumstances, they must fix punishment at life imprisonment. Were the instructions to end at this juncture, then a danger might exist that the jury could have concluded that they must unanimously find mitigating circumstances. However, Instruction 60 followed 56-59 and advised the jury what to do if they did not find unanimously that mitigating circumstances outweighed aggravating circumstances. Instruction 60 advised the jurors that if they reached this juncture, they were not compelled to fix death as punishment, but, rather, the decision of whether to impose death was left entirely to them. Unless the jury in petitioner's case ignored the instructions or failed to consider all of the instructions in the order that they were presented, they could not have reasonably concluded that a unanimity requirement existed. See also, Gilmore v. Delo, No. 89-1167C(2), slip op at 4-7, 1989 WL 109554 (E.D.Mo. June 20, 1989), appealed, No. 89-2234EM (8th Cir.); Laws v. Armontrout, No. 89-1115C(3), slip op. at 1 (E.D.Mo. June 16, 1989), aff'd on other grounds, No. 89-1985EM (8th Cir., June 19, 1989) stay granted, ___ U.S. ___, 109 S.Ct. 3205, 105 L.Ed.2d 713 (1989). Because this is an assumption we cannot indulge, Ground A will be dismissed.
2. GROUND "G"
In Ground G petitioner argues that Instructions 54-56 served to shift to petitioner the burden of proving mitigating circumstances that "outweigh" aggravating circumstances. Petitioner argues that because the state was required to prove aggravating circumstances beyond a reasonable doubt, if petitioner was to prove mitigating circumstances that outweighed aggravating circumstances, then, implicitly, petitioner also was required to prove mitigating circumstances beyond a reasonable doubt. Petitioner argues that such a requirement violates Lockett v. Ohio, 438 U.S. 586, 98 S.Ct. 2954, 57 L.Ed.2d 973 (1978). He also notes that the question of whether a defendant in a capital case can be required to prove mitigating circumstances by a preponderance of the evidence is currently pending before the United States Supreme Court in Walton v. Arizona, No. 88-7351. Finally, petitioner argues that if the jury instructions are not to be interpreted in the manner he suggests, then they are at least so confusing that the Court cannot determine whether the jury reached its conclusion on the basis of an unconstitutional understanding. Thus, petitioner argues, under Francis v. Franklin, 471 U.S. 307, 105 S.Ct. 1965, 85 L.Ed.2d 344 (1965), petitioner's death sentence must be set aside.
Because Ground G of petitioner's application is based upon the same line of cases as Ground A, and because petitioner fails to suggest any cause for his failure to raise this claim at an earlier date, the Court finds, for the same reasons set forth with respect to Ground A, that the instant claim is an abuse of the writ and that petitioner is procedurally barred from bringing it in a successive petition. Furthermore, the Court finds that plaintiff's argument regarding the burdens imposed under the jury instructions and potential confusion are without merit.
Following is a plain, common-sense reading of the jury instructions: (1) The jurors are advised in Instruction 54 that they must unanimously decide whether any aggravating circumstance exists, and if one does not, only a life sentence may be imposed; (2) In Instruction 55 they are advised *1345 that if aggravating circumstances exist, they should determine whether the aggravating circumstances warrant the imposition of death, and if they do not unanimously so find, only a life sentence may be imposed; (3) If the jurors make it past Instruction 55, then they are advised in Instructions 56-59 that they must decide whether mitigating circumstances exist, and if they do find mitigating circumstances, they must decide whether they outweigh aggravating circumstances; (4) If the jurors unanimously find that mitigating circumstances outweigh aggravating circumstances, then only a life sentence may be imposed; (5) Finally, Instruction 60 advises the jurors that if mitigating circumstances do not outweigh aggravating circumstances, they are not compelled to fix death as punishment, but rather, the decision to impose death rests with them.
This Court finds that the instructions, read as a whole and in the proper order, are neither confusing nor misleading; certainly not to the extent that they risk an unconstitutional understanding in violation of Francis v. Franklin. Furthermore, the instructions do not instruct the jury that mitigating circumstances must outweigh aggravating circumstances if the defendant is to avoid the death penalty. As the Court notes above, at only one point was the jury instructed that it must consider whether mitigating circumstances outweighed aggravating circumstances, and if the jury so found they were prohibited from imposing any sentence other than life imprisonment. Again, were the instructions to end at this juncture, then a danger might exist that the jury would misinterpret defendant's burden and conclude that if mitigating circumstances did not outweigh aggravating circumstances, death was mandatory. Instruction 60, however, again clarifies any ambiguity.
Finally, the pendency of Walton v. Arizona before the United States Supreme Court does not provide justification for delaying this Court's decision. Any new rule announced in Walton could not be applied retroactively in light of Teague v. Lane. Accordingly, Ground G will be dismissed.
III. Petitioner's Belated Claim
On March 23, 1990, after the state had responded to petitioner's supplemental application for federal habeas corpus and after the parties had presented their respective positions at oral argument, but before this Court had an opportunity to issue this written memorandum, petitioner lodged yet another ground for habeas corpus relief with this Court. This occurred while a temporary stay was in effect, which this Court issued solely for the purpose of enabling the Court to give considered judgment to petitioner's claims. Petitioner's attempt to supplement a delayed, successive petition with a further delayed, successive ground for relief provides yet another illustration of the difficulties that a Court faces with successive applications for habeas corpus relief. Nevertheless, this Court will grant petitioner leave to file this additional ground; however, as the Court concludes below, petitioner's claim is procedurally barred and lacks merit.
Petitioner's supplemental Ground I alleges that Missouri imposes the death penalty disproportionately in all cases and in this case in particular. Petitioner suggests that this claim is unexhausted and that this Court should stay the instant proceedings until petitioner has pursued relief in the state courts. Exhaustion is not an absolute bar to this Court's consideration of habeas corpus claims. Chitwood v. Dowd, 889 F.2d 781, 784-785 (8th Cir.1989). Indeed, in the case of a successive petition, exhaustion is usually the least of a petitioner's procedural problems. See generally, Id.; Mercer v. Armontrout, 864 F.2d at 1433. In the instant case, petitioner has already raised one variation of a proportionality claim in his first petition wherein he alleged that in Missouri the death penalty is sought and inflicted disproportionately against blacks. See Byrd v. Armontrout, 686 F.Supp. at 785. Assuming that petitioner's most recent disproportionality claim is not the "same ground" that was presented in his prior application to this Court, and assuming that this Court's prior determination was not on the merits, petitioner's latest claim *1346 must be treated as a "new claim". As the Court notes above, however, a petitioner must show both "cause" and "prejudice" to avoid a procedural bar to bringing new claims. Petitioner fails to suggest any cause for failing to bring this latest proportionality challenge at some earlier date. Furthermore, given that the jury found petitioner guilty of committing multiple killings, this Court cannot conclude that petitioner could show "prejudice" under either Wainwright v. Sykes, or the heightened standard under Murray v. Carrier even if the Missouri Supreme Court conducted no proportionality review. See Pulley v. Harris, 465 U.S. 37, 104 S.Ct. 871, 879, 79 L.Ed.2d 29 (1984) (state supreme court proportionality review constitutionally superfluous).
Finally, this Court notes that on petitioner's direct appeal, the Missouri Supreme Court conducted a proportionality review and found that petitioner's sentence of death was not disproportionate to the penalty imposed in similar cases, considering both the crime and the defendant. State v. Byrd, 676 S.W.2d 494 (Mo.1984) (en banc). This Court believes that these findings are entitled to the presumption of correctness under 28 U.S.C. § 2254(d). Furthermore, even absent the presumption of correctness, this Court would concur in the Missouri Supreme Court's findings with respect to proportionality. With respect to petitioner's facial challenge to the constitutionality of Missouri's death penalty scheme, this Court likewise finds that petitioner's claim is without merit.
Accordingly, and for the foregoing reasons, petitioner's application for federal habeas corpus relief under 28 U.S.C. § 2254 will be dismissed in its entirety.
ORDER
Pursuant to the memorandum filed herein this day,
IT IS HEREBY ORDERED that petitioner be and is granted leave to file his supplement to petition for writ of habeas corpus.
IT IS FURTHER ORDERED that petitioner's motion to hold proceedings in abeyance pending completion of state habeas corpus proceedings and to further stay execution be and is denied.
IT IS FURTHER ORDERED that petitioner's application for a writ of habeas corpus be and is dismissed.
IT IS FURTHER ORDERED that petitioner be and is granted a certificate of probable cause for appeal.
NOTES
[1] Rather than engage in a lengthy discussion of the history of this case, the Court will rely on the Eighth Circuit's decision in Byrd v. Armontrout, 880 F.2d 1, 4 (8th Cir.1989), and the previous cases cited therein to provide the necessary procedural and factual background. The Court would add that the United States Supreme Court denied the petition for writ of certiorari with respect to the first petition on March 5, 1990. On March 8, 1990, the Missouri Supreme Court set March 22, 1990, as petitioner's execution date. On March 19, 1990, petitioner filed the instant petition for writ of habeas corpus. After respondent filed his response and oral argument by the parties, this Court stayed petitioner's execution until Wednesday, March 28, 1990, in order that the Court might prepare the instant order and memorandum.
[2] The petition actually lists nine grounds for relief, A through I. Petitioner, however, failed to brief Ground I, and petitioner indicated during oral argument that the Court need not consider Ground I. After oral argument, however, and before this Court was able to issue a written opinion, petitioner submitted a new "Ground I", which the Court discusses below at pp. 1345-1346.
[3] A reading of the trial transcript clearly indicates that petitioner's trial was hard fought throughout. Petitioner's two defense counsel aggressively pursued strategies both before the jury and in proceedings outside the hearing of the jury. Petitioner's case was defended every step of the way. The decision to call Ford as a witness was a difficult one. However, by this time of the trial, it was obvious that the state had constructed a solid case against petitioner. Reading a trial transcript rarely gives the true flavor of a trial or of the effect of a witness' testimony. Particularly in the context of the entire case, the calling of Ford as a witness fails to support petitioner's claim of ineffective assistance of counsel. Thus, the facts in the present case differ widely from the facts in the Seventh Circuit's recent decision in Harris v. Reed, 894 F.2d 871 (7th Cir.1990), which petitioner has just recently cited in support of his position.
[4] See discussion below at pages 1339-1340.
[5] Petitioner has not suggested that Penry is an intervening change in the law. Nevertheless, because petitioner cites Penry in support of this argument, the Court will consider whether Penry marked such a change in the law that petitioner could not reasonably have been expected to raise this argument in his first petition.
[6] Of course, to establish a claim of ineffective assistance of counsel under Strickland v. Washington, petitioner must likewise establish "actual prejudice": "a reasonable probability that, absent the errors, the factfinder would have had a reasonable doubt respecting guilt." Strickland, 466 U.S. at 695, 104 S.Ct. at 2068. See also Mercer, 864 F.2d at 1434.
[7] Under Reed v. Ross, 468 U.S. 1, 104 S.Ct. 2901, 82 L.Ed.2d 1 (1984), a petitioner can show cause for failure to raise a claim in an earlier petition where a constitutional claim was "so novel that its legal basis [was] not reasonably available to counsel". Id. at 16, 104 S.Ct. at 2910. The Eighth Circuit held in Leggins v. Lockhart, 822 F.2d 764 (8th Cir.1987), that where "the legal basis for making the constitutional claim was available and other defense counsel had perceived and litigated the claim, it cannot be said that ... counsel so lacked the tools to construct [the] constitutional argument before the state court that cause existed which excuses the procedural default." Id. at 768. Given the similarity between the test for a "novel" claim under Reed and a "new rule" under Teague, it is difficult to imagine that a petitioner could discover a legal development that did not announce a new rule under Teague, but was sufficiently novel under Reed to qualify as an "intervening change in law".
[8] Because petitioner received four death sentences, four such instructions were submitted to the jury. Thus, the references to other instructions and references to victims' names varied according to the particular count upon which a given instruction was based.
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755 A.2d 560 (2000)
133 Md. App. 325
Thomas Dalton DIXON
v.
STATE of Maryland.
No. 1211, Sept. Term, 1999.
Court of Special Appeals of Maryland.
July 13, 2000.
*562 Richard K. Jacobsen, Asst. Public Defender (Stephen E. Harris, Public Defender, on the brief), Baltimore, for appellant.
Shannon E. Avery, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Baltimore and Jack Johnson, State's Atty. for Prince George's County, Upper Marlboro, on the brief), for appellee.
Submitted before MOYLAN, KRAUSER and JAMES S. GETTY (Ret., Specially Assigned), JJ.
*561 MOYLAN, Judge.
The appellant, Thomas Dalton Dixon, was convicted by a Prince George's County jury, presided over by Judge G.R. Hovey Johnson, of first-degree assault and the use of a handgun in the commission of a crime of violence. He was sentenced to twenty years imprisonment for the first-degree assault and a consecutive sentence of twenty years for the handgun violation. On this appeal, he claims
1) that Judge Johnson erroneously permitted the victim to testify that he had on a prior occasion purchased drugs from the appellant;
2) that Judge Johnson erroneously admitted evidence showing that the appellant shot and hit a second person;
3) that the twenty-year sentence for first-degree assault was illegal; and
4) that Judge Johnson erroneously allowed the prosecutor to nol pros the charge of attempted voluntary manslaughter and erroneously failed to instruct the jury with respect to that count.
What Do We Look At: The Forest or the Trees?
Our discussion of the first two contentions will interweave with our description of the factual background of the case. Both of those contentions assert that there was a violation of the law prohibiting the admission against a defendant of evidence showing the commission by him of "other crimes." In holding that no such error was committed, our fundamental rejection of the appellant's argument stems from the fact that he is looking at a legal principle in microcosm and fails to appreciate the larger view of what that principle is designed to accomplish.
The ultimate end to be served by the ban on "other crimes" evidence is that the State should not be permitted to bring in "out of left field" the fact that on some other occasion the defendant committed a crime. The danger being guarded against is that such past behavior will be offered to show and will be used by a jury to conclude that the defendant has a propensity to commit crime. The fear is that the jury may convict him in the case on trial because of something other than what he did in that case, to wit, because of his criminal propensity. There are also some well recognized exceptions to the evidentiary ban, permitting the evidence of "other crimes" to come in, if it is important to show something other than criminal propensity, such as identity, intent, motive, common scheme, etc. Md. Rule 5-404(b). An extensive body of law has evolved analyzing both the "other crimes" evidentiary prohibition and the various exceptions thereto. Harris v. State, 324 Md. 490, 597 A.2d 956 (1991); State v. Faulkner, 314 Md. 630, 552 A.2d 896 (1989); Bussie v. State, 115 Md.App. 324, 330-38, 693 A.2d 49 (1997); Wieland v. State, 101 Md.App. 1, 8-23, 643 A.2d 446 (1994); Solomon v. State, 101 Md.App. 331, 337-47, 646 A.2d 1064 (1994).
At the most fundamental level, however, we conclude that that entire body of law has no bearing on this case. There will be found in the extensive case law, to be sure, isolated phrases and sentences that, when lifted out of context, might seem to support the appellant in his present contentions. We decline to haggle, however, over such minutiae because of our view, in longer perspective, that that body of law is inapplicable. Why anguish over whether *563 the appellant is in the right pew when we conclude that he is not even in the right church?
Although the direct evidence of what happens at a crime scene may sometimes show some possible crime in addition to the one literally charged, that coincidental possibility does not necessarily engage the gears of "other crimes" evidence law. What we have in this case is evidence essentially integral to, even if not literally inextricable from, the criminal incident on trial. In earlier decades, it would have been felicitously referred to as part of the res gestae of the crime.
The Criminal Incident
The crime in this case took place during the early morning hours of May 23, 1997. The assault victim was Edward Johnson. Earlier that morning, he and a friend, Paquita Waiters, had together smoked between $40 and $50 of crack cocaine. Exhausting their supply by approximately 2 A.M., the two of them drove to the intersection of Virginia Avenue and Forest Terrace in Prince George's County to buy some more. During the State's case in chief, three witnesses testified as to what happened when Johnson and Waiters arrived at Virginia Avenue and Forest Terrace.
Johnson himself testified that he got out of his car, walked up to a group of men including the appellant, and told the appellant that he wanted to buy some crack cocaine. At that point, the appellant "like turned around, and then I thought he was pulling out some drugs, you know, and then he turned around and had a gun." Johnson went on to state that "at first I was shocked and then after I went and hit him, I ran ... straight down Virginia, right past my car and kept going." Johnson testified that he heard gunshots and then was struck in his back and buttocks and "it broke my leg in some kind of way." Johnson denied having had a gun or having pulled a gun on the appellant at any time during the incident.
The appellant's first contention concerns Johnson's explanation of why he stopped the car and approached the appellant in the first instance and of how he was able to identify the appellant first at the scene and subsequently in court. Over a defense objection, the direct examination went as follows:
Q: Did you know the individual whom you approached:
A: I have seen him before.
Q: Had you dealt with him before?
A: Yes.
Q: Had you purchased drugs from that individual before?
A: Yes.
Although we could validate that testimony on the theory that it undergirds Edward Johnson's ability to make a reliable identification of the appellant as the criminal agent,[1]Harris v. State, 324 Md. at 501, 597 A.2d 956, State v. Faulkner, 314 Md. at 634, 552 A.2d 896, that would be to dignify the contention more than it deserves to be dignified. Fundamentally, this was simply not extrinsic evidence showing the appellant's criminal propensity. It was direct evidence as to why Johnson stopped the car and approached the appellant in the first instance. In view of the fact, moreover, that the entire confrontation was one between a would-be purchaser of drugs and an ostensible seller of drugs, the coincidental fact that the two had been involved on an earlier occasion or occasions was inconsequential in terms of prejudicial impact. But for Johnson's knowledge that the appellant was someone from whom he could purchase "more *564 crack," his entire narration of the incident that morning would have been unintelligibly bizarre. We see no error.[2]
It was Paquita Waiters who had earlier that evening smoked crack cocaine with Edward Johnson and who accompanied him to the crime scene to buy more crack cocaine. Her version of the corpus delicti essentially paralleled the version given by Edward Johnson. She testified that when Johnson stopped the car at Virginia Avenue and Forest Terrace, he asked a group of men standing there if any of them had any drugs for sale. He then got out of his car. Although she could not identify the assailant, she described how one of the men approached Johnson and "was trying to get the money from [him] without giving him the purchase." One of the men then struck Johnson on the head with an object that looked like a gun. Both she and Johnson then ran down Virginia Avenue. Paquita Waiters heard gunshots and saw Johnson fall to the ground. She hid in the bushes for a few minutes and then ran to a 7-11 store and asked someone there to call the police.
The third witness to testify for the State in chief was one of the appellant's companions that morning. Carnell Chase testified that he and the appellant were at the corner of Virginia Avenue and Forest Terrace at about 2:30 A.M. when a car containing a man and a woman pulled up. The driver, the man, asked "if they had any cocaine." It was the appellant who responded. He told the driver of the car to wait and the driver got out of the car. The appellant walked over to some bushes, retrieved a .22 caliber revolver, and returned to the car. The appellant then told the driver to "give his money up." The driver turned his money over to the appellant but then "tried to fight [the appellant] off."
As Chase moved closer "to see what was going on," the driver took a swing at him. Chase swung back at the driver and hit him. The driver told his female passenger to run, removed his keys from the car's ignition, and then himself ran up the street. Chase described how the appellant then fired "about 5 or 6" shots at the driver. Chase did not see the driver with a gun at any time.
The appellant's second contention concerns Chase's testimony as to what happened as the appellant fired five or six shots at the fleeing driver. His description included the following observation:
I seen Mike fall on the ground, and then I seen the male that was driving the car still running, and then after that, he had got hit ... I saw the blood and stuff.
(Emphasis supplied).
"Mike" was the third individual who was with the appellant and Carnell Chase at the time of the incident. After Carnell Chase described seeing "Mike fall on the ground," the State inquired as to the identity of Mike. Over objection, the following testimony came out:
Q: You mentioned Mike. Who was Mike?
A: He's a crack head.
Q: And, do you know what happened to Mike?
A: He got shot.
Again, we simply do not elevate this to the level of "other crimes" evidence establishing the appellant's criminal propensity. It is a layman's description of what happened as the appellant fired five or six shots at the fleeing Edward Johnson. It is *565 no more significant than if one of those shots had smashed a flower pot or stilled a yelping dog. One witness may observe and describe a crime scene epigrammatically, a la Emily Dickinson. Another may observe and describe the same scene panoramically, a la Walt Whitman. The fact that a stray bullet winged "Mike" was simply part of the unfolding panorama. Could it have been excised? Of course! Does it make any difference that it was not? Of course not!
We might, of course, expatiate on "same transaction" relevance and cite Bussie v. State, 115 Md.App. at 333-38, 693 A.2d 49, Solomon v. State, 101 Md.App. at 354, 646 A.2d 1064, Tichnell v. State, 287 Md. 695, 712, 415 A.2d 830 (1980), and Ross v. State, 276 Md. 664, 670, 350 A.2d 680 (1976). It is pointless, however, to haul out heavy analytic equipment when instinct tells us clearly that the contention does not even break the horizon of possible significance.[3]
North Carolina v. Pearce And Vindictive Resentencing
On a more serious note, the appellant invokes North Carolina v. Pearce, 395 U.S. 711, 89 S.Ct. 2072, 23 L.Ed.2d 656 (1969). In that case, the Supreme Court held that if 1) a judge imposes a sentence on a defendant for a particular crime, 2) the defendant successfully appeals and the case is remanded for a retrial, and 3) the defendant is again convicted of the same crime by the same judge, that judge may not impose a greater sentence on the second occasion unless he can give valid reasons for doing so. The Supreme Court was guarding against the risk of judicial vindictiveness, the punishing of a defendant for appealing a judge's decision. It sought to avoid the "chilling effect" that the fear of vindictiveness at a resentencing might have on a defendant's right to appeal his initial conviction.
The appellant simultaneously invokes Md.Code (1998 Repl.Vol.) Cts. & Jud. Proc. Art., § 12-702(b), which provides:
(b) Remand for sentence or new trial; limitations on increases in sentences. If an appellate court remands a criminal case to a lower court in order that the lower court may pronounce the proper judgment or sentence, or conduct a new trial, and if there is a conviction following this new trial, the lower court may impose any sentence authorized by law to be imposed as punishment for the offense. However, it may not impose a sentence more severe than the sentence previously imposed for the offense unless:
(1) The reasons for the increased sentence affirmatively appear;
(2) The reasons are based upon additional objective information concerning identifiable conduct on the part of the defendant; and
(3) The factual data upon which the increased sentence is based appears as part of the record.
(Emphasis supplied). With respect to that section, Davis v. State, 312 Md. 172, 177, 539 A.2d 218 (1988), pointed out that "the Legislature intended to codify the ... holding of North Carolina v. Pearce ... that due process requires not only that vindictiveness play no part in the re-sentencing, but also that a defendant must be *566 free of apprehension of such a retaliatory motivation."
For this criminal incident, the appellant was initially sentenced on December 12, 1997. He had been convicted on three counts, those charging 1) attempted voluntary manslaughter, 2) first-degree assault, and 3) the use of a handgun in the commission of a crime of violence. He was sentenced by Judge Thomas A. Rymer to twenty years imprisonment for the first-degree assault, to ten years of concurrent imprisonment for the attempted voluntary manslaughter, and to twenty years of consecutive imprisonment for the use of a handgun.
Those convictions were appealed to this Court. In an unreported opinion filed on October 30, 1998, we reversed all three convictions because the trial judge had erroneously failed to make an adequate inquiry into a reported violation of the trial court's sequestration order. That was our only holding. The appellant had, however, raised four other contentions. By way of dicta, we did go on to "address each question presented for the Court's guidance on remand." One of those other contentions was that the trial court erred "by imposing separate sentences upon the convictions for first-degree assault and attempted manslaughter."
In our gratuitous discussion of that contention "for the Court's guidance on remand," we pointed out that from "our scrutiny of the record" in that case and from the jury instructions actually given in that case, we could not determine which prong of first-degree assault that jury had relied on to reach its verdict of guilty on that charge. Our discussion concluded by saying:
We are faced with ambiguity regarding not only the jury's verdict and the trial court's instructions, but also with the legislature's intent. Under Snowden, we would be constrained to give appellant the benefit of the doubt and merge his sentence for first degree assault into the greater sentence of attempted voluntary manslaughter. As we have stated previously, "[t]he fundamental principle of fairness in meting out punishment," Snowden [v. State], 321 Md. [612,] at 619, [583 A.2d 1056 (1991)], would require such a conclusion.
From the springboard of that dicta, the appellant now essays an extraordinary leap of logic. Although he raises thereby a subject our dicta never directly addressed, he argues that the merger of first-degree assault into attempted voluntary manslaughter alluded to by our opinion should compel a sentencing "cap" of ten years, the maximum penalty for attempted manslaughter, at the retrial where an attempted manslaughter count was never submitted to the jury.
In an H.G. Wells-like reversal of tenses, moreover, the appellant ignores the fact that the dicta was aimed at guiding a sentencing judge in the future 1) if there were a retrial and 2) if there were reconvictions on the same counts. In a reversal of direction on the time line, the appellant rewrites history as he projects the arguable penalty "cap" into the past and somehow reforms Judge Rymer's December 12, 1997, sentences of twenty years for first-degree assault and ten years for attempted voluntary manslaughter into a single sentence of ten years for the two offenses combined. Among many other problems, he conveniently ignores that there were no past sentences still in need of being reformed because their underlying convictions had already been reversed.
To implicate North Carolina v. Pearce and § 12-702(b), the appellant's Orwellian revision of history produced the major premise on which he builds his syllogism:
For purposes of § 12-702(b), therefore, the sentence that was imposed for "the offense" of attempted voluntary manslaughter/first degree assault was ten years.
(Emphasis supplied).
That premise, of course, is not true. Ten years was not the sentence Judge *567 Rymer imposed. Section 12-702(b) speaks of "the sentence previously imposed for the offense." North Carolina v. Pearce constantly refers to the sentence "originally imposed." For purposes of both the Maryland Rule and the federal Due Process Clause, it is beyond dispute that the standard against which we measure any subsequent sentence is the original sentence that actually WAS, not the sentence that arguably SHOULD HAVE BEEN.
The "sentence previously imposed" is the sentence that first came from the mouth of the sentencing judgeright or wrong, lawful or unlawful, constitutional or unconstitutionaland not the subsequent fate of that sentence, as it may have been cut or trimmed or shaped or in any way reformed by ex post facto appellate analysis. When Judge Rymer pronounced his sentences on December 12, 1997, that sentencing event was, for purposes of North Carolina v. Pearce and Md. Rule 12-702(b), locked immutably into history. No dicta of ours can change what Judge Rymer did. We may alter the effect of what he did, but we cannot change the fact that he did it. Neither may a leap of logic by the appellant. "The moving finger writes and, having writ, moves on ..."
The twenty-year consecutive sentences, imposed both then and now, for the unlawful use of a handgun do not concern us. The ten-year sentence originally imposed for attempted manslaughter does not concern us, for there was no attempted manslaughter conviction at the retrial now under review. Our only concern is with the twenty-year sentence imposed by Judge Johnson for first-degree assault. The original sentence imposed by Judge Rymer for first-degree assault was precisely the same, twenty years. There has been, therefore, no increase in sentence within the contemplation of North Carolina v. Pearce or § 12-702(b).
An Alternative Theory For a Sentencing "Cap"
In a separate subcontention, the appellant poses a completely distinct theory as to why the twenty-year sentence for first-degree assault was arguably improper. He invokes Simms v. State, 288 Md. 712, 421 A.2d 957 (1980), Gerald v. State, 299 Md. 138, 472 A.2d 977 (1984), and Johnson v. State, 310 Md. 681, 531 A.2d 675 (1987), for the proposition that, notwithstanding the eleventh-hour nol pros, the erstwhile presence in the trial of the attempted manslaughter count, after jeopardy had attached, effectively established a ten-year sentencing "cap" that precluded any greater sentence being imposed for the first-degree assault charge.
Whereas the earlier subcontention, involving the risk of vindictive resentencing, can only be triggered by the sequence of 1) an original conviction and sentence, 2) an appellate reversal followed by a retrial, and 3) a reconviction and resentencing, this second subcontention is unconcerned with any trial sequence. The appellant's argument would be precisely the same if there had never been an earlier trial. Even in the limited, present-tense context of a single trial, however, the appellant's argument does rely on the dicta from our opinion reviewing the first trial.
For purposes of the discussion that follows, we may conveniently put to one side the fact that the appellant was charged with and convicted of the use of a handgun in the commission of a crime of violence. There is no challenge being made with respect to that. What is here pertinent is that the appellant was charged with 1) attempted voluntary manslaughter, a crime carrying a maximum penalty of ten years, and 2) first-degree assault, a crime carrying a maximum penalty of twenty-five years. The State, over the appellant's objection, nol prossed the attempted manslaughter charge at the close of all of the evidence. The appellant was convicted of first-degree assault and sentenced to twenty years imprisonment for it.
The unusual twist that gave rise to the Simms, Gerald, and Johnson cases, of *568 course, was that the common law misdemeanor of simple assault, prior to a codification of assault law in 1996, had no statutorily prescribed penalty. The choice of a common law penalty was in the unfettered discretion of the trial judge, provided only that it not be cruel or unusual within the contemplation of that constitutional prohibition. Walker v. State, 53 Md.App. 171, 193-99, 452 A.2d 1234 (1982). It was, therefore, the ironic case that the penalty for simple assault could be far greater than the maximum penalty for a variety of aggravated and felonious assaults. As the Maryland case law evolved, Simms, Gerald, and Johnson imposed a necessary sentencing "cap" on simple assault under certain clearly defined and compelling circumstances.
Simms, Gerald, and Johnson all dealt with the bizarre circumstance 1) where a greater inclusive offense actually carried a lower maximum penalty provision than did a lesser included offense and 2) where both were charged and tried. Those cases did not establish any "cap" in the abstract on simple assault specifically or on a lesser included offense generally. Turner v. State, 45 Md.App. 168, 172-73, 411 A.2d 1094 (1980). Their constraints came into play only when 1) the greater inclusive offense was charged and 2) jeopardy attached with respect to that greater inclusive offense. In Simms, for example, the first count (the "flagship" count) was for the then statutory felony of assault with intent to rob with a maximum penalty of ten years. The jury acquitted Simms of that charge and found him guilty, under the second count, only of the misdemeanor of simple assault. His sentence of twelve years for the lesser crime is what prompted the examination of the ironic sentencing incongruity.
Under those circumstances, the State is deemed to have made a binding tactical decision that the greater inclusive offense will serve as the "flagship" count and that the maximum sentence for that flagship count will thereby serve as the sentencing "cap" for any lesser included offenses, even if those lesser included offenses have no "cap" of their own. If there is a conviction for the greater inclusive offense, all lesser included offenses merge into it and there is no problem. If, on the other hand, there is an acquittal, a hung jury, or a nol pros (after jeopardy) of the greater inclusive offense, the "cap" established by its earlier presence in the case nonetheless remains in force. Walker v. State, 53 Md. App. 171, 189-92, 452 A.2d 1234 (1982).
The principle established by the Simms, Gerald, and Johnson line of cases has nothing to do with the mere merger of penalties. Spitzinger v. State, 340 Md. 114, 125-30, 665 A.2d 685 (1995), articulates that principle, one whereby multiple convictions for different offenses do not formally merge but where multiple punishment is nonetheless sometimes prohibited. That phenomenon is not a constitutional one grounded in the Double Jeopardy Clause at all, but only involves a determination of legislative intent with respect to the permitted punishment of different offenses arising out of a single criminal incident.[4]Walker v. State, 53 Md.App. 171, 200-01, 452 A.2d 1234 (1982). In a case of merging penalties, moreover, it is the greater punishment, not the lesser, that prevails to establish the upper end of the permissible sentencing range. It is not, as it might be under Simms, a case of a lesser penalty imposing a "cap" on a potentially greater one.
The sine qua non for the applicability of the Simms, Gerald, and Johnson principle is that the two crimes and respective maximum penalties involved in that sentencing *569 symbiosis must be in the relationship to each other of a greater inclusive offense and a lesser included offense. In double jeopardy language, they must be "the same offense." The mere fact that they both arise out of the same criminal incident is immaterial; that factual common denominator only implicates the very different rule of Spitzinger v. State, 340 Md. 114, 665 A.2d 685 (1995). With respect to the symbiotic relationship necessary for the actual merger of convictions, Simms v. State, 288 Md. at 724, 421 A.2d 957, was clear:
[W]e hold that when a defendant is charged with the greater offense and a lesser included offense based on the same conduct, with jeopardy attaching to both charges at trial, and when the defendant is convicted only of the lesser included charge, he may not receive a sentence for that conviction which exceeds the maximum sentence which could have been imposed had he been convicted of the greater charge.
(Emphasis supplied).
Simms further explained that the existence of such a relationship is determined by applying the "required evidence" test of Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932):
This Court, along with most other courts, has consistently held that the only feasible test for determining what is a "greater" and what is a "lesser included" offense is the so-called "required evidence" test of Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 76 L.Ed. 306 (1932), which focuses upon the elements of the crimes....While usually the "greater offense" under this test will represent the more heinous or aggravated crime, this is not always true.
288 Md. at 726, 421 A.2d 957 (emphasis supplied).
Gerald v. State, 299 Md. at 141, 472 A.2d 977, restated the special relationship between the two offenses with which Simms was concerned:
Simms involved two offenses, a greater offense, assault with intent to rob, of which the defendant was acquitted, and one lesser included offense, simple assault, of which he was convicted.
(Italicized emphasis in original; other emphasis supplied). In applying the rule of Simms, the analysis in Gerald repeatedly made reference to the "greater inclusive" and the "lesser included" offense:
Simple assault is a lesser included offense of both robbery and armed robbery. Like a little fish being eaten by a bigger fish which in turn is eaten by a yet bigger fish, simple assault is swallowed by robbery which then is swallowed by armed robbery. Therefore, had Gerald been convicted of armed robbery, the offenses of robbery and assault would have merged into the armed robbery, and he could have been sentenced only on the armed robbery conviction. Had he been acquitted on the armed robbery offense but convicted on the robbery offense, he could have been sentenced only on the robbery conviction. That is, upon conviction of a greater offense, a separate sentence may not be imposed on any lesser included offense.
299 Md. at 140-41, 472 A.2d 977 (italicized emphasis in original; other emphasis supplied).
The appellant is, of course, correct that IF the two charges now under our scrutiny were, indeed, in the symbiotic relationship to each other of a greater inclusive offense and a lesser included offense, the fact that the State nol prossed the greater charge before it was submitted to the jury would not compromise the appellant's argument for a penalty "cap." In rejecting the State's attempt to rely on such a nol pros to extricate itself from the rule of Simms, Judge Eldridge, in Johnson v. State, explained, 310 Md. at 694, 531 A.2d 675:
A nolle prosequi during the presentation of evidence or after the close of evidence might be generated by the defendant's success in undermining the prosecution's *570 case or in presenting a defense. The same defense success which leads to an acquittal might lead to a nolle prosequi on a greater charge before the case is submitted to the jury. The anomaly pointed to in the Simms opinion, therefore, may arise when the greater charge is nol prossed.
And see Walker v. State, 53 Md.App. 171, 199-200, 452 A.2d 1234 (1982).
If the first-degree assault in this case should turn out to have been a lesser included offense within the greater inclusive charge of attempted manslaughter, the ten-year penalty "cap" should, indeed, have been applied. If, on the other hand, the first-degree assault in this case was not a lesser included offense, then there never was a penalty "cap" and the twenty-year sentence for the assault was properly imposed. What remains for us to consider, therefore, is the senior/junior relationship between those two offenses under the circumstances of this case.
Attempted Manslaughter and First-Degree Assault:
The "Same Offense" or Different Offenses?
The dicta in our earlier consideration of this case dealt with the question of whether two convictionsone for attempted manslaughter and the other for first-degree assaultshould have merged. From the pleadings, the evidence, the jury instructions, the argument of counsel, and the verdict at that trial we could not tell, and our dicta suggested that where there is such ambiguity, the defendant should be given the benefit of the doubt under the "rule of lenity." Merger, however, is no longer an issue before us on this appeal because we are dealing only with a single pertinent conviction. There is nothing to merge. Ours is the very different question of whether to apply a penalty "cap" under the rule of Simms.
Notwithstanding the difference between the two issues, the merger cases are nonetheless very helpful to us. Both the merger cases and the penalty "cap" cases involve the common denominator first step of identifying what is a lesser included offense within the contemplation of Blockburger v. United States.
To apply the test of Blockburger, we list, side by side, the required elements of each criminal offense under scrutiny and then compare the sets of elements. If one set is completely subsumed within the other, the crime represented by the subsumed set is deemed a lesser included offense within the other. Mergers or penalty "caps" would be appropriate, depending on the configuration of the convictions. If, on the other hand, each set contains a unique element not found in the other set, the offenses are distinct. If there are convictions for both offenses, one would not merge into the other. If charges are brought and jeopardy attaches with respect to both offenses, neither offense, whatever its subsequent fate, can impose a penalty "cap" on the other.
Attempted criminal homicide (murder or manslaughter) requires 1) an intent to kill the would-be victim, Glenn v. State, 68 Md.App. 379, 511 A.2d 1110 (1986), and 2) some step toward that end beyond mere preparation, Gray v. State, 43 Md.App. 238, 239, 403 A.2d 853 (1979).
Assault generally requires either an actual battery, an attempted battery, or an attempt to frighten (not here pertinent) as its basic element. Lamb v. State, 93 Md. App. 422, 613 A.2d 402 (1992). First-degree assault requires an additional aggravating element that may take either of two alternative forms. Article 27, § 12A-1 provides in pertinent part:
(a) Serious physical injury; use of a firearm.(1) A person may not intentionally cause or attempt to cause serious physical injury to another.
(2) A person may not commit an assault with a firearm.
Looking first at attempted criminal homicide (murder or manslaughter), it is *571 clear that the required mens rea of an intent to kill the would-be victim is a unique element that is not a required part of any form of assault in either of its degrees.
Nightingale v. State And Multi-Form Offenses
As we turn our focus onto first-degree assault, however, we encounter the complicating presence of what Judge William H. Adkins referred to in Nightingale v. State, 312 Md. 699, 705, 542 A.2d 373 (1988), as "a multi-purpose criminal statute." A second-degree assault may be aggravated upward to the first-degree level by either of two alternative factors. The variety of assault dealt with by subsection 12A-1(a)(1) would be subsumed within an attempted voluntary manslaughter. The intent to kill required for an attempted manslaughter clearly embraces the intent "to cause serious physical injury" required by subsection (a)(1). There is nothing in a subsection (a)(1) variety of first-degree assault that is not a required part of attempted voluntary manslaughter. In one of its forms, first-degree assault is a lesser included offense within attempted manslaughter.
That is not the case, however, with respect to a subsection (a)(2) variety of first-degree assault. Its requirement that the underlying assault be committed with a firearm is unique to it. Manslaughter, for its part, may be attempted by modalities or with instrumentalities other than a firearm, so there is no requirement that a firearm be used. The (a)(2) form of first-degree assault, therefore, is not a lesser included offense of attempted manslaughter. Neither would a conviction for it merge into one for attempted manslaughter nor would it be subject to any penalty "cap" established by the penalty for attempted manslaughter.
At first blush, the perplexing answer to the critical question before us seems to be that first-degree assault BOTH IS AND IS NOT a lesser included offense. That, of course, is not a satisfactory answer. Fortunately, Nightingale v. State shows us the way out of the dilemma. It tells us, 312 Md. at 705, 542 A.2d 373, that "[w]hen a multi-purpose criminal statute is involved, we refine it by looking at the alternative elements relevant to the case at hand." Quoting with approval from Pandelli v. United States, 635 F.2d 533, 537 (6th Cir.1980), it more fully explains:
When, as here, a multi-purpose criminal statute is involved, the court
must construct from the alternative elements within the statute the particular formulation that applies to the case at hand. It should rid the statute of alternative elements that do not apply. It must, in other words, treat a multi-purpose statute written in the alternative as it would treat separate statutes. The theory behind the analysis is that a criminal statute written in the alternative creates a separate offense for each alternative and should therefore be treated for double jeopardy purposes as separate statutes would.
If, when we look at the applicable alternative elements, a lesser offense in effect becomes one of the elements of another offense, the Blockburger test is met.
312 Md. at 706-07, 542 A.2d 373 (emphasis supplied).
As State v. Ferrell, 313 Md. 291, 545 A.2d 653 (1988) made clear, moreover, the Nightingale analysis of a multi-form[5] crime applies, regardless of whether the omnibus crime that needs further particularization or pinning down is a statutory offense or a common law offense. As *572 Judge Eldridge explained, 313 Md. at 298, 545 A.2d 653:
[W]hen a common law offense or a criminal statute is multi-purpose, embracing different matters in the disjunctive, a court in applying the required evidence test must examine "the alternative elements relevant to the case at hand."
(Emphasis supplied).
In Nightingale, the multi-purpose crime that caused the problem was the potentially greater inclusive offense of child abuse under Art. 27, Sect. 35A. That statute proscribed child abuse in either of two manifestations: 1) where the child sustained actual physical injury or 2) where the abuse was sexual in nature without regard to actual physical injury. The issue before the Court of Appeals was whether a series of second-degree, third-degree, and fourth-degree sexual offenses under Sects. 464A(a)(3), 464B(a)(3), and 464C(a)(1) were lesser included offenses, the convictions for which should have merged into the conviction for child abuse.
After examining the evidence, the jury instructions, the opening statements, and the closing arguments, it was clear that the convictions for child abuse, in both companion cases, were exclusively for the sexual variety of child abuse and had nothing to do with the physical injury variety of the crime:
So far as child abuse is concerned, we can put aside any thought that these cases involve any aspect of child abuse based on physical harm or cruel physical treatment. At both Nightingale's and Myers's trials, the State's theory, as presented in opening statement, closing argument, and the court's instructions, was sexual child abuse.
Nightingale v. State, 312 Md. at 707, 542 A.2d 373.
For the merger analysis that followed, the physical injury form of the multi-form crime of child abuse was factored out as if it had never existed. Using the rule of lenity to resolve certain further ambiguities, the Court of Appeals concluded that the specific sexual offense conviction did, indeed, merge into the conviction for the sexual variety of child abuse.
That the determination of which form or forms of a multi-form crime is actually involved in any given case is the indispensable first step of any analysis was made very clear in Snowden v. State, 76 Md.App. 738, 747-48, 548 A.2d 165 (1988)(dissenting opinion by Moylan, J.):
As Judge Adkins recently pointed out for the Court of Appeals in Nightingale v. State, 312 Md. 699, 542 A.2d 373 (1988), when dealing with a "multi[form]" crime ..., a crime that may consist of different combinations of legal elements, we do not even begin the comparing process of deciding whether each contains an element not included in the other until we first select the combination of elements that we are dealing with in the context of that particular case.
(Emphasis supplied).
In Vogel v. State, 76 Md.App. 56, 543 A.2d 398 (1988), this Court was dealing with the possible senior/junior relationship between child abuse and a specific third-degree sexual offense. We noted initially that the child abuse statute
provides, in the disjunctive, two forms of "abuse." The first, not here pertinent, is the causing of physical injury to the child through cruel or inhumane treatment. The second form of abuse, the only one remotely apposite to this case, is "sexual abuse of a child, whether physical injuries are sustained or not."
76 Md.App. at 60, 543 A.2d 398.
Before proceeding further with any Blockburger analysis, we had to decide whether we were dealing with only form A of child abuse or only form B or both. We explained, 76 Md.App. at 63, 543 A.2d 398:
When a criminal offense comes in several different kinds, one does not even begin to catalogue the required elements *573 until one has selected the kind of the offense applicable in a given case. "When a multi-purpose criminal statute is involved, we refine it by looking at the alternative elements relevant to the case at hand."
(Emphasis supplied). We explained further, 76 Md.App. at 64, 543 A.2d 398, why the first determination would be dispositive:
It is clear that a sexual offense is subsumed within the "sexual abuse" species of the genus "child abuse," but not within the "physical injury" species, which involves no necessary sexual aspect.
In holding that a merger was compelled, we determined that the only form of child abuse possibly involved is the child abuse conviction under review was the sexual variety of that multi-form crime:
The only theory of abuse put forward in this case was "sexual abuse" in the form of a sexual offense, to wit, the act of fellatio perpetrated by the appellant upon the child. Although the crime of child abuse might, in the abstract, be consummated by other modalities not involving the commission of a sexual offense, in this case the alternative form of the offense that was chosen and pursued did include that element.
76 Md.App. at 60, 543 A.2d 398.
The Selection Process
May Look Upward And/Or Downward
The fact that in the case now before us the multi-form crime that needs further particularization is the arguably lesser crime whereas in Nightingale and Vogel the multi-form crime in question was the arguably greater one is a distinction without a difference. The Nightingale analysis is just as necessary and works just as well whether looking upward or downward or, indeed, in both directions. The need for particularization does not depend on which rung on the ladder is occupied by the multi-form crime. It may well be that one form of crime B is a lesser included offense of one form of crime A, whereas other forms of both A and B are immune from such mandatory coupling.
The Choices Are Not Mutually Exclusive
Another variation that can complicate a Nightingale analysis is that both prongs of a multi-form crime might be found to have been proved in a given case with one, but not both, of those forms possessing a unique element so as not to qualify as a lesser included offense. It is quite possible, as in the case now before us, that the answer to the "either ... or" question will not be in the disjunctive but in the conjunctive. In such a case, where the question "A or B?" yields the answer "Both," the conviction for the multi-form crime will not merge and the penalty for the multi-form crime will not be subject, under Simms, to a penalty "cap."
The combination of Newton v. State, 280 Md. 260, 373 A.2d 262 (1977) and State v. Frye, 283 Md. 709, 393 A.2d 1372 (1978) is instructive in this regard. Judge Eldridge's opinion in Newton was the pioneer analysis of the relationship between a conviction for first-degree murder and a conviction for a felony (or its attempt) possibly implicating one of the first-degree felony-murder statutes, Art. 27, Sects. 408, 409, or 410. Newton's concern was with the risk of multiple punishment for the same offense in violation of the Double Jeopardy Clause of the Fifth Amendment. Newton held that the predicate felony (or attempt) was a lesser included offense within a first-degree felony murder. The conviction for the predicate crime would, therefore, merge into the murder conviction because every element of the lesser crime was necessarily part of the required proof of the felony murder.
In applying Newton, a threshold problem that has to be faced is that murder in the first degree is a multi-form offense. The required aggravation, at least, is multi-form. No less than two aggravating *574 circumstances may elevate ordinary murder to the first-degree level. One is the presence of a wilful, deliberate and premeditated intent to kill under Sec. 407. The coincidental commission of some other felony is immaterial to it. The other is that the killing was committed in the course of the perpetration (or attempted perpetration) of one of the felonies listed in Sects. 408, 409, and 410. If the theory supporting the first-degree murder conviction is felony murder and nothing else, the conviction for the predicate felony indisputably merges into the murder conviction. Conversely, if the rationale for the first-degree murder conviction is clearly that the killing was premeditated and nothing else, the issue of possible merger would not even raise its head:
If, on the other hand, the murder conviction is premised upon independent proof of wilfulness, premeditation and deliberation under § 407, ... the offenses would not merge. Each offense would then require proof of facts which the other did not, and convictions on both would be proper.
280 Md. at 269, 373 A.2d 262.
The two forms of aggravation are not mutually exclusive and Newton does not directly address the situation wherein both supporting rationales are clearly established. Implicitly, however, Newton does provide the answer. If the first-degree murder conviction is based on a finding that both rationales have been proved, the doubling of the aggravation is superfluous. A finding as to a predicate felony is self-evidently not REQUIRED in such a case to sustain the first-degree murder conviction. As Judge Eldridge makes clear, 280 Md. at 269, 373 A.2d 262, Blockburger's REQUIRED ELEMENTS or REQUIRED EVIDENCE test only comes into play when every element of the lesser offense subject to merger is literally and absolutely REQUIRED:
[T]o secure a conviction for first degree murder under the felony murder doctrine, the State is required to prove the underlying felony and the death occurring in the perpetration of the felony. The felony is an essential ingredient of the murder conviction. The only additional fact necessary to secure the first degree murder conviction, which is not necessary to secure a conviction for the underlying felony, is proof of the death. The evidence required to secure a first degree murder conviction is, absent proof of death, the same evidence required to establish the underlying felony. Therefore, as only one offense requires proof of a fact which the other does not, under the required evidence test the underlying felony and the murder merge.
(Emphasis supplied). The emphasis is on the participle REQUIRED. When a conviction can stand on its own without a second supporting rationale, the second rationale (though welcome) is not REQUIRED.
What was implicit in Newton, Judge Eldridge made explicit in State v. Frye, 283 Md. at 716, 393 A.2d 1372:
Although we held in Newton that felony murder and the underlying felony are to be considered one offense for purposes of multiple punishment, and therefore the underlying felony would merge into the felony murder conviction, we also emphasized that if a first degree murder conviction is premised upon independent proof of wilfulness, premeditation and deliberation under Art. 27, § 407, then the murder, even though committed in the course of a felony, would not be deemed the same offense as the felony, and there would be no merger. "Each offense would then require proof of facts which the other did not, and convictions on both would be proper."
(Emphasis supplied).
First-Degree Assault: Form A or Form B or Both?
The first-degree assault conviction in this case was indisputably supported by *575 both alternative theories of aggravation. Both theories were presented by the State in its opening statement. Both theories were abundantly supported by the evidence. As to the use of a firearm, three State's witnesses testified that the appellant fired four or five shots. The appellant himself testified that he fired a gun. A bullet broke the victim's leg. Three other bullets hit the victim in the back.
In closing argument, the prosecutor presented both theories of aggravation to the jury. With respect to the use of a firearm, he argued:
With regard to the second question that you are asked on the verdict sheet, Judge Johnson asked, is the Defendant guilty or not guilty of first degree assault? That is, did the Defendant intentionally shoot Edward Tyrone Johnson four times as a result of an intentional or reckless, but not accidental act?
The answer is yes to that. He's guilty. Mr. Johnson told you how many times he was shot. The medical records are in evidence. You can take a look at them yourself, and it was intentional.
(Emphasis supplied).
Judge Johnson instructed the jury as to both theories of aggravation. With respect to the use of a firearm, he explained:
Secondly, the Defendant is charged with first degree assault under a different theory. In this particular case, the State must prove to you beyond a reasonable doubt that the Defendant used a firearm to commit an assault. That is, the Defendant used a firearm to commit the assault.
(Emphasis supplied).
Quite aside from the fact that the jury found the appellant guilty of the use of a handgun to commit a crime of violence, the jury returned separate findings of guilty as to each theory of aggravation necessary to raise assault to the first-degree level. Questions two and three, respectively, dealt with those separate forms of aggravation. The jury's double verdict as to first-degree assault was:
THE DEPUTY CLERK: As to question number two, is the Defendant guilty or not guilty of first-degree assault?
THE FOREMAN: Guilty.
THE DEPUTY CLERK: As to question number three, is the Defendant guilty or not guilty of first-degree assault?
THE FOREMAN: Guilty.
Unlike the situation in the first trial, discussed in dicta in our first opinion, there was no ambiguity on this occasion as to the basis for the jury's verdict of guilty on the charge of first-degree assault. There was no vagueness calling for resolution under the rule of lenity. The hypothetical possibility discussed in the dicta never came to pass.
Allowing for a modest linguistic adjustment because we are here applying the Nightingale analysis by looking downward at a multi-form crime that was arguably a lesser included offense rather than upward at a multi-form crime that was arguably a greater inclusive offense, it is clear that the variety of first-degree assault that would merge into a conviction for attempted voluntary manslaughter was NOT REQUIRED to sustain the first-degree assault conviction here. That conviction rested, albeit redundantly, on an independent basis. That independent rationale, moreover, had a unique element, the use of a firearm, NOT REQUIRED to prove attempted voluntary manslaughter.
The first-degree assault in this case was not a lesser included offense of attempted manslaughter and was not, therefore, subject to any penalty "cap" under the rule of Simms by virtue of attempted manslaughter's earlier presence in the trial after jeopardy had attached.
Lesser Included Offenses
Under Hook v. State and Hagans v. State
Having settled the penalty-cap issue, we find, fortunately, that we have *576 already done our homework for the appellant's final contention. The appellant invokes Hook v. State, 315 Md. 25, 553 A.2d 233 (1989), for the proposition that the State should not have been permitted, over his objection, to nol pros the attempted manslaughter charge with its maximum penalty of ten years. Without mentioning it by name, the appellant, in a variation on the theme of Hook, also invokes Hagans v. State, 316 Md. 429, 559 A.2d 792 (1989), for the proposition that even if attempted manslaughter had never been a charge in this case, he was nonetheless entitled to have the jury instructed as to it.[6]
As a threshold matter, these cases only apply when the count to be shielded from the nol pros, per Hook, or the uncharged offense to be brought to the jury's attention as the possible basis of an alternative conviction, per Hagans, is a lesser included offense. The clear holding of Hook establishes a limitation on the State's prerogative to nol pros a charge only when that charge is a lesser included offense within a greater inclusive offense that is being submitted to the jury. As Judge Orth set out the full impact and applicability of Hook, 315 Md. at 43-44, 553 A.2d 233:
When the defendant is plainly guilty of some offense, and the evidence is legally sufficient for the trier of fact to convict him of either the greater offense or a lesser included offense, it is fundamentally unfair under Maryland common law for the State, over the defendant's objection, to nol pros the lesser included offense. ... [I]t is simply offensive to fundamental fairness, in such circumstances, to deprive the trier of fact, over the defendant's objection, of the third option of convicting the defendant of a lesser included offense. And if the trial is before a jury, the defendant is entitled, if he so desires, to have the jury instructed as to the lesser included offense.
(Emphasis supplied).
At the very outset of the Hagans opinion, 316 Md. at 433, 559 A.2d 792, Judge Eldridge stated the issue before the Court:
It is whether, as a matter of Maryland common law, a defendant ordinarily can be convicted of an offense which is not charged but which is a lesser included offense of the one that is charged.
(Emphasis supplied).
The legal analysis of the Hagans opinion constantly reiterated that the subject of that analysis was an uncharged lesser included offense:
The principle that a defendant, charged with a greater offense, can be convicted of an uncharged lesser included offense, has been adopted by virtually every jurisdiction in the United States which has passed upon the issue.....
The rationale underlying the lesser included offense doctrine was well stated in Note, Lesser Included Offense Doctrine in Pennsylvania: Uncertainty in the Courts, 84 Dick. L.Rev. 125, 126 (1979)[.] ...
Since the rule permitting a conviction on an uncharged lesser included offense was well-established at common law, is accepted throughout the United States today, and generally promotes a just result in criminal cases, we shall adhere to it.
316 Md. at 447-48, 559 A.2d 792 (Emphasis supplied; footnote omitted).
*577 Hagans then held, 316 Md. at 449-50, 559 A.2d 792, that the Blockburger test would be used to determine what charges qualified as lesser included offenses:
Under the "required evidence" or "elements tests," courts look at the elements of the two offenses in the abstract. All of the elements of the lesser included offense must be included in the greater offense. Therefore, it must be impossible to commit the greater without also having committed the lesser.
* * *
We agree that a defendant may only be convicted of an uncharged lesser included offense if it meets the elements test.
(Emphasis supplied; footnote omitted).
Judge Eldridge further explained, 316 Md. at 453, 559 A.2d 792, that the "lesser included offense doctrine" could work for the benefit of a defendant as surely as for the benefit of the State.
Although the lesser included offense doctrine developed at common law largely for the benefit of the prosecution, it may now also be invoked by the defendant.... In Keeble v. United States[, 412 U.S. 205, 93 S.Ct. 1993, 36 L.Ed.2d 844] (1973), the Supreme Court indicated that not allowing the defendant the right to request an instruction on a lesser included offense might violate the Due Process Clause of the Fifth Amendment of the United States Constitution. And in Beck v. Alabama[, 447 U.S. 625, 100 S.Ct. 2382, 65 L.Ed.2d 392 (1980)] ..., the Court held that before the imposition of the death sentence, the jury must be allowed to consider a lesser included offense if the evidence warrants it.
(Emphasis supplied).
The one characteristic that the Hook-Hagans line of cases shares with the compulsory merger cases and the penalty "cap" cases is that necessity for identifying what is a lesser included offense. As we have already established at great length, there was no lesser/greater symbiotic relationship in this case between the first-degree assault conviction and the charge of attempted manslaughter that the appellant wanted to have either salvaged or resurrected. Even had attempted manslaughter remained in the case, neither the conviction nor the sentence for first-degree assault would in any way have been affected.
Even if, moreover, we were to assume, arguendo, that such a lesser/greater relationship existed between first-degree assault and attempted manslaughter, the attempted manslaughter charge would have been the greater charge, not the lesser. The appellant attempts to apply Hook and Hagans to something other than a lesser included offense. The appellant actually turns Hook and Hagans upside down. There has never been a suggestion that Hook would in any way inhibit the nol pros of a greater charge or that Hagans would in any way mandate an instruction as to a greater crime than the one submitted to the jury. The fundamental rationale of those cases simply does not apply.
The rule of those cases, moreover, just won't work when turned upside down. Even to suggest, for example, that, under Hagans, a jury could return a verdict of guilty of attempted manslaughter on a count that only charged first-degree assault is, on its face, an absurdity. Where would the mens rea of a specific intent to kill come from? A defendant cannot be convicted of something with which he has not, even implicitly, been charged.
JUDGMENTS AFFIRMED; COSTS TO BE PAID BY APPELLANT.
NOTES
[1] After Johnson testified that he had selected a photograph of the appellant from a photographic array presented to him while he was being treated at the Shock Trauma Unit, defense counsel vigorously cross-examined him about the effects of his pain medication in an effort to show that he, under the influence of morphine, was not "aware of what he was doing" when he made that identification.
[2] Just as a precaution, it is worth noting that at a later point in the direct examination of Johnson, the following came in without objection:
[Prosecutor]: You indicated previously you had purchased drugs from the Defendant in that area? Do you know approximately how many times?
[Johnson]: No, not really.
See Klauenberg v. State, 355 Md. 528, 541, 735 A.2d 1061 (1999); Jones v. State, 310 Md. 569, 588-89, 530 A.2d 743 (1987); Tichnell v. State, 287 Md. 695, 716, 415 A.2d 830 (1980); Williams v. State, 131 Md.App. 1, 22, 748 A.2d 1 (2000); and Clark v. State, 97 Md.App. 381, 394-95, 629 A.2d 1322 (1993).
[3] Again just as a precaution, we note 1) that during a subsequent part of the State's case-in-chief, two different officers testified, without objection, to attending a second shooting "victim" found at the scene; 2) that on the cross-examination of the appellant, several references were elicited, without objection, to his accidental shooting of "Mike"; and 3) that in rebuttal, one of the officers testified, without objection, to references made by the appellant to the accidental shooting of "Mike." Although defense counsel had at one point requested a continuing objection to any reference to the shooting of "Mike," Judge Johnson did not grant a continuing objection. See Klauenberg v. State, 355 Md. 528, 541, 735 A.2d 1061 (1999); Jones v. State, 310 Md. 569, 588-89, 530 A.2d 743 (1987); Tichnell v. State, 287 Md. 695, 716, 415 A.2d 830 (1980); Williams v. State, 131 Md.App. 1, 22, 748 A.2d 1 (2000); and Clark v. State, 97 Md.App. 381, 394-95, 629 A.2d 1322 (1993).
[4] Where, instead of limiting the penalty, the Legislature chooses to permit, or even to require, multiple punishment for related offenses arising out of the same criminal incident, as in the case of many handgun offenses, there is no constitutional impediment. See also Md.Code (1996 Repl.Vol.) Art. 27, § 36H-6; Whack v. State, 288 Md. 137, 143-50, 416 A.2d 265 (1980).
[5] In terms of usage, we will refer to the Hydra-headed misconduct outlawed by a multi-purpose statute or by an equally variegated common-law prohibition as a "multi-form crime" or "multi-form offense."
[6] In this case, where a nol pros was actually entered, it would appear that the appellant would have to rely on Hook and not on the Hagans variation. As Hagans explained its own limitations, 316 Md. at 455, 559 A.2d 792:
[W]here the State enters a nolle prosequi as to an uncharged lesser included offense, ... it would obviously be inappropriate to submit the lesser included offense to the jury, except to the extent that the defendant desires and is entitled to have it submitted under principles recently set forth in Hook v. State [.]
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755 A.2d 1171 (2000)
333 N.J. Super. 362
CUMBERLAND COUNTY BOARD OF SOCIAL SERVICES, Plaintiff-Respondent,
v.
W.J.P., Defendant-Appellant, and
G.D., Defendant.
Superior Court of New Jersey, Appellate Division.
Argued February 28, 2000.
Decided July 14, 2000.
*1172 Robert J. O'Donnell, Millville, argued the cause for appellant W.J.P. (Mr. O'Donnell on the brief).
Julio L. Mendez, Vineland, argued the cause for respondent Cumberland County Board of Social Services (Mr. Mendez on the brief).
Cris D'Arrigo, Guardian ad Litem for A.P., argued the cause on her behalf (D'Arrigo & D'Arrigo, attorneys; Mr. D'Arrigo on the brief).
Before Judges HAVEY, KEEFE and A.A. RODRIGUEZ.
The opinion of the court was delivered by RODRIGUEZ, A. A., J.A.D.
In this appeal, a stepfather appeals from the Family Part's order directing that both he and the biological father of a minor each pay support for her benefit. The Family Part judge reasoned that the stepfather's obligations are premised on the fact that he acted in loco parentis. We hold that once a natural parent has been identified, has been ordered to pay support, and establishes a relationship with the minor, in loco parentis support cannot be compelled from a stepfather.
These are the pertinent facts. Anne is now age eleven.[1] Anne's mother and W.J.P. had a relationship from which one son was born. The relationship ended sometime in 1987. Anne's mother then began a relationship in December 1987 with G.D. Anne is the result of this union. Before Anne was born, her mother and G.D. ended their relationship. She then rekindled her relationship with W.J.P. When Anne was born, she received her mother's surname. Anne's mother did not identify anyone as the father on the birth certificate. Eight months later, she and W.J.P. were married. Thereafter, they had another son and two years later they separated.
*1173 During the separation, Anne's mother filed a complaint against W.J.P. for paternity of Anne. She also sought child support for all three children. W.J.P. agreed to paternity and child support, which was memorialized in a consent order. This order also directed the Bureau of Vital Statistics to issue a new birth certificate for Anne using W.J.P.'s surname. Three years later, Anne's mother and W.J.P. divorced. The final judgment of divorce provided that W.J.P. was to pay support for the two boys and Anne. Sometime in 1996, Anne's mother told her that G.D. was her natural father, not W.J.P. Since that time, W.J.P. has had virtually no contact with Anne. In August 1997, W.J.P. and Anne's mother stipulated that Anne be removed from the child support order. A consent order to this effect was entered by the court and the amount of support was reduced proportionally.
Several months later, Anne's mother applied for public assistance benefits from the Cumberland County Board of Social Services (Board). She disclosed that the natural father of her two boys was W.J.P. and the natural father of Anne was G.D. The Board filed a complaint for paternity against G.D., which he denied. The trial court ordered G.D. to undergo Human Leucocyte Antigen (H.L.A.) testing and W.J.P. was joined as a party in the paternity action. The judge directed that a Guardian ad Litem be appointed from the pro bono list in order to safeguard Anne's best interests. Thereafter, the Guardian ad Litem, Christen D'Arrigo, met with Anne and submitted a report to the trial court. The report recommended that G.D. and W.J.P. be ordered to submit to genetic paternity testing. The report also contains the following observation by the Guardian ad Litem:
Indeed, the realization that [WJP] is not her father has somewhat softened the rejection [Anne] has suffered from [him]....it was apparent to me that under no circumstances would she accept anyone other than her biological father as her "father."
The judge ordered G.D. and W.J.P. to undergo genetic paternity testing and that all parties share financial information. Thereafter, based on the genetic test results, G.D. admitted to paternity of Anne and he arranged for visitation with her.
After hearing oral argument from all parties, including the Guardian ad Litem, the judge ordered both G.D. and W.J.P. to pay child support reimbursement to the Board. The judge also ordered that the fee for the Guardian ad Litem be paid equally by G.D. and W.J.P. The judge also ordered both men to obtain a $50,000 life insurance policy for Anne's benefit, to remain in effect until Anne's emancipation. Lastly, G.D. was ordered to pay for the genetic testing. The judge issued a written opinion memorializing the oral decisions.
W.J.P. appeals the obligations to pay support and to provide life insurance coverage for Anne (December 16, 1998 order), and the obligation to pay one-half of the Guardian ad Litem fee (December 18, 1998 order). He contends that the judge erred by ordering him to pay support for Anne when her natural father has an obligation to provide support for her. W.J.P. asserts that he does not stand in loco parentis with Anne as determined by the trial court.
At common law, parents had an absolute duty to support their children. Monmouth County Div. of Soc. Serv. for D.M., n/k/a D.W. v. G.D.M., 308 N.J.Super. 83, 87-88, 705 A.2d 408 (Ch.Div.1997). There is no statutory requirement in New Jersey imposing a duty of support on third-party non-parents. Nonetheless, a person, other than a child's natural or adoptive parent, may be charged with a parent's duties and responsibilities if he or she stands in loco parentis. Miller v. Miller, 97 N.J. 154, 167, 478 A.2d 351 (1984). "The proper definition of a person in loco parentis to a child is a person who *1174 means to put himself [or herself] in the situation of the lawful father [or mother] of the child with reference to the father's [or mother's] office and duty of making provision for the child." D. v. D., 56 N.J.Super. 357, 361, 153 A.2d 332 (App.Div.1959) (citing with approval Brinkerhoff and wife v. Merselis' Executors, 24 N.J.L. 680, 683 (Sup.Ct.1855)).
Generally, an in loco parentis relationship does not permanently affix parental duties upon a step-parent. Ibid. That is, the relationship can be disclaimed after a step-parent divorces a child's natural parent. Nonetheless, courts have held that a step-parent's duty to support a spouse's child may extend beyond the dissolution of their marriage. See M.H.B. v. H.T.B., 100 N.J. 567, 498 A.2d 775 (1985); Miller, supra, 97 N.J. at 154, 478 A.2d 351; C.R. v. J.G., 306 N.J.Super. 214, 703 A.2d 385 (Ch.Div.1997). In these cases, courts have relied on principles of equitable estoppel and implied contract to impose a continuing obligation of child support upon the step-parent.
The first key case in this area is Ross v. Ross, 126 N.J.Super. 394, 314 A.2d 623 (J. & D.R. Ct.1973), aff'd, 135 N.J.Super. 35, 342 A.2d 566 (App.Div.1975). In Ross, a stepfather voluntarily allowed his name to be placed on the birth certificate of the minor child, even though he knew that the child was not his. Id. at 396, 314 A.2d 623. However, the child, in Ross, was unaware that his stepfather was not his natural father. Id. at 396-97, 314 A.2d 623. The court held that the stepfather was equitably estopped from withholding child support from the child. Id. at 400, 314 A.2d 623. Reasoning that the child would be "irretrievably injured," the court concluded that the stepfather could not repudiate "acts done or positions taken or assumed by him when there has been reliance thereon and prejudice would result to the other party." Id. at 398, 314 A.2d 623 (citations omitted). Additionally, the court in Ross found that the prior inconsistent admissions by the stepfather triggered the application of equitable estoppel. Ibid.
In Miller, the Supreme Court clarified the standard for applying principles of equitable estoppel. The Court held that a step-parent must make some representation of support to either the child or the natural parent before he or she can be obligated to continue that support. Miller, supra, 97 N.J. at 167, 478 A.2d 351. Although the Miller case specifically dealt with the issue of pendente lite support, the holding is equally applicable to permanent support obligations. Id. at 159, 478 A.2d 351. In Miller, the stepfather supported the children of his wife for seven years, as their father. Id. at 160, 478 A.2d 351. There was evidence that although the children knew he was not their father, they considered him their father and loved him very much. Ibid. Additionally, the children had used the stepfather's surname while they were in school. Id. at 161, 478 A.2d 351.
The Court, in Miller, held that in order to obligate a step-parent to continue permanent child support, there must be evidence of 1) representation; 2) reliance; and 3) detriment. Id. at 167, 478 A.2d 351. Further, the Court found that there must be some evidence "that the children will suffer future financial detriment as a result of the stepparent's representation or conduct that caused the children to be cut off from their natural parent's financial support." Id. at 168-69, 478 A.2d 351. As a result, a "natural parent should always be considered the primary recourse for child support," however, a step-parent can still be held accountable for a child's continued support. Id. at 169, 478 A.2d 351.
Next, in a factual setting similar to the case at hand, the Supreme Court determined whether a step-parent could be estopped from discontinuing a voluntarily assumed child support obligation in M.H.B. v. H.T.B., 100 N.J. 567, 498 A.2d 775 (1985). In M.H.B., the parties involved had two children together, while the third child was conceived by the natural mother *1175 and another man. Id. at 569, 498 A.2d 775. The stepfather in M.H.B., even after learning that the third child was not his own, continued to maintain a bond with all of the children after the separation and during a short-lived attempt at reconciliation. Ibid. The couple signed a separation agreement followed by a final decree of divorce whereby all three children were considered born of the marriage and all three children were to receive child support from the stepfather. Id. at 570, 498 A.2d 775.
Relying on the principles set forth in Miller, the Court held that the stepfather was equitably estopped from denying his duty to provide child support for the child that was not naturally his. Id. at 578-79, 498 A.2d 775. The Court concluded that the stepfather's actions amounted to "a voluntary and knowing course of conduct with respect to [the child], which constituted in its purpose and effect an affirmative representation that he was her natural father." Id. at 576, 498 A.2d 775. The Court continued finding that the child's reliance was detrimental due to the financial harm she would suffer if her stepfather were allowed to "evade the responsibilities he had assumed." Id. at 577, 498 A.2d 775.
In the most recent case in this area, Camden County Board of Social Services v. Yocavitch, 251 N.J.Super. 24, 34, 596 A.2d 769 (Ch.Div.1991), the Chancery Division determined that a natural father can not use principles of equitable estoppel to deny a duty to pay child support based on a stepfather's representations. In Yocavitch, the stepfather consented to support for a non-biological child during and after the divorce. Id. at 28, 596 A.2d 769. When the Board of Social Services brought a paternity suit against the natural father, the natural father brought in the stepfather as a third-party defendant. Ibid. The trial court held that the natural father could not use equitable estoppel to deny his obligation because he could not demonstrate the three requirements of representation, reliance and detriment. Id. at 31, 596 A.2d 769. The trial court stated further that a stepfather's "inaction" (acceptance of a child as his own knowing that the child was not his) "is not that type of `positive action interfering with the natural parent's support obligation' which Miller requires before the step-parent is bound." Id. at 31-32, 596 A.2d 769. Hence, Yocavitch does not allow a natural father to use "equitable estoppel as a shield to avoid his own obligation." Id. at 32, 596 A.2d 769.
The present case is different from Ross, Miller, M.H.B., and Yocavitch. Here, there is a biological father who is paying support and has established a bond with the child. Moreover, the stepfather, W.J.P., has terminated his relationship with Anne. As the Guardian ad Litem's report states, Anne has accepted G.D. as her father and does not want a relationship with W.J.P. Under these circumstances, it would be inequitable to foist a continuing in loco parentis status on W.J.P. with a concomitant support obligation. Therefore, we conclude that W.J.P. has no support obligation towards Anne after August 26, 1998, the date G.D. admitted paternity and began to take steps to establish a parental relationship with her. Based on this conclusion, we decline to consider W.J.P.'s argument that: (1) the judge's order requiring him to pay $37.00 per week for child support to Anne failed to consider the Child Support Guidelines pursuant to R. 5:6A; (2) there is no need for additional support from W.J.P. because Anne's financial needs are being met by G.D.; (3) the judge erred by failing to consider a prior order which was not appealed or subject to a motion under R. 4:50-1; and (4) the judge erred by determining W.J.P.'s child support obligation when not considering his financial circumstances and failing to place appropriate factual basis upon the record to support such an order.
The remaining contentions raised by W.J.P. are: the judge's decision to order defendant to pay part of the Guardian ad *1176 Litem fee was inappropriate when considering defendant's financial circumstances; and the judge's findings do not comport with the pleadings and documents submitted. After careful review of the record we are satisfied that these legal issues are clearly without merit and an opinion would have no precedential value. R. 2:11-3(e)(1)(E).
Accordingly, those portions of the December 16, 1998 order which imposed a child support obligation on W.J.P. after August 26, 1998, and the obligation to obtain a life insurance policy for the benefit of Anne are reversed. In all other aspects, the December 16, 1998 order is affirmed. Additionally, the December 18, 1998 order directing W.J.P. to pay one-half of the Guardian ad Litem fee, is affirmed.
NOTES
[1] Anne is a fictitious name. She is identified in the record as A.P.
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933 S.W.2d 336 (1996)
Leonard MEDNICK, Appellant,
v.
TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY, Appellee.
No. 03-96-00150-CV.
Court of Appeals of Texas, Austin.
October 30, 1996.
Rehearing Overruled December 5, 1996.
Susan Henricks, Maroney, Crowley, Bankston, Richardson & Hull, L.L.P., Austin, for appellant.
Dan Morales, Attorney General, Patricia Zacharie, Assistant Attorney General, Financial Litigation Division, Austin, for appellee.
Before CARROLL, C.J., and KIDD and B.A. SMITH, JJ.
*337 KIDD, Justice.
In his only point of error, Leonard Mednick, appellant, challenges the district court's dismissal of his suit seeking judicial review of an order of the Texas State Board of Public Accountancy, appellee (the "Board"). Without a hearing and based solely on the pleadings, the district court granted the Board's plea to the jurisdiction and dismissed Mednick's cause for lack of jurisdiction, finding that Mednick's motion for rehearing before the Board was not timely filed. We will reverse the order of the district court and remand the cause for further proceedings.
BACKGROUND
Leonard Mednick is a certified public accountant. On February 24, 1995, the Board found him in violation of an administrative rule regulating advertising by public accountants. On March 14, 1995, the Board mailed its written order to Mednick's attorney. On April 3, 1995, Mednick filed a motion for rehearing; however, the Board refused to consider the motion on the ground that it was not timely filed pursuant to section 22(f) of the Texas Public Accountancy Act (the "Accountancy Act"), Tex.Rev.Civ. Stat. Ann. art. 41a, §§ 1-32 (West Supp.1996). The Board took no further action and on May 19, 1995, Mednick filed a petition for judicial review in the district court. The district court found that Mednick's motion for rehearing was untimely filed under the Accountancy Act and dismissed the cause for lack of jurisdiction.
The issue in this case concerns the timeliness of Mednick's motion for rehearing. Mednick filed his motion for rehearing twenty days after the written order was mailed to his attorney. The Accountancy Act states that if a party files a motion for rehearing, it "must be filed within 15 days of the rendition of the order, ruling, or decision complained of." Accountancy Act § 22(f). In contrast, the Administrative Procedure Act (the "APA")[1] requires that, in order to preserve the right to appeal the Board's decision to the district court, a party must file a motion for rehearing "not later than the 20th day after the date on which the party or the party's attorney of record is notified." Tex. Gov't Code Ann. § 2001.146(a). Therefore, we must decide whether the procedures set forth in the Accountancy Act or the APA govern the time limit for filing a motion for rehearing of the Board's decision.
CONTENTIONS OF THE PARTIES
Both parties raise a number of theories regarding the resolution of the conflict between the procedural provisions of the two statutes. Mednick contends that receipt of written, as opposed to oral, notice of the Board's order commenced the running of the time period for the filing of a motion for rehearing. Further, Mednick argues that the APA's twenty-day deadline to file a motion for rehearing controls over the fifteen-day deadline in the Accountancy Act. To support his argument, Mednick asserts that the Accountancy Act's language is directory whereas the APA's language is mandatory; therefore, the APA provides the proper jurisdictional method to seek judicial review of the Board's order. Additionally, Mednick contends that the APA's language controls because the APA, codified in 1993, is the most recent expression of legislative intent with regard to administrative procedure. Finally, Mednick asserts that, because the APA sets the timetable for seeking judicial review, his petition was timely filed and the district court had jurisdiction.
In response, the Board contends that Mednick's presence, with his attorney, at the meeting at which the Board rendered its decision constituted personal notice of the Board's order and commenced the running of the time period for the filing of a motion for rehearing.[2] Further, the Board argues that *338 the Accountancy Act's fifteen-day provision should prevail over the APA's twenty-day provision. In support of this argument, the Board asserts that the Accountancy Act's provision applies because it is a specific statute, while the APA is a general one. The Board also asserts that, because the Accountancy Act was re-enacted in 1991, it is the legislature's most recent expression of intent regarding the administrative procedures to be followed by the Board; therefore, the provisions of the Accountancy Act apply except where supplemented by the mandatory requirements of the APA. Ultimately, the Board contends that, because Mednick did not file his motion for rehearing in compliance with the Accountancy Act, the district court did not have jurisdiction to hear Mednick's appeal.
DISCUSSION
Although the parties present persuasive arguments in support of their contentions, the language of the Accountancy Act provides the basis for the resolution of the present conflict. The Accountancy Act fully incorporates the APA, stating that "the Board is subject to ... the Administrative Procedure and Texas Register Act, as amended."[3] Accountancy Act § 27. As a result of this inclusive language, we are of the opinion that the two acts should be viewed as one.
The APA expressly establishes "minimum standards of uniform practice and procedure for state agencies." APA § 2001.001(1); see Railroad Comm'n v. Arco Oil & Gas Co., 876 S.W.2d 473, 489 (Tex.App.Austin 1994, writ denied). Because the APA provides the minimum standards for procedural matters, an agency's organic statute cannot restrict the procedural time requirements established by the APA. In its original form, the APA gave a party fifteen days to file a motion for rehearing; however, in 1989 the legislature amended the APA to extend the time limit to twenty days. Act of May 29, 1989, 71st Leg., R.S., ch. 362, § 1, 1989 Tex. Gen. Laws 1448 (Tex.Rev.Civ.Stat.Ann. art. 6252-13a, § 16(e), since repealed and codified at Tex. Gov't Code Ann. § 2001.146(a)). The time limit set forth in the Accountancy Act allows a party only fifteen days to file a motion for rehearing. Accordingly, the Accountancy Act denies an appealing party the minimum standard established by the APA.
In Reed v. Department of Licensing and Regulation, 820 S.W.2d 1 (Tex.App.Austin 1991, no writ), we considered whether a conflict existed between the APA's requirement that a party file a motion for rehearing as a prerequisite to judicial review and the organic act's failure to require any motion for rehearing. Id. at 2-4. We concluded that the legislature had clearly expressed its intent that the APA provide the principal law of judicial review and that the omission of mandatory language in the organic act "did not expressly repeal the application of [the APA] to the Department." Id. at 2. Similarly, in the present case, the Accountancy Act does not mandate that a party file a motion for rehearing; it does, however, provide for the application of the minimum procedural requirements of the APA. See Simmons v. State Bd. of Dental Examiners, 925 S.W.2d 652 (Tex.1996).[4]
Because the Accountancy Act has fully incorporated the APA, which provides the minimum standards for judicial review of agency decisions, we hold that the APA's twenty-day time period controls over the fifteen-day time period in the Accountancy Act. Under the APA, Mednick had twenty days to file a *339 motion for rehearing of the Board's order; therefore, Mednick's motion for rehearing was timely filed. Within thirty days after the Board's order became final and appealable,[5] Mednick filed his petition for review in the district court. See APA § 2001.176(a); Accountancy Act § 22(f)(3). Because Mednick timely complied with the procedural requirements for judicial review, the district court had jurisdiction over his appeal.
CONCLUSION
Accordingly, we sustain Mednick's point of error. We reverse the order of the trial court and remand the cause for further proceedings.
NOTES
[1] The Administrative Procedure and Texas Register Act was codified without substantive changes in 1993 and may be cited as the Administrative Procedure Act. All citations in this opinion are to the current Administrative Procedure Act. Act of May 4, 1993, 73d Leg., R.S., ch. 268, § 47, 1993 Tex. Gen. Laws 583, 986 (Administrative Procedure Act, Tex. Gov't Code Ann. §§ 2001.001-.902 (West 1988 and Supp.1996)).
[2] We reject this contention. It is well established that a party must move for rehearing with sufficient specificity so that an agency may correct its error. See Hamamcy v. State Bd. of Medical Examiners, 900 S.W.2d 423, 425 (Tex.App.Austin 1995, writ denied). It follows that a party's ability to file an intelligent and adequate motion for rehearing would be compromised if the oral pronouncement of the Board's decision commenced the procedural timetable.
[3] Numerous statutes mirror the "subject to" language of section 27. See, e.g., Texas Structural Pest Control Act, Tex.Rev.Civ. Stat. Ann. art. 135b-6, § 3(g) (West Supp.1996); Texas Engineering Practice Act, Tex.Rev.Civ. Stat. Ann. art. 3271a, § 7(b) (West Supp.1996).
[4] Although the organic statute at issue in Simmons did not require a motion for rehearing as a prerequisite to appeal, the plaintiff filed both a motion for rehearing with the board and a petition for review in the district court. Id. He then moved to stay the petition for review pending the overruling of his motion for rehearing by operation of law. Id. The court held that the plaintiff had substantially satisfied the judicial review requirements of the APA and that the district court had jurisdiction over his appeal. Id. at 654.
[5] Both the APA and the Accountancy Act provide that an order is final and appealable when the motion for rehearing is overruled. APA § 2001.144(a)(2); Accountancy Act § 22(f)(2). Although the two statutes differ as to what event initiates the timetable for overruling a motion for rehearing, the conflict is not properly before us because Mednick filed his petition for review after his motion for rehearing was overruled according to the provisions of both statutes. See APA § 2001.146(c); Accountancy Act § 22(f)(1).
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848 S.W.2d 314 (1993)
Manharlal B. SEDANI, Appellant,
v.
The STATE of Texas, Appellee.
No. 01-91-00839-CR.
Court of Appeals of Texas, Houston (1st Dist).
February 11, 1993.
Opinion Overruling Motion for Rehearing March 25, 1993.
Discretionary Review Refused June 9, 1993.
*315 W.E. Herman, III, Humble, for appellant.
John B. Holmes, Jr., Dist. Atty., Karen A. Clark, Larry McDougal, Bill Stradley, Asst. Dist. Attys., Houston, for appellee.
Before SAM BASS, COHEN and JONES, JJ.
OPINION
SAM BASS, Justice.
A jury convicted Manharlal B. Sedani of carrying a handgun, then assessed punishment of 180 days, probated, and a fine of $500. In three points of error, Sedani asserts the trial court erred in overruling his motion to suppress. We sustain his first two points of error, and reverse and remand the judgment.
On January 12, 1991, at about 1:20 a.m., Officer Treat was on patrol in the Montrose area. He observed Sedani make a right turn without a signal. A few blocks later, he observed Sedani drive in two lanes of traffic. Officer Treat stopped Sedani for these offenses. After asking for his license and proof of insurance, Officer Treat noticed Sedani's eyes were red and "real glassy." He asked Sedani to step out and administered a horizontal gaze sobriety test. Officer Treat determined Sedani was not intoxicated. He then wrote two citations for the traffic violations he observed and explained them to Sedani.
Sedani accused Officer Treat of lying and picking on him, and denied committing the violations. He asked Officer Treat what would happen if he didn't sign the citations. Officer Treat advised him that he would be booked and jailed. Sedani "yanked" Officer Treat's clipboard out of his hands and proceeded to sign the citations. He repeatedly told Officer Treat that this was a day the officer would remember and regret in court. Officer Treat gave Sedani his copies of the citations. Sedani "immediately took it and ripped it up into shreds before, before my very eyes and continues his threats of how I'm gonna regret this."
Officer Treat then opened the car door and asked Sedani to step out. He handcuffed Sedani and put him in the back seat of his patrol car. Pursuant to department policy, Officer Treat called his supervisor for authority to arrest Sedani on a class C misdemeanor. Sergeant Crawford arrived at the scene and approved the arrest.
Officer Treat called a wrecker and completed an inventory search of the cabin. He found a white bank bag under the driver's seat with a .38 revolver loaded with six live rounds, some checks, and assorted papers.
We first address Sedani's third point of error attacking the sufficiency of the evidence to support his conviction "where the evidence was insufficient to [sic] a rational trier of fact to have concluded that Officer *316 Treat has probable cause to believe the appellant would not appear in court as required." Sedani argues that Officer Treat needed probable cause to re-arrest him after he tore up his citation. Since the evidence does not support a finding of probable cause, he argues, the arrest was illegal, and the jury should have ignored the gun and acquitted him. The State counters the charge required only a "reasonable belief that appellant would not appear in court" and the evidence was sufficient to support the charge.
When reviewing sufficiency of the evidence on appeal, a reviewing court must view the evidence in the light most favorable to the prosecution and determine whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). The sufficiency of the evidence must be considered from the charge given. Nickerson v. State, 782 S.W.2d 887, 891 (Tex.Crim.App. 1990). If the evidence does not conform to the instructions given, it is insufficient as a matter of law. Id.
Sedani contends Officer Treat needed probable cause to believe the appellant would not appear in court. He cites the following portion of the charge as the measuring stick for sufficiency of the evidence:
Therefore, if you believe that HPD Officer R.G. Treat had a reasonable suspicion to connect the Defendant with activity related to crime or that the Defendant had commited [sic] an offense and if you believe that HPD Officer R.G. Treat had a reasonable belief that the alleged conduct of the Defendant, if any, in tearing up the traffic citation, if at all, issued by HPD Officer R.G. Treat, if at all, and the Defendant stating, if he did, I'll see you in Court, and that said conduct, if at all, warranted Officer R.G. Treat to believe that the Defendant would not appear in court for the traffic citations for which Defendant had been stopped, if at all, then you shall consider the evidence obtained by the officer as a result of the stop and seizure of the Defendant.
If you do not so find beyond a reasonable doubt, or if you have a reasonable doubt as to such matters, you will disregard such evidence derived from said seizure and not consider it as any evidence whatsoever and say be your verdict not guilty.
Thus, Sedani admits the evidence must support a "reasonable belief." Viewing the evidence in a light most favorable to the verdict, a rational factfinder could have concluded that Sedani's act of tearing up the notice gave Officer Treat reasonable belief that Sedani would not appear in court. That is all the charge required the State to prove on that subject. See Boozer v. State, 717 S.W.2d 608, 610-11 (Tex.Crim. App.1984) (sufficiency of the evidence is measured by the charge that was given). Therefore, the evidence was sufficient to support Sedani's conviction.
Point of error three is overruled.
In points of error one and two, Sedani asserts the trial court erred in overruling his motion to suppress the evidence of his handgun, which was required to support his conviction of carrying a handgun. In point of error one, Sedani asserts reversible error because "[a] peace officer must release a motorist arrested for a traffic offense after he secures a written promise to appear in court." In point of error two, he asserts Officer Treat did not have "probable cause to believe appellant would not appear in court." Sedani does not challenge the legality of the initial arrest for traffic violations.
In summary, Sedani argues that he was illegally arrested because Officer Treat did not have the authority to arrest him after he signed the citations. Since Officer Treat did not have authority to arrest him, Officer Treat did not have the authority to conduct an inventory search of his car, incident to the arrest. Without the inventory search, Officer Treat would not have found the handgun, and Sedani would not have been convicted of carrying a handgun.
The State counters Officer Treat had statutory authority to arrest Sedani for traffic violations under Tex.Rev.Civ.Stat. Ann. art. 6701d, § 148(a) (Vernon Supp. *317 1993) 153 (Vernon 1977), and that until he released Sedani, Officer Treat had the option to arrest him instead of issuing citations. Officer Treat testified that he had not released Sedani from custody because he had not yet reviewed with him the time and place for his court appearance according to departmental policy. The State argues that the arrest was legal because Sedani negated his promise to appear by tearing up his copies of the citations and Officer Treat then had reason to believe Sedani would not appear in court. The State does not contend Sedani committed another violation after the copies of the citations were delivered. See Evers v. State, 576 S.W.2d 46 (Tex.Crim.App. [Panel Op.] 1978) (after a traffic citation was given, an "improper start from a parked position" throwing mud and gravel on the police officer and his car was a traffic violation justifying a second arrest and subsequent inventory search).
The trial court is the sole trier of fact at a hearing on a motion to suppress, and as such, it may choose to believe or disbelieve any or all of the witnesses' testimony. Taylor v. State, 604 S.W.2d 175, 177 (Tex.Crim.App. [Panel Op.] 1980). Even if the trial court gives the wrong reason for its ruling on a motion to suppress evidence, this Court will uphold the ruling if it is correct on any theory of law applicable to the case. Calloway v. State, 743 S.W.2d 645, 651-52 (Tex.Crim.App. 1988).
At the end of the hearing on the motion to suppress, the trial court found that Sedani negated his promise to appear by tearing up his citation:
I find that Officer Treat wrote a traffic citation to the defendant Manharlal B. Sedani on or about January 12, 1991 for two violations of the traffic rules and regulations of the State of Texas. I find that Officer Treat told the defendant that the defendant would go to jail if the defendant did not sign the ticket; that is a citation; that the defendant did in fact receive the citation and that the defendant signed the citation; that the defendant Sedani received a true copy of the citation; that the defendant tore the citation in half and stated that the officer would regret his conduct. Thereafter Officer Treat arrested the defendant and placed the defendant into custody. Thereafter Officer Treat inventoried the interior of the automobile. Whereupon a seizure was made of a zipped bank bag which contained amongst other things a.38 caliber weapon, pistol which was loaded with papers and checks. And that I find that Officer Treat then charged the defendant Sedani with the additional charge, the misdemeanor offense of intentionally and knowingly carrying [on] or about his person a hand gun.
The Court's conclusions of law is that I find that had the defendant Sedani not by his own action and conduct ripped up the traffic citation, that any subsequent search based on that fact assuming that fact, then Officer Treat would have no probable cause to invade the interior of the vehicle under the traffic laws pursuant to Section 147 of Article 6701d. However, by the defendant's actions, in his own conduct and Officer Treat's reliance on that conduct, that the defendant negated his promise to appear in court; that the officer then had reason to believe that the defendant would not appear in court. And based on the officer's reason to believe that the defendant would not appear based on the defendant's conduct thereafter in accordance with Section 147-5 of the traffic regulations of Article 6701d, that he then had the right to place Mr. Sedani, the defendant, into custody and thereafter the inventory of the vehicle was indeed authorized under the laws of the state of Texas in the United States.
(Emphasis added.) Section 147(5) provides that a person arrested for a traffic misdemeanor shall be taken immediately before a magistrate, "In any other event when the person arrested refuses to give his written promise to appear in court as hereinafter provided." Tex.Rev.Civ.Stat.Ann. art. 6701d, § 147(5) (Vernon 1977).
Here, Sedani tore up his copies of the citation. Officer Treat retained the *318 original and other copies reflecting Sedani's written promise to appear. Section 149(a) of the act provides a person is guilty of a misdemeanor if he wilfully violates his promise to appear in court. Tex.Rev.Civ. Stat.Ann. art. 6701d, § 149(a) (Vernon 1977). However, as Sedani points out, the court appearance date must be set 10 days after the arrest. Tex.Rev.Civ.Stat.Ann. art. 6701d, § 148(b) (Vernon 1977). Therefore, he could not possibly have violated his promise to appear on the night of his arrest.
Article 6701d, section 148(d), of the Texas Civil Statutes provides:
The arrested person in order to secure release as provided in this section, must give his written promise so to appear in court by signing in duplicate the written notice prepared by the arresting officer. The original of said notice shall be retained by said officer and the copy thereof delivered to the person arrested. Thereupon, said officer shall forthwith release the person arrested, from custody.
Tex.Rev.Civ.Stat.Ann. art. 6701d, § 148(d) (Vernon 1977) (emphasis added).
Thus, whether Sedani was legally detained after the citations were given to him turns on whether the term "shall forthwith release" allows Officer Treat to re-arrest Sedani. The parties do not cite any case on point.
Statutes should be read as a whole and construed to give meaning to every part. Morter v. State, 551 S.W.2d 715, 718 (Tex.Crim.App.1977) (looking to both civil and criminal case law in construing the Penal Code). The issue in determining the meaning of the word "shall" is "what consequences follow a failure to comply." State v. $435,000, 842 S.W.2d 642, 644 (Tex. 1992).
Section 148(a) provides that when a person is arrested for a traffic violation, and is not immediately taken before a magistrate, the officer shall prepare a "written notice to appear." Tex.Rev.Civ.Stat.Ann. art. 6701d, § 148(a) (Vernon Supp.1993). Section 148(b) specifies the appearance must be set at least 10 days after the arrest. Tex.Rev.Civ.Stat.Ann. art. 6701d, § 148(b) (Vernon 1977). Section 148(d) provides that when a copy of the written notice is delivered to the person arrested, the officer shall forthwith release him. Tex.Rev.Civ. Stat.Ann. art. 6701d, § 148(d) (Vernon 1977). The next section, section 148(e), provides for the penalty when an officer does not adhere to this procedure: "Any officer violating any of the provisions of this section shall be guilty of misconduct in office and shall be subject to removal from office." Tex.Rev.Civ.Stat.Ann. art. 6701d, § 148(e) (Vernon 1977). The following section of the act, section 149(a), provides for the penalty when a person willfully violates his written promise to appear: the person is guilty of a misdemeanor. Tex.Rev.Civ. Stat.Ann. art. 6701d, § 149(a) (Vernon 1977).
Construing section 148(d) in the context of the entire statute, we conclude Sedani was illegally detained after he received his copies of the citation. The fact Sedani tore up his citation and did not have notice of the time and place for his court appearance is of no moment. We hold the statute is mandatory because it penalizes an officer who does not follow its provisions. Since the officer had a mandatory obligation to release Sedani, there was no probable cause to hold him after he signed the promise to appear. Cf. Lewis v. State, 664 S.W.2d 345, 351 n. 4 (Tex.Crim.App.1984) (Clinton, J., dissenting). Because the arrest that led police to the handgun was illegal, the handgun must be suppressed. Tex.Code Crim.P.Ann. art. 38.23(a) (Vernon Supp.1993). Points of error one and two are sustained.
The judgment is reversed, and the cause is remanded.
JONES, J., not participating in the opinion.
OPINION ON REHEARING[1]
COHEN, Justice.
On rehearing, the State contends that appellant's arrest was legal because, by *319 dropping some pieces of the torn traffic ticket to the ground, he committed the crime of littering in the officer's presence; thus, the warrantless arrest was justified by Tex.Code Crim.P.Ann. art. 14.01(b) (Vernon 1977). The State concedes that 1) the arresting officer testified at trial that he arrested appellant not for littering, but for totally unrelated reasons, 2) the trial court prosecutor never contended the arrest was justified by littering, but relied on totally unrelated reasons, and 3) the trial court judge did not find the arrest was for littering, but found it was justified for totally unrelated reasons. Nevertheless, the State contends we should overrule appellant's point of error because a trial judge's ruling, if correct, should be upheld even if it was made for the wrong reasons. For this proposition, the State relies on Calloway v. State, 743 S.W.2d 645, 651-52 (Tex.Crim. App.1988).
Calloway is distinguishable. That decision did not grant the State victory on appeal based on a theory totally different from what it claimed in the trial court. The trial judge in Calloway denied a motion to suppress because the defendant had no standing. The judge incorrectly stated there was no standing because Calloway had no proprietary or possessory interest in the house. The defendant correctly argued on appeal that standing is not determined by proprietary or possessory interest, but by whether he reasonably expected privacy in the place searched. The Court of Criminal Appeals held that although the judge used the wrong legal test to decide the standing issue, appellant was not harmed because no evidence showed he had standing under the correct test, i.e., that he had a reasonable expectation of privacy. Id. at 650-51. Thus, the Calloway court did nothing like what the State requests here. It did not uphold a judgment on appeal based on a theory unheard of at trial. On the contrary, the standing issue was litigated in Calloway in the trial court, in the court of appeals, and in the Court of Criminal Appeals. 743 S.W.2d at 646-49.
The court in Calloway concluded its lengthy discussion by stating,
Further it is well established that the mere fact that a correct ruling is given for the wrong reason will not result in a reversal. If the decision is correct on any theory of law applicable to the case it will not be disturbed.
743 S.W.2d at 651-52 (emphasis added).
Thus, the issue is not whether the decision is correct on any theory of law, but whether it is correct on any theory of law applicable to the case. That requirement makes a significant difference in this case. The State's theory of littering is not applicable to the case because it was not raised in the trial court. Both the State and trial judge expressly relied on totally different grounds. If the State believed the littering theory was applicable to the case, it should have said that in the trial court, when it had the burden of proof to justify a warrantless search and when appellant had a right to be heard, to present evidence, and to argue the relevant facts and law.
The Calloway opinion cited six decisions supporting the proposition that a ruling will not be disturbed if it is correct on any theory of law applicable to the case. Like Calloway, none of them allows the State to invent a new theory on appeal totally unrelated to what it argued in the trial court. O'Neal v. State, 491 S.W.2d 130, 131-32 (Tex.Crim.App.1973) (trial court, in rejecting defendant's plea for probation, erroneously stated that defendant was an accomplice, where evidence showed he was a principal); Miles v. State, 488 S.W.2d 790, 792 (Tex.Crim.App.1972) (trial judge incorrectly stated that defendant's statement was admissible as res gestae of the offense, but it was actually res gestae of the arrest); Smith v. State, 475 S.W.2d 238, 239 (Tex.Crim.App.1971) (trial judge incorrectly stated that prior consistent statement was admissible to determine the truth of the witness' testimony, rather than to *320 rehabilitate the witness after impeachment); Venable v. State, 397 S.W.2d 231, 233 (Tex.Crim.App.1965) (trial judge found DWI defendant was guilty for allowing an intoxicated person to drive his car, where the State alleged and proved that fact, as well as that defendant personally drove while intoxicated); Moreno v. State, 170 Tex.Crim. 410, 341 S.W.2d 455, 456 (1960) (trial judge erroneously ruled that search warrants were partially void, but correctly admitted evidence anyway); Parsons v. State, 160 Tex.Crim. 387, 271 S.W.2d 643, 655-56 (1953) (op. on reh'g) (when trial judge struck defendant's motion for continuance because defendant did not personally swear to it, there was no error because defendant never proved what the missing witnesses would have said).
In Parsons, the Court of Criminal Appeals quoted with approval from Helvering v. Gowran, 302 U.S. 238, 245-47, 58 S.Ct. 154, 158, 82 L.Ed. 224 (1937): "In the review of judicial proceedings the rule is settled that, if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason." 271 S.W.2d at 655.
While the Helvering court approved and applied the rule, it did so in a way completely different from the way the State would have us rule. Helvering was a tax case. The taxpayer lost in the board of tax appeals, an administrative appeal, and then appealed to the federal circuit court of appeals. 302 U.S. at 240, 58 S.Ct. at 155. At that point in the litigation, the government raised a new theory it had not urged before the board of tax appeals. The taxpayer, however, did not object; instead, he convinced the court of appeals to reject the government's new theory and to rule for him. Id. at 240-41, 58 S.Ct. at 155-56. The government then appealed to the Supreme Court, raising the same theory. At this point, the taxpayer objected that the government had failed to raise this theory in the board of tax appeals. Id. at 245, 58 S.Ct. at 157-58. The Supreme Court held that the government could assert the theory for the first time on appeal, agreed with the government's new theory, and reversed the judgment of the court of appeals. Id. at 245-47, 58 S.Ct. at 157-59. That is not the end of the story, however. Instead of rendering judgment for the government, the supreme court remanded the case to the board of tax appeals, in order to give the taxpayer the "opportunity to establish before the Board additional facts which would affect the result." Id. at 247, 58 S.Ct. at 158. Thus, the taxpayer, Mr. Gowran, did not lose on appeal based on some new theory the government discovered long after he had lost the opportunity to be heard in opposition to it. The State would have us do the opposite of what the Supreme Court did in Helvering. It would have us rule against appellant based on a theory never mentioned in the trial court, without giving appellant the right to be heard. We decline to do so.
There are two reasons why the Calloway line of cases should not be used as the State urges. First, Texas law requires an appellant to state specific grounds for an objection and to state reasons for any ruling or judgment he desires. Tex.R.App.P. 52(a). This requirement enables the trial judge to know the basis for the objection or motion, and it gives the opposing party the same knowledge so that it may present evidence and argue in opposition. When a party is allowed to hide the reasons for its requested relief until the appeal, both purposes are defeated. It is unfair to make a criminal defendant comply with these reasonable requirements, but exempt the State from them. See State v. Gonzales, 850 S.W.2d 672 (Tex.App.San Antonio 1993, no pet. h.) (refusing defendant's request to apply the Calloway rule to affirm an order suppressing evidence based on new grounds not raised in the trial court). The State should not get to keep its theories of the case a secret, while the courts require the defendant to reveal his in open court so that the State may rebut them. Moreover, if the State is to be allowed to raise new theories of law for the first time on appeal, then, at the very least, the defendant who requests it should be given a remand to the trial court, so that, like Mr. Gowran, "he should have the opportunity to establish before the [finder of *321 fact] additional facts which would affect the result." Helvering, 302 U.S. at 247, 58 S.Ct. at 158. Without that opportunity to establish additional facts, a party is denied due process of law because a judgment has been imposed upon it based on secret reasons not revealed until after it has lost the right to be heard.
We hold that neither Calloway nor the cases cited there allow this case to be affirmed based on the State's new theory of littering.
The State's motion for rehearing is overruled.
NOTES
[1] In order to give the parties the full time periods for seeking further review, we withdraw our earlier order denying without opinion the State's motion for rehearing and substitute this opinion and order.
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848 S.W.2d 822 (1993)
BAILEY COUNTY APPRAISAL DITRICT and the Appraisal Review Board for Bailey County Appraisal District, Appellants,
v.
Joe SMALLWOOD, a/k/a Joe L. Smallwood and Wife, Zuma Jauree Smallwood, Appellees.
No. 07-91-0270-CV.
Court of Appeals of Texas, Amarillo.
February 11, 1993.
Rehearing Overruled April 12, 1993.
*823 Perdue Brandon Fielder Collins and Mott, David A. Ellison, Amarillo, for appellants.
Clifford Krier Manning Greak & Stone, P.C, Nolan Greak, Amarillo, for appellees.
Before DODSON, BOYD and POFF, JJ.
DODSON, Justice.
Bailey County Appraisal District and the Appraisal Review Board for the Bailey County Appraisal District (collectively the "District") appeal the trial court judgment, which found that the property of appellees, Joe L. and Zuma Jauree Smallwood, be appraised at $25,000 for property tax purposes, in contravention of the District's appraisal of $55,000. The Smallwoods, by cross-point, challenge the trial court's judgment notwithstanding the verdict, which disallowed their attorney's fees. We affirm.
The Smallwoods purchased certain commercial property in Muleshoe, Texas, in November 1989. On 1 January 1990, the District valued this property for ad valorem tax purposes at $55,000. The Smallwoods sought to appeal this determination and, after exhausting their administrative remedies, pursued a judicial review of the 1990 tax appraisal.
During trial, both parties elicited testimony pertaining to the tax assessment of the property in question. The Smallwoods presented two witnesses who testified on the tax issue. First, the Smallwoods tendered Roy D. Whitt who, in 1989, sold them the property in muiesnoe. un direct examination, Mr. Whitt, a certified real estate appraiser, testified that he sold the Smallwoods the property for $27,000, which included $25,000 for the building and $2,000 for the office equipment. Mr. Whitt further testified that the property had been on the open market for eight or ten years, $27,000 was a fair price considering the market conditions in Muleshoe, and he was under no pressure to sell the property. On cross-examination, Mr. Whitt stated that he did not perform an appraisal or market analysis on the property.
Second, Mr. Smallwood, a real estate agent in Muleshoe for approximately twenty years, testified on direct examination to the following:
Q Do you have an opinion as to the value of the building that you bought, the building in question, and the property as of January the 1st of 1990?
A Yes.
Q What is your opinion?
A Well it's less than I paid for it. I paid $25,000.00 so that would have to be the value of it.
Q Is that your opinion?
A Yes.
On cross-examination, Mr. Smallwood conceded that the value he placed on the building was not based on a formal appraisal. Instead, he bases the building's value solely on the purchase price.
On the tax issue, appellants tendered Mr. Jay Louis Murfee, Jr. Mr. Murfee has been a real estate broker and real estate appraiser in investment counseling since 1947. Mr. Murfee made an independent appraisal of the disputed property. In his appraisal, Mr. Murfee used the three generally accepted approaches used in appraising income producing real estate, i.e. cost, market, and income. Mr. Murfee testified that the income appraisal was the most reliable and, based on that technique, the property in question was valued at $55,000 on 1 January 1990.
Upon the close of the Smallwoods case in chief, the District moved for directed verdict urging that the Smallwoods failed to produce any evidence on a generally accepted *824 appraisal technique as required by the Texas Tax Code. The trial court denied the motion. The District reurged their motion upon the close of their case in chief. The trial court, again, denied the motion. Finally, the case was submitted to the jury which found the fair market value of the property in question on 1 January 1990 was $25,000.
By a single point of error, the District contends the trial court erred in rendering judgment for the Smallwoods, because there was legally insufficient evidence presented to determine market value as required by law. We disagree.
In that regard, the District asserts that the Smallwoods failed to comply with section 23.01 of the Texas Tax Code, because the only evidence put forth by the Smallwoods did not derive any testimony of fair market value from generally accepted appraisal techniques. Instead, the Smallwoods presented evidence of the property's purchase price as being demonstrative of fair market value. Section 23.01 states that in determining market value for the purpose of tax appraisals, the "market value of property shall be determined by the application of generally accepted appraisal techniques, and the same or similar appraisal techniques shall be used in appraising the same or similar kinds of property." Tex.Tax Code Ann. § 23.01 (Vernon 1992).
We, however, do not interpret this statute to abolish the long line of precedent in this State on fair market value. Nor do we interpret this statute to abrogate the definition of fair market value as recognized in the Texas Constitution and section 1.04(7) of the Texas Tax Code.
In regard to valuing property at its fair market value, the Texas Constitution provides in pertinent part:
[n]o property of any kind in this State shall ever be assessed for ad valorem taxes' at a greater value than its fair cash market value nor shall any Board of Equilization of any governmental or political subdivision or taxing district within this State fix the value of any property for tax purposes at more than its fair cash market value; ...
Tex.Const. art. VIII, § 20.[1] In addition, section 1.04(7) states:
"Market value" means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
(A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
(B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and
(C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.
Tex.Tax Code Ann. § 1.04(7) (Vernon 1992).
From time out of mind, Texas courts have defined market value as "the price which the property would bring when it is offered for sale by one who desires, but is not obliged to sell, and is bought by one who is under no necessity of buying it...." City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808, 815 (1954); State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194 (1936). It is also settled that an owner is qualified to testify about the market value of his property. Porras v. Craig, 675 S.W.2d 503, 505 (Tex.1984); Maxey v. Texas Commerce Bank of Lubbock, 571 S.W.2d 39, 46 (Tex.Civ.App.Amarillo 1978), writ ref'd n.r.e. per curiam, 580 S.W.2d 340 (Tex. 1979). But, the landowner must testify as to market value, not intrinsic value, for that evidence to be probative of market value. Porras v. Craig, 675 S.W.2d at 505.
With this background, we will now evaluate the evidence in accordance with the appropriate standard. In reviewing a legal sufficiency, or "no evidence" challenge, this Court examines only the evidence *825 and inferences tending to support the findings, disregarding all contrary evidence and inferences. Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). When the evidence is legally insufficient, there is no evidence of probative force to support the finding in question. Garza v. Alviar, 395 S.W.2d at 823. Probative evidence, as defined by this Court, "serves to prove the asserted proposition and it must be more than a surmise or suspicion." Gray v. Baker & Taylor Drilling Co., 602 S.W.2d 64, 65 (Tex.Civ.App.Amarillo 1980, writ ref'd n.r.e.).
In the instant case, Mr. Smallwood did not consider the property's intrinsic value when making his evaluation. Instead, he determined the fair market value based on the property's purchase price. Moreover, Mr. Smallwood was under no pressure to buy. Also, Mr. Whitt stated that the property had been on the market for a number of years and he was under no pressure to sell. Finally, both men had been involved in the real estate market in Muleshoe as an appraiser and agent, respectively. Consequently, there is some probative evidence, and there are inferences therefrom, tending to support the jury finding on fair market value. Accordingly, point of error one is overruled.
By cross-point one, the Smallwoods contend the trial court erred by entering judgment notwithstanding the verdict and disallowing the award of attorney's fees to their counsel. Again, we disagree.
In this regard, the District served the Smallwoods with the following written interrogatory:
3. Please identify each person who you may call as an expert witness at the trial of this lawsuit and state for each the subject matter of his or her expected testimony, a brief summary of the opinions about which he or she may testily, and the profession or field in which (s)he is an expert.
Their response only identified Mr. Smallwood. Conversely, the Smallwoods served the District with written interrogatories. In their request, the Smallwoods asked the District to identify each person with knowledge of relevant facts. In their response, the District listed Nolan Greak, counsel for the Smallwoods.[2]
The court held a pretrial hearing addressing whether or not Mr. Greak would be allowed to testify on attorney's fees. The Smallwoods asserted that this testimony should be allowed because the District listed Mr. Greak as a person with knowledge of relevant facts. Counsel for the District, on the other hand, urged that Mr. Greak be excluded from testifying, because he failed to list himself as an expert witness. At trial, the court allowed Mr. Greak to testify as to reasonable and necessary attorney's fees.
In response to Question No. 2 of the court's charge, the jury awarded the Smallwoods attorney's fees in the following manner: $2,300 for preparation of trial, and $2,500 for an appeal to the court of appeals. Next, the court entered judgment notwithstanding the verdict on the issue of attorney's fees and ruled that the Smallwoods not recover those fees, because the Smallwoods failed to list Mr. Greak as an expert witness and, consequently, his testimony should have been excluded.
A party has an affirmative duty to identify expert witnesses in response to an appropriate inquiry. Sharp v. Broadway Nat. Bank, 784 S.W.2d 669, 671 (Tex.1990); Tex.R.Civ.P. 166b(6)(b). Furthermore, the identity of expert witnesses must be disclosed no later than thirty days prior to the beginning of trial. E.F. Hutton & Co., Inc. v. Youngblood, 741 S.W.2d 363, 364 (Tex.1987); Tex.R.Civ.P. 166b(6)(b). Failure to comply will result in exclusion of testimony unless the proffering party demonstrates good cause for its admission. *826 E.F. Hutton & Co., Inc. v. Youngblood, 741 S.W.2d at 364; Tex.R.Civ.P. 215(5). In this latter regard, we note that the Smallwoods do not argue good cause. Instead, as we mentioned earlier, the Smallwoods argue that Mr. Greak was properly allowed to testify because the District listed him as a witness with knowledge of relevant facts.
A fact witness is "limited to testimony about the specific facts of the case and should not be allowed to give expert opinions regarding scientific, technical, or other specialized knowledge." Baylor Medical Plaza Services v. Kidd, 834 S.W.2d 69, 73 (Tex.App.Texarkana 1992, writ denied). Fact witnesses, for discovery purposes, are generally referred to as witnesses with knowledge of relevant facts. Id. An expert witness, on the other hand, is "one who, by knowledge, skill, experience, training, or education, has specialized knowledge that will assist the trier of fact to understand the evidence or determine a fact in issue and may express an opinion about the matter." DeLeon v. Louder, 743 S.W.2d 357, 359 (Tex.App.Amarillo 1987), writ denied per curiam, 754 S.W.2d 148 (Tex.1988); Tex.R.Civ.Evid. 702.
Mr. Greak's testimony focused solely on the issue of attorney's fees. On this matter, Mr. Greak gave his opinion as to reasonable attorney's fees charged in Lamb County, Bailey County, and Lubbock County. Mr. Greak concluded the reasonable hourly fee was $125.00. After reviewing the record, we are persuaded that Mr. Greak testified only in the capacity of an expert witness. Therefore, it was incumbent that Mr. Greak be designated as such. Since the award of attorney's fees was based entirely on testimony that should have been excluded, the award cannot stand. Consequently, cross-point one is overruled.
Accordingly, the judgment is affirmed.
NOTES
[1] To avoid confusion, we note that the terms "fair market value" and "fair cash market value" are synonymous terms. West Texas Hotel Co. v. City of El Paso, 83 S.W.2d 772, 776 (Tex.Civ. App.El Paso 1935, writ dism'd).
[2] Neither the interrogatories propounded by the Smallwoods nor the answers given by the District are part of the record before us. Both parties, however, gave the same general renditiqn of facts pertaining to this set of interrogatories. Since the questions and answers allegedly contained in those interrogatories are not challenged, we can accept these assertions as true. Tex.R.App.P. 74(f).
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848 S.W.2d 148 (1993)
David Paul REYNOLDS, Appellant,
v.
The STATE of Texas, Appellee.
No. 315-92.
Court of Criminal Appeals of Texas, En Banc.
February 24, 1993.
Stephen A. Doggett, Richmond, for appellant.
Jack R. Stern, Dist. Atty., Fred M. Felcman, Asst. Dist. Atty., Richmond, and Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
OPINION ON APPELLANT'S PETITION FOR DISCRETIONARY REVIEW
MEYERS, Judge.
Appellant was convicted of driving while intoxicated and sentenced to probation for two years and a fine of $1,500.00. The court probated $1,300.00 of the assessed fine. The Fourteenth Court of Appeals affirmed the conviction. Reynolds v. State, 822 S.W.2d 341 (Tex.App. 1992). Appellant filed a petition for discretionary review contending that the Court of Appeals erred in upholding the trial court's failure to instruct the jury on the legality of appellant's stop.
Appellant was stopped by a Texas Department of Public Safety officer for speeding. No other reason for the stop was given. The officer testified that appellant told him he did not think he was going "that fast" and he was going to contest the speeding ticket. Appellant's brother, a passenger in the car, testified that he did not think appellant had been speeding and that appellant did not think he had been speeding.
*149 At the conclusion of the trial, appellant requested a charge on "probable cause," because he felt the evidence presented a fact issue as to the legality of the stop. The trial court refused. On appeal, the Court of Appeals implicitly found as a matter of fact that appellant's requested charge was sufficient to inform the trial court that appellant was actually requesting a charge on Tex.Code Crim.Proc.Ann. art. 38.23.[1] 822 S.W.2d at 343; see Arcila v. State, 834 S.W.2d 357 (Tex.Crim.App. 1992).
When the Court of Appeals reviewed the record they noted that appellant presented "evidence to the contrary" of the officer's testimony regarding speeding. However, the court found this evidence was insufficient to raise a fact issue on the legality of the stop. "How fast appellant thought he was driving is irrelevant to the issue of whether the officer had cause to make the stop. The reading on the officer's radar gun gave the officer cause." 822 S.W.2d at 343.
While it is true that appellant's own perception of his speed is not dispositive, his perception does fairly raise an issue that he was not speeding in fact. If, in turn, the jurors believed that appellant was not in fact speeding, they would then be forced to conclude that the officer's testimony was either mistaken or incredible. And, although a conclusion that the officer was mistaken would not affect the legitimacy of his stopping appellant, a conclusion that he was lying would. Consequently, appellant's perception of his own speed was relevant, contrary to the opinion of the Court of Appeals, because it did "have a[ ] tendency to make the existence of a[] fact that is of consequence to a determination of the action [i.e., whether the officer was telling the truth] more probable ... than it would [have] be[en] without the evidence." Tex.R.Crim.Evid. 401.
The jury was allowed to consider evidence that was obtained as a result of the stop without first determining whether the stop was legitimate. The evidence presented to the jury consisted, in part, of a failed field sobriety test, an incriminating video test, plus an intoxilyzer test. The results of the intoxilyzer test indicated appellant had a 0.20 alcohol concentration, well beyond the 0.10 permitted under the law. Tex.Rev.Civ.Stat.Ann. art. 6701l-5 § 3(j)(4)(B) (Vernon 1989). If the court had given an instruction under Art. 38.23(a), the jury could have believed appellant and his witness and found that the stop was impermissible because appellant was not speeding. As a result, they would have been instructed to disregard all evidence obtained from the illegal stop, including the field sobriety test, the video sobriety test, and the intoxilyzer test.
This Court has held that when conflicting evidence raises an issue regarding the right to stop a driver, a court is statutorily bound to include a requested charge on this issue. Stone v. State, 703 S.W.2d 652, 655 (Tex.Crim.App.1986). Failure to do so when requested can be reversible error. Ibid. In the instant case, the record reflects conflicting testimony regarding the circumstances surrounding the stop of appellant's vehicle. The conflicting testimony challenges the credibility of the peace officer. Had the jury believed the "evidence to the contrary" and believed the officer was not credible, the officer would not have been justified in stopping the car. See Morr v. State, 631 S.W.2d 517, 518 (Tex.Crim.App. 1982) (en banc). Appellant was entitled to the requested instruction. The Court of Appeals erred in upholding the trial court's failure to instruct the jury on the legality of the stop.
As a general rule, this Court will not make findings of harm in cases taken on *150 discretionary review unless such a finding is necessary to the disposition of questions presented to this Court. Tex. Const. Art. 5 § 6; See Arcila v. State, supra; Gipson v. State, 844 S.W.2d 738 (Tex.Crim.App.1992) (Benavides, J., concurring). The determination of harm, if any, should be left for the Court of Appeals. Therefore, the judgment of the Court of Appeals is vacated and the cause remanded to that court for further consideration consistent with this opinion.
McCORMICK, P.J, concurs in the result.
NOTES
[1] Tex.Code Crim.Proc.Ann. art. 38.23 provides:
(a) No evidence obtained by an officer or other person in violation of any provision of the Constitution or laws of the State of Texas, or of the Constitution or laws of the United States of America, shall be admitted in evidence against the accused on trial of any criminal case.
In any case where the legal evidence raises an issue hereunder, the jury shall be instructed that if it believes, or has a reasonable doubt, that the evidence was obtained in violation of the provisions of this Article, then and in such event, the jury shall disregard any such evidence so obtained.
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848 S.W.2d 334 (1993)
Joe A. BARNETT, Appellant,
v.
CITY OF PLAINVIEW, et al., Appellees.
No. 07-92-0234-CV.
Court of Appeals of Texas, Amarillo.
February 22, 1993.
*335 Thomas J. Griffith, P.C., Teresa Z. Levine, Lubbock, for appellant.
Howard W. Hatch, Jr., Tom Hamilton, Plainview, for appellees.
Before REYNOLDS, C.J., and BOYD and POFF, JJ.
BOYD, Justice.
Contending summary judgment was improper and material questions of fact exist to vitiate it, Joe Barnett appeals from the summary judgment granted in favor of the City of Plainview, Texas; E. V. Ridlehuber, *336 individually and as Mayor of Plainview; James Jeffers, individually and as City Manager of Plainview; Tom Aday, individually and as City Council Member of Plainview; Junior Brown, individually and as City Council Member of Plainview; Barbara Dorman, individually and as City Council Member of Plainview; Bobby James, individually and as City Council Member of Plainview; and Andy Taylor, individually and as City Council Member of Plainview.[1] Based upon the authorities and rationale discussed below, we will affirm the judgment of the trial court.
The parties stipulated to the underlying facts. On February 27, 1984, the City appointed Barnett as Plainview's municipal court recorder (judge) with duties including presiding over and disposing of cases in the municipal court, maintaining records of the court, signing warrants, and reading rights to juveniles. Barnett continued in this position until the events at issue occurred.
On January 10, 1986, Jeffers, with Ridlehuber's approval, sent a letter outlining the City's concerns over Barnett's performance of his duties, and instructing him to attend a January 14 hearing to discuss the matters addressed in the letter. After the hearing, at which Barnett was present, the City Council voted to remove him from office, effective immediately. The Texas Commission on Judicial Conduct was not notified of any grievance or proceedings against Barnett by the City.
On January 8, 1988, Barnett brought suit against the City. In his live trial pleadings, he alleged the City had violated the separation of judicial and legislative powers and his right to free speech, and deprived him of a liberty interest without due process.
Upon the City's general denials, Barnett filed his motion for summary judgment. As pertinent to the issues presented to us. Barnett alleged that the City's actions (1) were preempted by state laws, (2) denied him due process, (3) were an unconstitutional invasion of a judicial function, (4) were violative of judicial immunity, (5) were an impermissible procedure for removal, (6) denied him a property interest in a public office, and (7) denied him a liberty interest in his character and reputation without due process of law.
The City timely responded to each of Barnett's allegations, and in turn, filed its own motion for summary judgment. The City opined that Barnett was an employeeat-will, and his termination complied with the city charter and ordinances, the state constitution and statutes, and the Federal Constitution and statutes.
Barnett responded by attacking the City's affidavits in support of their motion as incompetent. He made no direct response to the City's contention that it fully complied with the charter and ordinances governing the office of municipal court judge, and did not allege that the charter and ordinances were preempted by state law.
In his response to the City's motion for summary judgment, Barnett states that a "separate response will be made by counter-affidavit." No such separate response is in the record before us. Ordinarily, we may only consider the response filed which made no contest concerning preemption, separation of powers, or due process. As appellant, it was Barnett's burden to see that a sufficient record was presented to show error by the trial court which requires reversal. Tex.R.App.P. 50(d).
Nevertheless, it is apparent from the record, specifically Tom Hamilton's December 14, 1989 letter to the trial court and the identical orders granting and denying the respective motions for summary judgment, that the legal issues presented by Barnett's motion were equally considered in the disposition of the City's motion. In the interest of justice, we will consider these matters as addressed.
In both the order denying Barnett's motion and that granting the City's motion, the trial court determined that Barnett was an officer and employee of the City and, as *337 a home-rule municipality, the City had authority to establish the manner and mode of selecting officers and employees and to prescribe their qualifications, duties, compensation, and length of employment. The trial court further determined, as a matter of law, that the authority exercised by the City in terminating Barnett's employment was in compliance with state law and the City's charter and ordinances.
Barnett contends the summary judgment was erroneously granted because (1) Texas statutes and the Supreme Court have promulgated rules for the removal of judges which preempt the City's provisions for removal of a municipal court recorder (judge), (2) material questions of fact exist about whether the City violated the separation of powers, (3) the City violated his judicial immunity when it removed him on improper grounds without the necessary proceedings, (4) a question of fact exists regarding whether his removal was consistent with the Texas Constitution, statutes, and Supreme Court rulings specifying grounds for removal, and (5) he did not receive due process safeguards regarding his property interest in continued employment. These contentions will be discussed in logical consecution.
A movant is entitled to summary judgment if he shows the absence of any genuine issues of material fact and the right to judgment under the undisputed material facts, as a matter of law, on grounds expressly stated in the motion. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex. 1983). The movant, against whom all doubts are resolved, has the burden of establishing both elements. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979).
When the defendant is the movant, summary judgment is proper only if the plaintiff cannot, as a matter of law, succeed upon any theory plead. Peirce v. Sheldon Petroleum Co., 589 S.W.2d 849, 852 (Tex.Civ.App.Amarillo 1979, no writ). Thus, a defendant can prevail by conclusively establishing against the plaintiff at least one factual element of each theory plead by the plaintiff, Gibbs v. General Motors Corporation, 450 S.W.2d 827, 828 (Tex.1970), or by conclusively showing every factual element of an affirmative defense. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972).
In his first point of error, Barnett contends summary judgment was improper because the provisions of the City's Charter and ordinances under which he was dismissed are, as a matter of law, inconsistent with the Texas Constitution, state statutes, and Supreme Court rulings and, thus, preempted thereby. We disagree.
Although not established by the record, it is uncontested that Plainview is a home-rule city as contemplated by the Texas Constitution, and we accept this as true. Tex.R.App.P. 74(f). A city is a home-rule municipality if it operates under a municipal charter that has been adopted or amended as authorized by article XI, § 5 of the Texas Constitution. Tex.Loc.Gov't Code Ann. § 5.004 (Vernon 1988); City of Sherman v. Municipal Gas Co., 133 Tex. 324, 127 S.W.2d 193, 195 (1939). A city becomes a home-rule municipality by a majority vote of the qualified voters, provided their charter or ordinance does not contain any provision inconsistent with the Texas Constitution or general laws enacted by the legislature (statutes). Tex. Const, art. XI, § 5.[2]
By statute, the municipal court recorder (judge) in a home-rule city is selected under the municipality's charter provisions relating to such appointment. Tex.Gov't Code Ann. § 29.004(a) (Vernon 1988). A homerule city has authority to create offices, determine the method for selecting officers, and prescribe the qualifications, duties, and tenure of offices for its officers. Tex.Loc.Gov't Code Ann. § 26.041 (Vernon 1988). The term of office is to be set by the charter but cannot be less than two years, nor more than four. Tex. *338 Const, art. XI, § 11; Tex.Gov't Code Ann. § 29.005 (Vernon 1988).
Plainview, Texas Charter Section 7 provides in pertinent part:
The other officers of said City shall be... and such other officers and employees the City Council may determine ... and all other officers or employees of the City shall be appointed by the Mayor and confirmed by the Council, and shall perform such duties and receive such compensation as may be decided upon by the Council, and for such length of time as the Council shall decide, ...
Article X, Section 84 of the Charter goes on to establish a corporation court as contemplated by statute, commonly referred to as a municipal court, providing:
the Mayor shall be ex officio Judge of said court ... provided, however, the City Council may by ordinance create the office of Recorder [judge] of said court and make said office appointive by said Council or elective by a vote of the people.
In accordance with these provisions, Plainview Code § 19-5 creates the office, and § 19-6 provides that the City Council shall appoint the recorder (judge) of the municipal court. Prom the portions of the Code and Charter provided in the record before us, the Charter and ordinances do not provide a set term of office, nor do they provide established procedures for removal from office.
The City contends that because there was no set term of employment, Barnett was an employee-at-will, and could be dismissed at any time, with or without cause. For the reasons expressed below, we disagree that, at the time in question, Barnett was an employee-at-will.
The purpose of the home-rule amendment to the Constitution is to bestow upon cities coming thereunder full power of local self-government, City of Monahans v. State, 348 S.W.2d 176, 177-78 (Tex. Civ.App.El Paso 1961, writ ref'd n.r.e.), and to grant them full power to do by their charter and ordinances everything which the legislature could have granted them to do. Municipal Gas Co. v. City of Sherman, 89 S.W.2d 436, 438 (Tex.Civ.App. Dallas 1935), affd, 133 Tex. 324, 127 S.W.2d 193 (1939). Therefore, a home-rule city looks to the acts of the legislature not for grants of power, but only for limitations on their powers. State v. City of La Porte, 386 S.W.2d 782, 785 (Tex.1965).
The powers of home-rule cities are subject to, and may be limited by, their charters, the Constitution or statutes. Lower Colorado Riv. Auth. v. City of San Marcos, 523 S.W.2d 641, 644 (Tex.1975). Limitation on the power of a home-rule city may be either express or implied; however, a limitation will not be implied unless the provisions are clear and compelling to that end. Id. at 645.
The broad language in the Charter that the municipal court recorder (judge) will serve "for such length of time as the council shall decide," is expressly limited by § 29.005 of the Texas Government Code, which states:
The judge of a municipal court serves for a term of office of two years unless the municipality provides for a longer term pursuant to Article XI, Section 11, of the Texas Constitution.
Tex.Gov't Code Ann. § 29.005 (Vernon 1988). Although the Charter is limited by the statutory requirement, it is not in conflict therewith so as to deem it void. Cf. Municipal Gas Co. v. City of Sherman, 89 S.W.2d at 439.
A city ordinance or Charter provision is presumed to be valid, and the courts have no authority to interfere unless it is unreasonable and arbitrary, amounting to a clear abuse of municipal discretion. City of Brookside Village v. Comeau, 633 S.W.2d 790, 792 (Tex.), cert, denied, 459 U.S. 1087, 103 S. Ct. 570, 74 L. Ed. 2d 932 (1982).
The entry of the state into a field of legislation does not automatically preempt that field from city regulation. Regulation ancillary to and in harmony with the general scope and purpose of the state's enactment is acceptable. Id. 633 S.W.2d at 796. A statute and a city ordinance *339 will not be held repugnant to each other if any other reasonable construction leaving both in effect can be reached. When there is no conflict between a state law and a city ordinance, the ordinance is not void. City of Richardson v. Responsible Dog Owners, 794 S.W.2d 17, 19 (Tex. 1990).
While the statute expressly provides for a minimum term of two years for a municipal court judge, the existence of the limitation does not preclude the City from making provisions governing the creation of the office, the selection of the judge, and prescribing his qualifications and duties. Tex.Loc.Gov't Code Ann. § 26.041 (Vernon 1988). The statute and the ordinances can be read in harmony together as allowing the municipal court judge to be appointed by the City for a minimum term of two years, with qualifications and duties prescribed by the City.
Barnett was entitled to a two-year term of appointment as municipal court recorder (judge) and, thus, to that extent, was not an employee-at-will. Since the removal occurred before the expiration of two years from the date of appointment, we must determine whether construction of the Charter provides for the City's removal of the recorder (judge) from office prior to the end of the appointed term.
In construing a city's charter, intent must be given effect and the language used construed as written, unless this would defeat the intent. Willman v. City ofCorsicana, 213 S.W.2d 155, 156-57 (Tex. Civ.App.Waco 1948), affd, 147 Tex. 377, 216 S.W.2d 175 (1949). If power is granted to a city, the exercise thereof is within the discretion of the city. Davis v. City of Taylor, 123 Tex. 39, 67 S.W.2d 1033, 1034 (1934).
When power over a particular subject matter has been delegated to a municipal corporation by the legislature without any express limitations, the extent to which that power shall be exercised rests in the discretion of the municipal authorities, and as long as it is exercised in good faith and for a municipal purpose, the courts have no ground upon which to interfere. Id.
Where removal is expressly provided for in the city charter, it is a part of the contract and officers of the city can be removed without a hearing. Jones v. Harlan, 109 S.W.2d 251, 259 (Tex.Civ.App.El Paso 1937, writ dism'd); see also City of San Benito v. Cervantes, 595 S.W.2d 917, 918 (Tex.Civ.App.Eastland 1980, writ ref'd n.r.e.) (city manager was discharged at will without cause on thirty days notice as provided in city ordinance); Manning v. Harlan, 122 S.W.2d 704, 707 (Tex.Civ. App.El Paso 1938, writ dism'd) (charter expressly gave mayor power at will to remove members of city civil service commission with or without cause and with or without approval of city council); and Ratliff v. City of Wichita Falls, 115 S.W.2d 1153, 1154 (Tex.Civ.App.Amarillo 1938, writ dism'd) (city had full authority under charter language to remove municipal court judge).
Contrarily, in the present instance, the power of removal is not expressly given in the Charter or ordinances. The question becomes whether the City, having all powers not denied to it by the Constitution or statutes, impliedly has the power to remove a municipal court judge prior to the end of his appointed term.
A home-rule city has full powers of local self-government and the grant of powers by the local government code does not prevent, by implication or otherwise, the municipality from exercising the authority incidental to local self-government. Tex.Loc. Gov't Code Ann. § 51.072(a), (b) (Vernon 1988). It may exercise such powers as are expressly granted to it in its charter or such implied powers as are incidental to the powers granted, or those essential and necessary to make effective the objectives and purposes of the city. Amstater v. Andreas, 273 S.W.2d 95, 97 (Tex.Civ.App.El Paso 1954, writ ref'd n.r.e.).
The Charter and ordinances expressly grant the City the power to appoint the municipal court recorder (judge). Without doubt, the objective of such provisions is to establish the office and the qualifications *340 for a competent person to fill that office. Incidental to that power, and essential and necessary to make the objective and purposes of the provisions effective, is the implied power to remove the judge if his performance is unsatisfactory. To hold otherwise would be to force the City to maintain a municipal court judge for two years regardless of his performance, and would not meet the objective of having a qualified, competent judge in office. Barnett's first point of error is overruled.
Having determined the City had authority to remove Barnett from office prior to the expiration of his term, we must determine, as Barnett's fourth point of error contends, whether there was a material question of fact that the removal was accomplished in a permissible manner.
The general rule applicable when a valid provision of a home-rule city charter vests a discretionary power in a city council, is that a court has no right to substitute its judgment and discretion for the judgment and discretion of that body and may only adjudge whether the council acted illegally, unreasonably, or arbitrarily. Barrington v. Cokinos, 161 Tex. 136, 338 S.W.2d 133, 142 (1960). The determination of that question is one of law rather than of fact. City of San Antonio v. Wallace, 161 Tex. 41, 338 S.W.2d 153, 157 (1960). Secret motives of members of the city council are not matters of judicial inquiry but the inquiring court's decision must be made in light of all the surrounding circumstances. Id. 338 S.W.2d at 156-57.
Since the thrust of Barnett's attack is upon the legality of the procedure followed by the City in making its determination, rather than the sufficiency of the reasons advanced for that determination, that is the question next presented for our decision.
Barnett contends that Texas Government Code § 33.001 et seq. preempts the City's Charter and ordinances, and that Matter of Davila, 631 S.W.2d 723 (Tex.1982) governs the removal of an elected official. Thus, he submits, the City's provisions governing the appointment and removal of a municipal court judge are void, and a question of fact arises whether his removal was accomplished in a reasonable fashion under the applicable standard. Barnett's contention is flawed because the authority upon which he relies is applicable only to justices or judges of the courts established by the Constitution or created by the legislature. Tex. Const, art. V, § l-a(6). The provision was not contemplated to govern municipal court recorders (judges), created by city ordinances.
There is a well recognized distinction between cities and towns incorporated under statutes and those known as home-rule cities. Municipal Gas Co. v. City of Sherman, 89 S.W.2d at 438. A city which operates under the home-rule amendment to the Constitution is not created by general law, and does not derive its power therefrom. Such a city is empowered by the Constitution to adopt or amend its charter in any manner it may desire, so long as it does not conflict with the Constitution and statutes. Id. at 439.
Until the statute has been extended to cities by the legislature, courts are not authorized to extend it beyond the class of cities to which it was designed to apply. City of Sherman v. Municipal Gas Co., 133 Tex. 324, 127 S.W.2d at 196. Laws applicable to municipalities incorporated under statutes are not applicable to homerule cities. Id. Consequently, the procedures upon which Barnett relies to create a fact question are not applicable to his situation.
The City provided Barnett with both a list of their concerns and an opportunity to be heard in that regard, neither of which was compelled by the Charter. We are not willing to say that because they offered the hearing it should have had the formalities required to remove district court judges. Accord Crain v. Firemen's & Policemen's Civil Service Com'n, 495 S.W.2d 20, 23 (Tex.Civ.AppFort Worth 1973, writ ref'd n.r.e.).
By its judgment, the trial court determined the removal procedure used by the City was lawful and reasonable. Barnett contends consideration of the reasons advanced for the council's determination that *341 Barnett's performance was unsatisfactory, raise fact questions whether, by deeming those reasons sufficient, the City unconstitutionally violated the principle of separation of powers. These fact questions, he urges, vitiate the summary judgment.
However, because we have determined the Charter and ordinances are not preempted, and an appointed municipal court recorder (judge) does not fall within the same category as justices or judges of the courts established by the Constitution or created by the legislature, the question of a violation of the separation of powers principle does not exist. Barnett's fourth point of error is overruled.
Having determined that, as an appointed municipal court judge of a home-rule city, Barnett was not entitled to take advantage of provisions afforded constitutional and statutorily created judges, a discussion of his remaining points of error is unnecessary. The judgment of the trial court is affirmed.
NOTES
[1] Hereinafter, the appellees will be collectively referred to as the City and individually by name.
[2] Hereinafter, all references to the Constitution are to the Tex. Const. Ann. (Vernon 1955), unless otherwise stated or indicated.
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848 S.W.2d 203 (1992)
Lee Arthur YOUNG, Appellant,
v.
The STATE of Texas, Appellee.
No. 05-89-00571-CR.
Court of Appeals of Texas, Dallas.
December 28, 1992.
Discretionary Review Refused June 16, 1993.
*204 Rober T. Rogers, Dallas, for appellant.
Sharon Batjer, Dallas, for appellee.
Before ENOCH, C.J, and BAKER and ONION[1] JJ.
OPINION ON REMAND
BAKER, Justice.
On original submission, we held the evidence sufficient to support the verdict and that the trial court did not err in overruling appellant's Batson[2] motion. See Young v. State, No. 05-89-00571-CR (Tex.App Dallas, March 5, 1990) (not designated for publication), rev'd, 826 S.W.2d 141 (Tex. Crim.App.1991). We stated:
In his brief, appellant brings forth testimony from the voir dire which he asserts casts doubt on the prosecutor's explanations. Appellant urges that we compare the individuals that the State struck with those who were not struck and to use these alleged discrepancies to determine whether the State's explanations were credible. Because appellant did not urge the trial court to make the comparisons during the Batson hearing, they are not available on appellant's behalf for consideration by a reviewing court.
Young, slip op. at 7. In reaching this conclusion, we relied on Tompkins v. State, 114 S.W.2d 195, 202 n. 6A (Tex.Crim. App. 1987), affd by an equally divided court, 490 U.S. 754, 109 S. Ct. 2180, 104 L. Ed. 2d 834 (1989). In Tompkins, the court of criminal appeals stated:
Because the trial judge was not urged to make, and did not make, a finding based upon a comparison analysis in deciding the issue whether the prosecutors' neutral explanations were rebutted or impeached at the "Batson" hearing with evidence that unchallenged white veniremen also possessed the same purportedly undesireable [sic] characteristics, we do not consider this circumstance in reviewing the trial judge's findings in this cause.
Tompkins, 774 S.W.2d at 202 n. 6A.
On discretionary review, the court of criminal appeals agreed with appellant that the footnote in Tompkins was not a holding and declined to adopt it as one. See Young, 826 S.W.2d at 144.[3] The court of criminal appeals concluded that this Court erred by refusing to consider appellant's comparisons in reviewing the trial court's Batson ruling. See Vargas v. State, 838 S.W.2d 552, 557 (Tex.Crim.App. 1992). The court of criminal appeals remanded the case to our Court not to determine whether the prosecutor's explanations were credible, but to determine whether the record supports the trial judge's ruling on appellant's Batson motion and was therefore not clearly erroneous. See Young, 826 S.W.2d at 146-47.
Upon remand of the cause to this Court, we advised appellant and the State of their right to rebrief the issue. See Robinson v. State, 790 S.W.2d 334, 335 (Tex.Crim.App. 1990) (per curiam). Both appellant and the State filed briefs on remand. Appellant did not request oral argument. The State requested argument only if appellant requested oral argument. We submit the case on the briefs on remand. We proceed to determine whether the record supports the trial court's ruling on appellant's Batson motion and was therefore not clearly erroneous.
After reviewing the record, we find that the record does not support the trial court's ruling on juror number eleven, Mr. Jones. We conclude that the trial court made a mistake. We reverse the trial court's judgment. We remand the cause for a new trial.
*205 STANDARD OF REVIEW
The standard of review for claims that the State used peremptory strikes in a racially discriminatory manner is the "clearly erroneous" standard. Hill v. State, 827 S.W.2d 860, 865 (Tex.Crim.App. 1992); Williams v. State, 804 S.W.2d 95, 101 (Tex.Crim.App.), cert, denied,___ U.S. ___, 111 S. Ct. 2875, 115 L. Ed. 2d 1038 (1991). To determine whether the fact finder's decision is clearly erroneous, we look to the record to see if the record leaves us with the definite and firm conviction that the trial court made a mistake. Hill, 827 S.W.2d at 865; Whitsey v. State, 796 S.W.2d 707, 728 (Tex.Crim.App. 1989) (op. on reh'g).
The clearly erroneous standard accords great deference to the trial court's findings and conclusions because the trial court bases its rulings in part upon a credibility determination that is not reviewable by the appellate court. Young, 826 S.W.2d at 152 (op. on reh'g). We review the evidence in the light most favorable to the trial court's ruling. Robinson v. State, No. 69,568, slip op. at 11, 1991 WL 57765 (Tex.Crim.App. April 17, 1991) (reh'g granted); Whitsey, 796 S.W.2d at 721.
The exercise of even one peremptory challenge for racial reasons invalidates the entire jury selection and mandates a new trial. See Linscomb v. State, 829 S.W.2d 164, 166 (Tex.Crim.App.1992); Keeton v. State, 724 S.W.2d 58, 65 n. 5 (Tex. Crim.App. 1987). The aggrieved party need not show multiple instances of racial prejudice in jury selection to prove a constitutional violation. Linscomb, 829 S.W.2d at 166.
Under Batson, we should be occupied with the question of whether the State was racially motivated in the exercise of its peremptory challenges against even one juror of discernable race. Linscomb, 829 S.W.2d at 167. We examine each of the prosecutor's neutral explanations to determine if they are a pretext for a racially motivated peremptory challenge. Whitsey, 796 S.W.2d at 713.
COMPARATIVE ANALYSIDISPARATE TREATMENT
The trial judge's decision on whether the defendant proves a Batson claim turns, in part, on the trial court's observations during voir dire examination. As the voir dire supervisor, the trial judge can readily perceive discrepancies during jury selection process. These discrepancies may include: (1) the prosecutor failing to question any of the minority jurors yet striking them anyway; (2) the prosecutor striking minority jurors who gave answers similar to those of majority jurors whom the prosecutor did not strike; and (3) the prosecutor striking minority jurors who had the same characteristics professionally, socially, religiously, etc. as majority jurors whom the prosecutor did not strike. These factors may show disparate treatment of prospective jurors. These factors enter into the trial judge's assessment of the prosecutor's credibility and eventually the trial judge's determination of the racial neutrality of the prosecutor's peremptory challenges. See Young, 826 S.W.2d at 145.
THE STATE'S PEREMPTORY CHALLENGES
In his brief on remand, appellant contends that the State peremptorily challenged prospective jurors numbers two, eleven, and twelve for racially motivated reasons. The reasons the State gave for its strikes were:
1. Juror number two, Mr. Davis. This juror's brother was involved in a theft. He was seen nodding, and his head was down and his eyes were closed during the State's voir dire.
2. Juror number eleven, Mr. Jones. This juror had an uncle who had been in trouble with the law.
3. Juror number twelve, Ms. Jennings. This juror told the parties that she had a problem sitting because of back problems, and the State was concerned that her ability to pay attention and give her undivided time to the case would be affected.
*206 APPELLANT'S CONTENTIONS
Appellant observes that the State struck seven blacks from the jury panel and that appellant struck one. No blacks served on the jury. Appellant is black. Appellant contends the State's explanations for striking the black veniremen were not racially neutral considering the disparate treatment of those jurors when compared with other jurors on the panel who shared the same or similar characteristics as the challenged jurors. Appellant offers the following as disparate treatment of the minority jurors whom the State struck:
1. Juror number two, Mr. Davis: The State struck him because he had a brother involved in a theft case and because he nodded off with his head down and his eyes closed during the voir dire conducted by the State. Appellant compares Mr. Davis to juror number one, Mr. Kudlacek, who had a brother charged with theft of meat for a barbecue. The State did not strike Mr. Kudlacek, who was white.
2. Juror number eleven, Mr. Jones: The State struck him because he had an uncle who had been in trouble with the law. Like Mr. Davis, appellant compares Mr. Jones to Mr. Kudlacek.
3. Juror number twelve, Ms. Jennings: The State struck Ms. Jennings because she had a back problem that the State felt could affect her ability to pay attention and give her undivided attention to the case. Appellant compares Ms. Jennings with juror number twenty-three, Mr. Penn, who was white. Mr. Penn also had a back problem, but the State did not strike him.
THE STATE'S RESPONSE
The State contends that, when viewed in the light most favorable to the trial court's ruling, the record shows that the trial court's decision on appellant's Batson motion was not clearly erroneous. The State's response on each prospective juror whom appellant claims the State struck for racial reasons is:
1. Juror number two, Mr. Davis: The State notes that the prosecutor struck Mr. Davis because he had a brother who had been involved in a theft case. The prosecutor also stated that Mr. Davis nodded off during the prosecutor's voir dire examination. The State notes that a juror's having a relative in trouble with the law is a legitimate reason for exercising a peremptory challenge. See Sims v. State, 768 S.W.2d 863, 865 (Tex.App.Texarkana 1989), pet. dism'd per curiam, 792 S.W.2d 81 (Tex.Crim.App.1990). The State also argues that inattentiveness may be a sufficiently race-neutral reason to justify the use of a peremptory challenge. See Woods v. State, 801 S.W.2d 932, 937 (Tex.App. Austin 1990, pet. ref'd).
2. Juror number eleven, Mr. Jones: The State notes that the prosecutor struck Mr. Jones because Mr. Jones had an uncle who had been in trouble with the law. The State argues that a relative's trouble with the law is a racially neutral reason for striking a juror. Sims, 768 S.W.2d at 865. The State also argues that the record shows there were two responses by a person or persons identified as Mr. Jones.
The State contends that the record is ambiguous because the juror information lists are not part of the record on appeal. The State argues that even if there were two Mr. Joneses, it is not possible to determine whether one or two people made the responses shown in the record. The State concludes that because of the ambiguity and because we are to give great deference to the trial court's decision, appellant has not shown that the trial court's decision was clearly erroneous.
3. Juror number twelve, Ms. Jennings: The State observes that the prosecutor stated he struck Ms. Jennings because she had a back problem. The State felt that her back problems would affect her ability to pay attention. The State notes that appellant compares Ms. Jennings with juror number twenty-three, Mr. Penn, who also had a back problem. The State asserts that the strike lists, which are part of the record, show that appellant struck Mr. Penn. The State argues that because appellant struck Mr. Penn and the State did not, we cannot find the trial court's ruling on Ms. Jennings clearly erroneous.
*207 The State also argues that the back problems of Ms. Jennings and Mr. Penn were not comparable. The State argues that the record shows that Ms. Jennings said she could not sit through the trial, while Mr. Penn said that if he could stand up every so often, he could sit through the trial. The State concludes that the two jurors were not comparable.
APPLICATION OF THE LAW TO THE FACTS
A. The Voir Dire
The record reflects the following exchange between the prosecutor and the prospective jurors:
[THE PROSECUTOR]: I'll ask you three questions. Please do not answer or raise your hand to any of these questions until I have finished all of them. Okay. Has anybody on this panel ever been charged, arrested or convicted in any criminal offense greater than a traffic citation? Okay. Charged, arrested or convicted of any criminal offense greater than a traffic citation? That's question number one.
Has anyone on this panel have a friend or a family member who has ever been charged, arrested or convicted of any criminal offense greater than a traffic citation? Okay.
Third question. Has thereis there anybody on this panel that for any health reasons, you have a problem sitting for a day or two during the course of this trial, you have a back problem. Whatever, the flu, you can't give us your undivided attention for a day or two and that's going to cause a problem for you for either side, for giving either side a fair trial.
Now, those are your three questions. Does anybody have an answer of yes to any of those three questions?
First row? Okay.
Is it Kudlacek?
[MR. KUDLACEK] Hey, that's great.
[THE PROSECUTOR]: Is that it? I worried about that when I went over there to talk to you.
Mr. Kudlacek, which question did you have to answer yes to?
[MR. KUDLACEK]: I had a brother that was charged with an offense.
[THE PROSECUTOR]: Here in Dallas?
[MR. KUDLACEK]: Oh, no, this was back east.
[THE PROSECUTOR]: Okay. What was the nature of the offense?
[MR. KUDLACEK]: They wanted to have a bar-b-que and didn't have the money to buy the beef, so they went and got their own.
[THE PROSECUTOR]: Well, sir, is that taken care of? Is it over and done with?
[MR. KUDLACEK]: Oh, yes.
[THE PROSECUTOR]: All right. Did they still have the bar-b-que?
[MR. KUDLACEK]: Yes.
[THE PROSECUTOR]: Okay. Can you set those facts aside and make your determination based upon what you hear in this courtroom?
[MR. KUDLACEK]: Oh, yes.
[THE PROSECUTOR]: Can you set that aside and give both sides a fair trial?
[MR. KUDLACEK]: Yes, sir.
[THE PROSECUTOR]: Thank you, sir. Mr. Davis, did you have a
[MR. DAVIS]: Well, no, a brother of mine
[THE PROSECUTOR]: Okay.
[MR. DAVIS]: played hookey with someone else. Someone else went in the store to steal a coke and gave it to him.
[THE PROSECUTOR]: Probably a theft case?
[MR. DAVIS]: Yes.
[THE PROSECUTOR]: Fine. Has that case been taken care of, is [it] done with, over with?
[MR. DAVIS]: Yes.
[THE PROSECUTOR]: Is there anything about that case or the way it's been handledthe way it was handled by the police department or the district attorney's office or any of the parties that were involved that would make it difficult for you to sit in this case?
[MR. DAVIS]: No.
*208 [THE PROSECUTOR]: Do you think, sir, that you can set aside those facts and give both the State of Texas as well as the defense a fair trial?
[MR. DAVIS]: Yes.
[THE PROSECUTOR]: Okay.
* * * * * *
Mr. Jones?
[MR. JONES]: May I ask a question?
[THE PROSECUTOR]: Yes.
[MR. JONES]: I have had a family member involved in an embezzlement case.
[THE PROSECUTOR]: All right. Okay. Has that case been taken care of? Is it over and done with?
[MR. JONES]: Yes.
[THE PROSECUTOR]: It took place in Dallas?
[MR. JONES]: Yes.
[THE PROSECUTOR]: Okay. Now that's pretty close, that's kind of close to the kind of offense that we are dealing with here. It's fraud so-to-speak, okay? Now what family member was it, a close family member?
[MR. JONES]: Yes.
[THE PROSECUTOR]: Sir, do you think you're so close to that set of circumstances that it may cause problems some here?
[MR. JONES]: No, it's over with.
[THE PROSECUTOR]: Now do you feel that the district attorney's office or the police agencies that were involved in this case treated your family members fairly?
[MR. JONES]: Yes.
[THE PROSECUTOR]: So, if you heard testimony from a police officer, or as you well know this offense is initiated by the district attorney's office and brought forward, do you think that you can give the State of Texas as well as the defense a fair trial?
[MR. JONES]: Yes, I can.
[THE PROSECUTOR]: Do you think you can do that?
[MR. JONES]: Yes.
[THE PROSECUTOR]: Thank you.
Anybody else in the first row? Some more hands?
(the individual voir dire of juror number ten, Ms. Stewart, is omitted)
* * * * * *
[THE PROSECUTOR]: Mr. Jones?
[MR. JONES]: I had an uncle that was arrested a long time ago.
[THE PROSECUTOR]: Okay, for what, sir?
[MR. JONES]: I don't know.
[THE PROSECUTOR]: I think we've all got one of those uncles. I used to cry about it. My mother told me, son, you can pick your friends but you can't pick your family.
All right. Do you think that would cause you a problem?
[MR. JONES]: No.
[THE PROSECUTOR]: Do you think you can be fair to both sides?
[MR. JONES]: Yes.
[THE PROSECUTOR]: Can you give Mr. Weddle and his client a fair trial as well as the State?
[MR. JONES]: Yes.
[THE PROSECUTOR]: Okay. Thank you.
Did you have your hand up?
Yes, ma'a [sic]. Ms. Jennings?
[MS. JENNINGS]: Your last question about sitting for a couple of hours. I hurt my back. I can't.
[THE PROSECUTOR]: Okay, we'll call you up, Ms. Jennings, fine.
* * * * * *
[THE PROSECUTOR]: Anybody else? Yes sir.
[MR. PENN]: I have a lower back problem.
[THE PROSECUTOR]: Okay. Mr. Penn, right?
[MR. PENN]: Yes.
[THE PROSECUTOR]: Thank you, sir.
B. Comparative Analysis Disparate Treatment
1. Juror Number Two, Mr. Davis
Appellant compares juror number two, Mr. Davis, to juror number one, Mr. Kudlacek. Both had relatives charged with theft. The State struck Mr. Davis but did *209 not strike Mr. Kudlacek. Mr. Kudlacek was white, Mr. Davis was black. The State argues that although both jurors had relatives charged with crimes, the State also said it struck juror Davis because he was inattentive. Kinship to a person who has had trouble with the law is a racially neutral reason for striking a juror. Sims, 768 S.W.2d at 865. Additionally, inattentiveness may be a sufficiently race-neutral reason to justify the use of a peremptory challenge. Woods, 801 S.W.2d at 937. Viewed in the light favorable to the trial court's ruling, the record supports the trial court's decision on juror Davis. The trial court's ruling was not clearly erroneous. Whitsey, 796 S.W.2d at 726.
2. Juror Number Eleven, Mr. Jones
Appellant compares juror number eleven, Mr. Jones, to juror number one, Mr. Kudlacek. Juror Jones was black, juror Kudlacek was white. Each of these jurors had a family member who had prior trouble with the law.
The State contends that the record is ambiguous because there are one or more Mr. Joneses identified in the record. The State argues that because the record is ambiguous, we are to give the trial court's ruling great deference. The State contends that the trial court's ruling on juror number eleven, Mr. Jones, was not clearly erroneous.
We disagree with the State's conclusion that the record is ambiguous. In our view, the record clearly shows there were two Mr. Joneses. The first Mr. Jones stated, "I have a family member involved in an embezzlement case." The second Mr. Jones stated, "I have an uncle that was arrested a long time ago." The prosecutor asked the second Mr. Jones for what. The second Mr. Jones responded that he did not know.
The prosecutor questioned an intervening juror, Ms. Stewart, between questioning the two Mr. Joneses. The record identifies Ms. Stewart as juror number ten. The prosecutor clearly identified Mr. Jones as juror number eleven when he stated his reasons for striking that particular juror. Both Mr. Kudlacek and Mr. Jones had relatives charged with crimes. Kinship to a person with criminal charges is a racially neutral reason for striking a juror. Sims, 768 S.W.2d at 865. Both Kudlacek and Jones gave similar answers to the prosecutor's questions about relatives charged with crimes. Mr. Kudlacek was white, Mr. Jones was black. The prosecutor did not strike Mr. Kudlacek but did strike Mr. Jones. These facts show disparate treatment of prospective jurors on a racial basis. Viewed in the light most favorable to the trial court's ruling, we cannot say the record supports the ruling on juror Jones. The record leaves us with a definite and firm conviction that the trial court made a mistake. Whitsey, 796 S.W.2d at 721, 728.
3. Juror Number Twelve, Ms. Jennings
Appellant compares Ms. Jennings with juror number twenty-three, Mr. Penn. Both had back problems. Ms. Jennings was black. Mr. Penn was not black. The State struck Ms. Jennings, appellant struck Mr. Penn.
Appellant argues the only distinguishable factor between Jennings and Penn is their race. The State argues that because of the trial court's individual examination of the two prospective jurors, the back problems of the two jurors were not comparable. The State contends the record shows that Ms. Jennings back was already giving her problems just from sitting during voir dire examination. She said she would have difficulty in paying attention because of her back problem. Conversely, the State claims that Mr. Penn said he had been sitting during the entire voir dire but was suffering no problems. Penn stated that sitting on hard benches would hurt his back. However, he told the court that if he could stand up periodically, this alleviated his problem. The court said Mr. Penn could stand up when necessary.
A juror's physical problem is a racially neutral reason for exercising a peremptory strike. See Roy v. State, 813 S.W.2d 532, 538 (Tex.App.Dallas 1991, pet. ref'd). The record reflects a difference in the responses by jurors Jennings and Penn when the court questioned them individually. *210 viewed in the light most iavorable to the trial court's ruling, the record supports the trial court's decision on juror Jennings. The trial court's ruling was not clearly erroneous. Whitsey, 796 S.W.2d at 721.
CONCLUSION
The record leaves us with the definite and firm conviction that the trial court made a mistake in its ruling on juror number eleven, Mr. Jones. We hold that the trial court's finding was clearly erroneous. Whitsey, 796 S.W.2d at 728. One peremptory challenge for racially motivated reasons invalidates the entire jury selection process. Linscomb, 829 S.W.2d at 166.
We reverse the trial court's judgment. We remand the cause for a new trial.
ONION, Justice, dissenting.
Young v. State[1] held that a defendant was not required to request the trial judge to make his findings upon a Batson[2] motion based on comparisons of venirepersons in order to have the same evidence considered on a direct appeal raising the issue of the prosecutor's peremptory challenges. Young, 826 S.W.2d at 145-46.
In order to reach this decision, the court abandoned the now famous footnote 6A in Tompkins v. State, 774 S.W.2d 195, 202 (Tex.Crim.App.1987), affd, 490 U.S. 754, 109 S. Ct. 2180, 104 L. Ed. 2d 834 (1989), and held that the footnote was not to be read as holding that a "comparison analysis" must be made at the trial level before it can be argued on appeal. Young, 826 S.W.2d at 144; see also Vargas v. State, 838 S.W.2d 552 (Tex.Crim.App.1992); Henderson v. State, 826 S.W.2d 156, 158 (Tex.Crim.App. 1991).
With all due respect, in my humble view, the 5-4 Young opinion was wrongly decided. It permits a partial trial de novo while an appellate court pretends that the standard of review is the "clearly erroneous" standard with great deterence being given to the trial court's findings. See Hill v. State, 827 S.W.2d 860, 865 (Tex.Crim.App.), cert, denied,___ U.S.___, 113 S. Ct. 297, 121 L. Ed. 2d 221 (1992) (standard of review is "clearly erroneous"); Williams v. State, 804 S.W.2d 95, 101 (Tex.Crim.App.) (op. on remand), cert, denied,___ U.S.___, 111 S. Ct. 2875, 115 L. Ed. 2d 1038 (1991); Whitsey v. State, 796 S.W.2d 707, 726 (Tex. Crim.App.1989) (op. on reh'g). Thus, Young permits the trial court to be "sandbagged." Cf. Seefurth v. State, 422 S.W.2d 931, 936 (Tex.Crim.App.1967).
Under the Batson procedure, see infra footnote 5, once the prosecutor has given his racially neutral explanations for peremptorily striking a certain venireperson or venirepersons, a defendant in support of his motion can cross-examine the prosecutor and offer evidence and argument concerning comparative analysis and disparate treatment of the prospective jurors to show that the prosecutor's explanations are merely a pretext or a sham. It must be remembered that the defendant has the ultimate burden to "persuade the trial judge by a preponderance of the evidence that the allegations of purposeful discrimination are true in fact." Tompkins, 774 S.W.2d at 202 (emphasis added); see also Tex.Code Crim.Proc.Ann. art. 35.261(a) (Vernon 1989); Shields v. State, 820 S.W.2d 831, 833 (Tex.App.Waco 1991, no pet.); Despite the ultimate burden of persuasion before the trial court, Young permits a defendant to lie behind a log and make no mention of the disparate treatment of prospective jurors or urge any type of comparative analysis to the trial court in an attempt to show that the prosecutor's explanations were a pretext or a sham. Once the trial court has overruled the Batson motion and a conviction occurs, the defendant in most cases has the right of appeal. If an appeal is undertaken, the defendant's counsel, either the trial counsel *211 or a different attorney on appeal, will have available to him the transcribed record of the voir dire examination. Counsel may then pore over the record at leisure to determine if there is any indication of disparate treatment of venire members or evidence of a comparative analysis not presented to the trial court as such but which under Young can be raised for the first time on appeal to undermine the trial court's findings. This is true even if the defendant was afforded ample opportunity to present persuasive evidence of comparability at the trial court level to support his Batson motion and did not present such evidence or call attention to such matters. Young explains that the State may also use the now-transcribed voir dire examination to controvert the comparisons raised on appeal in a trial de novo atmosphere. Young, 826 S.W.2d at 146. While the State may use the voir dire record to support its neutral explanations, it appears it cannot broaden its neutral explanations on appeal. Cf. Wright v. State, 832 S.W.2d 601, 605 (Tex.Crim.App. 1992) (Benavides, J, concurring). If the prosecutor's explanations are left unchallenged in the trial court, the prosecutor is unable to further explain his reason or dispel the inference that he acted with improper motive.
Under the Young order of procedure, the appellate court views the cold record of the Batson hearing in light of the contentions raised only on appeal to determine if the trial court's ruling was "clearly erroneous." Each trial judge is assumed to have a computer-type mind able to recall every bit of "evidence" from the voir dire examination which may last hours on end over a period of several days. The trial judge, prior to any Batson motion, is required to remember the specific details of the interrogation of each venireperson, the length of the interrogation, the nature and numbers of questions asked, and to determine which venirepersons were struck or not struck by either party even though this latter "evidence" is outside the "evidence" of the voir dire examination. See Tex.Code Crim.Proc.Ann. arts. 35.26 & 35.261 (Vernon 1989). If a Batson motion is filed and the procedure advances to the point where the prosecutor recites his racially neutral explanations for his peremptory challenges and the defendant leaves the explanations unchallenged, thus sidestepping his ultimate burden of persuasion in the trial court by not raising any comparisons of the venirepersons, the trial court, without the benefit of a transcribed voir dire record, must speculate about what factors the defendant may raise on appeal for the first time. While a trial judge might be able to detect some "deficiencies" by himself, that is not his normal role in our system of justice. He would have to take on the role of defense counsel, inventing possible arguments as to why the prosecutor's stated explanations might not be sufficient, while at the same time keeping an open mind so as to rule on the Batson motion impartially. This is not the way our adversary system should work.[3]
Young was wrongly decided not only for the foregoing reasons, but also for the reasons set forth by Judge Campbell in his dissenting opinion in Young, 826 S.W.2d at 147-49, and by Judge Benavides in his dissenting opinion on rehearing in Young, 826 S.W.2d at 153-56.
The issue confronted in Young was apparently res novo in Texas. Before Young spawns too prolifically, it is the fervent hope of this writer that the Texas Court of Criminal Appeals will carefully assay and reconsider its decision. It has been the great tradition of that court not to be afraid to reconsider any decision and change its mind in the interest of justice in our state.
Young is, nonetheless, the law at the present time, and we as appellate judges must follow it. On February 11, 1989, after the voir dire examination was concluded and before the selected jurors were sworn, appellant Young lodged his Batson objection.[4] Although appellant struck one *212 black venireperson, he complained that the State had peremptorily struck seven black venire members, which showed a "pattern" of racial discrimination. Appellant asked the trial court to require the prosecutor to provide explanations for the strikes. The prosecutor, without any ruling from the trial court on whether a prima facie case had been established,[5] immediately articulated detailed, racially neutral reasons for all seven challenged strikes. Therefore, appellant did not offer evidence or seek to cross-examine the prosecutor. He quarreled with the State's reason for striking one of the black veniremen and argued generally about being denied a jury of his peers. See Young, 826 S.W.2d at 142. Hearing no other evidence or argument, the trial court overruled the Batson claim.
Upon remand of this cause by the Texas Court of Criminal Appeals, the parties were permitted to rebrief the issue. See Robinson v. State, 790 S.W.2d 334, 335 (Tex. Crim.App.1990) (per curiam). In his remand brief, appellant complains of only three of the State's peremptory challenges, those being the strikes made against potential jurors numbers two, eleven, and twelve. I agree with the majority's disposition *213 of appellant's complaints that potential jurors numbers two and twelve, Mr. Davis and Ms. Jennings, were improperly struck. Viewed in the light most favorable to the trial court's ruling, there was no Batson error present. The prosecutor gave sufficiently race-neutral explanations and reasons for striking both of these members of the jury panel. The trial court's ruling as to these two panel members was not clearly erroneous. Whitsey, 796 S.W.2d at 726.
This, then, leaves the peremptory challenge to prospective juror number eleven, the so-called second Mr. Jones. The prosecutor stated that he struck Mr. Jones because Jones had an uncle who had been in trouble with the law. Kinship to a person who has an arrest record or has had difficulty with the law can constitute a legitimate racially neutral reason for striking a prospective juror. United States v. Guerra-Marez, 928 F.2d 665, 668 (5th Cir.), cert. denied,___ U.S.___, 112 S. Ct. 322, 116 L. Ed. 2d 263 (1991); McHenry v. State, 823 S.W.2d 667, 670 (Tex.App.Dallas 1991), remanded on other grounds, 829 S.W.2d 803 (Tex.Crim.App.1992); Sims v. State, 768 S.W.2d 863, 865 (Tex.App.Texarkana 1989), pet. dism'd per curiam, 792 S.W.2d 81 (Tex.Crim.App.1992); Rodgers v. State, 725 S.W.2d 477, 480-81 (Tex.App.Houston [1st Dist.] 1987, pet. ref'd); Rijo v. State, 721 S.W.2d 562, 564 (Tex.App. Amarillo 1986, no pet.); see also Garcia v. State, 833 S.W.2d 564, 567 (Tex.App.Dallas 1992, pet. granted).
The prosecutor's racially neutral explanation was not attacked in the trial court on a comparative analysis/disparate treatment basis. Appellant now contends that while the prosecutor struck Mr. Jones, a black venireman, he did not strike Mr. Kudlacek, a white venireman. Kudlacek had a brother who was charged with theft of some bar-b-que "back east." The majority concludes that the failure to strike Mr. Kudlacek demonstrated a disparate treatment of prospective jurors on a racial basis and that viewing the facts in the light most favorable to the trial court's ruling and under the "clearly erroneous" standard of review, the cold record leaves a definite and firm conviction that the trial court made a mistake. I cannot agree.
In United States v. Valley, 928 F.2d 130, 136 (5th Cir.1991), the prosecutor's strikes of black venirepersons for the race-neutral reason that they had relatives who had been in difficulty with the law was not rendered pretextual or a sham because the prosecutor had not struck all white venirepersons who had kinship to individuals charged with a crime in light of the great deference to be given to the trial court's findings. In the instant case, Mr. Jones, the black venireman who was struck by the prosecutor, had an uncle who had had previous difficulty with the law. The white venireman, Mr. Kudlacek, had a brother who was involved in the theft of some barb-que "back east."
A prosecutor's explanation for the exercise of a peremptory challenge need not be quantifiable and may include intuitive assumptions provided the intent is not race based. United States v. Clemons, 941 F.2d 321, 325 (5th Cir.1991); see also Keeton, 749 S.W.2d at 865 (peremptory strikes may be based on the prosecutor's legitimate "hunches" so long as racial discrimination is not the motive).
A neutral explanation in the context of our analysis here means an explanation based on something other than the race of the juror. At this step of the inquiry, the issue is the facial validity of the prosecutor's explanation. Unless a discriminatory intent is inherent in the prosecutor's explanation, the reason offered will be deemed race neutral.
Hernandez,___ U.S. at___, 111 S.Ct. at 1866.
In the instant case, the trial court chose to believe the prosecutor's race-neutral explanation for striking Mr. Jones, rejecting the appellant's assertions that the reasons were pretextual. In Batson it was explained that the trial court's decision on the ultimate question of discriminatory intent represents "a finding of fact of the sort accorded a great deference on appeal." Hernandez,___ U.S. at___, 111 S.Ct. at 1868.
*214 Batson s treatment of intent to discriminate as a pure issue of fact, subject to review under a deferential standard, accords with our treatment of that issue in other equal protection cases.
* * * * * *
Deference to trial court findings on the issue of discriminatory intent makes particular sense in this context because, as we noted in Batson, the finding will "largely turn on evaluation of credibility." In the typical peremptory challenge inquiry, the decisive question will be whether counsel's race-neutral explanation for a peremptory challenge should be believed. There will seldom be much evidence bearing on that issue, and the best evidence often will be the demeanor of the attorney who exercises the challenge. As with the state of mind of a juror, evaluation of the prosecutor's state of mind based on demeanor and credibility lies "peculiarly within a trial judge's province."
Hernandez,___ U.S. at___, 111 S.Ct. at 1869 (citations omitted); see also Newsome v. State, 829 S.W.2d 260, 266 (Tex.App. Dallas 1992, no pet.).
The Hernandez court discounted a claim that an appellate court should make an independent review of the facts involved in a Batson contention. The court noted that proper deference is to be shown to factual determinations by the court below when the reviewing court is not left with a definite and firm conviction that a mistake has been committed. Hernandez,___ U.S. at ___ ___, 111 S.Ct. at 1870-71; see Vargas, 838 S.W.2d at 554.
If an appellate court accepts a trial court's finding that a prosecutor's raceneutral explanation for his peremptory challenge should be believed, it is difficult to see how the appellate court nevertheless could find discrimination. "The credibility of the prosecutor's explanation goes to the heart of the equal protection analysis, and once that has been settled, there seems nothing left to review." Hernandez,___ U.S. at___, 111 S.Ct. at 1870.
Absent intentional discrimination violative of the Equal Protection Clause, parties should be tree to exercise their peremptory strikes for any reason or no reason at all. The peremptory challenge is "as Blackstone says, an arbitrary and capricious right; and it must be exercised with full freedom, or it fails of its full purpose." Lewis v. United States, 146 U.S. 370, 378, 13 S. Ct. 136, 139, 36 L.Ed 1011 (1892) [internal quotations omitted].... Batson requires only that the prosecutor's reason for striking a juror not be the juror's race.
Hernandez,___ U.S. at___ ___, 111 S.Ct. at 1874-75 (O'Connor, J., concurring) (emphasis in original).
In the instant case, the prosecutor gave a well-accepted racially neutral explanation for exercising a peremptory strike against Mr. Jones. The trial court had the opportunity to observe the prosecutor's demeanor and to pass on his credibility, which is not subject to review by this Court. The fly in the ointment is the comparative analysis. The prosecutor struck venireman Jones but not venireman Kudlacek for the same reasonkinship with someone who had been in difficulty with the law. The objective factors discussed in Keeton, 749 S.W.2d at 867, including "6. Disparate treatment of members of the jury venire with the same characteristics ...," certainly may be considered in evaluating the trial judge's overruling of a Batson claim, "but they are not determinative." Vargas, 838 S.W.2d at 554. The objective factor in the instant case has already been considered. I would hold that the evidence of "comparability" is not sufficiently concrete. It should be remembered that the United States Supreme Court made no mention of a "comparative analysis" in its discussion of a defendant's burden in Batson, Young, 826 S.W.2d at 145, and neither does article 35.261.
Great deference is given to the trial court's findings under the "clearly erroneous" standard of review. In viewing the record in the light most favorable to the trial court's findings, I, unlike the majority, am not left with a "definite and firm conviction that a mistake has been committed." Vargas, 838 S.W.2d at 554. We should keep in mind that where "there are *215 two permissible views ot the evidence, the factfinder's choice between them cannot be clearly erroneous." Anderson v. Bessemer City, 470 U.S. 564, 574, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518 (1985); Hernandez, ___ U.S. at___ ___, 111 S.Ct. at 187172; Garcia v. State, 833 S.W.2d 564, 567 (Tex.App.Dallas 1992, pet. granted); Woods v. State, 801 S.W.2d 932, 935 n. 3 (Tex.App.Austin 1990, pet. ref'd).
I respectfully dissent.
Although not on the panel, KINKEADE, J., as a member of the Court agrees with the dissent.
NOTES
[1] The Honorable John F. Onion, Jr., Presiding Judge, Court of Criminal Appeals, Retired, sitting by assignment.
[2] Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986).
[3] In a footnote, the majority opinion stated it regarded the Tompkins footnote as dictum. See Young, 826 S.W.2d at 144 n. 5; see also Young, 826 S.W.2d at 153 n. 3. (Benavides, J., dissenting).
[1] Young v. State, 826 S.W.2d 141 (Tex.Crim.App. 1991). The appellant in this cause was convicted by a jury of the offense of forgery. The trial judge assessed appellant's punishment at forty years' imprisonment after finding the allegations in two enhancement of punishment paragraphs of the indictment to be true.
[2] Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986).
[3] One may wonder just how a trial court may protect itself and the tax-paying public from Young in order to prevent unnecessary reversals and time-consuming and costly remands.
[4] This called into play the Batson procedure. A prosecutor is prohibited by the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution from challenging potential jurors solely on the basis of race. Batson, 476 U.S. at 89, 106 S.Ct. at 1719; see also Tex.Code Crim.Proc.Ann. art. 35.261 (Vernon 1989); Hill v. State, 775 S.W.2d 754, 755 (Tex. App.Fort Worth 1989, pet. ref'd) (interpreting State's constitution to prohibit Batson-type discrimination in selection of jury); Oliver v. State, 808 S.W.2d 492 (Tex.Crim.App.1991). The burden of establishing a prima facie case of purposeful racial discrimination is on the defendant. Tennard v. State, 802 S.W.2d 678, 680 (Tex.Crim.App.1990), cert, denied,___ U.S.___, 111 S. Ct. 2914, 115 L. Ed. 2d 1077. Under the Batson holding itself, the defendant, in order to establish a prima facie case, is required to show: (1) that he is a member of a cognizable racial group; (2) that the prosecutor has exercised peremptory challenges to remove members of the defendant's race from the jury panel; and (3) that these facts and any other relevant circumstances raise an inference that the prosecutor used the practice to exclude the veniremen from the jury on account of their race. A defendant can also rely upon the fact that peremptory challenges constitute a jury selection practice that permits those to discriminate who have a mind to discriminate. Batson, 476 U.S. at 96, 106 S.Ct. at 1723; Keeton v. State, 724 S.W.2d 58, 65 (Tex.Crim.App. 1987).
Since the time of appellant Young's trial, Powers v. Ohio,___ U.S.___, 111 S. Ct. 1364, 113 L. Ed. 2d 411 (1991) implicitly eliminated the requirements that a defendant must be a member of a cognizable racial group and that there must be racial identity between the objecting defendant and the excluded jurors. See Hernandez v. State, 808 S.W.2d 536, 539 (Tex.App.Waco 1991, no pet.); see also Edmonson v. Leesville Concrete Co.,___ U.S.___, 111 S. Ct. 2077, 114 L. Ed. 2d 660 (1991) (applying Batson to civil cases). Cf. Georgia v. McCollum,___ U.S.___, 112 S. Ct. 2348, 120 L. Ed. 2d 33 (1992) (criminal defendants are no more free to exercise peremptory challenges on racial grounds than are prosecutors or civil litigants).
Once a defendant makes a prima facie showing, the burden shifts to the State to come forward with racially neutral explanations for the challenges. Tompkins, 774 S.W.2d at 201; Keeton v. State, 749 S.W.2d 861, 868 (Tex.Crim.App. 1988). If the prosecutor articulates racially neutral reasons for the strikes, the defendant may offer evidence showing that the prosecutor's reasons are merely a sham or pretext, Keeton, 749 S.W.2d at 868, and he may crossexamine the prosecutor, Salazar v. State, 818 S.W.2d 405, 407 (Tex.Crim.App.1991), and offer argument for that purpose. The defendant has the ultimate burden "to persuade the trial court by a preponderance of the evidence that the allegations of purposeful discrimination are true in fact." Tompkins, 774 S.W.2d at 202; see also Shields, 820 S.W.2d at 833. At a Batson hearing, the trial court is the factfinder, and it is the court's responsibility to weigh the evidence and determine the credibility of the witnesses. Tompkins, 774 S.W.2d at 202 n. 6. An appellate court is not free to substitute its judgment of the witnesses' credibility and evidentiary weight for those of the factfinder. Id. at 202. The trial court's ruling will not be reversed unless it is clearly erroneous. Williams, 804 S.W.2d at 101; Tennard, 802 S.W.2d at 681. To determine whether the factfinder's decision is "clearly erroneous," an appellate court must look to the record to see if it is left with the definite and firm conviction that a mistake has been committed. Hill, 827 S.W.2d at 865; see also Hernandez v. New York,___ U.S.___,___, 111 S. Ct. 1859, 1872, 114 L. Ed. 2d 395 (1991).
[5] Where the prosecutor articulates his reasons for alleged racially discriminatory peremptory challenges without any prompting by the trial court and the trial court rules on the ultimate question of intentional discrimination, the preliminary issue of whether a defendant has made a prima facie showing becomes moot. See Hernandez, ___ U.S. at___, 111 S.Ct. at 1866; Hill, 827 S.W.2d at 865; Dewberry v. State, 776 S.W.2d 589, 591 (Tex.Crim.App.1989).
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328 A.2d 727 (1974)
STATE
v.
Robert L. CLARK.
No. 73-141-C. A.
Supreme Court of Rhode Island.
December 6, 1974.
Richard J. Israel, Atty. Gen., Donald P. Ryan, Asst. Atty. Gen., for plaintiff.
William F. Reilly, Public Defender, Walter R. Stone, Sp. Counsel, Providence, for defendant.
OPINION
ROBERTS, Chief Justice.
This is an indictment charging the defendant, Robert L. Clark, with robbery. After a trial to a jury in the Superior Court, a verdict of guilty was returned on January 23, 1973. On January 25, 1973, the defendant filed a motion for a new trial on the usual grounds, which was heard on February 6, 1973, and denied. Thereafter, on March 2, 1973, a judgment of conviction was entered, and a sentence of five years was imposed. On March 22, 1973, the defendant filed a notice of appeal from that judgment and is now prosecuting that appeal in this court.
It appears from the record that on June 7, 1972, the operator of a commercial vehicle was held up and robbed by three men on John Street in the city of Providence. The record also shows that one Kevin P. MacManus testified that he had seen three men leaving the area in which the crime had been committed and that he had observed them entering an automobile. He subsequently furnished a description of the auto along with its registration number to the Providence police. A short time later the police arrested defendant here and two other men when they were found in the automobile described by MacManus. Some *728 time later in the day a six-man lineup was held at the police station, and MacManus identified defendant and others as being the three men he had seen leaving the area of the crime.
At trial MacManus, testifying for the prosecution, made an in-court identification of this defendant, who thereafter moved that such testimony be stricken. The motion was denied, and defendant now contends that the denial thereof denied him due process under the fourteenth amendment in that the lineup at which he was identified was so unnecessarily suggestive as to be conducive to irreparable mistaken identification. Relying on Stovall v. Denno, 388 U.S. 293, 87 S. Ct. 1967, 18 L. Ed. 2d 1199 (1967), defendant argues that the suggestive character of the lineup caused an unreliable identification which, absent proof of an independent source of identification presented by the state, would render an in-court identification inadmissible as violative of his constitutional right to a fair trial.
The defendant makes no assertion that the impermissibly suggestive nature of the lineup resulted from intentional conduct on the part of the police designed to induce the witness to identify this defendant. At no time does it appear that the witness was allowed to see defendant or the other suspects in police custody. Neither was he shown any photographs which were identified by the police as being pictures of any of the suspects. What he is contending is that the witness overheard the radio message which announced that the car that he had identified had been located and that as a result of hearing that message the witness was induced to identify three participants in the lineup as those he had seen on John Street earlier in the day.
For a lineup to be impermissibly suggestive, it is not necessary that such a result have been intended. In United States v. Wade, 388 U.S. 218, 228, 87 S. Ct. 1926, 1933, 18 L. Ed. 2d 1149, 1158 (1967), the Court pointed out that "* * * identification evidence is peculiarly riddled with innumerable dangers and variable factors which might seriously, even crucially, derogate from a fair trial." The Court then went on to note that a major factor contributing to the instances of miscarriage of justice resulting from mistaken identification has been the degree of suggestion inherent in the manner in which the prosecution presents the suspect to witnesses for pretrial identification. In so doing, the Court clearly held that impermissible suggestiveness need not necessarily be the result of intentional conduct on the part of the police but may be created in many subtle ways by unintentional conduct or procedures. We turn to the question of whether the purely coincidental overhearing of the radio message can reasonably be held to have convinced the witness that all three suspects had been taken into custody and thus put him under a psychological compulsion to identify three participants in the lineup when he viewed it later on.
In our opinion, the evidence here was not susceptible of a reasonable inference by the witness that all three suspects would participate in the lineup. Consequently, the witness could not reasonably have felt compelled to identify three of the participants in the lineup. Nothing in the evidence tends to establish that the radio message made any reference to the apprehension of suspects. Neither does the evidence disclose that the witness had any knowledge that all three had been apprehended, nor was he advised by the police that he was to view the lineup and to identify some specific number of the participants therein as suspects.
The defendant stresses the fact that one of the three identifications made by the witness was erroneous. It might well be that if there were evidence tending to establish that the witness had some knowledge that all three suspects would participate in the lineup, the erroneous identification would be significant. However, there *729 is no evidence that the witness had such knowledge. We cannot agree, therefore, that the fact that the witness made an erroneous identification has the effect of making the evidence susceptible of a reasonable inference that he was motivated to make three identifications because he was convinced that he must identify all three of the men he had seen on John Street after the robbery.
In short, in light of all the circumstances of this case, we cannot agree that the radio message overheard by the witness could reasonably have induced a belief that all three men had been apprehended and that all would, therefore, participate in the lineup. We conclude, then, that the confrontation was not tainted by unnecessary suggestiveness so as to be conducive to irreparable mistaken identification of defendant who, it appears from the record, was one of the two suspects accurately identified by the witness during the confrontation. We hold, then, that the denial of the motion to strike the testimony of the witness relating to the identification of this defendant was not error.
The defendant contends also that the trial justice erred in denying his motion for a new trial. We see no merit in this contention, it clearly appearing from the decision of the trial justice that he passed upon the weight of the evidence and the credibility of the witnesses in an exercise of his independent judgment. He expressly stated that he found the witness MacManus entirely credible. He noted particularly that MacManus had an ample opportunity to observe the three suspects as they left the area in which the crime had been committed and entered the car in which they were subsequently taken into custody. Further, he expressly rejected the testimony of the defendant here on the ground that it lacked credibility. In the circumstances, it was the burden of the defendant to show that the trial justice was clearly wrong in that he either overlooked or misconceived material evidence on a controlling issue. The defendant did not meet this burden of proof. It is our opinion that the trial justice fully performed his duty and that his denial of the motion for a new trial was not an abuse of his discretion.
The appeal of the defendant is denied and dismissed, the judgment of conviction appealed from is affirmed, and the case is remanded to the Superior Court for further proceedings.
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848 S.W.2d 413 (1993)
312 Ark. 183
CARROLL ELECTRIC COOPERATIVE CORPORATION, Appellant,
v.
Joe BENSON and Amelia Benson, Appellees.
No. 92-1122.
Supreme Court of Arkansas.
March 1, 1993.
*414 John C. Everett, Fayetteville, for appellant.
James N. McCord, Fayetteville, for appellees.
HOLT, Chief Justice.
The issue presented is whether the appellant, Carroll Electric Cooperative Corporation (hereafter "Carroll Electric"), had a right pursuant to a 1962 easement to extend certain existing power lines across the western portion of appellees', Joe and Amelia Benson (hereafter "the Bensons"), property or was required to acquire a new easement. We hold that the trial court erred in determining that Carroll Electric could not extend this power line under a 1962 easement but remand to the trial court for its determination of the reasonableness of the route chosen for the line.
On May 12, 1962, the appellees' predecessor in title, Arrow Land Company, Inc., granted Carroll Electric the following described right-of-way easement:
KNOW ALL MEN BY THESE PREENTS, that we Arrow Land Company, Inc.... do hereby grant unto the Carroll Electric Cooperative Corporation ... the right to enter upon the lands of the undersigned... and to place, construct, operate, repair, maintain, convert to higher or lower voltage, to extend lines for other service upon the above lands and to extend lines from services on this land to and for service to other property and services beyond the above described lands, and overhead or underground electric transmission or distribution line or cable, such overhead lines or underground cable to serve as distribution or transmission line or both and to excavate, to cut, and trim trees and shrubbery to the extent necessary to lay cable and to keep clean said electric lines or cable, and to cut down from time to time all dead, weak or dangerous trees that are tall enough to strike wires in falling.
The undersigned agree that all poles, wires, and other facilities, including any main service entrance equipment, installed on the above described lands at the Cooperative's expense shall remain the property of the Cooperative, removable at the option of the Cooperative upon termination of service to or on said lands. In granting this easement, it is understood that all pole locations, only a single pole and appurtenances will be used, and that the location of the poles will be such as to form the least possible interference to farm operations, so long as it does not materially increase the cost of construction.
(Emphasis added.)
Three years later, in 1965, this property, Pointe Clear Heights Subdivision, was platted. In 1967, in accordance with this right-of-way *415 easement, Carroll Electric constructed an overhead electric line into the center of the Bensons' property to serve the residence now owned by the Bensons.
The Bensons filed this lawsuit on June 29, 1992 after Carroll Electric entered their land and cut down numerous large trees to clearcut a path for the construction of an overhead electric transmission line on the west side of their property to provide electric power to a residence on property in Pointe Clear Heights Subdivision owned by Mr. Larry Cox. Carroll Electric placed several tall poles within the clearcut path in preparation for stringing the overhead transmission line across the Bensons' property. Carroll Electric did not confer with the Bensons prior to cutting the path or placing poles nor did it give the Bensons an opportunity to "delimit" (lay out the boundary of) the easement. The Bensons approached the electric company and offered to permit underground wiring but the company refused.
The Bensons filed a complaint in Benton County Chancery Court requesting a preliminary as well as a permanent injunction enjoining Carroll Electric from further constructing overhead transmission lines across their property. The chancery court granted the preliminary injunction. Thereafter, the Bensons amended their complaint to ask for a mandatory injunction ordering Carroll Electric to remove all new poles and new overhead electric lines placed on the clearcut path across their property. Both sides filed motions for summary judgment, and the matter was submitted to the court. After considering the stipulated exhibits and facts, the chancellor granted the Bensons' countermotion for summary judgment. In reaching this decision, the chancellor made the following findings of fact and conclusions of law:
6. On May 12, 1962 plaintiffs' predecessor in title, Arrow Land Company, Inc., granted Defendant, Carroll Electric Cooperative Corporation, a "floating" (not described by metes and bounds) right-ofway easement across plaintiffs' land and adjoining land. The legal description of said right of way easement includes all of the land within Pointe Clear Heights Subdivision, Benton County, Arkansas.
7. The plat of Pointe Clear Heights Subdivision was filed of record in 1965.
8. In 1967, defendant constructed an overhead transmission line across the Benson's property to provide electric power to the residence on the property. Defendant has constructed other overhead electric lines throughout Pointe Clear Heights Subdivision to provide electric power to approximately 15 other residences in the subdivision.... Defendant has utilized said electric lines for many years to provide electric power to said residences.
9. Defendant proposes to construct a new overhead electric line across plaintiffs' property to provide electric power to a new residence under construction on property owned by Larry Cox, which adjoins Lot 13, Block 7 of the Bensons' property. The proposed new electric line would be an extension of an existing electric line. Defendant is legally obligated to provide electric service to the Cox property.
10. Employees of defendant recently entered upon the plaintiffs' property and cut down numerous large trees to clearcut a path across plaintiffs' lands for construction of the proposed new overhead electric line. The new electric line was partially constructed prior to entry of the Preliminary Injunction in this case. One additional pole would be installed on the Bensons' property if the line is completed.
11. Defendant has not obtained a new right-of-way grant from plaintiffs authorizing defendant to construct a new electric line across plaintiffs' property.
12. The "floating" right of way granted to defendant by plaintiffs' predecessor in title has become fixed. In Bradley v. Arkansas Louisiana Gas Company, 280 Ark. 492, 659 S.W.2d 180 (1983) the Supreme Court held:
... Undesignated grants of rights-of-way may be termed "floating rights-of-way" until located and utilized but thereafter such easements become fixed. *416... After the location is designated and used it cannot thereafter be redesignated at a different location without another grant.
13. A right-of-way grant is to be construed against the party preparing it, and in construing the grant the objective is to ascertain the intent of the parties.
14. The Court is not persuaded that the grantor of the 1962 "floating" easement intended that power lines could be erected 30 years later by the grantee independent of input by the successors to the grantor and without consideration as to the reasonable use and enjoyment of the property by the successors to the grantor.
15. Defendant cannot rely upon the 1962 easement and should be required to obtain a new easement.
IT IS, THEREFORE, CONSIDERED ORDERED, ADJUDGED AND DCREED that defendant Carroll Electric Cooperative Corporation is hereby permanently enjoined from constructing a new electric line across plaintiffs' property and defendant is hereby ordered to remove all new poles and electric lines which have been placed on plaintiffs' property and to remove the debris and tree stumps on plaintiffs' property within the path cut across said property by defendant.
The chancellor's reliance upon Bradley is misplaced. In Bradley the issue before this court was whether Arkla had the right under a 1960 easement to relocate a pipeline across the property owners' land without obtaining a new right-of-way. The new pipeline location was about one hundred feet south of the existing right-of-way. The language of the easement agreement gave the grantor the "right to lay, maintain alter, repair, operate and remove pipe lines for the transportation of oil and gas." Bradley, 280 Ark. at 495, 659 S.W.2d 180. There, as here, the right-of-way was undesignated. Yet, in holding that a new rightof-way was required, this court held that when the grantee selects a right-of-way not specifically described in the grant, the right-of-way becomes fixed and the "grantee has no right to go upon other parts of the grantor's land without a new grant. Bradley, 280 Ark. at 496, 659 S.W.2d 180.
However, Bradley is not comparable to the facts at hand. In Bradley the utility was relocating the right-of-way while here, Carroll Electric is extending a powerline under the authority of the existing easement. This line extension is clearly permitted by the 1962 easement agreement which states that Carroll Electric may "extend lines for other service upon the above lands and to extend lines from services on this land to and for service to other property." (Emphasis added.)
While it is true that a right-of-way grant is to be construed against the party preparing it, the language in the 1962 easement plainly provides that Carroll Electric may extend the lines as needed to provide service to other property, and that is just what they have done here. While the right-ofway of the lines to the Bensons' residence may have become fixed, the 1962 easement is still "floating" as to the extension of a line situated near the west side of their property. In sum, Carroll Electric was within its rights to extend this electric line across the west side of the Bensons' property to service the Cox property.
Although Carroll Electric is entitled to extend its power lines pursuant to the existing 1962 easement, this right-ofway easement entitles both the grantee and the grantor to a convenient, reasonable, and accessible way. Fulcher v. Dierks Lumber & Coal Co., 164 Ark. 261, 261 S.W. 645 (1924). The location of the undefined right-of-way must be reasonable to both the dominant and servient estates, considering the condition of the place, the purposes for which it was intended, and the acts of the grantee. Id. Further, the owner of the servient estate has the right to delimit the easement. Id. We have consistently applied the law as stated in Fulcher. See Bradley v. Arkansas Louisiana Gas Co., 280 Ark. 492, 659 S.W.2d 180 (1983); Arkansas Valley Elec. Coop. Corp. v. Brinks, 240 Ark. 381, 400 S.W.2d 278 (1966); Drainage Dist. No. 16 v. Holly, 213 Ark. 889, 214 S.W.2d 224 (1948).
*417 A review of the abstract reveals that the parties attempted to stipulate as to the reasonableness of the exact route but ultimately agreed with each other and with the court that this issue should be reserved depending upon the trial court's decision regarding the status of the easement. As the trial court made no further findings in this regard, we remand this issue to the trial court as well as for further proceedings consistent with this opinion.
Reversed and remanded.
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334 S.W.2d 20 (1960)
Violet M. Dunbar PINZINO, d/b/a Music Box, Appellant,
v.
SUPERVISOR OF LIQUOR CONTROL, State of Missouri, Respondent.
No. 47806.
Supreme Court of Missouri, Division No. 1.
March 14, 1960.
Motion to Modify Opinion Denied April 11, 1960.
Opinion Modified on Own Motion April 11, 1960.
*22 Louis Kranitz, Theodore M. Kranitz, St. Joseph, for appellant.
John M. Dalton, Atty. Gen., J. Burleigh Arnold, Asst. Atty. Gen., for respondent.
Opinion Modified on Court's Own Motion April 11, 1960.
COIL, Commissioner.
This is an appeal from the judgment of the circuit court affirming the decision of the state supervisor of liquor control (hereinafter sometimes called supervisor) refusing to issue a renewal license to appellant, Mrs. Pinzino, to sell 3.2% nonintoxicating beer at retail. Inasmuch as a state officer, as such, is a party, jurisdiction of the appeal is in this court. Art. V, § 3, Mo.Const.1945, V.A.M.S.
Mrs. Pinzino, who had been doing business as the Music Box in St. Joseph, had been issued a license in 1951 and annual renewal licenses thereafter through June 30, 1959. She filed an application on a form furnished by the supervisor for a renewal license for the year July 1, 1959, through June 30, 1960. The supervisor refused to issue that license and, in a letter dated July 1, 1959, addressed to Mrs. Pinzino, stated the reasons for his action. On July 9, 1959, pursuant to the provisions of section 311.700 (all section citations, unless otherwise noted, are to sections of RSMo 1949 V.A.M.S.), Mrs. Pinzino filed with the supervisor an application for review and the supervisor filed in the Circuit Court of Buchanan County (the county of appellant's residence) what he certified to be a "correct copy of the entire record" in the proceedings as a result of which a renewal license to Mrs. Pinzino was refused. The circuit court, after ruling certain motions and refusing to hear testimony or to receive other evidence, affirmed the supervisor's decision upon the record certified by the supervisor.
Appellant contends the circuit court erred in overruling her motion to strike portions of the record certified by the supervisor and in considering those portions, in rejecting evidence offered by appellant or, in the alternative, remanding to the supervisor with directions to hold a hearing, in failing and refusing to find that the supervisor's action was in fact a revocation of appellant's license, and in finding that there was competent and substantial evidence to support the determination of the supervisor.
From the record certified by the supervisor, it appears that appellant's application for renewal license was executed on May 4, 1959, received in the department of liquor control on May 25, 1959, and that on July 1, 1959, the supervisor addressed this letter to Mrs. Pinzino:
"I enclose herewith your Bank Money Order No. 19916 written on the Mechanics Bank, St. Joseph, Missouri, made payable to the Director of Revenue in the amount of $25.00 and dated April 29, 1959; also your Non-Intoxicating Beer Corporate Bond No. 825107 written by Western Surety Company.
"I have this date refused to issue you a 3.2% Non-Intoxicating Beer by Drink *23 license, because according to information furnished me which I consider to be reliable, you do not meet the requirements of Section 312.040 RSMo 1949 [V.A.M.S.], due to the way you have operated your licensed premises since the first issuance of a license to you January 26, 1951.
"You were cited before the Supervisor February 18, 1953 for a sale to a minor, loitering of a Police character, and your license was suspended for 7 days effective March 2, 1953.
"You were cited before the Supervisor of Liquor Control February 19, 1958 for permitting consumption of intoxicating liquor on a 3.2% licensed premises, and your license was suspended for 7 days, effective March 10, 1959.
"You were cited to appear before the Supervisor of Liquor Control, March 25, 1959 for permitting gambling on this licensed premises, and your license was suspended June 8, 1959 to and including June 30, 1959.
"At the Hearing March 25, 1959, Emilio Pinzino admitted he had served time in a Federal Penitentiary on a narcotic charge. It was also testified to at this same Hearing, that Emilio Pinzino was present and running the establishment. While the papers attached to the application of Violet M. Dunbar Pinzino shows her to be the owner, it is my considered opinion, Mr. Pinzino is the guiding influence behind the operation of this place of business, and for these reasons set out above, I am refusing to issue a renewal license."
The supervisor's certification was, in part, "I, Hollis M. Ketchum, do hereby certify that the foregoing is a full, true, complete and correct copy of the entire record of Violet M. Pinzino which was considered by me in denying Violet M. Dunbar Pinzino's application for * * *" a license. The record so certified consisted of: a copy of the supervisor's letter to Mrs. Pinzino set out above; a copy of section 312.040; a copy of an application to revoke Mrs. Pinzino's license and a notice advising Mrs. Pinzino that a hearing would be held on February 10, 1959 to inquire into charges that she had on the prior December 31 violated a regulation of the supervisor by allowing gambling on her premises and notifying her to show cause why her license should not be revoked; the return of service thereof; a copy of a report from Thomas and Nash, addressed to "Chief," relating apparently to the manner in which the information was obtained upon which the charges were based; a copy of the order reciting that on March 25, 1959 the supervisor found on the evidence adduced that Mrs. Pinzino was guilty as charged and suspended her license from June 8, 1959 (for the rest of the license year) through June 30, 1959; a copy of an application charging Mrs. Pinzino with unlawful possession and disposition of intoxicating liquor on her premises and a notice advising of a hearing on February 19, 1958; return of service; a copy of what purports to be a report of agents Sanford and Elsea to district 6 supervisor, dated January 19, 1958, purporting to contain an account of the manner in which evidence was obtained upon which the charge above stated apparently was based; a copy of what purports to be a report to the chief special agent, department of liquor control, dated January 20, 1958, by agents Connor and Watson relating to the last-mentioned charge; a copy of the order as a result of the hearing on February 19 in which the supervisor found appellant guilty as charged on the evidence adduced and ordered her license suspended for seven days from March 10, 1958; a copy of an application to suspend or revoke appellant's license and notice of a hearing on January 8, 1953 on charges that appellant had violated the relevant statutes by selling beer to a person under the age of 21 and permitted her husband, a known felon, to loiter about the premises; a copy of the return of service thereof; a copy of what purports to be a report of agent Williams to the district supervisor, dated November *24 20, 1952, relating to the obtaining of the information on which the charges apparently were based; a copy of the order as a result of the February 18 hearing in which the supervisor found appellant guilty as charged upon the evidence adduced and ordered her license suspended for seven days from March 2, 1953; a photostatic copy of appellant's application for a renewal license; a photostatic copy of what purports to be an undated item from a newspaper relating to a disturbance at appellant's premises; and the following letter dated May 21, 1959 from agent Williams to supervisor:
"I believe that an examination of our files will show that this applicant and her husband, Emilio Pinzino, have repeatedly violated the law during the course of operating a license. Each time they have come in with protestations of repentance and reformation, only to violate again. It wouldn't seem reasonable to suppose they could be regarded as reliable now, and it would appear that a great degree of leniency has already been extended to them.
"St. Joseph Chief of Police, Harry Crowell, stated to me, this morning, that no terms could be too emphatic in announcing his disapproval of the granting of this license. The Chief clipped the attached news story from the paper and gave it to me as we talked.
"I believe that most anything could happen at this place most any time and that the granting of a license would be hazardous to the youth of the city and the area."
In addition to the foregoing, the record contained questions and answers purporting to constitute the direct examination and partial cross-examination of James Pinzino, appellant's husband, the direct examination of appellant and her partial cross-examination relating to the charge heretofore mentioned on which a hearing was held on March 25, 1959, resulting in suspension of appellant's license from June 8 through June 30, 1959.
Chapter 311, RSMo 1949, V.A.M.S., is entitled "Liquor Control Law," and chapter 312 is entitled "Non-Intoxicating Beer." Sections 311.610 through 311.880 (the last section in that chapter) have to do with the administration of both the liquor control law provided for in chapter 311 and the provisions of chapter 312 relating to non-intoxicating beer. Section 311.610 provides in part that to carry out the provisions of those two chapters the governor, with the advice and consent of the senate, shall appoint a supervisor of liquor control who shall devote his full time to the office and, with the governor's approval, appoint and employ agents, assistants, deputies, and inspectors, and other employees for the proper enforcement and administration of the relevant law.
Section 311.660 provides that among other powers the supervisor shall have authority and power to establish rules and regulations for the conduct of the business carried on by each specific licensee under each license issued and that violation of the rules and regulations shall be grounds for revocation or suspension of the license.
Section 312.030 makes it unlawful for any person to manufacture, brew, or sell nonintoxicating beer without first having secured a permit from the supervisor authorizing such.
Section 312.120 provides in part that "All applications for all licenses mentioned in this chapter shall be made to the supervisor of liquor control * * *. The supervisor of liquor control shall have the power and duty to determine whether each application for such license shall be approved or disapproved. Upon disapproval of any application for a license, the supervisor of liquor control shall so notify the applicant in writing, setting forth therein the grounds and reasons for disapproval, and shall return therewith the applicant's remittance * * *."
Section 312.040 provides in pertinent part that no person shall be granted a license unless *25 he is of good moral character, a qualified legal voter, a taxpaying citizen of his city, if he has had a prior beer license which has been revoked, or if he has been or employs anyone who has been, since the ratification of the 21st Amendment, convicted of any law relating to the manufacture or sale of intoxicating liquor or nonintoxicating beer.
Section 312.110 requires a separate license for each place of business, fixes the license year, and provides further that "Applications for renewal of permits or licenses must be filed with the supervisor of liquor control on or before the first day of May of each calendar year."
Section 312.370 (as well as section 311.680) provides that whenever the supervisor has knowledge that a licensee "has not at all times kept an orderly place or house, or has violated any of the provisions of this chapter, said supervisor of liquor control shall revoke or suspend the license of said dealer, but the dealer must have ten days' notice of the application to revoke or suspend his license prior to the order of revocation or suspension issuing, with full right to have counsel to produce witnesses in his behalf in such hearing and to be advised in writing of the grounds upon which his license is sought to be revoked or suspended."
The record certified by the supervisor shows, and it is conceded that appellant had no notice of the supervisor's intention not to issue a renewal license, that no hearing was held by the supervisor on the question whether to issue the renewal license, and that appellant has had no opportunity either in a hearing before the supervisor or on review in the circuit court to adduce evidence in her behalf either to demonstrate her qualifications and fitness for the renewal license or to refute the information and conclusions therefrom upon which the supervisor acted.
A review of the statutes referred to above makes it reasonably clear that the legislature has vested sole discretion in the supervisor to issue or refuse to issue each license, whether one of original issue or a renewal, and that a hearing is not an essential prerequisite to the lawful exercise of that sole discretion. Section 312.120 (vesting discretion in the supervisor to issue or refuse to issue licenses) refers to all applications for all licenses mentioned in the chapter and vests discretion in the supervisor to determine whether each application for such license shall be approved or disapproved, thus including by that broad language the renewal licenses mentioned and provided for in section 312.110. And section 312.120 does not contain any requirement for a hearing on the question whether to issue a license, while section 312.370 requires that prior to revocation or suspension the supervisor must give notice and hold a hearing as an essential prerequisite to the lawful exercise of the discretion vested in him to revoke or suspend a license.
It would appear, therefore, that the legislature dealt differently with refusal to issue licenses and the suspension or revocation thereof, providing for a hearing as to the latter but omitting any such requirement as to the former. See State ex rel. Renner v. Noel, 346 Mo. 286, 140 S.W.2d 57, 59[4, 5] (dealing with the "Liquor Control Law," present chapter 311, but with statutory provisions similar to those of the presently pertinent sections); and State ex rel. Billado v. Wheelock, 114 Vt. 350, 45 A.2d 430, 431[3].
Appellant contends there is, as a practical matter, a difference between the refusal of the supervisor to renew a license and his refusal to issue a license in the first instance. (See Annotation, 2 A.L.R. 2d 1239, 1244-1248, for both views.) And appellant also contends that refusal to renew may be for some purposes equivalent to revocation, and there seems to be merit in the argument, in the absence of a definable legislative intent to the contrary, that a refusal to renew should, under some circumstances, be treated as a revocation in fact. Where, as here, however, the pertinent statutes *26 apparently distinguish between a refusal to issue any license and the suspension or revocation of an existing license, in that they require a hearing prior to revocation or suspension but omit any such requirement prior to refusal to issue any license, we must give effect to the legislative intent so expressed. So that, while we are of the opinion that a hearing after proper notice prior to the supervisor's exercise of his discretion not to renew, would be fairer and better procedure, particularly in a case such as this, we are unable to find any requirement therefor. Appellant's contention, therefore, that the provisions of section 312.370 (and of section 311.680) requiring a hearing prior to suspension or revocation are applicable in this case where the action was a refusal to issue a renewal license is, for the reasons stated, ruled adversely to her.
Article V, Section 22, Constitution of Missouri 1945, authorizes the direct judicial review of all final decisions, findings, rulings, and orders of administrative bodies which are judicial or quasi-judicial and affect private rights, and provides further that such review shall include the determination whether the decision, findings, etc., are "authorized by law, and in cases in which a hearing is required by law, whether the same are supported by competent and substantial evidence upon the whole record." Section 311.700 makes the scope of review by the reviewing court the same as the minimum scope of review provided for in the constitution. That statute says, "The reviewing court may affirm the decision of the supervisor or may reverse or modify it when such decision is not authorized by law and, in cases in which a hearing is required by law, when such decision is not supported by competent substantial evidence on the whole record."
It seems apparent, therefore, that inasmuch as no hearing was required by law prior to the supervisor's refusal to issue the renewal license, the circuit court's only province on review was to determine whether the supervisor's final decision was "authorized by law," that is, to determine whether the exercise of the supervisor's sole discretion was in accord with statutory authority, whether it was in violation of any constitutional provision, whether the decision reached was arbitrary or capricious, or unreasonable and thus an abuse of discretion. What we have heretofore said demonstrates that it is our view that the supervisor proceeded in accord with statutory authority, that is, as required by the statutes heretofore noted, he considered appellant's application, refused to issue a renewal license to her, notified appellant thereof in a writing in which he set forth "the grounds and reasons for disapproval" and in which he returned appellant's money order which she had tendered in payment of the required license fee.
The record certified by the supervisor to the circuit court demonstrates that the supervisor took into account and considered records of his own office, including records of his charges against appellant and his findings of appellant's guilt thereon, letters and reports from his agents, and testimony of appellant and her husband given at one of the hearings before the supervisor. It is true, as appellant points out, that some of the documents considered and relied upon by the supervisor would have been objectionable as hearsay if offered in evidence in a proceeding conducted according to the rules of evidence as enforced in the trial of cases in the circuit court. And it may well be that by reason of the hearsay and ex parte statements in the "record" certified by the supervisor, that record, as appellant contends, did not contain competent evidence to support the supervisor's action had the court been reviewing it as a record made on a hearing required by law before an administrative officer. The questions raised by appellant as to the sufficiency of the "record" can only arise, however, where the party to the administrative proceeding is entitled to a hearing. Here, as we have noted, the law required no hearing but *27 vested in the supervisor the sole discretion whether to issue or refuse to issue the license. Under those circumstances, as we view it, the record furnished by the supervisor needed only to disclose that the information upon which he exercised his discretion was of such a nature that he could reasonably act thereon or, expressed differently, the record needed only to show that the supervisor acted reasonably in exercising his sole discretion and thus did not act arbitrarily or capriciously, or unreasonably and in abuse of his sole discretion. See again State ex rel. Renner v. Noel, supra, 140 S.W.2d 59[4, 5]. We have no doubt that, as the circuit court, in effect, found, the information upon which the supervisor based the exercise of his sole discretion and his resulting decision was sufficient to demonstrate that his action was reasonable and not arbitrary or capricious, where, as here, sole discretion was vested in him to determine the question without a hearing.
Appellant contends, however, that even though we hold that the statutes required no hearing prior to the supervisor's refusal to issue a renewal license, the supervisor's failure to hold such a hearing and the refusal of the circuit court to hear evidence on review, constituted a denial of due process in violation of the pertinent provisions of the state and federal constitutions. While this contention probably should be presented as an attack on the constitutionality of the statute empowering the supervisor to refuse to issue a license or a renewal license without a hearing, the contention, as made, overlooks the fact that the license being presently considered is one permitting the sale of 3.2% beer, and thus is in a category separate and apart and not subject to the law applicable to the denial of other licenses to engage in a trade or business or profession, or to sell a certain product. In State v. Wipke, 345 Mo. 283, 133 S.W.2d 354, 359[9, 10], the court en banc quoted this from State v. Parker Distilling Co., 236 Mo. 219, 255, 237 Mo. 103, 139 S.W. 453, 461: "Those authorities also establish the fact that the liquor traffic is not a lawful business, except as authorized by express legislation of the state; that no person has the natural or inherent right to engage therein; that the liquor business does not stand upon the same plane, in the eyes of the law, with other commercial occupations. It is placed under the ban of law, and it is therefore differentiated from all other occupations, and is thereby separated or removed from the natural rights, privileges, and immunities of the citizen." In State ex rel. Billado v. Wheelock, supra, 45 A.2d 432[5,6], it was said: "When the purpose of an administrative determination is to decide whether a privilege which an applicant does not possess, such as a license to sell intoxicating liquor, shall be granted to him or withheld in the exercise of a discretion vested by statute, notice and hearing is not necessary in the absence of an express or implied statutory provision therefor. 42 Am.Jur., Public Administrative Law, § 135; City of Centerville v. Gayken, 20 S.D. 82, 104 N.W. 910; Mc-Cormick v. Pfeiffer, 19 S.D. 269, 103 N.W. 31; Burke v. Collins, 18 S.D. 190, 99 N.W. 1112; Casala v. Dio, 65 R.I. 96, 13 A.2d 693; Darby v. Pence, 17 Idaho 697, 107 P. 484, 27 L.R.A.,N.S., 1194; Oval Bar & Restaurant, Inc., v. Bruckman, 177 Misc. 244, 30 N.Y.S.2d 394; Usdane v. Bruckman, Sup., 30 N.Y.S.2d 396. It may be that there would be less danger of arbitrary action if a hearing were made a prerequisite, but that is a matter for legislative consideration, and not for us. The mere refusal to grant an applicant for a license to sell intoxicating liquors a hearing, when the statute does not require one, does not make the denial of the application arbitrary or capricious. Darby v. Pence, supra; State ex rel. Renner v. Noel, 346 Mo. 286, 140 S.W.2d 57; Burke v. Collins, supra." And it is generally held that due process is not violated even by suspension or revocation (much less refusal) of a license without notice and hearing (where no notice or hearing is required by law). Annotation, 35 A.L.R. 2d 1067, 1070-1073. *28 And so it is that the cases cited by appellant as to the right of an applicant to a hearing prior to the denial of a license are inapplicable where, as here, the license in question is one to engage in some aspect of the liquor business.
We find no Missouri case specifically ruling the question here presented. It appears, however, that the en banc opinion in State ex rel. Renner v. Noel, supra, is by implication in accord with the general view. However valuable in fact the right to a renewal of a license to sell 3.2% beer may be, and however desirable it may be to require notice and a hearing or for the supervisor to voluntarily accord such in order that an applicant for a renewal license may be heard and may have an opportunity to refute the evidence against him, still the failure to hold such a hearing prior to refusal to issue a renewal license where the legislature apparently intentionally failed to provide for such a hearing, does not violate due process, where, as here, the administrative decision is judicially reviewable to determine whether it was authorized by law.
Appellant's contention that due process was denied by the refusal of the circuit court to hear evidence has been answered by the reasons stated for our holding that the failure of the supervisor to hold a hearing was not a denial of due process; and it seems apparent that where, as we have held was here the case, the province of the circuit court on review was only to determine whether the sole discretion vested in the supervisor, who was authorized to act without a hearing, was lawfully exercised by him, the circuit court properly could not hear evidence.
Appellant's contentions that the circuit court erred in overruling her motion to strike and in considering those parts of the record which were hearsay and ex parte reports of the investigators have been answered by what we have said heretofore. Her further contention that under section 311.700 the "entire record of the proceedings under review" in this case consisted of appellant's application for renewal license, the written refusal of the supervisor to issue such license, and the application for review, is not well taken. While the language of section 311.700 does provide that the supervisor shall transmit to the circuit court "a certified copy of the entire record of the proceedings under review" and while in those cases in which no hearing has been held, it is difficult to understand the use of the words "proceedings under review," when, as here, the decision "under review" is the decision of the supervisor made in the exercise of his sole discretion without a hearing; nevertheless, inasmuch as the same sentence of section 311.700 which requires the supervisor to supply the circuit court with "a certified copy of the entire record of the proceedings under review" concludes with the words "including a transcript of the evidence heard in cases in which a hearing is required by law," it seems reasonably clear that the legislature meant that some kind of a record should be transmitted to the circuit court, both in matters acted upon by the supervisor without a hearing and those in which he acted after a hearing. That being true, was are of the opinion that transmittal by the supervisor of a file, properly certified, containing copies of all the records, writings, and other matters he considered and upon which he based the exercise of his discretionary power to refuse a license, constituted a compliance with the requirement of section 311.700 here considered.
One further matter encompassed by appellant's contentions and pertinent to a disposition of this case should be considered. As noted, the supervisor in his letter of explanation to Mrs. Pinzino stated that he had refused to issue the renewal license because "You do not meet the requirements of Section 312.040 * * * due to the way you have operated your licensed premises since the first issuance of a license to you January 26, 1951." He *29 then recited the three violations with the resulting suspensions of license, the fact that her husband was an ex-convict and present at the establishment and, in the supervisor's opinion, was the "guiding influence" behind the operation of the business. We have noted the provisions of section 312.040 which provide that no license shall be issued to one who is not of good moral character, who is not a qualified legal voter, who is not a taxpaying citizen of his city, who has had a prior beer license revoked, or who has been or who employs someone who has been convicted of a law relating to the manufacture or sale of intoxicating liquor. It appears that the reasons set forth in the supervisor's letter did not constitute reasons indicating that appellant did not meet the requirements of section 312.040 unless, as respondent contends, the matters recited in the letter showed that the supervisor was of the opinion that appellant was not a person of good moral character within the meaning of section 312.040. It has been held that it is proper to show the nature and character of one's business, the manner in which he has conducted that business, and the manner in which he has observed or violated the law, in determining the question of the good moral character of an applicant for a beer license. Madsen v. Town of Oakland, 219 Iowa 216, 257 N.W. 549, 551[6]. And we have no doubt that the manner in which appellant theretofore had conducted her business and the extent to which she had observed or violated the law in conducting that business were relevant to consider on the question of her good moral character.
The fact that a copy of section 312.040 was included in the record certified by the supervisor may indicate that he may have intended that his reason for refusal was that he believed appellant was not of good moral character, but we are of the opinion that the letter, considered in its entirety, was not so intended and, in any event, more important is the fact that appellant probably would not have understood from the letter that the supervisor had refused to renew her license because he had found that she was not a person of good moral character under section 312.040. The decisive fact is, however, that the letter makes clear that the supervisor was refusing to issue a renewal license and the specific reasons for that refusal were stated; in fact the supervisor said in the final paragraph that it was for the "reasons set out above" that he had refused to issue the renewal license. It is clear to us that appellant could not have been prejudiced by the fact, if it be a fact, that the supervisor erroneously concluded and erroneously stated in his letter that the reasons he specified caused appellant to be ineligible for a license under the requirements of section 312.040. That is true because, as we have held, the supervisor's belief of the matters stated in his letter was sufficient to demonstrate that his action in refusing the license was a reasonable and not an arbitrary or capricious exercise of the sole discretion vested in him by section 312.120, and because appellant was not entitled to a hearing and consequently no questions are involved relating to the sufficiency of the letter as a notice of charges to be considered at a subsequent hearing.
The judgment is affirmed.
HOLMAN and HOUSER, CC., concur.
PER CURIAM.
The foregoing opinion by COIL C., is adopted as the opinion of the court.
All concur.
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114 N.H. 778 (1974)
ANN J. HASTINGS
v.
ELLIOT P. HASTINGS.
No. 6950.
Supreme Court of New Hampshire.
November 29, 1974.
John B. Ford, by brief and orally, for the plaintiff.
Snierson, Chandler & Copithorne (Mr. Bernard I. Snierson orally) for the defendant.
GRIMES, J.
The question before this court is whether the legislative change in the age of majority from twenty-one years to eighteen years affects a support agreement to pay support during the minority of the children made prior to the statutory change.
At a hearing before a Master (Leonard C. Hardwick, Esq.), on December 10, 1973, the master found that "the parties intended that the support of the children ... was to continue until each child attained the age of twenty-one." In accordance with the master's report, the superior court approved his recommendation and ordered a final judgment to which the defendant excepted. The Trial Court (Keller, C.J.) subsequently reserved and transferred all questions of law seasonably raised.
On March 31, 1967, prior to a divorce in Germany where *779 they were temporarily residing, the parties entered into a separation agreement. That agreement provided "the child support obligation shall be reduced pro rata when any child reaches his twenty-first birthday ...." A divorce decree was later secured in Germany.
Thereafter, the wife and three children moved to Amherst, Massachusetts, and the husband moved to Laconia, New Hampshire. In January 1971, the wife brought an action at law in New Hampshire alleging that the defendant husband failed to comply with the original separation agreement. An out-of-court settlement was reached in a new agreement dated February 29, 1972, which replaced the initial arrangement. This new agreement provided that Elliot P. Hastings should pay his wife for "support maintenance of the said minor children the sum of two hundred dollars ($200) per child per month ... to continue during the minority of said children...." or until prior thereto the children are no longer dependent for their support.
At the hearing plaintiff testified without objection that she understood that the new agreement meant that the child-support payments were to terminate when the children reached twenty-one. She further testified she believed that at the time the new agreement was struck "[t]he reference being the age majority at the time was twenty-one. To me, they were interchangeable." Defendant also stated at the hearing, "I understood at the time the word minority to mean somebody who was under the age of twenty-one."
After the new agreement was reached but prior to the December 10, 1973 hearing, a New Hampshire statute became effective lowering the age of majority from twenty-one to eighteen years of age. RSA 21:B-1 (Supp. 1973). The Commonwealth of Massachusetts also enacted similar legislation effective January 1, 1974. On January 14, 1973, the oldest of the three Hastings children became eighteen. Defendant now asserts his obligation under the new support agreement should be terminated in respect to this child since she is no longer in her "minority".
On the record of this case none of the evidence suggests that either the original separation agreement or the subsequent agreement were ever incorporated into the German *780 divorce decree. H. Clark, Jr., Law of Domestic Relations § 16.12, at 556 (1968). Moreover, this final agreement stands independent of the divorce decree as a contract for support. 2 W. Nelson, Divorce and Annulment § 14.77 (1961 rev. ed., Supp. 1968).
Interpretation of support agreements in this State is made in light of the parties' intentions. Pindar v. Pindar, 109 N.H. 76, 242 A.2d 76 (1968). These intentions are revealed by inquiring what the parties meant who used them. Hamblett v. (Hamblett) Lewis, 114 N.H. 258, 319 A.2d 629 (1974). Since both parties testified that the term "minority" in the support agreement meant support was to cease at the age of twenty-one, the master had substantial evidence on which to base his finding that support was to continue under the agreement until each child reached twenty-one years of age.
Defendant, however, contends that legislative enactments reducing the period of minority from twenty-one to eighteen years of age prohibits support for longer than this new period of minority under the law. In support of his position he recites a number of cases most of which involve divorce decisions encompassing court orders for support payments rather than independent support contracts. See Price v. Price, 51 Mich. App. 656, 215 N.W.2d 756 (1974); Ruhsam v. Ruhsam, 21 Ariz. App. 101, 515 P.2d 1199 (1973); Shoaf v. Shoaf, 282 N.C. 287, 192 S.E. 299 (1972). Legislative enactments in those cases were found to limit the courts' power to order decrees for support beyond eighteen years of age. The case before us is in a different posture. According to the master's interpretation, the parents in the support agreement have contracted to support their children until the children reach twenty-one years of age regardless of when the State determined the parents' legal obligation of support terminates. Contracts like these are contrary neither to public policy nor the law and are enforceable. Collins v. Collins, 418 S.W.2d 739 (Ky. 1967).
Defendant's exception overruled; judgment for the plaintiff.
All concurred.
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328 A.2d 383 (1974)
In re Edith A. PARSONS, a conservatorship, Julian I. Richards, Appellant.
No. 7831.
District of Columbia Court of Appeals.
Submitted June 13, 1974.
Decided November 13, 1974.
Rehearing Denied December 16, 1974.
Julian I. Richards, pro se, was on the brief for appellant.
John L. Hamilton, Washington, D.C., entered an appearance as ancillary administrator of the estate of Edith A. Parsons.
David B. Nicholson, Washington, D. C., entered an appearance on behalf of Elizabeth A. Richards and Barbara J. Richards, ancillary executrices of the estate of Edith A. Parsons.
Before NEBEKER, YEAGLEY and HARRIS, Associate Judges.
NEBEKER, Associate Judge:
This appeal brought by Julian I. Richards is the third in a spate of appeals challenging various steps leading to the sale of real property during the administration of a conservatorship of his aunt's estate. *384 After review of the record, we dismiss the appeal on res judicata grounds.
In August, 1971, Richards petitioned the United States District Court to be appointed conservator of the estate of his aunt, Edith A. Parsons.[1] In September, 1971, the court appointed another individual to be conservator.
The estate included a one-half interest in an apartment house valued in excess of $190,000. The proposed sale of that property precipitated the instant case as well as two previous appeals. During the summer of 1972, the conservator was informed by the trustee of an estate holding the other one-half interest in the apartment house that he intended to sell the trust interest and that if necessary he would seek partition. The conservator entered into negotiations for the sale of the property rather than have a judicial partition of it. The conservator sought consent for the sale from Richards and his two sisters. Only Richards objected. The trial court held a hearing on October 20, 1972, to air Richards' objections which included, along with certain irrelevancies, concern over the loss of rental income. The trial court, perceiving the issue to be what would be in the best interest of the ward and the ward's estate, found
that it is in the best interest of the estate of the ward, and of the ward individually, that the conservator be permitted to proceed to the private sale of the real estate in question....
The court then ordered the conservator to proceed with a private sale of the one-half interest.
Richards noted an appeal from that order (No. 7128). The trial judge sought memoranda respecting the appealability of the order, no doubt questioning the trial court's continued jurisdiction if this court had acquired jurisdiction. Only the conservator responded, contending that the order was not final and therefore not appealable, with which the trial court agreed. We also think that the order was not appealable since it was not final, but simply an order authorizing negotiations for a private sale. Judicial control remained to determine regularity of the anticipated sale and confirmation of the sale when a buyer could be found. Cf. Catlin v. United States, 324 U.S. 229, 65 S. Ct. 631, 89 L. Ed. 911 (1945).
On December 15, 1972, another hearing was held, this time relating to an order nisi. See Super.Ct.Civ.R. 308(c). Richards again made general objections to the sale decision. The judge, again concluding that a private sale was preferable, signed the order nisi.
On January 12, 1973, a hearing was held, and at its conclusion a sale to Howard University was confirmed by the court. Richards noted an appeal that day (No. 7225). Subsequently, this court consolidater that appeal with appeal No. 7128, noted from the order of the October 20, 1972, hearing. After consolidation, Richards made repeated requests for extensions of time for filing a brief. Finally, on October 4, 1973, this court, acting upon an unopposed motion by intervenor Howard University, dismissed those appeals for lack of prosecution.
Edith Parsons died on February 19, 1973, and Richards became the executor of the estate. We note that her death occurred prior to completion of the sale and that the conservator's Second and Final Account, as does the report of the Auditor-Master, lists the property in question as part of the estate subject to probate.
The present appeal, filed on August 14, 1973, was taken after Richards received a *385 copy of an order ratifying the Auditor-Master's report and directing the conservator to file a verified Statement of Distribution and Settlement of the Conservatorship. Richards does not here challenge the report or statement but rather hearkens back to the contention that the notice of appeal in No. 7128 divested the trial court of jurisdiction to effectuate the subsequent sale confirmation.
Our first concern is whether the dismissal of the appeal in No. 7225, thus making final the confirmation order, precludes further litigation on the issue appellant is presently raising. Authority for a conservator to sell real property is contained in Superior Court Civil Rule 308. Most notably the rule states that, unless otherwise provided, sale of real property is to be governed by 28 U.S.C. § 2001 (Sale of Realty Generally). Both § 2001 and Superior Court Civil Rule 308 reveal that the final judicial step leading to a private sale is court approval through confirmation. Subsequent to that confirmation the parties are committed to complete the transaction. See Morrison v. Burnette, 154 F. 617 (Ind.T.1907); cf. Crowley v. Crowley, 56 App.D.C. 340, 13 F.2d 311 (1926); Jones v. United States, 258 F.2d 81 (10th Cir. 1958). Conversely, such liability is not created until confirmation takes place. See In re Beier, 48 N.J.Super. 450, 137 A.2d 617 (1958).
We conclude that the court's confirmation of the order was final. See In re Hardison's Guardianship, 28 Wash.2d 921, 184 P.2d 840 (1947); cf. Everett v. Forst, 50 App.D.C. 215, 269 F. 867 (1921). Our prior order of dismissal made final the order of confirmation, and Richards is barred by the doctrine of res judicata from further litigating his objection to that sale. See Taylor v. England, D.C.App., 213 A.2d 821 (1965); Warner v. Grayson, 24 App. D.C. 55 (1904); United States v. Heasley, 283 F.2d 422 (8th Cir. 1960). Accordingly, this appeal is dismissed.
So ordered.
NOTES
[1] Jurisdiction over this action was subsequently transferred to the Superior Court pursuant to the District of Columbia Court Reform and Criminal Procedure Act of 1970, Pub.L. No. 91-358, 84 Stat. 473 (July 29, 1970).
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334 S.W.2d 333 (1960)
GREAT AMERICAN INDEMNITY COMPANY, Appellant,
v.
Myrl PEPPER et vir, Appellees.
No. 16116.
Court of Civil Appeals of Texas, Fort Worth.
March 25, 1960.
Rehearing Denied April 22, 1960.
Collins & Green, and Robert C. Green, Fort Worth, for appellant.
Forrest Markward, Fort Worth, for appellees.
RENFRO, Justice.
This is an appeal from a judgment which awarded plaintiffs recovery of certain benefits under an accident policy.
*334 The following findings of fact by the trial court present an adequate statement of the case:
"1. Plaintiff Myrl Pepper is the insured under Automobile and Travel Personal Accident Policy No. ADE 1164, issued June 5, 1951 by defendant Great American Indemnity Company and in force on December 26, 1958, the time of plaintiff's injuries, providing certain coverage, as follows: `This insurance covers accidental bodily injury to the Insured while this Policy is in force and solely causing loss for which benefits are payable as herein provided, if such injury is sustained: * * * (f) while a passenger (not pilot or member of crew nor while receiving instructions) in an aircraft operated by a passenger airline on a regularly scheduled passenger trip over its established route.'
"2. Plaintiff Myrl Pepper and her husband through their travel agent purchased tickets issued by a passenger airline, American Airlines, Inc., providing passage for themselves as passengers by aircraft on a vacation trip commencing December 17, 1958 at Fort Worth, Texas, and taking them to Guadalajara, Acapulco, and Mexico City, Mexico, with return to Fort Worth on January 5, 1959.
"3. Using said tickets, on December 26, 1958 plaintiff and her husband enplaned at Guadalajara as passengers in an aircraft operated by a passenger airline, Compania Mexicana de Aviacion, S. A., on a regularly scheduled passenger trip over its established route from Guadalajara to Acapulco, which went by way of Mexico City and required landing and transfer between planes at the air terminal there, involving a layover of approximately one hour.
"4. Upon landing at Mexico City, plaintiff and her husband proceeded directly from the aircraft to the ticket counter within the air terminal, where their tickets were re-confirmed and where they receiving boarding tickets for the aircraft operated by the said passenger airline in continuation of its regularly scheduled passenger trip over its established route from Guadalajara to Acapulco.
"5. After obtaining her boarding ticket, plaintiff proceeded along the passageway in the air terminal from the ticket counter to the gate where said aircraft for Acapulco was standing, and immediately before reaching the gate, turned into the ladies lounge, the doorway of which opened on the passageway for enplaning and deplaning passengers.
"6. When plaintiff came out of the ladies lounge into the passafeway leading to her waiting plane, she failed to see a descending step, fell, and sustained accidental bodily injury in the nature of a fracture of her shoulder and concussion sprain of her left ankle.
"7. At the time and place of her injuries, plaintiff Myrl Pepper had not gone aboard the waiting aircraft for Acapulco, nor was she in any bodily contract with any part of an aircraft."
The court's conclusions of law, material to the appeal, were:
"1. Clause (f) of the policy in question, `while a passenger (not pilot or member of crew nor while receiving instructions) in an aircraft operated by a passenger airline on a regularly scheduled passenger trip over its established route,' is ambiguous, being susceptible of two constructions, as follows: (1) that the insured was covered only while a passenger actually riding in an aircraft at the time her bodily injury was sustained and, (2) that the insured was covered while she had the status of a passenger in an aircraft operated by a passenger airline on a regularly scheduled passenger trip over its established route.
"2. The interpretation of clause (f) of the policy in question as meaning that plaintiff, as insured, was covered while she had the status of a passenger in an aircraft operated by a passenger airline on a regularly scheduled passenger trip over its established route, is a reasonable interpretation.
*335 "3. Under such interpretation, plaintiff was covered by the policy in question for the bodily injury sustained by her on December 26, 1958 when she fell in the air terminal at Mexico City while transferring from one aircraft to another, both operated by a passenger airline on a regularly scheduled passenger trip over its established route, in the course of a continuous journey from Guadalajara to Acapulco.
"4. The language of clause (f) of the policy in question taken and understood in its plain, ordinary, and popular sense does not require that the insured must be physically located aboard, on, or within an aircraft in order to be covered by the policy."
No attack is made on the findings of fact, but appellant in eight related points of error attacks the court's conclusions concerning the effect of clause (f) of the policy. In brief, appellant contends insured could not recover unless she was "physically in" an aircraft at the time of injury.
Terms used in an insurance policy are to be given their plain, ordinary and generally accepted meaning unless the instrument itself shows them to have been used in a technical or different sense. Western Reserve Life Ins. Co. v. Meadows, 152 Tex. 559, 261 S.W.2d 554.
Generally a person remains a passenger while going, in the prosecution of his journey, from one of carrier's trains to another, and while waiting at a junction station in order to make a necessary change of trains. 10 Tex.Jur.2d 533.
In Northrup v. Railway Passenger Assurance Co., 43 N.Y. 516, 3 Am.Rep. 724, the court had before it a policy provision insuring against personal injury "* * * when caused by any accident while traveling by public or private conveyances." The insured fell while walking from a steamboat landing to a railway station. The court held: "An injury received while so necessarily walking in the actual prosecution of the journey is received while traveling by public conveyance within the meaning of the policy, as such walking is the actual and necessary accompaniment of such travel."
Undoubtedly Mrs. Pepper was a "passenger" at the time of injury for she was in the process, made necessary by the plane's operations, of changing planes.
In determining whether it was the intention of the contracting parties that the insured must be physically "in" the plane at time of injury, all words of limitation must be strictly construed against the insurer. Providence Washington Ins. Co. v. Proffitt, 150 Tex. 207, 239 S.W.2d 379.
If the language is reasonably open to two constructions, that one more favorable to the insured will be adopted. Mutual Life Ins. Co. v. Hurni Packing Co., 263 U.S. 167, 44 S. Ct. 90, 68 L. Ed. 235; Aschenbrenner v. United States Fidelity & Guaranty Co., 292 U.S. 80, 54 S. Ct. 590, 78 L. Ed. 1137.
The insurer may not escape liability merely because his or its interpretation should appear a more likely reflection of the intent of the parties than the interpretation urged by the insured. The latter interpretation has to be no more than one which is not itself unreasonable. Continental Casualty Co. v. Warren, 150 Tex. 164, 254 S.W.2d 762.
Clause (f) did not expressly exclude injuries which might occur in changing planes, and did not expressly limit liability to instances where injury might occur while the insured was "riding in" a plane.
As seen in the court's conclusions 2 and 4, the court held that the language of the policy, when taken and understood in its plain, ordinary sense, did not require that insured be physically located aboard, on, or within an aircraft. We agree with the conclusion.
*336 We think it a reasonable interpretation from the language used that the parties intended that insured would have insurance coverage while traveling as a passenger on a regularly scheduled passenger trip over its established run. The court found, and the find in is not under attack, that insured "enplaned at Guadalajara as passenger in an aircraft operated (by a named airline) on a regularly scheduled passenger trip over its established route from Guadalajara to Acapulco, which went by way of Mexico City and required landing and transfer between planes at the air terminal there."
We think it not unreasonable to interpret clause (f) as meaning that insured was protected while she had the status of a passenger in an aircraft operated by a passenger airline on a regularly scheduled passenger trip over its established route. The delay at Mexico City, for the purpose of changing planes, validating tickets, transferring luggage, etc., was a part of the operation of the plane on a regularly scheduled trip over an established route.
Since the intent of the policy to exclude injuries sustained by insured in the terminal building is not so certain as to make it wholly unreasonable to say that insured was included, the conclusions of the trial court are sustained and his judgment affirmed.
We find no error reflected in appellees' cross-points and they are overruled.
Judgment of the trial court is affirmed.
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334 S.W.2d 278 (1960)
Carl B. JORDAN et ux., Appellants,
v.
STATE BOARD OF INSURANCE, Appellee.
No. A-7550.
Supreme Court of Texas.
April 6, 1960.
F. L. Kuykendall, Austin, for appellants.
Will Wilson, Atty. Gen., Fred B. Werkenthin, Wallace P. Finfrock, Bob E. Shannon, Asst. Attys. Gen., for appellee.
NORVELL, Justice.
This is a direct appeal brought to this Court in accordance with the provisions of Article 5, § 3-b of the Texas Constitution, Vernon's Ann.St., Article 1738a, Vernon's Ann.Civ.St., Rule 499-a, Texas Rules of Civil Procedure. Appellants, Carl B. Jordan and wife, Ella Mae Walls. *279 Jordan, assert that the only question involved is the constitutionality of Article 1.14, § 3 of Vernon's Ann.Tex.Insurance Code which provides in part that:
"The Board may inquire into the competence, fitness and reputation of the officers and directors of each carrier. If, after inquiry, and based on substantial evidence, it shall appear to the Board that such officers and directors, or any of them, are not worthy of the public confidence, it shall give such carrier notice in writing of its intention to refuse the application for Certificate of Authority, or to revoke the certificate once granted, stating specifically why the Board intends such action, and the place and time for hearing by the Board, not sooner than ten (10) days nor later than twenty (20) days thereafter.
"After notice and hearing, the Board shall forthwith record in its official minutes its findings and order, which shall be subject to full review in a suit filed in a District Court in Travis County." * * *
The statute refers to an inquiry and order by the Board of Insurance Commissioners. By amendment adopted in 1957, this duty devolved upon the Commissioner of Insurance subject to the supervisory authority of the State Board of Insurance, Acts 1957, 55th Leg., p. 1454, ch. 499, Articles 1.02 et seq., Vernon's Ann. Tex.Ins.Code. This 1957 statutory change accounts for the references in this opinion to orders of the Board of Insurance Commissioners, the Commissioner of Insurance and the State Board of Insurance.
The trial judge held that the questioned statute was constitutional and that the orders entered by the Board of Insurance Commissioners, the Commissioner of Insurance and State Board of Insurance complained of by appellants were valid. Such orders were based upon a finding that appellants were "not worthy of public confidence."
Essentially it is appellants' contention that Article 1.14, § 3 of the Insurance Code is invalid because it lacks sufficiently definite standards whereby the competence, fitness and reputation of an officer or director of an insurance company may be determined and thus vests an unbridled discretion in the regulatory body contrary to the due process clauses of the Texas Constitution (Article 1, § 19), and the Fourteenth Amendment to the Constitution of the United States.
Briefly stated, the factual background of this litigation is as follows:
By order dated March 7, 1956, the Board of Insurance Commissioners of the State of Texas gave notice to the John L. Hammon Life Insurance Company that it was the intention of the Board to revoke its certificate of authority. The Baord tentatively found that some of the officers and directors of said company, including Carl B. Jordan, were not worthy of public confidence.
At a further hearing held on March 22, 1956 the Board finally revoked the company's certificate because of the incompetency of its officers and directors and the company went out of existence.
About August 1, 1957, Carl B. Jordan was offered employment with the Great United Life Insurance Company as Executive Vice-President and thereafter filed an application with William A. Harrison, Commissioner of Insurance, requesting that the order of March 22, 1956 be amended and modified so that he could accept employment with the Great United Life Insurance Company without jeopardizing the company's certificate of authority.
On December 10, 1957 the Commissioner notified the Great United Life Insurance Company of his intention to revoke the certificate of authority because both appellants, Carl B. Jordan and Ella Mae *280 Walls Jordan, were serving as officers and directors of the company, unless cause was shown why such action should not be taken.
On January 22, 1958 the Commissioner found that it was unnecessary to revoke the certificate of authority of the company as neither appellants, Carl B. Jordan or Ella Mae Walls Jordan, were then connected with the company.
On February 12, 1958 the Commissioner entered an order refusing to modify the order of the Board of Insurance Commissioners dated March 22, 1956.
Appellants then requested the State Insurance Board to review the orders of the Commissioner dated January 22, 1958 and February 12, 1958 asserting that as they had been forced to resign their positions with the Great United Life Insurance Company, they were directly and adversely affected by such actions and rulings of the Commissioner. Article 1.04(d), Insurance Code.
The Board of Insurance confirmed the action of the Insurance Commissioner whereupon this suit was filed in the District Court of Travis County.
Upon the trial, the Board of Insurance challenged the right of appellants to maintain this suit by urging a plea in abatement. This plea was overruled by the trial judge and a portion of appellee's brief is devoted to an alternative argument that the plea should have been sustained and this cause dismissed. However, the final order of the trial court and the one from which this appeal was taken is a judgment that plaintiffs take nothing against defendant and was based upon the express holding that Article 1.14, § 3 of the Insurance Code was constitutional and the question of the correctness of that holding is the controlling issue in the case.
The case was tried upon stipulations which set out the findings of the boards involved, as well as those of the Insurance Commissioner. Such findings support the conclusion that appellants were "not worthy of public confidence." In the District Court no attempt was made to attack these findings by evidence outside the stipulations. Accordingly, the trial court's holding must be sustained. We likewise conclude that the statute is constitutional and it follows that the judgment of the trial court should be affirmed.
Article 1.14, § 3 of the Insurance Code as amended in 1957 confers broad and plenary powers upon the Commissioner of Insurance and the Board of Insurance. Subject to the supervisory control of the Board, the Commissioner of Insurance is vested with the authority to inquire into the competence, fitness and reputation of the officers and directors of any insurance carrier operating within this state, and upon a finding that any such officer or director is "not worthy of the public confidence," refuse the carrier's application for a Certificate of Authority or revoke such certificate if theretofore issued, unless such officer or director be removed by the insurance carrier. While the term "not worthy of the public confidence" is broad and undoubtedly encompasses a multitude of factors, it is no more extensive than the public interest demands. Further the idea embodied within the phrase is reasonably clear and hence acceptable as a standard of measurement. And in this lies the true constitutional test. A court may act with reasonable certainty in reviewing a finding and while many elements, such as failure to meet contractual obligations, the record of past business failures, unfavorable personal notoriety and the like may enter into the conclusion that one is unworthy of public confidence, it does not necessarily follow that an administrative board must first establish detailed rules in order to carry out its statutory duty to make sure that the insurance companies of this state have competent officers and directors. In the recent case of Southwestern Sav. & Loan Ass'n of Houston v. Falkner, 331 S.W.2d 917, this Court held that the failure of the Banking Commissioner to promulgate *281 rules and regulations relating to the opening of branch offices of building and loan associations did not dispense with the necessary approval of the Commissioner for the opening of such offices. The adoption of rules was not regarded as a prerequisite to the exercise of authority; the statutory standardthe promotion of the public convenience and advantagebeing applicable and constitutionally sufficient for a definite standard.
Professor Davis in his "Administrative Law Treatise", § 2.03, gives numerous illustrations of phrases employing general terms which have been held sufficient as administrative standards and we quote therefrom:
"[T]he standards the Supreme Court [of the United States] has held adequate include `just and reasonable,' `public interest,' `unreasonable obstruction' to navigation, `reciprocally unequal and unreasonable,' `public convenience, interest, or necessity,' `tea of inferior quality,' `unfair methods of competition,' `reasonable variations,' `unduly or unnecessarily complicate the structure' of a holding company system or `unfairly or inequitably distribute voting power among security holders.'"
See, also, Annotation 79 L. Ed. 474, loc. cit. 487 following report of Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S. Ct. 241, 79 L. Ed. 446.
Closely in point upon the facts is the decision of the Supreme Court of the United States in Hall v. Geiger-Jones Co., 1916, 242 U.S. 539, 37 S. Ct. 217, 221, 61 L. Ed. 480 which involed the validity of the Blue Sky Law of the State of Ohio. The issue in the case as stated by the Court related to the statutory supervisory power delegated to the Superintendent of Banks and Banking:
"It [the objection] centers in the provision that requires the commissioners, as a condition of a license, `to be satisfied of the good repute in business of such applicant and named agents,' and in the power given him to revoke the license or refuse to renew it upon ascertaining that the licensee `is of bad business repute, has violated any provision of the act, or has engaged or is about to engage, under favor of such license, in illegitimate business or fraudulent transactions.' It is especially objected that, as to these requirements, no standard is given to guide or determine the decision of the commissioner. Therefore, it is contended that the discretion thus vested in the commissioner leaves `room for the plan and action of purely personal and arbitrary power.'"
The state statute was upheld against the attack made and the court was of the opinion that there was nothing "recondite in a business reputation or its existence as a fact which should require much investigation."
In Marrs v. Matthews, Tex.Civ.App. 1925, 270 S.W. 586, 587, wr. ref., a statute was upheld which empowered the State Superintendent of Public Instruction to cancel a teaching certificate upon a finding that the holder thereof was "a person unworthy to instruct the youth of this state." Vernon's Ann.Civ.St. art. 2884.
In Aetna Casualty & Ins. Co. v. Sullivan, 1928, 83 N.H. 426, 143 A. 687, 690, the Supreme Court of New Hamphire considered a statutory provision that provided that the license of a foreign insurance company to do business within the State should be renewed "so long as the company shall comply with the requirements of the law and the commissioner shall regard it as safe, reliable and entitle to confidence." P.L.N.H. c. 275, § 11.
In discussing the provision the court said:
"It is true that the test is not a mathematical one; but it may well have been regarded by those who established *282 it as a very practical one, and well calculated to protect the people of the state from the supposed abuses above referred to. The commissioner could ascertain, as the ordinary individual could not, whether the company was honorable in its dealings and whether it offered fair or unfair contracts. The measure was enacted for the protection of the people, rather than for the benefit of the companies. Past experience was believed to show the need for such protection, and the statute is to be construed from that point of view.
* * * * * *
"The court has not heretofore found it impossible to apply the test of worthiness of public confidence. `Character, no less than medical education, skill, and experience is, within the meaning of the statute, a qualification for a competent physician or surgeon. One who does not possess the requisite qualifications cannot be worthy of public confidence.' Gage v. Censors, 63 N.H. 92, 94, 56 Am.Rep. 492. Power to grant a license upon a finding that the applicant is a suitable person may be conferred. State v. Cohen, 73 N.H. 543, 63 A. 928; Diepenbrock v. State Board of Health, 82 N.H. 451, 135 A. 531."
The citation of further authority is deemed unnecessary. We are here concerned with the regulation of an enterprise which affects the public interest, that is, with licenses and cancellations, administrative directives and controls, and the like. The Legislature in using the phrase, "not worthy of the public confidence" was not attempting to define a crime.
As above pointed out, the District Judge overruled the Board's plea in abatement and held that appellants were entitled to maintain this suit which they contended was an appeal from orders of the State Board of Insurance under the provisions of Article 1.04(f) of the Insurance Code which provides that:
"If any insurance company or other party at interest be dissatisfied with any decision, regulation, order, rate, rule, act or administrative ruling adopted by the State Board of Insurance, such dissatisfied company or party at interest after failing to get relief from the State Board of Insurance, may file a petition setting forth the particular objection to such decision * * * in the District Court of Travis County, Texas, and not elsewhere, against the State Board of Insurance as defendant."
It was evidently the opinion of the trial judge that appellants were parties whose interests were affected by the order of December 10, 1957 wherein the Commissioner held that they were not worthy of public confidence and so notified the Great United Life Insurance Company. This order became final as a matter of course insofar as appellants were concerned when the Commissioner entered his order finding that it was unnecessary to suspend the charter of Great United Life Insurance because appellants had been discharged from their positions with the company. Appellants then requested and were granted a review of such order by the State Board of Insurance as provided for in Article 1.04(d) of the Insurance Code. While the Board expressed the opinion that appellants, after their dismissal by the insurance company, had no further standing as persons affected by a ruling or action of the Commissioner of Insurance under said Article 1.04(d), it nevertheless held a public hearing on March 6, 1958 (at which appellants were represented by counsel) and specifically found from the evidence there adduced that appellants and each of them were "not worthy of the public trust and confidence to act as officers or directors of an insurance company in this State." The action of the Commissioner was accordingly confirmed, whereupon suit was *283 filed in the District Court with the result noted.
There has been no denial of procedural due process in this case. Appellants have had both an administrative and judicial review of the Commissioner's adverse finding. Opp Cotton Mills, Inc. v. Administrator, 312 U.S. 126, 657, 61 S. Ct. 524, 85 L. Ed. 624; Industrial Accident Board v. O'Dowd, 157 Tex. 432, 303 S.W.2d 763; English Freight Co. v. Knox, Tex. Civ.App., 180 S.W.2d 633, wr. ref., w. o. m.
The judgment of the trial court is affirmed.
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334 S.W.2d 209 (1960)
Charles W. SCALING et al., Appellants,
v.
George BEGGS et al., Appellees.
No. 13540.
Court of Civil Appeals of Texas, San Antonio.
February 10, 1960.
Rehearing Denied March 16, 1960.
*210 Fischer, Wood, Burney & Nesbitt, Tracy N. DuBose, Corpus Christi, Lattimore & Lattimore, Fort Worth, for appellants.
Lattimore & Lattimore, Fort Worth, for appellees.
*211 MURRAY, Chief Justice.
This is a double appeal. Charles W. Scaling and others, plaintiffs below, appealed from the judgment because it denied to them a recovery of one-half of all the oil, gas and other minerals in and under and that may be produced from a tract of land containing about 151.67 acres, situated in San Patricio County, adjacent to the City of Portland, Texas, and fully described in the pleadings. George Beggs and others, defendants, appealed because the judgment awarded plaintiffs a recovery of one-half of the oil, gas and other minerals in and under 34.75 acres out of said 151.67-acre tract, known herein as Tract No. Two.
Originally, the 151.67-acre tract belonged to Claude G. Arnold and his mother, Jennie Arnold. Later Jennie Arnold died and left her son, Claude, and his wife, Christina C. Arnold, as her sole heirs and beneficiaries. Thus Claude G. Arnold and his wife became the owners of the 151.67-acre tract, subject to an incumbrance to George Beggs. The plaintiffs are the children and heirs of Claude and Christina Arnold. The defendants are, George Beggs, Jr., appearing individually and as independent executor of the estate of his deceased wife, Francine Beggs, George Beggs, III, and James Anderson, Trustees of the George Beggs Trust, and George Beggs, III, as the independent executor of the estate of Francine Beggs, deceased.
To determine who are the owners of the undivided one-half of the oil, gas and other minerals underlying the 151.67-acre tract here in dispute, we find it necessary to construe three written instruments.
The suit was in trespass to try title and for a declaratory judgment that the defendants hold a one-half mineral interest in said 151.67-acre tract as trustees for plaintiffs, and further that plaintiffs are the owners of one-half of $19,821, which George Beggs had theretofore collected as a bonus for an oil and gas mining lease on said land. The tract involved was a farm consisting of eight contiguous but separately described tracts.
The trial was to the court and judgment was rendered in favor of plaintiffs for one-half of the minerals in Tract No. Two, but judgment was denied them as to the minerals in the other seven tracts, and the court refused any money decree to the plaintiffs. The trial court filed its findings of fact. Both sides gave notice of appeal from that part of the judgment that was unfavorable to them.
The plaintiffs, by agreement of the parties, have assumed the role of appellants herein, and defendants, of appellees, at least insofar as briefing is concerned.
Appellants' first contention is that the court erred in not awarding to them the minerals in Tract 1, and Tracts 3 to 8, inclusive. We overrule this contention.
The evidence shows that George Beggs held a mortgage on the 151.67-acre tract, and that the owners were unable to pay off the mortgage. An agreement was reached whereby Jennie Arnold and Claude G. Arnold and his wife, Christina C. Arnold, executed a deed to the property and delivered it to escrow agents, to be held by them for fifteen months, and if the indebtedness against the land had not been paid during that time the deed was to be delivered to George Beggs. The parties further executed an escrow agreement, which they delivered along with the deed to the escrow agents, and in this agreement it was provided that the Arnolds were retaining one-half of the minerals underlying the 151.67-acre tract. The trial court held that when the deed and the escrow agreement were construed together, they were sufficient to show that the Arnolds had retained one-half of the minerals underlying the entire tract.
The real question is, Did Claude and Christina Arnold convey this reserved mineral interest to George Beggs when they subsequently, on December 23, 1932, executed *212 a quitclaim deed to him containing, among others, the following provision?
"Now, Therefore, for and in consideration of the premises and One Dollar cash in hand paid, the receipt of which is hereby acknowledged, we, Claude G. Arnold and Christina C. Arnold, do hereby acknowledge that all of the terms of the escrow agreement were fulfilled and that the delivery of the deed by E. W. Taylor and Thos. R. Anderson to George Beggs as aforesaid was in full compliance with the understanding of the parties, and we do here now confirm and ratify the delivery of said warranty deed to George Beggs as aforesaid; and we waive in favor of George Beggs any and all conditions as were understood in said escrow agreement and do here now acknowledge that said conditions have been fully satisfied; and we, Claude G. Arnold and wife, Christina C. Arnold, do by these presents quit claim unto the said George Beggs all our and each of our right, title, interest, claim and demand in and to that certain tract of land situated in San Patricio County, and described as follows:
"Being eight tracts of land, * * *."
This language clearly included the one-half mineral interest that had theretofore been reserved in the escrow agreement dated August 31, 1931.
Appellants contends that it was never the intention of the parties to convey their one-half mineral interest, that their intention was only to give approval to the delivery by the escrow agents of the original deed to George Beggs. Appellants undertook to show this limited purpose by extraneous oral statements, but such hearsay statement were properly excluded by the trial court.
Appellants contend that George Beggs was a trustee and, therefore, owed to defendants the duty of "full information given by the trustee and an adequate consideration," citing Connolly v. Hammond, 51 Tex. 635, and Benton v. Martin, Tex.Civ.App., 244 S.W.2d 930.
We cannot agree that the execution of the quitclaim deed by the Arnolds to George Beggs was a transaction between a trustee and his cestui que trusts. It is true that the original deed provided that George Beggs should have the exclusive right to lease the tract conveyed, and in making such a lease he would be required to act with the best of good faith with reference to the holders of the one-half, nonparticipating mineral interest. However, in a transaction between George Beggs and the Arnolds, whereby he acquired their undivided one-half of the minerals, he was not acting as a trustee and the parties were dealing with each other on equal footing. The evidence fails to show that the Arnolds were fraudulently induced by George Beggs to execute the quitclaim deed and it cannot be set aside on the grounds of fraud.
The evidence also fails to show that there was no consideration for the quitclaim deed. The trial court found that there was no consideration for the quitclaim deed, yet he refused to set it aside. The quitclaim deed recited: "* * * for and in consideration of the premises and One Dollar cash in hand paid, the receipt of which is hereby acknowledged, * * *." The recital of a consideration in an instrument of conveyance is prima facie evidence of its amount and the payment thereof, and the burden of proof is on the party who controverts it. Jones v. Humble Oil & Refining Co., Tex.Civ. App., 114 S.W.2d 398. Appellants did not offer any admissible evidence that there was no consideration for the quitclaim deed. Under such circumstances, its execution, delivery and recital of a consideration were sufficient to show a consideration. Rogers v. Rogers, Tex.Com.App., 15 S.W.2d 1037.
*213 This brings us to a consideration of the description of the "Second Tract" in the quitclaim deed. The trial court construed three instruments, (1) the warranty deed dated August 31, 1931, from Jennie Arnold, Claude G. Arnold and wife, Christina C. Arnold, to George Beggs; (2) the contract of the same date, between Jennie Arnold, Claude G. Arnold and Christina C. Arnold, and George Beggs; and (3) the quitclaim deed, dated December 23, 1932, from Claude G. Arnold and Christina C. Arnold to George Beggs, and determined that the interest acquired by George Beggs under the warranty deed was subject to the mineral reservation contained in the contract, but that the quitclaim deed conveyed all of such reserved mineral interest to George Beggs, except the portion thereof which applies to the 34.75-acre tract, known as Tract 2; that the description of Tract 2 was so fatally defective as to render it void and of no effect. We do not agree that the description is fatally defective. It is apparent from the four corners of the quitclaim deed that the parties were attempting to describe the same 151.67 acres of land as was described in the warranty deed. It is also apparent that two mistakes were made in the description of Tract 2 in the quitclaim deed. First, after the 1,377 ft. west call, it is erroneously stated, to the S.W. corner of this tract. This should have been to the N.W. Corner. Second, the call, "south 1100 ft. to a stake for the S.W. corner of this tract," is entirely omitted. When these two errors are corrected, the description of Tract 2 in the quitclaim deed is the same as the description of that tract in the warranty deed. If the corrections are not made the calls describe nothing other than a line. In making the above two corrections, you have the following things to suggest them: the description in the warranty deed; the acreage of 34.75 called for; the fact that by supplying the second call you have a parallelogram containing the correct amount of acreage, and without the corrections no acreage at all is described; and, further, by reversing the calls, three sides of the parallelogram can be located.
Randolph S. King, a licensed surveyor, who has been County Surveyor of San Patricio County for the past eighteen years, testified that it was obvious a call had been omitted from the description in the quitclaim deed. He further testified, in substance, that by running the first call he would establish the true northwest corner of the tract, and that by reversing the remaining calls he would be able to establish three sides of the tract, and by supplying the remaining line, thus completing the parallelogram, he would have the complete description of Tract 2. Since the description contained the number of acres in the tract, he would use this information to verify the accuracy of the description as constructed by him. The correct description of Tract 2 should be determined in the manner above stated. Fortenberry v. Cruse, Tex.Civ.App., 199 S.W. 523; Poitevent v. Scarborough, 103 Tex. 111, 124 S.W. 87; Mansel v. Castles, 93 Tex. 414, 55 S.W. 559.
The trial court erroneously held that the description in the quitclaim deed was not sufficient to convey the retained minerals under Tract 2, and that part of the judgment will be reversed and judgment here rendered that plaintiffs below, Charles W. Scaling, individually and as independent executor of the estate of Christina Beggs Arnold, and his wife, Martha Mae Scaling, Clara Arnold Gardner and husband, Rollins Gardner, Claude Gordon Arnold, Jr., and Robert Beggs Arnold, take nothing of defendants below, George Beggs, individually and as independent executor of the estate of his deceased wife, Francine Beggs, George Beggs, III, and James Anderson, trustees of the George Beggs Trust.
The trial court properly held that the above named plaintiffs were not entitled to recover the minerals underlying the remaining Tracts 1 and 3 to 8, both inclusive, *214 and that part of the judgment will be affirmed.
The trial court adjudged the trial court costs against George Beggs, III, and James Anderson as trustees. This part of the judgment will be reversed and judgment here rendered that the above named plaintiffs, who are both appellants and appellees here, pay all costs of this Court and the court below.
Affirmed in part; reversed and rendered in part.
On Motion for Rehearing.
Appellants in their motion for a rehearing have called to our attention that in line two of page 4 of our original opinion [334 S.W.2d 212], we stated that "the original deed provided that George Beggs should have the exclusive right to lease the tract conveyed, * * *," when in fact such provision is found in the escrow agreement. We are glad to acknowledge this error and to stand corrected.
The provision contained in the escrow agreement reads as follows:
"It is further understood and agreed that in case said title by virtue of the premises, vests in the said George Beggs, than and in that event the said parties of the first part shall be entitled to one-half of all the oil, gas and other minerals in, underlying and that may be produced from said land described in said deed, with the express understanding however that the said George Beggs shall have the power and he is hereby constituted our attorney-in-fact, to execute oil and gas leases thereon, royalty deeds with reference thereto, and to make any and all contracts necessary and proper for the management and control of said mineral interests, which management and control shall and is hereby vested in said party of the second part."
We have carefully considered appellants' motion for a rehearing and, with the exception of the above correction, it is in all things overruled.
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328 A.2d 385 (1974)
Michael L. BRAXTON, Appellant,
v.
UNITED STATES, Appellee.
No. 7430.
District of Columbia Court of Appeals.
Argued January 30, 1974.
Decided November 20, 1974.
*386 Warren C. Nighswander, Washington, D.C., for appellant. Douglas C. Dodge, D. C. Public Defender Service, Washington, D. C., appointed by this court, entered an appearance for appellant.
E. Lawrence Barcella, Jr., Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty., at the time the brief was filed, John A. Terry and Robert Alan Jones, Asst. U. S. Attys., were on the brief, for appellee.
Before REILLY, Chief Judge, KELLY and HARRIS, Associate Judges.
KELLY, Associate Judge:
Appellant was convicted on a plea of guilty to the charge of Burglary I, while armed, (D.C.Code 1973, §§ 22-1801(a), 22-3202) and sentenced to a prison term of two to fifteen years. As a part of the bargaining process leading to the plea appeallant had agreed that he would waive indictment on the charge to which he pled and the government had agreed that it would not prosecute a pending rape charge against him.[1] In addition, the government had agreed to waive its right of allocution at sentencing.[2]
Appellant later moved the court to reduce his sentence to a term of one to eight years. In support of the motion appellant detailed his efforts at rehabilitation during his four months of incarceration and furnished the court a current psychological report suggesting that he would benefit more from release into a minimum security situation than from continued confinement.[3] When the motion was heard the prosecutor reminded the court of the bargaining agreement underlying the guilty plea and stated that while the government had promised not to allocute at the time of sentence, it did not feel bound by that agreement in the present hearing. Then, without objection, he presented information concerning appellant's prior criminal conduct to the court and vigorously opposed a reduction in the sentence imposed. The motion was denied.
Appellant argues to this court that in allocuting at the hearing on his motion for a reduction in sentence the government breached the bargaining agreement made with him before he entered his guilty plea. Relying upon the holding in Santobello v. New York, 404 U.S. 257, 92 S. Ct. 495, 30 L. Ed. 2d 427 (1971), that a breach of a government promise not to allocute at sentencing entitles a criminal defendant to ask either to withdraw his plea of guilt or for resentencing before a different trial judge, appellant requests that his case be remanded for a new hearing on the motion to reduce sentence before another trial judge, at which the government would be held to its promise not to allocute.
That the courts will specifically enforce agreements made by the government *387 in the process of plea bargaining is not in dispute.[4] They do so in order to maintain the legitimacy of the bargaining process and to justify its use in the administration of the criminal laws, reasoning that:
If plea bargaining is to fulfill its intended purpose, it must be conducted fairly on both sides and the results must not disappoint the reasonable expectations of either....
... It is ... important to assure a defendant that after the agreement has received final judicial sanction, it will be carried out according to its terms. Only if it is generally believed that performance on the part of the State will not disappoint a defendant's reasonable expectations will plea bargaining become and remain a truly effective device in criminal administration. Aside from this pragmatic necessity, essential fairness dictates the same result. [State v. Thomas, 61 N.J. 314, 321-322, 294 A.2d 57, 61 (1972).]
Since there is no precedent in this jurisdiction on the precise question posed, we ask whether appellant could reasonably have expected that the government's agreement not to allocute at sentencing would extend to a hearing on any subsequent request that this sentence be reduced. We think that he could not.
Section 23-103 of the Code gives the government a right to allocute when sentence is to be imposed. Here, as a part of a plea bargain made in consideration of then existing facts, the government agreed to refrain from making a recommendation to the court on the sentence it should impose upon appellant. The government abided by its agreement not to speak and after appellant was sentenced the trial court explained:
I purposely create or establish under this sentence what I consider is an absolute minimum, so that Mr. Braxton will have a goal, a goal that can be attained by exemplary conduct; and, if attained, will find himself at an age where he is still a young man and still able to go forward with the plans which have been assembled for him.
When appellant requested a reduction in his sentence after a few months' incarceration he supported that request with a recitation of events which had come to pass after the bargaining agreement was executed. As a consequence, the government, as was its right, felt compelled to speak in opposition to the motion by giving the court information relating to appellant's criminal background which was clearly relevant to the question of early release. And it did so without objection from counsel for appellant.[5]
We are aware that at least one court has held that the specific terms of a plea bargaining agreement must be honored not only at sentencing but at a hearing on a motion to reduce sentence as well. United States v. Ewing, 480 F.2d 1141 (5th Cir. 1973). In Ewing, the court vacated the defendant's sentence and remanded the case for a new hearing before another judge because the government had breached a bargaining agreement not to oppose a probated sentence. The government had abided by its agreement at the original sentencing, but unfortunately for Ewing the trial judge had refused to grant probation. After imposition of sentence, Ewing moved that the sentence be reduced to probation. The government, then represented *388 by a different attorney, strongly opposed the request for probation and the motion was denied. The circuit court, also relying on Santobello v. New York, supra, said:
Our case is almost identical to Santobello except for the fact that the prosecution fulfilled its commitment at the initial sentencing hearing only to breach it at the subsequent hearing on Ewing's Rule 35 motion for the reduction of sentence. But this distinction is of little import because both of these proceedings were integral parts of the sentencing process in this case. Surely when Ewing obtained the Government's promise not to oppose probation in exchange for his plea of guilty, he did so in the expectation that the benefits of that promise would be available throughout the proceedings relevant to the determination of his sentence. The Government was obligated to fulfill its commitment at least until the question of Ewing's sentence was finally resolved by the sentencing judge. [480 F.2d at 1143.]
We regard the Ewing case as factually distinguishable in that the government there agreed specifically not to oppose a probated sentence. Thus when he entered the plea Ewing was entitled to a reasonable expectation that the agreement would extend to a hearing on a postsentence motion for the same relief should he fail initially to be placed on probation. A like expectation was not reasonable in this case, however, where the only specific agreement was to waive a statutory right at the time sentence was imposed.
We therefore hold that the government fulfilled its agreement with appellant not to allocute at the time of sentence and was not bound thereafter ot remain silent at the hearing on appellant's motion to reduce sentence.
Affirmed.
NOTES
[1] The plea bargaining process has the approval of the United States Supreme Court. Brady v. United States, 397 U.S. 742, 751-753, 90 S. Ct. 1463, 25 L. Ed. 2d 747 (1970).
[2] D.C.Code 1973, § 23-103, provides in part:
At any time when the defendant or his counsel addresses the court on the sentence to be imposed, the prosecuting attorney shall, if he wishes, have an equivalent opportunity to address the court and to make a recommendation to the court on the sentence to be imposed and to present information in support of his recommendation. Such information as the defendant or his counsel or the prosecuting attorney may present shall at all times be subject to the applicable rules of mutual discovery.
[3] Super.Ct.Cr.R. 35(a) provides:
The court may correct an illegal sentence at any time and may correct a sentence imposed in an illegal manner within the time provided herein for the reduction of sentence. The court may reduce a sentence within 120 days after the sentence is imposed, or within 120 days after receipt by the court of a mandate issued upon affirmance of the judgment or dismissal of the appeal, or within 120 days after entry of any order or judgment of the Supreme Court denying review of, or having the effect of upholding, a judgment of conviction. The court may also reduce a sentence upon revocation of probation as provided by law.
[4] Santobello v. New York, supra; United States v. Hallam, 472 F.2d 168 (9th Cir. 1973); Gallegos v. United States, 466 F.2d 740 (5th Cir. 1972); United States v. Carter, 454 F.2d 426 (4th Cir. 1972); Dorsey v. Cupp, 12 Or.App. 604, 508 P.2d 445 (1973); State v. Kimes, 188 Neb. 85, 195 N.W.2d 216 (1972); People v. Barajas, 26 Cal. App. 3d 932, 103 Cal. Rptr. 405 (1972); People v. Eck, 39 Mich.App. 176, 197 N.W.2d 289 (1972).
[5] Appellant was represented by a different public defender at the hearing on the motion.
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328 A.2d 141 (1974)
Theodore BEST, Defendant Below, Appellant,
v.
STATE of Delaware, Plaintiff Below, Appellee.
Supreme Court of Delaware.
October 31, 1974.
*142 Karl Haller, Asst. Public Defendant, Georgetown, for defendant below, appellant.
Lawrence Steele, II, Deputy Atty. Gen., Georgetown, for plaintiff below, appellee.
Before HERRMANN, C. J., DUFFY, J., and MARVEL, Vice Chancellor.
MARVEL, Vice Chancellor:
Following his conviction before a Justice of the Peace on a charge of driving a motor vehicle while under the influence of intoxicating liquor, 21 Del.C. § 4176, the appellant took an appeal to the Superior Court, where, after a trial de novo, he was again convicted of the same offense. The sentence imposed was sixty days in jail and a fine of $500.00. The present appeal ensued.
Introduced at the trial de novo in the Superior Court under the so-called Business Records Statute[1] was evidence of alcoholic intoxication on the part of the appellant at the time of his arrest deemed sufficient to warrant conviction. Such evidence was derived from a test of his breath through its analysis by means of a device known as an Omicron Intoxilizer. Prior to its testing of appellant's breath the device in question has been allegedly cleared and checked for accuracy by the State Chemist. The device purports to calculate the percentage of alcohol present in a person's breath.
The State also introduced so-called calibration tests to the effect that the device in issue was operating properly both before and after samples of appellant's breath had been taken. And while the State Chemist was not present at appellant's trial, the police officer in charge of the records of the Omicron Intoxilizer, whereby appellant's breath was tested, testified as to its proper operation and condition at the time of appellant's arrest and testing. In addition, the arresting officer testified that while on patrol he saw an over-turned motor vehicle at the side of the road in which he found appellant in an apparently intoxicated condition. Appellant was thereupon arrested and taken to police headquarters where the Omicron Intoxilizer test was administered.
Appellant now contends that unlike the analysis of blood samples or the use of a *143 drunkometer for the detection of intoxication, the device in question represents a relatively recent technique, that it has not been established as acceptable in this jurisdiction, and that in submitting the findings of such device as to appellant's alleged intoxication the State failed to introduce expert testimony concerning the reliability of the device, particularly that of the State Chemist explaining the theory of the test and vouching for the accuracy of the device. The evidence of the test and its results was introduced by the police officer in charge of the records of the device over appellant's objection.
In the recent case of State v. Moore, Del.Super., 307 A.2d 548, the Superior Court, following the presentation by the State of testimony concerning the theory and workings of the Omicron Intoxilizer device by experts in the fields of chemistry,[2] physics and electronics, concluded that the process was reliable, stating:
"... I cannot hold under any of the theories advanced by the defendant that it has been shown that the device is so unreliable so that results obtained by its use are inadmissible as a matter of law. Indeed, there is uncontroverted testimony in the record that the result of the use of the device in question is at least as reliable, and probably more so, than the method previously used in this State for the same purpose."
No appeal was taken in the Moore case. We therefore conclude that such ruling constitutes for the Superior Court, at least, a precedent in this State to the effect that the Omicron Intoxilizer device is a reliable and trustworthy method of testing the percentage of alcohol[3] present in an accused's system at the time of his submission to such a test. The decision in Moore is not attacked by appellant and we express no opinion thereon.
Accordingly, there being no other Delaware decision on the subject, the trial judge in the instant case was entitled to rely upon the ruling of the Superior Court in Moore under the principle of stare decisis. Compare State v. Moffit, 9 Terry 210, 100 A.2d 778, in which the trustworthiness of radar for testing the speed of a motor vehicle was held to have been established.
Finally, we hold that the Business Records Act is applicable in this case, Johnson v. State, Del.Supr., 253 A.2d 206. Accordingly, it was not error to admit in evidence thereunder documents showing that the Omicron machine had been checked by the State Chemist although he was not present at the trial.
The judgment below is affirmed.
NOTES
[1] 10 Del.C. § 4310.
[2] The State Chemist was among those who testified at such trial as to the workings and reliability of the omicron intoxilizer.
[3] 11 Del.C. § 3507 and 21 Del.C. § 4176 both authorize medical or chemical analysis of breath, blood or urine to determine whether or not the driver of a motor vehicle was under the influence of intoxicating liquor. In addition the former statute authorizes a testing of saliva.
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334 S.W.2d 894 (1960)
C. C. COWARD, Appellant,
v.
Luther BARNES, Appellee.
No. 5-2062.
Supreme Court of Arkansas.
May 9, 1960.
*895 Douglas Bradley, Jonesboro, for appellant.
E. D. McGowan, Jonesboro, for appellee.
McFADDIN, Justice.
This appeal necessitates a study of the law relating to garnishments, C. C. Coward, appellant, recovered judgment against Pfeifer on September 2, 1958, for $821.03 and interest and costs. On September 30, 1958, Coward had a writ of garnishment served on appellee, Luther Barnes, "* * * to answer what goods, chattels, moneys, credits, and effects he may have in his hands or possession belonging to said defendant, Ralph Pfeifer, to satisfy the judgment aforesaid". On October 3, 1958, Barnes filed answer, stating that Pfeifer was then indebted to him, and that he (Barnes) had nothing in his hands then belonging to Pfeifer. On September 24, 1959, trial in the Circuit Court, without a jury, resulted in a judgment discharging[1] Barnes as garnishee; and from that judgment Coward prosecutes the present appeal.
At the outset it is well to mention that the factual findings of the Circuit Judge have the force and effect of a jury verdict. Pate v. Fears, 223 Ark. 365, 265 S.W.2d 954. Barnes testified that Pfeifer was his sharecropper for 1958; that he furnished Pfeifer $817.40 in cash during the crop year; that half of the gross crop would go to Pfeifer, lessfrom Pfeifer's said halfall advances; that when the garnishment was served and answer made on October 3, 1958, only three bales of the 1958 crop had been gathered, and that no proceeds[2] had been determined because the remainder of the crop had not even been picked. One who cultivates land for a specified portion of the crop, the landlord furnishing the land, team, and tools, is not a tenant, but a laborer. Gardenhire v. *896 Smith, 39 Ark. 280; Hammock v. Creekmore, 48 Ark. 264, 3 S.W. 180; Douglas v. Lamb, 157 Ark. 11, 247 S.W. 77; Houck v. Birmingham, 217 Ark. 449, 230 S.W.2d 952. Barnes, being thus an employer of Pfeifer, was subject to garnishment proceedings under § 31-501, Ark.Stats, just as any other employer would be subject to garnishment proceedings; and our statute (§ 31-502) recognizes that wages may be garnished.
The question presented is, whether the undetermined amount due the sharecropper Pfeifer, was subject to garnishment on September 30, 1958, or on October 3, 1958 (Harris v. Harris, 201 Ark. 684, 146 S.W.2d 539). Did Barnes have anything in his hands definitely belonging[3] to Pfeifer on either September 30, 1958, or October 3, 1958? Did it belong to Pfeifer at all events, or was any such amount entirely contingent? In Wyatt Lumber & Supply Co. v. Hansen, 201 Ark. 534, 147 S.W.2d 366, 367, we had occasion to consider the matter of contingent obligations not subject to garnishment proceedings. In that case there had been a garnishment of the owner, Hansen, for whatever might be due by him to a building contractor, whose work had not been completed or finally accepted at the time of garnishment or answer. We held that any amount due to the contractor by the owner was entirely contingent[4] and, therefore, not subject to garnishment at the times involved in the case. Mr. Justice Frank G. Smith, speaking for a unanimous Court, said:
"Another reason why relief by way of garnishment may not be awarded the Wyatt Company is that the building contract was not fully completed. It is argued that there had been a substantial compliance with the original written building contract. But the court made a specific finding to the contrary; and we cannot say that this finding is contrary to the preponderance of the evidence. But, even so, by the terms of the written contract, additions thereto became a part thereof. * * * "There is an extended annotator's note to the case of McKendall v. Patullo, 52 R.I. 258, 160 A. 202, 82 A.L.R. 1111, and the annotator cites many cases in support of the following note: `It is held that, in order that a garnishee may be charged, there must be an existing debt at the time of the service of the garnishment, and not a mere conditional or contingent liability. So, in the case of a construction contract, where the employer is not to become indebted to the contractor until performance in all particulars, there is no indebtedness owing to the contractor which may be reached in a garnishment proceeding until the terms of the contract have been performed.'
"Here, as has been said, the contract price for the work was payable `Upon the completion of the work'.
"In the case of Medley v. American Radiator Co, 27 Tex. Civ. App. 384, 66 S.W. 86, 89, it was said: `In order for a fund or liability to be subject to garnishment, there must be no condition precedent, no impediment of any sort between the garnishee's liability and defendant's right to be paid. *'"
*897 Even though the 1958 cotton crop may have been matured at the time Barnes answered the garnishment, nevertheless the major portion of the cotton had not been picked, and it was Pfeifer's duty to pick this cotton and carry it to the gin. The cost of picking was a sizeable advance. The gin tickets were introduced in evidence, and twenty-three of them are dated after October 6, 1958. Who could have told on October 3, 1958, how many bales of cotton Pfeifer would make, when part of the cotton was still in the field ungathered? Who could have told the price to be received from the cotton? Barnes testified: "We always wait until we get through before we settle up". So on October 3, 1958, whether Barnes might owe Pfeifer any amount was entirely contingent on future events. We cannot view the results as they were at the time of the trial in September 1959. The issue is, what was the situation on October 3, 1958? In the annotation in 2 A.L.R. 506, the holdings are summarized in this language:
"But where a further performance of a contract is necessary before money payable thereon becomes due, the payment is conditioned on the performance, and is not subject to garnishment until the condition has been fulfilled. * * * The rule rests on the view that `as a plaintiff can have no greater right against the garnishee than the defendant would have, and can occupy no better position with respect to the garnishee than the defendant could in a suit brought by him against the garnishee, it follows that, where a contract between the defendant and the garnishee had not been fully performed by defendant at the time of attachment by plaintiff, the garnishee is not chargeable'. Johnson v. Healey (1913), 35 R.I. 192 [85 A. 938]."
We therefore conclude that the evidence is amply sufficient to support the finding and judgment of the Circuit Court to the effect that on September 30, 1958, as well as on October 3, 1958, any amount Barnes might ever owe Pfeifer was entirely too contingent to be subject to garnishment process.
Affirmed.
NOTES
[1] Our cases hold that unless the answer of the garnishee is denied by written pleadings, it is taken as conclusive. See Kochtitzky & Johnson v. Malvern Gravel Co., 195 Ark. 84, 111 S.W.2d 478, and cases there cited. The transcript before us does not contain a written pleading by Coward controverting the answer of Barnes; but we will not rest our opinion on that omission because it is not even mentioned or suggested in the appellee's brief, and such a pleading controverting the garnishment might have been filed and inadvertently omitted from the transcript, since the absence of such denial is not mentioned.
[2] It was shownat the trial in September, 1959that the total 1958 cotton crop was thirty bales, which, after paying ginning, brought a gross sum of $5,392.59; and that one-half of what, remained of this sum, after paying advances and expenses for which Pfeifer was liable, ultimately belonged to Pfeifer. The calculation appears to be as follows: Sharecropper's % gross $ 2696.29 Less cash advances by Barnes to make the crop $ 817.40 Less cost of fertilizer and poison 340.76 Less advance for cotton picking 1223.36 Total charged against Pfeifer ` 2381.46 Net balance to Pfeifer from crop $ 314.83
[3] This is really the point on which the learned Circuit Judge decided the ease; for he stated, after argument of counsel : "I cannot find any evidence that Mr. Barnes tried to beat the creditor out of the debt. If I did, I wouldn't hesitate to hold him responsible for it. I think he, under advice of counsel, stated what the situation was on September 30th."
[4] To the same effect see 4 Am.Jur. p. 082, "Attachment and Garnishment" § 200; annotation in 2 A.L.R. 506, entitled: "Money due only on further performance of contract by debtor as subject to garnishment"; and annotation in 134 A.L.R. 853, entitled: "What amounts to a contingency within statute or rule permitting garnishment or similar process before an obligation is due or payable, if payment or delivery is not dependent upon a contingency".
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334 S.W.2d 796 (1960)
Jimmie D. MARTIN, Appellant,
v.
STATE of Texas, Appellee.
No. 31918.
Court of Criminal Appeals of Texas.
April 27, 1960.
*797 T. B. Sisco, McKinney (court-appointed), for appellant.
Leon B. Douglas, State's Atty., Austin, for the State.
MORRISON, Presiding Judge.
The offense is murder; the punishment, 5 years.
Appellant's confession, which was introduced in evidence without objection, reads in part as follows:
"Bud Williams had been in my house earlier today and we had been drinking together and we had not been fussing. * * * About that time Bud Williams came in the front door and started to hit me with a whip. * * * I pulled my knife, opened it, and he run out the front door, and I chased him and cut him about three times. He was running from me, and I caught him in my yard and I cut him one time. I chased him into Mr. Wingfield's yard and caught him and cut him again. * * * After I seen his guts roll out, I folded my knife up and put it in my pocket, and the officers took it out of my pocket when they put me in jail."
Appellant's neighbor Wingfield testified that appellant and deceased came from appellant's house into his front yard, that appellant pushed deceased down near his front steps, that he refused to permit appellant to come in his house and covered deceased's body with a blanket.
It was shown by the testimony of the undertaker and his assistant that deceased died as the result of several knife wounds which severed his intestines and caused them to protrude and, further, that appellant's knife had an overall length of nearly seven inches and was a deadly weapon when used to cut or stab.
Appellant and his older brother, who was present on the occasion, gave conflicting testimony as to what occurred, but the testimony of each of them raised the issue of self-defense, which was submitted to the jury and decided adversely to appellant. Appellant testified that he did not know what was in the statement which he had signed because he was in the throes of an epileptic seizure at the time he signed the same. He did, however, admit that that portion of the confession in which he told of deceased's running out the front door and of his catching him in the front yard and cutting him was correct.
The jury resolved the conflict in the evidence against the appellant, and we find it sufficient to support the conviction.
In his brief, appellant's court-appointed counsel raises two questions. He first contends that the court erred in failing to grant the motion for new trial based upon allegedly newly discovered evidence. The motion for new trial was not sworn to by appellant or his counsel. The attached affidavit of the allegedly newly discovered witnesses alone will not suffice. Barnett v. State, 160 Tex. Crim. 622, 273 S.W.2d 878. We do observe, however, in this connection that both appellant and his brother testified at the trial regarding the presence of an ice pick upon the person of the deceased and have concluded that the fact that appellant's mother may have later found one near where the assault took place would not have altered the jury's verdict.
We fail to find anything in the record to support appellant's contention that he had not in fact been placed under a peace bond and that therefore State's counsel acted improperly in questioning his reputation witnesses about their having heard of such occurrence.
Finding no reversible error, the judgment of the trial court is affirmed.
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755 A.2d 784 (2000)
Paul HENDRICK, in his capacity as trustee
v.
Joyce C. HENDRICK, Executrix of the Estate of Jeffrey P. Hendrick et al.
Nos. 97-627-Appeal, 98-436-Appeal.
Supreme Court of Rhode Island.
July 10, 2000.
*785 Present WEISBERGER, C.J., LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.
Bret Jedele, Amato A. Deluca, Providence, for plaintiff.
Lauren E. Jones, Providence, John C. Tibbitts, Daniel P. Carter, Warwick, for defendant.
OPINION
BOURCIER, J.
In these consolidated appeals, Joyce Hendrick, individually and as executrix of the estate of her late husband, Jeffrey Hendrick, seeks review of two Superior Court final judgments that served to dismiss her eight counterclaims and/or crossclaims asserted against various parties, both plaintiff and defendant, that include the Exeter Country Club, Inc., its officers, directors, stockholders and certain trustees.[1] Those asserted claims alleged, in general terms, breach of fiduciary obligations and duties and majority stockholder oppression. They also sought dissolution of the corporation, or alternatively, the corporate buyout of Joyce's approximately *786 30 percent shareholder interest in the corporation pursuant to G.L. 1956 §§ 7-1.1-90 and 7-1.1-90.1.
I
Case Facts and Travel
The appellate Gordian knot we have before us was created and solidified in the following fashion: Exeter Country Club, Inc. (ECC) is a closely held corporation owned by the Hendrick family and authorized under Rhode Island law to carry on the business of a golf course in the Town of Exeter. As of 1986, Paul Hendrick was a majority stockholder in ECC, and his two sons, Jeffrey and Peter, owned minority interests in ECC. On January 17, 1986, Jeffrey and Peter entered into a reciprocal stock purchase agreement (the purchase agreement), whereupon the death of one brother, the survivor-brother would automatically, by way of such purchase agreement, purchase certain identified ECC stock held by the decedent-brother, through the use of proceeds from life insurance policies held on the life of that decedent-brother.[2] The agreement named both Paul and Rolland Jones (Jones), an insurance agent, as trustees to administer the purchase-agreement transaction. Pursuant to that agreement, the trustees were required to hold Jeffrey's and Peter's shares of stock designated in the purchase agreement in trust, receive the life insurance policies proceeds, deliver the designated stock to the survivor-brother, and deliver the stock purchase proceeds from the purchase-agreement transaction to the particular decedent-brother's executor or representative.
In late December 1990, ECC underwent a process of corporate recapitalization through the issuance to the respective family shareholders of nine shares of Class B nonvoting stock for each Class A voting stock or Class B stock then owned by the shareholders. Additionally, Paul and his wife, Elizabeth, made subsequent gifts to both Peter and Jeffrey of a percentage of the newly issued stock. As a result of the corporate recapitalization and the parental gifts, Jeffrey's Class B equity shares in ECC increased from 1,858 to approximately 22,000 shares. There was some immediate disagreement between the Hendrick family members as to whether the newly issued and newly received shares were to be governed by the 1986 stock purchase agreement executed between Peter and Jeffrey. Legal counsel for trustee Jones opined in an August 1992 letter that because the purchase agreement predated the recapitalization, the recapitalized new shares were not within the parameters of the purchase agreement. On the other hand, ECC's corporate counsel, several years later, reached the opposite conclusion, advising ECC, its directors and the trustees that the purchase agreement was intended to encompass all shares held by Jeffrey at the time of his death.
In June 1993, while Jeffrey was still alive but seriously ill, an attempt was made by ECC and the trustees, through counsel, to revise or amend the 1986 purchase agreement to include those new Class B shares in the purchase agreement, but Joyce, now acting as Jeffrey's "attorney-in-fact," refused to allow the purchase agreement to be modified to include the new shares. Despite this continuing feud over the scope of the purchase agreement, after Jeffrey's death on December 22, 1993, the trustees designated by the purchase agreement attempted a valuation of all shares then owned by Jeffrey and set a purchase closing date in September 1994 for the transfer of all of those shares to Peter. Joyce, the executrix of Jeffrey's estate, disputed the trustees' valuation and purchase attempt of the additional Class B stock owned by Jeffrey, disagreed with the price valuation on that stock as determined by ECC's accountant, and did not attend *787 the scheduled stock-purchase closing. Subsequently, no attempt was made by the trustees to transfer any of Jeffrey's interest in ECC, although under the purchase agreement the original 1,858 shares could have been transferred by the trustees without the presence or permission of Joyce.
On November 9, 1994, Paul commenced an action in the Washington County Superior Court against Joyce, Jeffrey's estate and Peter,[3] seeking specific performance of the stock purchase agreement. Joyce responded to that complaint by denying that specific performance should be ordered, and filed a counterclaim against Paul in his individual capacity and as trustee, and a crossclaim against Peter, alleging certain breaches of fiduciary duty towards her and waste of corporate assets as a result of actions taken by both Paul and Peter. Over the later course of the litigation, ECC, trustee Jones, later his executrix, Alice Jones[4] and Elizabeth Hendrick, Paul's wife, all were added as parties in the case.[5] The Hendrick family feud not only expanded, but also spilled out of the courtroom into the everyday operations of the corporation, with ever-increasing animosity. In December 1994, ECC declared no dividends on its stock for the year, but instead voted to give Paul a bonus of $65,000 and to give Peter a bonus of $85,000, while Joyce received a bonus amount of only $2,500. The Internal Revenue Service, upon review, subsequently disallowed $40,000 of that bonus amount paid to the ECC corporate officers during 1994.
In March 1995, Paul proceeded on his complaint for a declaratory judgment relating to the purchase agreement. On May 18, 1995, after trial, a Superior Court trial justice issued a declaratory judgment declaring that the January 17, 1986, purchase agreement was unambiguous on its face and did not by its terms include the shares in ECC that Jeffrey had subsequently acquired. He declared that the purchase agreement provided for the sale and purchase of only the original 1,858 shares held by Jeffrey on January 17, 1986, and not to the recapitalization shares and the stock gifts Jeffrey received after that agreement was executed.[6] He ordered those 1,858 shares to be transferred, and severed Joyce's counter and crossclaims for later trial. After the transfer of the 1,858 shares to Peter, pursuant to the May 18, 1995 declaratory judgment, Joyce was left owning approximately 31 percent of the Class B nonvoting shares in ECC. Unfortunately for Joyce, her status as a powerless minority shareholder was merely the beginning of her travails with ECC. In August 1995, Joyce was fired from her position as ECC's bookkeeper after eighteen years of service, for what she claimed was her refusal to convey her remaining stock to ECC and what ECC characterized as her creation of a hostile workplace environment. She also found herself thwarted in her attempts to gain sufficient access to review ECC's corporate books and records. Finally, in January 1996, ECC purchased a $400,000 parcel of land which, although not adjacent or directly beneficial to ECC's property, apparently fronted certain parcels owned jointly by Peter and his wife and son, a transaction that Joyce asserted benefited Peter individually and not the corporation.
On September 2, 1997, the defendants in Joyce's counterclaims and crossclaims moved for summary judgment on Joyce's claims relating to the breach of fiduciary duties owed to her and the issue of excessive bonuses paid to the directors and officers of ECC. While that summary judgment motion was pending, Joyce *788 moved, and was granted leave, to amend both her counterclaims and crossclaims. Upon amendment, her counterclaims and crossclaims alleged common law breach of fiduciary duty on the part of the trustees and ECC by failing to act impartially in their attempts to coerce Joyce into modifying the stock purchase agreement to include all shares owned by Jeffrey at the time of his death; malicious prosecution and abuse of process[7] relating to the specific performance and declaratory-relief civil action filed by Paul against her; oppressive conduct by ECC toward her as a minority shareholder by its failure to declare stock dividends while granting excessive bonuses to its officers and directors, as well as the termination of her eighteen-year long-standing employment relationship with ECC and finally, denying her access to necessary ECC corporate books and records, in violation of § 7-1.1-46. Joyce also alleged shareholder derivative type-claims, asserting that the $400,000 land purchase by ECC was for the primary benefit only of Peter and not the corporation and that the above-described excessive bonuses paid to Paul and Peter operated as a financial drain on the corporate assets. Contained within each count in Joyce's claims were allegations based in part upon § 7-1.1-90.1 as well as common law, and allegations that the acts described in each count amounted to "illegal, oppressive or fraudulent" conduct pursuant to § 7-1.1-90. Her prayers for relief included a demand in the form of a buyout of her corporate shares at fair value by ECC, or, in the alternative, a court-ordered forced liquidation sale of ECC, pursuant to § 7-1.1-90.
On October 21, 1997, a Superior Court motion hearing justice, after hearing on the counter and crossclaim defendants' motions for summary judgment, granted those motions on counts 1, 2, and 5 in the counterclaims and crossclaims. He found that as a matter of law, no coercion had been exerted by the trustees toward Joyce, and that the trustees had acted in good faith reliance on advice of counsel, pursuant to § 7-1.1-33,[8] when they attempted to persuade Joyce to modify the purchase agreement to include all of Jeffrey's outstanding shares. The hearing justice determined that there was no evidence of any disputed material facts concerning whether any corporate assets had been wasted or improperly drained through the payment of the corporate bonuses. The record reveals, however, that the hearing justice failed to address Joyce's claims of oppression under §§ 7-1.1-90 and 7-1.1-90.1.
On June 26, 1998, the defendants moved to dismiss Joyce's remaining counterclaims and crossclaims in a second Superior Court hearing before a different motion justice in that court. The second hearing justice ultimately dismissed with prejudice Joyce's shareholder derivative claims (counts 4 and 7), finding that both causes of action as alleged properly belonged to the corporation, not to Joyce. She also granted summary judgment against Joyce with respect to Joyce's remaining counts (counts 3, 6, and 8), concluding that Joyce had failed to show, in those three counts, the existence of any material issues of *789 disputed facts. Alternatively, she found that the trustees were shielded from liability relating to the purchase-agreement transaction by an exculpatory provision contained in the purchase agreement.[9] The hearing justice, it should be noted, only addressed Joyce's claims made pursuant to §§ 7-1.1-90 and 7-1.1-90.1 to the extent that she believed they were not properly pled as causes of action. Joyce has timely appealed the final judgments entered in both those proceedings, and they have been consolidated here for purposes of this appeal.
II
The Summary Judgment Motions
It is well settled that "[s]ummary judgment is an extreme remedy that should be applied cautiously." Sjogren v. Metropolitan Property and Casualty Insurance Co., 703 A.2d 608, 610 (R.I. 1997) (citing Rotelli v. Catanzaro, 686 A.2d 91, 93 (R.I.1996)). "In reviewing the grant of a summary judgment motion, this Court employs the same standard on review as the trial justice. We must examine all of the pleadings, memoranda and affidavits in the `light most favorable to the party opposing the motion.'" Truk-Away of Rhode Island, Inc. v. Aetna Casualty & Surety Co., 723 A.2d 309, 313 (R.I. 1999) (quoting Splendorio v. Bilray Demolition Co., 682 A.2d 461, 465 (R.I.1996)). We have said on previous occasions that "[i]n reviewing these materials, the motion justice should draw all reasonable inferences in favor of the nonmoving party and must refrain from weighing the evidence or passing upon issues of credibility." Superior Boiler Works, Inc. v. R.J. Sanders, Inc., 711 A.2d 628, 631 (R.I.1998) (citing Rustigian v. Celona, 478 A.2d 187, 189 (R.I.1984)). "Accordingly, if our review of the admissible evidence viewed in the light most favorable to the nonmoving party reveals no genuine issues of material fact, and if we conclude that the moving party was entitled to judgment as a matter of law, we shall sustain the trial justice's granting of summary judgment." Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1225 (R.I.1996) (citing Mallane v. Holyoke Mutual Insurance Company in Salem, 658 A.2d 18, 20 (R.I.1995)).
We are mindful that "[c]orporate officers and directors of any corporate enterprise, public or close, have long been recognized as corporate fiduciaries owing a duty of loyalty to the corporation and its shareholders * * *." A. Teixeira & Co. v. Teixeira, 699 A.2d 1383, 1386 (R.I.1997). This Court has also recognized that, quite apart from officers and directors, the shareholders themselves in a closely held family corporation may have a fiduciary duty toward one another and to the minority shareholders because of the potential for oppression by the majority toward the minority shareholders by simple virtue of majority voting share power, coupled with the absence of a ready market for a closely held corporation's shares. See, e.g., Broccoli v. Broccoli, 710 A.2d 669, 673 (R.I.1998); A. Teixeira & Co., 699 A.2d at 1386-87; Long v. Atlantic PBS, Inc., 681 A.2d 249, 256 n. 8 (R.I.1996); Estate of Meller v. Adolf Meller Co., 554 A.2d 648, 651-52 (R.I.1989). "Such a [fiduciary] relationship is one of trust and confidence and imposes the duty on the fiduciary to act with the utmost good faith." Point Trap Co. v. Manchester, 98 R.I. 49, 54, 199 A.2d 592, 596 (1964).
*790 Recognizing the potential for the freeze out and oppression of minority shareholders, the General Assembly enacted several statutory mechanisms by which such aggrieved shareholders might seek relief. Section § 7-1.1-90, entitled "[j]urisdiction of court to liquidate assets and business of corporation," allows shareholders to seek relief from "illegal, oppressive, or fraudulent" acts of those controlling the corporation:
"(a) The superior court shall have full power to liquidate the assets and business of a corporation:
(1) In an action by a shareholder when it is established that, whether or not the corporate business has been or could be operated at a profit, dissolution would be beneficial to the shareholders because:
(i) The directors or those other persons that may be responsible for management pursuant to § 7-1.1-51(a) are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock; or
(ii) The acts of the directors or those in control of the corporation are illegal, oppressive, or fraudulent; or
(iii) The shareholders are deadlocked in voting power, and have failed, for a period which includes at least two (2) consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors; or
(iv) The corporate assets are being misapplied or are in danger of being wasted or lost; or
(v) Two (2) or more factions of shareholders are divided and there is such internal dissension that serious harm to the business and affairs of the corporation is threatened * * *."
Section 7-1.1-90.1, entitled "[a]voidance of dissolution by stock buyout," provides an alternative to the drastic remedy of liquidation by allowing the corporation the option of buying out the aggrieved shareholder's equity interest at fair value:
"Whenever a petition for dissolution of a corporation is filed by one or more shareholders (subsequently in this section referred to as the `petitioner') pursuant to either § 7-1.1-90 or a right to compel dissolution which is authorized under § 7-1.1-51 or is otherwise valid, one or more of its other shareholders may avoid the dissolution by filing with the court prior to the commencement of the hearing, or, in the discretion of the court, at any time prior to a sale or other disposition of the assets of the corporation, an election to purchase the shares owned by the petitioner at a price equal to their fair value. If the shares are to be purchased by other shareholders, notice shall be sent to all shareholders of the corporation other than the petitioner, giving them an opportunity to join in the election to purchase the shares. If the parties are unable to reach an agreement as to the fair value of the shares, the court shall, upon the giving of a bond or other security sufficient to assure to the petitioner payment of the value of the shares, stay the proceeding and determine the value of the shares, in accordance with the procedure set forth in § 7-1.1-74, as of the close of business on the day on which the petition for dissolution was filed."
By its plain language, § 7-1.1-90.1 thus permits "a corporation, rather than be forced to dissolve by a shareholder dissolution petition, [to] elect to buy out the shareholder's stock." Charland v. Country View Golf Club, Inc., 588 A.2d 609, 610 (R.I.1991). However, fair value must be given for those shares, and "if the fair value cannot be agreed upon, the court shall determine the value of such shares as of the close of business on the day on which the petition for dissolution was filed." Id.
In the case at bar, we believe that the two motion hearing justices erred by *791 failing to give substantive consideration to Joyce's pleadings under §§ 7.1.1-90 and 7-1.1-90.1. "Under Rhode Island law, Rule 8 of the Superior Court Rules of Civil Procedure is a liberal-pleading rule." Bresnick v. Baskin, 650 A.2d 915, 916 (R.I.1994) (citing Haley v. Town of Lincoln, 611 A.2d 845, 848 (R.I. 1992)). "Although a plaintiff is not obligated to `set out the precise legal theory upon which his or her claim is based,' he or she must provide `the opposing party fair and adequate notice of the type of claim being asserted.'" Id. (quoting Haley, 611 A.2d at 848). "The policy behind these liberal pleading rules is a simple one: cases in our system are not to be disposed of summarily on arcane or technical grounds." Haley, 611 A.2d at 848.
We note that each count in Joyce's amended complaint alleged conduct on the part of the cross and counterclaim defendants that was "illegal, oppressive or fraudulent," and demanded relief pursuant to §§ 7-1.1-90.1 and 7-1.1-90. While it is undeniable that these pleadings pursuant to §§ 7-1.1-90 and 7-1.1-90.1 could have been framed with more particularity, we believe that they provided the counter and crossclaim defendants with more than sufficent notice of the type of claim that Joyce was asserting against them in her complaint as well as the relief sought. Because the hearing justices failed to address Joyce's claims under §§ 7-1.1-90 and 7-1.1-90.1, summary judgment as to those counts was not appropriate as a matter of law, and consequently must be considered reversible error.
Further, we are of the opinion that genuine issues of material fact do exist concerning whether Joyce, as a minority shareholder, was oppressed by the actions of the other ECC shareholders pursuant to both common law and statutory law. We note that the term "oppression" in § 7-1.1-90 has not yet been specifically defined by this Court as it relates to close corporations. "Oppression," however, has been defined by other courts to encompass that conduct which deviates from a heightened good faith standard that exists in closely held corporations, a more stringent standard than found in their public counterparts. See, e.g., Tomaino v. Concord Oil of Newport, Inc., 709 A.2d 1016, 1021 (R.I.1998); Donahue v. Rodd Electrotype Company of New England, Inc., 328 N.E.2d 505, 515 (Mass. 1975) (oppressive conduct found where stockholders in a close corporation did not "discharge their management and stockholder responsibilities in conformity with this strict good faith standard"); 19 Am. Jur.2d Corporations, § 2766 (1986) (oppression defined "as burdensome, harsh or wrongful conduct, a visible departure from the standards of fair dealing or fair play * * *. It also constitutes a breach of the fiduciary duty of good faith and fair dealing owed by the majority shareholders to the minority").
Alternatively, a more recent trend has been to define oppressive conduct as conduct "that substantially defeats the `reasonable expectations' held by minority shareholders in committing their capital to the closed corporation." In re Rambusch, 533 N.Y.S.2d 423, 425 (N.Y.App.Div.1988). "This approach takes into account the fact that shareholders in close corporations may have expectations that differ substantially from those of shareholders in public corporations." Muellenberg v. Bikon Corp., 669 A.2d 1382, 1387 (N.J. 1996). The reasonable expectation analysis also recognizes the fact sensitive nature of judicial inquiry into this area and the need to "examine the understanding of the parties concerning their role in corporate affairs." Id.
Likewise, oppressive conduct can manifest itself in a range of actions designed to disadvantage or freeze out a minority shareholder. The majority shareholders "`may refuse to declare dividends; they may drain off the corporation's earnings in the form of exorbitant salaries and bonuses to the majority shareholder-officers and perhaps their relatives * * * [and] they may *792 deprive minority shareholders of corporate offices and of employment by the company.'" Donahue, 328 N.E.2d at 513; Giannotti v. Hamway, 387 S.E.2d 725, 731-32 (Va. 1990). Oppression also has been found to exist where the majority shareholders have engaged in waste of the corporate assets, Mullenberg, 669 A.2d at 1388, or where relevant financial information is withheld from shareholders. See generally 19 Am. Jur. 2d Corporations, § 2767 (1986), for a check list of oppressive acts.
Whether in this case the existence of oppressive conduct is viewed under a heightened good faith or reasonable expectation analysis, we conclude that both motion hearing justices erred by granting summary judgment in favor of the counterclaim and crossclaim defendants on the issue of oppression when genuine issues of material fact were particularly raised by Joyce's submissions of affidavits and pleadings. After reviewing the record before us, we believe a determination of whether Joyce, as a minority shareholder, has been the victim of oppression appropriately can be made only at a hearing in which she will have opportunity to fully develop and present the facts relevant to her claims.
In reaching that conclusion, we are mindful that, as discussed infra, oppression within a closely held corporation can manifest itself as a series of acts or a pattern of conduct by majority shareholders that can have the cumulative, overall effect of freezing out or depriving the minority shareholder of a voice in the corporation, as well as manifesting itself in more distinct, identifiable actions. We note that even in the absence of demonstrable oppression, we have upheld a Superior Court trial justice's determination that a forced buyout of a minority shareholder's shares pursuant to § 7-1.1-90.1 was warranted when there appeared no prospect for harmony between the shareholders and long-term injunctive control of the actions of the majority shareholders was not practicable. A. Teixeira & Co., v. Teixeira, 674 A.2d 407 (R.I.1996). We believe that the hearing justices, however, "missed the forest for the trees" in their inquiry, and instead focused exclusively on each count, to the exclusion of an appropriate broader inquiry into an alleged pattern or series of acts by the ECC majority shareholders that a fact-finder reasonably could conclude therefrom rose to the level of oppression toward Joyce as alleged in her counterclaims and crossclaims. Further, we believe that the hearing justices inappropriately made factual determinations concerning those various issues of fact raised by Joyce. We emphasize that the correct judicial role in a summary judgment motion hearing is simply to identify disputed material fact issues, and not to resolve them. Superior Boiler Works, Inc. v. R.J. Sanders, Inc., 711 A.2d 628, 632 (R.I.1998).
Viewing the evidence here in the light most favorable to Joyce, we are persuaded that Joyce has demonstrated at least an arguable case that oppression against her and Jeffrey's estate existed within ECC, and has demonstrated that more than one reasonable inference could be drawn from the various actions and pattern of conduct manifested by ECC and its officers and directors. Among Joyce's allegations that present several material disputed factual questions are (1) whether the ECC directors, officers or stockholders acted coercively violated Joyce's reasonable expectations as a minority shareholder or otherwise manifested bad faith in their dealings with her relating to the purchase agreement, given the existence of the contradictory legal opinions by counsel for one of the trustees and counsel for ECC about the scope of the purchase agreement and the trial justice's specific finding and the final judgment in the unappealed declaratory judgment portion of this litigation; (2) whether the bonuses awarded were excessive, given the discrepancy of the bonus award between the minority shareholder and the majority faction, given the IRS's *793 subsequent disallowance of part of that bonus amount, and in light of ECC's decision not to declare dividends to stockholders; (3) whether ECC breached its fiduciary duty toward Joyce by terminating her employment in retaliation for her continued participation in the litigation against ECC, and (4) whether the corporate records and books provided to Joyce were adequate for proper purposes pursuant to § 7-1.1-46, given the evidence presented of their apparent paucity and questionable accuracy. Further, we conclude that a material factual issue exists as to the scope of the exculpatory clause in the purchase agreement and whether that clause shielded any of the crossclaim and counterclaim defendants in their roles as directors, officers or shareholders relating to the stock purchase-agreement transaction.
III
The Motion to Dismiss
Two of the counts in Joyce's complaint (counts 4 and 7) alleged shareholder derivative-type actions relating to the payment of bonuses to Peter and Paul and the purchase of the $400,000 land parcel. Joyce asserted that by these two actions, the majority shareholders caused ECC to waste or misapply corporate assets and failed to seek recovery of those amounts. The second hearing justice, acting on the cross and counterclaim defendants' motions to dismiss, found that as derivative claims, both counts were improperly pleaded pursuant to Rule 23.1 of the Superior Court Rules of Civil Procedure. The cross and counterclaim defendants had filed Super.R.Civ.P. 12(b)(6) motions to dismiss those counts and also filed motions for summary judgment on the same counts. At the motion hearing, the hearing justice, without objection by either counsel, decided the motions pursuant to the standard employed in determining a Rule 12(b)(6) motion to dismiss. She concluded "based upon the standards for granting a 12(b)(6) motion, the court grants the cross and counterclaim defendants' motions to dismiss." Cf. Cipolla v. Rhode Island College Board of Governors for Higher Education, 742 A.2d 277, 280 (R.I.1999) (holding that a motion to dismiss must be made strictly on the pleadings, and a Rule 12 motion to dismiss that relies on matters outside the pleadings must be treated as a motion for summary judgment).
In reviewing a hearing justice's grant or denial of a Rule 12(b)(6) motion to dismiss, we undertake the same analysis as used by the hearing justice. "A motion to dismiss under Rule 12(b)(6) will only be granted `when it is clear beyond a reasonable doubt that the plaintiff would not be entitled to relief from the defendant under any set of facts that could be proven in support of the plaintiff's claim.' " Bruno v. Criterion Holdings, Inc., 736 A.2d 99, 99 (R.I.1999) (quoting Folan v. State, 723 A.2d 287, 289 (R.I.1999)). "In reviewing a motion to dismiss under Rule 12(b)(6), we accept the allegations of the plaintiff's complaint as true and view them in the light most favorable to the plaintiff." Id. (citing Folan, 723 A.2d at 289).
After reviewing the record before us, we are of the opinion that the hearing justice properly dismissed the derivative claims. Rule 23.1 provides in pertinent part:
"In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege that the plaintiff was a shareholder or member at the time of the transaction of which the plaintiff complains or that the plaintiff's share or membership thereafter devolved on the plaintiff by operation of law. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and, if necessary, *794 from the shareholders or members, and the reasons for the plaintiff's failure to obtain the action or for not making the effort."
We note in particular that Rule 23.1 requires that the complaint allege with particularity the efforts made to secure the desired corporate action or the reasons why such efforts were not made. Although such efforts may indeed prove ultimately futile, the plain language of the rule requires that a plaintiff demonstrate that all avenues of redress are foreclosed before a derivative suit may be brought. Consequently, because Joyce's claims chronicle no such attempts to secure action by ECC and set forth no reasons for her failure to demand such corrective action, those counts were properly dismissed pursuant to Rule 12(b)(6).
More problematic, however, is the hearing justice's decision to dismiss those derivative claims with prejudice. Although it is well settled that leave to amend a defective pleading is committed to the sound discretion of the hearing justice, see Babbs v. John Hancock Mutual Life Insurance Co., 507 A.2d 1347, 1349 (R.I.1986), "we have consistently held that Rule 15(a) liberally permits amendment absent a showing of extreme prejudice." Wachsberger v. Pepper, 583 A.2d 77, 78 (R.I.1990) (citing Inleasing Corp. v. Jessup, 475 A.2d 989, 993 (R.I.1984)). Further, we have held that the burden rests on the party opposing the motion to amend to demonstrate the existence of such extreme prejudice. Babbs, 507 A.2d at 1349. After reviewing the hearing record, we are of the opinion that the counterclaim and crossclaim defendants failed to show in any manner how they would be substantially prejudiced by Joyce's amending of her derivative claims. Absent such a showing, we conclude from the record that the hearing justice in reaching her decision was apparently influenced by what counsel for the counterclaim and crossclaim defendants had asserted was the first hearing justice's position and holding foreclosing any further amendments to the case pleadings. Counsel informed the hearing justice that the first hearing justice had warned the parties that he would deny any future attempts to amend the pleadings that could prejudice the parties and delay the litigation.[10] However, we have said that mere delay is insufficient reason for denying a party's request to amend his or her pleading to avoid a Rule 12(b)(6) dismissal. Inleasing Corp., 475 A.2d at 993.
IV
Conclusion
In remanding the papers in this case to the Superior Court, we note "[i]f ever there was a case in which a remedy should be fashioned, this is such a controversy." Cheetham v. Cheetham, 121 R.I. 337, 342, 397 A.2d 1331, 1334 (1979). We believe that these notable words ring particularly true for the case now before us. For purposes of severing the tangled Gordian knot that has been strangling the litigants in this case for more than five years, this Court now looks to its inherent supervisory and revisory powers, pursuant to Cheetham, for Alexander the Great's proverbial sword such that we may fashion a fair, yet appropriately sharp-edged remedy to cut through this protracted family feud and thus achieve a final and fair conclusion to this litigation.
Accordingly, pursuant to our plenary authority, our remand is made with the following directions to the Superior Court to proceed:
(a) To conduct an evidentiary hearing to determine whether Joyce is entitled to dissolution of ECC pursuant to § 7-1.1-90, or in the alternative, to determine whether Joyce is entitled to a buyout of her shares *795 by ECC pursuant to § 7-1.1-90.1. In the event that the hearing justice concludes that ECC is to be dissolved, he or she shall appoint a receiver to effect such liquidation and to pay a liquidation dividend to each shareholder. Any statutory interest on Joyce's liquidation dividend will accrue from November 30, 1994, being the date of the initial demand for liquidation of ECC made by both the estate of Jeffrey Hendrick and Joyce Hendrick in count 8 of their respective counterclaims and count 1 of their respective crossclaims. See A. Teixeira & Co., 674 A.2d at 408; Charland, 588 A.2d at 610.
In the alternative, if a buyout of Joyce's shares by ECC is found to be warranted, the trial justice is instructed to appoint an appraiser to determine the fair value of such shares. To that fair value amount shall be added statutory interest computed from November 30, 1994. The combined total of both fair value and interest shall constitute the final purchase price for Joyce's shares.[11]
(b) The judgment dismissing Joyce's derivative claims (counts 4 and 7) with prejudice is to be vacated, and the dismissal of those claims will be noted as having been dismissed without prejudice with leave to amend.
(c) If the hearing justice determines that Joyce is not entitled to dissolution of ECC pursuant to § 7-1.1-90 or to a buyout of her shares by ECC pursuant to § 7-1.1-90.1, we direct that Joyce's common law and statutory claims in her amended complaint shall then proceed to trial and shall be accorded priority status on the appropriate trial calendar.
For the foregoing reasons, the plaintiff's consolidated appeal is sustained, and the judgments of the Superior Court appealed from are vacated. The papers in this case are remanded to the Superior Court for further proceedings in accordance with this opinion.
NOTES
[1] Because most of the parties in this litigation share the last name of Hendrick, we will refer to those parties by their first names and no disrespect is intended. As to Joyce Hendrick, there is no material distinction or significance between her status as an individual plaintiff and as executrix of the estate of her late husband, Jeffrey, and thus for purposes of convenience and clarity, we will hereinafter refer to her without designation of her particular capacity.
[2] Jeffrey's health had been in decline, and his subsequent death apparently was not unexpected. At the time of the purchase agreement, he owned 203 shares of Class A common shares and 1,858 Class B common shares.
[3] Joyce asserts that the decision to list Paul as sole plaintiff and to list Peter as a codefendant was a mutual decision among the trustees and the directors, including Peter.
[4] Rolland Jones died in October 1994.
[5] Paul died on April 9, 1998, and no representative of his estate has yet been substituted as a party.
[6] That judgment was never appealed.
[7] Joyce has not appealed the dismissal of her malicious prosecution and abuse of process claims. She, however, maintains those counts on appeal, insofar as those claims relate to the oppressive pattern alleged against the counterclaim and crossclaim defendants.
[8] General Laws 1956 § 7-1.1-33 provides in pertinent part:
"(b) A director shall discharge his or her duties as a director, including his or her duties as a member of a committee:
(1) In good faith;
* * *
(c) In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
* * *
(2) Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person's professional or expert competence * * *."
[9] Section 8.05 of the purchase agreement provided:
"The Trustees shall have no other duties or obligations hereunder than to hold and receive the proceeds of the insurance and to hold and deliver the Stock Certificates upon receipt of the purchase price therefor. Except as provided in this paragraph, the Corporation and the Stockholders hereby release the Trustees of any and all claims under this Agreement or otherwise. The Trustees shall not be required to take any action for collection of insurance proceeds or against the Corporation for payment of any balance of the purchase price unless indemnified to their mutual satisfaction by the Corporation and/or Stockholders in their discretion."
[10] Actually what the first hearing justice had said was: "And I will not I don't care what the contents of it was, I will not accept anything late in this matter beyond today's date from anybody."
[11] We are mindful that § 7-1.1-90.1 provides for statutory interest on the share purchase price to accrue "from the date of the filing of the election to purchase the shares * * *." Given the protracted nature of the proceedings before us, however, and pursuant to our inherent power to fashion a fair and conclusive remedy, Cheetham v. Cheetham, 121 R.I. 337, 342, 397 A.2d 1331, 1334 (1979), we believe that the date of the initial demand for ECC's dissolution serves as the most appropriate historical event in these proceedings for the commencement of the accrual of statutory interest.
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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/1517556/
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755 A.2d 482 (2000)
2000 ME 23
STATE of Maine
v.
Marc TARMEY.
Supreme Judicial Court of Maine.
Submitted on Briefs January 14, 2000.
Decided February 10, 2000.
Norman R. Croteau, District Attorney, Craig E. Turner, Deputy Dist. Atty., Auburn, for State.
Michael Whipple, Esq., Law Offices of William Maselli, Auburn, for defendant.
Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and CALKINS, JJ.
ALEXANDER, J.
[¶ 1] Marc Tarmey appeals the judgment of the Superior Court (Androscoggin County, Delahanty, J.) entered on a jury verdict finding him guilty of theft by unauthorized use of property pursuant to 17-A M.R.S.A. § 360(1)(A) (1983).[1] Tarmey argues *483 on appeal that the court erred in instructing the jury that he could be found guilty even if he did not intend to take, operate, or exercise control over a motor vehicle without the owner's consent at the time he first obtained possession of the vehicle. We affirm the judgment of conviction.
I. BACKGROUND
[¶ 2] On August 20, 1998, Marc Tarmey asked his son's 18-year-old girlfriend, Heather Jeselskis, for a favor. He gave her $80 or $90 and asked her to rent a truck for him. Tarmey was planning to leave the State in the rented truck in order to avoid the consequences of an operating under the influence charge and an operating after suspension charge acquired while on probation for burglary and theft convictions. Jeselskis rented the truck for Tarmey and drove it to Tarmey's house, where Tarmey resided with three of his five children. The Tarmeys loaded the truck with Tarmey's washer and dryer, which he planned to sell for funds, two mattresses on which the family could sleep, and the family members' personal items. Because he was concerned that the police would be looking for him, Tarmey asked Jeselskis to drive the truck to a rendezvous point where he would take control of the truck. To transport himself to the rendezvous point, Tarmey obtained Jeselskis's consent to use her 1992 Ford Escort. Tarmey's sons, Chris and Phil, rode with Jeselskis in the rented truck. His daughter, April, rode with Tarmey in the Escort. The police stopped the truck, apparently in search of Tarmey. Tarmey saw that the police had stopped the truck and, abandoning his boys, he left the State with his daughter in Jeselskis's Escort.
[¶ 3] April testified that they had no particular destination in mind, only that they "thought about different . . . places" and would "pretty much . . . get there first and then . . . decide." During the course of their wanderings, Tarmey would periodically stop and work construction in order to earn money. According to April, Tarmey wanted to show her places "like the Redwood Forest" and "like Anaheim," and "he taught [her] a lot" while she was otherwise unenrolled in school. Tarmey and April visited "a lot of places" in the Escort, including New York, Illinois, Iowa, the Dakotas, Oregon, and California before deciding to go to "Uncle Joe's" in Florida.
[¶ 4] Sometime in late September or early October, Tarmey and April drove to Maine to pick up Chris and Phil and bring the boys back to Florida. Shortly after returning to Florida, Tarmey was apprehended by the police. Jeselskis's father paid an auto carrier to transport the Escort back to Maine. According to Jeselskis, the Escort had approximately 30,000 additional miles on it when she recovered it, two months after it was taken.
[¶ 5] Tarmey was indicted by the grand jury for criminal restraint by a parent pursuant to 17-A M.R.S.A. § 303 (1983),[2] and for unauthorized use of property pursuant to 17-A M.R.S.A. § 360. After trial, the jury returned its verdict acquitting Tarmey of criminal restraint by a parent and convicting him of unauthorized use of property. The court sentenced Tarmey to 364 days and imposed a restitution order in the amount of $3,000 to compensate Jeselskis for the damage and depreciation to her Escort. Tarmey filed a timely notice of appeal.
II. DISCUSSION
[¶ 6] This appeal presents a single legal issue: whether 17-A M.R.S.A. § 360(1)(A) *484 requires the State to prove that a defendant had the intent to use or exercise control over property without the owner's consent at the moment possession was initially obtained.
[¶ 7] Tarmey does not claim that Jeselskis gave him consent to take her Escort on his extended travels. Rather, Tarmey contends that, had the court instructed the jury properly, the jury would not have convicted him because Jeselskis's testimony clearly indicated that she consented to Tarmey's initial possession of the Escort.
[¶ 8] The court instructed the jury as follows:
As to the second count ... Maine law says a person is guilty of theft if, knowing that he does not have the consent of the owner, he takes, operates, or exercises control over a vehicle .... The State must prove to you beyond a reasonable doubt that Mr. Tarmey took, operated, or exercised control over a vehicle, that this vehicle did not belong to him, but belonged to somebody else, in this case, specifically, Heather Jeselskis, and at the time he knew that he did not have the consent of Heather Jeselskis.
[¶ 9] We review jury instructions to ensure that they correctly informed the jury of the governing law. See State v. Ashby, 1999 ME 188, ¶ 3, 743 A.2d 1254, 1256. The interpretation of a statute is a question of law and is reviewed de novo by this Court. See State v. Raymond, 1999 ME 126, ¶ 6, 737 A.2d 554, 555. In order to effectuate the Legislature's intent, we look to the plain meaning of the language used in a statute, see id., keeping in mind that we must construe penal statutes strictly so that a criminal offense is not created by inference or implication, see Ashby, 1999 ME 188, ¶ 6, 743 A.2d at 1257.
[¶ 10] The common law crime of larceny required the State to prove that the defendant had larcenous intent at the time he or she took possession of the property. See Clewley v. State, 288 A.2d 468, 474 (Me.1972); State v. Boisvert, 236 A.2d 419, 423 (Me.1967). However, the Maine Criminal Code "was intended to be a complete codification of common law principles," and the idiosyncracies of common law crimes no longer govern to the extent they conflict with the Code. See State v. Poole, 568 A.2d 830, 831 (Me.1990).
[¶ 11] In Raymond, we considered an appeal from convictions for burglary of a motor vehicle and theft by unauthorized use of property. We held that proof of the elements necessary to support the conviction for theft by unauthorized use of a motor vehicle also supported the conviction for burglary of a motor vehicle pursuant to 17-A M.R.S.A. § 405 (1985 & Supp.1999). See Raymond, 1999 ME 126, ¶¶ 6-9, 737 A.2d at 555-56. In response to the defendant's argument that the Legislature could not have intended to make proof of theft by unauthorized use of a motor vehicle tantamount to proof of burglary of a motor vehicle, because every violation of the former would necessarily be a violation of the latter, we noted:
A violation of section 360(1)(A) does not necessarily result in a violation of section 405. A person can enter a vehicle with the owner's consent, but then take the vehicle for an extended drive that the owner did not authorize and violate section 360(1)(A), while not violating section 405.
Id., ¶ 9, 737 A.2d at 556.
[¶ 12] The language of section 360(1)(A), when redacted to eliminate language irrelevant to the facts of this case, reads, "A person is guilty of theft if ... [k]nowing that he does not have the consent of the owner, he ... operates or exercises control over a vehicle." 17-A M.R.S.A. § 360(1)(A). The plain meaning of this language indicates that a person can be convicted of theft by unauthorized use of a motor vehicle despite the fact that he or she initially had permission to use the vehicle, if the control exercised over *485 the vehicle extends beyond the use originally permitted. Accordingly, we find no error in the court's instruction.
The entry is:
Judgment affirmed.
NOTES
[1] Title 17-A, section 360(1)(A) provides:
§ 360. Unauthorized use of property
1. A person is guilty of theft if:
A. Knowing that he does not have the consent of the owner, he takes, operates or exercises control over a vehicle, or, knowing that a vehicle has been so wrongfully obtained, he rides in such vehicle;
. . . .
3. It is a defense to a prosecution under this section that the actor reasonably believed that the owner would have consented to his conduct had he [or she] known of it.
17-A M.R.S.A. § 360(1)(A) & (3) (1983).
[2] The case at trial involved an issue of whether Tarmey properly had custody of April during their travels.
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755 A.2d 818 (2000)
Ruben DILONE
v.
ANCHOR GLASS CONTAINER CORPORATION et al.
No. 98-439-Appeal.
Supreme Court of Rhode Island.
July 12, 2000.
*819 Present: WEISBERGER, C.J., LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.
William Filippo, Providence, for plaintiff.
Paul A. Anderson, James A. Ruggieri, Carol Nicholson Glick, Providence, for defendant.
OPINION
PER CURIAM.
This appeal arises from a products liability action in which the plaintiff, Ruben Dilone (Dilone), suffered severe injuries when he opened a bottle of Veryfine juice that was defective and shattered in his hands. A jury returned a $75,000 award in favor of Dilone. Dilone subsequently filed a motion for a new trial, or in the alternative an additur, on the ground that the award for pain and suffering was inadequate. The trial justice ordered a new trial on the issue of damages, or in the alternative an additur of $50,000. The defendants, Northbrook Property and Casualty Company (succeeding the interest of Anchor Glass Container Corp., d/b/a Diamond Bathhurst Glass Co.) (hereinafter Northbrook), New England Apple Products Co., Inc., d/b/a Veryfine and Tropic Juice Co., Inc. (collectively Veryfine), and Doris Espinal, d/b/a Espinal Market (Espinal Market), have appealed. Veryfine also appeals the trial justice's denial of its motion for judgment as a matter of law. The parties were directed to appear and show cause why the issues raised in this appeal should not be summarily decided. After hearing the arguments of counsel, and examining the memoranda submitted7/13/00 by the parties, we are satisfied that cause has not been shown and we shall proceed to decide the case at this time.
Facts and Travel
On July 2, 1987, Dilone lacerated his right wrist while opening a bottle of Veryfine juice at the Espinal Market in Providence, Rhode Island. Soon thereafter, Dilone was driven to St. Joseph Hospital, where the laceration was stitched. As a result of the incident, Dilone's median nerve in his right wrist was damaged, causing pain and a loss of feeling in his thumb, index finger, middle finger, and half of the ring finger on his right hand. Dilone underwent three surgeries and extensive therapy in an effort to correct the damage to the nerve, at a total cost of more than $24,000 for medical expenses. At trial, Dilone's treating physician, Leonard Hubbard, M.D. (Dr. Hubbard), testified that the three surgeries were unsuccessful. He testified that during one of the surgeries, the sural nerve had been harvested from his right leg and implanted in his right wrist in an attempt to revive the normal sensation in his wrist. Dilone *820 testified that he has experienced a cold sensation in these fingers since the incident, and has worn a TENS unit to help alleviate the pain. Doctor Hubbard further testified that Dilone has a permanent impairment rating of thirty-nine percent of the upper extremity, or twenty-three percent whole body impairment.
Dilone also presented the testimony of Professor Bar-on Braun Isa (Professor Isa), an engineer and physicist, who testified that the bottle had broken as a result of twisting the cap top. Professor Isa further testified that the thickness on the side wall of the glass bottle was well below the standards for thickness of glass established by Anchor Glass, and that the thin point of the glass was exactly where the fracture began.
At the close of the evidence,[1] Veryfine moved for judgment as a matter of law, contending that Dilone had failed to prove that the bottle was in a defective condition when it left Veryfine. The motion was denied, and thereafter, the jury returned a verdict of $75,000 for Dilone. Subsequently, Veryfine renewed its motion for judgment as a matter of law, and Dilone filed a motion for a new trial or additur on the issue of damages. The trial justice denied Veryfine's motion, concluded that the jury award compensating Dilone for pain and suffering was inadequate, and granted a new trial on the issue of damages unless defendants agreed to an additur of $50,000. Additional facts will be supplied insofar as they are pertinent to the issues raised in this appeal.
Discussion
On appeal, the defendants argued that the trial justice erred in granting Dilone's motion for a new trial on damages or in the alternative an additur of $50,000. They contended that based upon the evidence presented at trial, the verdict of $75,000 was neither unresponsive to the controversy, nor did it shock the conscience of the court. Specifically, defendants argued that the nature and extent of Dilone's injuries were seriously questioned, particularly Dilone's "alleged continuing pain and suffering." They argued that the award of $75,000 clearly compensated Dilone for his medical bills, which were roughly $25,000. They also contended that because Dilone had no meaningful employment at the time of the accident, lost wages and earning capacity were not claimed, therefore $50,000 represented the jury's award for pain and suffering.[2] In support of their position, defendants argued that the jury may7/13/00 have found that other injuries that occurred both before and after the incident may have contributed to Dilone's pain. Further, they suggested that Dilone's credibility was suspect because of his criminal record and altercations he had with police officers after the accident, which indicated his hand could be used in an aggressive manner. Further, defendants pointed to the testimony of Dr. Hubbard, which suggested that Dilone had full range of motion and only slightly diminished grip strength. Finally, the defendants argued that an initial impairment test found only a 10 percent upper-extremity disability and a 6 percent whole person disability, and therefore the jury could have chosen to accept this initial finding.
This Court has consistently held that "a damage award may be disregarded by the trial justice and a new trial granted only if the award shocks the conscience or indicates that the jury was influenced by passion or prejudice or if the award demonstrates that the jury proceeded from a *821 clearly erroneous basis in assessing the fair amount of compensation to which a party is entitled." Shayer v. Bohan, 708 A.2d 158, 165 (R.I.1998) (quoting Hayhurst v. LaFlamme, 441 A.2d 544, 547 (R.I.1982)). Further, the standard of review on a motion for a new trial is also well settled; the trial justice must review the evidence passing upon the weight of the evidence and the credibility of the witnesses. Pimental v. D'Allaire, 114 R.I. 153, 157-58, 330 A.2d 62, 64-65 (1975) (citing Dawson v. Rhode Island Auditorium, Inc., 104 R.I. 116, 122-23, 242 A.2d 407, 412 (1968)).
We are satisfied that the trial justice properly applied this standard in concluding that the award of $75,000 was inadequate. In Hayhurst, this Court held that "motions for additur, remittitur, or a new trial are to be reviewed by the trial justice from the prospective of a seventh juror," and "[a]fter sifting through the material evidence and passing on the credibility of the witnesses, the trial justice must then refer to those aspects of the case which have prompted his ruling." 441 A.2d at 547. In so doing, "this7/13/00 [C]ourt will accord great weight to the trial justice's determination concerning the adequacy of the jury's award." Id. (citing Kelaghan v. Roberts, 433 A.2d 226, 229 (R.I.1981); Roberts v. Kettelle, 116 R.I. 283, 301-02, 356 A.2d 207, 218 (1976)).
Here, the trial justice, in a detailed bench decision, stated with specificity the evidence that prompted his decision. First, he noted that after reviewing the medicals filed in the case at some length, "the overwhelming credible testimony established that the particular bottle * * * was defective." He then stated the standard that the court must adhere to before disturbing a jury's finding as it relates to damages. After noting that he had reviewed Dilone's testimony about his injuries, he remarked that Dilone, according to the life tables introduced into evidence, had a life expectancy of 34.2 years, and that this was material and relevant evidence "because of the medical determination that [Dilone] had a permanent partial impairment of the use of the upper right extremity." Finally, we note that the trial justice thoroughly summarized the evidence, including the testimony of Dilone, the photographs that depicted scarring, the medical bills, the extensive medical history, and numerous reports of the doctors. The trial justice concluded by remarking that the jury, in assessing the damages for pain and suffering, erred. He stated that,
"in the Court's judgment, the past ten years of pain and suffering for the nature of the injury that he sustained, a nerve injury, for the pain associated with the nerve grafts, and for the continued use of the TENS unit to assist in minimizing pain, and for future pain and suffering for 34.2 years, the sum of $50,000 shocks my conscience. It is grossly inadequate. * * * [T]here is only two possibilities to explain the jury's award of $50,000 for pain and suffering and future pain and suffering, permanent partial impairment. One of those explanations is that the jury misconceived the evidence, or the significance of the evidence, or possibly the jury considered that because the defendant had a criminal record * * * they ignored the evidence. * * * I rather believe that the jury, in the time allotted, misconceived the significance of the injuries sustained and the resulting pain and suffering endured."
In light of the record, we concur with the decision of the trial justice that $50,000 as compensation for pain and suffering is wholly inadequate. The trial justice was within his discretion, based on that amount and the duration of plaintiff's pain and suffering, to order a new trial, or in the alternative, an additur of $50,000. We are satisfied that the trial justice's additur of $50,000 for pain and suffering in this case will provide Dilone adequate compensation and render substantial justice.
Finally, defendant Veryfine maintained that the trial justice erred in rejecting *822 its motion for judgment as a matter of law because Dilone failed to prove that the bottle was in a defective condition when it left Veryfine. Specifically, Veryfine contended that Dilone did not establish that the bottle was in an unreasonably dangerous condition, and therefore Dilone failed to meet the standard of proof for a products liability action enunciated in Ritter v. Narragansett Electric Co., 109 R.I. 176, 283 A.2d 255 (1971). We disagree.
In initially denying the motion, the trial justice found that:
"The defect, on the evidence before the jury, took place at the time the bottle was formed; perhaps in the cooling process, but it existed from the time the bottle was shaped and the cooling process took place. There is no evidence at all that anything in the bottle other than the thinness of one side of the bottle caused the bottle to fail when the consumer attempted to open it using clockwise and counter-clockwise torque to remove the cap. There is no evidence before this jury that while in possession of New England Apple Products Company or in possession of Espinal Market that they caused damage to the bottle which would relieve one prior in time having custody and control of that bottle from potential liability."
Veryfine contends that the testimony of Professor Isa, proffered by Dilone, did not satisfy Dilone's burden of establishing that the juice bottle was unreasonably dangerous, only that the bottle was "probably quite unsafe." Specifically, Professor Isa testified that the bottle,
"was defective according to the specifications and it's most probably dangerous to someone because this is a very thin it's thinner than your glasses that you're wearing and your glasses don't get any twist or torque applied to them while you're wearing them. So, yes, it's probably quite unsafe to use this bottle."
Although Professor Isa did not explicitly refer to the defect in the bottle as "unreasonably dangerous," as Veryfine contends she should have done, she did state that the bottle was "quite unsafe" and defective. We have held that there are no magic words that must be used by an expert witness to trigger liability, and we have consistently declined to exalt form over substance. See Gallucci v. Humbyrd, 709 A.2d 1059, 1066 (R.I.1998). In Gallucci, we rejected the notion that lawyers and their expert witnesses "must recite precisely constructed talismanic incantations." Id. Here, Dilone's attorney's questioned Professor Isa about whether the bottle was so defective that it was unreasonably dangerous to a user. In response, Professor Isa, although not stating precisely that the defect was unreasonably dangerous, answered the question in the affirmative, stating it was in fact defective and "quite unsafe." We are satisfied that the trial justice was correct in denying Veryfine's motions for judgment as a matter of law because the evidence established by a clear preponderance that the bottle was defective, and therefore Veryfine was strictly liable.
Further, we are satisfied that, in the context of this case, a plaintiff does not have to present evidence that every defendant in the chain of commerce tampered with the product or contributed to the defect. Because defendant Veryfine failed to put forth any evidence that something other than the thinness of one side of the bottle caused the bottle to shatter when the consumer attempted to open it, the trial justice was correct in denying Veryfine's motions for judgment as a matter of law.
Conclusion
For the foregoing reasons, the defendants' appeals are denied, the order appealed from is affirmed, and the case is remanded to the Superior Court for a new trial on the issue of damages unless the defendants, within fourteen days subsequent to the filing of this opinion, consent to the additur awarded by the trial justice.
NOTES
[1] We note that the defendants did not put on any evidence.
[2] In their briefs, defendants Espinal Market and Northbrook contended that the total amount of the judgment pursuant to the trial justice's order would be $231,250. In reaching this figure, Espinal Market includes the additur and interest. However, we note that the trial justice did not include, nor was it proper to include, the interest that had accrued in determining what amount would adequately compensate Dilone for his pain and suffering.
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755 A.2d 1034 (2000)
In re Philip L.K. LEE, Respondent.
A Member of the Bar of the District of Columbia Court of Appeals.
No. 97-BG-195.
District of Columbia Court of Appeals.
Argued April 4, 2000.
Decided July 13, 2000.
*1035 Marion E. Baurley, Washington, DC, for respondent.
Michael S. Frisch, Senior Assistant Bar Counsel, with whom Leonard H. Becker, Bar Counsel at the time the brief was filed, was on the brief, for the Office of Bar Counsel.
Before TERRY, STEADMAN and RUIZ, Associate Judges.
PER CURIAM:
The Board on Professional Responsibility ("Board") recommends that Philip L.K. Lee be disbarred from the practice of law in the District of Columbia as a result of his conviction for conspiring to engage in a monetary transaction in property believed to be derived from illegal drug trafficking, 18 U.S.C. §§ 1956(h), 1957 (1994). The Board contends that this crime on its facts involved moral turpitude within the meaning of D.C.Code § 11-2503(a) (1995). Respondent asserts that it did not involve moral turpitude and that suspension is a more appropriate sanction.
In May 1995, respondent accepted $30,000 from the purported agent of a South American drug cartel seeking to launder money. He forwarded checks to the same person on six occasions between August 1995 and February 1996. In fact, unbeknownst to respondent, the purported agent was an FBI cooperating witness. On August 8, 1996, respondent pled guilty in United States District Court for the Northern District of Georgia to violating 18 U.S.C. § 1956(h), the conspiracy provision of the federal money laundering statute. He was sentenced to 15 months imprisonment, three years supervised release, 200 hours community service, and $22,400 restitution.
Respondent's conviction was brought to the attention of this court, and we referred the matter to the Board to determine whether respondent's crime involved moral turpitude.[1] Relying on an earlier decision, In re Denker, Bar Dkt. No. 482-95 (B.P.R.Rep. July 24, 1996), the Board concluded that money laundering was not a crime of moral turpitude per se and so referred the matter to a Hearing Committee to determine whether it was a crime of moral turpitude under the facts and circumstances of the case. See In re Colson, 412 A.2d 1160, 1167 (D.C.1979) (en banc) (providing for a hearing where the crime does not involve moral turpitude per se).
Based on its factual findings, the Hearing Committee concluded, and the Board agreed, that respondent's crime was one of moral turpitude. In reaching this conclusion, both bodies relied predominantly on previous disciplinary actions in which attorneys were disbarred after being convicted of crimes involving drug trafficking. The Board reasoned that money laundering is "an integral part of the stream of commerce in illegal drugs."[2]
*1036 We adopt the Board's recommendation. See In re Regent, 741 A.2d 40, 42 (D.C.1999) ("the Court shall . . . adopt the recommended disposition of the Board unless to do so would foster a tendency toward inconsistent dispositions for comparable conduct or otherwise would be unwarranted") (quoting D.C. Bar R. XI, § 9(g) (1998)). Historically, this court has consistently disbarred attorneys involved with drug trafficking. Possession of a controlled substance with intent to distribute is a crime of moral turpitude per se, mandating disbarment. See In re Dechowitz, 741 A.2d 1061, 1061 (D.C.1999); In re Campbell, 572 A.2d 1059, 1060-61 (D.C. 1990); In re Roberson, 429 A.2d 530, 531 (D.C.1981) (en banc). Further, where drug trafficking is involved, even an attorney who has never actually possessed the drugs may be disbarred. See In re Robbins, 678 A.2d 37 (D.C.1996) (use of a telephone in attempting to possess cocaine with intent to distribute).[3]
It is true that, unlike the attorneys in the aforementioned cases, respondent's involvement in the drug trafficking scheme was less direct and would not have required him to be involved in the possession or distribution of any controlled substance. Nonetheless, we agree with the Board that drug trafficking, especially on the large scale suggested by the purported agent in this case, is sufficiently egregious that respondent's knowing and willing involvement in it, albeit only in integral financial aspects, evidences moral turpitude. Cf. Office of Disciplinary Counsel v. Williams, 66 Ohio St.3d 71, 609 N.E.2d 149, 150 (1993) ("Williams knowingly conspired to launder what he thought to be profits from illegal drug sales. Such conduct speaks for itself. Disbarment is the only appropriate sanction.").
Finally, we reject respondent's contention that there is not substantial evidence to support the Board's finding that he knew the alleged source of the money. See Regent, supra, 741 A.2d at 42 ("the Court shall accept the findings of fact made by the Board unless they are unsupported by substantial evidence of record"). Respondent pled guilty to an information which specifically asserted that he believed the money to be derived from unlawful drug activity. He expressly stated in his plea proceeding that he knew the money was alleged drug proceeds. Moreover, after viewing an FBI videotape of the May 1995 meeting at which respondent received the $30,000, the Board "emphatically" agreed with the Hearing Committee that respondent's testimony that he had not been paying attention at the meeting when the source of the money was mentioned was not credible.[4]
Accordingly, it is ORDERED that respondent Philip L.K. Lee be, and he hereby is, disbarred from the practice of law in the District of Columbia, nunc pro tunc to May 26, 1998. See supra note 1.
NOTES
[1] In the same order, we forthwith suspended respondent pursuant to D.C. Bar R. XI, § 10(c). On May 26, 1998, respondent filed the requisite affidavit under § 14(g).
[2] The Board also concluded that respondent's conduct violated Rule 8.4(b) of the D.C. Rules of Professional Conduct, which provides that it is professional misconduct for a lawyer to "[c]ommit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects."
[3] In Robbins, supra, as in the instant case, the Board concluded that the crime was not one of moral turpitude per se but was on the facts. 678 A.2d at 38. This court did not specifically address the per se issue in Robbins, and there is similarly no need to do so here.
[4] Respondent also contends there was not substantial evidence to support the Board's finding that he intended to profit from the transaction by re-loaning the money at a higher interest rate. The record is somewhat unclear on this issue, but we need not decide it conclusively since it is not determinative of the result.
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755 A.2d 421 (2000)
Keith W. YANCEY, Appellant,
v.
UNITED STATES, Appellee.
Nos. 86-CF-696, 94-CO-1420.
District of Columbia Court of Appeals.
Argued April 9, 1998.
Decided June 15, 2000.
*423 Marion E. Baurley, Washington, DC, appointed by this court, for appellant.
Karen L. Melnik, Assistant United States Attorney, for appellee. Mary Lou Leary, United States Attorney at the time the brief was filed, and John R. Fisher, Mary-Patrice Brown, and Carmen R. Kelley, Assistant United States Attorneys, were on the brief for appellee.
Before WAGNER, Chief Judge, TERRY, Associate Judge, and PRYOR, Senior Judge.
PER CURIAM:
Following a trial by jury, appellant Keith Yancey was convicted of first-degree burglary while armed and first-degree felony murder while armed. Appellant's later motion for collateral relief pursuant to D.C.Code § 23-110 (1996 Repl.) was denied following a hearing before Judge Cheryl M. Long. In this consolidated appeal from his convictions and the denial of the post-trial motion, appellant raises a number of contentions, most of which are related to the preparation and performance of his trial counsel, who took over his case shortly before trial after appellant's earlier retained counsel was suspended from the practice of law, and who was granted a brief continuance to prepare for trial. Upon consideration of the arguments advanced, we affirm.
I. Facts
Appellant and his codefendant John Lyles were charged with first-degree burglary while armed,[1] attempted robbery while armed,[2] first-degree felony murder while armed,[3] and perjury[4] in April 1985. These charges related to the murder of Robert Wiant, a Capitol Hill real estate agent, who was stabbed to death in his home on June 20, 1984. Appellant retained *424 W. Edward Thompson to represent him.
Mr. Thompson entered his appearance as retained counsel for defendant in May 1985. The trial date was set for September 25, 1985, before Chief Judge H. Carl Moultrie I. Mr. Thompson worked on the case, filing with the court, among other things, a motion to suppress appellant's videotaped statement, in which appellant admitted some involvement in the crime,[5] and which appellant claimed had been obtained by the police through physical and mental coercion. Several days before the first scheduled trial date, the government requested a continuance because an essential prosecution witness was unavailable due to a medical emergency. Judge Moultrie granted that motion and continued the trial to November 21, 1985. In October 1985, Mr. Thompson was suspended from the practice of law for a period of three months, commencing on October 27, 1985. Attorney Adgie O'Bryant entered an appearance for appellant on November 18, 1985, and filed a request for a continuance. Among the reasons listed by Mr. O'Bryant in requesting the continuance were that he was "unavailable for trial on November 21, 1985," and that "[t]he defendant requests additional time for his new counsel to prepare his defense."
At a hearing held on November 20, 1985, Mr. O'Bryant elaborated on his reasons for requesting a continuance, explaining that he had not spoken to any of the witnesses and was "totally not prepared to go to trial to try a murder case in two days." Over objections by Mr. O'Bryant that he needed more time to prepare, Judge Moultrie granted appellant a three-day continuance, explaining that the case was not complex, and November 25th was the only day the case could fit into the court's calendar. Judge Moultrie assisted Mr. O'Bryant in having his other matters continued so he could devote himself solely to preparing for appellant's trial, and ordered him to be in court to try the case on Monday, November 25, 1985.
On November 25th, Mr. O'Bryant appeared in court with his own attorney, Melvin Marshall. Mr. Marshall spoke on behalf of Mr. O'Bryant, explaining that there were witnesses to whom Mr. O'Bryant had not spoken and physical evidence that Mr. O'Bryant had not had an opportunity to see, and that therefore Mr. O'Bryant felt that he was "constitutionally ineffective" at that time. Judge Moultrie, who had previously explained to Mr. O'Bryant that the trial would go forward, stated:
Well, ineffective depends on what transpires, sir. He may rise to the occasion. He's a good lawyer.
Later that day, appellant addressed Judge Moultrie, explaining that he did not feel the trial would be fair because Mr. O'Bryant only had a few days to prepare. Judge Moultrie explained to appellant that the matter of the continuance had already been decided and resumed hearing motions. The trial concluded on December 2, 1985, when a jury found appellant guilty of first-degree murder while armed and first-degree burglary while armed. He was sentenced in January 1986 and resentenced in April 1986. Appellant filed a timely notice of appeal.
In August 1988, appellant filed a motion seeking to vacate his convictions, alleging ineffective assistance of counsel. His primary contention was that Mr. O'Bryant was ineffective at trial due to the lack of time he was permitted to prepare for the case. Appellant's direct appeal was held in abeyance pending resolution of his collateral attack.
*425 Because Judge Moultrie by then was deceased, appellant's motion came before the Honorable Cheryl Long. Following a five-day hearing, which consisted of the testimony of witnesses and representations from counsel, Judge Long issued a sixty-four page memorandum opinion and order denying appellant's claim for relief. In that order, Judge Long reviewed the pretrial investigation, pretrial motion hearing, and trial performance of Mr. O'Bryant in great detail. She found that appellant had failed to show any constitutional deficiency on the part of his trial counsel, and that even if he had succeeded in doing so, the deficiency would not have prejudiced appellant, given the strength of the government's case and the poor credibility of appellant and appellant's potential witnesses.[6] Appellant filed a second notice of appeal, this one from the denial of his motion, and the two appeals were consolidated in this court.
II. The Right to Choose Counsel
Appellant contends the trial court violated his right to choose his own counsel by ruling that Mr. O'Bryant, with whom appellant now claims he had not established an attorney-client relationship prior to the continuance hearing on November 20, 1985, must try the case. A defendant has a constitutionally protected right to choose his own counsel, arising out of both the Sixth Amendment right to counsel and notions of due process under the Fifth Amendment. Such right includes "a fair opportunity to secure counsel of his own choice." Crooker v. California, 357 U.S. 433, 439, 78 S.Ct. 1287, 2 L.Ed.2d 1448 (1958) (quoting Powell v. Alabama, 287 U.S. 45, 53, 53 S.Ct. 55, 77 L.Ed. 158 (1932)) (other citations omitted). The Supreme Court held in Powell that "the failure of the trial court to give [defendants] a reasonable time and opportunity to secure counsel was a clear denial of due process." 287 U.S. at 71, 53 S.Ct. 55. This right is not absolute, however, and "`cannot be insisted upon in a manner that will obstruct an orderly procedure in courts of justice, and deprive such courts of the exercise of their inherent powers to control the same.'" Lee v. United States, 98 U.S.App.D.C. 272, 274, 235 F.2d 219, 221 (1956) (quoting Smith v. United States, 53 App.D.C. 53, 55, 288 F. 259, 261 (1923)). The right may be balanced against other factors by the trial court in order to prevent the administration of justice from being impeded. Douglas v. United States, 488 A.2d 121, 143 (D.C.1985) (citation omitted).
We are not persuaded that the record factually supports appellant's claim that the trial court deprived him of his right to retain counsel of his choice. Thompson was unavailable to practice law and would continue to be unavailable for nearly three months. Furthermore, appellant's claim that he did not know who Mr. O'Bryant was, and that he had not established an attorney-client relationship with Mr. O'Bryant, though expressed by appellant at the § 23-110 hearing, are noticeably absent from the record of the continuance hearing before Judge Moultrie. Mr. O'Bryant entered his appearance as appellant's counsel, and nothing in the record of that hearing suggests that this appearance was only for the purpose of requesting a continuance "for Mr. Thompson," as appellant now claims. In appellant's original motion for a continuance, Mr. O'Bryant expressed that "Mr. Thompson can no longer represent the defendant," and that "defendant requests to have a fair opportunity and reasonable time to employ counsel of his choosing to wit attorney Adgie O'Bryant, Jr." At the time of the *426 continuance hearing, therefore, it appeared that appellant had chosen Mr. O'Bryant to represent him.[7] Judge Moultrie did not violate appellant's right to counsel of his choice by ruling that he go to trial with an attorney who appeared to be of his choosing. Following the hearing on appellant's § 23-110 motion, the trial court found that Mr. O'Bryant had indicated that he would take the case if financial arrangements could be made, and his prior, counsel Mr. Thompson, informed O'Bryant that appellant's family would make those arrangements. The trial court further found that Mr. O'Bryant sought a continuance "specifically for the purpose of affording the Yancey family and Mr. Thompson more time to make firm financial arrangements for hiring Mr. O'Bryant."[8] Appellant had spoken to Mr. O'Bryant before he entered his appearance. Thus, it appears that appellant had in fact chosen Mr. O'Bryant as Mr. Thompson's successor, with only the financial arrangements to be resolved. The record of the continuance hearings and the § 23-110 hearing support the conclusion that appellant had in fact chosen Mr. O'Bryant as his counsel, although counsel sought more time to finalize financial arrangements and to prepare for trial. Under these circumstances, we do not view this to be a case where appellant was deprived of his right to select counsel of his choice. In Part IV of this opinion, we consider appellant's argument that the denial of a longer continuance deprived him of effective assistance of counsel.
III. The Monroe-Farrell Claim
Appellant also contends that the trial court violated his Sixth Amendment right to counsel by failing to conduct an inquiry into the pretrial preparation of Mr. O'Bryant when appellant expressed concern that his attorney did not have enough time to prepare. When a defendant makes a claim of ineffective assistance of counsel pretrial, the trial court must conduct an inquiry sufficient to assess the counsel's preparedness and determine whether the defendant's claim has merit. See McFadden v. United States, 614 A.2d 11, 15 (D.C. 1992). A failure to do so will result in reversal, see id. at 17-18, or remand for an inquiry into the trial counsel's pretrial preparedness (a "Monroe-Farrell" hearing). See Bass v. United States, 580 A.2d 669, 671 (D.C.1990).
In this case, appellant told Judge Moultrie during the suppression hearing that he did not believe the trial would be fair because his attorney had not had enough time to prepare. Judge Moultrie, apparently taking this as additional argument in support of a longer continuance, resumed the hearing without inquiring further into appellant's claims. We need not reach the issue of whether appellant's brief statement to the court was sufficient to require an inquiry into his concerns, see Monroe v. United States, 389 A.2d 811, 819-20 (D.C.), cert. denied, 439 U.S. 1006, 99 S.Ct. 621, 58 L.Ed.2d 683 (1978), Farrell v. United States, 391 A.2d 755 (D.C. 1978), as Judge Long made findings on the record relating to Mr. O'Bryant's pretrial preparation; these findings are similar to those that would be made by a trial court on remand for a Monroe-Farrell hearing.
Based on the evidence presented at appellant's § 23-110 hearing, Judge Long found that Mr. O'Bryant's pretrial investigation was extensive despite the time constraints. After the hearing in which he *427 was granted the short continuance, Mr. O'Bryant met with Mr. Thompson to retrieve appellant's file and discuss the case. He reviewed the notes of the private investigator who had been hired by Mr. Thompson and met with the trial prosecutor to begin the discovery conference, where he reviewed government evidence. Mr. O'Bryant also met with appellant on several occasions to discuss appellant's version of the events of the day of the murder and how they related to the government's evidence. He personally interviewed several witnesses, including those who appellant claimed provided him with an alibi. He also retraced the route appellant claimed to have taken on the day of the murder in an attempt to reconstruct the events of that day. In addition, he reviewed the physical evidence with the assistance of experts.
After reviewing Mr. O'Bryant's pretrial preparation, Judge Long concluded that Mr. O'Bryant, despite the time constraints imposed on him, "conducted a sufficient, reasonable, and competent pre-trial investigation." Judge Long noted that those aspects of Mr. O'Bryant's pretrial preparation about which appellant complained, including his failure to locate two witnesses, the fact that he did not take photos or make diagrams of the crime scene, and the fact that he did not hire an investigator, had no detrimental effect on appellant's case, as the witnesses could not exonerate appellant or account for his whereabouts at the time of the crime.
Based on Judge Long's findings, which were amply supported by the record, we conclude that appellant's trial counsel was constitutionally prepared for trial. Therefore, even if the trial court did err in refusing to conduct a further inquiry into appellant's concerns, there is no need to remand the case for a Monroe-Farrell hearing in view of the trial court's in-depth inquiry and determination that trial counsel was prepared constitutionally. See Wingate v. United States, 669 A.2d 1275, 1279 (D.C.1995) ("If the judge in a § 23-110 motion hearing determine[s] that trial counsel was in fact constitutionally prepared, the Monroe-Farrell issue ... effectively disappear[s] from the case, even if the inquiry actually made [was] insufficient.") (citing Matthews v. United States, 459 A.2d 1063, 1066 (D.C.1983)).
IV. The Ruling on Continuance and the Claim of Deprivation of Counsel
Appellant argues that the trial court abused its discretion in failing to grant a continuance of sufficient duration to allow his counsel to prepare for trial. He contends that the trial court's failure to grant a longer continuance interfered with his Sixth Amendment right to counsel. The duty of the court to assure that the accused's right to counsel is protected "is not discharged by an assignment [of counsel] at such a time or under such circumstances as to preclude the giving of effective aid in the preparation and trial of the case." Powell, supra, 287 U.S. at 71, 53 S.Ct. 55. "Thus, the trial judge may not insist on such expeditiousness that counsel for the defendant lacks a reasonable time to prepare for trial; stripping away the opportunity to prepare for trial is tantamount to denying altogether the assistance of counsel for the defense." United States v. Burton, 189 U.S.App.D.C. 327, 331, 584 F.2d 485, 489 (1978). That is essentially appellant's argument here.
Appellant acknowledges that the grant or denial of a continuance is a matter within the trial court's discretion, which is not subject to reversal absent an abuse of discretion. See id.; Welch v. United States, 689 A.2d 1, 5 (D.C.1996); see also Morris v. Slappy, 461 U.S. 1, 11, 103 S.Ct. 1610, 75 L.Ed.2d 610 (1983). In considering whether the trial court has properly exercised its discretion, we consider, among other factors, whether the trial court considered relevant factors, or relied upon improper factors, and whether the reasons for its actions are reasonably supported. Johnson v. United States, 398 *428 A.2d 354, 365 (D.C.1979). In the context here, the reasonableness of the length of a continuance allowed for trial preparation depends upon the circumstances. Among the factors for consideration are:
the length of the requested delay; whether other continuances have been requested and granted; the balanced convenience or inconvenience to the litigants, witnesses, counsel, and the court; whether the requested delay is for legitimate reasons, or whether it is dilatory, purposeful, or contrived; whether the defendant contributed to the circumstance which gives rise to the request for a continuance; whether the defendant has other competent counsel prepared to try the case, including the consideration of whether the other counsel was retained as lead or associate counsel; whether denying the continuance will result in identifiable prejudice to defendant's case, and if so, whether this prejudice is of a material or substantial nature; the complexity of the case; and other relevant factors which may appear in the context of any particular case.
Burton, 189 U.S.App.D.C. at 332-33, 584 F.2d at 491 (footnotes and citations omitted). It is not apparent that the trial court considered anything in this case other than the demands of the criminal docket. An examination of the relevant considerations, which are outlined in Burton, weigh heavily in favor of a longer continuance than the trial court granted. Appellant found himself in circumstances not of his own making. He retained his initial counsel and had nothing to do with that attorney's suspension from the practice of law such that he could no longer represent him. The government had sought and received a continuance previously at a time when initial counsel could have proceeded. There is no showing that with sufficient notice, a convenient date for the trial could not have been secured without substantial prejudice to the government. While new counsel was available to try the case, it was reasonable under the circumstances to allow him more time to prepare for this first-degree murder trial and no reason not to allow it, except that there was no available date in December for trial. The trial court failed to take into account other relevant factors and balance them against its desire to control its docket and have the case proceed to trial expeditiously. Therefore, we conclude that the trial court exercised its discretion erroneously in denying a continuance of more reasonable duration under the circumstances. See Johnson, supra, 398 A.2d at 365 (failure to consider relevant factors may result in erroneous exercise of discretion).
"[A] myopic insistence upon expeditiousness in the face of a justifiable request for delay can render the right to defend with counsel an empty formality." Burton, supra, 189 U.S.App.D.C. at 333, 584 F.2d at 491 (quoting Ungar v. Sarafite, 376 U.S. 575, 589, 84 S.Ct. 841, 11 L.Ed.2d 921 (1964)). Because not every denial of a request for additional time for preparation will result in a denial of due process and require reversal, id. (citing Ungar, supra, 376 U.S. at 589, 84 S.Ct. 841), we are obliged to consider several aspects of the denial of continuance in this instance.
A.
The Supreme Court, in United States v. Cronic, 466 U.S. 648, 104 S.Ct. 2039, 80 L.Ed.2d 657 (1984), addressed this question at length. It declined a formulaic approach, but instead offered a broad litmus: a reviewing court should consider whether counsel representing an accused, was enabled to act as an advocate throughout the process so as to engage in meaningful adversarial testing of the prosecution's case. Failing in that, the constitutional protection is lost. Id. at 656-57, 104 S.Ct. 2039. In one category of cases the court perceived circumstances of a magnitude where there would be "an actual breakdown of the adversarial process." Id. at 657, 104 S.Ct. 2039. In those situations a court may presume counsel's ineffectiveness because "circumstances are so *429 likely to prejudice the accused that the cost of litigating their effect in a particular case is unjustified." Id. at 658, 104 S.Ct. 2039. However, the court recognized that "every refusal to postpone a criminal trial will not give rise to such a presumption." Id. at 661, 104 S.Ct. 2039. In instances where no presumption is invoked, greater attention is given to counsel's performance during the actual trial of the case. In that posture, the two-pronged test announced in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), is applied. (Strickland was decided on the same day as Cronic.)
In assessing what magnitude of circumstances destroys the adversarial balance so as to trigger a presumption of ineffective counsel, the circumstances may be varied and different. There is no per se rule. See Chambers v. Maroney, 399 U.S. 42, 54, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970). A most obvious case for invoking the presumption is the complete denial of counsel. Cronic, supra, 466 U.S. at 659, 104 S.Ct. 2039. The refusal to allow counsel to engage in cross-examination is similarly defective. Davis v. Alaska, 415 U.S. 308, 94 S.Ct. 1105, 39 L.Ed.2d 347 (1974). In Powell, a trial judge appointed all members of the bar to represent nine defendants at arraignment in a capital offense. 287 U.S. at 45, 53 S.Ct. 55. A few days later the trial date a lawyer from another state appeared in court to inquire about the cases. The trial judge appointed the lawyer to represent the defendants and immediately initiated trial proceedings. In a hostile setting, involving clients who were not literate, the Supreme Court held that "[u]nder the circumstances ... [the] defendants were not accorded the right of counsel in any substantial sense." Id. at 58, 53 S.Ct. 55. See also Brown v. Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682 (1936). In Avery v. Alabama, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377 (1940), the accused was tried in a capital case within a few days after arraignment. Despite the requests of two local practicing attorneys for a continuance, the trial went forward. On appeal the conviction was affirmed; the court referred to the rural jurisdiction in question, and noted that counsel had had access to witnesses and were able to inform themselves in order to adequately defend. Id. at 450, 60 S.Ct. 321.
The circumstances in which ineffective assistance of counsel may be presumed without inquiry into counsel's performance are exceptional. The presumption is available "when although counsel is available to assist the accused during trial, the likelihood that any lawyer, even a fully competent one, could provide effective assistance is so small that a presumption of prejudice is appropriate without inquiry into the actual conduct of the trial." Cronic, supra, 466 U.S. at 659-60, 104 S.Ct. 2039. While it would be extremely difficult, we are not persuaded that competent counsel could not render effective assistance with a few days of concentrated preparation where prior counsel had investigated the case and made his files available to successor counsel, at least not to the extent that a presumption of ineffectiveness would be justified. See id. at 660-62, 104 S.Ct. 2039.
Appellant's trial attorney was experienced in defending persons charged with criminal offenses. He was acquainted with local practice and procedures. Notwithstanding an intense time pressure, he utilized available resources to prepare. He studied existing investigative files. He personally interviewed potential witnesses and took full advantage of discovery from the government. Ultimately counsel had access to the significant evidence in the case. He therefore was able to consult with his client and weigh the government's case and possible defenses. While it is a serious aspect of this case that the judicial ruling as to continuance provoked a legitimate constitutional concern, we conclude that despite all that occurred, trial counsel was able to prepare adequately for trial in a meaningful way. We, therefore, reject *430 the argument that appellant's counsel's preparation was presumptively deficient, making inquiry into actual prejudice unnecessary.
B.
As the Court made clear in Cronic where no presumptive deficiency of ineffective counsel is invoked, we review counsel's actual performance at trial, utilizing the standards set forth in Strickland, supra. In this instance, we find no basis to conclude that trial counsel rendered ineffective assistance. In ruling on appellant's § 23-110 motion, Judge Long made an extended effort to probe counsel's performance. She virtually reconstructed the trial proceedings. In the course of a prolonged hearing, she heard the testimony of a number of witnesses. She was aware of factual questions which arose at trial. She gave particular attention to trial counsel's preparation and presentation of appellant's defense, including cross-examination of adverse witnesses. Her conclusion was that, notwithstanding the time constraints which existed, counsel mounted a defense which was both vigorous and adequate. She further concluded that even if counsel's performance was to be deemed deficient as to matters claimed by appellant, there was no basis, under Strickland, to conclude that the jury's verdict would have been different.
In rulings of this kind, the trial judge, especially when he or she is obliged to conduct a hearing, is called upon to resolve questions of law and fact. Our scope of review is two-fold. As to factual findings, as here, we consider with some deference, whether the findings are supported by the evidence presented. However, we consider de novo whether the trial court erred as to its legal conclusions. Derrington v. United States, 681 A.2d 1125, 1132 (D.C.1996) (citation omitted).
Judge Long's comprehensive order contains specific findings regarding counsel's investigation, preparation and trial performance.[9] The record supports these findings. Similarly, we perceive no error in her legal conclusion that appellant has failed to meet both prongs of the Strickland test. Thus we conclude that the trial judge did not err in this critical aspect of the case.
C.
Lastly, we consider whether the trial court's denial of a continuance resulted in substantial prejudice to appellant, independent of Cronic, with the government having the burden of persuasion on the issue. See Burton, supra.
Although Judge Long, in the collateral attack proceeding, correctly viewed the conduct of the trial through the lens of appellant's Sixth Amendment claim of ineffective assistance of counsel (rather than examining the effect of an erroneous denial of a continuance), her analysis and findings demonstrate why, in our view, it would be bare speculation to conclude that with additional time to prepare Mr. O'Bryant's chances of winning acquittal would have improved significantly. Judge Long carefully examined the evidence presented by the government, the defense actually mounted by Mr. O'Bryant, and alternative defenses (or alternative support for the chosen defense) that might have been presented with additional time. As she pointed out, "the prosecution produced a strong case that included eyewitness testimony and various admissions of the defendant," as well as palmprint and fingerprint evidence that placed appellant inside the home where the stabbing took *431 place. Moreover, in preparing appellant's defense of partial alibi, O'Bryant had received "no fewer than three versions" from appellant "of what happened on the morning of the murder," including his insistence "that he had never been at the decedent's home at all ... until ... confronted with the government evidence that he indeed had been inside the home." Judge Long heard testimony from the additional alibi witnesses appellant contends should have been called, and concluded that "they would not have made a difference in the outcome of the trial," either because their accounts contained "significant inconsistencies" inter se (as well as conflicting with appellant's own statements to the police), because they could not account for appellant's whereabouts at the relevant time, or because in the case of one witness, calling her as a witness might well have elicited the fact that appellant admitted the killing to her. Indeed, notes of an investigator hired by the defense disclosed that appellant had admitted the stabbing to four persons.
The record developed before Judge Long and our review of the trial record thus reveal no manner in which O'Bryant, given additional time, could have more effectively attacked the government's formidable evidence or buttressed an alibi defense contradicted by the forensic evidence and weakened by the inconsistencies and plain incredibility (as the judge found) of one or more of the witnesses supporting it. We are not persuaded, in sum, that the failure to grant a longer continuance had a "substantial and injurious effect or influence in determining the jury's verdict." Kotteakos v. United States, 328 U.S. 750, 776, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946).[10]
Affirmed.
NOTES
[1] D.C.Code §§ 22-1801(a), -3202 (1996 Repl.).
[2] D.C.Code §§ 22-2902, -3202 (1996 Repl.).
[3] D.C.Code §§ 22-2401, -3202 (1996 Repl.).
[4] D.C.Code § 22-2511 (1996 Repl.).
[5] While Yancey did not make an outright confession, his admissions are incriminating. In his statement, he admitted knowing that his co-defendant intended to rob the decedent and had pointed out to him some of the furnishings in the decedent's home before the decedent asked them to leave. Yancey claimed that he declined Lyles' invitation to take a knife and return to the house, but that he waited outside when Lyles re-entered the house, and unknown to him at the time, killed the decedent.
[6] The trial court declined to rule on whether the Judge Moultrie abused his discretion in denying a continuance, stating:
Where [Chief Judge Moultrie's] scheduling decision is concerned, such a ruling cannot result in a grant of a new trial because such relief is not within the purview and power of the Superior Court. The provision of a new trial, based upon damage that accrues from a judicial decision, lies only in the District of Columbia Court of Appeals.
[7] The only assertion made by either Mr. O'Bryant or appellant during the continuance hearing that could have suggested a desire to wait for Mr. Thompson was Mr. O'Bryant's suggestion that the case be continued until January 27, 1986, the date that Mr. Thompson anticipated being permitted to resume practice. During the course of the hearing, Mr. O'Bryant expressed a willingness to proceed to trial on December 9th or December 16th. However, the trial court had other cases set for trial on those dates.
[8] Mr. O'Bryant was aware that the family had already paid Mr. Thompson $10,000, and according to the trial court's findings, "Mr. Thompson had already spent the money."
[9] At the § 23-110 hearing, appellant made a belated contention seeking the remedy of a new trial on the basis of newly discovered evidence. Appellant claimed, in this respect, that his codefendant would exonerate him. Since a collateral attack proceeding is not a catch-all for all remedies, it is clear that the assertions made were beyond the purview of the relief sought. See Vaughn v. United States, 600 A.2d 96 (D.C.1991). See also Super. Ct.Crim. R. 33 (motion for new trial).
[10] Given our rejection of appellant's constitutional (i.e., Sixth Amendment) claims, we see no reason to apply the constitutional test for harmless error, see Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967), to the erroneous failure to grant the continuance. Even if we applied that test, moreover, the result would not be different.
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https://www.courtlistener.com/api/rest/v3/opinions/1517577/
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755 A.2d 596 (2000)
333 N.J. Super. 236
STATE of New Jersey, IN the INTEREST OF S.B., Juvenile-Appellant.
Superior Court of New Jersey, Appellate Division.
Submitted April 19, 2000.
Decided July 11, 2000.
*597 Ivelisse Torres, Public Defender, attorney for appellant (Paul M. Klein, Assistant Deputy Public Defender, of counsel and on the brief).
Andrew N. Yurick, Gloucester County Prosecutor, attorney for respondent State of New Jersey (Dianna Reed-Rolando, Assistant Prosecutor, on the brief).
Before Judges STERN, KESTIN and STEINBERG.
The opinion of the court was delivered by STEINBERG, J.A.D.
S.B., a juvenile, appeals from two adjudications of delinquency for offenses that would constitute aggravated assault under N.J.S.A. 2C:12-1(b)(5)(d) if committed as an adult. He also appeals from the imposition of a probationary sentence. We affirm in part, and modify in part.
Specifically, S.B. was charged with assaulting four teachers, Graham Hall, Nicholas Yates, John Schilling, and David Vignola, who had intervened to attempt to break up a fight between S.B. and another student. At the end of the State's case, the trial judge granted defendant's motion to dismiss the charge relating to Yates. At the conclusion of the trial, the judge found S.B. not guilty of assaulting Schilling, but found him guilty of assaulting Hall and Vignola. The judge sentenced S.B. to a one-year term of probation, and also imposed the appropriate statutory penalties and assessments.
According to the State's proofs, S.B. was a student at Monongahela Middle School in Deptford Township. On October 19, 1998, the students at the school were dismissed early due to a water main break. Hall, Schilling, and Maryann Brown, another teacher, were walking out of the school. Hall heard Brown say that there was a fight. The fight was between S.B. and another student. Hall and Schilling ran to the fight and separated the combatants.
*598 Hall testified that he grabbed the other student, T.D., and attempted to separate him from S.B. who was being held by Schilling. Hall was looking back over his shoulder and observed S.B. "coming back towards [T.D.] and that's when I was kicked in the left leg" by S.B. He said he felt the impact of the kick, but was not in any particular pain. He also testified that S.B. was very determined to get to T.D., that he was "crazed, kind of out of control". Hall was able to move T.D. from the area. On cross-examination, Hall conceded that he assumed S.B. intended to kick T.D., rather than him. Schilling also said on cross-examination that he thought S.B. was attempting to kick T.D., rather than Hall. He said he thought S.B. "just missed ... Hall was in the ... wrong place". Vignola also said that S.B. broke away from Schilling and Yates and "attempted to kick [T.D.] in the head as [T.D.] was bending over to pick up his books". However, "in reality, he had hit [Hall]". Yates also testified that S.B. attempted to kick T.D., rather than Hall. Schilling testified that he and Yates separated S.B. from T.D., taking S.B. to the ground. They let him up and allowed S.B. to retrieve his book bag. However, Schilling said S.B. began to run towards T.D. and attempted to kick him. Instead, S.B. kicked Hall. Schilling again intervened and "grabbed a hold of [S.B.], pulled him away".
S.B. continued to be aggressive. Vignola then came to Schilling's assistance. Ultimately, Yates, Vignola, and Schilling were able to move S.B. towards the entrance to the school. They took S.B. to the main office. S.B. again became aggressive and was shouting at Vignola. Vignola attempted to calm S.B. down. According to Schilling, S.B. "grabbed a hold of [a] picture to try to hit Mr. Vignola".
Vignola testified that he and Schilling attempted to separate S.B. from T.D., and they were able to escort S.B. into the building. He said S.B. "was still fighting and struggling to get away". They proceeded to the main office. According to Vignola, S.B. "erupted again". Vignola said S.B. "jumped up into my face and pushed me, and I put my hands up to stop him and pushed him away". He and Schilling attempted to put S.B. into a chair and S.B. grabbed a picture from the wall and attempted to "swing it around". Vignola said Schilling "intercepted [S.B.'s] hand before he hit me in the head with the picture, and the picture went flying".
On this appeal, S.B. raises the following arguments:
POINT I THE ADJUDICATION OF DELINQUENCY MUST BE REVERSED BECAUSE THE EVIDENCE DOES NOT SUPPORT A FINDING THAT THE JUVENILE COMMITTED AGGRAVATED ASSAULT.
POINT II THE FAMILY COURT JUDGE ERRED BY NOT ADJOURNING THE DISPOSITION OF S.B.'S CASE FOR 12 MONTHS PURSUANT TO N.J.S.A. 2A:4A-43b(1).
Initially, we point out that our scope of appellate review of the factual determinations of the trial judge is extremely narrow. We must review the record not from the point of how we would decide the matter if we were the trial judge. State v. Locurto, 157 N.J. 463, 471, 724 A.2d 234 (1999); State v. Johnson, 42 N.J. 146, 161, 199 A.2d 809 (1964). We must give deference to those findings of the trial judge which are substantially influenced by his or her opportunity to hear and see the witnesses and have the "feel" of the case, which we do not enjoy upon appellate review. Ibid. Thus, we must determine whether the findings made could reasonably have been reached on sufficient credible evidence present in the record as a whole. Locurto, supra, 157 N.J. at 471, 724 A.2d 234; Johnson, supra, 42 N.J. at 162, 199 A.2d 809. If we are satisfied that the findings and result meet this criterion, *599 our task is complete, and we may not disturb the result, even though we may feel we may have reached a different conclusion. Ibid. Only if we are thoroughly satisfied that the finding is clearly a mistaken one and so plainly unwarranted that the interest of justice demand intervention and correction may we appraise the record as if we are deciding the matter at inception and make our own findings and conclusions. Ibid. On the other hand, a trial judge's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference. Manalapan Realty v. Township Comm., 140 N.J. 366, 378, 658 A.2d 1230 (1995); Zahner v. Pathmark Stores, Inc., 321 N.J.Super. 471, 476, 729 A.2d 478 (App.Div.1999); S.P. v. Collier High Sch., 319 N.J.Super. 452, 466, 725 A.2d 1142 (App.Div.1999). In that context, we review S.B.'s contention that the record does not contain sufficient credible evidence to support the trial judge's determination that he committed an aggravated assault on Hall or Vignola.
A person is guilty of aggravated assault if he commits a simple assault upon any "teacher or other employee of a school board while clearly identifiable as being engaged in the performance of his duties or because of his status as a member or employee of a school board". N.J.S.A. 2C:12-1(b)(5)(d). A person is guilty of simple assault if he "[a]ttempts to cause or purposely, knowingly or recklessly causes bodily injury to another". N.J.S.A. 2C:12-1(a)(1). "Bodily injury" is defined as "physical pain, illness or any impairment of physical condition". N.J.S.A. 2C:11-1(a). We have carefully considered the record and conclude that there was more than ample evidence for the judge to determine that when S.B. grabbed the picture in Vignola's office and swung it around towards Vignola, S.B. intended to strike Vignola and cause him pain. We recognize that to be guilty of an attempt a defendant's conduct must be purposeful. State v. Robinson, 136 N.J. 476, 485, 643 A.2d 591 (1994). In other words, it must be defendant's purpose to cause a particular result. Id. at 485-56, 643 A.2d 591. Here, the record clearly supports the judge's ultimate conclusion that S.B.'s purpose, when he swung the picture, was to cause bodily injury to Vignola. Accordingly, we affirm the adjudication regarding the aggravated assault upon Vignola.
We next consider the adjudication regarding S.B.'s kicking Hall. The judge was satisfied that S.B. intended to kick the other student, but, since he actually kicked Hall, he "could be considered reckless". Again, giving substantial deference to the factual determinations made by the judge, we conclude that the record supports the judge's factual conclusion that S.B. committed a simple assault upon Hall. However, we disagree with the judge's legal conclusion that the simple assault was elevated to aggravated assault by virtue of Hall's status as a teacher.
We recognize that the evidence led to the inescapable conclusion that S.B. intended to kick the other juvenile, rather than Hall, and the judge so found. Regarding the charge of simple assault, which is a predicate to a finding of guilt of aggravated assault upon a teacher, that fact is of no consequence. The principle of "transferred intent" makes an actor criminally responsible for the result of his conduct, even though the person injured is not his intended victim. N.J.S.A. 2C:2-3(d) specifically provides that a person is not relieved of criminal responsibility "for causing a result if the only difference between what actually occurred and what was designed, contemplated or risked is that a different person or property was injured or affected or that a less serious or less extensive injury or harm occurred". Thus, our Supreme Court has held that a defendant may be convicted for purposeful or knowing homicide of an unintended victim based upon his intent to knowingly or purposely kill someone else. State v. Worlock, 117 N.J. 596, 615-17, 569 A.2d 1314 (1990). Here, defendant is not absolved of *600 criminal responsibility simply because his intended victim was the other juvenile, rather than Hall.[1] However, since S.B. did not have the specific intent to commit an assault upon a teacher clearly identifiable as being engaged in the performance of his duties, or because of Hall's status as a teacher, his adjudication of delinquency on the charge of aggravated assault must be modified to an adjudication for an offense that would constitute simple assault, if committed by an adult, as a lesser included offense. See State v. Washington, 60 N.J. 170, 173, 287 A.2d 1 (1972); State v. Alexander, 215 N.J.Super. 522, 530-31, 522 A.2d 464 (App.Div.1987).
We now turn to S.B.'s contention that there was insufficient evidence to support a finding, beyond a reasonable doubt, that Hall suffered bodily injury. We disagree. Hall testified that S.B. kicked him in the calf. He conceded that he suffered no abrasions. When asked if he suffered any injuries, the following colloquy ensued:
Hall: No. No. But I mean, it wasI could feel it. It was
Defense Attorney: Was it painful?
Hall: Not particularly, no. Because at the same time I was still moving.
On cross-examination, Hall stated he "could still feel the kick" that he "felt the impact of the kick, but [was not] in any particular pain". On cross-examination, Vignola stated that after he was kicked, Hall "went down and grabbed his leg". The term "pain" is difficult to quantify. It is defined in Webster's Ninth New Collegiate Dictionary 846 (9th ed.1984), as "localized physical suffering associated with a bodily disorder (as a disease or an injury)." Initially, we note that Hall did not say he did not suffer pain. He said "it was not particularly painful" (emphasis added). Not much is required to show bodily injury. N.B. v. T.B., 297 N.J.Super. 35, 43, 687 A.2d 766 (App.Div.1997). A "stinging sensation" suffered by the victim as he was struck by defendant in the face with a backward motion of his open hand, during a verbal confrontation, was held sufficient to constitute pain. State v. Downey, 242 N.J.Super. 367, 371, 576 A.2d 945 (Law Div.1988). We conclude that physical discomfort, or a sensation caused by a kick during a physical confrontation, as well as pain, as that word is commonly understood, is sufficient to constitute bodily injury for purposes of a prosecution for simple assault. Indeed, here Hall did not say he did not suffer pain, he said he did not suffer any "particular" pain.
Alternatively, S.B. contends that even if there was sufficient evidence to support an adjudication for a simple assault, the evidence was insufficient to support an adjudication for aggravated assault. We agree. As previously noted, a simple assault under N.J.S.A. 2C:12-1(a)(1) is elevated to an aggravated assault if it is committed upon a teacher "while clearly identifiable as being engaged in the performance of his duties or because of his status". N.J.S.A. 2C:12-1(b)(5)(d). While the principle of "transferred intent" renders S.B. criminally responsible for a simple assault upon Hall, even though the other juvenile was S.B.'s intended victim, that principle has no applicability here in considering the charge of aggravated assault. That is because the only intent that is transferred is the intent to commit a simple assault. On the other hand, the principle of transferred intent cannot be utilized to elevate the offense to aggravated assault. For example, to constitute an aggravated assault upon a law enforcement officer, contrary to N.J.S.A. 2C:12-1(b)(5)(A), the State must prove, beyond a reasonable doubt, in addition to the other elements of the offense, that defendant *601 knew the victim was a law enforcement officer acting in the performance of his duties while in uniform or exhibiting evidence of his authority. State v. Green, 318 N.J.Super. 361, 375-76, 724 A.2d 254 (App. Div.1999), aff'd o.b., 163 N.J. 140, 747 A.2d 1234 (2000); State v. Parsons, 270 N.J.Super. 213, 224, 636 A.2d 1077 (App.Div. 1994); State v. Moll, 206 N.J.Super. 257, 260, 502 A.2d 87 (App.Div.), certif. denied, 103 N.J. 498, 511 A.2d 670 (1986).
Likewise, we conclude that a simple assault can only be elevated to an aggravated assault upon a teacher if the actor knowingly assaulted a teacher. The State must prove beyond a reasonable doubt, in addition to the other elements of the offense, that the actor knew the person he was assaulting was engaged in the performance of his duties or knew of his status as a teacher, or was aware of a high probability that he was, in fact, assaulting the teacher, rather than the other juvenile.
We reject the State's contention that since recklessness will support a conviction for simple assault, it is also sufficient to elevate the simple assault to aggravated assault. The requisite level of culpability is knowing conduct. See State v. Green, supra, 318 N.J.Super. at 376, 724 A.2d 254 (State must prove beyond a reasonable doubt that defendant knew the victim was a law enforcement officer acting in the performance of his duties, while in uniform or exhibiting evidence of his authority); State v. Moll, supra, 206 N.J.Super. at 260, 502 A.2d 87 (to support a conviction for aggravated assault upon a law enforcement officer, the State must prove beyond a reasonable doubt that the actor knew the victim was a law enforcement officer acting in the performance of his duties while in uniform or exhibiting evidence of his authority), cf. State v. Parsons, supra, 270 N.J.Super. at 224, 636 A.2d 1077 (in a prosecution for aggravated assault upon a law enforcement officer State need only prove beyond a reasonable doubt that defendant was reckless in that he consciously disregarded a substantial and unjustifiable risk that he was assaulting a law enforcement officer acting in the performance of his duties).
Finally, we consider S.B.'s contention that the judge erred by not adjourning the disposition of his case for twelve months. N.J.S.A. 2A:4A-43(b)(1) authorizes a judge to adjourn formal entry of a disposition of a case involving a juvenile for a period not to exceed twelve months for the purpose of determining whether the juvenile can make a satisfactory adjustment, and to ultimately dismiss the complaint if during the period of the continuance the juvenile does, in fact, make such an adjustment. The judge considered the application, but denied it concluding that it would be an inappropriate disposition in light of the fact that the incident took place in school, against teachers, feeling it would be the wrong message to send to other students that an assault on a teacher in school results in an ultimate dismissal of the charge. We cannot conclude that the judge mistakenly exercised his discretion in arriving at that determination. To hold otherwise would result in our substituting our judgment for that of the trial judge. That we cannot do. We must defer to the trial judge who has the feel for the case, and we may only intervene if we are satisfied that the sentence imposed represents an abuse of discretion. State v. Gardner, 113 N.J. 510, 516, 551 A.2d 981 (1989).
Affirmed, as modified and remanded to the Chancery Division, Family Part, to amend the judgment, consistent with this opinion.
NOTES
[1] We note also that the judge found S.B. guilty, concluding that he was reckless in kicking Hall rather than his intended victim. Since recklessness suffices to support a conviction of N.J.S.A. 2C:12-1(a)(1), the judge was correct in concluding that there was sufficient proofs to support an adjudication of S.B., even though Hall was not the intended victim, on a theory of recklessness.
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848 S.W.2d 7 (1992)
Dennis COMSTOCK, Appellant, and
Jessie Comstock, Appellant,
v.
Martha Irene WALSH, M.D., and Children's Mercy Hospital, Respondents.
Jessie COMSTOCK, Appellant,
v.
Martha Irene WALSH, M.D., and Children's Mercy Hospital, Respondents.
Nos. WD 45697, WD 45783.
Missouri Court of Appeals, Western District.
December 1, 1992.
Motion for Rehearing and/or Transfer Denied December 22, 1992.
Application to Transfer Denied March 23, 1993.
*8 Elizabeth Diane Baker, Kansas City, for appellant Dennis Comstock.
Jacqueline K. McGreevy, Kansas City, for appellant Jessie Comstock.
Nancy E. Kenner, Kansas City, for respondent.
Before KENNEDY, P.J., and SPINDEN and SMART, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Denied December 22, 1992.
KENNEDY, Presiding Judge.
Plaintiffs are Dennis Comstock, non-custodial father of Jessie Comstock, and Jessie Comstock, represented by Dennis Comstock as next friend. The exact age of the child is not shown in the record, but apparently she was something like three years old. The trial court dismissed plaintiffs' petition against Children's Mercy Hospital and Martha Walsh, M.D., which alleged that the defendants had been guilty of medical malpractice in the mistaken diagnosis of sexual abuse of plaintiff Jessie Comstock, resulting in damage to the father and to the little girl herself. The physician's negligence allegedly consisted of failing to take indicated steps to identify the presence of sexual abuse practiced upon the little girl. The hospital, according to the petition, was liable as the physician's employer under respondeat superior principles, and also for its own negligence in not establishing a protocol for the diagnosis of young children alleged to have been sexually abused.
The meager facts shown in the record are that the mother of the childwho lived with the child in Johnson County, Kansas brought her into Children's Mercy Hospital with a "pain in the bottom", claiming the child had been sexually abused. Dr. Martha Walsh conducted an examination, which included questioning the little girl with the aid of anatomically correct dolls. Dr. Walsh reported suspected sexual abuse to the Prairie Village (Kansas) police.
A Kansas proceeding followed with respect to the custody of the child and the father's visitation privileges, which resulted in limitation of father's visitation privileges. Later, this lawsuit was filed.
*9 We have only one issue before us. That issue is whether Section 210.135, RSMo 1986,[1] gives Dr. Walsh and Children's Mercy Hospital immunity from liability for alleged negligence in the diagnosis of "suspected child abuse." The trial court held it does, and that is the only ground advanced by Dr. Walsh and the hospital in their brief for sustaining the trial court's dismissal. While we affirm the trial court's summary judgment on any ground supported by the record, whether relied upon by the trial court or not, Strunk v. Hahn, 797 S.W.2d 536 (Mo.App. 1990), we ordinarily confine ourselves to grounds advanced in respondent's brief; we do not on our own initiative go into the countryside searching for a ground to sustain the summary judgment. Thomas v. DeGrace, 776 S.W.2d 500 (Mo.App.1989). We rule the issue whether defendants are immune from liability under section 210.135, and that issue alone.
We hold in the circumstances of this case, that section 210.135 does not give Dr. Walsh and the hospital immunity from liability for malpractice in the examination of the child for indications of sexual abuse and the diagnosis of sexual abuse.
The parties have concentrated upon the question whether section 210.135, besides granting to the reporter immunity from liability for reporting suspected sexual abuse, also grants immunity from liability for negligence in the examination and diagnosis preceding the report. Defendants say the statute does grant that immunity, while plaintiffs say it does not. Their arguments do not distinguish between reports made to the division of family services and reports made, as this one was, to other persons or agencies. Assuming immunity from liability for making the report, does section 210.135 grant immunity from liability for negligence in the examination and diagnosis preceding the report? We do not reach the question, because we hold the immunity granted by section 210.135 does not include the report to the Prairie Village Police Department. It could not, therefore, include the examination and diagnosis leading up to the report.
Section 210.135 establishes immunity for "any person, official or institutions complying with the provisions of sections 210.110 to 210.165 in the making of a report, the taking of color photographs, and making of radiologic examinations, or the removal or retaining of a child pursuant to sections 210.110 to 210.165, or in cooperating with the division in any of its activities pursuant to sections 210.110 to 210.165...."
The immunity granted by this statute is only for acts done to comply with sections 210.110 to 210.265. As long as the reporting person, official or institution stays within the boundaries of this system of statutes, he or it is immune from liability. That system requires certain persons, including physicians, to report cases of suspected child abuse to the Division of Family Services. Section 210.115.1. There is no provision for making the report to any other person or agency. In this case, the examination of the child by the physician at Children's Mercy Hospital, and the report made in pursuance thereof, had no reference to the protocol of sections 210.110 to 210.265. The report of suspected child abuse was made, not to the Division of Family Services, but to the Prairie Village Police Department in Kansas.
There is nothing in section 210.135 to give immunity from liability for a child abuse report made to a police department by a physician or hospital. It follows that the section does not give immunity for liability growing out of the examination and diagnosis preceding the report.
Judgment reversed and cause remanded to the trial court for further proceedings.
All concur.
NOTES
[1] All statutory references are to RSMo 1986 unless otherwise noted.
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853 F.Supp. 1443 (1994)
CAMPBELL SOUP COMPANY, INC., Plaintiff,
v.
UNITED STATES, Defendant.
Court No. 91-05-00403.
United States Court of International Trade.
May 16, 1994.
*1444 Sandler Travis & Rosenberg, Ronald W. Gerdes, Joseph A. Black, and David G. Curran, Washington, DC, for plaintiff.
Frank W. Hunger, Asst. Atty. Gen. of the U.S.; Joseph I. Liebman, Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Bruce N. Stratvert (Jacob B. Diamond, Office of Asst. Chief Counsel, Intern. Trade Litigation, U.S. Customs Service, Washington, DC, of counsel), for defendant.
Katten Muchin & Zavis, Robert F. Seely, Chicago, IL, for amicus curiae, Baxter Healthcare Corp.
OPINION
CARMAN, Judge:
Plaintiff initiated this action pursuant to 19 U.S.C. § 1515(a) (1988) to contest the denial of its protest against the United States Customs Service's (Customs) appraisal of certain merchandise that plaintiff had imported from Mexico. This Court has jurisdiction under 28 U.S.C. § 1581(a) (1988) and, for the reasons which follow, enters judgment for defendant.
I. BACKGROUND
Plaintiff is the importer of record for the merchandise at issue in this case. The subject merchandise consists of tomato paste produced in Mexico by plaintiff's subsidiary, Sinalopasta, S.A. de C.V.
During the period at issue, Sinalopasta received rebates of $1,327,284.00 from the Mexican government for domestic taxes the company had paid on manufacturing input materials. Plaintiff's Statement of Material Facts Not in Dispute (Statement) at ¶ 8.[1] The company obtained the rebates under a program known as "Certificado Export de Devolucion de Impuestos," or "CEDIS," under which the government issues tax certificates in amounts "equal to a stated percentage of the value of exported merchandise." PPG Indus., Inc. v. United States, 13 CIT 297, 298 n. 3, 712 F.Supp. 195, 197 n. 3 (1989) (citation omitted); see also Statement at ¶ 6. Recipients may apply the certificates as credit toward payment of other Mexican taxes or may exchange the certificates for cash from the Bank of Mexico after paying a commission. Statement at ¶ 7. Sinalopasta accounted for the rebates in its financial statements as "miscellaneous profit and loss." Id. at ¶ 9; Sinalopasta Financial Statements for Period Ending June 30, 1982 at 3.
In connection with its entries of the subject merchandise into the United States, plaintiff submitted a cost submission form to Customs. On the form, plaintiff calculated Sinalopasta's profits using the CEDIS rebates as profits and deducted the same amount from the subsidiary's expenses. Statement at ¶¶ 10, 11; Pl.'s Compl. at ¶ 14; Def.'s Answer at ¶ 14. Plaintiff's form also indicated Sinalopasta had $926,636.00 in expenses and net profits of $1,739,182.00. Statement at ¶ 13. The amount of expenses reflected the amount of income taxes the subsidiary paid during the period under review. See id. at ¶¶ 12, 13.
Plaintiff's form also shows Sinalopasta incurred $416,324.00 in freight costs for materials used to produce the subject merchandise. Id. at ¶ 20. This figure, however, actually represents the inland freight costs incurred by Sinalopasta to transport the merchandise from its loading docks in Mexico to the United States border. See id. at ¶ 21.
Before Customs appraised the subject merchandise, it audited plaintiff's cost submission form as well as certain books and records of plaintiff and Sinalopasta. Customs auditors recommended treating the $926,636.00 which plaintiff had characterized as expenses as profit. Id. at ¶ 15 (citing Ex. *1445 A in Customs Regulatory Audit Report No. 6-83-87I-012 (Customs Audit) at 2). The auditors also recommended disallowing the deduction from expenses that plaintiff claimed for the CEDIS amounts.[2] Customs officials, however, did not suggest reducing Sinalopasta's profits by the amount of CEDIS payments. Statement at ¶ 17.
Customs subsequently appraised the merchandise using the "computed value" method established in 19 U.S.C. § 1401a(e) (1988). This statute provides as follows in relevant part:
(e) Computed value
(1) The computed value of imported merchandise is the sum of
(A) the cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise;
(B) an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by the producers in the country of exportation for export to the United States;
....
(2) For purposes of paragraph (1)
(A) the cost or value of materials under paragraph (1)(A) shall not include the amount of any internal tax imposed by the country of exportation that is directly applicable to the materials or their disposition if the tax is remitted or refunded upon the exportation of the merchandise in the production of which the materials were used; and
(B) the amount for profit and general expenses under paragraph (1)(B) shall be based upon the producer's profits and expenses, unless the producer's profits and expenses are inconsistent with those usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by producers in the country of exportation for export to the United States, in which case the amount under paragraph (1)(B) shall be based on the usual profit and general expenses of such producers in such sales, as determined from sufficient information.
The appraisal incorporated the auditors' recommendations noted above. As a result, Customs disallowed the deduction from expenses that plaintiff had claimed for Sinalopasta's CEDIS payments and included in the subsidiary's profits the amount of CEDIS rebates.[3]See Pl.'s Compl. at ¶¶ 14, 15; Def.'s Answer at ¶¶ 14, 15. In addition, Customs determined Sinalopasta's inland freight costs were properly regarded as selling expenses that contributed to the subsidiary's "profit and general expenses" under § 1401a(e)(2)(B). See Customs Headquarters Ruling Letter 544344 of Nov. 14, 1990 at 4.
*1446 Plaintiff filed a timely protest under 19 U.S.C. § 1514(a) (1988) to contest Customs' appraisal. Customs denied the protest under 19 U.S.C. § 1515 and, after having paid all liquidated duties, plaintiff commenced this action pursuant to 28 U.S.C. § 1581(a) within the time allowed by law.
II. CONTENTIONS OF THE PARTIES
In its papers, plaintiff raises two principal claims against Customs' appraisal of its merchandise. First, plaintiff charges Customs should consider the CEDIS rebates as a reduction in expenses for appraisement purposes based on the plain language contained in § 1401a(e)(2)(A). Second, plaintiff contends Customs erred in treating Sinalopasta's inland freight charges as part of the subsidiary's general expenses because the agency lacked proof that the subsidiary actually incurred the charges. In its brief, amicus curiae Baxter Healthcare joins plaintiff's position regarding Customs treatment of freight costs, adding the GATT provisions upon which Congress based § 1401a(e), related provisions in § 1401a, and Customs regulations and previous Headquarters Rulings all indicate general expenses under § 1401a(e)(1)(B) do not include freight costs.
Defendant opposes both claims raised by plaintiff. With respect to the CEDIS issue, defendant maintains Customs properly included the rebates as an element of value of the subject merchandise because plaintiff and Sinalopasta accounted for the rebates as profits. As to the freight costs, defendant argues Customs correctly treated the costs as selling expenses because Sinalopasta itself accounted for the costs as selling expenses and such treatment is consistent with generally accepted accounting principles in Mexico.
III. DISCUSSION
A. Standard of Review
As in all "[c]ivil actions contesting the denial of a protest under section 515 of the Tariff Act of 1930," the Court reviews the record in this case de novo. See 28 U.S.C. § 2640(a)(1) (1988). Customs' appraisement decisions carry a presumption of correctness and "[t]he burden of proving otherwise ... rest[s] upon the party challenging such decision." See 28 U.S.C. § 2639(a)(1) (1988); Moss Mfg. Co. v. United States, 13 CIT 420, 424, 714 F.Supp. 1223, 1227 (1989), aff'd, 8 Fed.Cir. (T) 40, 896 F.2d 535 (1990).
B. Summary Judgment
This case is before the Court on cross-motions for summary judgment. Under the rules of this Court, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." USCIT R. 56(d). The Court will deny summary judgment if the parties present "a dispute about a fact such that a reasonable trier of fact could return a verdict against the movant." Ugg Int'l, Inc. v. United States, 17 CIT ___, ___, 813 F.Supp. 848, 852 (1993) (quotation and citation omitted). "In assessing the parties' claims, the Court must resolve all ambiguities and draw all reasonable inferences in favor of the party opposing summary judgment." Id. (citation omitted).
This case does not present any genuine issue of material fact. The facts that are germane to the case's resolution are not in dispute. The issues that remain pertain solely to the proper construction of § 1401a(e). Because these issues only involve matters of statutory interpretation, the Court concludes the parties' conflict raises questions of law which the Court may properly resolve by summary judgment.
C. Customs' Determination
The Court begins its review of Customs' determination by examining the "computed value" provisions set forth in 19 U.S.C. § 1401a(e). In general terms, the "computed value" of imported merchandise under § 1401a(e) equals the sum of four figures. The first figure represents "the cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise." § 1401a(e)(1)(A). The second figure reflects the "amount for profit and general expenses equal to that usually reflected in sales of *1447 merchandise of the same class or kind as the imported merchandise that are made by the producers in the country of exportation for export to the United States." § 1401a(e)(1)(B). The third and fourth figures are, respectively, amounts for assists and packing costs. § 1401a(e)(1)(C), (D). These latter two figures are not at issue in this case and, therefore, will not be addressed.
The statute further limits what Customs may include in the subject merchandise's "cost or value" under § 1401a(e)(1)(A). Specifically, § 1401a(e)(2)(A) requires Customs to exclude from the "cost or value" calculation under § 1401a(e)(1)(A) "the amount of any internal tax imposed by the country of exportation that is directly applicable to the materials or their disposition if the tax is remitted or refunded upon the exportation of the merchandise in the production of which the materials were used."
The statute does not provide such an exclusion for the "profit and general expenses" calculation under § 1401a(e)(1)(B). With respect to the "profit and general expenses" calculation, the only additional statutory guidance appears in § 1401a(e)(2)(B). This provision reads as follows:
the amount for profit and general expenses under paragraph (1)(B) shall be based upon the producer's profits and expenses, unless the producer's profits and expenses are inconsistent with those usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by producers in the country of exportation for export to the United States, in which case the amount under paragraph (1)(B) shall be based on the usual profit and general expenses of such producers in such sales, as determined from sufficient information.
In contrast to the express exclusion from cost or value of certain amounts "remitted or refunded upon exportation" in § 1401a(e)(1)(A), the plain language of § 1401a(e)(2)(B) does not single out any type of profit or general expense that Customs must exclude from its calculations. Instead, the section generally indicates how Customs may compute profits and general expenses and what the computation may include where "the producer's profits and expenses are inconsistent with those usually reflected in sales of merchandise of the same class or kind as the imported merchandise."
In this action, plaintiff challenges Customs' interpretation of the "computed value" statute with respect to the CEDIS rebates that Sinalopasta received and freight costs that the subsidiary incurred. The Court will consider each of these items in turn.
1. CEDIS Rebates
As noted previously, the benefits available under the CEDIS program are in the form of tax certificates. The purpose of the certificates, as described by the Mexican government in an unrelated countervailing duty investigation, is to rebate indirect taxes and promote exports. Ceramic Tile From Mexico, 47 Fed.Reg. 7866 (Dep't Comm.1982) (prelim. determination). The Mexican government issues the certificates in amounts "equal to a percentage of the f.o.b. value of the exported merchandise or, if national insurance and transportation are utilized, a percentage of the c.i.f. value of the exported product." Ceramic Tile From Mexico, 47 Fed.Reg. 20,012 (Dep't Comm.1982) (final determination). The CEDIS rate represents a "percentage of the value of the [exported] product" as determined by the Secretary of Commerce of Mexico. Id. Exporters who receive the CEDIS certificates may apply them "against a wide range of [Mexican] federal tax liabilities (including payroll taxes, value added taxes, federal income taxes, and import duties) over a period of five years from the date of issuance." Id. at 20,013.
Plaintiff argues Customs incorrectly disallowed plaintiff's deduction from expenses for the CEDIS rebates. Plaintiff asserts the direction contained in § 1401a(e)(2)(A) that Customs must exclude from the "cost or value" calculation under § 1401a(e)(1)(A) the amount of certain internal taxes rebated upon exportation supports the deduction. Pl.'s Br. at 7-10. Plaintiff also claims the purpose of the CEDIS program, which plaintiff maintains is "to lower the value of exported merchandise," precludes *1448 Customs from treating the rebates in a manner that would increase the profits used in valuing the subject merchandise. Id. at 11-13. In sum, plaintiff contends the rebates should not have affected Customs' appraisement determination. Id. Finally, plaintiff charges Customs overstated the rebates' effect on Sinalopasta's profits as the subsidiary could have offset other taxes owed to the Mexican government with the rebate amounts instead of accepting such amounts as cash. Id. at 13-14.
At the outset, the Court notes plaintiff's reliance on § 1401a(e)(2)(A) is wholly misplaced. Section 1401a(e)(2)(A) only applies to Customs' "cost or value calculation" under § 1401a(e)(1)(A). Plaintiff, however, seeks a deduction from "general expenses,"[4] the calculation of which depends on the application of § 1401a(e)(1)(B), (e)(2)(B). Consequently, because § 1401a(e)(2)(A) is inapplicable to the "general expenses" determination under § 1401a(e)(1)(B), plaintiff's argument based on § 1401a(e)(2)(A) must fail.
Plaintiff's second contention with respect to the expense deduction is also unpersuasive. Contrary to plaintiff's suggestion, the purpose underlying Mexico's CEDIS program is immaterial to the application of the computed value provisions contained in § 1401a(e). In drafting the "profit and general expenses" provision in § 1401a(e)(1)(B) and the additional direction in § 1401a(e)(2)(B), Congress clearly did not include a subjective assessment of the purposes underlying a foreign government's rebate program among the factors Customs must consider in appraising merchandise under the computed value method. Because such a consideration is outside the parameters of the inquiry mandated by § 1401a(e), the Court concludes the purposes underlying the CEDIS program do not require Customs to deduct from Sinalopasta's general expenses the amount of taxes that the Mexican government ultimately rebated to the company. Cf. Schweppes, Ltd. v. United States, 43 Cust.Ct. 608, 611-12 (1959) ("At the outset, we are constrained to observe that the Congress has ... laid down a complete and inclusive formula for determining cost of production, and, if a literal construction of its provisions tends to bring about inequities, it is not the function of this court to relieve against them. The remedy lies with the legislature.").
Plaintiff's third argument is equally unconvincing. Similar to the deficiency noted previously with respect to plaintiff's reliance on the purposes underlying the CEDIS program, the fact that Sinalopasta could have offset other taxes with CEDIS amounts instead of accepting such amounts as cash is immaterial to the inquiry mandated by § 1401a(e)(1)(B). In short, the statute simply does not require Customs to assess the operation of a foreign government's rebate program in calculating a foreign producer's general expenses under the computed value method.
Moreover, to the extent plaintiff's position depends on how Sinalopasta might have otherwise used the rebates, the Court finds plaintiff's position conflicts with the plain language of § 1401a(e)(1)(B). This section indicates Customs must consider the actual transactions undertaken by the foreign producer under review and analyze the producer's accounting of those transactions. The record in this case shows Sinalopasta accounted for the CEDIS rebates on its books under a category entitled "miscellaneous profit & loss" and effectively used the rebates as credits to offset other losses. See Sinalopasta Financial Statements for the Period Ending June 30, 1982 at 3. Similarly, on its cost submission form, plaintiff included the CEDIS amounts in profit, but reduced foreign operating expenses by the same amounts. See Campbell Soup Company Cost Submission to U.S. Customs Service for Period July '81 through June '82 at 3, Sched. 5; *1449 Customs Audit, Ex. A at 3. Most significant, however, is the fact that plaintiff has not pointed to anything in Sinalopasta's accounting statements or elsewhere in the record which indicates the subsidiary actually treated as expenses the taxes that the Mexican government ultimately rebated through the CEDIS program. The lack of evidence demonstrating Sinalopasta treated the CEDIS amounts as expenses compels the Court to conclude plaintiff has failed to rebut the presumption of correctness attached to Customs' decision to disallow the deduction that plaintiff sought for the CEDIS amounts. See 28 U.S.C. § 2639(a)(1); Moss, 13 CIT at 424, 714 F.Supp. at 1227.
2. Freight Costs
The second challenge posed by plaintiff concerns Customs' inclusion of Sinalopasta's inland freight costs as part of the subject merchandise's dutiable value. Plaintiff claims the transaction value appraisement method under § 1401a(b), case law relating to the predecessor statute for the computed value method, and the GATT provisions upon which Congress based § 1401a all indicate Customs improperly regarded the freight costs as part of the merchandise's dutiable value. Baxter relies on the same matters as plaintiff to support plaintiff's position. Baxter, however, also argues the deductive value appraisement method contained in § 1401a(d), both statutory predecessors of the current computed value method, and various Customs decisions demonstrate the computed value method excludes freight costs.
The Court turns first to plaintiff's and Baxter's suggestion that it read the provisions governing the transaction value, deductive value, and computed value appraisement methods in pari materia, Specifically, plaintiff and Baxter cite to the exclusion from "price paid or payable" in the transaction value method for "costs, charges, or expenses incurred for transportation ... and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States." See 19 U.S.C. § 1401a(b)(4)(A) (1988). The parties also refer to the reduction from "price" in the deductive value method for "the actual costs and associated costs of transportation ... incurred with respect to international shipments of the merchandise concerned from the country of exportation to the United States." See 19 U.S.C. § 1401a(d)(3)(A)(ii) (1988). In essence, plaintiff and Baxter argue the foregoing passages indicate Congress intended to preclude Customs from using freight costs to determine dutiable value under any of the appraisal methods contained in § 1401a.
Plaintiff's and Baxter's argument does not persuade the Court that Congress intended to exclude inland freight costs such as those incurred by Sinalopasta from imported merchandise's computed value. As a general matter, statutes which relate to the same subject matter or have the same purpose or object are considered in pari materia and must be read together. RUTH F. STURM, CUSTOMS LAW AND ADMINISTRATION, § 51.6, at 59 (3d ed. 1992) (citations omitted). Yet, even when considered in pari materia, as urged by plaintiff and Baxter, the various appraisement statutes simply do not indicate a legislative intent to exclude categorically inland freight costs from all appraisement determinations made pursuant to § 1401a. To the contrary, a review of the scheme established in § 1401a shows Congress adopted five discrete methods for determining the value of imported merchandise. See § 1401a(a)(1)(A)-(F) (setting forth the order in which the various appraisal methods apply); see also S.REP. No. 249, 96th Cong., 1st Sess. 20, 114 (1979), reprinted in 1979 U.S.C.C.A.N. 381, 406, 500 (noting the appraisal methods have a "hierarchical" order and "order of priority").
The Court finds the diverse language contained in each of the provisions in § 1401a(a) through (e) underscores the mutual exclusivity of each appraisement method and the differences in their scope. For example, in general terms, the transaction and deductive value methods base appraisement determinations on the price of the imported merchandise or related merchandise with numerous adjustments. See § 1401a(b)-(d). On the other hand, the computed value method focuses on several components, including the *1450 costs to produce the merchandise, the profit and expenses actually realized or incurred, and other income and expense items. See § 1401a(e). The distinctions among the factors that inform Customs' determinations under the various appraisement methods strongly suggest Congress intended to separate the inquiries required by each method. In short, as the Customs Court observed previously, each method provides "a complete and inclusive formula" that Customs must apply accordingly. Schweppes, 43 Cust.Ct. at 611-12.
Moreover, because Congress expressly provided for transportation costs in connection with the transaction and deductive value methods and indicated nothing in this regard in drafting the computed value statute, it would appear Congress did not intend to preclude Customs from using such costs in appraising merchandise under the computed value method. In sum, Congress' silence indicates no specific exclusion or reduction from value based on transportation costs exists with respect to the computed value appraisement method. As a result, the Court concludes the statutory provisions contained in § 1401a(b)(4)(A), (d)(3)(A)(ii) which prescribe specific treatment for transportation costs under the transaction and deductive value appraisement methods do not apply to appraisements under the computed value method in § 1401a(e).
The Court next considers plaintiff's and Baxter's contention that the predecessors of the current computed value statute demonstrate the computed value method excludes inland freight costs such as those incurred by Sinalopasta. The computed value standard in § 1401a(e) stems from the constructed value and cost of production standards which existed under former law. See H.R.REP. No. 317, 96th Cong., 1st Sess. 94 (1979) ("The computed value standard under the proposed law conceptually follows the constructed value standard under present Section 402 and the cost of production standard under present Section 402a.") (emphasis added). The former constructed value standard based appraised value on the sum of
(1) the cost of materials (exclusive of any internal tax applicable in the country of exportation directly to such materials or their disposition, but remitted or refunded upon the exportation of the article in the production of which such materials are used) and of fabrication or other processing of any kind employed in producing such or similar merchandise, at a time preceding the date of exportation of the merchandise undergoing appraisement which would ordinarily permit the production of that particular merchandise in the ordinary course of business;
(2) an amount for general expenses and profit equal to that usually reflected in sales of merchandise of the same general class or kind as the merchandise undergoing appraisement which are made by producers in the country of exportation, in the usual wholesale quantities and in the ordinary course of trade, for shipment to the United States; and
(3) the cost of all containers and coverings of whatever nature, and all other expenses incidental to placing the merchandise undergoing appraisement in condition, packed ready for shipment to the United States.
19 U.S.C. § 1401a(d) (1976). The cost of production standard used the sum of
(1) [t]he cost of materials of, and of fabrication, manipulation, or other process employed in manufacturing or producing such or similar merchandise, at a time preceding the date of exportation of the particular merchandise under consideration which would ordinarily permit the manufacture or production of the particular merchandise under consideration in the usual course of business;
(2) [t]he usual general expenses (not less than 10 per centum of such cost) in the case of such or similar merchandise;
(3) [t]he cost of all containers and coverings of whatever nature, and all other costs, charges, and expenses incident to placing the particular merchandise under consideration in condition, packed ready for shipment to the United States; and
(4) [a]n addition for profit (not less than 8 per centum of the sum of the amounts found under paragraphs (1) and (2) of this subdivision) equal to the profit which ordinarily *1451 is added, in the case of merchandise of the same general character as the particular merchandise under consideration, by manufacturers or producers in the country of manufacture or production who are engaged in the production or manufacture of merchandise of the same class or kind.
19 U.S.C. § 1402(f) (1976).
Only one of the cases cited by plaintiff and Baxter addressed the question of whether inland freight costs should figure into imported merchandise's appraised value under the former constructed value or cost of production appraisement methods.[5] In R.J. Saunders & Co. v. United States, the Customs Court considered whether the cost of production measure under the former § 1402(f) included the cost of transporting the subject merchandise from the producer's factory in Czechoslovakia to Hamburg, Germany, the port of shipment to the United States. 26 Cust.Ct. 578, 580-81 (1951). The court noted all of the appraisal measures set forth in § 1402(f) except for the cost of production measure referred to the merchandise's value "in the `principal market' or `principal markets,' as the case may be, of either the country of exportation or of the United States[,]" but observed "the cost of production formula, however is silent as to the place at which the value represented thereby is to be determined." Id. at 580-81. The court nevertheless found the purpose of the cost of production measure "is to ascertain a value for merchandise in the country of manufacture or production, and this must particularly be true when, as here, the country of manufacture or production is also the country of exportation." Id. at 581. The court thereafter concluded "the charge for freight from the country of exportation, Czechoslovakia, to another country is not properly a part of the cost of production under the statutory formula." Id.
Several years before the Customs Court decided R.J. Saunders, the Court of Customs and Patent Appeals addressed the freight cost issue in connection with the foreign value appraisement measure under former § 402(c) of the Tariff Act of 1930. See United States v. Zellerbach Paper Co., 28 C.C.P.A. 303, C.A.D. 159, 1941 WL 4536 (1941). Section 402(c) read as follows:
The foreign value of imported merchandise shall be the market value or the price at the time of exportation of such merchandise to the United States, at which such or similar merchandise is freely offered for sale to all purchasers in the principal markets of the country from which exported, in the usual wholesale quantities and in the ordinary course of trade, including the cost of all containers and coverings of whatever nature, and all other costs, charges, and expenses incident to placing the merchandise in condition, packed ready for shipment to the United States.
Tariff Act of 1930, ch. 497, § 402(c), 46 Stat. 590, 708 (repealed 1979). The foreign producer in Zellerbach shipped its merchandise from its places of manufacture to the ports of exportation at either Hamburg or Bremen, Germany. Zellerbach, 28 C.C.P.A. at 304. The importer contended the cost of shipping from the place of manufacture to the port of exportation "should have been deducted from the invoice price to the importer" to determine the merchandise's appraised value. Id. Upon reviewing the record, the appellate court emphasized the following facts: (1) the per unit price at which the foreign producer sold its merchandise in the German home market remained the same regardless of where the buyer was located; (2) if the buyer paid freight charges, the producer or seller would deduct the charges from the invoice; and (3) if the producer or seller paid the freight charges, the buyer "would remit the total amount (based on the same unit price) to the seller." Id. at 306. Based on these facts, the court concluded the per unit price paid by the German buyers remained the same regardless of where the buyers were located and always included freight costs. *1452 Id. at 308. In short, because such price was identical in all German markets and included freight costs, the court held the merchandise's dutiable value should reflect the freight costs the producer incurred to transport the merchandise to the ports of exportation. See id. at 308-10.
The Customs Court in R.J. Saunders referred to Zellerbach, but distinguished the facts it addressed from those underlying the appellate decision. In contrast to Zellerbach, the R.J. Saunders court found the record before it did not indicate "the manufacturer and exporter paid the freight to inland destination in all instances and that the price was the same no matter what the destination was." 26 Cust.Ct. at 580. The court also noted, unlike Zellerbach, "the inland destination in this case, Hamburg, Germany, was not within the country of exportation, but was obviously the most convenient port of shipment for the overseas portion of the journey of exportation of the goods." Id. In distinguishing Zellerbach, however, the R.J. Saunders court did not appear to attach any significance to the fact that Zellerbach involved the foreign value appraisement measurea measure dissimilar to the cost of production measure. See id. at 580-81. Instead, the court emphasized the importance of applying the cost of production measure in the country of exportation, Czechoslovakia, and concluded "the charge for freight from the country of exportation ... to another country is not properly a part of the cost of production under the statutory formula." Id. at 581.
Contrary to plaintiff and Baxter, the Court finds R.J. Saunders inapplicable to the facts presented in this case. In R.J. Saunders, the Customs Court concluded because the cost of production measure must apply in the country of exportation and Czechoslovakia was the country of exportation, freight costs incurred to transport the merchandise beyond Czechoslovakia to Germany could not form part of the merchandise's dutiable value. Id. The R.J. Saunders court, therefore, had no occasion to consider the problem raised in the instant casenamely, whether costs incurred within the country of exportation are includible in merchandise's dutiable value. Because R.J. Saunders did not reach this issue, the Court finds the case's reasoning and holding inapplicable in this action.
The Court also finds the GATT provisions cited by plaintiff and Baxter do not support the exclusion of freight costs from dutiable value. The most pertinent of these provisions are articles 6 and 8.2 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT Customs Valuation Code). Article 6 sets forth the GATT's computed value appraisement method and reads as follows in relevant part:
The customs value of imported goods under the provision of this Article shall be based on a computed value. Computed value shall consist of the sum of:
(a) the cost or value of materials and fabrication or other processing employed in producing the imported goods;
(b) an amount of profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the country of importation;
(c) the cost or value of all other expenses necessary to reflect the valuation option chosen by the Party under Article 8.2
Customs Valuation Code, art. 6, reprinted in LAW AND PRACTICE UNDER THE GATT II.C.3 at 59-60 (Kenneth R. Simmonds & Brian H.W. Hill eds. 1988). Article 8.2, in turn, provides for the following:
In framing its legislation, each Party shall provide for the inclusion in or the exclusion from the customs value, in whole or in part, of the following:
(a) the cost of transport of the imported goods to the port or place of importation;
(b) loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation; and
(c) the cost of insurance.
Id. at art. 8.2, reprinted in LAW AND PRACTICE UNDER THE GATT II.C.3 at 62. Based on articles 6 and 8.2, the parties contend *1453 Congress' failure to provide for transportation costs in the computed value statute indicates the legislature sought to exclude such costs from the computed value method. The parties also maintain such an interpretation would conform United States law to the Customs Valuation Code.
The Court finds plaintiff's and Baxter's GATT-based arguments unpersuasive. The Court rejects these arguments for the reasons discussed previously with respect to plaintiff's and Baxter's reliance on the transaction and deductive value appraisement methods contained in § 1401a(b)(4)(A), (d)(3)(A)(ii). As noted above, the Court does not construe Congress' failure to address transportation costs in connection with the computed value method in § 1401a(e) to indicate an intention to exclude such costs from appraisements employing this method. Moreover, the Court does not believe Congress' omission in this regard demonstrates the legislature did not act in accordance with article 8.2. Even assuming Congress did not conform United States laws with the GATT, such a problem is immaterial to the Court's resolution of this case. See Suramerica de Aleaciones Laminadas, C.A. v. United States, 10 Fed.Cir. (T) ___, ___, 966 F.2d 660, 667 (1992) ("While we acknowledge Congress's interest in complying with U.S. responsibilities under the GATT, we are bound not by what we think Congress should or perhaps wanted to do, but by what Congress in fact did. The GATT does not trump domestic legislation; if the statutory provisions at issue here are inconsistent with the GATT, it is a matter for Congress and not this court to decide and remedy.") (citations omitted). Consequently, the Court finds the GATT provisions cited by the plaintiff and Baxter do not demonstrate Customs improperly treated Sinalopasta's inland freight costs as part of the subject merchandise's dutiable value. In addition, none of the other authorities cited by Baxter compels a different conclusion. The Court concludes, therefore, plaintiff and Baxter have failed to rebut the presumption of correctness attached to Customs' decision to treat Sinalopasta's inland freight costs as part of the subject merchandise's dutiable value. See 28 U.S.C. § 2639(a)(1); Moss, 13 CIT at 424, 714 F.Supp. at 1227.
IV. CONCLUSION
After considering all of the parties' contentions, the Court makes the following holdings: (1) Customs properly disallowed the deduction from general expenses that plaintiff claimed for taxes paid by its subsidiary and subsequently rebated under Mexico's CEDIS program; and (2) Customs correctly treated as general expenses the amount of freight costs that plaintiff's subsidiary incurred from its loading docks to the United States border. The Court will enter judgment for defendant.
ORDER
This case having been duly submitted for decision, and the Court after due deliberation, having rendered a decision herein; now, in conformity with said decision it is hereby
ORDERED that the appraisement by the United States Customs Service of the imported merchandise at issue in this case is sustained; and it is further
ORDERED that plaintiff's motion for summary judgment is denied; and it is further
ORDERED that defendant's cross-motion for summary judgment is granted; and it is further
ORDERED that this action is dismissed.
NOTES
[1] During oral argument in this case, defense counsel indicated defendant's assent to all 30 items set forth in plaintiff's Statement. See Transcript of Oral Argument at 2.
[2] Although Plaintiff's Statement at ¶ 16 indicates the auditors "recommended disallowance of the deduction ... of the CEDIS amounts from costs," the parties' pleadings, other items contained in Plaintiff's Statement, and numerous record documents demonstrates the claimed deduction and recommended disallowance pertained to expenses. See Pl.'s Compl. at ¶¶ 14, 15; Def.'s Answer at ¶¶ 14, 15; Pl.'s Statement at ¶ 11; Pl.'s Customs Form 247 at 3; Customs Audit, Ex. A at 3; Customs' Appraisement Explanation Letter dated May 21, 1984 at 1-2; Customs' Initial Protest Decision dated May 2, 1988 at 1, 3; Customs' Protest Decision Reconsideration dated Nov. 14, 1990 at 1-2. While the confusion between terms such as "costs" and "expenses" may appear minor, the Court observes such confusion in this case significantly hampered the parties' ability to explicate their respective positions and unnecessarily hindered the Court's ability to resolve the issues presented. The Court also notes where, as here, such obfuscation arises with respect to statutes, the application of which hinges upon terms such as "costs" and "expenses," counsel's carelessness with details such as statutory terminology becomes all the more inappropriate. See 19 U.S.C. § 1401a(e)(2) (1988) (specifying on the one hand the particular treatment Customs should accord to certain items in computing "cost or value" under § 1401a(e)(1)(A) and detailing on the other hand how Customs should calculate "general expenses" under § 1401a(e)(1)(B)).
[3] Similar to the confusion noted previously with respect to plaintiff's Statement's characterization of the recommendation made by Customs' auditors, plaintiff's Statement mischaracterized Customs' disallowance of plaintiff's claimed deduction as a deduction from "costs." See Statement at ¶ 19.
[4] See Pl.'s Compl. at ¶¶ 14, 15 (alleging plaintiff sought a deduction from expenses and Customs disallowed the deduction); Def.'s Answer at ¶¶ 14, 15 (admitting plaintiff allegations); Pl.'s Statement at ¶ 11 (noting plaintiff deducted the rebate amounts from expenses on its cost submission form); Pl.'s Customs Form 247 at 3 (same); Customs Audit, Ex. A at 3; Customs' Appraisement Explanation Letter dated May 21, 1984 at 1-2 (same); Customs' Initial Protest Decision dated May 2, 1988 at 1, 3 (same); Customs' Protest Decision Reconsideration dated Nov. 14, 1990 at 1-2 (same).
[5] Contrary to the reading urged by Baxter, the Customs Court in International Packers, Ltd. v. United States considered whether the constructed value measure under the former § 1401a(d) included export taxes paid to the Argentine government and not freight or transportation costs. See 52 Cust.Ct. 518 (1964). Consequently, the Court concludes the International Packers decision does not aid the freight cost inquiry.
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273 Md. 231 (1974)
328 A.2d 264
FEDERAL ARMORED EXPRESS, INC. ET AL.
v.
PUBLIC SERVICE COMMISSION OF MARYLAND ET AL.
[No. 48, September Term, 1974.]
Court of Appeals of Maryland.
Decided December 3, 1974.
*232 The cause was argued before MURPHY, C.J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.
Charles E. Brooks, with whom were John Grason Turnbull, II, William N. White and Brooks & Turnbull on the brief, for appellants.
William B. Dulany, with whom were Dulany & Davis on the brief, for appellee, Public Service Commission of Maryland. Peter A. Greene, with whom were Macleay, Lynch, Bernhard & Gregg, Samuel B. Drue and Mandel, Rocklin, Franklin & Drue on the brief, for other appellees.
SMITH, J., delivered the opinion of the Court.
Federal Armored Express, Inc. (Federal), and its related corporation, Dunbar Armored Express, Inc. (Dunbar), applied to the Public Service Commission (PSC) for intrastate operating authority. Their joint application was denied. They appealed to the Circuit Court for Baltimore County. Their petition filed there in support of their appeal pursuant to Maryland Rule B2 e included a request for a declaratory decree "that the business of armored car and courier carriage as conducted by [Federal and Dunbar] and others similarly situated is not properly within the sphere of regulation of the Public Service Commission," a point pressed in their appeal here. Thus, we have the anomalous situation of their complaining because the PSC did not grant their application and yet they are saying at the same time that they are not subject to PSC control.
Federal and Dunbar have been engaged for a number of years in operating an armored car and courier business in *233 the Baltimore and Washington metropolitan areas. On September 6, 1972, the Director of Transportation of the PSC wrote to the President of Federal. He forwarded a copy of a memorandum from PSC's Assistant Director of Transportation concerning his investigation of a complaint made by Bonded Armored Carrier, Inc. (Bonded), an intervenor before the PSC and one of the appellees here, that Federal and Dunbar were operating in violation of the law. The president was advised that "[t]he memorandum [was] self-explanatory and indicate[d] that Federal Armored Express, Inc. [was] engaging in the intrastate movements of certain property which require[d] certification from [that] Commission under [Maryland Code (1957, 1969 Repl. Vol.)] Article 78, Section 32," and that "[s]uch intrastate transportation should be properly regulated or discontinued." It was pointed out that "[f]ailure to comply could result in infringement proceedings by the Commission as provided by Article 78, Section 100A (a)." The then counsel for Federal advised the PSC one week later that they were "reviewing [their] client's situation in the light of [that] letter and the memorandum prepared by ... [PSC's Assistant Director of Transportation] after the complaint filed by Bonded Armored Carrier, Inc." and that counsel had "obtained the necessary [application for] permits and the same [would] be filed as and when a full determination of [their] client's position [was] completed."
On October 24, 1972, Federal and Dunbar filed a joint application "for permits to operate motor vehicles in public transportation over" certain specified routes that included a large part of the State. The requested permits were to be restricted "to the transportation of commercial papers, documents, and written instruments, including currency, and negotiable instruments used in the operations of banks and banking institutions; also, semi-processed (used) punch cards, business papers, records, and documents of all kinds used in the electronic processing and computing of business data; also film, photographic equipment and supplies, also whole human blood and blood derivatives, drugs, narcotics, pharmaceuticals and drug products." The application was *234 subsequently amended by the inclusion of coins among the items sought to be transported. After protests were received from other certificated carriers, the request for permission to transport film, photographic equipment and slides, whole human blood and blood derivatives, drugs, narcotics, pharmaceuticals, and drug products was deleted. Part of the application was a listing of motor vehicles for which permits were sought "to operate ... for public use on fixed routes in the State of Maryland." Also appended was "public motor vehicle schedule of rates and fares," specifying the rate to be charged for each of the items for which authority was sought.
The matter was heard by a hearing examiner of the PSC. He filed a comprehensive report in which the evidence and the law were reviewed. He concluded that the service performed by Federal and Dunbar was "public transportation for hire and not other transportation for hire on regular schedules and between fixed termini" and "[t]hat with the exception of exclusive use trips all of the transportation [then] provided by [Federal and Dunbar] requires a permit from [the PSC]." (Emphasis in original.) He found that Bonded and its affiliates were "performing satisfactory service to the public under the permits issued by [the PSC] and are capable of promptly meeting such additional service requirements as may result should the Commission adopt the findings and recommendations of its Examiner in this proceeding." The Commission denied the requested permits.
Motions to dismiss this appeal have been filed by the PSC and Bonded. The motions are based upon contentions that the record extract fails to comply with the provisions of subparagraphs b and c of Rule 828 and that the appeal should have been to the Court of Special Appeals. The latter contention is made notwithstanding the provisions of Maryland Code (1957, 1969 Repl. Vol.) Art. 78, § 98 providing for appeal to this Court by an aggrieved party. The provision for review of action of the PSC in § 90 is provided by § 91 to be to "the circuit court for any county within which *235 operations are carried on by the public service company involved, or in any equity court in Baltimore City." Code (1974) § 12-308 (a) (13), Courts and Judicial Proceedings Article provides that the Court of Special Appeals "has exclusive initial appellate jurisdiction over any appeal" in "[a]ny action in which an appealable judgment or decree has been entered by a court of equity." It is upon this basis that it is claimed that the appeal properly should be to the Court of Special Appeals. The contention is correct, but Rule 814 provides in pertinent part:
"When it shall appear that an appellant is or may be entitled to have an appeal heard and determined in the Court of Appeals or in the Court of Special Appeals, but not in the appellate court to which an appeal has been taken or transferred, the appeal shall not on that account be dismissed; but the case shall be transferred by an order of the court to which the appeal was improperly taken or by the Court of Appeals to the docket of the proper court, upon such terms as to payment of costs, including reasonable attorneys' fees, as the order may provide."
Since the case has been fully argued in this Court, we shall follow the procedure of our predecessors in Moulden v. State, 217 Md. 351, 353, 142 A.2d 595 (1958), and treat the appeal as an application for certiorari and grant the application. Since the appellants intended from the beginning to come to this Court, we shall decide so much of the case as can be decided with the abbreviated record extract before us. Because there are issues presented here which can be decided with the abbreviated record extract, we shall not dismiss the appeal on that account.
Federal and Dunbar first ask us to determine that the PSC "does not have jurisdiction over the appellants in that they are private carriers and not common carriers."
The requirement relative to permits for "motor carrier companies" is found in Code (1957, 1969 Repl. Vol.) Art. 78, § 32 (a-1) which states in pertinent part:
*236 "(a-1) When permits required. With the exceptions enumerated in subsection (b) of this section, no motor vehicle shall be used in the public intrastate transportation for hire, or in any transportation for hire on regular schedules and between fixed termini (as these terms are defined in Article 66 1/2, § 2) of passengers, or of property or freight ... without a permit from the Commission to the owner, which shall prescribe the route and schedule, if any, of operation."
None of the exceptions contained in subsection (b) of § 32 are here applicable. The examiner found that the activities of Federal and Dunbar did not constitute "other transportation for hire on regular schedules and between fixed termini." Thus, to be subject to PSC regulation it must be found that Federal's and Dunbar's operations are "public intrastate transportation for hire." The scope of our review is set forth in Art. 78, § 97 where it is said that a decision of the PSC "shall be prima facie correct and shall be affirmed unless clearly shown to be (1) in violation of constitutional provisions, or (2) not within the statutory authority or jurisdiction of the Commission, or (3) made upon unlawful procedure, or (4) arbitrary or capricious, or (5) affected by other error of law, or (6) if the subject of review is an order entered in a contested case after hearing, such order is unsupported by substantial evidence on the record considered as a whole."
The term "public intrastate transportation for hire" is not defined in Art. 78, but § 2 of that article defines "common carrier" as "any person ... engaged in the public transportation for hire of persons, property or freight...." (Emphasis added.) It will be recalled that reference was made to a "public service company" in § 91 which section provides where an appeal should be docketed. The definition of "public service company" in § 2(o) is:
"(o) `Public service company' means a common carrier company, gas company, electric company, steam heating company, telephone company, *237 telegraph company, water company, sewage disposal company, and/or any combination thereof. Two public service companies shall be considered of the same class, where they are both common carrier companies or both gas companies, electric companies, gas and electric companies, steam heating companies, telephone companies, telegraph companies, water companies or sewage disposal companies."
The Public Service Commission was created by Chapter 180 of the Acts of 1910. By Chapter 610 of the Acts of 1916 the PSC was granted the right to regulate motor vehicles used in the public transportation of passengers for hire, the provision becoming Code (1912) Art. 56, § 189. Smith v. State, 130 Md. 482, 483, 100 A. 778 (1917), construed this provision as "relating to the licensing of motor vehicles used as common carriers." It also said:
"The distinction is sought to be drawn on the basis of definite route and an established schedule. This ground is not tenable. The intent of the legislative enactment is perfectly clear. What that body was attempting to do, was to distinguish as between motor vehicles operated as common carriers, and those not regularly so operated; the former would be subject to the provisions of Chapter 610; the latter governed by the provisions of Chapter 687." Id. at 485.
This provision of the Code was again before the Court in Towers v. Wildason, 135 Md. 677, 109 A. 471 (1920). By that time the Act of 1916 had been amended by Chapter 199 of the Acts of 1918. Under that law it was "the duty of each owner of a motor vehicle to be used in the public transportation of passengers for hire operating over State ... roads ... in the State of Maryland to secure a permit from the Public Service Commission of Maryland...." Wildason lived near Bel Air in Harford County and was employed at Aberdeen Proving Ground. He was in the habit *238 of transporting five of his fellow employees to their place of employment in the morning and bringing them back in the evening "for a definite compensation per week." He had taken out a "hiring license" from the Commissioner of Motor Vehicles. The PSC brought suit to enjoin him "from operating one or more motor vehicles in the public transportation of passengers for hire from the town of Bel Air, in Harford County, ... to the town of Aberdeen, in said county ... over any State ... road ... without first having secured a permit so to do from the Public Service Commission of Maryland...." Judge Thomas for our predecessors referred to the language used in Smith and said:
"With this construction of the two Acts of 1916, it is apparent that unless the use the defendant made of his car brought him within the definition of a common carrier he was not subject to the provisions of Chapter 610. Chapter 180 of the Acts of 1910 (Sec. 413 of Art. 23 of the Code of 1912), declares that the term `common carrier' shall include all railroad corporations, etc., `and all persons and associations of persons, * * * operating such agencies for public use in the conveyance of persons or property within this State,' and Section 1 1/2 of Chapter 445 of the Act of 1914 (Section 413-A of Art. 23, Vol. 3, of the Code), provides that `The term "common carrier," * * * shall likewise include all automobile transportation companies, and all persons and associations of persons, whether incorporated or not, operating automobiles or motor cars, or motor vehicles, for public use in the conveyance of persons or property within this State.' It is clear from the evidence in the case that the use that the defendant made of his car did not constitute him a common carrier as that term is defined by the statutes referred to. He did not operate his car `for public use,' but only for his use and the use of the five men we have named." Id. at 682-83.
*239 Towers must be placed in the context that language similar to that found in § 32 (a-1) relative to "transportation for hire on regular schedules and between fixed termini" did not come into the Maryland law until 1927 with the enactment of Chapter 152 of the Acts of that year.
The same sections of law considered in Smith and Towers were before the Court in Goldsworthy v. Pub. Serv. Comm., 141 Md. 674, 678, 680, 119 A. 693 (1922). There the owner of a "passenger truck," Goldsworthy, entered into a contract with Buckell by which Buckell hired the truck for the purpose of transporting such persons as Buckell might desire. Goldsworthy agreed to transport any and all persons designated by Buckell to a number equal to the capacity of the truck. Transportation was between two points in Allegany County. The PSC brought suit against Goldsworthy and Buckell to restrain their operation of the motor vehicle for the public transportation of passengers without first obtaining a permit. The Court indicated that the question before it was whether or not Buckell and Goldsworthy were common carriers.
The same statute was again before the Court in Restivo v. Pub. Serv. Commn., 149 Md. 30, 129 A. 884 (1925). Restivo had previously operated a bus business which he sold to Blue Ridge Transportation Company. Shortly after that sale he began to run certain buses and cars over the same route on Sundays. The PSC advised that he was violating the "Public Passenger Motor Vehicle Law" and that if he did not cease his operations he would be arrested by the state police for the violation. Restivo thereupon filed a bill in the Circuit Court of Baltimore City seeking to enjoin the PSC and the Commissioner of Motor Vehicles from preventing him from operating his "busses and ... touring cars" and "from interfering in any way with the said plaintiff or with the said busses and touring cars or with the agents and servants of the plaintiff in operating said busses and touring cars." Judge Walsh indicated for this Court that the question to be decided was whether Restivo was a common carrier, adding:
"It is difficult to determine with exactness just when the owner of a motor vehicle is operating as a *240 common carrier, as that term is ordinarily understood in the law, but the courts have not been inclined to excuse the increasing number of those who earn their livelihood by transporting persons or goods for hire in motor vehicles, from the responsibilities of common carriers simply on technical grounds, and they have been particularly slow to excuse them when their plan of operation bore evidence of being a studied attempt to reap the rewards of common carriers without incurring the corresponding liabilities." Id. at 34-35.
In Pub. Serv. Commn. v. West. Md. Dairy, 150 Md. 641, 135 A. 136 (1926), the Court was concerned with what was then Code (1924) Art. 56, § 258, originally enacted by Chapter 714 of the Acts of 1916, making it "the duty of each owner of a motor vehicle to be used in the public transportation of merchandise or freight, operating over State ... roads ... in the State of Maryland, to secure a permit from the Public Service Commission of Maryland, to operate over said roads and streets...." The dairy collected milk from various farmers and transported that milk to its dairy in Baltimore. It claimed that it was not required to obtain a permit because it was engaged in the private transportation of its own milk. The Court held the ownership of the milk was in the producers while in transportation and thus subject to PSC regulation. In the process it quoted the language we have quoted above from Restivo.
It will be recalled that the PSC examiner found that the activities of Federal and Dunbar did not constitute "other transportation for hire on regular schedules and between fixed termini," with which findings Federal and Dunbar are in full agreement. Bearing this in mind and also bearing in mind the definitions we have quoted from the statute and the interpretations placed by our predecessors upon identical language relative to "public transportation for hire" appearing in the statutes which preceded the present § 32 (a-1), we hold that for Federal and Dunbar to be subject *241 to PSC regulation it must be found that they are common carriers.
In passing upon this point we are faced with the stark fact that not one iota of the evidence before the PSC has been printed in the record extract. That extract has been limited to the report of the hearing examiner, the PSC order, the order for appeal to the circuit court, the petition in support of appeal there, and the chancellor's opinion. Thus, without resort to the voluminous PSC record, we are left in the position of not having before us a basis for determining whether the operation of Federal and Dunbar is "within the statutory authority or jurisdiction of the Commission" or for a determination of the validity of the contention of Federal and Dunbar that the order here "is unsupported by substantial evidence on the record considered as a whole." As far back as 1948, Judge Henderson commented for the Court in Platt v. Wilson, 191 Md. 371, 62 A.2d 191 (1948):
"We have indicated in several recent cases that this court will not undertake to pass upon testimony contained in the transcript, but not printed in an appendix to the brief, as contemplated by rule 39 of this court, so as to be available to each member of the court." (Citations omitted.) Id. at 373.
In McIntyre v. Byrne, 217 Md. 71, 141 A.2d 692 (1958), Judge Prescott said of Rule 828:
"The Rule is clear, definite and certain; there is little excuse for having an attorney's compliance therewith questioned, much less to have it closely challenged. The substantial rights of litigants to have judgments and decrees reviewed upon appeal should not be jeopardized by the possibility of failing to comply, or reluctance to comply, with a Rule so easy to follow." Id. at 74.
More recently, in State Roads Commission v. Sharper, 231 Md. 411, 190 A.2d 647 (1963), Judge Marbury said for the Court:
"Maryland Rule 828 b 1 specifies that the printed *242 extract shall contain such parts of the record reasonably necessary for the determination of questions presented on appeal. It is noted that this section is a mandatory requirement." Id. at 413. (Emphasis in original.)
There is no shortage of pronouncements on this subject by this Court. See, e.g., Caroline v. Reicher, 269 Md. 125, 137, 304 A.2d 831 (1973); A.S. Abell Co. v. Skeen, 265 Md. 53, 58-59, 288 A.2d 596 (1972); Basiliko v. Royal Nat'l Bank, 263 Md. 545, 549, 284 A.2d 227 (1971); and Walsh v. Lewis Swim. Pool Constr., 256 Md. 608, 617, 261 A.2d 475 (1970). From the meager record extract printed we are unable to say whether there is evidence from which the PSC could have found Federal and Dunbar to be common carriers. Therefore, we do not have a basis for determining whether the chancellor or the PSC erred in determining that these corporations were engaged in "public intrastate transportation for hire ... of property or freight."
The second contention of Federal and Dunbar is that "the decision of the Public Service Commission [refusing to grant the desired permits] is clearly erroneous and contrary to the substantive evidence." They point out that they "and protestants below have been in business for almost twenty years and their businesses have expanded with the growth of the banking institutions and other businesses and the need for transportation of commercial paper, documents and other business data" and that "[t]he question here is not strictly speaking [that of an application] for a new certificate, but merely to comply with the requests of the Public Service Commission so as to avoid any possibility of violation of the law."
Federal and Dunbar are not entitled to any special consideration because of their prior operation. Their contention here is but little different from that which was before the Court in Clark v. Pub. Serv. Commission, 209 Md. 121, 120 A.2d 363 (1956). Clark had held a certificate for many years from the Interstate Commerce Commission authorizing him to transport general commodities in *243 interstate commerce over designated regular routes between Baltimore and Washington. He was also authorized to give service to and from all intermediate points and the off-route points of Fort George G. Meade, Gambrills, Millersville, and Odenton in Maryland. He admitted that for 11 years he hauled freight from Baltimore to Annapolis, not only by way of Washington as authorized by the ICC, but also by direct route. In 1952, on advice of counsel, he discontinued intrastate operations. He then gave his drivers instructions to cross into the District of Columbia before going to Annapolis, thinking, so it was said, that he was thereby complying with his certificate from the ICC. The Public Service Commission held that Clark should not be allowed to convert intrastate commerce into interstate commerce by merely crossing the state line. This Court affirmed. Before our predecessors at the same time was Clark's application for a permit to operate as a carrier of freight between Baltimore and Annapolis over Maryland Route 2. He produced witnesses, including the county manager of Anne Arundel County, who testified that his service had been satisfactory and who recommended that he be granted a permit. The application was opposed by competitors. Judge Delaplaine said for the Court:
"In this case the evidence failed to show that the service furnished by City Express, Inc., was inadequate or unsatisfactory. The testimony of Barker, its general manager, was uncontradicted that there had been no complaint of its service. His testimony was also uncontradicted that it had ample equipment to carry all freight to Annapolis and intermediate points. He said that the company had 32 trucks, 39 trailers, 40 tractors, and 11 company and service cars. In addition, its rates have been about 10 cents per 100 pounds lower than appellant's rates.
"As the evidence in this case did not show that the order of the Commission was arbitrary or unreasonable, but on the contrary was sufficient to support the finding that City Express, Inc., was *244 furnishing the public adequate and satisfactory service, the order of the Court below dismissing appellant's bill must be affirmed." Id. at 133.
Thus, any claim for special consideration here because of the prior activities of Federal and Dunbar must fall. Any contention that the PSC erred otherwise in not granting the requested permits likewise must fail because we have not been supplied in the record extract with any evidence which was before the PSC. Therefore, we have no basis for making a determination that the PSC's order was unsupported by substantial evidence on the record considered as a whole.
Federal and Dunbar next contend that "the failure to permit the appellants to continue to operate as private carriers or to grant them a permit so that their established business will continue is a denial of the due process of law." This in essence amounts to an argument that if one operates without PSC authority long enough, then the PSC is bound to grant authority if one applies for it, possibly something akin to a prescriptive right. We are unable to subscribe to such a proposition. The contentions made on behalf of Federal and Dunbar are similar to those made on behalf of Restivo, Western Maryland Dairy, and Clark, all of which our predecessors found to be without merit. In Salisbury Beauty Schools v. St. Bd., 268 Md. 32, 63, 300 A.2d 367 (1973), we said that "[a]lthough it is recognized that estoppel may operate against the State by acts done in its proprietary capacity, the doctrine of estoppel will not be applied against the State in the performance of its governmental, public or sovereign capacity or in the enforcement of police measures." The position in which Federal and Dunbar find themselves differs but little from that of parties in zoning cases in which we have held that the doctrine of equitable estoppel would not apply. See City of Hagerstown v. Long Meadow, 264 Md. 481, 495, 287 A.2d 242 (1972), and Kent County v. Abel, 246 Md. 395, 399, 403, 228 A.2d 247 (1967), and authorities cited in each.
Motions to dismiss denied; decree affirmed; appellants to pay the costs.
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848 S.W.2d 859 (1993)
Margaret KILPATRICK and Susan Crull (Assignee and Successor in Interest of Helen Sears), Appellants,
v.
The ESTATE OF Oneta A. HARRIS, Nettie Ruth Hoskins, Independent Executrix of the Estates of Oneta A. Harris, Deceased and Earl Bancroft Harris, Deceased and Nettie Ruth Hoskins, Individually, Appellees.
No. 13-91-491-CV.
Court of Appeals of Texas, Corpus Christi.
February 18, 1993.
Rehearing Overruled March 18, 1993.
*860 Richard B. Stone, Law Offices of Stone & Stone, Corpus Christi, for appellants.
M.W. Meredith, Jr., Caroline L. Bertuzzi, Meredith, Donnell & Abernethy, Corpus Christi, for appellees.
Before NYE, C.J, and KENNEDY and GILBERTO HINOJOSA, JJ.
OPINION
NYE, Chief Justice.
Appellants Margaret Kilpatrick and Helen *861 Sears,[1] sisters of Earl Harris, appeal from a judgment imposing a constructive trust upon Oneta Harris's estate. Appellants claim that the trial court erred by imposing a constructive trust on Oneta Harris's estate and ordering that the assets of Oneta's and Earl's estates be distributed according to the constructive trust. We affirm the trial court's judgment.
Earl and Oneta Harris were husband and wife. They lived in Robstown, Texas. They had no natural or adopted children. Earl and Oneta ran their own asphalt paving business and an oilfield service business. Together, Earl and Oneta amassed an estate of almost one million dollars. In October of 1974, Earl executed his will. Oneta wrote a virtually identical document which was signed and witnessed two days after Earl's.[2] Two of the witnesses to Earl's will also witnessed Oneta's. Although each made a separate instrument, the provisions of the two were virtually identical. Earl's will provided that if he died first, he gave Oneta a life estate in all of his property, with the remainder to be divided equally between appellants. Oneta's will mirrored Earl's, except that she devised the residue of her estate to her relatives in unequal portions.[3]
Earl died on August 23, 1984. At the time of his death, his will was not found, and his property passed to Oneta by intestate succession. Under independent administration, all of Earl's assets were transferred to Oneta. They still remain in Oneta's estate.
Oneta Harris died on September 15, 1985, leaving a will dated September 27, 1984. An independent administration was opened on October 8, 1985, naming Nettie Ruth Hoskins as the Independent Executrix of Oneta Harris's estate. Hoskins was the Harrises' accountant and a long-time friend. Hoskins administered Oneta's estate according to the provisions of her 1984 will. Estate taxes were paid on the value of Oneta's total estatealmost one million dollars.
In September of 1986, Hoskins found Earl's 1974 will among the Harrises' papers. Earl's will was then admitted to probate on January 22, 1987. The court subsequently ordered the causes on the two estates to be consolidated and issued letters testamentary naming Nettie Ruth Hoskins the independent executrix for Earl's estate. Thereafter, appellants filed a petition requesting an accounting, distribution, and removal of the independent executrix (or to require her to post bond). They also requested that the affidavit of intestacy on Earl's estate be set aside and that his estate be probated according to his will. They argued that the distribution of the assets according to Oneta's will was not in accordance with Earl's wishes and had given Oneta's legatees a disproportionate share of the assets.
Hoskins claimed that Earl and Oneta had contractual wills. The parties tried and *862 submitted this issue to a jury. The jury found that:
Earl and Oneta entered into an agreement between themselves that each of them would make a will whereby the survivor would have the use of all of the property of both of them during the survivor's life, and then the remaining property would pass one-half to Earl's selected relatives and friends and one-half to Oneta's selected relatives and friends.
By point two, appellants complain that the trial court erred by imposing a constructive trust upon Oneta's estate and in ordering the distribution of the properties of both estates in a manner that ignores both parties' wills. The trial court entered judgment based upon the jury's findings that Earl and Oneta entered into the agreement, that Earl executed his 1974 will pursuant to that agreement, and that Oneta's 1984 will breached their agreement. Appellants claim there is no evidence or insufficient evidence to uphold the jury's answers to these questions.
In reviewing no evidence points, we must consider only the evidence and reasonable inferences tending to support the jury's findings and disregard all evidence and inferences to the contrary. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983). If there is any evidence of probative force to support the jury's findings, the "no evidence" point must be overruled. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). When reviewing insufficient evidence points, we must consider and weigh all the evidence. The jury findings will be upheld unless the evidence to support a finding is so weak that it is clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).[4]
First, appellants attack the finding of an agreement and argue that the "agreement" found by the jury is not an enforceable contract because there is no evidence showing a meeting of the minds, no comprehensive plan for the distribution of the estates, and no definite designation of beneficiaries or gifts. One who contends that mutual wills are contractual as well as testamentary in character has the burden to prove that the wills are contractual and resulted from a mutual agreement by both parties. Kastrin v. Janke, 432 S.W.2d 539, 540 (Tex.Civ.App.El Paso 1968, writ ref'd n.r.e.). Usually, such proof includes a showing that the wills are mutual, irrevocable and resulted from a prior agreement whereby each party agreed to execute the will in question in return for the execution of a will satisfactory to him by the other party. Kastrin, 432 S.W.2d at 540.[5] The agreement must be definite, defined, or certain in all of its parts. Magids v. American Title Ins. Co., 473 S.W.2d 460, 465 (Tex.1971). Proof that a will is contractual may be made by provisions of the will itself or by competent witnesses who testify of the agreement. Evidence of declarations of the promisor, relations or conduct of the parties and other facts and circumstances that tend to prove that an agreement was made, are admissible. Knesek v. Witte, 754 S.W.2d 814, 817 (Tex. App.Houston [1st Dist.] 1988, writ denied).
An examination of Earl's 1974 will and Oneta's two wills reveals no language which indicates that the wills are contractual or mutual. Therefore, we must examine the record to determine whether there is any extrinsic evidence showing a meeting of the minds and a definite designation of beneficiaries and gifts.
Hoskins presented her own testimony and that of Bob Payne and Jacque Hefte. Hoskins testified that she talked to Earl "at length" about what "they were doing with their estate plan," that is, why they *863 had prepared their 1974 wills the way they had. Hoskins testified that she had several meetings with Earl and Oneta. Although Hoskins knew of their 1974 wills and the agreement between them, she testified that she eye-witnessed only one meeting with both Earl and Oneta. That particular meeting took place "long after the '74 wills had been signed." At that time, the Harrises agreed on a change to Oneta's will regarding one of her heirs, but there was no change in their agreement that fifty percent of the total estate would go to each of their respective sides of the family. Hoskins stated that the change was made to both Earl's and Oneta's wills. Hoskins stated that when the meeting she attended took place, the Harrises were planning to make new wills which would leave the first decedent's property to the other "outright," with no distribution until after the last one died. The new wills were never made. Nevertheless, Hoskins' testimony established that at all times the agreement was to divide the estate evenly.
Bob Payne, Earl's business partner, testified that on one or two occasions Earl told Payne his plans for dividing his and his wife's estate. That plan was to divide it evenly between their families. Payne also told the jury about a conversation he had with Oneta after Earl's death. He stated:
she and Earl had always said they were going to divide their estate between their families and that she had to change her will because Earl had always been very generous with her family, and she wanted to make sure that half of her estate went to his sisters.
At that time, Oneta possessed 100% of Earl's estate through the laws of intestacy because Earl's will had not been found. Payne stated that he understood that their agreement was to "divide everything equal." He further explained that, while Earl was a very private person and did not discuss the matter very deeply, Oneta discussed their agreement with him in detail.
Jacque Hefte, a close friend of the Harrises, testified that Earl and Oneta discussed the disposition of their estate with her "many times." She stated that "they wanted the property split right down the middle.... Earl wanted his sisters to get his half and Oneta's relatives her half." She did not recall any provision for the survivor to have all the property up until his or her death. Hefte said that Earl and Oneta made these statements to her in each other's presence many times. After Earl's death, Oneta was very determined to comply with Earl's wishes, which were that Oneta's family was to have one-half and Earl's sisters the other half.
The Harrises' 1974 wills were entered as evidence corroborating their agreement. Hoskins also introduced documents showing that in 1980 through 1983 Earl made gifts of 125 shares of stock to Helen Sears, his sister, and to Oneta's sister, Gertrude Coffman. The Harrises had received the stock as consideration from the sale of their business. Oneta continued the pattern of giving equal gifts to both her and Earl's relatives by giving $10,000 to each side of the family in 1985. Again in 1985, Oneta gave $1,500 to her sister, Gertrude Coffman, and $1,500 to Earl's sister, Helen Sears. The foregoing evidence constitutes more than a scintilla and supports the jury's finding that Earl and Oneta agreed to make wills giving a life estate to the survivor and then to divide their estate evenly between their relatives.
Contrary to appellants' contention, the trial court did not "make up" amounts or beneficiaries. The wills themselves show the percentages of the gifts to be made to each family member. We disagree with appellants' claim that the essential terms of the agreement were too indefinite to be enforced and that there was a fatal lack of a clear plan of distribution. The jury found that the agreement alleged did exist. Earl's 1974 will and Oneta's 1984 probated will made it clear who the couple's intended beneficiaries were. Once the jury found an agreement to split the estate evenly, the beneficiaries were plain from the wills before the court. We do not find the terms of the agreement to have been too vague and indefinite to preclude enforcement. The evidence is not so weak that the jury's *864 finding is clearly wrong or manifestly unjust.
Appellants argue alternatively that Oneta's 1984 will did not breach the agreement because Kilpatrick and Sears were also Oneta's "friends and relatives," and the agreement allowed Oneta to designate whomever she wished as beneficiaries. The jury found that the effect of Oneta's 1984 will is to distribute 75% of the total estate to Kilpatrick and Crull and 25% to relatives and friends designated by Oneta. The effect of her 1984 will is contrary to the Harrises' agreement that each side of the family receive fifty percent only of the total estate. That Oneta's relatives would receive fifty percent of the estate was as much a part of Earl's bargain as was the term that his relatives would receive fifty percent. The evidence is sufficient to support the jury's findings.
Next, appellants argue that the critical question in this case, whether Oneta's 1984 will breached the contractual agreement made in 1974, was omitted from the charge. They objected to the omission of this issue and tendered it in writing to the court. See Wright Way Construction v. Harlingen Mall Co., 799 S.W.2d 415, 418-19 (Tex.App.Corpus Christi 1990, writ denied); see Tex.R.Civ.P. 278. We find no error in the court's charge. By their answer to question 1, the jury found that Earl and Oneta had entered into the agreement on or around 1974. Hoskins' question 3 asks if Oneta breached the agreement "if the effect of her will is to distribute the total estate of Earl and Oneta Harris 75% to those designated by Earl and 25% to those designated by Oneta." We believe the charge is clear. As appellants have pointed out, only Oneta's 1984 will was proven to have been executed, probated, and therefore effective. While we agree with appellants that there was some evidence of another agreement between Earl and Oneta around 1984 concerning their plan to execute new wills to affect a different distribution of property to the surviving spouse, the evidence showed that those wills were never made. The case was tried and submitted on the theory of the 1974 agreement and the ensuing execution of Earl's will. The jury was asked if Earl and Oneta had entered an agreement "on or before October 7, 1974." Next, the jury was asked if Earl executed his will pursuant to this agreement. The jury found that he did. Finally, the jury was asked if Oneta failed to carry out the agreement "if the effect of her will was to distribute the total estate of Earl and Oneta Harris 75% to those designated by Earl and 25% to those designated by Oneta." The jury found that she did breach the agreement.
Finally, appellants complain that Earl and Oneta's agreement was not in writing. Earl's will was executed in 1974. At that time, nothing in the law required wills to expressly recite the existence of a contract. Tex.Prob.Code Ann. § 59A (Vernon 1980), (effective only upon wills executed after Sept. 1, 1979), requiring the wills to expressly state that a contract exists. Wiemers v. Wiemers, 683 S.W.2d 355, 356 (Tex. 1984).
Similarly, appellants argue that the Harrises' oral agreement violates the statute of frauds. An oral agreement to make mutual wills can be taken out of the statute of frauds by partial performance. Kastrin, 432 S.W.2d at 541. Such partial performance occurs when the first party to the agreement dies, having performed his obligation, and the survivor benefits from that performance. Although she initially did not take under the will, Oneta benefitted from Earl's performance of the obligation when he made his will pursuant to their agreement. When his will was finally probated, Oneta's estate received an estate tax refund. Thus, Oneta benefitted from Earl's performance, and the agreement does not fall within the strict confines of the statute of frauds.
In addition, both Earl and Oneta performed acts in partial compliance with their agreement. In the years 1980-1983, Earl delivered equal gifts of stock to his and Oneta's relatives, in accordance with their agreement to divide the estate. After Earl's death, Oneta also made equal cash gifts to both her own and Earl's relatives. *865 Further, Oneta made her 1984 will with the mistaken belief that Earl had no will and her new will was the only way to comply with their agreement. Absent some showing of fraud or undue influence, the testator's mistake of law or fact will not invalidate her will, even if she would have made a different will had she known the true facts. Carpenter v. Tinney, 420 S.W.2d 241, 244 (Tex.Civ.App.Austin 1967, no writ). To probate Earl's will and then to probate Oneta's 1984 will according to its strict language, without reference to their agreement, which precipitated the making of the wills, would amount to a fraud on both estates. The law will enforce contractual wills because it would be manifestly unjust to permit the surviving party to the contract to disavow it and its obligations, as those obligations are incorporated in the will, after the other party has fully performed by abiding by it until his ability to revise it has been terminated by death. Novak v. Stevens, 596 S.W.2d 848, 852 (Tex. 1980). As stated before, the agreement that Oneta's relatives would receive fifty percent of the estate was as much a part of the bargain as the term that Earl's relatives would receive fifty percent.
Finally, appellants complain that Hoskins was barred by limitations from asserting the Harrises' contractual agreement. Appellants correctly state the law in Texas, that in a case involving a constructive trust, the statute of limitations does not begin to run until the beneficiary knew or should have known that he had a cause of action. See Knesek, 754 S.W.2d at 815. Appellants argue that Hoskins should have known that she had a contractual wills claim in September of 1986 when she discovered Earl's will, since she knew the provisions of both wills. Yet she did not file her answer alleging contractual wills until September 6, 1989, more than two years later. We disagree with appellants' argument. Hoskins's defense of contractual wills merely adds additional facts and asserts additional defenses to the cause of action appellants filed against her. It does not arise out of a transaction or occurrence which is new or different from appellant's cause of action. Therefore, her September b, 199 amended answer in which she alleged contractual wills for the first time relates back to the filing of her original answer, on July 25, 1988. Such date was within two years of the earliest date from which the contractual wills claim could have accrued, that is, September of 1986 when Earl's will was found. See Knesek, 754 S.W.2d at 816; Tex.Civ.Prac. & Rem.Code Ann. § 16.068 (Vernon 1986); see also Weidner v. Crowther, 291 S.W.2d 472, 477 (Tex.Civ.App.Austin 1956), affd, 157 Tex. 240, 301 S.W.2d 621 (1957). We find no error. Point two is overruled.
By their first point of error, appellants claim that the trial court erred in ordering distribution of Earl's estate in a manner contrary to his will. Earl gave Oneta a life estate in all of his property. After his death, all of the assets of Earl's estate were transferred into Oneta's. Earl's will provided that, when Oneta died, the residue of his estate would be divided equally between his sisters. The trial court's disposition of 25% each, of the total estates of Earl and Oneta Harris, to Helen and Margaret, is in accordance with Earl's desire that all of his one-half share of the estate go to appellants. We see no error in the trial court's disposition.
Appellants wish the trial court to transfer Earl's assets back to his separate estate and to have the estate administration reopened. Appellants claim that the trial court's failure to do so deprives them of their right to have Earl's will probated under sections 37 and 83 of the Probate Code. See Tex.Prob.Code Ann. §§ 37, 83 (Vernon 1980). Section 83(c) of the Probate Code provides:
Whenever letters of administration shall have been granted upon an estate, and it shall afterwards be discovered that the deceased left a lawful will, such will may be proved in the manner provided for the proof of wills. All acts done by the first administrator prior to the qualification of the executor or of the administrator with the will annexed, shall be as valid as if no such will had been discovered. Tex. Prob.Code Ann. § 83(c) (Vernon 1980).
*866 We believe that the trial court's order ior distribution of Earl's estate is in harmony with his will and with the provisions of the Probate Code. Appellants concede that § 83 validates acts of the intestate administrator, but they argue that, when a valid will is later found, the administrator's acts are voidable and may be set aside by the court. Appellants further complain that the court's order closing Earl's estate was error because it was filed by Hoskins, who at that time was not executrix of Earl's estate.
We note that appellants state that certain transfers of property have already been made, at the agreement of all parties. While asking this Court to set aside the administrator's acts and separate Earl's assets, they somewhat inconsistently request that these distributions not be disturbed. The trial court has ordered distribution of the assets of the estates to appellants in percentages commensurate with the devise in Earl's will. Texas Rule of Appellate Procedure 81(b)(1) states:
no judgment shall be reversed on appeal and a new trial ordered in any cause on the ground that the trial court has committed an error of law in the course of the trial, unless the appellate court shall be of the opinion that the error complained of amounted to such a denial of the rights of the appellant as was reasonably calculated to cause and probably did cause rendition of an improper judgment in the case.
The trial court did not ignore the distribution scheme of Earl's will. Rather, it distributed Earl's estate to his family as he directed. We find no reversible error. Point one is overruled.
The judgment of the trial court is AFIRMED.
NOTES
[1] Mrs. Sears is now deceased and her interest in the lawsuit has been assigned to her only child, Susan Crull.
[2] Although Oneta's 1974 will was signed, dated, and apparently witnessed, the executrix Hoskins never conclusively established that it was executed. At no time did Hoskins ever attempt to prove execution or to probate Oneta's 1974 will.
[3] Paragraph 4 of Earl's will provided that if Oneta predeceased him, he devised one-half of his property to his sisters, to be divided equally. The other one-half of the property he devised to Oneta's relatives in the following percentages: 33% to Hoyt Wilkerson, 33% to Beth Marie Manning, 17% to Gertrude Coffman, and 17% to Arthur Ralph Tucker.
The corresponding portion of Oneta's 1974 will mirrored Earl's. It provided that if he predeceased her, she devised one-half of her property to appellants, to be divided equally. The other half she devised to her family as follows: 33% to Hoyt Wilkerson, 33% to Beth Marie Manning, 17% to Gertrude Coffman, and 17% to Arthur Ralph Tucker.
It appears from the plain language of paragraph 4 that neither of the wills actually affect a 50-50 disposition of the entire estate if the testator died last. However, the paragraph 4 language never became effective in either will. Earl died first, making the life estate provision of his will effective. Oneta executed a different will in 1984, thereby revoking her 1974 will. Appellants do not complain on appeal of the admission of the wills as evidence corroborating an agreement between Earl and Oneta to divide their estate equally between their two families.
[4] Appellants also claim that the jury findings are against the overwhelming weight and preponderance of the evidence. Such a claim is used by the appellant when attacking an adverse finding upon which he had the burden of proof. Raw Hide Oil & Gas, Inc. v. Maxus Exploration Co., 766 S.W.2d 264, 275-76 (Tex.App.Amarillo 1988, writ denied); Hall, Standards of Appellate Review, 21 St. Mary's L.J. 865, 909 (1990).
[5] The issues of proof of consideration and irrevocability are not before us. See Kastrin, 432 S.W.2d at 540. Therefore, we do not address them.
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853 F.Supp. 585 (1994)
INTERNATIONAL CONTROLS AND MEASUREMENTS CORP., a New York Corporation, Plaintiff,
v.
WATSCO, INC. and Watsco Components, Inc., both Florida Corporations, Defendants.
WATSCO, INC. and Watsco Components, Inc., both Florida Corporations, Counterclaimants,
v.
INTERNATIONAL CONTROLS AND MEASUREMENTS CORP., a New York Corporation, Counterdefendants.
Civ. A. No. 92-CV-1304 (FJS).
United States District Court, N.D. New York.
May 23, 1994.
*586 Harris, Beach & Wilcox (August E. Roehrig, of counsel), Syracuse, NY, for plaintiff and counterdefendant.
MacKenzie Smith Lewis Mitchell & Huggins (Arthur A. Chalenski, Jr., Peter D. Carmen, of counsel), Syracuse, NY, for defendants and counterclaimants.
DECISION AND ORDER
SCULLIN, District Judge:
INTRODUCTION
Plaintiff has brought this patent infringement action pursuant to 35 U.S.C. § 284, alleging that defendants have willfully infringed upon plaintiff's patent for an air conditioning device by, inter alia, marketing these infringing products. Defendants have denied infringement and have counterclaimed for damages arising out of plaintiff's alleged unfair competition and patent misuse as well as for a judicial declaration that the patent at issue is invalid.
On August 12, 1993, after Magistrate Di Bianco conducted an extensive hearing on plaintiff's motion for a preliminary injunction, the court approved Magistrate Di Bianco's *587 report-recommendation and entered a preliminary injunction against both defendants. Paragraph 3 of that Order (the "marketing" paragraph) held that "Defendants are thus enjoined from marketing all models of the WATSCO EAC 511 series except for the Model 511 ADJ (to the extent that it is still used) and their WATSCO EAC-650-003-300-W, pending the outcome of the instant action". On January 24, 1994, plaintiff filed a motion to hold defendants in contempt of that Order, and specifically the "marketing" paragraph. The court heard oral argument on this motion on April 8, 1994 and reserved decision at that time. This order constitutes the decision of the court.
BACKGROUND
At issue in this dispute are "lock-out timers" (also known as time delay devices), which are used to prevent the compressor in an air conditioning system from prematurely restarting after the system has been shut off. Plaintiff ICM claims that it owns the exclusive right to manufacture, use and market lock-out timers embodying the invention described in United States Patent No. 4,991,049, entitled "Anti-Short-Cycle-Circuit", issued on February 5, 1991 to Andrew S. Kadah. Plaintiff alleges that it has acquired this exclusive right through its acquisition of the patent by agreement with the patent inventor, Mr. Kadah, and defendant Watsco Components's model EAC-511/4-300-W and EAC-650-003-300-W lock-out timers infringe on that patent.
Plaintiff ICM and defendant Watsco Components actively compete in the market for these devices. Defendant Watsco, Inc. is a "holding company", doing business solely through its subsidiaries, one of which is defendant Watsco Components. Watsco Components markets, sells and ships its own products as well as distributing them nationally through several distributors, the independence of one of which, Gemaire, plaintiff ICM challenges.
Like Watsco Components, Gemaire is substantially owned by Watsco, Inc. Watsco, Inc. owns 80% of Gemaire, although defendants assert that there is no interrelation of operation, management or employees between the two entities.
DISCUSSION
A. The Standard for Civil Contempt
Defendants deny that they intended to violate the injunction and cite to governing Second Circuit law holding that simply violating a court order does not expose a party to liability for civil contempt. That law directs that the court's contempt power may be invoked only when the following three conditions are met: (1) the order the party allegedly failed to comply with is clear and unambiguous; (2) the proof of noncompliance is clear and convincing; and (3) the party has not diligently attempted in a reasonable manner to comply with the Order. New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1351 (2d Cir.1989), cert. denied, 495 U.S. 947, 110 S.Ct. 2206, 109 L.Ed.2d 532 (1990).
The movant must prove each of these three elements by clear and convincing evidence. Schmitz v. St. Regis Paper Co., 758 F.Supp. 922, 925 (S.D.N.Y.1991) (Broderick, J.). Clear and convincing evidence is a quantum of proof lying at an intermediate point between the "preponderance of the evidence" standard appropriate to most civil cases and the "beyond a reasonable doubt" standard employed in criminal prosecutions. Addington v. Texas, 441 U.S. 418, 423-25, 99 S.Ct. 1804, 1808-09, 60 L.Ed.2d 323 (1979). Although not capable of precise definition, clear and convincing evidence has been "described as evidence which produces in the mind of the trier of fact an abiding conviction that the truth of a factual contention is `highly probable.'" Buildex, Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed.Cir.1988) quoting Colorado v. New Mexico, 467 U.S. 310, 316, 104 S.Ct. 2433, 2437, 81 L.Ed.2d 247 (1983), reh'g denied, 468 U.S. 1224, 105 S.Ct. 19, 82 L.Ed.2d 915 (1984). In applying the Second Circuit's contempt calculus, some courts have considered "whether the defendant has `displayed an evident sense of non-urgency bordering on indifference.'" Id. at 927, quoting Aspira Of New York v. Board of Educ. Of The City of New York, 423 F.Supp. 647, 654 *588 (S.D.N.Y.1976). See also Equal Employment Opportunity Comm. v. Local 580, Int'l Ass'n Of Bridge, Structural And Ornamental Ironworkers, Joint Apprentice-Journeyman Educ. Fund, 925 F.2d 588, 594 (2d Cir.1991); Wojnarowicz v. American Family Ass'n., 772 F.Supp. 201, 202 (S.D.N.Y.1991) (The court "finds no `willfulness' on the part of defendants and concludes that the mailings were mistakes from which no malevolence may be presumed."); E.I. DuPont De Nemours & Co. v. Schnur & Cohan, Inc., 85 Civ. 7844, 2 U.S.P.Q.2d 1772, 1986 WL 15723 at *3 (S.D.N.Y. November 10, 1986) ("Brenner's actions, therefore, amount to either a deliberate violation of the preliminary injunction, or at the very least, deliberate indifference to its terms."). But see Canterbury Belts Ltd. v. Lane Walker Rudkin, Ltd., 869 F.2d 34, 39 (2d Cir.1989) ("The [district] court concluded that ... no showing of intentional violations had been made. This determination is not clearly erroneous, and we accordingly do not disturb it. We note, however, that sanctions for civil contempt can be imposed without a showing of willfulness.")
B. Plaintiff's Allegations of Contempt
Plaintiff claims that defendants are in contempt of the court's August 12, 1993 Order through the commission of the following acts:
1. On November 30, 1993, plaintiff ICM's Florida manufacturing representative, Henry LeBlanc purchased an enjoined WATSCO Model EAC-511 from Gemaire, whose clerk informed LeBlanc that he had "plenty of the Watsco EAC-511 Series time delay units in stock." LeBlanc Aff. at ¶ 8.
2. On September 23, 1993, Watsco Components shipped an enjoined EAC-650 to its customer, Locke Supply.
3. On October 13, 1993, Watsco Components shipped fifty enjoined EAC-650 units "on consignment" to a distributor, E.S. Gallagher and received payment on November 26, 1993, when E.S. Gallagher sold the units.[1]
C. Defendants' Claim of Good Faith
Defendants admit most of the essential facts, but supplement the record to place these incidents in a different context. In addition, they offer general evidence of their alleged good faith efforts to comply with the court's Order. First, they offer the uncontroverted affidavit of Watsco Components's president, Neal Fischer, who avers that he personally instructed the eight person sales staff to cease marketing the enjoined EAC-511 and EAC-650 lock-out timers after he received notice of the court's Order on September 3, 1993.
Second, they offer the uncontroverted affidavit of Martin Katz, Watsco Components's controller, who avers that his examination of the relevant sales records shows that from August 1993 to February 1994, Watsco Components sold 2,754,000 products or units. This would indicate that the alleged violations constituted less than 0.01% of Watsco's total sales by unit. However, it is unclear how many of those sales were attributable to the enjoined units or how many units of the enjoined devices were sold in the same period prior to the entry of the August 12 Order.
D. Defendants' Specific Explanations
Specifically, defendants offer the following explanations for the alleged violations to demonstrate their alleged good faith attempts to comply with the Order.
1. The Gemaire Sale
a. Agency
Although Gemaire is not named in the injunction Order, it is still subject to the restrictions named in that Order if it is either (a) an agent of Watsco, Inc. or (b) is "in active concert or participation with it" and Gemaire "received actual notice of the order by personal service or otherwise." Fed. R.Civ.P. 65(d). Thus, the threshold inquiry in examining this transaction is whether Gemaire can be considered an agent of Watsco, Inc.[2]
*589 Plaintiff advances its agency argument by relying on two uncontroverted facts and one factual contention. First, it observes that defendant Watsco, Inc. owns eighty per cent of the stock of Gemaire. Second, plaintiff attaches a copy of Watsco, Inc.'s 1992 Annual Report to show that its financial statement is consolidated to incorporate the finances of its subsidiaries. Third, it contends that Watsco, Inc. exercises sufficient control over the operations of Gemaire to establish a principal-agent relationship.
To show the extent of Watsco Inc.'s alleged control over Gemaire, the plaintiff offers excerpts from the deposition of Albert Nahmad, Watsco, Inc.'s president and a director of Gemaire. At pages 37 and 38 of his deposition, Nahmad testified that he had input on the operations of distribution subsidiaries such as Gemaire with respect to acquisitions, large investments and expansion. However, he also stated that Watsco Inc.'s structure was very decentralized and the subsidiaries essentially ran themselves. Id. at 37. Hence, he claimed that Watsco, Inc. had no input into the business directions of the subsidiaries. Nahmad did testify that he would meet with the CEO's of the manufacturing subsidiaries to discuss long-term planning and strategy, id. at 36, but, while including whole pages of attorney colloquy, the plaintiff has not included any deposition testimony relative to meetings or other contacts between Nahmad and the CEO's of Watsco, Inc.'s distribution subsidiaries, such as Gemaire, providing evidence of Watsco Inc.'s alleged control of those subsidiaries.
Finally, plaintiff apparently takes great stock in Nahmad's testimony that he had no knowledge of any steps that Watsco Components took to comply with the injunction. Id. at 108.
Defendants attempt to explain Gemaire's sale of a Watsco Components EAC-511 unit to LeBlanc by insisting that Gemaire is not an agent or instrumentality of Watsco Components or of Watsco, Inc. In support, they have produced the affidavit of Ronald Newman, Watsco Inc.'s vice-president and treasurer averring to Gemaire's independence from Watsco, Inc., the owner of 80% of its stock, and Watsco Inc.'s purported inability to interfere in Gemaire's management or operations. Newman also represents that Watsco, Inc. was unaware of Gemaire's sale of the unit prior to receipt of plaintiff's motion.[3] Defendants also point out that Gemaire's distribution is not limited to products produced by Watsco Components and includes products produced by Watsco Components's competitors, such as the allegedly infringing unit manufactured by plaintiff ICM. Further, defendants claim that Gemaire does not use Watsco, Inc. property or resources in its operations.
The record does not demonstrate an agency relationship between Watsco, Inc. and Gemaire. Plaintiff may consider a wholly-owned subsidiary with the level of interrelationship with its parent shown in this record to be the parent's agent, but the law is otherwise. See Loral Fairchild Corp. v. Victor Co. of Japan, Ltd., 803 F.Supp. 626, 632 (S.D.N.Y.1992) (Johnson, J.) (A wholly-owned subsidiary was not an agent of its parent even though four of its directors were representatives of the parent.). See also National Labor Relations Bd. v. Deena Artware, Inc., 361 U.S. 398, 402-03, 80 S.Ct. 441, 443, 4 L.Ed.2d 400 (1960) ("The insulation of a stockholder from the debts and obligations of his corporation is the norm, not the exception. Yet, as Mr. Justice Cardozo said in Berkey v. Third Avenue R. Co., 244 N.Y. 84, 95, 155 N.E. 58, 61, `Dominion may be so complete, interference so obtrusive, that by the general rules of agency the parent will be a principal and the subsidiary an agent. Where control is less than this, we are remitted to the tests of honesty and justice.' That *590 is not a complete catalogue [looking to intermingling of operations].")
b. Piercing the Corporate Veil
Alternatively, relying on Florida law and particularly, the case of Dania Jai-Alai v. Sykes, 450 So.2d 1114 (Fla.1984), plaintiff seeks to pierce the corporate veil, asserting that Gemaire is a mere instrumentality of Watsco, Inc. and Watsco, Inc. used this subsidiary to accomplish an ulterior purpose, namely the violation of the Order.
At oral argument, plaintiff's counsel implied that it was self-evident that whether one Florida corporation was the instrumentality of another Florida corporation was an issue for Florida law. Undoubtedly, if this was a negligence case brought in a Florida state court arising out of an accident that occurred in Florida involving only Florida residents, as in Dania Jai-Alai, he would be correct. However, plaintiff has brought a patent case in a federal court in New York, and while choice of law principles in cases arising under federal question jurisdiction have not always been applied with precision, see Mobil Oil Corp. v. Linear Films, Inc., 718 F.Supp. 260, 268 (D.Del.1989) ("Mobil Oil"); Note, Piercing the Corporate Law Veil: The Alter Ego Doctrine Under Federal Common Law, 95 Harv.L.Rev. 853, 859-61 (1982), invocation of those principles determines that federal common law, not Florida law, governs whether the veil should be pierced.[4]See United States v. Nicolet, Inc., 712 F.Supp. 1193, 1201 (E.D.Pa.1989) ("[W]hen a federal statute is silent as to the choice of law to be applied, but overriding federal interests exist [such as the promotion of scientific progress by the granting of exclusive rights in inventions described in Article I, Section 8 of the United States Constitution] courts should fashion uniform rules of decision.") citing Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573, 574-75, 87 L.Ed. 838 (1943).
In so concluding, the court observes that in patent cases, as in state corporation cases, it is fundamental that "the corporate entity should be recognized and upheld, unless specific, unusual circumstances call for an exception." Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 552 (Fed. Cir.1990) quoting Zubik v. Zubik, 384 F.2d 267, 273 (3d Cir.1967), cert. denied, 390 U.S. 988, 88 S.Ct. 1183, 19 L.Ed.2d 1291 (1968). Courts have found such circumstances in the patent area in a parent's control over the actions of its subsidiary and a showing that the parent "could have stopped the infringement", A Stucki Co. v. Worthington Indus., Inc., 849 F.2d 593, 596 (Fed.Cir.1988) (emphasis in original), or where a defendant "employ[s] the corporate fiction to execute a fraud or inflict an injustice". Mobil Oil, 718 F.Supp. at 270. See also Kinetic Instruments, Inc. v. Lares, 802 F.Supp. 976, 985 (S.D.N.Y.1992) ("In determining whether to disregard the corporate entity" to obtain jurisdiction over a corporate officer ... [t]he court may consider such factors as the lack of corporate formalities, the inadequate capitalization of the corporation, and the intermingling of corporate and individual finances.)
*591 In the case at bar, the plaintiff has failed to provide clear and convincing evidence of control, fraud or any other mechanism by which Watsco, Inc. operates Gemaire as a mere instrumentality. Absent such a showing, the court will not pierce the corporate veil.
2. The Locke Supply Shipment
Defendants maintain that they did not "market" any of the enjoined products to Watsco Components's customer, Locke Supply Co. Instead, they argue that they simply honored a pre-existing warranty and shipped a single unit to its customer to replace a part. In so doing, they insist, they did not market the unit, as the customer had paid for the original part prior to the entry of the injunction and they simply honored the warranty pursuant to that agreement. Plaintiff does not contest these facts, but urges that Watsco Components's appropriate course under the injunction was to refund the customer's initial purchase price, not to replace the part.
The court finds that plaintiff has not proven by clear and convincing evidence that the defendants violated the terms of the injunction by this alleged action.
3. The E.S. Gallagher Sale
Defendants admit that Watsco Components marketed 50 enjoined lock-out timers to its customer, E.S. Gallagher, through an alleged mistake by one of its salespersons, Susan Ottoway. See Fischer Aff. and Ottoway Aff. However, defendants assert that this "honest" and "innocent mistake" does not constitute contempt under the Second Circuit's formulation, especially where they have "substantially complied" with the terms of the Order. See The New York Times Co. v. Newspaper And Mail Deliverers' Union Of New York And Vicinity, No. 92 Civ. 3345, 1992 WL 110721 (S.D.N.Y. May 12, 1992) (Leval, J.) ("The Union contends that it is in substantial compliance and it should not be held responsible for [its] inability to control individual[s] ... These contentions are not convincing. As shown above, the Union has made only token attempts to secure compliance.") (collecting cases on substantial compliance).
a. Reasonable Attempts to Comply with an Injunction
To avoid the sanction of contempt, the governing law directs that an enjoined party must make a reasonable attempt to comply with the court order and it must diligently implement that program of compliance. Plaintiff has not introduced clear and convincing evidence that the defendants did not do so and thus, the motion will be denied. However, defendants should not take too much comfort in this ruling. Plaintiff's motion has been defeated less by defendants' program of compliance than by the substantial burden of proof on a motion for contempt.
Defendants have characterized Watsco Components's sale of the enjoined units to E.S. Gallagher as "one innocent mistake." Defendants' Memorandum at 7. Now that the defendants have been apprised of at least one deficiency in their program of compliance, namely that it is wholly dependent on the memory and attentiveness of Watsco Components's sales staff, the bounds of the level of effort necessary to reach reasonable compliance have been changed and what was once reasonable may now have become inadequate.[5]
In his affidavit, Watsco Components's president, Mr. Fischer, averred that "our sales staff, in my opinion, has done a commendable job in complying with my unusual instructions." Fischer Aff. at ¶ 8. While the sales staff's compliance may have been commendable, the instructions were not. At oral argument, plaintiff's counsel offered a far more reasonable program of compliance than that implemented by Watsco Components, consisting of (1) writing a warning into the computer sales or stock list database to alert any salesperson who is about to enter an order to market enjoined products and (2) separating enjoined products from the remainder *592 of Watsco Components's products wherever they may be stored. However, at the time that defendants' program of compliance was implemented, the court cannot find that it was unreasonable. Defendants may take solace from the fact that the Second Circuit has not bound this court to a "commendable" or "praiseworthy" standard for compliance with an injunction order.
E. Defendants' Costs and Fees
Pursuant to Local Rule 41(d), defendants seek their costs and reasonable attorney fees incurred in defending this motion. That rule provides that the court has discretion to award such costs and fees.
Had plaintiff's counsel discussed the disputed incidents with defendants' counsel prior to filing a contempt motion, it is likely that certain issues raised by this motion would not have been before this court for review. The record reveals no evidence of such discussion or attempts at discussion. However, as discussed above, the court has also concluded that had defendants made a more comprehensive effort to comply with the terms of the injunction, it is highly probable that there would not have been no contempt dispute before the court. Defendants' request is denied.
CONCLUSION
It is hereby ORDERED that the plaintiff's motion to hold defendants in contempt of the court's August 12, 1993 order entering an injunction is DENIED. It is further
ORDERED that defendants' request for costs and attorneys' fees is DENIED.
IT IS SO ORDERED.
NOTES
[1] In its moving papers, plaintiff characterized this transaction as two distinct sales of 50 EAC-650 units to E.S. Gallagher. However, evidently after reviewing defendants' opposition submissions, plaintiff revised its allegations and alleged that this constituted a single sale of 50 units.
[2] Plaintiff ICM has not argued that Gemaire fits the second alternative, namely that it is in active concert and participation with Watsco, Inc. and there is nothing in the record that Gemaire received actual notice of the injunction Order. Rule 65(d) does not require that an agent of an enjoined party have notice of an injunction order to be bound by its strictures. Dole Fresh Fruit Co. v. United Banana Co., Inc., 821 F.2d 106 (2d Cir.1987).
[3] Plaintiff has not produced any evidence as to when Gemaire received the enjoined units from Watsco Components. It simply relies on Watsco Inc.'s ownership of 80% of the stock of Gemaire to bring Gemaire's actions within the scope of the court's August 12 Order.
[4] Even if Dania Jai-Alai was the governing law on this issue, plaintiff's reliance thereon is unavailing. In Dania Jai-Alai, the plaintiff-respondent sought damages for the injuries she allegedly suffered when a Carrousel parking attendant struck her with her own car in the process of parking it. At the close of the evidence, the trial court directed verdicts against Carrousel Concessions, Inc. for employee negligence and against Dania Jai-Alai Palace, Inc. on the ground that the public had been led to believe that Dania Jai-Alai and Carrousel, each of which was a subsidiary of a third corporation, was in fact a single legal entity.
The Florida Supreme Court quashed an appellate court's affirmance of the trial court's directed verdicts. The Florida court observed that in Florida (as in New York) "courts are reluctant to pierce the corporate veil", Dania Jai-Alai, 450 So.2d at 1121, and it found that the record contained "evidence which, if accepted by the jury, tended to show that Dania and Carrousel operated independently of each other." Id. Among this evidence was that Carrousel (1) had separate offices, (2) controlled its own operations, (3) had separate bank accounts and profit and loss statements, (4) dealt with independent suppliers, (5) independently hired, fired and controlled its employees, and (6) issued parking tickets identifying itself as the parking operator. Id. In the instant case, many, if not all, of these considerations distinguish Gemaire and Watsco, Inc. as distinct legal entities.
[5] The parties should not read this opinion as allowing an enjoined party one free "innocent mistake." The court does not exclude the possibility that in future cases, an enjoined party that maintains it committed only one "innocent mistake" will be shown to be in contempt of a court order. In the instant case, had the evidence in the record tipped the balance slightly more in the direction of the plaintiff, that evidence would have been clear and convincing.
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994 So.2d 1124 (2007)
Horace L. JENKINS, Appellant,
v.
The STATE of Florida, Appellee.
No. 3D07-2137.
District Court of Appeal of Florida, Third District.
December 19, 2007.
Horace L. Jenkins, in proper person.
Bill McCollum, Attorney General, and Lane Hodes, Assistant Attorney General, for appellee.
Before COPE, GREEN, and SALTER, JJ.
PER CURIAM.
Affirmed.
GREEN and SALTER, JJ., concur.
COPE, J. (concurring in part and dissenting in part).
Although it apparently will have no practical effect on the length of time that defendant-appellant Jenkins will serve, he claims in point two that there was no factual basis for his plea in Miami-Dade County Circuit Court Case Number 04-117, and that his plea was involuntary. The defendant alleges that the codefendant gave a statement exonerating him in case number 04-117.
Although the trial court denied the claim as successive, it is not clear that the successiveness bar is applicable. See Fla. R.Crim. P. 3.850(f). The prior motion and order were not attached to the denial order. See Romeo v. State, 965 So.2d 197 (Fla. 3d DCA 2007). Because the postconviction record now before us does not conclusively refute the defendant's point two, I would remand for further proceedings on that point only. See Fla. R.App. P. 9.141(b)(2)(D).
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870 So. 2d 940 (2004)
Urs KOECHLI, Charles R. Cushing, and C.R. Cushing & Company, Inc., Appellants,
v.
BIP INTERNATIONAL, INC. d/b/a Global Interior Group, Appellee.
No. 1D03-1511.
District Court of Appeal of Florida, First District.
April 26, 2004.
*941 Michael G. Tanner and Mark G. Alexander of Holland & Knight LLP, Jacksonville, for Appellants.
Gregory A. Anderson, John J. Glenn and Brian W. Davey of Anderson St. Denis & Glenn, P.A., Jacksonville, for Appellee.
VAN NORTWICK, J.
Urs Koechli, Charles R. Cushing, and C.R. Cushing & Company, Inc. appeal a non-final order denying their motions to compel arbitration. The underlying action arose out of a business transaction in which Alpha GMBH & Co. Schiffsbesitz KG (Alpha), and appellee, BIP International, Inc., doing business as Global Interior Group (BIP), entered into a vessel refurbishment agreement providing for the terms under which BIP would renovate the vessel M/Y Giant I (the vessel). Appellants were not signatories to the refurbishment agreement, but possessed rights and incurred obligations under it. Among other things, the refurbishment agreement included a provision that required arbitration of "any dispute between the parties hereto as to any matter arising *942 out of or relating to this Contract." BIP filed suit against the appellants based upon actions they took on behalf of and as agents or officer of Alpha in connection with the refurbishment agreement. We hold that these non-signatories may invoke the arbitration provision of the refurbishment agreement and compel arbitration by BIP, a signatory, where appellants acted as the representatives or agents for Alpha in entering into and performing the refurbishment agreement; BIP's action against appellants asserts claims based upon appellants' alleged wrongful acts committed while performing their duties relating to the refurbishment agreement; and BIP's separate federal court action against Alpha, which has been referred to arbitration, is based in substantial part on allegations of wrongful acts by the appellants while acting in their capacity as agents for or officers of Alpha which are substantially interdependent to the allegations in the instant action. Accordingly, we reverse and remand for further proceedings.
I. Factual Background
Alpha purchased the M/Y Giant I with plans to refurbish and operate the vessel as a luxury charter yacht. Alpha and BIP entered into a refurbishment agreement under which BIP agreed to make specified renovations and modifications to the vessel. Cushing & Co., acting through its principal, C.R. Cushing, was appointed as Alpha's onsite representative and was authorized to act on behalf of Alpha. Urs Koechli signed the refurbishment agreement as Alpha's chief executive officer.
The refurbishment agreement contains two provisions that are relevant here. Article XIV, paragraph 1 provides in pertinent part:
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulations herein or with respect hereto which cannot be settled by the parties themselves, such dispute shall be finally settled by binding arbitration in New York, New York, pursuant to the commercial rules of arbitration of the American Arbitration Association by a single arbitrator designated in accordance with the rules of the American Arbitration Association.
Article XXI, paragraph 6 provides:
This Contract shall not be deemed for the benefit of any third party nor shall it give any person not a party to this contract any right to enforce its provisions.
After work on the vessel began under the refurbishment agreement, both BIP and Alpha asserted that the agreement had been breached. BIP contended that Alpha had misrepresented the condition of the vessel and the extent of necessary modifications and that Alpha had failed to make agreed upon payments under the refurbishment agreement. Alpha contended that BIP failed to properly complete the modifications.
BIP filed an in-rem action in Federal District Court in the Southern District of Florida to arrest the vessel to recover progress payments. The claims between the parties included breach of contract, fraud in the performance of the contract, wrongful arrest of the vessel and defamation. The vessel filed a motion to stay the civil action and compel arbitration pursuant to article XIV of the refurbishment agreement. The Federal District Court granted the motion and the cause proceeded to arbitration.
BIP also filed suit in the Duval County Circuit Court against Cushing & Company, Cushing, Koechli, and eight other defendants. Count I of BIP's complaint alleges that the appellants and others fraudulently induced BIP to enter into the refurbishment agreement by making representations *943 regarding the status or condition of the vessel which the defendants knew to be false. Count II alleges the same misrepresentations, but alleges that they resulted from negligence. Count III alleges that certain defendants, including Cushing, conspired to defraud BIP. Count IV alleges that appellants and others converted the proceeds of a $1,000,000 letter of credit which BIP and a corporate affiliate had posted to secure BIP's performance under the agreement. Count V alleges that appellants and other defendants tortiously interfered with BIP's business relationship with Alpha. Count VI alleges tortious interference with a contractual right against appellants and other defendants.
Appellants filed separate motions to compel arbitration and to stay. The trial court denied the motions, reasoning that the appellants were not parties to the contract between BIP and Alpha and, thus, could not enforce the arbitration provision.
II. Applicable Law
The refurbishment agreement provides that New York law applies. An arbitration agreement is not generally enforceable under Florida law if it incorporates the law of another state. Riverfront Properties Ltd. v. Max Factor III, 460 So. 2d 948, 952 (Fla. 2d DCA 1984). Because this case involves interstate commerce, however, the Federal Arbitration Act applies, and Florida courts must enforce an arbitration agreement that is valid under the Federal Arbitration Act. Jensen v. Rice, 809 So. 2d 895, 899 (Fla. 3d DCA 2002)("Florida courts must enforce arbitration agreements that are valid and enforceable under the Federal Arbitration Act, even where, as here, the arbitration agreement would not be enforceable under Florida law."). While federal law establishes the enforceability of arbitration agreements, state law governs the interpretation and formation of such agreements. Employers Insurance of Wausau v. Bright Metal Specialties, Inc., 251 F.3d 1316, 1322 (11th Cir.2001).
III. Issues on Appeal
On appeal, appellants contend that this case is a transparent attempt by BIP to circumvent its obligation to arbitrate under the refurbishment agreement. They contend that, as Alpha's agents, appellants are entitled to the benefit of Alpha's arbitration agreement. Alternatively, they contend that equitable estoppel applies to allow them, non-signatories, to require arbitration.
We start from the general principle that arbitration is a matter of contract and "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960)). Therefore, a non-signatory to a contract containing an arbitration agreement ordinarily cannot compel a signatory to submit to arbitration. While exceptions to this rule should be rare, see Westmoreland v. Sadoux, 299 F.3d 462, 465 (5th Cir.2002), exceptions nonetheless exist depending upon the factual circumstances involved.
"Although arbitration is a contractual right that is generally predicated on an express decision to waive the right to trial in a judicial forum, [courts have] held that the lack of a written arbitration agreement is not an impediment to arbitration." Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 756-57 (11th Cir.1993). Florida law recognizes that contracts may be validly formed without *944 an express written agreement. Nautica Intern., Inc. v. Intermarine USA, L.P., 5 F. Supp. 2d 1333, 1340 (S.D.Fla.1998). Florida and federal courts have recognized that a non-signatory can compel arbitration by a signatory to an arbitration agreement when the underlying proceeding concerns actions allegedly taken by the non-signatory as an agent of a signatory, Thomson-CSF v. American Arbitration Association, 64 F.3d 773, 777 (2d Cir. 1995); Qubty v. Nagda, 817 So. 2d 952, 957-58 (Fla. 5th DCA 2002); Merrill Lynch Pierce, Fenner & Smith, Inc. v. Melamed, 453 So. 2d 858, 860 (Fla. 4th DCA 1984); Vic Potamkin Chevrolet, Inc. v. Bloom, 386 So. 2d 286, 288 (Fla. 3d DCA 1980); when the non-signatory is an intended third party beneficiary of the contract in question, E.I. Dupont de Nemours & Co. v. Rhone, Poulenc Fiber and Resin Intermediates, S.A.S., 269 F.3d 187, 194 (3d Cir.2001); Henderson v. Idowu, 828 So. 2d 451, 452 (Fla. 4th DCA 2002); Technical Aid Corporation v. Tomaso, 814 So. 2d 1259, 1261 (Fla. 5th DCA 2002); and, under the doctrine of equitable estoppel, when the signatory's claims allege substantially interdependent and concerted misconduct by the signatory and the non-signatory or when the claims relate directly to the contract and the signatory is relying on the contract to assert its claims against the non-signatory. MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir.1999); Armas v. Prudential Securities, Inc., 842 So. 2d 210, 212 (Fla. 3d DCA 2003); see also Jensen v. Rice, 809 So. 2d 895, 900 (Fla. 3d DCA 2002). See generally Reynolds v. York, 2003 WL 22880945 (S.D.Tex. November 21, 2003). Finally, "it matters whether the party resisting arbitration is a signatory or not." Merrill Lynch Investment Managers v. Optibase, Ltd., 337 F.3d 125, 131 (2d Cir. 2003).
IV. Agency and Equitable Estoppel
Appellants do not contend that they are intended third party beneficiaries under the refurbishment agreement. They argue that they can invoke the arbitration provision in the refurbishment agreement because they are agents of Alpha, a signatory to the refurbishment agreement. We reject the broad construction of the agency exception urged by appellants, which would permit a non-signatory agent to a signatory to invoke arbitration simply because the agency relationship exists. This argument erroneously blurs the legal distinction between individual capacity and representative capacity which is "a meaningful legal difference." Westmoreland, 299 F.3d at 466, quoting McCarthy v. Azure, 22 F.3d 351, 360 (1st Cir.1994). Like the Westmoreland court, we conclude that "a non-signatory cannot compel arbitration merely because he is an agent of one of the signatories." Id. A non-signatory agent should be permitted to compel arbitration
when the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the nonsignatory .... [or] when the signatory to the contract containing a arbitration clause raises allegations of substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.
Id. at 467.
Applying these equitable estoppel principles, see MS Dealer Corp. v. Franklin, 177 F.3d at 947, we have examined the language of the refurbishment agreement[1]*945 and the claims which have been asserted in this action and have determined that, even though BIP's claims sound in tort, BIP's claims rely upon and are necessarily related to the refurbishment agreement. Moreover, the facts constituting the alleged misconduct of Alpha in the separate federal court action referred to arbitration are substantially the same facts on which BIP relies to demonstrate the alleged misconduct of appellants in the case before us. Because the basis of BIP's claims arise out of or are intimately related to the refurbishment agreement, it would be inequitable to allow BIP both to rely upon the agreement in its action against non-signatories and selectively to repudiate it when seeking to resist arbitration. See Hughes Masonry Co. v. Greater Clark County School Building Corp., 659 F.2d 836, 838-39 (7th Cir.1981). Thus, even though BIP's claims sound in tort, under the circumstances here, BIP is estopped from denying the appellants the benefit of the arbitration provision.
V. "Party"
The definition of the term "party" under the refurbishment agreement is also a central issue here. The arbitration provision requires arbitration "of any dispute between the parties hereto as to any matter arising out of or relating to this Contract...." In addition, article XXI, paragraph 6 of the contract provides that "this Contract shall not be deemed for the benefit of any third party nor shall it give any person not a party to this contract any right to enforce its provisions." Neither party has supplied any directly-on-point authority for the meaning of "party" or "third party" under these provisions. Appellants contend that, because they stood in the shoes of the principal, Alpha, in their actions under the contract, they are not a "third party" within the meaning of the contract.
We note that this is not a situation in which the language of the contract expressly restricts arbitration to the signing parties. Compare Parkway Dodge, Inc. v. Yarbrough, 779 So. 2d 1205 (Ala.2000)(arbitration agreement between automobile "dealer" and "purchaser" did not entitle automobile manufacturer to compel arbitration of dispute with purchaser). Similar to the agency relationship analysis discussed in section IV above, we conclude that, in the context of the unique facts of this case, for the purposes of invoking the arbitration provision the word "party" includes appellants, who received rights and were bound to obligations under the refurbishment agreement.
In concluding that the appellants are deemed parties for the purpose of compelling arbitration by a signatory to the underlying agreement, we find persuasive the reasoning of the Fourth District Court of *946 Appeal in Ocwen Financial Corp. v. Holman, 769 So. 2d 481, 483 (Fla. 4th DCA 2000) and Tenet Healthcare Corp., FMC v. Maharaj, 787 So. 2d 241 (Fla. 4th DCA 2001). In Holman, Ocwen, a non-signatory of the underlying contract but the parent corporation of a signatory, sought to compel arbitration. The court held that, even though Ocwen and other individual defendants were not signatories to the underlying contract, they were deemed parties for purposes of arbitration. As the court explained:
[W]e conclude that Ocwen is a "party" within the meaning of the arbitration clause because it received rights and accepted obligations under the asset purchase agreement. The individual defendants as well are entitled to the protection of the arbitration clause in the contract signed by OFS because the claims against them arose solely in connection with their activities as officers and directors of that corporation.
769 So.2d at 483.
Similarly, in Tenet Healthcare Corp., FMC v. Maharaj, 787 So. 2d 241, 243 (Fla. 4th DCA 2001), although Tenant Healthcare and the hospital were not signatories to the underlying agreements, the court held that they were "parties" within the meaning of the arbitration clauses "because the claims against them arose solely in connection with their activities as officers and directors of the Transplant Institute, [and] also because the claims against them arose from the same set of operative facts as those claims against the Transplant Institute and the General Partner." The Tenet Healthcare court reasoned:
Because the arbitration clauses in this case are expansive provisions, encompassing "any controversy or claim arising out of or in connection with this Agreement, or the alleged breach thereof," and because the factual allegations in the complaint relied on the contract between the parties, we resolve the issue in favor of arbitration.
Id.
As the non-signatories in Ocwen and Tenet, appellants received rights and assumed obligations under the refurbishment agreement and the claims against them arose from actions in their capacity as agents or an officer of Alpha, a signatory under the agreement. Thus, we hold the appellants are deemed parties for the purpose of the arbitration provision.
VI. Conclusion
For the reasons explained above, we hold that appellants, although non-signatories to the contract, may invoke the arbitration provision of the refurbishment agreement, and that the trial court erred in denying the motion to compel arbitration. Accordingly, the order on appeal is REVERSED and REMANDED for further proceedings consistent with this opinion.
PADOVANO and HAWKES, JJ., concur.
NOTES
[1] The arbitration provision in the contract requires arbitration "of any dispute between the parties as to any matter arising out of or relating to this contract." See Merrill Lynch Pierce Fenner & Smith, Inc. v. Melamed, 453 So. 2d 858 (Fla. 4th DCA 1984)(claim against account executive, a non-signatory who was employed by securities firm, was subject to arbitration pursuant to arbitration clause in a contract governing the cash management account between the securities firm/employer and customer, where the language of the contract was broad enough to include persons within the respondeat superior doctrine); accord Vic Potamkin Chevrolet, Inc. v. Bloom, 386 So. 2d 286 (Fla. 3d DCA 1980)(where parties agree to arbitrate "any controversy or claim arising out of, or relating to this agreement" such language was broad enough to include persons within respondeat superior doctrine; and thus nonsignatory employees of a car dealership were considered parties to arbitration contract between buyers and dealership). Compare Qubty v. Nagda, 817 So. 2d 952, 958 (Fla. 5th DCA 2002)("broad arbitration provisions [are] intended to obligate signatories to the agreement to arbitrate disputes brought not only against the principal, but claims made against the principal's agents").
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10-30-2013
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-3452
___________
Leonardo Cabera De Leon, *
*
Petitioner, *
* Petition for Review of
v. * an Order of the Board
* of Immigration Appeals.
Alberto Gonzales, United States *
Attorney General, * [UNPUBLISHED]
*
Respondent. *
___________
Submitted: June 13, 2006
Filed: June 16, 2006
___________
Before ARNOLD, BYE, and SMITH, Circuit Judges.
___________
PER CURIAM.
Leonardo Cabera De Leon (petitioner), a native and citizen of Guatemala,
petitions for review of an order of the Board of Immigration Appeals (BIA), affirming
the decision of the immigration judge (IJ), who denied his requests for asylum and
withholding of removal.
Because the BIA summarily affirmed without an opinion, we review the IJ’s
decision as the final agency decision, applying the substantial-evidence standard of
review. See Mamana v. Gonzales, 436 F.3d 966, 968 (8th Cir. 2006). We treat the
IJ’s credibility findings as conclusive unless contrary to what a reasonable adjudicator
would have been compelled to find, and we will reverse only if petitioner has shown,
based on the evidence, that no reasonable adjudicator could have reached the same
decision. See id.
Upon review, we hold that the evidence reasonably supports the IJ’s adverse
credibility determination. We further agree with the IJ that the evidence fails to show
past persecution or a likelihood of future persecution on account of political opinion,
much less a likelihood of future persecution throughout Guatemala on account of
political opinion. See Mohamed v. Ashcroft, 396 F.3d 999, 1002-06 (8th Cir. 2005)
(denying petition for review where evidence suggested that attacks on petitioner’s
home were part of generalized looting and banditry, and not on account of her
membership in her social clan, and where petitioner failed to proffer evidence that she
would be persecuted on account of her clan membership throughout her homeland).
The petition for review is denied. See 8th Cir. R. 47B.
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334 S.W.2d 34 (1960)
STATE of Missouri, Respondent,
v.
Walter KING, Appellant.
No. 47716.
Supreme Court of Missouri, Division No. 2.
March 14, 1960.
Rehearing Denied April 11, 1960.
*35 Raymond A. Bruntrager, St. Louis, for appellant.
John M. Dalton, Atty. Gen., Richard R. Nacy, Jr., Sp. Asst. Atty. Gen., for respondent.
EAGER, Judge.
Defendant was found guilty of robbery by means of a dangerous and deadly weapon, *36 with a prior felony conviction, and he was sentenced to life imprisonment. He has appealed in due course, but has filed no brief here. We, of course, consider those matters properly raised in his motion for new trial.
From the State's evidence the jury could reasonably have found the following facts: Shortly before 5:00 p. m. on January 13, 1959, a large Negro man appeared before the cashier's counter of Georgia White on the second floor of Scruggs-Vandervoort-Barney, Inc., in St. Louis. This man had waited behind two women for whom Mrs. White had cashed checks, but when he approached the counter he was alone. He reached over the counter and dropped a note, a brown paper bag and a one-dollar bill on Mrs. White's desk, which was on a lower level; Mrs. White asked him what he wanted, and getting no reply she turned and walked away about six or seven steps. The man said: "Come back here. I only want change for a dollar bill." She went back to the counter, and found that she was confronted by the barrel of a pistol pointed at her through a hole in another paper sack held in the man's hand at a distance of "an arm's length." The man said he wanted "the big money and to hurry it up"; he kept the gun pointed at her and she placed something over $2,400 in bills in the paper bag, at the same time managing to press an alarm button; she handed the man the bag and he departed rather hurriedly down a stairway leading from the cashier's office to the outside Ninth Street entrance. The alarm bell rang at a location outside the store. Mrs. White immediately told her supervisor and others of the occurrence. Within a matter of minutes the building protection employee and the police were there. Mrs. White did not examine the man's note until after he left.
Defendant was arrested on the same evening at the home of one Alberta Ross. He was very definitely identified by Mrs. White, who testified that she had observed him from his chest or shoulders up for a matter of minutes, including the time when she was putting the money in the bag; she described his build, weight, color, hair, and parts of his clothing in detail. Mrs. White also picked out the defendant as the robber in the "line-up" at the police station on the same evening. Miss Janet Vaughn, a cashier stationed the length of one desk to Mrs. White's right, had noticed the man while she was stamping mail; he was then standing in line, but when he did not come to her station, she went ahead with her work. She identified defendant in the police "line-up" on the day after the robbery and identified him at the trial; she also described his appearance in detail. Alfred Hodges, in charge of protection at Scruggs, identified defendant as the man he had seen coming down the steps leading from the cashier's office to the Ninth Street entrance; the man was carrying a brown bag and passed on outside; this was just before Hodges was notified of the robbery. He also picked out the defendant in the line-up on the evening of the robbery. When arrested, defendant had on the same type of dark blue shirt or sweater described by Mrs. White. The State introduced the records of three prior Missouri convictions, two for second degree burglary and one for grand larceny. The sentences on these were served concurrently, and defendant's discharge was also shown. An attempt to prove a prior conviction and confinement in Michigan for armed robbery was unsuccessful, because of the insufficiency of the records produced; this ruling followed a discussion between court and counsel and the records were never formally offered in evidence.
Defendant adduced some evidence tending to establish an alibi. A Federal Narcotics Agent testified that he talked with defendant on the phone twice after 4:00 p. m. on the day in question, the last conversation terminating at 4:25 or 4:30. Defendant called the witness the first time, and on the second he reached defendant at a number which proved later to be that of a confectionery at Vandeventer and St. Ferdinand Streets, beneath the place where *37 defendant lived. Along a different line, and over strenuous objections, defendant was permitted to show the circumstances of a robbery at the Laclede Gas Company office in St. Louis on February 4, 1959. This date was three weeks after the Scruggs robbery. Defendant's theory was that he was in jail at the time and could not have committed that robbery, but that its modus operandi was so similar as to be convincing that he did not commit either. The Laclede cashier testified that a large Negro man put a note and a paper bag on the cashier's counter and, by means of a gun concealed in another paper bag, perpetrated the robbery. She testified also that defendant was not the man who robbed her. The note used in the Laclede robbery was offered in the present trial; it was similar in wording to the one used at Scruggs. Both were printed on the back of check forms. A Mr. Vollertsen, an examiner of questioned documents for the Federal Government, was produced in an effort to show that both notes were written or printed by the same person. It will suffice to say that he pointed out certain similarities and certain differences, but stated that he was unable to reach a definite conclusion on that question; he also failed to reach a definite conclusion from a comparison of the notes with known writing or printing of the defendant.
Defendant does not question the sufficiency of the evidence for submission. We consider now the matters assigned as error in the motion for new trial. The Assistant Circuit Attorney stated in his opening statement that he expected to prove a prior conviction for armed robbery in Michigan. The documents by which he attempted to prove this were ruled inadmissible, primarily because no actual judgment of conviction or sentence was shown, but only a "mittimus" or direction for confinement. The colloquy concerning these records took place out of the hearing of the jury; at its conclusion counsel for defendant stated that he objected "to the instrument" and asked that "it will be stricken from the record." The court said: "Sustained. The motion was sustained." Counsel further stated that he had consulted with the defendant and that they had determined not to ask a mistrial. These records were never received in evidence and, in fact, they were never actually offered, although identified by the reporter. The point now made is that the court erred in not instructing the jury affirmatively to disregard the statements previously made about the conviction on voir dire and in the opening statement. The voir dire is not shown. The court ruled favorably to the defendant on his objections; it could not strike the exhibit from the record, for it was never in the record. No request was made for an instruction on the subject, and no motion was made to strike the statements. There was no occasion or necessity for the court to instruct the jury on this matter without specific request. See, generally, State v. Lee, 361 Mo. 163, 233 S.W.2d 666, 667, 668; State v. Parker, Mo., 324 S.W.2d 717, 724. The making of the statements did not constitute error for they were not objected to and the good faith of counsel was not and is not impugned. Thereafter, the court could not be put in error except by a specific request. And it would be difficult to find this matter prejudicial in view of the three other uncontradicted prior convictions and sentences; particularly is this true where the Michigan conviction was never referred to in the evidence or in the instructions, and the given instruction on this subject (No. 2) specified three prior felonies and set them out specifically.
Defendant assigns error in that the court failed to instruct that the jury "should consider the fact that the defendant could not and did not commit the holdup of the Laclede Gas Company * *." Even assuming that defendant was in jail on February 4, 1959, which he did not attempt to show affirmatively, there is no merit whatever in the assignment. Actually, defendant claims error because the court *38 failed to comment upon and emphasize certain evidence favorable to him. This the court may not do. State v. Wilson, Mo., 233 S.W.2d 686, 688; State v. Lyles, 351 Mo. 1174, 175 S.W.2d 587; State v. Talbert, 351 Mo. 791, 174 S.W.2d 144. Of course, the court must instruct on the "law of the case" without request. Section 546.070(4) RSMo 1949, V.A.M.S.; State v. Wood, Mo., 266 S.W.2d 632, 637. Such an "instruction" as defendant claims should have been given would not have been an instruction on the law, but a mere statement of the meaning of certain isolated evidence. That was a matter solely for the jury. No such instruction was requested in writing but, if requested, it would have been improper to give it. The jury had before it the evidence and the direct issue as to whether or not defendant committed the Scruggs robbery; it merely failed to find as defendant wanted it to find. We remark here that the court allowed to defendant a considerable latitude in permitting the introduction of this evidence at all. It involved a collateral matter and introduced an element of confusion. When properly considered, it did not even bear upon a true alibi (as the State seems to indicate), for it involved defendant's whereabouts at a date long subsequent to the offense for which he was on trial.
It is claimed that error was committed in receiving State's Exhibits 2 and 3; No. 2 was a photograph of the stairway leading both up and down from the cashier's office and of a part of that office; No. 3 was of the same stairway as it came up from the ground floor. Exhibit No. 1 was a photograph of the cashier's office. These were all taken by a police photographer on March 6, 1959, and they were identified by him. Defendant now complains that No. 2 and No. 3 were not sufficiently identified because no one testified that they correctly represented the respective places shown as of January 13, 1959. There was no intimation of any change subsequent to January 13, 1959; the pictures were all interrelated and one witness specifically testified that Exhibit No. 1 truly represented the conditions on January 13, 1959. The exhibits were merely illustrative; the various identifications and references to the photographs carry a fair inference that they correctly showed the scenes as of the time of the holdup. Defense counsel used Exhibit No. 2 extensively in cross-examination. Defendant does not even assert prejudice in his motion for new trial in the use of these pictures. The assignment is denied.
In an effort to establish an alibi, defendant produced Bernard A. Theisen, Jr., a Federal Narcotics Agent, who testified, as related above, to two telephone conversations with defendant between 4:00 o'clock and 4:30 p. m. on January 13, 1959. As preliminary thereto, he testified on direct examination: that he had talked with defendant on the phone prior to that date "about a half dozen times" and also in person; that he knew defendant's voice and recognized it; that on defendant's first call on January 13, 1959, he left a number, whereupon he, Theisen, "spoke with one of the other agents there in the office" and called the number back; that defendant answered and they talked for 12-15 minutes. On cross-examination Theisen testified, without objection, that he had known defendant since November 18, 1958; counsel then asked whether he had met defendant "socially or in an official capacity." Objection was first made that the question was immaterial, and later that the State was thus placing defendant's "character" in issue. The objections were overruled. The witness answered that he met defendant "in an official capacity," and that phase of the inquiry went no further. Defendant apparently claims that through this answer the jury was permitted to infer that defendant was guilty of a narcotics violation. This case is clearly distinguishable from the case of State v. Farmer, Mo., 130 S.W.2d 572, where the State produced a prison official from Minnesota and brought out evidence that he had known the defendant there under two other names. It was held *39 that this might cause the jury to infer that his acquaintance had been in an "official capacity." In the present case the defendant himself was responsible for the production of the evidence in the first instance; he put on a witness who claimed on direct examination sufficient acquaintance with defendant to recognize his voice over the telephone. His means of knowledge and recognition were subject to a fair cross-examination, and this could hardly be accomplished without some inquiry into the nature of the acquaintance. If competent and relevant evidence is received, it does not become inadmissible or erroneous merely because it was prejudicial. State v. Murray, Mo., 280 S.W.2d 809; State v. Johnson, Mo., 234 S.W.2d 219, 222; State v. Poucher, Mo. App., 303 S.W.2d 197. The situation here is somewhat analogous to that in State v. Curtis, Mo., 325 S.W.2d 489, where, on a shoplifting charge, it was held proper to permit an assistant buyer to testify on direct examination that the defendant had been pointed out to her before the date of the offense in question, and to permit a store detective to testify that she had seen defendant "many a time" and had talked to her. The court there said, 325 S.W.2d loc. cit. 492: " * * * the witnesses did not in point of fact testify to or refer to, either directly or indirectly, any other crime Ruby may have committed (Compare: State v. Farmer, Mo., 130 S.W.2d 572) and there was in this instance no reflection on her character (State v. Hayes, 356 Mo. 1033, 204 S.W.2d 723), even though she was charged with and a prior conviction of manslaughter was shown. It is inconceivable that there could be more cogent, satisfying corroboration of a witness' identification of a person, or of their qualification to identify a person, then his or her prior acquaintance. State v. Malone, Mo., 301 S.W.2d 750, 757." On such matters there is a large discretion in the trial court. State v. Turner, Mo., 320 S.W.2d 579. There was no necessary inference here that defendant was a narcotics violator; he might just as likely have been an "informer," as suggested by the trial court at the time, or some kind of undercover agent. If any unfavorable inference was created here the cross-examination added little, if anything, to what the defendant himself had already brought out. There was no error in the ruling.
After the admission of the collateral evidence concerning the Laclede holdup, the State sought to put on evidence of a prior holdup at the Bell Telephone Company; this was presumably an attempt to show that a similar procedure had been used before the Scruggs holdup and before defendant was arrested. This attempt brought on a colloquy between court and counsel when the first witness was placed on the stand; the court indicated that it would not permit any testimony concerning that holdup, but that he could only rule on questions as asked. Two employees of the Telephone Company were permitted to state merely their names, their residences, and that they were employed in the City of St. Louis; objections were sustained to questions as to whether they were employed by the Bell Telephone Company. A mistrial was requested upon the theory, previously advanced, that this attempt of the State raised an inference that defendant had been involved in another robbery. The motion was denied but the court instructed counsel to make an offer of proof if he had any further witnesses on that matter; the subject was then dropped. While we fail to understand the studied persistence of the State's attorney in offering this evidence and attempting to force the issue after the court had indicated what his ruling would be, we do not find any such prejudice to defendant's interests as would justify a reversal. Even if the jury understood from the questions that these were Telephone Company employees, it would be rank speculation to assume that it further inferred that they were witnesses to a robbery committed by the defendant. The trial court, which heard and considered the whole matter, felt the same way. And, if it be material, the whole issue of collateral robberies was instigated by the defendant, and *40 the only evidence in the record concerning any other robbery was produced by the defendant. The point of error is denied.
The remaining assignments of the motion are that the court erred in not declaring a mistrial on each of two occasions during the State's final argument. These may be considered together. The particular statements now attacked were: (a) "if you want this type of thing to go on in the community then I say you should acquit him * * *"; and (b), "if you acquit this defendant then you have struck a blow on behalf of violence, * * *." Previously counsel for the State had argued without objection: that "the type of community we have rests with you * * *"; that "robbery is rabid in this city, and you have to stamp it out, and the only way * * * is * * * severe verdicts * * *"; that "Its not an easy task * * * but * * you would be less than men if you dont perform this task * * *"; that, "This is your community and * * * it affects you." The remark shown in (a) above really added little or nothing to the argument already made. The court sustained an objection to it. No request for a mistrial was made. There were certainly no such exceptional circumstances as to require the court to declare a mistrial of its own motion. See the discussion, generally, in State v. Laster, Banc, 365 Mo. 1076, 293 S.W.2d 300, certiorari denied Laster v. State, 352 U.S. 936, 77 S. Ct. 237, 1 L. Ed. 2d 167. When the statement quoted in (b) above was made, defense counsel objected, asked that the remarks be stricken, that the jury be instructed to disregard them, and that a mistrial be declared. The court sustained the objection and instructed the jury to disregard the statement, but overruled the request for a mistrial. We find no error in that action. The granting or refusal of a mistrial for improper argument lies largely within the discretion of the trial court. State v. Hardy, Banc, 365 Mo. 107, 276 S.W.2d 90, 95; State v. Green, Mo., 292 S.W.2d 283. There was no abuse of the discretion here. The remark was really a continuation of the prior argument. And the prosecution is generally permitted considerable latitude in arguing the necessity of law enforcement and the responsibility resting upon trial juries. See, again, the discussion and the cases cited in State v. Laster, supra. We find no error in the respects thus urged.
After the trial defendant expressed a desire for the appointment of other counsel. His original counsel, appointed by the court prior to trial, had performed a highly efficient and commendable job in representing defendant. This case, and others, afford a noteworthy commentary upon the total lack of appreciation which we so often see in such cases. Be that as it may, the court then appointed a member of the Public Defender's Staff to interview the defendant and "prepare affidavit for defendant, if so requested." Defendant's original counsel had prepared a draft of the motion for new trial, furnished it to defendant, suggested that if other grounds were desired they might be added, and that he would be glad to cooperate. Three affidavits are attached to the motion as filed; one of these is of the defendant himself. All three seek to establish the fact that the defendant was at the home of one Alberta Ross during certain hours on January 13, 1959, which would supposedly have made it impossible for him to have committed the Scruggs robbery. We need not consider these affidavits further, for there is no assignment in the motion for new trial concerning newly discovered evidence. And there is no showing whatever, in the motion or in the affidavits or otherwise, that such evidence of the defendant's whereabouts first came to his knowledge after the trial. See, State v. Brotherton, Mo., 266 S.W.2d 712, 718; State v. Stehlin, Mo., 312 S.W.2d 838, 842. Indeed, from the very nature of the purported testimony in the *41 affidavits, defendant would necessarily have known of the facts, if true, prior to trial.
We find no error in those parts of the record which we consider independently of the motion for new trial. The judgment is affirmed.
All concur.
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334 S.W.2d 1 (1960)
Helen McFARLAND, Respondent,
v.
Leo R. WILDHABER, Jr., Appellant.
No. 47747.
Supreme Court of Missouri, Division No. 2.
April 11, 1960.
*2 Derrick & Holderle, St. Louis, for appellant.
Wood & Raack, Marvin S. Wood and William J. Raack, St. Louis, for respondent.
BOHLING, Commissioner.
Mrs. Helen McFarland sued Leo R. Wildhaber, Jr., for personal injuries received when struck by his automobile. She asked $15,000 damages. The jury returned a verdict for $1,000. The court sustained plaintiff's motion for new trial on the issue of damages only. Defendant has appealed and contends the court erred in overruling his motion for judgment in accordance with his motion for a directed verdict at the close of the evidence (§§ 510.280 and 510.290, RSMo 1949, V.A.M.S.), and abused its discretion in granting plaintiff a new trial limited to damages only.
By submitting plaintiff's case solely under the humanitarian doctrine on defendant's failure, in the exercise of the highest degree of care, to have discovered plaintiff's imminent peril and thereafter to have stopped his automobile and avoided striking plaintiff, plaintiff abandoned all other pleaded allegations of negligence. Quinn v. St. Louis Public Service Co., Mo., 318 S.W.2d 316, 323[16], citing cases. Plaintiff's position is that a case was clearly made on the submitted issue.
Defendant's automobile struck plaintiff, a pedestrian, about 6:30 p. m., December 20, 1957, on the intersection of Michigan Avenue and Meramec Street, St. Louis, Missouri. Michigan is a north-south and Meramec is an east-west street. They intersect at right angles. Each is 36 feet wide. There are major stop signs on Michigan for southbound and northbound traffic approaching Meramec, but no stop signs for traffic on Meramec approaching Michigan. Each corner of the intersection had a standard for street lights. It was after dark and the street lights were on. The weather was clear and dry and the visibility was good.
Plaintiff was walking west about the center of the north walk on Meramec, wearing a pink colored coat and a light scarf. When she reached the east curb of *3 Michigan Avenue, she looked up and down Michigan and did not see any cars. She stepped down and looked straight ahead as she crossed Michigan. She did not see any cars on Meramec because she did not look up and down Meramec. She could have seen cars on Meramec had she looked. She saw no traffic after she started to cross Michigan. She did not see defendant's car until it struck her when she was halfway across Michigan.
Defendant, twenty-three years of age, married, and employed by the International Shoe Company, was on his way to attend a night class at St. Louis University. He was eastbound on Meramec intending to turn north on Michigan. His 1950 Dodge automobile was in good mechanical condition. His headlights were on city beam. Two cars, westbound on Meramec, were approaching the intersection and defendant stopped his car at the west curb line of Meramec for the first car to pass. After it passed the second car was still three-fourths of or a block away. Defendant testified he started his left turn after looking both ways on Michigan and seeing nothing; that he first saw plaintiff when she came into the beam of his headlights on the crosswalk; that then he was six feet south of her and about two feet south of the north curb line of Meramec and his speed was four to five miles an hour; that he "slammed on" his brakes; that he could and did bring his automobile to a dead stop in six feet; that it was the forward lurching of the car that caused its right headlight to strike plaintiff, and that he stopped headed at a slight angle.
The evidence favorable to plaintiff (Miller v. Riss & Co., Mo., 259 S.W.2d 366, 371 [4]; Bronson v. Kansas City, Mo.App., 323 S.W.2d 526 [2,3]) made a case on defendant's ability to stop under the humanitarian doctrine. The case is presented on the theory plaintiff had walked 18 feet to the center of Michigan Avenue and was oblivious to the peril of defendant's approaching automobile. The obliviousness of a pedestrian may extend the imminent peril zone beyond his ability to stop short of the path of an approaching vehicle. Wright v. Osborn, 356 Mo. 382, 201 S.W.2d 935, 937 [2-7]; Perry v. Dever, Mo., 303 S.W.2d 1 [8]. There was a duty on defendant to maintain a lookout for other travelers upon the street, and his liability extended to discoverable as well as discovered peril. Wright v. Osborn, supra; Frandeka v. St. Louis Pub. Serv. Co., 361 Mo. 245, 234 S.W.2d 540, 548 [15, 16]. Judicial notice is taken that the ordinary walking speed of an average man is two to three miles an hour, 2.9 to 4.4 feet per second. Bunch v. Mueller, 365 Mo. 494, 284 S.W.2d 440 [4]; Romandel v. Kansas City Pub. Serv. Co., Mo., 254 S.W.2d 585 [6]. When and where an oblivious plaintiff enters the imminent peril zone is a fact issue for the jury. Hendershot v. Minich, Mo., 297 S.W.2d 403, 407. Whether plaintiff traveled 2.9 or 4.4 feet a second, the jury could find that defendant could and should have discovered her presence, obliviousness and imminent peril of being struck by his automobile sooner than he did and, with the ability to stop in six feet at four or five miles an hour, should have stopped his automobile and avoided striking plaintiff. Hendershot v. Minich, supra; Wright v. Osborn, supra; Millar v. Berg, Mo., 316 S.W.2d 499, 503 [6,7]; Wofford v. St. Louis Pub. Serv. Co., Mo., 252 S.W.2d 529, 533; Miller v. Williams, Mo., 76 S.W.2d 355 [1,2].
The cases stressed by defendant are distinguishable. In Vietmeier v. Voss, Mo., 246 S.W.2d 785, 790; Paydon v. Globus, Mo., 262 S.W.2d 601 [2], and Bean v. St. Louis Pub. Serv. Co., Mo.App., 233 S.W.2d 782, 787, the record did not establish that defendant had the ability to avoid the injury under the submitted humanitarian doctrine after plaintiff's imminent peril arose. See Ross v. St. Louis Pub. Serv. Co., Mo., 312 S.W.2d 849, loc. cit. 851, 852. In Silver v. Westlake, Mo., 248 S.W.2d 628, *4 631, and Martin v. Effrein, 359 Mo. 1150, 225 S.W.2d 775, 779, the court was concerned with instructions for the defendant, the verdict having been for defendant.
Defendant contends the court abused its discretion in granting a new trial as to damages only and a new trial, if warranted, should be on liability as well as damages.
Awarding a new trial on the ground the verdict is grossly inadequate rests within a broad discretion of the trial court and is equivalent to granting a new trial because the verdict is against the weight of the evidence on that issue. Sapp v. Key, Mo., 287 S.W.2d 775, 779 [2-5].
Plaintiff, a widow fifty-six years of age, was in good health and earning $40 a week. On December 20, 1957, defendant's car knocked plaintiff down, causing the left side of her body and head to strike the pavement and knock off her glasses. She, nervous and crying, was taken by defendant to Dr. Weinsberg's, her physician's, office. He sent her to Alexian Brothers Hospital for X-rays. She then went to her son's home. That night she was nervous, crying, and had a severe headache. Her face and neck were swollen. She was black and blue across her back at her hips. Her left ankle was swollen and her left knee and thigh were discolored. She was trembling, gagging and vomiting. She could not walk and had to be carried to the bathroom. She was taken to St. Anthony's Hospital December 21. The trembling, gagging and vomiting continued for four days. Her leg was propped up on pillows. Plaintiff's St. Anthony's Hospital record showed hyperactive reflexes in the left side, face and neck, with slight swelling; she was crying, faint, weak and nauseated; she had headaches and pain in her back, a contusion of left leg, sprain of left knee, and mild sprain of both ankles. On January 6, 1958, she returned to her son's home in a wheelchair. Plaintiff testified she returned to work January 24, 1958, but was still nervous and shook up. She also testified she would have "spells," "black out," "dazed," trance-like experiences, during which she could not talk. The trial was had in April, 1959. Plaintiff stated she had had five such experiences. The first "spell" occurred about April 15, 1958. Dr. Weinsberg referred plaintiff to Dr. Frank M. Grogan for this complaint. Dr. Grogan first saw plaintiff in June, 1958. He testified that from the information that she had had no "spells" prior to the accident it was his opinion that the accident of December 20, 1957, caused this condition of plaintiff, and in all probability plaintiff would continue to have this tension, anxiety, uneasiness and possibly the "spells" for at least an indefinite time. Dr. William A. Stephens gave testimony to like effect.
Defendant's position is that plaintiff's "spells" were caused by plaintiff's arteriosclerosis and high blood pressure; that plaintiff's injuries attributable to defendant were minor and her medical expenses connected therewith negligible, and that defendant should not be held responsible for the "spells" testified to by plaintiff and the expenses incurred therefor. Defendant adduced testimony sustaining this contention.
Notwithstanding we might reach a different conclusion upon weighing the evidence, we do not interfere with rulings of the nature under review where the trial court has exercised a sound judicial discretion, as where the ruling is supported by substantial evidence. Sapp v. Key, supra [4]; Millar v. Berg, Mo., 316 S.W.2d 499, 505; Nix v. Gulf, M. & O. R. Co., 362 Mo. 187, 240 S.W.2d 709, 712[4,5].
Taking the evidence most favorably to the trial court's ruling (the Nix case, supra [5]), plaintiff incurred medical expenses of $700, and lost over $200 in *5 wages, a total of $900. The verdict was for $1,000.
Defendant cites Taylor v. St. Louis Pub. Serv. Co., Mo., 303 S.W.2d 608 [5,8,9]; Lilly v. Boswell, 362 Mo. 444, 242 S.W.2d 73 [13-16], and Moore v. St. Louis S. W. R. Co., Mo.App., 301 S.W.2d 395 [21]. The Taylor case, stressed by defendant, is distinguishable in that there the trial court considered the verdict in favor of plaintiff so grossly inadequate as to establish passion and prejudice and misconduct on the part of the jury. The Lilly case supports the trial court's action in this case. The only after trial motion filed by defendant was his motion for judgment in accordance with his motion for a directed verdict. With this exception, no issue of trial error affecting defendant's liability was presented to the trial court. We have hereinbefore ruled adversely to defendant on said issue. See Sapp v. Key, supra, 287 S.W.2d 780 [7]; Millar v. Berg, supra, 316 S.W.2d 502 [1-3]. Defendant's Moore case, supra, was an appeal from a judgment in favor of plaintiff, based upon a nine-juror verdict. In the instant case plaintiff was awarded a new trial on the discretionary ground the damages were inadequate. Defendant has not established his right to a new trial upon the issue of liability as well as the issue of damages.
The order granting plaintiff a new trial on the issue of damages only is affirmed, and the cause is accordingly remanded.
BARRETT and STOCKARD, CC., concur.
PER CURIAM.
The foregoing opinion by BOHLING, C., is adopted as the opinion of the Court.
LEEDY, P. J., EAGER and STORCKMAN, JJ., and JAMES W. BROADDUS, Special Judge, concur.
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165 Conn. 102 (1973)
PAUL FRONCZEK ET AL.
v.
DELLA BITTA-BASSOLA, INC.
Supreme Court of Connecticut.
Argued May 2, 1973.
Decided June 5, 1973.
HOUSE, C. J., SHAPIRO, LOISELLE, MACDONALD and BOGDANSKI, JS.
William F. Gallagher, with whom were Bernard Poliner and, on the brief, Cyril Cole, for the appellants (plaintiffs).
John J. Reid, for the appellee (defendant).
PER CURIAM.
The sole assignment of error in this appeal is whether the trial court erred in setting aside the verdict in favor of the named plaintiff unless he filed a remittitur. The jury returned a verdict of $15,000 for the named plaintiff for his injuries and a verdict of $1400 for the plaintiff Stanley Fronczek, the father of Paul, for special damages. The trial court, after a review and analysis of the evidence relating to damages, concluded that the verdict was excessive and ordered remittiturs by both plaintiffs. The plaintiff Stanley Fronczek filed a remittitur of $933, but the plaintiff Paul Fronczek refused to file a remittitur and has appealed.
*103 From a review of the evidence printed in the appendices to the briefs submitted by both the named plaintiff and the defendant, it appears that the court in its memorandum of decision ordering the remittiturs correctly analyzed the evidence concerning both plaintiffs. It noted that on November 15, 1962, Paul Fronczek, hereinafter referred to as the plaintiff, was hospitalized for about a week after a plank fell on him causing severe bruises and injuries to the muscle and the soft tissues of his back. Thereafter, the plaintiff was treated on an irregular basis for nine months by a general medical practitioner. Following discharge by his physician, the plaintiff entered the armed forces and at the time of trial had served almost eight years. Although at the time of trial he still complained of backaches after periods of stress, he had no permanent disability and during his military service he had sought medical attention on only one or two occasions. The court also noted that the plaintiff, while in uniform, testified with respect to his service in Vietnam. It concluded that, on all the evidence, the jury were motivated by both partiality and prejudice in their award of damages. The court's conclusion was buttressed by the fact that the jury had disregarded the court's instructions in awarding Stanley Fronczek the sum of $1400 when, on the basis of the evidence, his maximum recovery was limited to $467.
Where the court orders the verdict set aside unless a remittitur is filed, that action will not be disturbed unless the broad legal discretion vested in the trial court was abused. Brooks v. Singer, 147 Conn. 719, 158 A.2d 745; Butler v. Steck, 146 Conn. 114, 117, 148 A.2d 246. The court's action is entitled to great weight; Peterson v. Sypher, 162 Conn. 616, 617, 295 A.2d 560, Gorham v. Farmington Motor Inn, Inc., *104 159 Conn. 576, 583, 271 A.2d 94; and in determining whether a court has abused its discretion an important consideration is the fact that the trial judge can sense the atmosphere of a trial and can apprehend far better than this court, limited to a printed record, what factors, if any, could have improperly influenced the jury. Birgel v. Heintz, 163 Conn. 23, 26, 301 A.2d 249. From an examination of the record and the appendices to the briefs, it appears that the court did not abuse its discretion in ordering the remittitur. Peterson v. Sypher, supra; Brooks v. Singer, supra.
In reducing the verdict by $3500 the court "went as far as it believed it reasonably could without trespassing upon the prerogatives of the jury.... In the ordering of a remittitur, a fair appraisal of compensatory damages, and not the limit of legitimate generosity, is the rule.... The verdict as reduced falls within the necessarily flexible limits of fair and reasonable compensation, and this court should not interfere with it." Allen v. Giuliano, 144 Conn. 573, 578, 135 A.2d 904.
There is no error.
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334 S.W.2d 780 (1960)
CALIFORNIA PRODUCTS, INC., et al., Petitioners,
v.
PURETEX LEMON JUICE, INC., Respondent.
No. A-7421.
Supreme Court of Texas.
March 23, 1960.
Rehearing Denied May 18, 1960.
Robert H. Kern, Jr., McAllen, James & Conner, Ft. Worth, for petitioners.
Strickland, Wilkins, Hall & Mills, Mission, for respondent.
GRIFFIN, Justice.
Petitioners herein, hereafter called plaintiffs, filed this suit in the 107th District Court of Willacy County, Texas, against respondent herein, hereafter called defendant, seeking a declaratory judgment to determine whether or not a certain bottle in which plaintiffs expected to sell lemon and lime juice would violate a judgment of the 107th District Court entered June 3, 1952. The prior suit in the 107th District Court was between the same parties, except petitioners herein were defendants and respondent herein was plaintiff. In the first suit between the parties, Puretex, as plaintiff, recovered a permanent injunction against California Products and Davis prohibiting them from marketing their lemon and lime juice in bottles which resembled in appearance the bottles used by plaintiff. This judgment was an agreed judgment and there was no appeal taken from it and it became final. After the entry of the above decree, petitioner files this declaratory judgment suit.
*781 Trial was had before a jury and two special issues were answered by the jury. The first issue asked the jury to find from a preponderance of the evidence whether plaintiff planned to have bottles made of the kind set out in a blueprint introduced in evidence, such bottles to be used as containers in which to market its lemon and lime juice. The jury answered this issue in the affirmative which was favorable to the plaintiff. The second issue asked the jury to find from a preponderance of the evidence whether the bottle and its markings which plaintiff proposed to use to market its lemon and lime juice "will not so closely resemble in appearance the bottle of defendant and its markings as to be liable to deceive a reasonably prudent buyer, exercising such ordinary care and observation as shoppers generally may be expected to use so as to mislead such buyer into believing that this bottle contains Puretex lemon or lime juice." The jury answered, "It will not be likely to deceive." On this verdict, the court rendered judgment for plaintiff-California Products, Inc. The judgment entered by the trial court reads, in part, as follows:
"That the terms of the agreed judgment entered by this Court on June 3, 1952, in Cause No. 1860, entitled Puretex Lemon Juice, Inc. v. California Products, Inc., and Charles H. Davis, properly construed, do not prohibit the use by Plaintiffs herein, in the marketing of lemon and lime juices, of a bottle resembling the said bottle of Defendant in any respect whatsoever, but the purport and meaning thereof is to prevent the use by Plaintiffs of a bottle so resembling in appearance that of Defendant's bottle as to be calculated to mislead and deceive the buying public, and;
"That the use by Plaintiff, California Products, Inc. of its proposed bottle, above described in the marketing of its lemon and lime juices will not be violative of, or inconsistent with, the injunction issued by this Court in said Cause No. 1860."
Defendant appealed to the Court of Civil Appeals. That Court reversed and rendered denying plaintiff and relief. The basis for the opinion of the Court of Civil Appeals was (1) plaintiffs had shown no justiciable interest, and were only seeking an advisory opinion from the Court and (2) the trial court had no right to modify and change the terms of the judgment entered some five years in the past. 324 S.W.2d 449.
We granted the petition for writ of error on plaintiffs' first point. This asserted error by the Court of Civil Appeals in holding there was not an actual, real, or bona fide controversy between the parties. Petitioners-plaintiffs also have points on the error of the Court of Civil Appeals in holding that the trial court had no right to modify and change the terms of the previous judgment.
All parties agree that there must be a justiciable controversy between the parties before a declaratory judgment action will lie. That is well settled law. Board of Water Engineers v. City of San Antonio, 1955, 155 Tex. 111, 283 S.W.2d 722(1); Parks v. Francis, Tex.Civ.App.1947, 202 S. W.2d 683(5), no writ history; Southern Traffic Bureau v. Thompson, Tex.Civ.App. 1950, 232 S.W.2d 742(10), ref., n.r.e.; Anderson, Declaratory Judgments, 2d Ed., Vol. 1, p. 38, § 9; 16 Am.Jur. 282, § 9; Hodges, General Survey of the Uniform Declaratory Judgments Act in Texas, Vernon's Texas Civil Statutes, Vol. 8, p. VII. The Court of Civil Appeals has cited and discussed some additional authorities and we will not repeat them.
"The rule with respect to the necessity for a justiciable controversy may be stated in the vernacular in this wise: The Uniform Declaratory Judgments Act does not license litigants to fish in judicial ponds for legal advice." Anderson, Declaratory Judgments, 2d. Ed., Vol. 1, p. 47, quoting from Lide v. Mears, 231 N.C. 111, 56 S.E.2d 404.
*782 The case nearest in point to the case at bar which we have been able to find is the case of Ladner v. Siegel, 1928, 294 Pa. 368, 144 A. 274, 275. Plaintiffs Ladners owned certain residences on land purchased from defendant Siegel. On the remaining land adjoining plaintiffs' residences, Siegel proposed to erect a shopping center. One of the buildings was to be occupied by a garage operated for the general repair and service of automobiles for the public. The Ladners brought suit against Siegel seeking to restrain him from erecting and occupying the garage as a violation of the residential district use. The Ladners won this suit and secured their injunction. That cause became final.
Thereafter Siegel filed a declaratory judgment action asking the court to fix his rights in the conduct of the garage in case it was carried on in such a way as not to constitute a private nuisance. The court was presented with the question of determining a method by which Siegel would operate the garage, and then asked to determine whether or not such method of operation would be permitted in this residential district. The trial court entered a judgment setting out a method whereby the garage could be operated so as not to constitute a private nuisance.
On appeal the Supreme Court of Pennsylvania says the crucial question is "do the circumstances here disclosed give any jurisdiction to the court below to enter a declaratory judgment?" The Court then quotes from the Declaratory Judgments Act which provides that courts of record "within their respective jurisdictions, shall have power to declare rights, statutes, and other legal relations" between parties where there is a real matter in controversy. These are the identical provisions in our statuteart. 2524-1, Vernon's Ann.Civ.St. The Court then says the Declaratory Judgments Act gives the court no power to grant advisory opinions, or to determine matters not essential to the decision of the actual controversy although such questions may in the future require adjudication, or passing upon contingent or certain other situations. The court then says:
"* * * In the present case, the question of whether the use of the garage as now contemplated would constitute an offensive business in the neighborhood, and a private nuisance, affecting not only complainants, but others residing near by, could not be determined until its actual operation at some future date."
And the Court further says:
"* * * If such a proceeding [as sought] was to be countenanced, then approval would be given to applications in any like equity case to have a determination as to whether the court's order should be held ineffective, under stated facts depending on contingent and future events, with resulting confusion, and the decree would lack the finality which is contemplated in law. If petitioners believe the operation intended to be unobjectionable under the order made, they may proceed at their own risk. * * * `Construction of a decree cannot be given until the question comes regularly before the court in proceedings requiring construction and application to acts alleged to have been done or omitted under it.' 21 C.J. 689."
To the same effect see Shattuck v. Shattuck, 1948, 67 Ariz. 122, 192 P.2d 229(18); Glassford v. Glassford, 1953, 76 Ariz. 220, 262 P.2d 382(3); National Biscuit Co. v. Kellogg Co., D.C.Del.1938, 22 F. Supp. 801; J. Greenebaum Tanning Co. v. National Labor Relations Board, 7 Cir., 129 F.2d 487(2); 154 A.L.R. 740, et seq.,
In the case of Southern Traffic Bureau v. Thompson, Tex.Civ.App.1950, 232 S.W.2d 742, 751, ref., n. r. e., it was said:
"The Uniform Declaratory Judgments Act does not provide for the giving of merely advisory opinions on the part of courts. In government this is a duty of the executive branch. In private business it is the function of *783 the legal profession. City and County of Denver v. Lynch, 92 Colo. 102, 18 P.2d 907, 86 A.L.R. 907.
"It is further a well established rule that a declaratory judgment should not be based upon facts which are particularly subject to mutation and change as are the facts here. Anderson on Declaratory Judgments, p. 195, § 72."
A declaratory judgment rendered herein would not settle the controversy between the parties. The permanent injunction in Cause No. 1860 is still outstanding. A violation of that judgment is subject to be punished for contempt in a proper proceeding. It cannot be determined whether or not a proposed bottle will be violative of the injunction issued on June 3, 1952 until California Products seeks to market its product in a bottle in the same market with Puretex. Only in this way can it be determined whether the California Products' bottle is of the size and appearance that it misleads and deceives the buying public into believing that it is securing Puretex products rather than California products.
We agree with the Court of Civil Appeals that this proceeding is one in which an advisory opinion is sought. Should we decide that the bottle proposed to be used by California Products did violate the injunction, we would settle nothing. California could continue indefinitely to propose bottles of different sizes, shapes and colors on which it could seek an equally indefinite number of advisory opinions as to whether such bottles violate the injunction. Such procedure would accomplish nothing. California Products should propose a bottle which it thinks does not violate the injunction, use it and litigate the material issue on a contempt hearing.
We affirm the judgment of the Court of Civil Appeals.
GREENHILL, J., not sitting.
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23 Md. App. 555 (1974)
328 A.2d 349
CAROL SUSAN SHIPP
v.
AUTOVILLE LIMITED ET AL.
No. 253, September Term, 1974.
Court of Special Appeals of Maryland.
Decided November 22, 1974.
The cause was argued before ORTH, C.J., and POWERS and DAVIDSON, JJ.
Charles W. Foster for appellant.
Charles C. Bowie, with whom were Brault, Scott & Brault on the brief, for appellees.
ORTH, C.J., delivered the opinion of the Court.
CASE SUMMARY
This is an appeal from a judgment for costs in favor of the defendants in an ex delicto action before a jury in the Circuit Court for Prince George's County in which Carol Susan Shipp, appellant, sued Autoville Limited and John A.B. Fenwick, appellees, seeking damages for malicious prosecution and false arrest and imprisonment. The *557 judgment was entered upon a directed verdict granted by the court at the close of all the evidence. Maryland Rule 552. We reverse.
PRELIMINARY ISSUE
A preliminary issue for decision is whether the appeal is properly before us. The case was tried on 21 and 22 January 1974. The court reserved a ruling on a motion for a directed verdict made by appellees at the close of evidence offered by appellant. The course of events thereafter is shown by the docket entries:
"1/22/74 ... At the conclusion of the entire case, Motion for Directed Verdict renewed. Motion granted.
1/22/74 Judgment nisi entered in favor of the Defendant for costs.
1/28/74 Final Judgment entered in favor of the Defendant for costs."
On 20 February 1974 appellant filed an order of appeal. She requested the Clerk to enter an appeal to the Court "... from the judgment entered in this action on January 22, 1974." This was not a final judgment. The general rule is that an appeal may be taken only from a final judgment. Courts Art., § 12-301. See Courts Art., §§ 12-302 and 12-303.
It once was that the practice followed in a law case in entering a final judgment upon a jury trial was different from the practice followed in entering a final judgment upon a bench trial. Uniformity was obtained by rule. Maryland Rule 564 b 1 provides: "Where an action at law is tried upon the facts by the court, the court shall direct judgment nisi to be entered upon the law and the evidence." Rule 567 a prescribes: "A motion for a new trial as to all or part of the matters in controversy shall be filed within three days after the reception of a verdict, or, in case of a special verdict or a trial by the court within three days after the entry of a judgment nisi." Rule 567 f declares: "If a motion for a new trial is not made, within the time prescribed by section a of this Rule, the clerk shall enter a final judgment as of *558 course."[1] The Court of Appeals explained it all in Merlands Club v. Messall, 238 Md. 359, 362:
"This portion [§ b 1] of Rule 564 was amended to its present form in 1957, to make the practice of law in regard to the entry of judgment by the court sitting without a jury the same as the practice of entering judgment upon a verdict of a jury. See Baltimore Luggage Company v. Ligon, 208 Md. 406, 118 A.2d 665 (1955). Prior to the amendment of Rule 564, an absolute judgment was entered immediately upon the announcement of the court's `verdict' when sitting without a jury and upon the rendition of special verdicts by a jury, Baltimore Luggage Company v. Ligon, supra. After the amendment, when the facts of the case are tried by the court sitting without a jury, the clerk enters up a judgment nisi, which act is analogous to the entry of a verdict when the facts of the case are tried by a jury. The principal purpose of the entry of a judgment nisi is to enable an aggrieved party to file a motion for a new trial within three days from the rendition of the verdict or judgment nisi."
So with respect to actions at law it is now well settled that a) when no motion for a new trial has been filed, the judgment absolute is entered at the expiration of 3 days from the entry of the judgment nisi in a court trial and from the rendition of the verdict in a jury trial, and b) when a motion for a new trial has been filed, the judgment absolute is entered upon denial of the motion, whether the trial be by court or jury. It is the "final judgment" from which an appeal may be taken. An appeal lies only from a judgment absolute and not from a judgment nisi. Hawkins v. GMAC, 250 Md. 146, 148. Of *559 course, the time in which the appeal must be filed runs from the entry of the final judgment. Rule 1012.
The Court of Appeals has stated, iterated and reiterated that jurisdiction may not be conferred upon an appellate court in this jurisdiction by consent of the parties. Lang v. Catterton, 267 Md. 268, 275. It has been steadfast in dismissing appeals not taken from a final judgment. It has found its Rule 812, Section a of which is substantially the same as Rule 1012 applicable to this Court, to be mandatory, giving it no alternative but to dismiss the appeal for non-compliance, in the absence of proof of extenuating circumstances.[2]Hawkins v. GMAC, supra, at 148. See Rules 835 and 1035. It has dismissed the appeal where the order was filed after the judgment nisi but before the judgment absolute, Merlands Club v. Messall, supra, Hawkins v. GMAC, supra; after the verdict of the jury but before judgment absolute, even though the clerk should have entered judgment, Aronstamn v. Coffey, 259 Md. 47, Page-Loten v. Howard, et ux., 260 Md. 1; in the absence of both a judgment nisi and absolute, A. & A. Masonry v. Polinger, 259 Md. 199; when there was no final judgment under Rule 605 (Multiple Claims Judgment Upon) Arteno v. Arteno, 257 Md. 227, Lang v. Catterton, supra. The rationale of the action of the Court of Appeals in dismissing the appeals was that there was no order of appeal entered within 30 days after the entry of a judgment absolute. It is this rationale which saves the appeal in the case before us. Appellant's order for appeal was filed after the judgment absolute was entered and within 30 days thereof. Although she designated the appeal to be from the judgment nisi, the designation was superfluous.[3] The order of appeal would have been effective had it merely directed the clerk to note an appeal; it would necessarily follow that it be from the *560 final judgment.[4] As the order of appeal here was filed within 30 days of the entry of the judgment absolute, we conclude the appeal is properly before us.
ISSUE
The sole issue on the merits of the appeal is whether the court below erred in directing a verdict for appellees.
Appellant claims that the evidence adduced was sufficient to compel submission of the case to the jury. Appellees argue that it was not, and that they were properly entitled to judgment in their favor as a matter of law.
FACTS
The bare facts are that appellant issued a check payable to Autoville Limited in the amount of $30.20 drawn on her account at the Suburban Trust Company for repairs Autoville had made to her automobile. She later stopped payment on the check, which was returned to Autoville uncollected for that reason. John A.B. Fenwick, Vice President of Autoville, swore out a warrant for her arrest, charging the crime proscribed by Code, Art. 27, § 144 obtaining something of value by check with intent to stop payment. She was arrested under authority of the warrant. When the case came on for trial, the prosecutor entered a nolle prosequi with the notation "No evidence of criminal intent." Appellant instituted an action against Autoville and Fenwick for damages arising from the malicious prosecution and false arrest and imprisonment of her. The case terminated at the close of all the evidence in the grant of a motion for a directed verdict in favor of the defendants.
We flesh out this apothegm with an account of the circumstances leading to appellant's order to stop payment and appellees' prosecution of her. The prevailing rule of law is that where the court directs in favor of one of the parties, we must assume the truth of all credible evidence in the case *561 tending to sustain the contention of the party against whom the verdict is directed as well as all inferences of fact reasonably and fairly deducible therefrom. Trionfo v. R.J. Hellman, Inc., 250 Md. 12, 15; Buchanan v. Galliher, 11 Md. App. 83, 87-88. We narrate the evidence adduced accordingly.
In 1971 appellant, then single and known as Carol Susan Pike, was a student at the University of Maryland, residing in an apartment at 3588 Powder Mill Rd., Apt. 302, Beltsville, Maryland.[5] On 31 August of that year she and her father, William Patrick Pike, purchased a new 1971 Volkswagen Super Beetle from Silver Spring Auto City, Inc. Among the accessories with which the car was to be delivered equipped as listed on the purchase order was an air conditioner at $379. On 31 May 1972 when the car had been driven about 7,300 miles, appellant took it to Autoville, an authorized service dealer, for repairs to the air conditioning and heater systems. She spoke to William Roberson, a "service adviser". He told her the heater was covered by warranty. His recollection was that "She asked me about the air conditioner and, of course, she said it should be warranty. Now I wasn't too sure because warranty on the air conditioner is kind of tricky, so I said, well, I will check on it. I said, `I am not sure. I won't guarantee you it is warranty.' I believe she said she would check back with me later during the day.... I told her at that time that it was not warranty. Well, she said, `Go ahead and fix it. It had to be fixed anyhow.'"
When she bought the car she received a Warranty Voucher, issued by Volkswagen of America, Inc. and authenticated by the selling dealer. It specified: "The warranty commences at the date the VW automobile is delivered to the original purchaser, viz. on 9-1-71 and covers a period of 24 months or the period before the vehicle has *562 been driven 24,000 miles, whichever event shall first occur. Should any warranty claim arise, you are requested to submit this voucher to your VW dealer." The warranty voucher was contained in a Volkswagen Maintenance Record Book which discussed the warranty terms. It stated: "If any part of the vehicle becomes defective during this period under normal use and service and the vehicle is brought to the workshop of any authorized Volkswagen dealer in the continental United States, Hawaii or Canada, the dealer will, without charge, either repair the defective part or replace it with a new or factory reconditioned part." It designated items not covered by warranty. An air conditioner was not listed as one of them. The warranty was further explained in the book. There was no indication that the air conditioner was not covered. The explanation declared: "Volkswagen of America, Inc. is proud of the quality of the automobiles it imports. It warrants new vehicles for a period of 2 years or 24,000 miles from the date of purchase, whichever comes first. In general the complete vehicle including battery and tires is covered under the provisions of the Volkswagen New Vehicle Warranty. It will be honored by any Authorized Volkswagen Dealer in all 50 States, the District of Columbia and Canada."[6]
Later in the day on 31 May 1972 when she went to Autoville to pick up the repaired car, she questioned the bill,[7] telling the cashier that she understood that at least the heater was under the warranty. The cashier called Roberson over. He simply said that it was not covered "Well, I made a mistake." She paid the bill by check. She did not press the warranty issue further at the time because "... well, he had convinced me I don't know anything about mechanical process or anything and he talked to me in mechanical language and I figured of the two of us he certainly knew *563 more about cars than I did and I at that point had no reason to distrust him." When she went home she talked to her future husband, Gary Shipp, and her father. Both thought the repairs should be under the warranty. Her father said, "We got you a new car so there wouldn't be any problems." He suggested she stop payment on the check. She decided to call Autoville "... and talk not just to a service adviser but to a service manager and I asked I called them and I asked for such a person, I didn't have any name, and I was going to explain how I felt and what I had learned since I got home, and you know, find out if there was something that could be done about it, and if I didn't get any satisfaction from that phone call that I would stop payment on the check, because I didn't think I was going to get any better satisfaction, and they also had my money." She made the phone call the next morning and spoke to a Mr. Hunt who identified himself as a Service Manager. She told him about the transaction, that she felt it was work covered by the warranty and that an error had been made in charging her $30.20. She testified that she told him "That I had on good authority, that other Volkswagen dealerships in the area would have called that work warranty work and would not have charged me and ... his answer was that I had to bring him notarized affidavits from service managers that this was true, and I said that was ridiculous. Why should the burden of proof be on me, that he should know what the warranty was without everybody else telling him, and he was not really very cooperative. He said, `Well, I really don't know anything about the case and I will have to look into it and see the invoice and I will call you back.' And because I didn't get any satisfaction and he had not been the most cooperative person I decided it was best if I did stop payment on the check, so I called my father and I told him what had happened and then I called the bank". She stopped payment on her check.
The early part of June 1972 Sharon Greer, appellant's roommate, took a telephone message for appellant from Hunt. According to Ms. Greer, Hunt said, "First of all she does have to pay the check; she should not stop payment on *564 the check. She has to, you know, pay the check." He went on to explain about the air conditioning. "There was a problem, warranty problem. He said that some parts of the air conditioning, he used all the technical terms, but the gist of it was that some parts of the air conditioner were put in by the manufacturer and other parts were put in by the dealer. The dealer parts that air conditioner was put under wasn't covered by the warranty and he said, `But if Miss Pike feels that she still is entitled to this money she should go back to the original dealer where she purchased the car and they will in turn reimburse her for the payment, I think it was $30, but they will pay her', but she still had to pay them."
Appellant testified that Fenwick called her about the middle of June. "He informed me that he had a cancelled check and that if I didn't make good on the check he was going to have me arrested and he read out the code and everything that I had violated and after he had gone on for a bit and I hadn't really gotten a chance to say anything I broke in and I said `Well, I did have a reason for stopping payment on that check.' And I explained to him what it was, and that I felt it needed more of an explanation as to why this was not warranty work and then he told me that he really did not know any details about the case and these are his own words, he said the only thing he knew was he had my cancelled check in his hand. I use his words because I remember them. And he said that he would have to look into it and that he would get back to me in the mail and either he would send me the check or he would send me information as to that he would proceed with prosecuting me for stopping payment."
Fenwick told about his telephone call to appellant. "It took a while to contact her, but I finally did through her mother. Her mother gave me a phone number where I could reach her and I got her at a number other than the one on this check,[8] I think.... She said, well, she told me something *565 about a warranty dispute that she didn't believe that she should be responsible for paying for some repairs. All I had at that time was the check and I believe that I said that `Well, I will have to look into it' or something like that.... Well, I believe that I told her that I would be back to her, one way or another and I think that because I had a hard time getting her on the telephone that I said that I would send her something in the mail." He "probably" asked her that the check be made good. Fenwick decided that the work that was performed was not covered by the Volkswagen warranty as he interpreted it. He sent a letter, signed by him as Vice President, to the address that was on the check and the invoice. The letter was dated 9 June 1972. It read:
"The Suburban Trust Company has returned your check #312 written to Autoville, Ltd. for $30.20 marked `Payment Stopped'. Unless we have received this sum in cash within ten days of receipt of this letter, we shall use the avenues of legal recourse left open to us.
If you have any questions on this matter, please contact us."
The letter was mailed on 9 June 1972 by certified mail, return receipt requested, with instruction to deliver to addressee only. It was returned "Unclaimed". Fenwick had no contact with appellant between the time he talked to her on the telephone and the sending of the letter. When the letter was returned he went to Detective Schachner and complained. Schachner said, "We are not a collection agency." Fenwick replied, "Well, I don't particularly care about [the money] at this point." No civil suit had been instituted. During his testimony he was asked why he went to the police. He explained: "Well, because I just, I couldn't understand why someone could just arbitrarily decide to well, I considered it stealing. They had gotten something and not given anything back for it, and I just I didn't feel it was right." He could not remember whether he was told that appellant had discussed the warranty problem with *566 Roberson and Hunt. He admitted that in the telephone conversation with appellant he told her when she inquired about the warranty that he would be in touch with her concerning the warranty matter. But he made clear he did not do so. "The only time I believed I talked to her was the one time on the telephone. I had never seen her. Never met her. Never seen her car at all." There was no mention of the warranty dispute in his letter of 9 June.
In Fenwick's application for a warrant for appellant's arrest the reason as set out therein was that appellant "paid for services received with a worthless check, number 312, dated 5-31-72, in the amount of $30.20 drawn on the Suburban Trust Co., Hyattsville, Md., returned Payment Stopped. Said check was given to an employee, Florence V. Webb, who can identify the accused. No restitution has been made to date. The accused did not claim the registered letter sent to notify her of the banks refusal to honor said check." The warrant was issued upon the sworn application of "John A.B. Fenwick agent for Autoville Ltd." The defendant was named as Carol S. Pike, 620 University Blvd., West, Silver Spring, Maryland, who was described as "W/F/20/5'3/140 lbs/heavy bld/bleached blond".[9] It charged her with violation of Code, Art. 27, § 144 and gave a "Concise statement of essential facts constituting offense charged":
"did unlawfully with intent to cheat and defraud the said Florence V. Webb, agent for Autoville, Ltd., 9330 Baltimore Blvd., College Park, Maryland, of Thirty dollars and twenty cents ($30.20), current money of the United States by means of a check drawn on Suburban Trust Company, Hyattsville, Maryland, which said bank was not indebted to the drawer, and said drawer did not provide for payment of same, said check was not paid on presentation and returned marked payment *567 stopped and said check was not made good within ten (10) days."
During his testimony, Fenwick expressly conceded that other than the fact that he had a check on which payment had been stopped, he had no other evidence that appellant intended to stop payment on the check when she delivered it to Autoville. Appellant asserted emphatically in testifying that when she gave the check to Autoville she had no intention of stopping payment on it. It is clear that when she made the check there were sufficient funds in her account to cover it. She had deposited $75.34 in her checking account before she wrote the check. The deposit slip so showing and a ledger sheet of her account were received in evidence. The ledger sheet showed that when the check was charged to her account on 5 June (it was credited the same day as not paid) there was a balance on deposit of $263.12. The balance on 31 May was $82.44. At no time between the time the check was made and the time it was presented for payment were there insufficient funds to cover it. Around the 4th of July 1972 appellant went to Ocean City with her parents. When she returned home on 7 July there was a message to call Detective Schachner. He told her a warrant had been issued for her arrest and that it would be better for her to come in on her own than for him to send a squad car after her. She went to the Forestville Police Station with her mother and was arrested. She was transported to the Hyattsville Police Station. She was given a copy of the warrant, informed of her rights, fingerprinted and photographed.[10] After being in *568 custody over two hours she was released on her own recognizance.
DECISION
The Torts of False Arrest and False Imprisonment
The Court of Appeals in Great Atl. & Pac. Tea Co. v. Paul, 256 Md. 643, 654-657, neatly summed up the status of the law in this jurisdiction with respect to false arrest and false imprisonment:[11]
"False imprisonment and false arrest are common law torts that apparently differ only in terminology. 32 Am.Jur.2d, False Imprisonment, Sec. 1 (1967). The necessary elements of a case for false imprisonment are a deprivation of the liberty of another without his consent and without legal justification. Safeway Stores Inc. v. Barrack, 210 Md. 168, 122 A.2d 457 (1956).
The term legal justification has created some confusion in other courts. See Roberts v. Hecht Company, 280 F. Supp. 639 (D. Md. 1968). This confusion arises because of the frequent statement that probable cause is not a defense to an action for false imprisonment but legal justification is. Probable cause, however, may be shown in mitigation of punitive damages. Clark's Park v. Hranicka, 246 Md. 178, 227, A.2d 726 (1967); Fleisher v. Ensminger, 140 Md. 604, 118 A. 153 (1922).
* * *
We think the law in Maryland is settled on this point.[[12]] When the cases speak of legal justification *569 we read this as equivalent to legal authority. In Dorsey v. Winters, 143 Md. 399, 122A. 257 (1923) the jury was instructed that if they found `that defendant deprived the plaintiff of his liberty without probable cause, then the verdict must be for the plaintiff.' We held this instruction defective for failure to distinguish between the torts of false imprisonment and malicious prosecution, saying at page 411, `If the prayer was based upon the theory that the detention of the plaintiff was unlawful, it is defective in failing to require the jury to find as a fact essential to recovery that the arrest and imprisonment were without color of legal authority.'
Whatever technical distinction there may be between an `arrest' and a `detention' the test whether legal justification existed in a particular case has been judged by the principles applicable to the law of arrest....
* * *
As it now stands in this state arrest or detention without legal authority, with or without probable cause, will render the arresting person liable for such damages `as the jury may consider actual compensation for the unlawful invasion of his [the plaintiff's] rights and the injury to his person and feelings.' In addition, if the act was `inflicted maliciously or wantonly, the jury are not restricted to an award of compensatory damages, but [in its discretion] may award ... such punitive damages as the circumstances of the case may warrant as a punishment for the wrong done and as an example to others.' Dennis v. Baltimore Transit Co., 189 Md. 610, 616, 56 A.2d 813 (1948). If punitive damages are allowable, probable cause for the detention may be shown in mitigation of this stripe of damage as *570 having a bearing on the quality of any malice or wantonness found to exist. Clark's Park v. Hranicka, supra at 187; Safeway Stores Inc. v. Barrack, supra at 173-174; Fleisher v. Ensminger, supra at 620; Lewin v. Uzuber, 65 Md. 341, 348-49, 4 A. 285 (1886)."[13] (footnote omitted)
This was in full accord with Safeway Stores Inc. v. Barrack, supra, cited therein, in which it was stated at 173-174, that for false imprisonment "... there must be a deprivation of the liberty of another without his consent and without legal justification. Although intent is necessary, `malice' is not, nor is probable cause a defense." It is fundamental, therefore, that when an arrest has been effected by valid legal process, an action for false arrest and false imprisonment arising from the legal arrest, will not lie. Brewer v. Mele, 267 Md. 437, 440; Lewin v. Uzuber, 65 Md. 341.
The Tort of Malicious Prosecution
The necessary elements of a case for malicious prosecution of a criminal charge are well established. A summary of the requisites for such an action was set out in Banks v. Montgomery Ward & Co., 212 Md. 31, 38 and applied in Gladding Chevrolet v. Fowler, 264 Md. 499, 505:
"To prevail in a suit for malicious prosecution the plaintiff must show: (1) that the criminal proceeding instituted or abetted by the defendant has terminated in his favor, apart from whether any inference as to probable cause for the proceeding arises from the termination; (2) a want of probable cause for the proceeding which may, or may not, be inferred from the termination of the proceeding, depending upon the manner of the *571 termination; (3) malice, which is a primary purpose for the institution of the proceeding, other than that of bringing an offender to justice. Safeway Stores, Inc. v. Barrack, 210 Md. 168, 173, supra, and authorities cited."
See Durante v. Braun, 263 Md. 685, 688; Jannenga v. Libernini, 222 Md. 469, 472. False arrest, false imprisonment, and malicious prosecution are kindred actions. The Court pointed out in Safeway Stores, Inc. v. Barrack, supra, at 174, "The chief distinction between the two actions [false imprisonment and malicious prosecution] lies in the existence of valid legal authority for the restraint imposed." Prosser, Torts, 4th ed. (1971) § 12, p. 49, puts it thus:
"The distinction between the two lies in the existence of valid legal authority for the restraint imposed. If the defendant complies with the formal requirements of the law, as by swearing out a valid warrant, so that the arrest of the plaintiff is legally authorized, the court and its officers are not his agents to make the arrest, and their acts are those of the law and the state, and not to be imputed to him. He is therefore liable, if at all, only for a misuse of legal process to effect a valid arrest for an improper purpose. The action must be for malicious prosecution, upon proof of malice and want of probable cause, as well as termination of the proceeding in favor of the plaintiff." (footnotes omitted)
The Instant Case False Arrest and False Imprisonment
Appellant presents no argument in her brief going to the propriety of the direction of the verdict in regard to false arrest and false imprisonment. We deem, therefore, that she has abandoned any contention regarding them. Maryland Rule 1046 f. In any event, it is clear that appellant's arrest and the restraint imposed were under valid legal authority a duly issued arrest warrant sworn out by Fenwick as *572 Vice President of Autoville. Autoville and Fenwick complied with the formal requirements of the law in swearing out the warrant and while it may be that they could be liable for misuse of legal process to effect a legal arrest for an improper purpose, the actions of false arrest and false imprisonment will not lie against them. We conclude that the trial court did not err in directing a verdict in favor of appellees with respect to false arrest and false imprisonment, that is as to counts one and three of the Declaration.
The Instant Case Malicious Prosecution
The crime of which appellant was accused is proscribed by Code, Art. 27, § 144, as amended effective 1 July 1972 with no change in the substantive offense:
"Every person who shall obtain money, credit, goods, wares or anything of value, of the value of one hundred dollars or more, from another by means of a check, draft or any other negotiable instrument of any kind, with intent at the time of giving such instrument without the consent of such other to stop or countermand the payment of the same or otherwise to cause the drawee thereof to disregard or dishonor or refuse to recognize such instrument, shall be deemed to have obtained such money, credit, goods, wares, or other thing of value with intent to cheat and defraud another and upon conviction, shall be fined or imprisoned or both, as provided in § 140 of this article, at the discretion of the court. Where the value of such money, credit, goods, wares or anything of value is less than one hundred dollars, such person, upon conviction, shall be deemed guilty of a misdemeanor and fined not more than fifty dollars or imprisoned for not more than eighteen months in the house of correction or jail, or both fined and imprisoned in the discretion of the court. And upon the trial of any person accused of violation of this section, the fact that such person without the consent of such other to *573 stop or countermand the countermanded payment of such instrument, or otherwise caused the drawee to disregard or dishonor the same without returning or tendering the return of the thing so obtained shall be presumptive evidence of such intent to cheat and defraud."
The criminal proceeding under this statute which was instituted or abetted by appellees terminated in appellant's favor. The question is whether the court properly refused to permit the elements of (a) want of probable cause for the criminal proceeding, and (b) malice as the primary purpose for the institution of the proceeding, to be submitted to the jury.
(a)
Gladding Chevrolet v. Fowler, supra, at 505-506, reaffirms the definition of probable cause set out in Banks v. Montgomery Ward & Co., supra, at 39:
"Probable cause is a reasonable ground of suspicion supported by circumstances sufficiently strong in themselves to warrant a cautious man in believing that the accused is guilty.... Mere belief, however sincere, is not sufficient. There must be such grounds of belief founded upon actual knowledge of facts as would influence the mind of a reasonable person." (citations omitted)
It is well settled that the existence of probable cause is a question to be determined as a matter of law by the court upon a given set of facts, but when the facts are disputed, the question shall be submitted to the jury under adequate instructions. Montgomery Ward & Co. v. Cliser, supra, at 416, and cases cited. Kennedy v. Crouch, 191 Md. 580, 590-591, said it a little differently but to like effect:
"What facts are sufficient to show want of probable cause in any case is, of course, a question of law for the court; but whether such facts are proved by the evidence is a question for the jury. *574 * * * If the facts relied on to constitute probable cause, or the inferences to be drawn therefrom, are clear and undisputed, the question is one of law for the court; but if the evidence or inferences to be drawn therefrom are disputed, it becomes a mixed question of law and fact." (citations omitted)
The trial judge explained to the jury why he directed a verdict in favor of appellees. Referring to the intent required by § 144, he recognized that "it is always difficult to prove what goes on in the mind of a person charged with such an offense." But the intent here gave him no difficulty, even though he was satisfied that appellant had no intention to defraud when she gave the check. "Mrs. Shipp deposited money in the Suburban Trust Company to cover payment of this, came back, got her car, paid for it, no intention to defraud. I go along with that." He made clear that the reason "intent" gave him no difficulty was because of the presumption declared in the statute of an intent to cheat and defraud when the person giving the check causes the drawee to dishonor it without returning or tendering the return of the thing obtained. He said, "Now we won't in my discussion belabor this particular section too much. It is obvious that when you receive services you cannot return the services. They are spent. But, it is also obvious from the statute that if you don't get the consent to stop payment there is a presumption under the law of such intent to cheat and defraud." He felt the advice given appellant to stop payment on the check "was not the best that could have been given, that because of the fact there is a presumption under the law where the stop payment was not consented to that that in and of itself would be enough to defeat the Plaintiff's action because of want of probable cause." We are constrained to conclude that the trial judge considered the statutory presumption to be a conclusive rather than a rebuttable presumption. We do not find this to have been the legislative intent. The statute speaks in terms of "presumptive evidence" upon the trial and we think that "presumptive evidence" of intent to defraud may be rebutted by evidence tending to show that there was no such intent. The *575 presumption was simply legislative recognition of the inherent difficulty in proving intent to cheat and defraud, and may establish such intent prima facie at trial. But it was surely not meant by the Legislature to be legally sufficient to establish conclusively such intent beyond a reasonable doubt.
Even if the remarks of the trial judge may be fairly interpreted as considering the presumption rebuttable, when we take the whole of his comments as finding that the evidence adduced was not sufficient to raise a dispute as to want of probable cause, we think he was wrong. In the first place, we note that a want of probable cause may be inferred from the termination of the proceeding, depending upon the manner of the termination. It is generally held that a nolle pros is a sufficient termination of the proceeding. Norvell v. Safeway Stores, Inc., 212 Md. 14, 22. See Greathouse v. State, 5 Md. App. 675. Norvell observes that whether such a determination is evidence of a want of probable cause is a question on which the authorities are divided. "Prosser inclines to the view that it is not. See also Western Union Telegraph Co. v. Thomasson, [251 F. 833], p. 838, and Shoemaker v. Shoemaker, 78 A.2d 605, 608 (N.J. App. Div.). The Restatement, Torts, § 665, takes the position that a dismissal by a public prosecutor is not evidence of a want of probable cause, but contra, as to dismissal by a private prosecutor. In the latter situation it has been held here that the dismissal by an instigator is not in itself sufficient evidence. Flickinger v. Wagner, 46 Md. 580, 603." Id., at 22-23. The question has not been settled in this jurisdiction. But here we have on the record not merely the fact of the entry of a nolle prosequi, which may be entered by the State's Attorney only in open court, Rule 711, but also the reason for the entry. The prosecutor ascribed the nolle pros to "No evidence of criminal intent." It may well be that the termination here may be properly considered, at least to the extent of tending to show that the facts or inferences drawable from the "probable cause" that motivated the criminal charge were not clear and undisputed. See Carl M. Freeman Assoc. v. Murray, 18 Md. App. 419. But we need *576 not decide the point. Even apart from any inference as to want of probable cause for the criminal proceeding arising from the termination, we are of the opinion that the trial court erred in ruling as a matter of law that appellant did not produce legally sufficient evidence to warrant submission to the jury of the issue of lack of probable cause on the part of appellees. As we have indicated, in rendering a directed verdict against appellant, the court was bound to assume the truth of all credible evidence supporting appellant's contention and the reasonable inferences to be drawn from them. Viewed in this light, the evidence was patently not clear and undisputed that appellant obtained the repairs to her car by means of a check with intent at the time of giving it to stop the payment of it. She deposited money in her checking account sufficient to cover the amount of the check before she drew it. She stopped payment of it in the light of the warranty provisions, the meaning of which was uncertain to Autoville's agents. Three of them had promised to look into the question. Fenwick, before he swore out the warrant, knew directly from appellant that she was seriously questioning the propriety of the charge for repairs and he could have ascertained by reasonable inquiry of other employees that she had raised the issue with them. He swore out the warrant without contacting her about the warranty even though he told her he would look into the warranty question. The return of the letter unclaimed apparently triggered his visit to the police. The letter was sent to the address on the check, the residence of her parents, but it was mailed with direction to deliver to addressee only. Fenwick, however, was on notice when he sent the letter that she may not be at that address. He testified that he had trouble contacting her and reached her through her mother who lived at the address he had. Her mother gave him a number "other than the one on this check", and he reached appellant there. He could have asked her for her current address or inquired further of her mother when the letter was returned. Appellant testified that when she gave the check she had no intention of stopping the payment of it. Fenwick expressly stated he had *577 no evidence of any unlawful intent other than that payment had been stopped. Fenwick had appellant's explanation why payment had been stopped before he instituted the criminal prosecution. He could not with impunity ignore it. A failure to investigate may destroy probable cause. Montgomery Ward & Company, Inc. v. Keulemans, 23 Md. App. 81. See Durante v. Braun, supra. We find that the question of probable cause to initiate the prosecution was for the jury.[14]
(b)
The rule of law with respect to malice was succinctly put by the Court of Appeals in Banks v. Montgomery Ward & Co., supra, at 42:
"Where there is lack of probable cause, malice may be inferred, although the inference may be rebutted by the defendant. The question of malice, that is, the question of whether the defendant acted from other than proper motives, unlike probable cause, is a question for the jury. Torsch v. Dell, 88 Md. 459."
In Safeway Stores, Inc. v. Barrack, supra, the Court said, at 175:
"We have held that malice may be inferred from a lack of probable cause, although want of probable cause cannot be inferred from any degree of malice. .. . Probable cause is a good defense, although the instigator may have been actuated by malice and the accused was acquitted.... The presumption of malice resulting from the want of probable cause is only prima facie and may be rebutted by the circumstances under which the defendant acted." (citations omitted)
*578 We find that the question of malice was for the jury.
We conclude that the trial court erred in directing a verdict in favor of appellees with respect to malicious prosecution, that is counts two and four of the Declaration. To hold otherwise, in our opinion, would deprive appellant of the benefit of the assumptions and inferences to which she was lawfully entitled as the party against whom the motion for a directed verdict was made.
The judgment is reversed. Appellant is entitled to a new trial under counts two and four of her Declaration, seeking damages for malicious prosecution.
Judgment reversed; case remanded for a new trial in accordance with this opinion; costs to be paid by appellees.
NOTES
[1] Rule 552 e provides: "Upon the granting by the court of an instruction directing a verdict, the court shall instruct the clerk to enter such a verdict, and to note that it has been entered by the court's instruction. It shall not be necessary for the jury, by its foreman, or otherwise, to render such a verdict." See Rule 563 as to judgment n.o.v. and Rule 560 as to special verdict.
[2] "Extenuating circumstances" were present in Keystone Engineering v. Sutter, 196 Md. 620 (appellant appealed, but upon realizing that there was no final judgment, applied to judge who granted judgment nunc pro tunc; appellee made no motion for dismissal) and in Kendall v. State, 132 Md. 93 (where both appellant and appellee considered the appeal valid and so treated it, held, motion to dismiss denied). See 26 Md.L.Rev. 94 (1966).
[3] The entry of the judgment nisi was also superfluous. The verdict directed by the court was the equivalent of a judgment nisi.
[4] We note a caveat. We think that if there are two or more appealable judgments in a cause, an appellant designating one would be bound by the designation.
[5] Carol Susan Pike and Gary Edward Shipp intermarried on 16 February 1973. In January 1974, at the time of the trial of the case before us, she resided in Gaithersburg and was employed by the Board of Education in Montgomery County. "I work at Montgomery Hills Junior High School and I run a remedial reading center for students in junior high who do not read grade level."
[6] Volkswagen owner's manual also mentioned a warranty; It said: "Genuine Volkswagen Parts, new and rebuilt and Approved Volkswagen Accessories are covered by a warranty guaranteeing them to be free of defects in material and workmanship for a period of 6 months or 6,000 miles, whichever comes first."
[7] The bill showed a charge of $20 to check out and evacuate the air conditioner system, $5 to "free up heater box", $5 for freon and 20 cents sales tax for a total of $30.20.
[8] The check was imprinted with appellant's name and address, "Carol Susan Pike, 620 University Blvd., West, Silver Spring, Md. 20901." This was also the name and address on the repair bill. The address, that of her parents, was apparently her permanent address as distinguished from the apartment in which she lived as a college student.
[9] The mug shots taken of appellant showed vividly the substantial inaccuracy of this description. Appellant appeared to have dark hair, and her build was not "heavy". She testified she had never had bleached blond hair and that she was 5 feet 9 inches tall.
[10] She described her reaction:
"Well, I was extremely upset at first because I was just scared and terrified and couldn't believe that this had happened over $30.20 when no one had ever talked to me, and afterward I think the best word would be I was humiliated. Nobody knew when I was in that police station being booked and fingerprinted why I was there. Detective Schachner on more than one occasion referred to me as `the white female 1015' or some number and at the time I was being fingerprinted and photographed it was not a private room. Policemen and other people were walking in and out and saw me standing there having my picture taken and at no time did anyone say why I was there and, you know, I didn't nobody knew why. I was just a criminal like anybody else being processed in there and I think it was probably one of the most upsetting things that has ever happened to me."
[11] Appellant sought damages in the first and second counts of her Declaration from Autoville in the first count for false arrest and false imprisonment and in the second count for malicious prosecution. She sought damages in the third and fourth counts from Fenwick in the third count for false arrest and false imprisonment and in the fourth count for malicious prosecution.
[12] The Court expressly rejected Restatement of Torts (Second), Sec. 120A, providing that the detention of a suspected shoplifter may be justified by probable cause.
[13] But see Montgomery Ward & Co. v. Cliser, 267 Md. 406, 415-416, where the Court seems to speak in terms of probable cause for the arrest with respect to a directed verdict. There was, however, an award of punitive damages.
[14] Although Fenwick discussed the matter with his attorney the trial judge correctly determined that "His advice in this particular case, the attorney's advice cannot be used as a method of defeating the action of the Plaintiff because there is no testimony as to the specifics which is necessary for a person to be relieved of the responsibility of the act fully upon the advice of the attorney." Fenwick never testified that his lawyer advised him to prosecute and the lawyer had no independent recollection of the conversation. See Gladding Chevrolet v. Fowler, supra, at 506-510.
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334 S.W.2d 686 (1960)
M. F. A. MUTUAL INSURANCE COMPANY, Appellant,
v.
Mary WHITE and George Hawkins, Appellees.
No. 5-2048.
Supreme Court of Arkansas.
April 11, 1960.
Hardin, Barton, Hardin & Garner, Ft. Smith, for appellant.
Douglas O. Smith, Jr., Warner, Warner & Ragon, Ft. Smith, Donald Poe, Waldron, for appellees.
*687 JOHNSON, Justice.
Appellant, M. F. A. Mutual Insurance Company, as the insurer of George Hawkins on an automobile liability policy, instituted this suit for a declaratory judgment contending that George Hawkins' failure to notify them of the pendency of a suit against him by Mary White (Scott Circuit Court Case No. 2767) relieved them from liability as insurers. Appellee, Mary White, upon becoming cognizant of Hawkins' failure to notify the insurance company of the pendency of suit No. 2767, filed an identical action as suit No. 2783 in the same court and later dismissed without prejudice suit No. 2767.
The pertinent parts of the insurance policy here in question, which was admittedly in full force and effect on the date of the accident, are as follows:
* * * If a claim is made or suit is brought against the insured, he shall immediately forward to MFA Mutual every demand, notice of summons received by him or his representative. If any suit or counterclaim is brought which may result in a claim under Coverage E, a copy of any pleadings filed shall be immediately forwarded to MFA Mutual.
* * * * * *
"Action against MFA Mutual: No action shall lie against MFA Mutual, under any Coverage, until after full compliance with all the terms of this policy, nor, as respects Coverages A and B, until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and MFA Mutual * * *"
From an adverse decree appellant appeals contending that: "Waiver, estoppel and res judicata are bars to Scott County Circuit Court Case No. 2783," and "The failure of Hawkins to turn over the summons in Case No. 2767 relieves appellant of any liability because of the breach of the policy conditions."
The material facts in this case are undisputed. Appellee, George Hawkins, was served with summons in action No. 2767 on June 16, 1958, and did not notify appellant of the service until some 28 days thereafter. This lapse of time admittedly exceeds the statutory answer time. If this were the only issue before the Court in the case at bar we would be inclined to agree with the contentions of appellant, but that is not the case. Here, Appellee White dismissed her action No. 2767 without prejudice, even though at the time of dismissal she was entitled to a default judgment by authority of § 29-401 Ark. Stats. The case was never finally submitted for a judgment and no judgment was obtained. Section 27-1405, Ark.Stats. is as follows:
"Dismissal of actions.An action may be dismissed without prejudice to a future action:
"First. By the plaintiff before the final submission of the case to the jury, or to the court, where the trial is by the court."
A dismissal without prejudice has been aptly described as being like a person blowing out a candle, which at his own pleasure may be lit again. We have held many times that if a plaintiff dismisses a suit before final submission, the order of dismissal is not res judicata in another suit involving the same parties and issues. See: Jordan v. McCabe, 209 Ark. 788, 192 S.W.2d 538. Here another suit (action No. 2783) was filed involving the same parties and issues. Service was had on appellee Hawkins and it is not contended that he did not meet every requirement of his insurance policy. Nor is it contended that the policy was not in force at the time Miss White sustained her injuries complained of in action No. 2783.
Therefore, following the rule laid down in Southern Surety Company v. Pur-year-Meyer *688 Grocer Co., 151 Ark. 480, 236 S.W. 841, we find that the delay of Hawkins to notify appellant of the service of summons in action No. 2767 affords no defense in the present action, for that action was dismissed without prejudice. The purpose of the stipulation in the policy was to afford the insurance company an opportunity to control the litigation and interpose a defense against the claim on the merits of the case. Since the first action was dismissed without prejudice there was no judgment, no payment, and no liability against appellant was sought; hence, it is clear that there was no breach of the conditions of the policy by failure of appellee to give notice of the first suit.
Affirmed.
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328 A.2d 419 (1974)
Norman J. VERMETTE
v.
Louise S. CIRILLO, Administratrix of the Estate of Leo Ciarlelli.
No. 74-4-M. P.
Supreme Court of Rhode Island.
November 27, 1974.
*420 Edwards & Angell, John H. Blish, for plaintiff-respondent.
D.A. St. Angelo, for defendant-petitioner.
OPINION
KELLEHER, Justice.
In this certiorari proceeding we are presented with a question of first impression. The question to be resolved is whether an individual nominated in a will as an executor can be considered as a "person aggrieved" by the denial of his petition to admit the will to probate.
The records certified to us disclose that on July 1, 1971, Leo Ciarlelli died a resident of the town of Bristol. Shortly thereafter, Norman J. Vermette, the executor designate, filed a petition seeking both admittance of the will and a codicil to probate and his appointment as executor. The will was dated February 6, 1968. The codicil was executed on June 19, 1971. The petition was granted. Within a matter of weeks, a controversy erupted when it became known that the attorney who drew the will and who was named as a beneficiary of a $78,000 legacy, was the probate judge who had granted the petition. This sequence of events caused the resignation of the judge, the revocation of his decree, and the withdrawal of Norman's petition.
The town council filled the Probate Court vacancy. The new judge was presented with two petitions relating to the Ciarlelli estate. One was a petition by a niece and a nephew of the deceased asking that the niece be appointed administratrix of her uncle's estate. Norman submitted a second petition for probate of the will. Both petitions list the decedent's personal assets as having a value of $150,000. After a hearing, the Probate Court denied Norman's petition and a decree was entered granting the petition seeking the niece's appointment as the administratrix of the estate. Norman took an appeal to the Superior Court.
When the appeal was perfected in the Superior Court, the niece moved to dismiss Norman's appeal contending that as an executor designate Norman was not a "person aggrieved" within the meaning of our probate appeal statute. General Laws 1956 (1969 Reenactment) § 33-23-1. The niece's motion was denied, and we issued the common-law writ of certiorari.
Generally speaking, the aggrievement that entitles one to judicial review flows from a judgment that adversely affects in a substantial manner some personal or property right of the one seeking review or imposes some burden or obligation upon him. This principle was first laid down at the turn of the century in Tillinghast v. Brown University, 24 R.I. 179, 52 A. 891 (1902), and it has been repeated innumerable times. Fifteen years after Tillinghast, this court recognized that a fiduciary such as a duly qualified executor or administrator could be aggrieved in his representative capacity even though he has suffered no personal harm. Hall v. Burgess, 40 R.I. 314, 100 A. 1013 (1917). Beginning in the 1950's, this court fashioned another exception whereby another class *421 whose members, while not technically aggrieved, are permitted to obtain review because they represent the general public whose vital concern in the ultimate outcome of a particular controversy extends beyond the interests of the immediate parties. Board of Police Comm'rs v. Reynolds, 86 R.I. 172, 133 A.2d 737 (1957).
Rhode Island's probate statutes specifically require (1) any person having custody of a will to deliver the instrument, within 30 days after being notified of the testator's death, to the proper Probate Court or to the executor named in the will;[1] (2) a Probate Court clerk to notify an executor who is not a party to a petition of the pendency of the probate proceeding;[2] (3) an executor-designate having possession of a will to present the will for probate within 30 days after the testator's death or after he first knows of his nomination ("failure or refusal to comply with the 30-day limitation will be deemed a declination of the office");[3] and (4) the Probate Court to appoint the executor named in the will if the designee is legally competent and gives the requisite bond (the court may not inquire into the wisdom or suitability of the selection, but must, if these two conditions are satisfied, issue letters testamentary).[4]
The statutory stipulations to which we have just alluded are expressions of the principle found in Hazard v. Engs, 14 R.I. 5, 7 (1882), where it was held that it is the "duty" of the person nominated as executor, unless he "renounces" the appointment, to do "what is reasonable to establish the will." In Hazard, the will had been admitted to probate and the heirs appealed. The court ruled that since the executor was dutybound to defend the will, he was entitled to be reimbursed from the estate for the reasonable expenses he incurred as a result of the litigation.
The petitioner-administratrix acknowledges that in cases similar to Tillinghast and Hall fiduciaries have been held to be aggrieved, but she seeks to distinguish Norman's appeal from the cases where the nominated executor had won the first round, the will had been admitted to probate, and letters testamentary had been issued. She claims that since Norman lost in the Probate Court he has no statutory duties nor any lawful recognition as the deceased's representative. Such a conclusion, while at first blush may seem logical, is without substance when one considers the statutory mandates to which we have just referred and the rationale of Hazard.
If an executor in the Superior Court has the right to defend against an attack on the will which was originally unsuccessful in the Probate Court, it is difficult to see how such right is lost because the first attack is successful. Many a general has lost a battle but has gone on to win the war!
It is quite apparent from our examination of the statutes relating to the custody and probating of wills that the designated executor has some status when an instrument is being presented for probate. In Hazard, the designee was referred to as the "representative of the will, and of all interests created by it." He has also been described by other courts as the "champion of the will"[5] or the "* * * champion of the common cause, and charged to keep the lists against all antagonists * * *."[6]*422 From time immemorial, courts have been guided by the proposition that an individual, if he is of sound mind and under no undue restraint, can dispose of his property as he sees fit provided his dispositive scheme is not repugnant to law. Furthermore, a testator can nominate a representative who can act as his spokesman when he can speak no more. This spokesman is charged with the duty of making a good-faith effort to advance the expressed intent of the deceased. Having in mind the interests to be served by one's right to make a testamentary disposition of property, we believe that the Probate Court's denial of Norman's petition constituted a threefold aggrievement. Norman was aggrieved as a representative of the deceased, as a representative of those legatees who might benefit under the will, and as a representative of the public interest that a testator's wishes[7] be effectuated. In finding aggrievement,[8] we join the overwhelming majority of jurisdictions that have considered this question. 3 Bowe-Parker, Page on Wills § 26.135 at 309, & n. 3 (1961); 3 Woerner, American Law of Administration § 544 at 1855, & n. 2 (1923); Annot. 88 A.L.R. 1158, 1171 (1934).
The petition for certiorari is denied and dismissed, the writ heretofore issued is quashed, and the records certified to this court are to be returned to the Superior Court.
NOTES
[1] General Laws 1956 (1969 Reenactment) § 33-7-5.
[2] General Laws 1956 (1969 Reenactment) § 33-7-9.
[3] General Laws 1956 (1969 Reenactment) § 33-8-3.
[4] General Laws 1956 (1969 Reenactment) § 33-8-1; Trustees of House of the Angel Guardian v. Donovan, 71 R.I. 407, 46 A.2d 717 (1946).
[5] Burmeister v. Gust, 117 Minn. 247, 249, 135 N.W. 980, 981 (1912).
[6] Ward v. Brown, 53 W. Va. 227, 236, 44 S.E. 488, 491 (1903).
[7] The deceased in his will left specific instructions as to his funeral and burial. He directed that the residuary estate bear the burden for the payment of all taxes. The residue was to be divided equally between two religious organizations. One nephew who would share in an intestate distribution is specifically omitted in the will because of the deceased's displeasure at the nephew's departure from the family circle.
[8] Vermont is listed in the minority. Its Supreme Court has acknowledged the merit in the position we have just adopted but, in the light of the initial judicial view taken many years ago of aggrievement by a Probate Court decree plus a subsequent legislative acquiescence in that view, it decided that if change was to come, it should emanate from the Legislature. In re Estate of Gaskell, 123 Vt. 57, 181 A.2d 67 (1962).
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853 F. Supp. 424 (1994)
CONCERNED PARENTS TO SAVE DREHER PARK CENTER, Deborah Berris, Joycelyn Thomas, Stephen Lord, Chad Johnson, Tor Lind, Michael Potente, Maria Blasi, Laurie Mullis, Karrie Pitman, Duncan Cruickshank, James Irwin, and Frances Irwin, Plaintiffs,
v.
CITY OF WEST PALM BEACH, Defendant.
No. 93-8532-CIV-RYSKAMP.
United States District Court, S.D. Florida.
May 26, 1994.
James K. Green and David Gorman, West Palm Beach, FL, for the American Civ. Liberties Union of Florida, Inc., Palm Beach Chapter.
Holland & Knight, Stephen F. Hanlon, and Robert Rivas, West Palm Beach, FL, for City of West Palm Beach.
CONSENT JUDGMENT
RYSKAMP, District Judge.
This cause came before the Court on a stipulation of the plaintiffs and the defendant, the CITY OF WEST PALM BEACH (the "City"), for the entry of a Consent Judgment. The Court has approved and adopted the stipulated Consent Judgment and enters the following judgment according thereto:
This action is brought pursuant to Title II of the Americans with Disabilities Act, 42 U.S.C. § 12132 (the "ADA"). The action was removed from the 15th Judicial Circuit Court of Florida to this Court and this Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 1441 and the ADA.
On March 1, 1994, the Court executed an Order Granting Preliminary Injunction. 846 F. Supp. 986. That Order made certain findings of fact, some of which are repeated here. This Consent Judgment controls in the event of any conflicting findings of fact or conclusions of law.
*425 Since 1986, the City of West Palm Beach has operated certain leisure services programs at its Dreher Park Center for persons with physical and mental disabilities. The Dreher Park Center programs placed the City in the forefront of municipal governments in providing superior access for disabled people to the City's overall leisure services programming.[1]
Because neighboring municipalities provided inadequate recreational programs for the disabled, the Dreher Park Center programs for the disabled attracted many participants who did not live in the City. Non-residents in City recreational programs for the nondisabled typically numbered about 30 percent, but that ratio was inverted in the Dreher Park Center programs. Non-residents numbered about 70 percent.
Due primarily to unsound budgeting practices during prior years, the City made severe reductions in the budgets of all departments during the latter part of the 1992-93 fiscal year. In these budget cuts, the City terminated more than 100 employees and took a variety of other measures, such as more than doubling fees charged to participants in the City's leisure services programs for the non-disabled.
City commissioners sought to cut programs used disproportionately by non-residents and therefore cut funding of the Dreher Park Center programs from roughly $165,000 to $83,000. Then the City administration decided to use the remaining $83,000 to enter into a contract with an outside agency to provide comparable services. The contract also called for the outside agency to undertake to persuade neighboring municipal governments to participate in a regional cooperative recreational program for the disabled. Meanwhile, however, because the contract with the outside agency was not finalized until May of 1994, the City ceased providing recreational programs of the type formerly offered at Dreher Park Center.
In its Order Granting Preliminary Injunction, the Court concluded that the plaintiffs were denied the benefits of the City's leisure services program in contravention of Title II of the ADA when the Dreher Park Center programs were eliminated. The City argues that its elimination of the Dreher Park Center program was motivated not by discrimination by reason of the plaintiff's disabilities, but by reason of discrimination against non-residents. Regardless of the City's motive or intent, the ADA forbids action that carries with it a discriminatory effect, and the effect of the elimination of the Dreher Park Center program was to discriminate against the disabled, both residents and non-residents of West Palm Beach.
The Court's Order Granting Preliminary Injunction was buttressed in part by a finding that the depth of the budget cut affecting the Dreher Park Center programs was disproportionally more severe than the depth of the budget cut overall for recreational programs. The City argues that "discriminatory budget cutting," standing alone, does not in this case establish a violation of the ADA, and could not in any case. While the City's argument on this point, standing alone, may have merit, the Court need not *426 decide this case based on the fact of discriminatory budget cutting. The elements required to prove that the City violated Title II of the ADA are:
1. That the benefits of a City program were requested by a "qualified individual with a disability," which means a disabled person who otherwise meets the "essential eligibility requirements" to participate in the program;
2. That the individual was either excluded from participation in or denied the benefits of the City's leisure services program or was otherwise discriminated against;
3. That such exclusion or denial of benefits was by reason of the individual's disability.
The Court finds that the 12 named plaintiffs were qualified persons with disabilities. Although some of the individual named plaintiffs were non-residents, the City could not deny access to recreational programming to non-resident disabled persons because the City did not deny access to non-residents in the programs for the non-disabled. Under the circumstances of this case, it is clear that the plaintiffs requested the benefits of the City's leisure services programs, and that such programs existed for the non-disabled population, whether residents or not.
Yet, as of the effective date of the elimination of the Dreher Park Center programs, the City no longer offered any programs specifically for the plaintiffs. The evidence further established that the plaintiffs could not participate in the programs offered to the non-disabled populations and required special services, none of which were available after the elimination of the Dreher Park Center programs. The City, therefore, denied the benefits of the City's leisure services program to the plaintiffs by reason of the plaintiffs' disabilities.
Such a denial violated the ADA. Therefore, the City is liable to the plaintiffs.
The City has filed a motion to dismiss Concerned Parents to Save Dreher Park Center as a party plaintiff, arguing that the group lacks associational or representational standing to bring suit in behalf of its members. This judgment is without prejudice to the City's motion to dismiss Concerned Parents.
DONE AND ORDERED.
NOTES
[1] The programs included the "Jammin' in the Sun" Summer Day Camp for children with mental, learning and attention deficit disabilities, and hearing impairments; the "Awesome Adventurers' Club," in which up to 12 disabled children met once a month to play sports and games, create crafts and explore local attractions; "Sib Shop," which provided group discussions and activities once a month for the brothers and sisters of children with disabilities; "Leisure Alternatives," a program twice a week during seven months of the year for adults with mental disabilities to set and work toward fitness goals; "T.G.I.F.!" a program twice a month for adults with mental and learning disabilities to go to dances, movies, community performances and sporting events; Little League Baseball for Disabled Youth, aged 6 to 18, with physical and mental disabilities; the "Good Times Club," a program held once a month for adults with visual impairments; Social for Visually Impaired Adults, held once a month; the "Out and About Club," a program held on four occasions per year for youth with visual impairments and sighted friends to go on community outings; Deaf Senior Activity Club, which provided speakers on nutrition and fitness and community outings, card games and other activities for adults with hearing impairments; Lip Reading Instruction, an eight-week class for people with hearing impairments; and Swim for Physically Challenged, which was available twice a week between June and August.
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16 Pa. Commw. 306 (1974)
Springfield School District, Appellant,
v.
Paul J. Shellem, Appellee.
Paul J. Shellem, Appellant,
v.
Springfield School District, Appellee.
Nos. 206 and 234 C.D. 1974.
Commonwealth Court of Pennsylvania.
Argued October 9, 1974.
November 26, 1974.
*307 Argued October 9, 1974, before President Judge BOWMAN and Judges CRUMLISH, JR., KRAMER, WILKINSON, JR., MENCER, ROGERS and BLATT.
*308 D. Barry Gibbons, with him Gibbons, Buckley and Smith, for Springfield School District.
Joseph L. Monte, Jr., with him Eckell, Sparks, Vadino, Auerback and Monte, for Paul J. Shellem.
OPINION BY JUDGE KRAMER, November 26, 1974:
This matter involves cross appeals, consolidated for determination, from an order of the Court of Common Pleas of Delaware County, dated January 29, 1974 ordering that the appeal of Paul J. Shellem (Shellem) to that court from an adjudication of the Springfield School District (School District) be heard de novo before the court below.
In September 1969 the School District engaged Shellem as a "long-term substitute" to teach mathematics for the school year 1969-70 at a salary of $7,170. No written contract was executed between the parties but, as a condition of employment, Shellem was to obtain teaching credits by attendance at a college which would certify his enrollment. The School District agreed to reimburse Shellem for one-half the tuition cost upon completion of the credits. Shellem soon encountered difficulties with the school administration and in December 1969 his teaching performance was rated as "unsatisfactory." On January 21, 1970 Shellem was notified that he should resign or face dismissal. Shellem requested a hearing but he was informed by the School District that the charges and proof against him would be presented at a private meeting and that he would not be permitted to bring witnesses or an attorney. The private meeting was held on January 29, 1970 and Shellem was dismissed shortly thereafter. Shellem filed an action in mandamus to compel his reinstatement as a teacher and to recover money damages for the breach of his contract of employment. In the mandamus action the *309 lower court held that Shellem had not been provided a hearing pursuant to section 514 of the Public School Code of 1949, Act of March 10, 1949, P.L. 30, as amended, 24 P.S. § 5-514, and ordered that Shellem be reinstated to his job and reimbursed for unpaid salary and tuition costs. On appeal this Court agreed that Shellem was entitled to a hearing. We also held that the lower court erred by reinstating Shellem and that proper procedure required that the case be remanded back to the School District for the purpose of holding the hearing to which Shellem was entitled.[1]
As a result of the order of this Court, the School District by letter dated March 2, 1973, notified Shellem and his counsel that a hearing would be held on March 12, 1973. The notice also set forth eight specific reasons or specifications for Shellem's dismissal, all of which were generally referred to as "neglect of duty."[2] A hearing was held before the entire Board of School Directors and a complete transcript of the proceedings was taken and prepared by a court reporter. After *310 the hearing, the Board issued its adjudication in which it discussed each of the eight charges in some detail, and in which it concluded that Shellem's conduct amounted to "gross neglect of duty." The adjudication ordered that Shellem "be dismissed from employment as of the date of his severance in January of 1970."
Shellem then took a timely appeal to the court below in which he argued, in the alternative, (1) that the court should reverse because there was not substantial evidence in the record to support the School District's action or (2) that the court should grant a hearing de novo because he had not received a fair and impartial hearing mandated by the due process laws of the Constitution. After argument and without receiving any additional evidence or testimony, the lower court ordered that "the appeal of plaintiff [Shellem] be heard de novo by the court."
Both parties filed an appeal with this Court. Shellem here argues, in the alternative, (1) that the lower court had the power to order a hearing de novo and (2) that the School District failed to meet its burden of proof with substantial evidence, and therefore, we should reverse the School District's adjudication, order Shellem's reinstatement for the balance of the school year 1969-70, and order reimbursement for his salary and certain tuition expenses. The School District urges us to find that the court below was without power to order a hearing de novo and that the court below erred in failing to affirm the adjudication.
Both parties agree that the appeal taken to the court below was subject to the Local Agency Law, 53 P.S. § 11301 et seq. Section 7 of the Local Agency Law, 53 P.S. § 11307, clearly provides for such an appeal.[3]*311 Section 8 of the Local Agency Law, 53 P.S. § 11308, sets forth the scope of review of the court below. It states:
"(a) In the event a full and complete record of the proceedings before the local agency was not made, the court may hear the appeal de novo, or may remand the proceedings to local agency for the purpose of making a full and complete record or for further disposition in accordance with the order of the court.
"(b) In the event a full and complete record of the proceedings before the local agency was made, the court to which the appeal is taken shall hear the appeal without a jury on the record certified by the local agency. After hearing, the court shall affirm the adjudication unless it shall find that the same is in violation of the constitutional rights of the appellant, or is not in accordance with law, or that the provisions of this act have been violated in the proceeding before the agency, or that any finding of fact made by the local agency and necessary to support its adjudication is not supported by substantial evidence. If the adjudication is not affirmed, the court may set it aside or modify it, in whole, or in part, or may remand the proceeding to the local agency for further disposition in accordance with the order of the court." (Emphasis added.)
The lower court concluded that the record in this case is not a "full and complete record of the proceedings before the local agency" and, therefore, ordered a de novo hearing in accord with section 8(a), quoted above. In Sharp's Convalescent Home v. Department of Public Welfare, 7 Pa. Commw. 623, 628, 300 A.2d 909, 911 (1973), we stated that:
*312 "The crucial aspect on appeal is whether there is a complete and accurate record of the testimony taken so that the appellant is given a base upon which he may appeal, and also, that the appellate court is given a sufficient record upon which to rule on the questions presented." We have carefully reviewed the record in this case and we conclude that it satisfies the criteria quoted above and that it is a "full and complete record of the proceedings before the local agency." Therefore the proper scope of review for the court below is set forth in section 8(b) of the Local Agency Law, 53 P.S. § 11308(b), and the court below erred when it ordered a hearing de novo.
In reaching its decision to order a hearing de novo, the lower court relied primarily upon the presence in the record of hearsay evidence and evidence not related to the eight specific charges. Under the provisions of the various statutes applicable to this case, the scope of review of the court of common pleas is limited. The right to dismiss Shellem for "neglect of duty" is specifically delegated to the School District by statute. See section 514 of the Public School Code, 24 P.S. § 5-514. The type of dismissal involved in this case is not to be litigated de novo in the courts, except as specifically provided in section 8(a) of the Local Agency Law, 53 P.S. § 11308(a). Even if the lower court, on an appeal under the Local Agency Law, 53 P.S. § 11301 et seq., determines the existence of a violation of a constitutional right, or an abuse of discretion, or an error of law, where there is a full and complete record, that court can only set aside or modify the order of the local agency or remand the case. The determination by the court of errors in the record does not mean necessarily that the record is not full and complete. We can find no legislative intent that a court of common pleas in a case such as this should substitute its judgment for that of the local agency. *313 It would be hard indeed to find a record made before a school board operated by nonlawyers, as most of them are, in which a judge of a court of common pleas could not find some error made in the technical rules of evidence. That being so, if we were to uphold the lower court in this case, then any judge on appeal in such a case could hold a hearing de novo, merely because he did not like the manner in which the record was made. This, the Legislature never intended.
We recognize that it is initially the responsibility of the lower court to pass upon the adjudication of the School District, and that at this stage of the proceedings it is not for this Court to pass upon the merits of the case. We have, however, read the entire record carefully, and although we do not pass upon the merits in any final way, we note that at this time we would be hard-pressed to conjure up any basis for setting aside or modifying the School District's adjudication. It appears to us that all of the due process protections mandated by the constitutions and the statutes have been provided. Although there are undoubtedly several items of hearsay testimony in the record, we believe they are de minimis and do not invalidate the adjudication.[4] Some of the testimony and evidence may have touched upon matters outside the scope of the eight specific charges, but there appears to be sufficient remaining evidence to support those charges.
In summary then, we hold that under section 8(b) of the Local Agency Law, 53 P.S. § 11308, the court was in error in ordering a hearing do novo and we must reverse. It quite naturally follows that we must dismiss *314 the appeal of Shellem and uphold the appeal of the School District. In view of this, we
ORDER
AND NOW this 26th day of November, 1974, based upon the above discussion, the order, dated January 29, 1974, of the Court of Common Pleas of Delaware County is hereby reversed and it is ordered that the above-captioned matter be remanded to that court for the purpose of a final determination under the provisions of section 8(b) of the Local Agency Law, Act of December 2, 1968, P.L. 1133, 53 P.S. § 11308(b).
NOTES
[1] See Shellem v. Springfield School District, 6 Pa. Commw. 515, 297 A.2d 182 (1972).
[2] The eight reasons are as follows:
"(1) Consistent tardiness for class, even after requests from the School Administration to be prompt.
"(2) Failure to give homework assignments to students, even after requests by his supervisors to do so.
"(3) Failure to maintain a current rollbook, even after requests by his supervisors to do so.
"(4) Failure to prepare lesson plans, even after requests by his supervisors to do so.
"(5) Failure to report and record student tardiness, as required by the administration of the school.
"(6) Failure to conduct tests and examinations on the days specified by the School Administration.
"(7) Failure to maintain order in the classroom, even after requests by his supervisors to do so.
"(8) Failure to properly carry out his hall duties, even after requests by the School Administration to do so."
[3] Shellem was not a professional employe under the Public School Code, 24 P.S. § 11-1101 et seq. and therefore his right to appeal is under the Local Agency Law, 53 P.S. § 11301 et seq. rather than the Public School Code. See LaPorta v. Bucks County Public Schools Intermediate Unit No. 22, 15 Pa. Commw. 566, 327 A.2d 655 (1974), Smethport Area School District v. Bowers, 219 Pa. Super. 269, 280 A.2d 632 (1971).
[4] Section 5 of the Local Agency Law, 53 P.S. § 11305, provides that: "Local agencies shall not be bound by technical rules of evidence at agency hearings, and all relevant evidence of reasonable probative value may be received. Reasonable examination and cross-examination shall be permitted."
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334 S.W.2d 596 (1960)
Tom S. BRITE, Appellant,
v.
Randolph PFEIL, Appellee.
No. 13576.
Court of Civil Appeals of Texas, San Antonio.
April 6, 1960.
J. Taylor Brite, Jourdanton, for appellant.
L. Sanborn McDowell, Floresville, for appellee.
*597 POPE, Justice.
Tom S. Brite sued Randolph Pfeil in the Justice Court of Wilson County for the possession of a calf. After pending for more than three years, the case was tried and judgment rendered that Brite owed Pfeil $70.00 for the expense of caring for the calf, now a cow, and that Pfeil could hold the animal until he was paid. Brite appealed to the County Court, where, upon a jury trial, judgment was rendered that Pfeil should recover $100.00, and that he had an equitable lien which entitled him to hold possession. After the appeal to the County Court, Pfeil cross-acted against Brite for malicious prosecution, since Brite had filed criminal charges against him. On this new action the County Court also rendered judgment against Brite for $400.00. Brite has appealed.
The legal questions for our determination are: (1) Was Pfeil entitled to hold possession of the animal on the mere claim of an equitable lien? (2) If not, were the special issues submitted to the jury improperly submitted in permitting the jury to decide Pfeil's right of possession? (3) Did the County Court have jurisdiction at all over a malicious prosecution action in excess of $200.00, which was filed after the appeal from the Justice Court?
Tom S. Brite on October 11, 1955, bought a calf for eight dollars at the Floresville auction. He tied the calf and put it in his pick-up truck and started toward Pleasanton. After he had gone about three miles he discovered the calf was missing. He searched for but did not find the calf. He learned that Randolph Pfeil had found the calf and had it at his home. On October 22, 1955, Brite went to the Pfeil house and asked for the return of the calf. Pfeil in the meantime had purchased medicine and had cared for the calf which had suffered injuries in a fall from the pick-up truck. He demanded eleven dollars for the surrender of the calf. They could not agree on the expenses that should be paid Pfeil, and thereafter Brite, over a period of three years, made demands upon Pfeil to return the animal, which Pfeil refused unless Brite met his demands for payment of his expenses, which increased as time passed.
Certain statutes permit one to take up stock forbidden to run at large, impound them and hold possession and collect fees and damages, but the steps precedent to the collection of the fees and damages must be carefully followed. Arts. 6966, 6967, Vernon's Ann.Civ.Stats.; Lyles v. Meyer, Tex.Civ.App., 293 S.W. 295. Pfeil is unable to and does not try to hold possession under these statutory rules. By agreement of the parties, Wilson County did not have a stock law and hence it was permissible for livestock to run at large. Clarendon Land Inv. & Agency Co. v. McClelland, 89 Tex. 483, 34 S.W. 98, 31 L.R.A. 669; Molton v. Young, Tex.Civ. App., 204 S.W.2d 636; Conner v. Parker, Tex.Civ.App., 181 S.W.2d 873. He did not, and under the facts of this case could not, claim under the estray statutes, Arts. 6911-6927, Vernon's Ann.Civ.Stats. His sole claim is that he earned an equitable lien by doctoring and caring for the calf.
We have found no Texas authority which entitles one to hold another's livestock upon the basis of a mere equitable lien. In fact, it is said to be settled that one who feeds or cares for an animal, even as an agistor, has no lien for his charges independent of statute or special agreement. 2 Am.Jur., Animals, § 22. One who takes up livestock, other than in compliance with the statutes, and who knows the owner, can assert no lien, and if he does hold possession under such an assertion he is a wrongdoer. Moore v. Hensley, 189 Mo.App. 326, 175 S.W. 91. Ordinarily, even though there be an equitable lien, the right of possession will remain with the debtor. Ward v. McKenzie, 33 Tex. 297, 317; Osburn v. Smart, Tex.Civ. App., 58 S.W.2d 1073, 1076; 53 C.J.S. Liens § 8; 37 C.J., Liens, § 34; 33 Am. *598 Jur., Liens, § 18. Brite, therefore, was entitled to possession of his calf upon demand.
Whether Pfeil had an equitable lien and whether an equitable lien carries with it the right of possession were law questions. Nevertheless, the County Court permitted the jury to determine as a fact whether Brite or Pfeil was entitled to possession. In doing this the court submitted a question of law to the jury. Gulf States Equipment Co. v. Toombs, Tex.Civ. App., 288 S.W.2d 203. Brite filed the suit for damages for Pfeil's detaining his animal. As a matter of law, Pfeil was not entitled to the possession after Brite's demand on October 22, 1955. However, the jury was erroneously permitted to decide that Pfeil was entitled to hold the animal until the time of trial in 1959, and therefore to deny Brite any damages. Lyles v. Meyer, Tex.Civ.App., 293 S.W. 295.
On Pfeil's cross-action for damages for the care and feeding of the animal, the jury awarded Pfeil $100.00. Here too the jury was permitted to decide who was entitled to the possession up to the time of trial. The jury erroneously found that Pfeil was entitled to hold possession from October 11, 1955, until the time of trial in 1959, and then awarded Pfeil $100.00 damages for the care of the animal over that period of time. A correct issue would have inquired as to the amount of money, if any, that Pfeil was entitled to for his care and feeding of the animal from October 11, 1955 to October 22, 1955. That was the only period under any theory that Pfeil held lawful possession of the calf. Chief Justice Fly went further in Lyle v. Meyer, supra, and stated that one who fails to comply with the law in holding livestock, forfeits his right to recover either fees or damages. Under that principle, and the fact that Pfeil unlawfully withheld possession of the animal from Brite after October 22, 1955, he forfeited his rights of recovery. The doctrine of trespass ab initio is followed in Texas, and though the original possession of the calf was a lawful possession, his unlawful detention of the animal after demand made it an unlawful trespass from the beginning. Humphreys Oil Co. v. Liles, Tex.Civ.App., 262 S.W. 1058, affirmed, Tex.Com.App., 277 S.W. 100, 103; American Mortgage Corp. v. Wyman, Tex.Civ.App., 41 S.W.2d 270, 273; Lyles v. Meyer, supra; 41-A Tex.Jur., Trespass, § 6. Brite, therefore, was entitled to an issue to determine his damages from and after October 11, 1955.
The other important point on this appeal is not raised by the parties, but it is apparent from the record that the County Court did not have jurisdiction over the malicious prosecution action at all. The case originated in the Justice Court and reached the County Court by appeal. On appeal, Pfeil injected a new claim into the case by way of a cross-action, seeking $750.00 damages for malicious prosecution. This was prompted by a complaint for cattle theft made by Brite against Pfeil on which Pfeil was "no billed." The cross-action exceeds the monetary limit on the jurisdiction of a Justice Court which is $200.00. On appeal to the County Court, the pleadings may not be amended so as to introduce an action beyond the jurisdiction of the Justice Court, and hence the proceedings with respect to the malicious prosecution cross-action were void. Ray v. City of Fort Worth, Tex.Civ.App., 284 S.W.2d 930; Stanley v. Hicks, Tex.Civ. App., 272 S.W.2d 917.
We conclude, therefore, that Brite is entitled to the possession of the calf, and Pfeil's detention of possession after demand constituted the possession a trespass ab initio. The action for malicious prosecution was beyond the jurisdiction of the court and that part of the judgment is void. For a correct submission of the issue to determine the damages to Brite for detention of the calf after October 11, 1955, the judgment is reversed and remanded for trial in accord with this opinion.
Reversed and remanded.
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131 N.J. Super. 29 (1974)
328 A.2d 242
TOWNSHIP OF EWING AND RICHARD WEASNER, PLAINTIFF-RESPONDENT,
v.
THOMAS M. KING AND DONALD FORT, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Submitted October 21, 1974.
Decided November 1, 1974.
*30 Before Judges LEONARD, SEIDMAN and BISCHOFF.
Messrs. Scott and Fox, attorneys for appellant.
Messrs. Dietrich, Allen & St. John, attorneys for respondent.
The opinion of the court was delivered by BISCHOFF, J.A.D.
Defendant Thomas M. King, having been convicted in the municipal court of a violation of a zoning ordinance and fined $200, appealed to the County Court. After a trial de novo on the record, R. 3:23-8(a), defendant was again convicted. This further appeal followed.
Defendant and his father are the owners of a dwelling in the Township of Ewing near Trenton State College. The property was leased to Donald Fort for the 1971-72 school year and, in turn, occupied by eight female college students. Defendant was charged in the complaint with "renting illegally converted one-family residence to eight college students * * *." The complaint was based on an alleged violation of the Ewing Township Zoning Code, Art. T, § II, which contains provisions respecting student rooming houses. We are, however, concerned only with paragraph 1 thereof which provides, "No more than four (4) students will be roomed in any one house."
*31 The facts were stipulated at the trial. The sole defense interposed was the contention that the ordinance was unconstitutional. Defendant submitted no evidence in support of that contention and proceeds on the theory that the ordinance is per se invalid, and he basically relies on the cases of Gabe Collins Realty, Inc. v. Margate, 112 N.J. Super. 341 (App. Div. 1970), and Kirsch Holding Co. v. Manasquan, 59 N.J. 241 (1971), as support for that contention.
The narrow issue thus presented is whether a zoning ordinance may properly limit the number of students rooming in a one-family dwelling to four.
Zoning ordinances are to be liberally construed in favor of the municipality and to be given a reasonable construction and application. Place v. Saddle River Bd. of Adj., 42 N.J. 324, 328 (1964); J.D. Const. v. Freehold Tp. Bd. of Adj., 119 N.J. Super. 140, at 145.
We are instructed that:
Judicial review of a zoning ordinance duly adopted by a municipality is confined to a narrow sphere. There is a presumption in favor of the validity of the ordinance which can only be overcome by an affirmative showing that the ordinance is arbitrary or unreasonable. (citation omitted). "By these standards which control judicial review, the plaintiff to prevail must show beyond debate that the township in adopting the challenged amendment transgressed the standards of R.S. 40:55-32." [Morris v. Postma, 41 N.J. 354, 359-360 (1964)]
Defendant concedes that a municipality may act by zoning to prevent overcrowding, but would confine the exercise of such power to a specific use ratio formula such as that suggested in Kirsch Holding Co. v. Manasquan, supra, "limiting the number of occupants in reasonable relation to available sleeping and bathroom facilities or requiring a minimum amount of habitable floor area per occupant." Id., 59 N.J. at 254, and contends that the blanket prohibition against no more than four students in a one-family dwelling regardless of the size of the structure renders the ordinance arbitrary, unreasonable and unconstitutional.
*32 We disagree. Defendant's reliance upon the Gabe and Kirsch cases, supra, is misplaced.
In the Gabe case plaintiffs, the owners of two-family houses attacked a provision of the zoning ordinance of Margate City defining a family for the purposes of use restrictions in certain zones as "one or more persons related by blood, marriage or adoption or not more than two unrelated persons occupying a dwelling unit as a single non-profit housekeeping unit." Id., 112 N.J. Super. at 342. This definition was adopted in an attempt to eliminate what the governing body considered undesirable conditions resulting from summer rentals at the seashore for unmarried groups of young men and young women. This court held that the definition was "unreasonably restrictive of the ordinary and natural utility of such property as dwellings for people, and of the right of unrelated people in reasonable number to have recourse to common housekeeping facilities in circumstances free of detriment to the general health, safety and welfare." Id. at 349. The court, however, said it was not holding that "an ordinance may not limit a group of unrelated rentors or owners to a reasonable number in a single dwelling unit." Id. at 350. That is the specific issue now before use.
The ordinance in the Kirsch case, supra, was somewhat similar in that it sought to deal with the influx of summer visitors and rentors to a seashore town and, in particular, to control group rentals. The court, in striking down the ordinance as "sweepingly excessive," pointed out that it was aimed at the prohibition of obnoxious rentals but said that in its attempt to bar one offensive dwelling use the ordinances, in effect, barred many uses which were non-obnoxious.
It is clear from the opinion in that case that when "intensity of use, i.e., overcrowding of dwelling units and facilities," is a factor in causing anti-social conduct, zoning ordinances can, under appropriate circumstances, be used for the purposes of control. Id. at 254.
*33 Defendant's attack on the ordinance in question is a generalized one. He argues the principle of invalidity without any factual support in the record.
A substantially similar ordinance has recently been approved by the United States Supreme Court in the case of Village of Belle Terre v. Boraas, 416 U.S. 1, 94 S. Ct. 1536, 39 L.Ed.2d 797 (1974). A zoning ordinance there restricted land use to one-family dwellings and prohibited occupancy of a dwelling by more than two unrelated persons "as a family" while permitting occupancy by any number of persons related by blood, adoption or marriage. The ordinance was attacked by the owner of the property who had been cited for violating the ordinance as a result of his renting his property to six unrelated college students. The court, in upholding both the zoning ordinance and this principle of land use restriction said:
The regimes of boarding houses, fraternity houses, and the like present urban problems. More people occupy a given space; more cars rather continuously pass by; more cars are parked; noise travels with crowds.
A quiet place where yards are wide, people few, and motor vehicles restricted are legitimate guidelines in a land use project addressed to family needs. This goal is a permissible one. (citation omitted). The police power is not confined to elimination of filth, stench, and unhealthy places. It is ample to lay out zones where family values, youth values, and the blessings of quiet seclusion, and clean air make the area a sanctuary for people. [416 U.S. at 9, 94 S.Ct. at 1541, 39 L.Ed.2d at 804].
We see nothing inherently unreasonable in the provisions of the ordinance here attacked, limiting occupancy of the dwelling to four student roomers. The ordinance is presumptively reasonable and valid. The burden is upon defendant to demonstrate that the ordinance is arbitrary and unreasonable, and he has not done so.
Our opinion is not to be understood as approving any other sections of this ordinance. Our attention has been directed *34 solely to the one provision restricting roomers to no more than four students in any one house which defendant was charged with violating.
Affirmed.
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131 N.J. Super. 125 (1974)
328 A.2d 653
TOWNSHIP OF CHERRY HILL, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, YOUTH CENTER, INC., A CORPORATION OF THE STATE OF NEW JERSEY, AND KEIM & KEIM, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFFS,
v.
NEW JERSEY RACING COMMISSION, NEW JERSEY SPORTS AND EXPOSITION AUTHORITY, AND GARDEN STATE RACING ASSOCIATION, A CORPORATION OF THE STATE OF NEW JERSEY, JOINTLY SEVERALLY, OR IN THE ALTERNATIVE, DEFENDANTS.
Superior Court of New Jersey, Law Division.
Decided November 6, 1974.
*130 Mr. Ralph J. Kmiec for plaintiffs (Messrs. Kmiec & Palumbo, attorneys).
Mr. Clinton E. Cronin for defendant New Jersey Racing Commission (Mr. William F. Hyland, Attorney General of New Jersey, attorney).
Mr. Andrew F. Zazzali for defendant New Jersey Sports and Exposition Authority (Messrs. Zazzali & Zazzali, attorneys).
Mr. George H. Hohweiler for defendant Garden State Racing Association. (Messrs. Richman, Berry, Ferren, Hohweiler & Tyler, attorneys).
RIZZI, A.J.S.C.
This is a mixed in lieu proceeding and action to enjoin a public nuisance in which the issues to be determined are:
(I) Whether a joint permit issued by the New Jersey Racing Commission (Commission) to the New Jersey Sports *131 and Exposition Authority (Authority) and Garden State Racing Association (Garden State) to conduct a thoroughbred race meeting at the premises in Cherry Hill of Garden State during the period November 25, 1974 through December 31, 1974 was issued in violation of N.J.S.A. 5:5-43.
(II) Whether the Authority statute, N.J.S.A. 5:10-7(a) prohibited the Authority from operating a thoroughbred racing meet in a place other than the "Meadowlands Complex";
(III) Whether N.J.S.A. 5:5-47 provides for an unconstitutional delegation of legislative power for the lack of adequate, reasonable and clear standards to guide the Commission in authorizing the transfer of racing days from one permit holder to another.
(IV) Whether there has been a denial to plaintiffs of equal protection under the United States Constitution because the revenue received by the State of New Jersey from racing operated by the Authority is limited to .05% under N.J.S.A. 5:10-7(f), while the revenue received from other permit holders in the conduct of racing is 9.15% under N.J.S.A. 5:5-66;
(V) Whether the conduct of horse racing at the premises of Garden State of Cherry Hill during the period November 25, 1974 through December 31, 1974 will constitute a public nuisance, and if in the affirmative, whether such public nuisance is actionable such as to require the issuance of an injunction thereon;
(VI) Whether the action of the Commission in granting the joint application to the Authority and Garden State to operate throughbred racing at the premises of Garden State at Cherry Hill should be set aside as arbitrary, unreasonable and capricious.
Defendant Authority is a body corporate and politic established by N.J.S.A. 5:10-1 et seq., which became effective on May 10, 1971. Under date of May 24, 1972 the Authority, pursuant to the authority of N.J.S.A. 5:10-7, applied to the Commission for a permit to conduct the running *132 of horse race meetings at the site of the "Meadowlands Complex" in East Rutherford. Thereafter, the Authority commenced the construction of recreation facilities on the land described in the statute, which construction is continuing and will include a thoroughbred horse race track among other facilities. In June 1972 the Authority had been advised by the Commission that a permit to conduct horse racing was approved, and an official permit was issued by the Commission on April 27, 1973.
By letter dated August 16, 1974 the Commission urged the Authority to apply to it for a permit to conduct a meeting for a portion of its available racing dates in 1974 at the facilities of a licensed permit holder in New Jersey, presumably under the authority of N.J.S.A. 5:5-47. Sometime thereafter there was a joint application filed by the Authority and Garden State for permission to conduct a meeting at the track of Garden State during the period November 25, 1974 through December 31, 1974.
On September 24, 1974 the Commission held a meeting at its offices at Trenton to which representatives of Cherry Hill, including the mayor, had been invited at their request, and after hearing the opposition of the mayor expressed at the meeting to the issuance of the permit and the reasons therefor, the Commission proceeded to grant the joint application to operate racing at Garden State.
This proceeding was thereafter instituted by the plaintiffs seeking to void the permit granted for the various reasons above enumerated, and also seeking to enjoin defendants, if the permits were otherwise declared to be valid and effectual, from exercising the permit, upon the ground that the conduct of racing at the premises of Garden State in Cherry Hill during the days in question will constitute an actionable public nuisance.
The various legal questions with respect to the validity of the joint permit will first be considered.
*133 I
Plaintiffs charge that the grant by defendant Racing Commission of the challenged license is void because it is in violation of N.J.S.A. 5:5-43. It has been established that the joint application of the Authority and Garden State was not filed until September 20, 1974.
N.J.S.A. 5:5-43, insofar as relevant to plaintiffs' argument, provides that:
All applications for dates for horse race meetings after the first year shall be filed with the commission prior to October 15 of each year and shall be acted upon by the commission at a meeting of the commission to be held not later than December 1 of the same year. At such meeting so held the commission shall act upon all applications filed with it prior to October 15 of such year and shall allot to the respective applicants, subject as hereinbefore and hereinafter stated, racing days for the ensuing year. * * *
The argument goes that the Authority did not file its joint application prior to October 15, 1973; therefore, it is asserted, the application is untimely and should have been denied by the Commission.
N.J.S.A. 5:5-43, however, goes on to provide that
* * * In the event any such application is filed with the commission on or after October 15 of any year, the commission shall act upon the same at a meeting of the commission to be held not later than 60 days following the filing of such application; * * *.
While plaintiffs urge this portion of the statute to be inapplicable to the type of joint application under review, it is clear to the court that the language of the statute authorizes the very application here involved.
In the case of applications filed before October 15 of any year, the Commission is directed to act thereon at a meeting to be held not later than December 1 of the same year, by allotting to the respective applicants racing dates for the ensuing year. Thus an applicant to be afforded an opportunity to obtain desired racing dates for the following year must have applied by October 15. Failure to timely file does *134 not result in forfeiture of the right to be licensed at all, but only forfeits the right to compete with other applicants for favored dates, since presumably they already will have been allotted among those who filed before October 15.
The second portion of the statute was calculated, then, to authorize the tardy filing of an application by an applicant for dates, whether in the current year or for the following or ensuing year. If this were not a proper construction of the statute, a new track which may not have received its approval or may not have completed its facilities until, for example December 15, would be denied the right to operate at all during the ensuing year, even though there were many available dates during the ensuing year, for the technical reason that its application was not filed by October 15. Such a strained construction would reach a result which in this courts view was not intended by the statute.
The court is of the view that the application in question falls within the provisions of the second portion of the statute providing for the filing of a late application and that the Commission had a right and indeed the duty to act thereon within 60 days, with the full right to grant the application if otherwise appropriate to do so.
II
Plaintiffs next urge that defendant Commission exceeded its powers in granting the joint license because the right of the defendant Authority to hold a license is limited under N.J.S.A. 5:10-7(a) to the "Meadowlands Complex," and since the license here is to run races at a track other than on the grounds of the Meadowlands, plaintiffs say the statutory authority has been exceeded.
The statute which created defendant Authority limited, in section 6 thereof, its power to a "project to be located in the Hackensack Meadowlands upon a site not to exceed 750 acres." N.J.S.A. 5:10-6(a).
*135 N.J.S.A. 5:10-7(a) provides:
The authority is hereby authorized, licensed and empowered to apply to the Racing Commission for a permit or permits to hold and conduct, as part of the meadowlands complex, horse race meetings * * * and to provide a place or places on the race meeting grounds or enclosure for wagering * * *. [Emphasis added]
Another section of the statute creating the Authority, N.J.S.A. 5:10-22, says that "It is the express intent of the Legislature that the powers of the authority to undertake the meadowlands complex shall be limited to the site of the project * * *."
Plaintiffs urge that the combined effect of these statutory references is to make clear that the Legislature did not intend to allow the Authority to share with other racing license holders the right to operate, under N.J.S.A. 5:5-47, at a track of another license holder.
N.J.S.A. 5:5-47 provides that:
* * * The commission may in its discretion authorize a permit holder to conduct the horse race meeting for which it has been issued a permit, or a portion thereof, at a place, track or enclosure owned or operated by another permit holder upon application therefor made by both said permit holders, subject to such terms, conditions, and requirements as the commission shall direct * * *.
There is no provision in the statute establishing the Authority, N.J.S.A. 5:10-1 through 26, which expressly prohibits racing elsewhere. The issue to be decided, then, is whether the various statutes read together prohibit such activity, or conversely, whether the statutes may be read to inferentially permit racing elsewhere.
N.J.S.A. 5:10-7(a) hereinabove set forth in its germane content merely describes the location for which the Authority had the right to seek a permit. Once the permit was issued to the Authority, N.J.S.A. 5:10-7(b) came into play. It provides that
Except as otherwise provided in this section, such horse race meetings and parimutuel wagering shall be conducted by the authority *136 in the manner and subject to compliance with the standards set forth in P.L. 1940, C. 17 (C.5:5-22, et seq.) and the rules, regulations and conditions prescribed by the Racing Commission thereunder for the conduct of horse race meetings, and for parimutuel betting at such meetings.
The above section, N.J.S.A. 5:5-22 et seq., then, controls the actual conduct of horse meetings after the original application is made and permit issued under N.J.S.A. 5:10-7(a).
Although N.J.S.A. 5:10-22 does limit the acreage of the Meadowlands Complex and thereby guarantees there will be no further infringement by the Authority in the Meadowlands, it is the view of this court that the Legislature did not intend that the Authority must at all times during its existence and under all circumstances conduct its racing on the specified tract. It must be mentioned here that the Legislature, in N.J.S.A. 5:5-47.1, provided that
In the event that any licensed race meeting cannot be held or completed at the time prescribed by the license for the holding thereof, because of the occurrence of an event beyond the permit holder's control, such as a fire, hurricane, tornado or other catastrophe, the permit holder shall be entitled to an emergency permit to hold or complete the said race meeting at any other available race track, upon such terms and conditions as shall be fixed by the New Jersey Racing Commission.
If the Authority had constructed its race track and the stadium were destroyed by catastrophe, such as a fire, applying the reasoning ascribed to the statutes by plaintiffs, the Authority could not avail itself of N.J.S.A. 5:5-47.1 and operate at another track temporarily while its facilities were reconstructed. This result is in the view of this court an unreasonable construction of the statutes and would produce a result never intended by the Legislature. It is more cogent to infer that when the Legislature adopted N.J.S.A. 5:10-7(b) which made the Authority subject to the rules and regulations of the Commission after it came into being, it intended that all of the provisions which established rights as *137 well as obligations as to the other race tracks equally applied to the Authority. It is concluded by this court then that N.J.S.A. 5:10-7(a) is a limitation only upon the application for the original permit to race and not a limitation as to the use by the Authority of the permit itself, and further, that the Authority derived the same right to operate elsewhere under N.J.S.A. 5:5-47 and 5:5-47.1 as did the other permit holders who have been licensed by the Commission. The permit granted under the joint application is valid and effective.
III
Plaintiffs next contend that the provisions of N.J.S.A. 5:5-47 are an unconstitutional delegation of legislative power for the lack of any adequate, reasonable and clear standards to guide the Commission in authorizing the transfer of racing days from one permit holder to another.
N.J.S.A. 5:5-47 in its challenged portion provides that
* * * The commission may in its discretion authorize a permit holder to conduct the horse race meeting for which it has been issued a permit, or a portion thereof, at a place, track or enclosure owned or operated by another permit holder upon application therefor made by both said permit holders, subject to such terms, conditions, and requirements as the commission shall direct. * * *
In the case of State v. Seligson, 106 N.J. Super. 329 (App. Div. 1969) it was held that
* * * [T]he Legislature may not vest unbridled or arbitrary power in the agency but must furnish reasonably adequate standards to guide it.
In Seligson the court went on to hold that such standards need not be expressly stated in a particular section of the statute if they may reasonably be inferred from the statutory scheme as a whole, citing Schierstead v. Brigantine, 20 N.J. 164, 169 (1955).
*138 In Schierstead the Supreme Court held that
In ascertaining the presence of standards and norms to support delegated powers, it is fundamental that we are not confined to the four corners of the particular section under consideration but are obligated to examine the entire act in the light of its surroundings and objectives. Nor need the standards be set forth in express terms, if they may reasonably be inferred from the statutory scheme as a whole.
An examination of other sections of the racing statute, specifically N.J.S.A. 5:5-38 through 51, will disclose numerous requirements for the filing of applications, renewal permits and revocation and refusal of licenses. One of these sections, N.J.S.A. 5:5-43, proscribes that:
* * * In making such allotment of racing dates, the commission shall endeavor to allot to each applicant * * * the dates requested * * *, after giving due consideration to all factors involved and the interests of such respective applicants and the public.
There have been numerous cases in New Jersey in which standards similar to the guiding language of N.J.S.A. 5:5-43 have been upheld. See Burton v. Sills, 53 N.J. 86, 90-92 (1968) ("the public health, safety and welfare"); Elizabeth Federal S. & L. Ass'n v. Howell, 30 N.J. 190, 194 (1959) ("in the public interest"); In re Greenville Bus Co., 17 N.J. 131, 135 (1954) ("necessary and proper for the public convenience and properly conserves the public interests"); Ward v. Scott, 11 N.J. 117, 123-125 (1952) ("without substantial detriment to the public good"); Newark v. New Jersey Turnpike Auth., 7 N.J. 377, 383-385, (1951), app. dism. 342 U.S. 874, 72 S.Ct. 168, 96 L.Ed. 657 (1951) ("which it may determine is reasonably necessary"); State v. Seligson, 106 N.J. Super. 329, 332-333 (App. Div. 1969) ("commodities"); Department of Health v. Owens Corning Fiberglas Corp., 100 N.J. Super. 366, 383-384 (App. Div. 1968), aff'd 53 N.J. 248 (1969) ("air pollution").
*139 It is the view of the court that the racing statute taken in its entirety contains a constitutionally sufficient standard, as delineated in N.J.S.A. 5:5-43 to govern the Racing Commission's action in granting permits and allotting dates under N.J.S.A. 5:5-43 and N.J.S.A. 5:5-47.
IV
Plaintiffs next argue that there has been a denial of equal protection of the laws under the United States Constitution to the people of the Township of Cherry Hill because under the Authority statute N.J.S.A. 5:10-1 et seq., the State of New Jersey will receive as revenue, out of the total betting handle collected by the Authority in the running of horse races, a sum limited to .05% of the total handle, while the running of races by other permit holders results in the collection of revenue by the State under N.J.S.A. 5:5-66(b)(1) on the total handle in the amount of 9.15% thereof.
Legislation carries with it a strong presumption of constitutionality. The United States Supreme Court has held in such cases as McGowan v. Maryland, 366 U.S. 420, 81 S.Ct. 1101, 6 L.Ed.2d 393 (1961); Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 2d 491 (1970) and Levy v. Louisiana, 391 U.S. 68, 88 S. Ct. 1509, 20 L. Ed. 2d 436, reh. den. 393 U.S. 898, 89 S. Ct. 65, 21 L. Ed. 2d 185 (1968), that state economic or social legislation which results in some degree of inequality is not violative of the Equal Protection Clause of the Fourteenth Amendment, unless the classification involved has no underlying facts or rationale which would reasonably justify it.
The New Jersey Supreme Court held in Guill v. Mayor, etc., of Hoboken, 21 N.J. 574 (1956) that
The classification satisfies the constitutional test of equality and reasonableness if it rests upon same ground of difference having a real and substantial relation to the basic object of the legislation or some relevant consideration of public policy. [at 582]
*140 In New Jersey Sports and Exposition Auth. v. McCrane, 119 N.J. Super. 457 (Law Div. 1971), aff'd 61 N.J. 1 (1972), the general constitutionality of the Authority statute was upheld by both tribunals. In the lower court opinion Judge (now Justice) Pashman made specific note that
The Authority is a public corporation constituted for a public purpose. It is not a private association or entity. Thus, any revenue it receives from its operations and which it utilizes in furtherance thereof is revenue received by a state agency "for the support of government." [119 N.J. Super. at 502]
Applying the test of McGowan v. Maryland, supra, to the alleged inequality of this case, it is clear that our Legislature intended that the Authority as a public corporation be assisted via the medium of extra income in its goal of providing general recreation to the people of the State. Obviously, the ultimate goal of public recreation, not just in racing but in many other areas, reasonably justified the differences in the taxing system between the private permit holders and the Authority.
The court has also considered all other arguments alleging a denial of equal protection but is of the view that the statute in so providing a disparity of taxation is nevertheless constitutional in all respects..
V
The next argument of plaintiffs to be considered is that there will be an actionable public nuisance that will ensue if the permit holders are allowed to conduct a horse race meeting in Cherry Hill from November 25, 1974 through December 31, 1974, and that an injunction should therefore be issued restraining all of the defendants from exercising any rights acquired through the issuance of the joint permit. Defendants assert by way of defense that although some inconvenience will be suffered by various citizens of Cherry Hill by the conduct of racing during the period in question, such inconvenience does not measure up to the existence of *141 a public nuisance. Defendants further argue that even if the court were to find to be present a public nuisance, it would not be actionable or enjoinable because the conduct of horse racing by a permit holder is a legislatively authorized activity.
Plaintiffs and defendants offered proofs over a period of many days dealing with the claim of public nuisance. These proofs established that the Garden State race track is located at the heart of the Township of Cherry Hill, a community of 70,000 inhabitants spread over 24 square miles. The track itself is located on 250 acres of land at the intersection of State Route 70 and Haddonfield Road, a county highway. This intersection is actually a traffic circle known as the Grove Street Circle. Besides Route 70, the major roads in Cherry Hill in the track vicinity are State Route 38, State Route 41 (also known as Kings Highway) State Route 154 (also known as Brace Road) County Road 544 (also known as Haddonfield Road) and certain other county roads known as Chapel Avenue and Church Road, all of which surround the Garden State Race Track. All of these roads are heavily travelled during the day and are especially so during the homeward bound peak hour of 5 to 6 P.M. Besides the Grove Street Circle, there is another major traffic intersection known as the Ellisburg Circle which is located along Route 70 about two miles east of the Grove Street Circle and where Route 70, Route 41 and County Road 544 intersect. Route 70 at the race track is a triple lane highway and from the Grove Street Circle to Ellisburg Circle and beyond in an easterly direction is a dual highway. Route 38 is a three-lane highway running somewhat parallel to Route 70 which, with Route 70, shares the burden of traffic moving between Cherry Hill and the cities of Philadelphia and Camden where thousands of motorists using these highways are employed. Philadelphia also supplies more than half of the daily attendance at the track.
During the afternoon hours of nonracing days these major circle intersections are not traffic controlled but the Cherry *142 Hill police make periodic observation of traffic flow, and where major congestion becomes imminent, foot patrols are enlisted to maintain a manual flow. During racing days these circle intersections are controlled by Cherry Hill police on a regular basis. Other intersections adjacent to the track, including the exits, are traffic controlled by New Jersey State Police. These police details commence immediately after the last race and continue until regular traffic flow resumes and the track parking is substantially emptied, usually about 1 1/2 hours later.
During racing days in the spring of 1974 the number of automobiles which parked on the official parking lot of the track varied between a February weekday low of about 3000 to an April weekday high of about 5000. Saturdays ran about 50% higher than weekdays. Many other automobiles of course found parking in adjoining private lots and spaces. The pattern of attendance indicated quite conclusively that much less attendance could be anticipated during the colder days of the year.
Statistics produced by the secretary to the Racing Commission indicated the daily average attendance at Garden State had dropped considerably between the years 1963 and 1974. In 1963 the daily average paid count was 19,926 while in 1974 the paid daily average had reduced to 12,654. There was credible testimony that the average automobile brought 2.4 persons to the track. There was also credible testimony that the proposed 31-day meeting in late November and December would produce average daily attendance of 8500 to 9000 patrons, much less than prior averages because of two reasons: (1) the colder days of late November and December will itself result in declining attendance and (2) the running of competitive horse racing at the new Keystone Race Track outside of Philadelphia during the same period of time would cause a sharp decline in attendance at Garden State. At 2.4 persons per auto, 9000 persons would produce 3750 automobiles a day.
*143 Many days were spent by the court in hearing testimony from both sides concerning the various traffic counts and studies that had been made from time to time during various months in 1974 and prior, and the projected count of automobiles that might be expected on the various highways surrounding the track during the month of December.
There was credible expert testimony that during December there would be some buildup of traffic on these highways as the Christmas holidays approached because of the location of Cherry Hill Mall, a major shopping mall with two department stores and some 100 smaller stores, located at the intersection of Route 38 and Haddonfield Road, about a half-mile from the race track.
From all of the testimony present there is little doubt that there will be significant additional traffic that will exist on the highways surrounding the track for the 1 to 1 1/2-hour period following the last race. There was testimony that because of Standard Time and the earlier sunset in December, the last race would be required to go off by 4:30 P.M. in order to be run under visible conditions. The evidence indicated that on these roads the peak homeward bound traffic was reached between 5 and 6 P.M. Thus, this race track traffic would pour into the highways partially during these peak hours, with a 4:30 P.M. race track close. There was testimony that a 3:30 to 4:00 P.M. close would result in a much reduced traffic collision between the race goers' vehicles and those of the commuters. It was established that most of the commuters would be travelling on Routes 70 and 38 in an easterly direction, returning from Camden and Philadelphia, while more than half of the race track traffic would be going in a westerly direction back toward Philadelphia. There was testimony that the biggest traffic problems occurred at the Ellisburg Circle, about two miles east of the track along Route 70, where that road intersected with State Route 41 and County Road 544, where it was necessary after the last race of past meets for traffic to be manually directed by three *144 Cherry Hill police. With the presence of the police, traffic was kept moving fairly fluidly even during peak hours.
It was further established by defense expert testimony that notwithstanding the expected commuter rush between 4 to 5 P.M. and 5 to 6 P.M., there was still room during those hours for some 4000 automobiles to exit the track parking lot onto the three major highways, Route 70, Route 38 and Haddonfield Road, and still maintain a movement of traffic, albeit with the aid of police at key intersections to keep traffic moving at a moderate pace. Indeed, the movement of traffic would, in the view of the court, be no worse than has been existent during the past racing sessions at Garden State over a period of many years.
Plaintiffs assert that all of these described conditions of the highways would cause such a slowdown or stoppage of traffic as to compel the court to conclude that a public nuisance would thereby be created and the court is asked to enjoin the defendants from the running of horse races during the 31 days between November 25 and December 31, 1974 in order to abate the anticipated public nuisance.
In 66 C.J.S. there will be found the following definition of a nuisance:
§ 1. Although the term "nuisance" has been regarded as incapable of precise definition, so as to fit all cases, it has also been held to be a term with a well defined legal meaning, and in legal phraseology applies to that class of wrongs which arise from the unreasonable, unwarrantable, or unlawful use by a person of his own property, real or personal, or from his own improper, indecent, or unlawful personal conduct, working an obstruction or injury to a right of another, or of the public, and producing material annoyance, inconvenience, discomfort or hurt.
§ 2. Nuisances are often classified either as public or private or both. A nuisance is common or public where it affects the right enjoyed by citizens as part of the public * * *.
In 58 Am. Jur. 561 the following definition appears:
A public nuisance has been defined as the doing of or the failure to do something that injuriously affects the safety, health, or morals of the public, or works some substantial annoyance, inconvenience, *145 or injury to the public, and as a nuisance which causes hurt, inconvenience, or damage to the public generally, or such part of the public as necessarily comes in contact with it in the exercise of a public or common right.
In the case of Lieberman v. Saddle River Tp., 37 N.J. Super. 62 (App. Div. 1955), the court held that the mere maintenance of a Little League baseball field for the enjoyment of juvenile players was not a nuisance per se. The opinion noted that
The trial judge resolved that the plaintiffs had failed clearly and convincingly to prove that the alleged annoyances are so material and substantial in character, * * * as to require the extraordinary relief prayed for by the plaintiffs. Our examination of the record does not incline us to overthrow that conclusion.
Applying these definitions of public nuisance to the traffic conditions anticipated during the critical period here, this court is of the view that while there will be some degree of inconvenience to commuters who are on these highways when the track traffic spills onto the highways, conditions will be no more critical than they have been during many days of past racing seasons. Such conditions would not be so material or substantial in character as to amount to a public nuisance such as to authorize here the extraordinary remedy of an injunction.
Plaintiffs, in charging a public nuisance, assumed the burden of establishing their cause of action by clear and convincing evidence. They have failed to so establish an anticipated public nuisance and their complaint thereon for injunction as well as for damages must fail.
Defendants assert that even if the activity at the track would constitute a public nuisance, an injunction could not issue because the conduct of horse racing is a legislatively authorized activity and hence not enjoinable. This argument goes that the New Jersey Legislature has authorized horse racing in New Jersey, N.J.S.A. 5:5-22 et seq.; the Legislature has authorized racing by one permit holder at the track *146 of another, N.J.S.A. 5:5-47; the Legislature has authorized racing by the New Jersey Sports and Exposition Authority, N.J.S.A. 5:10-1 et seq., and finally, the Racing Commission, pursuant to all of this legislative authority, has issued the appropriate permits to the Authority and Garden State to operate.
Our Chancery Division has dealt with this issue in Borough of Westville v. Whitney Home Builders, 32 N.J. Super. 538 (1954). In that case the State Department of Health had authorized the construction of a sewage disposal plant which was later said by plaintiff to be a public nuisance. In denying the requested injunction Judge Haneman (later Justice of the Supreme Court) held that
Even though it be admitted, for the sake of this motion alone, that the construction and operation of a sewage disposal plant, as approved by the Department of Health, would constitute a public nuisance, the plaintiffs are without remedy before this court. The Legislature has seen fit to make the commission of such a public nuisance lawful and has placed the sole power to permit and control such a public nuisance within the jurisdiction of the State Department of Health. The Legislature has the power to make lawful, so far as the public is concerned, a work or business which by common law would otherwise be a public nuisance. Garrett v. State, 49 N.J.L. 94, 693 (Sup. Ct. 1886).
Where, as here, the Legislature has authorized the State Department of Health to approve the discharge of effluent from a sewage disposal plant into a stream in this State, even though the discharge of said effluent would, under common law, be deemed a public nuisance, it does not constitute such a public nuisance. [at p. 544]
This ruling was not involved in the appeal of the same case, reported in 40 N.J. Super. 62, at 68 (App. Div. 1956).
In 58 Am. Jur.2d, § 228 at 831, the following comment appears:
Generally, the courts will not hold conduct to constitute a nuisance where authority therefor exists by virtue of legislative enactment, and there are numerous statements in the cases to the effect that although it otherwise would be one, the doing of that which the law authorizes cannot be a nuisance, or such a nuisance as will give a common-law right of action.
*147 It is the view of this court that, even assuming plaintiffs had established an anticipated public nuisance, such nuisance would not be actionable because the Legislature had seen fit to authorize the Commission to issue the permit here for a period covering any time of the year, including the time period in issue, subject only to the limitations of N.J.S.A. 5:5-43. Since horse racing at Garden State is an authorized legislative activity there cannot be an actionable public nuisance.
VI
This leads the court to the last cause of action of plaintiffs to be discussed, namely, that the action of the Racing Commission at its meeting of September 24, 1974 in granting the joint permit to the applicants was arbitrary, capricious or unreasonable.
It should be noted here that while ordinarily a review of the action of a state agency is by appeal directly to the Appellate Division, R. 2:2-3(a)(2), the decisions of the New Jersey Racing Commission are specifically reviewable by a proceeding in lieu of prerogative writ as prescribed by N.J.S.A. 5:5-60.
While the action of an administrative agency is presumed to be valid, Elizabeth v. Sullivan, 125 N.J. Super. 569 (App. Div. 1973), the reviewing court has the power to review the Commission's actions and, if necessary, make independent findings thereon, although it will not substitute its judgment for that of the Commission where there is proof to support the Commission action and its judgment is not arbitrary, capricious or unreasonable. East Patterson v. Civil Service Dept., 47 N.J. Super. 55, 65 (App. Div. 1957).
Applying these concepts to the facts here, this court is of the view that while there was ample reason for the Commission to grant the disputed joint permit to race at Garden State during the time period of November 25, 1974 to December 31, 1974, the Commission in the pursuit of its responsibilities had the duty to determine whether terms or *148 conditions should have accompanied the issuance of the permit. At the hearing on September 24, 1974 conducted by the Commission, Mayor Holden of Cherry Hill offered a written statement as well as an oral presentation in which he brought to the attention of the Commission the probable traffic snarls that would ensue. His statement in evidence asserted that "the business community is clearly liable to suffer especially this Christmas season. The prospect of massive traffic jams from one end of Cherry Hill to the other will drive shoppers away from our local stores * * *." The mayor went on in his statement to bring to the Commission's attention that the traffic circle problems would cause great cost to the township for which he was asking state relief. Much of this cost according to the evidence was involved in the furnishing of police details on control traffic at the two circles as well as at other intersections near the track during the racing season.
It is the view of this court that there was a duty on the Commission to give its earnest consideration to the position of the Township of Cherry Hill. It had the right and duty to investigate the problems by resting the issuance of the permit conditioned upon whatever requirements it deemed to be just and appropriate. Indeed, this was conceded by defense counsel at argument. There also was testimony from the secretary of the Racing Commission that on occasions in the past permits had been issued with conditions attached.
This court then is of the view that the Commission should have acted in two areas: (1) it should have considered the imposition of a cut-off time for the running of the last daily race, and (2) it should have determined whether extra traffic police needed to keep traffic moving before and after the races should be provided for or paid by the permit holders.
Ordinarily the court would be loathe to enter into fact-finding responsibility in reviewing the action of a state agency but rather would remand to the agency with direction to consider the evidence and make appropriate findings. However, since time does not permit such action here, this court *149 prefers to assume the duty of making these findings, as authorized by East Patterson v. Civil Service Dept., supra.
All of the evidence that was considered in this case by the court, although not establishing a public nuisance, leads the court to find that on week-days during the period in question the addition of race track traffic to the commuter and holiday traffic on the highways and circles near the track will create a substantial slowdown of traffic. Some of the problems can be minimized by an early closing hour for the track. The heaviest hour of commuter traffic on week-days is that between 5 and 6 p.m. About 1 to 1 1/2 hours is needed to empty the track parking lot. Plaintiffs proofs showed that a closing time between 3 P.M. and 3:30 P.M. would most effectively reduce the impact of vehicles leaving the track.
N.J.S.A. 5:5-84 provides that racing may not commence before 12 noon. There was defense testimony that nine races were contemplated, spaced one-half hour apart. Further testimony indicated that a start of 12:30 P.M. was planned. This would project a ninth race starting time of 4:30 P.M. However week-day traffic is such that evacuating the track parking lot just after 4:30 P.M. would create the greatest traffic problems because much of it would join the 5 to 6 P.M. commuter peak. There was defense testimony from the secretary of the Commission that when attendance at any track meet was low, the time between races was reduced to as little as 25 minutes. If the first race commenced at 12 noon and nine races were spaced 25 minutes apart, the last race could be scheduled at 3:20 P.M. Even if emergency problems caused a delayed start, the last race would be run by 3:30 to 3:45 P.M. This would result in the earlier departure of track patrons and would cause most of the parked cars to leave before the 5 o'clock peak. All of these findings apply to weekday racing. Since there were no special Saturday or holiday problems established, other than expected shopping traffic, there would appear to be no reason why any special closing should apply to those days.
*150 As to the police problem, there is proof that the township supplied an average of 12 police officers on each racing day during the track exit period, in addition to State Police on duty at the track exits. These township officers were on duty at the two circles and at various other intersections near the track. Before the opening of races the township supplied an average of five police officers on each racing day in addition to State Police. None of these locations required traffic details on nonracing days. The township was reimbursed for the salaries of some of these men, and others were assumed by the township. The court finds, however, that since their traffic duties are occasioned solely by reason of track traffic, the township should be entitled to total reimbursement for these expenses. This applies both to entrance costs as well as exit costs for such number of men as the Director of Public Safety shall determine to be necessary.
It is the view of the court that the action of the Commission was unreasonable in not having provided conditions to accompany the issuance of the joint permit. These conditions should have been that:
(1) The last race on every week-day shall be scheduled for not later than 3:30 P.M., and in the event of an emergency condition that shall require an extension, such race may commence up to 3:45 P.M., but not thereafter.
(2) The permit holders shall reimburse the Township of Cherry Hill for all police salaries involved with respect to the handling of traffic at the circles and other locations where needed both before the races and after the races on all days of racing, including weekdays, Saturdays and holidays, during the period November 25, 1974 to December 31, 1974.
This court therefore orders and directs that the joint permit issued to defendants Garden State and Authority be amended so that it will be subject to the two conditions above prescribed.
No costs to any of the parties.
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334 S.W.2d 486 (1960)
AMERICAN INCOME LIFE INSURANCE COMPANY, Appellant,
v.
Edgar Lee DAVIS, Appellee.
No. 6946.
Court of Civil Appeals of Texas, Amarillo.
April 4, 1960.
Rehearing Denied April 25, 1960.
Allison & Allison, Levelland, for appellant.
Boedeker & McCann, Levelland, for appellee.
NORTHCUTT, Justice.
The American Income Life Insurance Company, hereinafter referred to as appellant, issued its accident policy insuring the students and teachers of Levelland Public Schools against (1) accidental death or dismemberment, and (2) loss due to actual, necessary, usual and reasonable expense incurred resultant from accidental bodily injury sustained while this policy is in force, subject to the conditions, limitations and provisions set forth in the policy. The provision here in question provides, "Injury as used in this policy means accidental bodily injury causing the loss directly and independently of all other causes and sustained while this policy is in force and while the injured student or injured teacher is:" Then sets out the conditions.
Bobby Davis, a minor, was a student in the Levelland Public Schools and was injured on or about May 26, 1958, while covered by the terms of the policy here in question. The policy covered hospital, doctor and certain other expenses. The appeallant refused payment of the expenses covered by the policy. Edgar Lee Davis, father of Bobby Davis, brought this action to recover the actual, necessary, usual and reasonable medical and hospitalization expenses resulting from the accidental bodily injury sustained by Bobby Davis and for 12% penalty and reasonable attorneys' fees. Appellant denied liability and defended the *487 suit on the ground that if Bobby Davis was injured that it was not an accidental bodily injury caused directly and independently of all other causes; but that a pre-existing bone cyst contributed to the injury.
The case was submitted to the jury upon two special issues. The first issue inquired if Bobby Davis sustained the alleged bodily injury on or about May 26, 1958 through external violence and accidental means. The jury answered "yes." The second issue inquired whether said accidental bodily injury, if any, was the direct result of Bobby Davis' disability, if any, exclusive of all other causes. The jury answered "yes." Upon this verdict the court granted the plaintiff judgment for $330.30 medical and hospital expenses, 12% penalty and $110 attorney's fees, making the total judgment of $479.94. From this judgment appellant perfected this appeal.
Appellant presents this appeal upon the grounds that appellee failed to prove an accidental injury causing loss directly and independently of all other causes; that under Rule 94, Texas Rules of Civil Procedure, after appellant had pleaded a pre-existing bodily infirmity, appellee failed to establish that the medical expenses incurred did not result in whole or in part from treatment of a pre-existing disease; that the court erred in failing to give appellant's requested charge that the jury be asked if Bobby Davis had a bone cyst, and if they found that he did, if any part of the medical expenses were attributable to the treatment of the bone cyst; failure of the court to ask the jury as to the amount of reasonable attorney's fees; that the findings of the jury found that the accidental injury was the result of a pre-existing bone cyst, and that the court erred in instructing the jury not to consider the testimony of Bobby Davis that he had a bone cyst in the proximity of the place where his arm was broken.
The undisputed record shows that Bobby Davis injured his arm in playing ball and came within the terms of the policy, unless the injury came within the terms of the exceptions set out in the policy. The statement made by Doctor Barnes being the only doctor testifying was: "In my opinion it cannot be determined when the bone cyst had its onset. There was no history of any previous pain in the arm. I think it is reasonable to assume that throwing the ball was enough trauma to precipitate the fracture." The undisputed record shows Bobby had never had any trouble with his arm before but realized he hurt his arm at the time he threw the ball. Any testimony Bobby might have given as to whether he had a cyst would have been purely hearsay, as he had to be told he had one. We are unable under this record to see where there was any proof other than he injured his arm by the throwing of the ball as he did. Neither are we able to see where there is any showing any of the expenses were attributed to the treatment of the bone cyst or that the cyst caused the injury. Under this record we do not believe the jury could have found other than they did.
Appellant in presenting its point of error that the court erred in not submitting to the jury the reasonableness of the attorney's fees stated: "Although appellee introduced testimony to the effect that the attorney's fees were reasonable there was no jury finding that such fees were reasonable. Then cited Vernon's Annotated Texas Statutes Insurance Code, Article 3.62. This article reads as follows:
"Art. 3.62. Delay in Payment of Losses; Penalty For
"In all cases where a loss occurs and the life insurance company, or accident insurance company, or life and accident, health and accident, or life, health and accident insurance company liable therefor shall fail to pay the same within thirty days after demand therefor, such company shall be liable to pay the holder of such policy, in addition to the amount of the loss, twelve (12%) per cent damages on the amount of such loss together with reasonable *488 attorney fees for the prosecution and collection of such loss. Such attorney fee shall be taxed as a part of the costs in the case. The Court in fixing such fees shall take into consideration all benefits to the insured incident to the prosecution of the suit, accrued and to accrue on account of such policy. Acts 1951, 52nd Leg., ch. 491." (Italics ours.)
We think under the provision of Article 3.62 above mentioned it was the duty of the court to determine the reasonableness of the attorney's fees. This statute as it now reads has been well discussed in the case of American National Insurance Company v. Points, Tex.Civ. App., 131 S.W.2d 983, and a writ was dismissed by the Supreme Court as judgment being correct. We find no reversible error in this case. All of appellant's assignments of error are overruled.
Judgment of the trial court is affirmed.
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23 Md. App. 435 (1974)
328 A.2d 76
LEE FRANKLIN DeLAWDER
v.
WARDEN, MARYLAND HOUSE OF CORRECTION.
App. No. 92, September Term, 1974.
Court of Special Appeals of Maryland.
Decided November 18, 1974.
Before ORTH, C.J., and POWERS and GILBERT, JJ.
*436 ORTH, C.J., delivered the opinion of the Court.
On 30 June 1972 Lee Franklin DeLawder was found guilty by a jury in the Circuit Court for Montgomery County of carnal knowledge of a female under the age of 14 years. A 15 year sentence was imposed. The judgment was affirmed on direct appeal. DeLawder v. State, No. 663, September Term, 1972, filed 8 June 1973, unreported, 18 Md. App. 740, cert. denied 269 Md. 757. He filed a petition on 19 December 1973 attacking the judgment under post conviction procedures. After a plenary hearing, relief was denied by an order of the Circuit Court for Montgomery County issued 14 October 1974. Maryland Rule BK45 a. He seeks leave to appeal from that order. Code, Art. 27, § 645-I; Rule BK46.
At the hearing below DeLawder presented three allegations of error:
"1. That the trial attorney defended the petitioner inadequately and improperly and thereby violated the petitioner's rights to a fair trial, due process and equal protection of the law.
2. That the alleged victim perjured herself and that the State was aware of this perjury thereby violating the petitioner's rights to a fair trial, due process and equal protection of the law.
3. That the trial court's denial to defense counsel of the right to cross-examine in detail the State's witnesses for purposes of attacking their credibility and establishing their hostility towards the petitioner has violated the standards as enunciated in Davis v. Alaska, [415 U.S. 308,] concerning the constitutional right to confront the witnesses against the petitioner."
The hearing judge denied relief under all three. He disposed of the first two by baldly stating: "The court finds no merit in the first two contentions." With respect to the third allegation, he found it to be essentially the same contention raised by DeLawder on direct appeal and determined by this Court. He was of the opinion "that it would be inappropriate *437 under a petition for post conviction relief to reconsider a point previously raised by the petitioner and ruled on by the Court of Special Appeals of Maryland, or to reverse that Court. The court takes this position even through Article 27, Sec. 645A (d) preserves that right for post conviction consideration thinking it more proper for the Court of Special Appeals to review the petitioner's third contention on appeal."
Rule BK45 b provides:
"The order [prescribed by § a of the Rule to be made by the hearing court as justice may require] shall include or be accompanied by a short memorandum of the grounds of the petition, the questions, including specifically the federal and State rights involved, and the reasons for the action taken thereon."
The memorandum included in the order here is deficient because it does not sufficiently set out the reasons for the action taken by the hearing judge. The conclusion that the first two allegations were without merit must be supported by the reasons for the conclusion, adequately expressed. As to the third allegation, it is correct that on direct appeal we adhered to the rule of law that in rape cases the defense is confined to evidence of the general reputation of the victim and is not permitted to show specific acts of sexual misconduct and that in a case of statutory rape, where there can be no consent, even general reputation as to chastity is not a material issue. We held the trial court did not err in sustaining objections made to questions attempting to show that the victim had sexual intercourse with other men on other occasions. Our holding, however, did not necessarily finally litigate the contention as presented upon collateral attack. Code, Art. 27, § 645A (d) provides:
"For the purposes of this subtitle and notwithstanding any other provision hereof, no allegation of error shall be deemed to have been finally litigated or waived where, subsequent to any *438 decision upon the merits thereof or subsequent to any proceeding in which said allegation otherwise may have been waived, any court whose decisions are binding upon the lower courts of this State holds that the Constitution of the United States or of Maryland imposes upon State criminal proceedings a procedural or substantive standard not theretofore recognized, which such standard is intended to be applied retrospectively and would thereby affect the validity of the petitioner's conviction or sentence."
Davis v. Alaska, supra, was decided 27 February 1974, subsequent to our decision on direct appeal. We think the hearing judge should have determined the third contention on the merits and given his reasons for the action he took thereon.
The application for leave to appeal is granted. The case is remanded with direction to the hearing judge to determine whether the action of the trial court in restricting the cross-examination of the victim was proscribed by the holding in Davis v. Alaska, supra, and, if so, whether that holding is to be retroactively applied. He shall then file a memorandum giving his reasons for his conclusion that the first two allegations are without merit and his reasons for the action he takes with respect to the third allegation. See McCready v. Warden, 9 Md. App. 92.
Nothing we have said herein is to be construed as reflecting any opinion as to the applicability vel non of Davis v. Alaska, supra, to the case at hand.
Application granted; case remanded for further proceedings pursuant to this opinion; mandate to issue forthwith.
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334 S.W.2d 379 (1960)
Earl KAGAN (Plaintiff), Respondent,
v.
ST. LOUIS PUBLIC SERVICE COMPANY, a Corporation (Defendant), Appellant.
No. 30396.
St. Louis Court of Appeals, Missouri.
April 19, 1960.
*380 Robert E. Wieland, St. Louis, for appellant.
Louis Gilden, St. Louis, for respondent
WOLFE, Presiding Judge.
This is an action for damages arising out of personal injuries. The plaintiff claimed to have been injured when his automobile was struck in the rear by a street car owned and operated by the defendant corporation. There was a verdict and judgment for the plaintiff in the sum of $3,500. The defendant has appealed.
Plaintiff Kagan was a drug salesman. He had been so employed by a drug company up to the last of June, 1958, when he severed his connections with this company, and was to start to work for another drug company on August 24, 1958. The reason for the lapse of time between the severance of his employment with one company and his start with the other was that he was going on a two weeks' tour of active duty with the National Guard in August.
On August 5, which was the day before he was to leave for the encampment, he was driving his automobile eastwardly on Olive Street in the City of St. Louis. When he reached the intersection of Olive Street and Compton Avenue, he was obliged to stop for a red traffic light. He had been stopped for about fifteen to twenty seconds when his automobile was struck in the rear by a street car. The force of the impact sent his car forward 25 to 30 feet.
After the collision he talked briefly to a man who had witnessed the collision, and was in the process of writing down the number of the street car when the operator of the car came over to him. This was about four or five minutes after the collision. Over the objection of the defendant the plaintiff was permitted to testify that the operator of the car said, "that he was very sorry, but that his brakes just hadn't held."
*381 The witness who saw the collision testified that he saw the motorman standing up trying to stop the car, and the operator in the defendant's case stated that the wheels locked and that the brakes slid upon the rails.
As a result of the collision plaintiff was thrown forward. He said that he struck his head on the steering wheel. He claimed, and presented medical testimony to the effect, that he suffered a "whiplash" injury to the neck area of the spine. He also claimed difficulty in bending over. He said that he had an occasional eye twitch that bothered him, and a duodenal ulcer which was attributed to the accident by a medical witness. There was evidence on behalf of the defendant by an examining physician. He stated that he found no objective symptoms to account for the plaintiff's complaints.
The first point raised is that the court erred in permitting the plaintiff to testify about the statement made by the operator of the street car, after the collision. It is true that the admission of an agent or employee, unless within the scope of his authority, may not be received as evidence against the employer. Such statements are barred from consideration because of the hearsay rule. Roush v. Alkire Truck Lines, Mo.Sup, 299 S.W.2d 518. An exception to this is found where the admissions are part of the res gestae.
In considering whether or not a statement is admissible under such circumstances, there is a presumption that it is not because it is hearsay. This casts upon the party offering the statement the burden of proving that it comes within the exception to the hearsay rule in that it is part of the res gestae. Woods v. Southern Railway Co, Mo.Sup, 73 S.W.2d 374. There must be a showing that the statement offered was an instinctive and spontaneous utterance so closely associated with the occurrence as to have been evoked by it. We need not elaborate further upon the matter, for the entire subject of the admissibility of a statement such as the one before us, with facts almost identical to those being here considered, was passed upon by the Supreme Court in Wren v. St. Louis Public Service Co, 333 S.W.2d 92. The court there held that the statement was not admissible, and the opinion contains a very lucid and comprehensive discussion of the subject.
Although the court erred in admitting the statement, we do not see how it could be held prejudicial since the operator later testified that his wheels locked and the brakes slid upon the rails.
The second point raised is that Instruction No. 8 given at the request of the plaintiff is erroneous. It is asserted that the instruction, which is on the measure of damages, permitted the jury to consider the loss of future earnings, and that there was no evidence to support this. The next contention is that the instruction allows an overlapping award of damages. The instruction is as follows:
"The Court instructs the jury that if under the evidence and other instructions given you in this case, you find in favor of the plaintiff, Earl Kagan, then in awarding him damages, you should, allow him such an amount of money as you may find and believe from the evidence will reasonably compensate him, and in arriving at such damages, you may consider:
"1. The injuries, if any, that you find and believe from the evidence that the plaintiff sustained on the occasion in question as a direct result of the street-car striking the plaintiff's automobile, if you so find.
"2. The pain of body and anguish of mind, if any, which the plaintiff has suffered by reason of such injuries, if any, and directly caused thereby.
"3. The pain of body, if any, and the anguish of mind, if any, which you *382 find and believe from the evidence the plaintiff is reasonably certain to suffer in the future by reason of and on account of such injuries, if any, and directly caused thereby.
"4. The extent to which, if any, plaintiff's earning power and ability to work will be impaired as a direct result of such injuries, if any.
"5. Any distinct permanent injury which you find and believe from the evidence that the plaintiff has suffered."
The appellant directs our attention to paragraph 4 of the above instruction and states there was no evidence from which the jury could determine the extent to which plaintiff's earning power had been impaired, for there was no evidence of the amount that the plaintiff earned before or after the accident. The respondent conversely maintains that there was substantial evidence in support of the instruction. He states that there was evidence that his occupation as a drug salesman prior to the accident required him to travel from 2,500 to 3,500 miles a month by automobile. He states that there was evidence that thereafter he could not drive to the far points of his territory. He also directs our attention to the eye twitch and some trouble in bending over, of which there was evidence. The respondent cites us to Donahoo v. Illinois Terminal Railroad Company, Mo. Sup, 300 S.W.2d 461; Rauch v. McDonnell Aircraft Corporation, Mo.App, 303 S.W.2d 226; and Hill v. Landau, Mo.App, 125 S.W.2d 516.
The case of Donahoo v. Illinois Terminal deals only with an impairment of the plaintiff's ability to work; Rauch v. McDonnell Aircraft Corporation did not deal with an instruction submitting any issue of impaired earning capacity; and Hill v. Landau specifically states that the instruction complained of did not submit a loss of future earnings. These cases therefore do not support the respondent. The law as pronounced by the Supreme
Court and this Court is that in order to recover for the loss of earning capacity, there must be evidence, not only of an impaired ability to work, but also evidence of a pecuniary loss occasioned by it. Without some evidence of what the plaintiff earned and the extent to which this amount would be reduced in the future, there is no way that a jury could arrive at an estimate of any future loss of earnings. Seymour v. House, Mo.Sup, 305 S.W.2d 1; Honeycutt v. Wabash Railroad Company, Mo.App, 313 S.W.2d 214. Since there was no evidence of the amount that the plaintiff earned at any time or might in the future earn, the instruction should not have been given, and the court erred in so doing.
As stated, it is also contended that the instruction permitted the jury to award overlapping damages. It does not appear to be susceptible to this construction in that it merely directs the plaintiff to take into consideration the various matters listed in arriving at the amount of their verdict. A comprehensive review of the law relating to such instructions is contained in Kelly v. Kansas City Public Service Co, Mo, 335 S.W.2d 159.
As to another point raised, counsel for the plaintiff had said in his opening statement that the plaintiff had two children, and upon objection the court admonished the jury to disregard the statement. Despite this, counsel elicited from the plaintiff when the plaintiff was testifying a statement that he had two children. Again the court sustained an objection and directed the jury to disregard the evidence. Counsel for the defendant requested a mistrial, and the request was denied. It is asserted that a denial of a mistrial was erroneous. Inasmuch as we are reversing and remanding the case upon the instruction given, and the matter is not likely to occur upon retrial, we need not pass upon this.
Nor will we consider the question of whether or not the verdict is excessive, *383 which is another point raised. Since the case must be retried and a new verdict reached, a determination of this point would serve no useful purpose.
Because of the errors noted, the judgment is reversed and the cause remanded.
ANDERSON and RUDDY, JJ, concurring.
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334 S.W.2d 458 (1960)
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant,
v.
Clay WALKER et al., Appellees.
No. 16090.
Court of Civil Appeals of Texas, Fort Worth.
March 25, 1960.
Rehearing Denied April 22, 1960.
*459 Leachman, Gardere, Akin & Porter, and Gordon H. Rowe, Jr., Dallas, for appellant.
Mike E. Powell and Max E. Clark, Fort Worth, for appellee Clay Walker.
Crowley, Wright, Miller & Garrett and George A. Crowley, Fort Worth, for appellee International Service Ins. Co.
MASSEY, Chief Justice.
This case involves and is to be resolved through the construction of one of the "standard forms" of insurance policies promulgated by the Board of Insurance Commissioners of Texas pursuant to provisions of law.
Trial in the lower court was upon the law only, and was a hearing of motions for summary judgment, pursuant to which summary judgment was entered for one movant and in denial of the motion of another. This proceeding followed antecedent transactions, including litigation, as result of which all matters relative to damages were resolved, and the damages sustained with which we are concerned became liquidated damages, the primary liability for the payment thereof being established as a matter of law.
*460 Briefly, the facts by which primary liability has been established are as follows: Under and by virtue of contract, a Miss Viola or Vicki Lafoon roomed and boarded with the Forrest family. She was not a relative. A thirteen year old boy, hereinafter termed young Forrest, was a member of this family. Miss Lafoon owned an automobile which she kept at the Forrest home, and by a policy issued by the International Service Insurance Company this automobile was covered for liability (including property damage) and $50 deductible collision. The Forrest family owned and kept another automobile, and by a policy issued by the State Farm Mutual Automobile Insurance Company, said automobile was covered for liability. Both insurance policies were what is known as the "Family Automobile Policy", a "standard form" Texas policy. Without the knowledge or consent of any one, young Forrest secured the keys to the Lafoon automobile during Miss Lafoon's absence and used it in a "joy ride" around the neighborhood. During the course of this "joy ride" young Forrest negligently caused and permitted the Lafoon automobile to come into collision with a parked automobile belonging to Clay Walker. Damage was done to both vehicles, and legal damages were sustained by the owners of both vehicles. As previously noted, the liability of young Forrest is established. The amount which he has become legally obligated to pay to Mr. Walker is fixed and certain. The same is true as to the amount he is legally obligated to pay to Miss Lafoon. By subrogation and/or assignment from Miss Lafoon, the International Service Insurance Company has become the legal and equitable owner of her rights against young Forrest, but we believe that the situation may be more readily kept in mind if we generally disregard the fact that there has been such a transfer, and view the claim as though it were still Miss Lafoon's.
The construction necessary is of those parts of the "standard form" Family Automobile Policy, denominated "Part ILiability" and "Part IIIPhysical Damage", pertinent to the determination of whether one only or both the aforementioned policies afford coverage as applied to Walker's damages, and, if by only one of such policies, which it is. Further, whether either or both of the policies afford coverage as applied to Miss Lafoon's damages, and if so the supplementary questions which come into existence in the event coverage is afforded.
Most material in the construction is the determination of language of the "standard form" defining an "insured" for purposes of "Liability" coverage and for purposes of "Physical Damage" coverage, in instances, (1) where an automobile identified and described by the policy is involved in collision resulting in damage to third parties, (2) where an automobile not described or identified in the policy (a nonowned automobile) is involved in collision resulting in damage to third parties, and (3) in like instances as to non-owned automobiles as applied to "Physical Damage" occasioned thereto as incident to such collision resulting in damage to third parties.
Pertinent provisions of the "standard form" with which we are concerned, under "Part ILiability", read as follows:
"Persons Insured. The following are insureds under Part I:
"(a) With respect to the owned automobile,
"(1) the named insured and any resident of the same household, (emphasis supplied).
"(2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured;
"(b) with respect to a non-owned automobile,
"(1) the named insured,
"(2) any relative, but only with respect to a private passenger automobile or trailer not regularly furnished for the use of such relative;
*461 "* * * * * *
"Other Insurance. If the insured has other insurance against the loss covered by Part I 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 insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance."
Pertinent provisions of the "standard form" with which we are concerned, under "Part IIIPhysical Damage", read as follows:
"Coverage ECollisionTo pay for loss caused by collision to the owned automobile or to a non-owned automobile but only for the amount of each such loss in excess of the deductible amount stated in the declarations as applicable hereto.
"* * * * *
"insured' means the named insured and (a) with respect to the owned automobile, any person or organization maintaining, using or having custody of said automobile with the permission of the named insured; (b) any relative (meaning relative of the named insured who is a resident of the same household), with respect to a non-owned automobile not regularly furnished for his use;
"`non-owned automobile' means a private passenger automobile or trailer not owned by the named insured or any relative (meaning relative of the named insured who is a resident of the same household), other than a temporary substitute automobile, while said automobile or trailer is in the possession or custody of the insured or is being operated by him;
"* * * * * *
"Other InsuranceIf the insured has other insurance against a loss covered by Part III 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 of this policy bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance." (Emphases supplied.)
We will first confine ourselves to the construction requisite to determination of insurance coverage as applied to Clay Walker's damages, sustained when young Forrest ran the Lafoon automobile into and against the Walker automobile. In examining the "standard form" Family Automobile Policy, no part thereof other than "Part ILiability" is necessary of consideration in this determination. It may readily be observed that the Forrest policy afforded liability protection to young Forrest in his negligent operation of the Lafoon automobile, despite the circumstances under which he happened to be operating the same. This is so because with respect to the non-owned automobile belonging to Miss Lafoon young Forrest was a "relative" of the named insured in the Forrest policy. The policy was that issued by the State Farm Mutual Automobile Insurance Company.
However State Farm contends that its policy (which named Mrs. Forrest as the insured and described her automobile as the automobile owned) would be "excess" insurance under the provisions of the "Other Insurance" clause of "Part ILiability", because primary "valid and collectible" liability coverage was afforded by International in the Lafoon policy, which described the automobile owned, and provided that an operator thereof would have liability coverage under its policy while it was used by "any resident of the same household" as its named insured, Miss Lafoon. Alternatively, it is contended that if the coverage of the State Farm policy (the Forrest policy) should not be considered as "excess", then the provisions regarding "proportion" in the "Other Insurance" clause would have *462 application and both companies should pay the whole of Mr. Walker's damages through a contribution by each in its proper proportion.
Basis for State Farm's contentions in either event lies in the provision that as to an "owned automobile", specifically Miss Lafoon's, her policy contract with International provided that "any resident of the same household" as Miss Lafoon was an "insured".
There is ambiguity which must be resolved. In a policy contract of some analogy, this Court reached the conclusion that similar use of the term "household" connoted a "family", or group of persons who habitually reside under one roof and form one domestic circle. Travelers Indemnity Co. v. American Indemnity Co., Tex.Civ.App., Fort Worth, 1958, 315 S.W.2d 677, and cases cited. We know of no specific case where the term "resident", as applied to the phrase "resident of a household" has been construed in any contract, regulation or statute, particularly as incident to any insurance matter. As may be noted from the many cases defining "resident" in 37 Words and Phrases, such term means one thing for some purposes and a different thing for others, though usually denominative of citizenship, etc., as of a State, county, municipality, or other governmental subdivision. In the use by which the term is made in any "standard form" policy of insurance, its importance lies in the result designed to be accomplished by its use.
Action taken from time to time by the Insurance Commission in amending or revising the various "standard forms" prescribed by it in obedience to and under authority of V.A.T.S. Insurance Code, Art. 5.06, "Policy Forms and Endorsements", is intended to be remedial in character, and in the ordinary instance seeks to accomplish some result by each revision or change in a "standard form". It is contended that since the Lafoon policy is a "standard form" prescribed by the Insurance Commission, the old rule (to the effect that construction will be against the company and liberally in favor of the policy holder, or in supplying insurance benefits) has become obsolete, and should not be applied. Such new theory is quoted from language in Appellant, Insurance Law and Practice, Vol. 13, p. 111, sec. 7407. The case of Glens Falls Ins. Co. v. McCown, 1951, 149 Tex. 587, 236 S.W.2d 108, is cited by counsel along with the claim that its holding is in accord with the language quoted from Appellant. We are of the opinion that there is some question as to whether the holding of the case is subject to this interpretation.
However, that need not be decided by us, for under general rules of construction it is said that there should be a fair and reasonable construction of the language of a policy, rather than a strained, unnatural or technical interpretation, and the interpretation should not necessarily be literal. 24-B Tex.Jur., p. 95, "Insurance", sec. 28, "Rules of Reasonable Construction." We have already mentioned previous construction of the term "household" in a case of some analogy here. A rather unreasonable and ridiculous result would flow from any attempt to ascribe to the term "household" in the phrase under consideration the meaning of a building or structure, or to ascribe to the term "resident" a meaning which would embrace any and all persons who sleep within and take meals at such structure. To do so would mean that any thief who might reside in the same hotel as an automobile owner would become insured by the owner's policy if he stole the automobile and unlawfully it to his own use. One may visualize other circumstances possible to be hypothesized which present as unreasonable a result as that mentioned.
We believe that the term "household" should receive the construction we gave it in the case of Travelers Indemnity Co. v. American Indemnity Co., supra [315 S.W.2d 680], and that the term "resident" should be construed to mean "member", or *463 "member of the same family". As applied to a "family", a person is either a member of it or is not a member of it, for it is a personal relationship. It would not be possible to be a "resident" of a family. It is possible to reside in or be a "resident" "in a house", but not "of a house". One may be a "member" of a family or organization or group, but not of a building or of anything inanimate.
As applied to Miss Lafoon, the question is, therefore, whether she was a member of the Forrest family at the time young Forrest took her automobile and wrecked it and the Walker automobile. Of course, circumstances might be hypothesized which would make the question one of fact for determination by a jury, or other finder of fact. All parties to the appeal seemingly concede that there is no question of fact and that under the undisputed facts the question is one of law only. We concur. From our discussion, it follows that as of the time of the occurrence Miss Lafoon was not a "member of the same family" as that of young Forrest, and, as applied to the phrase of the policy, was not a "resident of the same household" as that individual. Young Forrest was therefore not an "insured" under the Lafoon policy, and the only policy under which liability insurance was afforded in respect to the damages sustained by Mr. Walker was the Forrest policy, issued by State Farm. This was the conclusion of the trial court and judgment entered properly established liability for the payment of Mr. Walker's damages upon the State Farm Mutual Automobile Insurance Company.
Construction as above conforms to analysis to be found in the Insurance Law Journal, April 1957, No. 411, p. 199, entitled "Standard Family Automobile Policy", by Norman E. Risjord and June M. Austin.
In view of conclusions aforesaid, the second question is reached. That question is whether State Farm is also liable, under "Part ILiability", for the damages done to Miss Lafoon's automobile. As previously noticed, young Forrest is liable for these damages and such is established by a judgment. It is evident that he cannot pay such damages, at least at this time, and they will not be paid (as damages) unless State Farm is obligated to make such payment under and by reason of provisions of the same policy of insurance which we have held applicable to Mr. Walker's damages.
The trial court was of the opinion that such damages were covered by the policy, in that the State Farm was obliged to pay off and extinguish the liability of its insured, young Forrest. Judgment was entered accordingly. We do not agree, and are of the opinion that the judgment, as entered in this respect, should be reversed.
The objectives of liability insurance and physical damage insurance (including collision) are readily distinguishable and the protection afforded by either form of coverage is wholly unrelated to the other.
It is to be noted from the language quoted by us out of "Part IIIPhysical Damage" that young Forrest could not have been an "insured" under the Lafoon coverage of "$50.00 Deductible Collision" insurance, for it was Miss Lafoon's "owned automobile" which was damaged. Young Forrest could not have been an "insured" under the Forrest policyas applied to collision damage done to the non-owned Lafoon automobilebecause no collision insurance was afforded by such policy. Even had the Forrest policy afforded "$50.00 Deductible Collision" insurance, making young Forrest an "insured" (as a relative residing with his mother, the "named insured") under "Part IIIPhysical Damage" as applied to the non-owned Lafoon automobile, and furthermore making such automobile an insured vehicle under said "Physical Damage" section, the insurer under such policy would nevertheless not have been obligated thereunder. Such would be the case because under the "Other Insurance" clause such coverage would have been "excess insurance". It has been already noticed *464 that the primary insurance afforded to Miss Lafoon under her own policy with International was for $50.00 Deductible Collision", and it was valid and collectible.
There is substantial authority for refusing to ascribe any coverage of the damage done to the Lafoon automobile under "Part ILiability" of the Forrest policy. In the case of Glens Falls Ins. Co. v. McCown, supra, our Supreme Court had a case before it which posed a question analogous to that presented here. We have indicated that in the instant situation the coverage of the Forrest policy could have been broadened by payment of additional premium so that an available protective element would have been thereunder afforded, i. e., collision insurance on non-owned automobiles (as well as the owned automobile) while being driven by a relative who resided in the same household as Mrs. Forrest, albeit such would be "excess insurance" as applied to such of said automobiles as were covered by other valid and collectible collision insurance. The purchaser of the policy chose not to pay the premium. In the circumstances considered in the Glens Falls case, the purchaser of a "standard form" policy acted in like manner. There, as here, a loss was sustained under circumstances which would have been covered had the policy which was secured been broadened by the payment of additional premium, and the contention was made that since under the long established rules of construction insurance contracts should be construed liberally in favor of the insured and so as to afford coverage, the judgment should decree liability since there existed language (under certain clauses of the policy which had become effective as the result of premium payments made), susceptible of a construction that coverage existed. The Supreme Court held that where the "standard form" fully disclosed all the coverages offered, it was proper to consider those rejected along with those accepted in determining the respective obligations and rights of the parties. It then proceeded to apply the rule to the circumstances of the case and held that "Since respondent did not accept and pay for Coverage F, he `expressly failed to cover the very damage sued for' and cannot recover." [149 Tex. 587, 236 S.W.2d 111.] Coverage F. of the policy under consideration by the Supreme Court, would unquestionably have covered the loss sustained, and it would only have been by application of the "rule of construction" herein above mentioned that liability under other clauses of the policy could be said to have covered the loss sustained.
Applying the reasoning of the Supreme Court to the circumstances of the instant case, we believe that we would only hold that since the purchaser of the Forrest policy did not accept and pay for collision insurance she "expressly failed to cover the very damage sued for" and cannot recover. The rights involved in the litigation between the parties are all derivative of and from such rights under the Forrest policy as was held by an "insured" contemplated to be covered. Since young Forrest had no rights under the policy (as applied to the Lafoon damage), neither did Miss Lafoon, nor the Insurance Company succeeding to such rights, if any, Miss Lafoon ever held.
It might be noted that we are convinced that neither the Commission nor any insurance company ever contemplated that damage such as that suffered by Miss Lafoon would ever be payable under liability insurance carried by the person driving the automobile at the time it was damaged. This character of loss has always been considered to be covered under the coverage known as collision insurance.
Judgment in favor of Clay Walker against State Farm Mutual Automobile Insurance Company is affirmed. Judgment in favor of International Service Insurance Company (on action subrogated and assigned from Miss Lafoon) and against State Farm Mutual Automobile Insurance Company is reversed and rendered.
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334 S.W.2d 386 (1960)
STATE of Missouri (Plaintiff), Respondent,
v.
Ben MUCHNICK (Defendant), Appellant.
No. 30352.
St. Louis Court of Appeals, Missouri.
April 19, 1960.
*387 *388 Cecil Block, Merle L. Silverstein, St. Louis, for appellant.
William J. Geekie, Pros. Atty., Sidney Faber, Asst. Pros. Atty, St. Louis, for respondent.
RUDDY, Judge.
Defendant was found guilty by a jury of permitting a person under the age of twenty-one years to assist in the sale of intoxicating liquor and his punishment was assessed at a fine of $550.00. In accordance with the verdict of the jury defendant was sentenced to pay said fine and he appeals.
Defendant's first point presents the contention that the Information does not state any facts which constitute a crime under the laws of the State of Missouri. In support of this contention he asserts that the statute involved provides that no person under the age of twenty-one years shall assist in the sale of intoxicating beverages and that defendant is charged only with "permitting" a minor to assist in such sale which is not prohibited by statute or common law.
The Information under which defendant was tried and found guilty [omitting recitals], reads as follows:
"That Ben Muchnick in the City of St. Louis, on the 3rd day of August, 1958 being then and there licensed by the Supervisor of Liquor Control for the State of Missouri to sell intoxicating liquor in the original package at and upon the premises located at 1000 N. Sarah Street, in said city and state, did then and there unlawfully permit Gilbert D. Brown, fifteen years of age, to assist in the sale and dispensation of intoxicating liquor contrary to the form of the Statute in such case made and provided, and against the peace and dignity of the State."
The only statute applicable to the charge contained in the aforesaid Information is Section 311.300 RSMo 1949, V.A.M.S. which reads as follows:
"No person under the age of twentyone years shall sell or assist in the sale or dispensing of intoxicating liquor."
A violation of this statute is a misdemeanor. All who participate in the commission of a misdemeanor are principals. There are no accessories in misdemeanors, either before or after the fact, and all persons concerned therein are to be treated as principals. State of Missouri v. Weston, Mo.App, 275 S.W.2d 601; State of Missouri v. Sargent, 241 Mo.App. 1085, 256 S.W.2d 265; 22 CJ.S. Criminal Law § 81b, pp. 145, 146.
The aforesaid statute refers only to persons under twenty-one years of age and prohibits such persons from selling or assisting in the sale or dispensing of ii toxicating liquor. The only other person capable of being charged with a violation of this statute would have to be one wha aids, abets, assists or encourages a minor in the sale or dispensation of intoxicating liquor.
Aiding or abetting, in the sense that those words are used in criminal law, contemplate conduct calculated to incite, encourage or assist in the perpetration of a crime. These words comprehend all assistance rendered by acts or words of encouragement, incitement or support in the* criminal act and involve some participation, either before or at the time the criminal act is committed. It implies some conduct of an affirmative nature. 22 CJ.S. Criminal Law § 88b, pp. 158, 159.
In the case of State v. Orrick, 106 Mo. Ill, 17 S.W. 176, loc. cit. 178, the court, in *389 discussing the meaning of "aiding and abetting" said: "Mere consent to a crime, when no aid is given, and no encouragement rendered, does not amount to a participation." In the Orrick case the court also held that in order to hold one as an aider and abettor the evidence must tend to prove "that he did some act in aid of his principal in the commission of the felony, or his presence gave encouragement to its perpetration." 17 S.W. loc. cit. 178.
In the case of State v. Bresse, 326 Mo. 885, 33 S.W.2d 919, loc. cit. 921, the court approved an instruction which told the jury, "that every person who is present at the commission of a felony, aiding, abetting, assisting or encouraging the same by words or gestures, looks or signs is in law deemed an aider and abettor and is liable as a principal."
In order to aid and abet in the commission of a crime it is necessary that a defendant in some way associate himself with the principal in bringing about the commission of the crime. Mere negative acquiescence is not sufficient. 22 C.J.S. Criminal Law § 88b, p. 159.
"`A mere presence, or presence combined with a refusal to interfere or with concealing the fact, or a mere knowledge that a crime is about to be committed, or a mental approbation of what is done while the will contributes nothing to the doing, will not create guilt.' Bishop Criminal Law, 9th Ed. Vol. 1, sec. 633. State v. Bresse, 326 Mo. 885, 33 S.W.2d 919; State v. Odbur, 317 Mo. 372, 295 S.W. 734." State v. Mathis, Mo.App, 129 S.W.2d 20, loc. cit. 22.
The Information in the instant case alleges that defendant did "unlawfully permit Gilbert D. Brown, fifteen years of age, to assist in the sale and dispensation of intoxicating liquor * * *." Merely alleging that defendant "did unlawfully permit" the minor to assist in the sale and dispensation of intoxicating liquor is insufficient to charge that defendant aided, abetted or took any affirmative action to assist the minor in the unlawful act. The use of the word "permit" fails to clearly charge that defendant participated in some way in the doing of the prohibited act by the minor. The Information wholly fails to disclose the character of the permission alleged, whether defendant actively encouraged the minor or whether defendant's permission consisted of mere passiveness or non-interference with the minor's act. The Information fails to show whether the minor was an employee under the control of defendant or under what circumstances the minor was present when the prohibited act took place.
In the case of In re Thomas, D.C, 103 F. 272, loc. cit. 274, the court, in considering the meaning of the word permit, said: "`To permit' is defined as not to hinder. Webster defines `permit' as more negative than `allow'; that it imports only acquiescence or an abstinence from prevention, while `suffer' he defines as having an even stronger passive and negative sense than permit, and as implying sometimes mere indifference. It would seem, therefore, that to permit or suffer implies no affirmative act,involves no intent. It is mere passivity, indifference, abstaining from preventive action."
The case of Wittenberg v. Board of Liquor Control, Ohio App, 80 N.E.2d 711, loc. cit. 716, was a proceeding to revoke a liquor permit. In considering a charge that the proprietor of a hotel in which he maintained a night club, operated under a permit issued by the Department of Liquor Control, permitted the rooms of the hotel to be used in a lewd and lascivious manner, the court said:
"In Dorris v. McKamy, 40 Cal. App. 267, 180 P. 645, 646, the court had under consideration an allegation that the marshal `permitted' prostitutes to occupy certain buildings. The Court held that as charged, ` "permit" involved] no intent, but implfied] mere passivity and abstinence from preventive *390 action'. At page 649 of 180 P. the writer of the opinion says: `The word "permit" is a word of considerable elasticity; it lacks clear-cut and precise definiteness. As defined by Webster and others, "permit" implies no affirmative act. It involves no intent. It is mere passivity, abstaining from preventive action.' Citing In re Thomas, D.C. 103 F. 272, 274."
To the same effect see Evans v. United States Fidelity & Guaranty Co, 195 Mo. App. 438, 192 S.W. 112, loc. cit. 115.
The sufficiency of the Information in the case before us depends on the meaning of the word "permit." As we have shown, it implies no affirmative act, necessary to hold one as aider and abettor and of more importance to our consideration, it involves no intent to commit a crime. Intent to aid and abet the minor in the commission of the offense is an essential element of the charge.
We are aware that the same nicety is not required in drawing Informations in cases of misdemeanors as is required in charging common law felonies. State v. Maurer, 255 Mo. 152, 164 S.W. 551, and State v. Granger, Mo.App, 199 S.W.2d 896. However, the Information should state, with reasonable certainty, facts which constitute the offense. The defendant should not have to guess the nature of the charge against him or speculate as to the meaning of the allegations in the Information, and this is true in prosecutions for misdemeanors as well as for felonies. State v. Maher, 232 Mo.App. 998, 124 S.W.2d 679; City of St. Louis v. Wyatt, Mo. App, 189 S.W.2d 129.
An additional reason exists why the Information should state the facts with reasonable certainty and leave nothing to speculation or guess, and it is, that the basis for the charge against the defendant in the "3,se is of purely statutory origin and the charge contained in Section 311.300
RSMo 1949, V.A.M.S, was unknown to the common law. State v. Shortell, 174 Mo.App. 153, 156 S.W. 988.
We are in full accord with the efforts of the responsible enforcement authorities in the strict enforcement of § 311.300. Nevertheless, we cannot lose sight of the fact we are dealing with a criminal statute. There is a total failure to allege an offense under the statute. The St. Louis Court of Criminal Correction was without jurisdiction to entertain a prosecution under this Information. The judgment of said court is reversed and defendant is discharged.
WOLFE, P. J, and ANDERSON, J, concur.
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334 S.W.2d 182 (1960)
S. B. BARKER, Appellant,
v.
STATE of Texas, Appellee.
No. 31805.
Court of Criminal Appeals of Texas.
April 6, 1960.
*183 Sanders & Stanford, by C. L. Stanford, Canton, for appellant.
Ralph Prince, Dist. Atty., Longview, and Leon B. Douglas, State's Atty., Austin, for the State.
WOODLEY, Judge.
The offense is operating a motor vehicle upon a public road while intoxicated, second offense; the punishment, 5 months in jail and a fine of $100.
Highway Patrolman Durrough testified that appellant "was driving all over the road and running cars off the road" when he observed the car, pursued and stopped it and, after observing appellant and concluding that he was intoxicated, placed him in the patrol car and took him to the Gladewater Police Station.
Patrolman Durrough testified that at his request, and in his presence, a blood specimen was taken from appellant by a nurse at the Leake Hospital in Gladewater.
The blood was placed in a container prepared for the purpose and mailed to the laboratory of the Texas Department of Public Safety in Dallas.
George E. Browne, chemist and toxicologist, testified that he examined the contents of the container and found that the blood "contained an alcoholic content of zero point two seven (0.27), that's milligrams per cubic centimeter of blood."
Having testified to his experience and training and his qualifications in regard to the matter, the witness Browne testified that all persons are intoxicated when the alcoholic content of their blood reaches the level of zero point one five (0.15), and that in his opinion the person from whom the specimen was taken was intoxicated.
Appellant was identified as the person tried in the misdemeanor conviction alleged in the indictment, and certified copies of the judgment, complaint and information were introduced.
Appellant did not testify and no evidence was offered in his behalf on the question of his state of sobriety at the time of his arrest.
Reversal is sought upon two grounds.
He first complains that his motion to quash the indictment should have been sustained, the ground being that the misdemeanor conviction pleaded therein could not be used for the reason that the original judgment signed by the judge who presided at the trial provided for a probated jail term.
The certified copy of the judgment introduced by the state was regular in form and showed a conviction in the County Court with punishment assessed at 3 days in jail and a fine of $50.
Appellant called the clerk of said County Court, and proved by him that the judgment signed for entry by the County Judge contained an additional paragraph ordering that the three days confinement in jail be "commuted to a probation period of 6 months as provided by Art. 802 of the *184 Penal Code" and that upon payment of the fine and costs the defendant should be released from custody. The judgment containing this provision was offered in evidence.
Appellant relies upon Gilderbloom v. State, 160 Tex. Crim. 471, 272 S.W.2d 106, holding that the provision of the statute authorizing probation of the jail term was unconstitutional and inoperative, and argues that in the absence of a nunc pro tunc entry of a proper judgment, the prior misdemeanor judgment is not final, and not available as a first conviction in a prosecution under Art. 802b Vernon's Ann.P.C.
The holdings of this Court are to the contrary.
In Ex parte King, 156 Tex. Crim. 231, 240 S.W.2d 777, we held that a judgment or sentence containing an irregularity which may be reformed on appeal or by nunc pro tunc entry is not void, and may not be collaterally attacked.
In Lenore v. State, 137 Tex. Crim. 417, 129 S.W.2d 657, it was held that a prior judgment providing for a fine of $25 when the minimum punishment provided by law was a $100 fine was erroneous, but not void, and was available for enhancement of punishment in a prosecution for a subsequent offense.
The second ground for reversal is predicated upon the contention that the evidence relating to the taking of the blood test and its analysis was inadmissible, and that it was not necessary for appellant to object to such testimony. Reliance is had upon the majority holding in Trammell v. State, 162 Tex. Crim. 543, 287 S.W.2d 487.
In the Trammell case, the blood was taken at the hospital at a time when Trammell was, according to his testimony, unconscious and the State failed to show that the specimen was taken with his consent.
When Dr. Mason was asked about the analysis of Trammell's blood, objection was made that it had not been shown that Trammell consented to the taking of his blood, or that the blood was taken for the purpose of treatment.
The testimony as to the results of the test in the case at bar was admitted without any objection that the test was taken without the consent of the accused and therefore Trammell v. State is not controlling.
The judgment is affirmed.
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853 F. Supp. 104 (1994)
PFIZER INC., Plaintiff,
v.
ACETO CORPORATION, F & S Alloys and Minerals Corporation, Anhui Hefei Flavour Factory and ABC Corporation, Defendants.
No. 93 Civ. 7160(MEL).
United States District Court, S.D. New York.
May 20, 1994.
Hopgood, Calimafde, Kalil & Judlowe, New York City, for plaintiff; Stephen B. *105 Judlowe, Dennis J. Mondolino, Richard E. Parke, of counsel.
Darby & Darby, New York City, for Defendant F & S Alloys and Minerals Corp.; David R. Francescani, Joseph R. Robinson, of counsel.
Ostrager, Chong & Flaherty, P.C., New York City, for defendant Anhui Hefei Flavour Factory; Glenn F. Ostrager, Dara L. Onofrio, of counsel.
LASKER, District Judge.
Pfizer Inc. sues Anhui Hefei Flavour Factory ("Anhui") and F & S Alloys and Minerals Corporation ("F & S") for patent infringement in violation of 35 U.S.C. § 271(g) (1994).
Anhui is a foreign manufacturer located and doing business in the People's Republic of China. It manufactures a flavor enhancer, known as maltol, by a process which Pfizer alleges is in violation of its patent. It is undisputed that Anhui does not itself import the maltol into the United States. Anhui sells the maltol in China to another Chinese corporation known as Sinochem, which in turn sells to F & S, a Delaware corporation that imports the maltol into the United States.
Anhui moves to dismiss the patent claim against it for failure to state a claim on the ground that 35 U.S.C. § 271(g) does not apply to a foreign manufacturer who does not itself import the allegedly infringing product into the United States. Pfizer argues that § 271(g) was enacted to target, among others, a foreign manufacturer such as Anhui.
35 U.S.C. § 271(g) states in relevant part:
Whoever without authority imports into the United States or sells or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, sale, or use of the product occurs during the term of such process patent.
Prior to the enactment of § 271(g), a process patent holder had a remedy under the patent laws only if the unauthorized use of the its patented process occurred within the United States. A process patent holder had no remedy against a foreign company that manufactured goods using the patented process and subsequently imported the goods into the United States. Section 271(g) was enacted to provide such a remedy, in recognition of the fact that "[t]here is no logical reason to exclude from the ambit of patent infringement acts associated with the abuse of a United States process as long as they occur within the reach of United States domestic law." H.R.Rep. No. 60, 100th Cong., 1st Sess. 6 (1987) (emphasis added).
Section 271(g) was not intended, and indeed there is serious doubt whether Congress would have the authorityexcept perhaps by treatyto prevent the use of a U.S. patented process in another country. Thus, § 271(g) "will not give extraterritorial effect to U.S. law" and provides no remedy against foreign manufacturers whose infringing acts do not occur within the United States. S.Rep. No. 83, 100th Cong., 1st Sess. 48 (1987).
Pfizer contends that "Anhui is exactly the type of manufacturer Section 271(g) was designed to cover" because it manufactures its maltol products "with full knowledge of their importation and sale within the United States...." It urges a broad reading of the term "importer," as used in the statute, to include a foreign manufacturer who knowingly sells to an importer even though it does not itself import the product into the United States.
Pfizer's argument finds no support in the language of the statute, its legislative history or in the caselaw.
Section 271(g) states without qualification that "[w]hoever without authority imports into the United States or sells or uses within the United States a product which is made by a process patented in the United States" shall be liable for patent infringement. (Emphasis added.) Nothing in the language suggests that a foreign manufacturer, who does not import the product into the United States, may be liable simply because it can foresee that a buyer of its product may ultimately import it into the United States.
*106 The House and Senate reports accompanying the Process Patents Amendments Act of 1987 are replete with commentary specifying that "the offending act is the importation of a product made through the use of a protected process patent or its subsequent sale within the United States." H.R.Rep. No. 60, 100th Cong., 1st Sess. 6. "Liability exists ... only if the importation, sale or use of the product occurs in the United States during the term of such process patent." Id. at 13. Moreover, in remarks made on the floor of the Senate, Senator Frank Lautenberg of New Jersey summed up the purpose of the legislation thus: "While U.S. courts may not reach a foreign manufacturer that has no presence in the United States, the bill would allow a patent owner to enforce its patent in the U.S. courts against the importer or seller of the foreign manufacturer's product." Process Patent Amendments Act of 1987: Hearing on S. 568 Before the Subcomm. on Patents, Copyrights and Trademarks of the Senate Comm. on the Judiciary, 100th Cong., 1st Sess. 21 (1987).
The decisions cited by Pfizer do not provide support for its suggested reading of § 271(g). One involves a Japanese manufacturer who itself imported the infringing product into the United States, Allegheny Ludlum Corp. v. Nippon Steel Corp., 765 F. Supp. 224 (E.D.Pa.1991), another a domestic company that itself sold the infringing product in the United States, Shamrock Technologies Inc. v. Precision Micron Powders Inc., 1991 WL 335362 (E.D.N.Y.1991). The defendants in both cases fall squarely within the language of § 271(g) that whoever "imports" or "sells" the product "within the United States" shall be liable. Although Pfizer selectively quotes from Bristol-Myers Co. v. Erbamont Inc., 723 F. Supp. 1038, 1043 (D.Del.1989), that "Congress did not intend the term `importation' to turn upon extremely intricate concepts of title and sales contracts," the Erbamont opinion ultimately concluded that the terms "importation" and "import" in § 271(g) "are to have their plain ordinary meaning of bringing goods into the United States from another country." Id.
Because Anhui has not brought its product into the United States from China, it is not an "importer" within the meaning of § 271(g) and, accordingly, its motion to dismiss is granted. This disposition does not leave Pfizer without a remedy because F & S, the remaining defendant in this case and the actual importer of the maltol, is subject to liability under § 271(g) and Pfizer may secure full redress from F & S should infringment be established. Such a result is precisely in accordance with Congress' intent in enacting § 271(g) to hold an importer of an infringing product liable.
Anhui's motion to dismiss is granted. It is so ordered.
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853 F. Supp. 376 (1994)
Robert B. REICH, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
DAYTON TIRE, A DIVISION OF BRIDGESTONE/FIRESTONE, INC., Defendant.
No. CIV-94-556-L.
United States District Court, W.D. Oklahoma.
May 19, 1994.
*377 Sue Ann Wolff, Janice L. Holmes, U.S. Dept. of Labor, Office of the Sol., Washington, DC, for plaintiff.
Leonard Court, Crowe & Dunlevy, Oklahoma City, OK, Willis Goldsmith, Thomas Beck, Ellen D. Gregory, Michael F. Dolan, Jones Day Reavis & Pogue, Washington, DC, for defendant.
MEMORANDUM OPINION
LEONARD, District Judge.
Plaintiff, Robert B. Reich, Secretary of Labor, brings this action for injunctive relief pursuant to section 13 of the Occupational Safety and Health Act of 1970 ("Act"), which provides that:
The United States district courts shall have jurisdiction, upon petition of the Secretary, to restrain any conditions or practices in any place of employment which are such that a danger exists which could reasonably be expected to cause death or serious physical harm immediately or before the imminence of such danger can be eliminated through the enforcement procedures otherwise provided by this chapter.
29 U.S.C. § 662(a). Plaintiff seeks an order requiring defendant, Dayton Tire, "to train its covered employees in appropriate lockout procedures, to provide them with locks, and to require that the employees utilize those locks and procedures when servicing the equipment." Pretrial Brief of the Secretary of Labor on Motion for Preliminary Injunction at 5.
On May 11-13, 1994, this court conducted an evidentiary hearing on plaintiff's motion for preliminary injunction. Also on May 13, 1994, the court viewed the Dayton Tire plant.[1] This opinion constitutes the court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
BACKGROUND
Dayton Tire, which is a division of Bridgestone/Firestone, Inc., manufactures approximately 35,000 automobile tires per day at its plant in Oklahoma City, Oklahoma. The facility employs approximately 1,400 employees.
*378 In May 1993, the Occupational Safety and Health Administration ("OSHA") began an inspection of the Oklahoma City plant. Deposition of Carlos Reynolds at 8.[2] In conjunction with that inspection, OSHA compliance officers Faye Kearney and Carlos Reynolds visited the plant in June and July 1993. See Exhibit 122. During the July 1993 on-site inspections, compliance officers Kearney and Reynolds noted alleged violations of OSHA's lockout/tagout standard. See Exhibits 62-69. The lockout/tagout standard, which is codified at 29 C.F.R. § 1910.147, applies to "the servicing and maintenance of machines and equipment in which the unexpected energization or start up of the machines or equipment, or release of stored energy could cause injury to employees." 29 C.F.R. § 1910.147(a) (emphasis in original). With certain exceptions, the standard requires that equipment be turned off and energy sources be locked-out "to prevent unexpected energization, start-up or release of stored energy" during servicing and maintenance operations. 29 C.F.R. § 1910.147(a)(3)(i). In addition, the standard mandates that employees receive training regarding the purpose and function of lockout/tagout procedures. 29 C.F.R. § 1910.147(c)(7). While compliance officers Kearney and Reynolds noted violations of both the substantive and training sections of the regulations, they did not mention such violations at the October 25, 1993 closing conference. Nor did they at any time indicate to Dayton Tire officials that the employees were in imminent danger as a result of such violations.
On October 19, 1993, Robert Julian, a Dayton Tire employee, was seriously injured at the facility and later died as a result of those injuries. That same day, OSHA Area Director William W. White, Jr. was informed by a media representative that a possible fatality had occurred at the Dayton Tire plant. Mr. White therefore directed compliance officer George McCown and safety supervisor Hugh Terrell to investigate the circumstances of the accident. As a result of their investigation, the OSHA inspectors informed Dayton Tire that it was not in compliance with the lockout/tagout standard; neither inspector, however, indicated that such noncompliance placed the Dayton Tire employees in imminent danger.
Mr. McCown returned to the plant in November 1993 in response to an inspection referral from Ms. Kearney. In the referral, Ms. Kearney noted six areas of the Dayton Tire plant where possible lockout/tagout violations were occurring. Exhibit 61. The referral classified the violations as "serious" and described the hazards as:
Employees are exposed continuously to the risk of being caught up or crushed by machinery & equipment in the following locations:
a). Dept # 134Set Up/Tire Assembly Machines throughout Tirerooms including Dept # 174, 173, 130/TAM Size Changer
b). Dept # 133, Final Inspection/TUO Module Machine/Module Operator
c). Dept # 132, Curing/Curing Press Machine/Mold Changer & Bladder Changers
d). Dept # 112, Banbury/Banbury Mixer Machine/Belt Loader/Trucker
e). Dept # 124, Beadbuilding/Beadforming Machine/Beadwinder
f). Dept # 126, Tubing/BEI Extruder WSW Mills/BEI Extruder/WSW Mill Attendants
g). Dept # 132, Tire Curing/Radial Doper Machines/Doper Attendant
Id. In response to this referral, Mr. McCown inspected the plant in the latter part of November 1993. No formal closing conference was held at the conclusion of his on-site inspection, but Mr. McCown did inform Kelly Mattocks, Dayton Tire's Safety and Security Manager, that Dayton Tire was not in compliance with the lockout/tagout standard with respect to these areas. At no time, however, did Mr. McCown indicate to Ms. Mattocks or to any Dayton Tire employee *379 that the lockout/tagout violations placed the employees in imminent danger.
On April 18, 1994, Mr. White issued a 57 page citation to Dayton Tire seeking approximately $7.5 million in penalties for alleged violations of OSHA's lockout/tagout standard. Exhibit 28. At the same time, a "Notice of Alleged Imminent Danger (to Employer(s) and Employees)" was posted at Dayton Tire's Oklahoma City plant. Exhibit 27. This Notice reflected that
it is alleged that an imminent danger to employees exists in that A DANGER EXISTS WHICH COULD REASONABLY BE EXPECTED TO CAUSE DEATH OR SERIOUS PHYSICAL HARM IMMEDIATELY or before the imminence of such danger can be eliminated through the enforcement procedures otherwise provided by the Occupational Safety and Health Act of 1970....
Id. (emphasis in original). The Notice described the alleged imminent danger as:
Employees engaged in setting-up, adjusting, cleaning, unjamming, modifying, maintaining and servicing machinery and equipment are exposed to the unexpected energizing, start up or release of stored energy and could be injured or killed in the following locations:
1) Compounding & Mixing
2) Tubing
3) Bead Winding
4) Tire Assembly
5) Curing
6) Final Inspection[.]
Id.
By letter dated May 3, 1994, Dayton Tire filed its Notice of Contest to "all citations, citation items, abatement dates, abatement methods and proposed penalties" contained in the April 18, 1994 Citation and Notification of Penalty. Exhibit 29. By contesting the Citation, Dayton Tire is exercising its right to review of the Citation before the Occupational Safety and Health Review Commission ("Review Commission"), which is independent of the Department of Labor. 29 U.S.C. §§ 659(c), 661. It has been represented that adjudication of a contested citation before the Review Commission is a lengthy process, sometimes taking several years to conclude.
DISCUSSION
Normally, the party seeking a preliminary injunction must satisfy the following prerequisites:
(1) substantial likelihood that the movant will eventually prevail on the merits; (2) a showing that the movant will suffer irreparable injury unless the injunction issues; (3) proof that the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) a showing that the injunction, if issued, would not be adverse to the public interest.
Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir.1980). This case, however, differs from most injunction proceedings because the "merits" of the underlying dispute between the parties will not be decided in this forum. Rather, the issue of whether Dayton Tire has violated the lockout/tagout standard will be determined by an Administrative Law Judge ("ALJ") at the Review Commission. It will be the ALJ's task to determine if the lockout/tagout standard applies to certain operations performed by Dayton Tire employees; that issue is not before this court.
In this case, the four Lundgrin factors must be examined against the backdrop of the statutory requirement for issuance of an injunction. The court may issue an injunction only if it finds that conditions exist at the Dayton Tire plant that "are such that a danger exists which could reasonably be expected to cause death or serious physical harm immediately or before the imminence of such danger can be eliminated" through enforcement procedures under the Act.[3] 29 U.S.C. § 662(a) (emphasis added). Because the Act expressly provides for injunctive relief, plaintiff need not show irreparable harm; rather, he "need only show that the statutory *380 conditions for the issuance of an injunction" are met. Mical Communications, Inc. v. Sprint Telemedia, Inc., 1 F.3d 1031, 1036 (10th Cir.1993). That is, plaintiff must establish that the employees at the Dayton Tire plant are in imminent danger.
Neither the Act, nor the regulations define "imminent danger."[4] The court, however, is guided by the interpretation of the term in other contexts. For example, in regulations pertaining to discrimination against employees who exercise rights under the Act, OSHA has indicated that "imminent danger" must be viewed from the perspective of a reasonable person and that a real risk of death or injury must be present.[5] Likewise, in the Surface Mining Control and Reclamation Act of 1977, Congress
defines the threat of "imminent danger to the health and safety of the public" as the existence of a condition or practice which could
"[r]easonably be expected to cause substantial physical harm to persons outside the permit area before such condition, practice, or violation can be abated. A reasonable expectation of death or serious injury before abatement exists if a rational person, subjected to the same conditions or practices giving rise to the peril, would not expose himself or herself to the danger during the time necessary for abatement."
Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 452 U.S. 264, 301, 101 S. Ct. 2352, 2373, 69 L. Ed. 2d 1 (1981). With this guidance, the court concludes that imminent danger within the meaning of the Act requires more than the "mere possibility"[6] that an employee may be injured. Rather, to establish imminent danger, plaintiff must show that a reasonable person would conclude that a real risk of injury or death exists because of the alleged lockout/tagout violations.
Based on the evidence presented, the court finds that plaintiff has failed to establish a prima facie case for issuance of an injunction. The testimony of plaintiff's own witnesses failed to demonstrate that the injuries that have occurred were due to Dayton Tire's alleged noncompliance with the lockout/tagout standard. In addition, not one witness testified that a real risk of future injury exists at the plant if machines are not locked out during the operations at issue.[7] It is noteworthy that employees and union representativethe people most knowledgeable about the machines and operations at issue herehave not indicated a belief that imminent danger exists at the Dayton Tire plant.[8] In addition, three out of the four compliance officers who personally inspected the plant have yet to conclude that imminent danger exists at the facility due to lockout/tagout violations.
In a work place that contains heavy machinery with moving parts and human operators, it is likely that injuries may occur in the future. Plaintiff, however, has failed to demonstrate that any such injurieseither those in the past or those that may occur in the futureare due to violations of the lockout/tagout standard. As such, plaintiff has failed to meet the statutory burden and thus is not entitled to the equitable relief he seeks.
CONCLUSION
In short, plaintiff has failed to demonstrate entitlement to injunctive relief. Accordingly, *381 plaintiff's Motion for Preliminary Injunction is DENIED.
It is so ordered.
NOTES
[1] The court was joined by counsel for plaintiff, Sue Ann Wolff; plaintiff's representative, William W. White, Jr., the Area Director for the Occupational Safety and Health Administration; counsel for defendant, Leonard Court; and Carmelita Shinn, the court's law clerk. The tour was conducted by defendant's representative, John Dougherty, Production Manager for Dayton Tire's Oklahoma City plant.
[2] During the hearing, the parties stipulated that the depositions of the four OSHA compliance officersCarlos Reynolds, Faye Kearney, Hugh Robert Terrell, and George McCownwould be admitted into evidence. In accordance with that agreement, the court has reviewed these depositions.
[3] Plaintiff concedes that the conditions at the plant do not warrant an injunction under the first prong of section 13. Transcript of Proceedings at 375. Rather, plaintiff argues that death or serious injury will occur due to defendant's failure to comply with the lockout/tagout standard during the time that it will take to adjudicate this case at the administrative level. Id.
[4] See 29 U.S.C. § 662; 29 C.F.R. § 1903.13.
[5] See 29 C.F.R. § 1977.12(b)(2) ("The condition causing the employee's apprehension of death or injury must be of such a nature that a reasonable person, under the circumstances then confronting the employee, would conclude that there is a real danger of death or serious injury....")
[6] See Industrial Union Dept. v. American Petroleum Institute, 448 U.S. 607, 651-52, 100 S. Ct. 2844, 2868-70, 65 L. Ed. 2d 1010 (1980).
[7] Indeed, a number of employees testified that they cannot perform their required tasks without power. See, e.g., Transcript of Proceedings at 73, 158, 516.
[8] The Union has never filed a safety grievance regarding the lockout/tagout standard, nor has the Union ever filed a complaint with OSHA over Dayton Tire's alleged failure to comply with that standard.
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334 S.W.2d 869 (1960)
Frank ERHART et al. Appellants,
v.
Benjamin HUMMONDS et al. Appellees.
No. 5-2054.
Supreme Court of Arkansas.
May 2, 1960.
Rehearing Denied May 30, 1960.
*870 Jacob Sharp, Jr., J. W. Barron, Little Rock, for appellants.
Martin, Dodds Howell, Price & Worsham, Little Rock, Gordon & Gordon, Morrilton, for appellees.
HOLT, Justice.
This appeal comes from a judgment against appellants, architects, on a jury verdict awarding substantial damages to one injured workman and to the representatives of three other workmen who were killed. The record reflects that the Seventh & Main Street Realty Company, owner of the premises at Sixth and Main Street, entered into an agreement with J. C. Penney and Company to erect a building suitable for Penney to house and sell merchandise. Pursuant to this agreement, Seventh & Main Street Realty Company negotiated with the architectural firm of Erhart, Eichenbaum & Rauch to design and draw the necessary plans for a suitable building. This was done and a contract was let by Seventh & Main Street Realty Company to the J. A. Jones Construction Company of Shreveport, Louisiana. After this contract was let, it developed that Penney was not going to furnish supervision of the construction work, contrary to the owner's prior understanding that they would. Seventh & Main Street Realty employed the present appellants, architects, to guard its interest by supervising construction of the building, in addition to their architectural duties. For this additional work, appellants were to receive an additional fee over and above their architectural fee. Work under the contract proceeded and the Jones Construction Company subcontracted the excavation to one Claude Machen. Due to the depth of the excavation and because of danger to adjacent buildings and workmen, the plans for the excavation were set out in some detail in the contract. As the excavation proceeded in depth, it became necessary to shore the walls to prevent sliding and caving of the earth. Serious *871 questions were raised by the field supervisor of the architects, Vance A. Davenport, as to the adequacy of the shoring on the east wall, then 17 feet deep and perpendicular. Comments by Davenport were to the effect that the shoring of this wall was no better than a "whitewash" and "it wasn't worth a d____" With some dispatch, a call was placed by Mr. Eichenbaum, one of the architects, to the general office of Jones Construction Company at Shreveport, requesting that a new job superintendent be brought to the job at once; otherwise, they would ask the owners to stop work on the job immediately, as allowed under the contract. The next day, Friday, the new superintendent arrived on the job and promised to make shoring of the east wall the first order of business Monday morning. There was evidence that a slow drizzle of rain fell over the weekend causing the excavation walls to soften. Monday morning, as Vance Davenport, appellants' supervisor and superintendent, drove his automobile [which weighed 4,600 lbs.] into the alley near the edge of the east embankment wall, this wall caved in killing three employees and seriously injuring a fourth. It was stipulated: "It is further stipulated and agreed by the defendants Erhart, Eichenbaum & Rauch that Vance Davenport was their agent, servant, and employee and acting within the scope of his employment on the J. C. Penney Company job site at the time of the accident and prior thereto."
Suit was filed by the injured workman on behalf of himself and by the personal representatives of the three estates of the three workmen who were killed alleging, in effect, that appellants, architects, were negligent in failing to inspect and direct the erection by the contractor of the necessary protection for the workmen according to the plans and specifications, in failing to require compliance in accordance with Little Rock Ordinance # 2801 and that the negligence of the agent and supervisor, Vance A. Davenport, in driving his automobile through the alley above the excavation when he knew vibrations therefrom might cause the wall to fall, was imputable to them, and that appellants were negligent in failing to stop the work under their powers set forth in the contract until the dangerous conditions had been corrected. Appellants answered, in effect, with a general denial.
Upon a trial of the issues, as indicated, the jury found in favor of appellees and the following judgments rendered accordingly:
"Benjamin Hummonds - $10,000.00
Monteen Criswell - 48,000.00
Lucy Lewis - 48,000.00
Vernie Lowman - 12,000.00."
The points for reversal may be summed up as follows: (1) The appellees have no cause of action on the basis of contract provisions (2) The architects did not breach any contractual duty to the owner (3) There is no substantial evidence that the presence of the Davenport car in the alley caused the cave-in (4) That numerous instructions given by the court and numerous instructions refused by the court were error (5) The verdicts are excessive.
Appellants' contention under point one has been settled adversely to them in our recent case of Hogan v. Hill, Ark, 318 S.W.2d 580, 584. Hogan, a contractor, entered into a contract with the Arkansas Highway Commission to do certain work. Hogan violated the safety clause contained in a provision of the contract and as a result, Hill, not a party to the contract, was injured. We there stated: "It will be noted that Hill's complaint states a cause of action in tort based not only on the common law of negligence, but based also on Hogan Company's failure to comply with the regulations in the contract relative to public safety. This, we think he had a right to do. See: Prosser on The Law of Torts, 1955, Second Edition § 81, at page 478 and page 482; Ann.Cas.1913C, p. 217; Pugh v. Texarkana Light & Traction Co, 86 Ark. 36, 109 S.W. 1019; Hill *872 v. Whitney, 213 Ark. 368, 210 S.W.2d 800, and Collison v. Curtner, 141 Ark. 122, 216 S.W. 1059, 8 A.L.R. 760."
Assignment two presents the question of whether the architect breached any duty to the owner, and further the issue if there was a duty whether it did not arise until the excavation was completed. The issue here, we think, is not whether the architect breached any duty to the owner, but whether there was a breach of duty owed to the workmen by the architect arising out of the safety provisions of the contract. In the Hogan case above, Hogan did not breach any duty to the highway commission, but did breach a duty which it owed to the traveling public and for whom the safety provisions were intended. In the case here presented, we hold that there was substantial evidence that appellants, architects, breached a duty owed to the workmen whom the safety provisions of the contract specifically named. Appellants were further obligated to inspect the excavation upon completion and prior to the commencement of concrete work. Section l-02(d) of the contract, dealing with inspection and excavation, provides: "Upon completion of excavation, and prior to commencement of concrete work, excavations will be inspected by the Architect to insure that suitable earth foundation conditions have been obtained, and that compliance with the requirements of the specifications and the drawings have been maintained. No concrete shall be placed until this inspection has been made and approval of the Architect has been obtained."
Mr. Davenport, appellants' employee and supervisor, testified that the east wall footings were poured Friday afternoon before the accident on Monday; that he was the architects' inspector or supervisor to see that the plans and specifications were followed; that he did not approve making a vertical cut on the wall, that it was a dangerous thing to do and dangerous to workmen underneath; that the vibrations of any vehicle in the alley would be a contributing factor to the cave-in; that he was familiar with the effect of rain on the banks of an excavation, that the dirt around the excavation wras saturated with rain which created a greater tendency for cave-ins; it was his opinion that the wall was dangerous and the shoring inadequate and that one should have people trained to detect a dangerous wall like that, that it would not be noticeable to the average layman or citizen. Section 2801 of the Little Rock Building Code provides: "All excavations for buildings and excavations accessory thereto shall be protected and guarded against danger to life and property."
As indicated, the architects were paid, in addition to the fee for preparing the plans and specifications, $12,000 by the owners to see to it that the terms of the contract between the owners and the contractors were complied with. The contract provides that the general contractor "shall erect such protection as may be required, or as directed by the architect, maintain same, and maintain any existing protections, all in accordance with the governing laws, rules, regulations and ordinances." And, further, the "contractor shall do all shoring necessary to maintain the banks of excavations, to prevent sloughing or caving, and to protect workmen." The contract further provides: The architect "shall have general supervision and direction of the work. He has authority to stop the work whenever such stoppage may be necessary to insure the proper execution of the contract." It was a question for the jury as to whether the architect was negligent in failing to stop all work until the shoring on the east wall was made safe for the workmen.
Under appellants' third assignment they argue that there is no substantial evidence that the presence of the Davenport car in the alley caused the cave-in. We do not agree. Without detailing the testimony here, so as not to unduly extend this opinion, we hold that there was substantial *873 testimony from which the jury could have found that the east wall, where the cave-in occurred, was dangerous; that the rain had saturated the ground, giving it a greater tendency to cave in, that vibrations caused by motor vehicles in the alley above the east wall would have a tendency to cause the wall to fall. In Missouri Pacific R. Co. v. Henderson, 194 Ark. 884, 110 S.W.2d 516, 519, we stated our oftquoted rule as follows: "The rule is, and has always been, * * * that where there is any evidence of a substantial nature, which, by positive statements or reasonable inference, when given its strongest probative value, tends to support the finding of the jury, that finding will be sustained, although from the record presented to this court it might seem to be against the preponderance of the credible evidence." In the case of Lavender v. Kurn, 327 U.S. 645, 66 S. Ct. 740, 744, 90 L. Ed. 916, the rule is announced in this language: "It is no answer to say that the jury's verdict involved speculation and conjecture. Whenever facts are in dispute or the evidence is such that fair-minded men may draw different inferences, a measure of speculation and conjecture is required on the part of those whose duty it is to settle the dispute by choosing what seems to them to be the most reasonable inference."
The fourth assignment of error is the refusal, and giving of numerous instructions over both general and specific objections of the appellants. In answer it suffices to say that we have carefully examined all instructions and objections thereto and find no prejudicial or reversible error in any of them.
The fifth assignment is that the verdict is excessive. Again we do not agree. The extent of injuries is always for the jury and when supported by any substantial evidence, the verdict should not be set aside or disturbed. In Sinclair Refining Co. v. Fuller, 190 Ark. 426, 79 S.W.2d 736, 740, we said:
"`While the discretion of the jury is very wide, it is not arbitrary or unlimited discretion, but it must be exercised reasonably, intelligently and in harmony with the testimony before them. The amount of damages to be awarded for breach of contract, or in actions for tort, is ordinarily a question for the jury; and this is particularly true in actions for personal injuries and other personal torts, especially where a recovery is sought for mental suffering.' * * *
"* * * The amount of recovery in a case of this sort should be such, as nearly as can be, to compensate the injured party for his injury." And in Cohen v. Ramey, 201 Ark. 713, 147 S.W.2d 338, 342, we said: "The extent of injuries like any other fact is for the jury and when supported by any substantial testimony the verdict should not be set aside or reduced. * * * It is just as much the province of the jury to determine the extent of one's injuries, and the amount of damages, as it is to determine the question of liability. His injury, pain, and suffering, are purely questions of fact, and should be left to the jury to determine."
A local physician, a Dr. Dishong, who in his official capacity as coroner viewed the bodies of the three decedents to ascertain the cause of death, testified that decedent Abe Lowman sustained only a fracture of the left elbow; that Nathaniel Criswell sustained no bodily injuries whatsoever, and Anderson Lewis apparently sustained a chest injury and he fixed the cause of death of each as suffocation. Here the lips of the victims are sealed and it would be difficult to prove by direct testimony the extent of the decedents' conscious realization and understanding of the impending peril, agony and horror surrounding their death by suffocation,it could only be shown by circumstantial evidence. Appellants also argue that the awards were excessive for the reason that the jury awarded $12,000 to Lowman for conscious pain and suffering and awarded amounts *874 greatly in excess of $12,000 to Lewis and Criswell. Jury verdicts do not have to be consistent. Here the jury no doubt took into consideration the fact that Criswell and Lewis each had several dependents, while Lowman had none. We cannot say that the award of $12,000 to Lowman for conscious pain, mental anguish and suffering was excessive.
On the whole case, finding no error, the judgment is affirmed.
WARD, J. dissents.
HARRIS, C. J., and GEORGE ROSE SMITH, J, not participating.
WARD, Justice (dissenting).
It is my best judgment that the cause of action should be reversed and remanded for a new trial. My reasons are briefly hereafter stated.
The trial court submitted to the jury two theories upon which to find appellants liable: (a) one was that appellants' agent, Davenport, was negligent in driving his automobile close to where the excavation gave way knowing that the ground was soaked by reason of excessive rains and, therefore, liable to cause the high, steep bank to collapse; (b) the other was that Davenport was negligent in not stopping all work until the defect was remedied.
(a) I agree with the majority that the trial court correctly submitted this issue to the jury, and further agree that there is substantial evidence in the record to support the jury's finding that Davenport was negligent.
(b) A careful reading of all the record convinces me that there is no substantial evidence in the record justifying the trial court's submission of this issue to the jury. Summarily stated, set out below are the facts and circumstances relative to this issue.
On Thursday afternoon Davenport detected the unstable condition of the excavation, inquired of the contractor's representative whether or not he had obtained the approval of the Safety Department of the Department of Labor, expressed his disapproval, and then very promptly telephoned Mr. Pugh, Vice President of the Prime Contractor at Shreveport, Louisiana. Davenport told Mr. Pugh of the condition and advised immediate action on his part. The result was that Mr. Pugh sent their regular Superintendent to Little Rock, arriving on the following morning (Friday) to take over the management of the job. At that time there had been no collapse. The new representative of the Prime Contractor (a Mr. Wright) immediately conferred with an agent of appellant who pointed out the defects of the work, and Mr. Wright promised to take care of the situation. The following day, Saturday, no work was done on the excavation, and none was done on Sunday. On Monday morning, at 8 o'clock, work was resumed under the supervision of Mr. Wright who had all the shoring removed without telling Davenport. A short time later that morning, about the time Davenport appeared on the scene, the wall caved in on the workmen.
What I cannot understand, and the majority do not point out, is how any negligence can be imputed to Davenport or the appellants. The majority do point out that appellants were paid a substantial fee and thereby appear to infer that Davenport should have taken over the operation, but in this connection two other things must be considered. One is that appellants had many other duties to perform under its contract of employment. The other is that the Prime Contractor, under the terms of its contract, was specifically charged with the duties which the majority would impose on appellants. In part this contract reads: "Each contractor shall be responsible for his own work and every part thereof, and all work of every description used in connection therewith. He shall specifically assume, and does assume, all risk of damage *875 or injury from whatever cause to property or persons * * *." (Emphasis supplied.) Not only so, but a witness for appellees (the Chief Safety Engineer for the Arkansas Department of Labor) stated that he looks to the Prime Contractor to make the job safe and not to the architects or a subcontractor.
Since there is no substantial evidence in the record to contradict the above factual situation it was, in my opinion, error for the trial court to permit the jury to base a finding of negligence on this point. Since there is no way for this court to determine on what ground the jury based its verdict, the cause should be reversed and remanded for a new trial.
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334 S.W.2d 950 (1960)
TENNESSEE-CAROLINA TRANSPORTATION, INC., et al.
v.
Cayce PENTECOST et al.
Supreme Court of Tennessee.
April 6, 1960.
*951 Walter Harwood, Robert H. Cowan and J. C. Hutcheson, Nashville, For Tenn-Carolina, et al.
Alfred T. MacFarland and Phillip Reed, Lebanon, For Defendants, Potter Freight Lines, et al.
BURNETT, Justice.
This lawsuit grows out of an Order of the Tennessee Public Service Commission, decreeing that Potter Freight Lines, Inc., are authorized to abandon a portion of the certificate of convenience and necessity to operate between Jamestown, Tennessee, and Crossville, Tennessee, and Monterey, Tennessee, serving intermediate points. The petition was filed in the Chancery Court insisting that the Commission was without legal authority to enter the *952 Order under the statutes, particularly Section 65-1514, T.C.A.
The Order of the Commission was based upon what it considered to be its authority under said Section. The Chancellor properly held that under the first portion of this Section of the Act the motor carrier had the right "to abandon or discontinue any service established under the provision of this Chapter," upon order of the Commission "and only after hearing upon notice." His memorandum then goes on to hold what the meaning of the second section of the statute is and decrees that the only authority of the Commission is to authorize abandonment or discontinuance of any service and not to abandon a segment of the certificate of convenience and necessity. After so holding the Chancellor dismissed the bill. The complainants in that bill, Tennessee-Carolina and other carriers, appealed as did the defendant, Potter Freight Lines. The Commission has not appealed. We, after hearing argument, reading briefs and authorities, now have the matter for disposition.
At the time of the hearing of this mattter before the Commission the so-called Joe Davis Act (T.C.A. § 65-1508) was in full force and effect. The effect of this Act was to give a carrier, who holds two certificates meeting the standards of criteria contained in that Act, the right to lawfully join or tack the two certificates and transport freight for hire between the extreme termini of both certificates.
At the time of the hearing before the Commission Potter Freight Lines held certificates authorizing service between Nashville, Tennessee, on the one hand, and Crossville, Tennessee, on the other hand. It also held a certificate authorizing service between Chattanooga, Tennessee, on one hand and Monterey, Tennessee, on the other hand. These certificates, however, did not meet the requirements of the Joe Davis Act for tacking, and Potter could not lawfully transport freight between Chattanooga, Tennessee, on the one hand for example and Nashville, Tennessee, on the other hand.
The Chancery Court of Davidson County in a previous law suit, involving the right of Potter to transport freight from Chattanooga to Nashville, had permanently enjoined Potter from solicitation or transportation of property between Chattanooga on the one hand to Cookeville or Sparta on the other. At a later date Potter was held in contempt for violating the injunction prior to the Order of the Commission now in question.
Contention, and the meat in the coconut, in the present lawsuit is that if Potter is allowed to abandon a segment of his certificate of convenience and necessity under the Order of the Commission, then he would be able to tack his two certificates together because Monterey and Cookeville are eliminated, and could come from Chattanooga to Nashville and thus compete with Tennessee-Carolina Transportation and those on that side of this litigation in the hauling of freight over this route. This, of course, then becomes the interest of Tennessee-Carolina Transportation and the group on that side in the interpretation of the Order of the Commission in allowing Potter to abandon the portion, or segment, of his certificate that is shown by the Order of the Commission to be abandoned.
Potter demurred to the bill herein and upon the overruling of the demurrer, he relied on the same proposition in his answer that Tennessee and those associated with it had no interest in the matter and therefore had no right to litigate the question. We think though by the proof offered before the Commission, and certain stipulations therein, that a sufficient interest is shown to allow these parties to enter this litigation.
The question then is here squarely presented as to what authority the Commission has under the statute (§ 65-1514, T.C.A.) in passing upon the request or application of a motor carrier to voluntary abandon *953 a portion of a certificate. As said above, we think the Chancellor correctly held that under this Section, and particularly the first paragraph thereof, that it only "gives a motor carrier the right to `abandon or discontinue any service established under the provisions of this Chapter' upon `order of the Commission' and `only after hearing upon due notice'."
Under the provisions of the Motor Carrier Act of Tennessee (Sections 65-1501 through 65-1524, T.C.A.) as it existed at the time the Order herein complained of was made, there were only two ways by which a carrier could acquire authority to operate between given points as a common carrier for hire; that is, (a) by applying for a certificate of convenience and necessity under the provisions of Section 65-1507, T.C.A., and by the Commission issuing the certificate after a hearing, or (b) by acquiring or holding two or more certificates of convenience and necessity which are end to end, so to speak, and under which the requirements of the Joe Davis Act (Section 65-1508, T.C.A.) would apply.
By allowing an abandonment of a section of the certificate as apparently done by the Commission herein, they have in effect created another way different from that authorized by statute in which this certificate of convenience and necessity, or the right to travel over highways that they did not have otherwise, which is not authorized by statute. The powers of the Commission must be found in the statutes. If they are not there, they are non-existent. If the interpretation is given to the Order of the Commission herein complained of as desired by Potter, that is, that we take out Monterey etc., and that the two certificates may be tacked with the result that they have a route from Chattanooga to Nashville, the Commission has done something that it has no authority to do under the statute. The statute plainly authorizes the Commission upon a proper hearing after notice, etc., to allow a certificate holder to abandon or discontinue service, but it does not authorize the abandonment or discontinuance of a segment of a certificate, so that something can be done indirectly which could not be done directly.
In other words, if they could do what Potter contends that it can do under this Order of the Commission, then it amounts to allowing Potter to do something that the Chancery Court of Davidson County enjoined it from doing under the certificates which it held. Of course, if Potter applied under the statute for a new certificate and was granted a certificate over this route in competition with Tennessee and others, the Commission would have a right to do this under Section 65-1507, T.C.A., but the Act in question does not permit what was done. In other words, reiterating what we have said two or three times heretofore, the Chancellor correctly interpreted the meaning of this Act as to merely abandon service, not abandon certificate. Thus service may be abandoned temporarily or for any length of time as the Commission thinks best under public necessity, but the Commission is not authorized under this statute to abandon a segment of the certificate and allow the accomplishments of the things which could happen, if this is done.
We are of opinion, therefore, that as far as the Chancellor went he was correct, but that he should have gone further and held and issued a directive to the Commission that all authority that they had was to issue an order of abandonment or discontinuance of service, but that said order could have no effect whatsoever upon the certificate itself and thus the abandonment and discontinuance of service did not affect the certificates of convenience and necessity which the Order related to so that they could be tacked together under the Joe Davis Act and thus change their route which they did not theretofore have. With this in mind we remand the case to the Chancery Court for further orders and disposition in accordance with the views herein expressed. The costs of the cause will be taxed against Potter.
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124 N.J. Super. 414 (1973)
307 A.2d 142
DONNA L. HOWELL, PLAINTIFF,
v.
THE OHIO CASUALTY INSURANCE COMPANY, DEFENDANT.
Superior Court of New Jersey, Law Division.
Decided June 12, 1973.
Mr. Robert A. Porter on the Brief for the Plaintiff. (Messrs. Hartman, Schlesinger & Schlosser, Attorneys.)
Mr. Ernest F. Picknally on the Brief for the Defendant. (Messrs. Schuenemann & Picknally, Attorneys.)
*415 BELOPOLSKY, J.C.C., Temporarily Assigned.
This matter comes before the court on cross-motions for Summary Judgment. The defendant, The Ohio Casualty Insurance Company, seeks to deny payment to a wife, who played no part in her house being destroyed by fire, under a fire insurance policy, because her spouse intentionally set fire to their home. The house was destroyed and the husband took his own life while the building was in flames.
The policy in question was issued in the name of plaintiff and her husband. It contained the standard provision, required by N.J.S.A. 17:36-5.20, that the policy shall be void because of fraud by the "insured."
It is undisputed that the intentional burning of one's own house is fraud, 44 Am. Jur.2d, Insurance, § 1365. The sole question in issue here, and one which is novel in New Jersey, is whether the intentional burning by one spouse of a homestead, held in tenancy by the entirety, will bar the recovery by the innocent spouse under a fire insurance policy.
The insurance company asserts that the insured interest here was joint, arising both from the legal identity of husband and wife, and the legal estate which they possessed. This joint interest or identity, it is argued, creates, in law, but one insured under the policy. Therefore, the fraudulent act of one spouse would necessarily become the act of both and bar the innocent spouse's recovery. Kosior v. Continental Ins. Co., 299 Mass. 601, 13 N.E.2d 423 (Sup. Jud. Ct. 1938); Matyuf v. Phoenix Ins. Co., 27 Pa. D. & C.R.2d 351 (Cty. Ct. 1933); Jones v. Fidelity & Guaranty Ins. Corp., 250 S.W.2d 281 (Tex. Civ. App. 1952); Bridges v. Commercial Standard Ins. Co., 252 S.W.2d 511 (Tex. Civ. App. 1952); California Ins. Co. v. Allen, 235 F.2d 178 (5 Cir.1956); Klemens v. Badger Mut. Ins. Co., 8 Wis.2d 565, 99 N.W.2d 865 (Sup. Ct. 1959); 44 Am. Jur.2d, Insurance, § 1365; See also, Monaghan v. Agricultural F. Ins. Co., 53 Mich. 238, 18 N.W. 797 (Sup. Ct. 1884), *416 dealing with joint ownership by a mother and her children; Federal Ins. Co. v. Wong, 137 F. Supp. 232 (D.C. Cal. 1956), dealing with joint ownership of a truck.
Plaintiff points out that where the interests of the coinsureds are several, the innocent party has not been precluded from recovering, notwithstanding the fraudulent acts of the other. Mechanics' Ins. Co. v. Inter-Southern L. Ins. Co., 184 Ark. 625, 43 S.W.2d 81 (Sup. Ct. 1931); Mercantile Trust Co. v. New York Underwriters Ins. Co., 376 F.2d 502 (7 Cir.1967); Rent-A-Car Co. v. Globe & Rutgers Fire Ins., 158 Md. 169, 148 A. 252 (Ct. App. 1930); Hoyt v. New Hampshire Fire Ins. Co., 92 N.H. 242, 29 A.2d 121 (Sup. Ct. 1942); see also the annotation in 24 A.L.R.3d 450.
Plaintiff contends that New Jersey has abolished the common law legal identity of husband and wife, the most recent evidence of this being Immer v. Risko, 56 N.J. 482 (1970), which abolished interspousal immunity. Therefore, the insured interest under the fire insurance policy should be interpreted to be several and not joint, thus allowing the wife to recover as any innocent coinsured would.
Whether there is a joint or several interest present requires an examination of the status of the legal identity of husband and wife in New Jersey. The New Jersey Married Women's Act, N.J.S.A. 37:2-1 et seq., secured a separate legal identity for married women, Sillery v. Fagan, 120 N.J. Super. 416 (Cty. D. Ct. 1972), and released them from the disabilities of coverture, Patusco v. Prince Macaroni, Inc., 50 N.J. 365 (1967).
The concept of an identity of husband and wife has come under criticism. Justice Haneman, in Long v. Landy, 35 N.J. 44, 50 (1961), referred to the legal identity of husband and wife as "artificial and technical." In Immer v. Risko, supra, Justice Proctor explored the question at great length and concluded (56 N.J. 488) that the legal identity *417 of husband and wife was a "metaphysical concept" which "cannot be seriously defended today."
Justice Proctor's pronouncement in Immer is dictum, yet it recognizes the existence of an outmoded legal fiction which continues to produce harsh and inequitable results.
The manner in which the husband and wife held the property in question is of particular importance, because it has a bearing on the legal identity issue. Here the property was held in tenancy by the entirety, an estate which at common law connotes ownership by one person, McDermott v. French, 15 N.J. Eq. 78 (Ch. 1862); Thomas v. DeBaum, 14 N.J. Eq. 37 (Ch. 1861). Defendant has expressed the fear of the demise of this ancient common law estate, if the rationale of Immer is applied; yet a review of the case law suggests that such a result may be well on its way already. See "Weeding Out the Troublesome Plant of Tenancy by the Entirety," 2 Seton Hall L. Rev. 415 (1971).
In King v. Greene, 30 N.J. 395, 413 (1959), Chief Justice Weintraub, in a vigorous dissent, called the estate a "remnant of other times", which "rests upon the fiction of a oneness of husband and wife."
Over a decade later, in Fort Lee S. & L. Ass'n v. LiButti, 106 N.J. Super. 211 (App. Div. 1969), rev'd 55 N.J. 532 (1970), our Supreme Court, in reversing the Appellate Division, adopted the opinion of Judge Carton, speaking below in dissent. That case dealt with an action by a judgment creditor of one spouse against the excess left after a mortgage foreclosure, held by a couple in tenancy by the entirety. The court held that a judgment creditor should not be made to wait and "gamble" for the prior death of the other spouse but should be allowed to sever that portion of the estate which belonged to the debtor spouse. Judge Carton stated, at 106 N.J. Super. 216, that to extend the estate of tenancy by the entirety to the personal property which replaces the realty would be to indulge in a "further fiction" (emphasis *418 supplied), which "serves no useful purpose and acts to frustrate justice."
An opinion by the highest court of New York State also sheds light on this inquiry. In Hawthorne v. Hawthorne, 13 N.Y.2d 82, 242 N.Y.S.2d 50, 192 N.E.2d 20 (Ct. App. 1963), an action by a wife against her husband sought a division of the proceeds of a fire policy on realty owned by the entirety. The court allowed the division holding that
The unity of person of husband and wife [expressed through the tenancy by the entirety] gives no clue to the relationship that ought properly to obtain between the owners of the proceeds of insurance. * * * [242 N.Y.S.2d at 51, 192 N.S.2d at 21]
The court also looked at the insurance contract and held that the policy proceeds were fruits of the insurance contract and the premiums paid under it. While the loss could be said to be involuntary, the policy itself was a product "of their voluntary contractual act and is held by them in the same way as any personal property voluntarily acquired." Ibid. 242 N.Y.S.2d at 52, 192 N.E.2d at 22.
The case of Miller & Dobrin Furniture Co. v. Camden Fire Ins. Ass'n, 55 N.J. Super. 205 (Law Div. 1959), has been cited by defendant in support of its position. There, recovery under a fire insurance policy was denied to an innocent copartner where the dominant and controlling partner set fire to the insured's property. This court is of the opinion that Miller is distinguishable on the facts because of the dominant position held by the wrongdoing partner. It is also noted that the Miller court (at 218) recognized the rule that the intentional burning of property by an insured's agent would not defeat recovery where the insured was not implicated in the act, citing 29 Am. Jur., Insurance, § 1028.
The nature of the common law requires that each time a rule of law is applied it be carefully scrutinized to make sure that the conditions and needs of the times have not so changed as to make further application of it the instrument of injustice. [Sillery v. Fagan, supra, 120 N.J. Super. at 426, citing Long v. Landy, 35 N.J. 44, 50 (1961)]
*419 In view of the foregoing cases it might well be said that while the legal identity of husband and wife may still exist, it has been severely eroded in recent years. The estate of tenancy by the entirety, with its inherent doctrine of the identity of spouses, has been delimited by King and Fort Lee Savings.
In the present case defendant's argument, to consider the husband and wife as a single "insured," goes against both the policy of recent cases and the facts herein. Even if it could be said that the realty was owned jointly, certainly the contract rights under the fire policy could not be said to be in the same category. This court views those rights as personal property able to be possessed separately and individually by both spouses. Hawthorne v. Hawthorne, supra.
Indeed, the policy was issued in both names, and it is fair to say the contract was a product of the voluntary actions of each and held in the same way as any voluntarily acquired personal property. Hawthorne v. Hawthorne, supra.
This court finds that the rights and interests under this policy can be said to be several, not joint, and thus not subject to divestment or forfeiture by the unilateral actions of one spouse. Since the interest is several, recovery should be had to the extent of the wife's interest. Hoyt v. New Hampshire Fire Ins. Co., supra.
Judgment is ordered for plaintiff in the amount of one-half of the damages within the limits of the policy.
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569 F. Supp. 1057 (1983)
UNITED STATES of America, Plaintiff,
v.
WESTERN ELECTRIC COMPANY, INC., and American Telephone and Telegraph Company, Defendants.
UNITED STATES of America, Plaintiff,
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY, et al., Defendants.
Civ. A. No. 82-0192. Misc. No. 82-0025 (PI).
United States District Court, District of Columbia.
July 8, 1983.
On Motion for Partial Reconsideration July 28, 1983.
On Motions for Reconsideration and Clarification August 5, 1983.
*1058 *1059 *1060 *1061 James P. Denvir, Michael F. Altschul, Luin P. Fitch, J. Philip Sauntry, Jr., Richard Lavine, Antitrust Div. U.S. Dept. of Justice, Washington, D.C., for plaintiff.
Howard J. Trienens, Jim G. Kilpatric, New York City, John D. Zeglis, Washington, D.C., Francine Berry, New York City, for defendants.
John Dempsey, Bruce Renard, National Ass'n of Regulatory Utilities Commissioners, Chester T. Kamin, MCI, Chicago, Ill., Lewis J. Paper, United Church of Christ, Malcolm Pfunder, Tandy Corp., Jeffrey Olson, Black Citizens for a Fair Media, Washington, D.C., for intervenors.
OPINION
HAROLD H. GREENE, District Judge.
Section I(A) of the decree entered on August 24, 1982, provides that "[n]ot later than six months after the effective date of [the decree], defendant AT & T shall submit to the Department of Justice for its approval, and thereafter implement, a plan of reorganization," and section VIII(J) specifies that the plan of reorganization "shall not be implemented until approved by the Court as being consistent with the provisions and principles of the decree." In accordance with these provisions, AT & T has submitted its plan to the Court following approval by the Department of Justice.[1] The intervenors were thereafter given the opportunity to raise objections; a considerable number of such objections were, in fact, filed with the Court; and AT & T and the Department of Justice, in turn, filed their own responses.
Following receipt of these papers, the Court designated certain issues for more intensive briefing and for oral argument.[2] Voluminous briefs were received on these issues, and argument was had thereon on June 2, 1983.[3] At that hearing, the Court *1062 also heard testimony from three of the designated chief executives[4] of the seven newly-established Regional Companies.[5] Additional documents were submitted after the hearing, including one a letter with attachments from AT & T (see p. 1067 infra) as late as June 29, 1983.
The Court has considered all issues raised with respect to the plan of reorganization on the basis of the written materials, the oral hearing, the testimony, and the entire record herein, and it has concluded that the plan of reorganization will be approved[6] provided that certain inconsistencies with the provisions and principles of the decree are corrected.[7]
I
Equal Access
The decree requires the Operating Companies to "provide to all interexchange carriers and information service providers exchange access, information access, and exchange services for such access ... that is equal in type, quality, and price to that provided to AT & T and its affiliates." Section II(A).[8] As the stepping stone to increased competition in the field of intercity telecommunications, the decree's equal access requirements and the implementing provisions of the plan of reorganization have generated substantial controversy. Comments filed by Operating Company executives, interexchange carriers, regulatory *1063 commissions, consumer groups, and telecommunications associations indicate that at this stage of the proceedings[9] there is a need to resolve three primary questions relating to equal access:[10] what is it, how is it to be achieved, and who will pay for it?
A. What Does "Equal" Mean?
A number of the Operating Companies propose to connect AT & T's interexchange competitors to the homes or businesses of local telephone subscribers by using facilities built or upgraded specially for that purpose; AT & T, on the other hand, will in numerous LATAs gain access to subscriber lines through different facilities, many of which are already extant.[11] For that reason, the access provided AT & T's competitors will not be identical to that given AT & T in all places; rather, it will be technically different in certain areas and at certain times.
The Operating Companies assert that any such technical deviations will be so slight as to be imperceptible to all customers, whether of voice or of data.[12] Accordingly, they urge the Court to accept a definition of "equal access" as access whose "overall quality in a particular area is equal within a reasonable range which is applicable to all carriers,"[13] and to reject a more stringent definition which would demand access that yields identical technical quality (i.e., identical values for loss, noise, and echo, and identical possibility of blocking).[14]
The Court accepts the Operating Companies' definition and will not insist on absolute technical equality. To do otherwise would necessitate substantial dismantling and reconstruction of local telephone networks without any real benefits either to the consuming public or to AT & T's intercity competitors. This ruling, however, is based squarely upon the Operating Companies' representations that both voice and data customers will perceive no qualitative differences between AT & T transmissions and those of its competitors at least with respect to those portions of the transmissions carried by an Operating Company.[15] The Operating Companies are well aware, however, that the Department of Justice will be monitoring the quality of the access they will provide and that the price of falling short of their assurance of equal quality will be enforcement proceedings brought by the Department.[16]
*1064 The interexchange competitors, as noted, would not be disadvantaged if the Operating Companies meet the standard they have proposed. Their real complaint is that the Operating Companies will be unable to meet that standard in many of the LATAs by the means they propose[17] a subject to which the Court now turns.
B. Which Switches Should Be Used for Access Arrangements?
First. Since the initial comments were filed regarding the first, or LATA, phase of the plan of reorganization, a number of intervenors have expressed concern over the kinds of switches the Operating Companies will use to route traffic from an interexchange carrier's point of presence in a LATA to a local Class 5 end office.[18]
The Court initially shared this concern, primarily because so little information about equal access planning for individual LATAs had been made available. In May of 1983, it therefore requested the Regional Companies to report in detail regarding their plans for equal access and their need in this respect for the efficient, state-of-the-art No. 4ESS switches.[19] The Court asked to be apprised of any instances where an Operating Company believed that a particular switch should be assigned to it for equal access purposes even though that switch would belong to AT & T under the predominant use test.[20] The responses were extremely helpful. Their detail and the varied recommendations made with respect to each region revealed that, contrary to some speculation, the Operating Companies had carefully studied the alternatives for the provision of access within their respective territories, and that they had concluded, independent of pressure from AT & T, which arrangements would be most economical and efficient for them.
Most of the LATAs will be served by four-wire digital tandems,[21] if not in 1984, *1065 then within two years.[22] The Operating Companies are not planning to make as much use of the existing No. 4ESS switches, however, as might have been anticipated. The basis of that choice appears reasonable.
Because of the large capacity of the No. 4ESS switch, the cost to an Operating Company of leasing part of it would be, in most cases, greater than would be that of constructing a smaller-scale switch directly for that company. The other alternative vesting ownership of the No. 4ESS switch in the Operating Company, in the expectation that it will be able to lease substantial capacity to AT & T is problematic in many cases because AT & T may choose instead to build a new switch (and even if it did not, it would be required in any event under the plan to terminate the lease after eight years). In either event, the Operating Company would thus be left with the expense of stranded capacity.
For these reasons, the Operating Companies will instead engage in a substantial amount of new construction, and they have persuaded the Court that this is an appropriate decision. In some instances they will thereby be merely accelerating construction which would have occurred in any event, and new construction, as opposed to leasing, will have the advantage of facilitating network separation between AT & T and the Operating Companies.
Given the care which went into the Operating Companies' studies, the Court will not second-guess them by imposing upon them an assignment of switches which they do not endorse. The Court therefore rejects the position of some[23] that all No. 4ESS switches should be divested from AT & T and assigned instead to the Operating Companies.
Second. The New England Telephone Co. (NET) has suggested that it could provide access more economically if the Court were to override the predominant use test in its territory with respect to three advanced switching systems. NET wishes to make extensive use of No. 4ESS switches which apparently would be more appropriate in its region than elsewhere because of existing population densities and it states that it could benefit from the allocation of three existing No. 4ESS switches (in Manchester, New Hampshire; Springfield, Massachusetts; and Cambridge, Massachusetts).[24] NET has further informed the Court that if it were to receive the existing switches in these locations, the net present value advantage to it would range from $20 to $25 million with respect to the Cambridge switch and from zero to $8 million *1066 per switch with respect to the Manchester and Springfield facilities.[25]
Although it accepted the predominant use test, the Court has stated that this test would be waived where particular equipment was needed by an Operating Company for the provision of equal access. See note 20 supra. Clearly that need is present with respect to the Cambridge switch,[26] and the Court will therefore require that AT & T assign that switch to NET. The matter is not as clear with regard to the Manchester and Springfield switches. If NET wishes to make a formal proposal for the transfer of these switches, it should submit a motion explaining under what circumstances the savings would amount to zero and under what circumstances they would amount to $8 million,[27] and AT & T and the Department of Justice may respond to the motion. The Court will order no other changes in the assignment of switches.[28]
C. How Should the Operating Companies Recover the Costs of Becoming Equal Access Providers and of Reconfiguring Local Networks to Conform to LATA Boundaries?
AT & T estimates that it will cost the Operating Companies $73 million to reconfigure their networks[29] and $2.47 billion to provide equal access.[30] The plan of reorganization does not directly address the issue of who should pay these costs but seems to proceed on the premise that equal access is exclusively an Operating Company responsibility with which the plan, and AT & T, need not be concerned. That approach is improperly simplistic.
Section I(A)(1) of the decree states that AT & T shall
transfer from AT & T and its affiliates to the BOCs ... sufficient facilities [and] systems ... to permit the BOCs to perform, independently of AT & T, exchange telecommunications and exchange access functions ... and [which are] sufficient to enable the BOCs to meet the equal exchange access requirements of Appendix B (emphasis added).
There can be no doubt, then, that AT & T has a significant responsibility[31] to see to it *1067 that the Operating Companies are left in a position, as of divestiture, that will enable them to offer equal access to AT & T's competitors.[32] The only question is what obligations attach to this responsibility.
The intervenors have proposed various ways to assign the costs of network configuration and equal access directly to AT & T, from requiring AT & T to give the Operating Companies more switches to requiring it to finance all equal access projects. The former has the disadvantage of imposing switch assignments on the Operating Companies which they do not want; the latter is problematic in that it will perpetuate a liaison between AT & T and the Operating Companies where none should exist. AT & T, for its part, while it rejects any suggestion that it should have to pay these costs, in effect concedes that it bears some share of the responsibility since it asserts that the access charges paid by interexchange carriers will reimburse the Operating Companies, and that it, as the dominant interexchange carrier, will pay the lion's share of such charges.
All the parties have agreed that these costs are properly to be recovered from the interexchange carriers, rather than through access charges levied on local ratepayers, because the expenditures represent improvements to the long distance network. AT & T's assurances to the contrary notwithstanding, it is unsettled at present by what methodology the interexchange carriers could be made to bear the costs of equal access and network reconfiguration through interstate access charges. Under existing procedures for allocating property costs, revenues, expenses, and reserves between intrastate and interstate jurisdictions for rate making purposes (see 47 C.F.R. § 67.1), a disproportionately small amount of equal access and network reconfiguration costs would be designated for recoupment through interstate tariffs; most of these costs would be designated for recovery through intrastate tariffs even though, at least initially, most of the benefits of equal access connections will flow to users of interstate, not intrastate, telecommunications services. See Correspondence between Howard J. Trienens and A. Gary Collins, filed June 29, 1983; Response of Mid-Atlantic Bell Telephone Companies, May 31, 1983, at 8-10.[33] In fact, only after it was pointed out by others did AT & T acknowledge that all equal access and network configuration costs would not be recovered through interexchange carrier charges under the current jurisdictional separations procedures.
*1068 Another, equally serious problem is created by the ability of AT & T to make use of the so-called bypass technology (552 F.Supp. at 175-76) which would allow that company, at its choice, and given the availability of the necessary technology, to bypass the Operating Company circuits altogether and to reach ultimate telephone subscribers directly. To the extent that bypass is a serious threat to the Operating Companies,[34] AT & T, because of its size and its well-developed telecommunications technology, is by far the most likely origin of that threat. Use of that bypass technology by AT & T would, of course, permit it to escape the payment of access charges to the Operating Companies, and this, in turn, would jeopardize the recovery of the funds which will be expended by the Operating Companies for the equal access and reconfiguration construction program.
It is thus not certain that the Operating Companies will be fully reimbursed through carrier access charges for their equal access and network reconfiguration expenditures. Yet because the decree anticipated that AT & T would transfer sufficient facilities to the Operating Companies to ensure equal access; because it now appears that the Operating Companies will instead have to undertake substantial new construction of their own; and because AT & T has throughout this proceeding assured the Court that access charges paid by interexchange carriers would be the instrument which would prevent divestiture from causing increases in local rates, it is appropriate that AT & T should bear the ultimate risk if it turns out that its assurances are overly optimistic.[35] That risk will accordingly be assigned to AT & T in the following manner.
According to the plan of reorganization, the equal access construction program will be completed in five years. Within five years thereafter, that is by January 1, 1994, if the Operating Companies have not recovered the costs of equal access and network reconfiguration, inclusive of financing costs, through their collection of access charges from the interexchange carriers,[36] AT & T will be responsible for reimbursing the Operating Companies in the amount of any remaining deficit.[37] A preliminary accounting will take place at the close of the construction program on by January 1, 1989, whichever is earlier.
If the Operating Companies and AT & T are able to report to the Court on or before January 1, 1994, of their agreement that all costs have been recovered, AT & T will be discharged from any further obligation with respect to the cost of equal access and network reconfiguration. If there is a dispute, the Court will decide, if necessary with the assistance of the Department of Justice and the Federal Communications Commission, whether all costs have been recovered.[38]
*1069 II
Contingent Liabilities
Under the plan of reorganization, the contingent liabilities of the Bell System are apportioned among AT & T and the Operating Companies on the basis of their relative net investment[39] as of the date of divestiture.[40] Section VIII(H) of the decree allocates to each Operating Company a proportionate share of the System's consolidated debt and equity; and the plan of reorganization provides that the post-divestiture entities will share in the contingent liabilities on the same basis.[41]
The intervenors acquiesce in most aspects of the plan's allocation of contingent liabilities,[42] and they limit their objections in the main to the allocation of contingent antitrust liabilities. Several intervenors assert broadly that because the Operating Companies were not responsible for AT & T's alleged conduct in violation of the antitrust laws and reaped no benefits from such violations, they should not have to share in the liabilities resulting from any antitrust claims. Others make similar arguments more narrowly with respect only to certain types of antitrust violations, such as those relating to the provision of interexchange services or of customer premises equipment (CPE).[43]
The contingent liability provisions of the plan assume (1) that prior to divestiture the Bell System operated as a single unit, and (2) that the residual risks of the System's predivestiture operations should be shared by all entities which receive a part of the System's assets. Several intervenors challenge these assumptions.
A. Principle of the Division of the Contingent Liabilities
It is argued by a number of opponents of the plan that for many purposes the Bell System did not operate as a single enterprise. Thus, it is claimed that various Operating Companies charged different rates, operated under different tariffs, were directed by different personnel, and engaged in other practices which differed from company to company. One consequence of this diverse pattern, according to the plan's opponents, is that some Operating Companies were charged with violations of the antitrust laws along with AT & T while others were not. Further, since under the law a corporation is not automatically liable for the antitrust violations of its affiliates,[44] there is no basis, it is said, for imposing liability upon entities (i.e., the Operating Companies) which have not been or may not be found to have been at fault. Finally, citing Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 101 S. Ct. 2061, 68 L. Ed. 2d 500 (1981), several intervenors argue that the plan violates the "rule" *1070 against contribution for antitrust damages.[45]
All of these arguments miss the mark. Until the time the reorganization takes effect, the Bell System is legally a single enterprise, with a single claim to the System's assets and a single responsibility for the System's liabilities. It is erroneous, therefore, to pose the problem in terms of imposing liability upon parts of the enterprise based upon fault or lack of fault; at the time the acts complained of occurred there was only one entity (the Bell System), and should there be a judgment in any particular case, that entity will have been found to be at fault.
The evidence at the trial of this case did not isolate specifically whether the fault for particular activities which allegedly violated the antitrust laws lay with personnel assigned to AT & T headquarters or with personnel working for an Operating Company; and, of course, there was no adjudicated final judgment by which such fault could have been parceled out. In view of the commingling and transfers of personnel between AT & T's central divisions (e.g., Western Electric) and the Operating Companies, it may be that no such decision could ever have been made.[46]
This basic problem with the theory advanced by the intervenors is not cured by the circumstance that some Operating Companies are defendants in some of the pending private antitrust lawsuits while others are not. The decisions of antitrust plaintiffs as to which Operating Companies, if any, should be named as defendants in the private suits appear to have most often been dictated by such non-substantive matters as jurisdiction, venue, and ease of discovery.[47] Such choices were available to the plaintiffs in the various actions because they knew that the cost of any judgment would be shared by AT & T and all Operating Companies[48] regardless whether or not a particular Operating Company was a party to the proceeding in which liability was determined. In short, the identity of the particular Bell defendants played no real substantive part in pre-divestiture lawsuits or judgments, and it would make no sense to regard it as the determinative factor with respect to the payment of judgments based on pre-divestiture conduct which are entered or become final after divestiture actually occurs.
More broadly, it is incorrect to view the plan's allocation of contingent liabilities as an attempt to impose upon this Court the responsibility for making findings concerning fault or for imposing liability with respect to lawsuits pending in other forums.[49] The plan of reorganization does not purport to assign fault; all that is involved here is that, as part of its review of the decree and of the plan of reorganization of the Bell System, the Court has been presented with a proposed contractual arrangement[50]*1071 whereby the Operating Companies and AT & T will share in the payment of liabilities arising from pre-divestiture operations regardless of fault in effect a form of self-insurance. See p. 1073 infra.
The intervenors' reliance upon Texas Industries, Inc. v. Radcliff Materials, Inc., supra, as an obstacle to this procedure is misplaced. In that case the Supreme Court held merely that there is no right to contribution in antitrust cases;[51] it did not decide, nor was its decision based on the premise, that contribution is contrary to the policies underlying the antitrust laws.[52]Texas Instruments thus does not invalidate either the liability sharing arrangement which presently exists (and has long existed) among the Bell System's components for that System's liabilities or the contractual arrangement proposed for the future by the plan of reorganization.[53]
B. Method of Apportionment
The plan of reorganization proceeds on the basis that the residual risks of the Bell System's pre-divestiture operations should be shared by the entities of the System on the same basis as their receipt of the System's assets and equity.[54] This method of apportionment is challenged by several intervenors who suggest a division of contingent liabilities based on a "benefit" or "line of business" approach rather than the "relative net investment" approach provided for by the plan.[55] While this suggestion appears abstractly to have some merit, it is faulty if only because it suffers from serious, indeed insuperable, difficulties in administration.
It may well be doubtful that the Operating Companies benefitted quite as much from the activities challenged in the various pending antitrust suits as AT & T now claims; but it would also surely be incorrect to say that the Operating Companies' past and future lines of business received no benefits. For example, activities which adversely affected competitors of AT & T in the CPE business probably benefitted not only AT & T "headquarters" but also the Operating Companies' own CPE business, and the effects of these activities may even *1072 linger so as to continue to provide the local companies with a benefit after divestiture. Further, evidence at the trial of this case indicated significant involvement of the Operating Company personnel in the so-called "procurement" portion of the case, i.e., that dealing, among other things, with CPE.
Likewise, because the Operating Companies received a substantial portion of revenues from interexchange services through the division of revenues process, and because it appears that they stood to lose revenues to the extent that long distance traffic was handled by one of AT & T's competitors, it is difficult to say that they did not benefit from Bell System activities claimed to be unlawful which affected the interexchange market.
For these reasons, several intervenors candidly acknowledge that it is not possible, at least not without lengthy proceedings, to conclude that the Operating Companies received no benefit from the conduct challenged in pending antitrust actions[56] or precisely how such benefits might be allocated between them and AT & T.[57] The Court will go further. In its view, to attempt to trace benefits from conduct challenged in lawsuits not yet decided to lines of business[58] which will be engaged in at a later time by entities which do not yet exist would involve the Court in an impossible, almost metaphysical task, and it is one which, for that reason, it will not undertake.
More affirmatively, the assumption underlying the plan's allocation of contingent liabilities that, as a matter of equity, the contingent liabilities should be shared proportionately by all entities which "succeed" to the assets of the Bell System, is not unreasonable. Under the current division of revenues and costs within the Bell System, antitrust liabilities are liabilities of the entire System. Contingent antitrust liabilitiesjust as the other contingent liabilities not challenged by the intervenors do not encumber particular assets or particular lines of business; they encumber all of the System's assets and equity. Because the decree provides that the Operating Companies and AT & T will each receive a portion of the consolidated debt and equity of the Bell System,[59] it is reasonable for each of the post-divestiture entities also to receive a corresponding portion of the System's pre-divestiture business risks which encumber the equity.[60]
*1073 The proof of that proposition lies in an examination of the alternatives. If AT & T had decided to settle, insure, or self-insure all contingent liabilities prior to divestiture, the costs of these liabilities would have been reflected now in the Bell System's debt and equity accounts,[61] and there would have been no need for making provision in the plan of reorganization for the allocation of contingent liabilities. These other options were apparently considered by AT & T and the Operating Companies,[62] and the choice was made that each Operating Company would take on a portion of the System's consolidated equity as well as all associated business risks. In furtherance of that decision, all Bell System Companies are, in essence, insuring one another against the possibility that the contingent liabilities will become certain after divestiture. The chief executives of the Regional Companies have informed the Court that, with but one exception, they agree with the choice made in the plan for allocating the contingent liabilities.[63]
For these reasons, the Court rejects the objections to the treatment accorded in *1074 the plan of reorganization to the contingent liabilities,[64] and it will approve that portion of the plan as part of its overall disposition of the parties' motions.
III
Bell Name and Logo
The plan of reorganization originally submitted by AT & T provided that upon the divestiture both AT & T and the Operating Companies could continue to use the "Bell" name.[65] Complex provisions were made with respect to the Bell trademarks,[66] and the plan further provided that if, in light of the Justice Department's opposition to the AT & T approach, the Court were to disapprove it, AT & T "will adopt the alternative ... [to] retain all uses of the Bell name, including all Bell trademarks, the Bell logo or seal, the blue and ochre stripes, and other graphics and all uses of Bell in corporate names" (emphasis added).[67] The Department of Justice did not oppose the second alternative,[68] but with respect to the first it proposed an amendment which AT & T accepted. It is this Department of Justice version (Amendment No. 15), described in more detail below, which is now before the Court.
Under Amendment No. 15, although the Operating Companies would have exclusive rights to the Bell logo in the United States,[69] they could use it only in connection with the provision of exchange telecommunications services, exchange access services, and printed directory advertising. The Operating Companies would be prohibited from using the Bell logo in connection with the marketing of any customer premises equipment (even that supplied by AT & T and its affiliates). As concerns the "Bell" name, the Operating Companies would be permitted to use it only in connection with *1075 services other than the sale of equipment and only when explicitly modified by a geographic designation of an area less than national in scope (e.g., Southwestern Bell); AT & T, on the other hand, could use the name "Bell" on a national basis for all these purposes if preceded by the word "American."[70]
A. Use of the "Bell" Name by both AT & T and the Operating Companies Would Be Confusing
The Department of Justice apparently considered that the original AT & T plan was unacceptable because it could lead to consumer confusion and mutual promotion (i.e., cross subsidization). The proposal presently before the Court is as flawed in those respects as the first plan if not more so and it therefore cannot be approved.
There is no question but that the proposal, if implemented, would be confusing as to the relationship between AT & T and the Operating Companies: contrary to fact, it would lead consumers to believe that there is a continuing close connection between these entities or, worse, that they are all still components of the same company. The proposed system AT & T's use of the "Bell" name preceded by the word "American" and the Operating Companies' use of the "Bell" name preceded by the designation of some smaller geographic area inevitably suggests that each of the Operating Companies provides service in a particular region of the country while AT & T provides the national service which ties all of the components together into one integrated Bell System. As one of the intervenors correctly points out,
for AT & T to suggest that consumers will not likely think that "Illinois Bell" is part of "American Bell" is as preposterous as it is that consumers would not think Illinois to be part of America.[71]
This implication, that there is a continuing link between AT & T and the Operating Companies, would have several significant anticompetitive effects: in the market for intercity telecommunications services it would imply that AT & T is the natural or "official" long distance company to be used in conjunction with the local services provided by the several Bell Operating Companies; in the market for consumer premises equipment it would lead consumers to believe that the local system maintained by a "Bell" Operating Company calls for "American Bell" (i.e., AT & T) equipment, or at a minimum, that American Bell equipment is made for and works better than the equipment of other manufacturers when hooked up to the local Bell network;[72] and it would suggest that the local Bell Operating Companies will warrant, service, and repair the equipment of the national Bell company (i.e., AT & T).
It is only to belabor the obvious to record that with respect to each of these areas, AT & T's competitors would, in terms of consumer perception, come off distinctly second best. None of them could claim a similarly close relationship with the local Operating Companies. Sprint and MCI would inevitably be regarded as not as well suited as AT & T to render long distance service in partnership with the local circuits of the Bell Operating Companies; and Tandy and ITT would constantly have to strive to overcome the perception that, even if their equipment could be connected at all to the local Bell Operating Company loops, it *1076 would not operate as smoothly and naturally with them as would AT & T's, and that, again unlike AT & T's equipment, it would not be locally serviced.
The implication of a continuing relationship between AT & T and the Operating Companies is thus inconsistent with the bedrock principles underlying the decree. The principal purpose of the decree was to introduce fair and equitable competition in the telecommunications markets. This was to be achieved by separating the Operating Companies from AT & T so as to ensure that purchasing decisions regarding AT & T's competitive services and equipment would be unaffected by the position of the Operating Companies as the providers of local monopoly exchange and exchange access services.[73] It was, in brief, the decree's purpose to give AT & T's competitors the opportunity to compete with AT & T on equal terms without artificial impediments. The proposal for joint use of the "Bell" name substantially, if not fatally, undercuts these objectives.[74]
Moreover, as long as AT & T and the Operating Companies both used the "Bell" name, there would also be subsidization between them to the detriment of the other existing and potential competitors. Any promotional efforts by either AT & T or an individual Operating Company would accrue to the benefit of the other, transmitting overtly or subliminally the message that Bell is a single, dominant supplier of telecommunications services and equipment. When an Operating Company advertised under the "Bell" name, it would necessarily also promote the products and services of AT & T marketed under the "American Bell" label, and vice versa. The long-standing consumer association of the "Bell" name with all aspects of the Bell System's local, long distance, and equipment operations would not only persist; it would actually be reinforced.[75]
The decree is designed to effect a radical separation of the Operating Companies from AT & T;[76] it will hardly do to continue *1077 to have the various divested entities of the Bell System[77] hold themselves out as if they were all still part of the same complex.[78] The plan proposed by AT & T would create the impression to the consuming public that the divestiture had never taken place. The Court did not approve a decree breaking up the Bell System to have that system rise again, phoenix-like, in the plan of reorganization.
For these reasons, the "Bell" name and the Bell logo must belong either to AT & T or to the Operating Companies but not to both.
B. AT & T Is Not Entitled to the "Bell" Name and Logo as a Matter of Right
Since the concurrent use by AT & T and the Operating Companies of the name "Bell" cannot be approved, it remains to be decided which entity or entities should inherit that name and along with it the logo as part of the divestiture. Before proceeding to determine whether AT & T or the Operating Companies should, consistently with the decree's principles, be assigned the Bell tradename and trademark, consideration must be given to several preliminary arguments made by AT & T.
First. AT & T contends that it owns the "Bell" name,[79] from which it would presumably follow that it cannot be deprived thereof without its acquiescence. That argument is not well taken.
All of the assets of the combined Bell System are the property of AT & T[80] yet some indeed the majority of these assets are being assigned by the decree to the Operating Companies. If AT & T had a veto power stemming from general principles of property law with respect to the "Bell" name, it would have the same kind of power with regard to all other Bell System assets. Obviously that is not so, in the context of a distribution of assets and liabilities stemming from a break-up of the corporation under a court-approved decree.[81] The question actually is a much more simple and direct one: how should the assets represented by the "Bell" name and logo be distributed in order to effectuate the provisions and principles of the decree an issue which is considered in Part C below.
Second. AT & T next claims that the "Bell" name is part of the heritage of AT & T,[82] and that customers who have purchased Bell telephones and services and who may want to patronize Bell System companies in *1078 the future are entitled to know, post-divestiture, which companies "are historically related to those products and services they have enjoyed for a hundred years."
But not only is that name as much a part of the heritage of the Bell Operating Companies as that of AT & T, but, in the public mind, "Bell" may well be said to stand primarily for the local companies, for that is where the public has traditionally obtained its telephones and its service.[83] It was the Operating Company to which one turned with a malfunction, a complaint, a request for new or altered service, a billing inquiry, and the like. The function of a trademark or tradename is to indicate the party which "puts the goods on the market and accepts the responsibility or plaudits for their acceptability or quality." E. Vandenburgh, Trademark Law and Procedure at 34 (2d ed. & 1979 Supplement).[84] In this instance, that means, more than any other entity, the Operating Companies.
Third. AT & T contends that the name "Bell" is assigned to it by the plan of reorganization and that this assignment should not be disturbed because it allegedly is not inconsistent with the provisions of the decree. It is true that the Department of Justice has capitulated to this argument, stating that it could find no basis for over-turning the AT & T decision. But the provisions of the plan drawn by AT & T are entitled to much less weight here than in other circumstances, since it is clear from the submissions of the designated chief executives of the Regional Companies that a number of them oppose the proposed disposition of the Bell name and logo.[85] Beyond that, as the Court has had occasion to explain a number of times, the plan of reorganization, to be approved, must be consistent not only with the provisions of the decree but also with the underlying principles. For the substantive reasons discussed below, an assignment of the "Bell" name and logo, or either, to AT & T would not be consistent with these principles.
C. Use of the Bell Name and Logo Are More Appropriately Assigned to the Operating Companies than to AT & T
Both the original plan and the proposed Department of Justice amendment would *1079 deny to the Operating Companies the use of the Bell name and logo in marketing customer premises equipment (CPE).[86] The former would have severely limited this use; the latter would preclude it altogether. It is this aspect which has drawn the widest criticism from the States, the interexchange carriers, the manufacturers of CPE, and the Operating Companies themselves. In the view of the Court, the critics are entirely correct.
The decree as ultimately entered expressly authorized the Operating Companies to market customer premises equipment. The Court fully explained why it required this modification as a condition of its approval of the decree:
As against [the] relatively slight risks to competition from Operating Company involvement in the marketing of CPE must be weighed the very substantial contribution these companies could make to vigorous competition in the customer premises equipment market.... The Operating Companies, with their existing relationship to telephone users, are more likely than any other competitive entity to provide an effective counter-balance to AT & T's market strength and thereby to promote a genuinely competitive market.
552 F.Supp. at 192 (footnotes omitted).[87]
To deprive the Operating Companies of the use of the Bell logo and the Bell name in the CPE area would effectively cripple their efforts to become viable competitors in this market. The Court approved the decree in the expectation that the Operating Companies would be able to use their "existing relationship to telephone subscribers" in marketing equipment as a counter to AT & T's market strength.[88]
The various Operating Company officials who provided comments to the Court[89] on this aspect of the plan of reorganization attested to the fact that their
principal strength in the marketplace for customer premises equipment (and other potential services which may be approved by the Court) [is their] long and solid reputation for quality products and excellent service. Our ability to trade on that hard earned reputation is important and should not be compromised by denying us the ability to use the Bell logo and marks as legitimate reminders of who we are.[90]
Several executives of the new Regional Companies have stated that they might have to stay out of the equipment market entirely (or limit themselves to the sale of large-scale equipment) if they were prevented from using the Bell name and logo in connection with equipment marketing. See testimony of Thomas Bolger, June 2, 1983, transcript at 25601-02; see also, Wall Street Journal, Some Bell Companies May Stop Supplying Residential Phones as Competition Grows, June 17, 1983.
It would not be similarly inimical to the purposes and principles of the decree to preclude AT & T from the use of the Bell name and logo. One principle underlying the decree is that both AT & T and the *1080 Operating Companies shall be in a position to be vigorous competitors with each other and with others in the marketing of customer premises equipment. To that end, the decree sets up a carefully balanced structure, as follows. AT & T will retain all embedded CPE; it will retain the Bell System retail outlets; and it will retain the ability both to manufacture and to market CPE. The decree further takes into account in this regard that, by comparison with the individual Operating Companies, AT & T will be a giant, with financial and other resources far overshadowing those of the local entities.
The Operating Companies, on the other hand, will come out of the divestiture with relatively limited CPE-related resources and functions. They will be prohibited from manufacturing CPE; they will be deprived in part of their existing customer base by the assignment of existing CPE to AT & T; they will lack the ready-made outlet of existing retail stores; and they will not have the benefit of Bell personnel experienced in the marketing of CPE. Insofar as such marketing is concerned, these companies will essentially be limited to their proximity to the local customer base in addition to the goodwill inherent in the "Bell" name and logo (if these are assigned to them). In short, in competitive terms, the assignment of the Bell name and logo to the Operating Companies rather than to AT & T can hardly be characterized as unfair to the latter.[91] The true situation is that, without the name and logo the local companies' right, under the decree, to market CPE would be defeated, while AT & T's right to do so would only be minimally affected.[92]
It is appropriate, finally, to quote from the representations which were made to the Court by AT & T's counsel at last year's public interest hearing. On June 29, 1982, counsel stated in response to comments made by an attorney representing a competitor that
... The problem is not the logo, the yellow and blue stripes and that sort of thing .... We do not want to get into that fight and we have already agreed ... that the Bell that you know, the stripes that you have come to know they will go to the BOCs. Trucks that get repainted will be the Long Lines trucks, [not?] the BOC trucks.
The only thing left then is the names. I think Tandy's counsel was very appropriate in saying that after all, you're breaking up the Bell System.... What he objected to was concurrent use of the same corporate names. I stand before you and say there will be no such concurrent use of the same corporate name after the split.
When the Court suggested that this understanding had best be incorporated in the decree, AT & T's counsel replied that this was not necessary because
[t]he question has been raised about these common names, the Court Reporter is recording this and there is a record of this hearing that should well outlast all of us, I suppose.
Transcript at 25214-15.
To be sure, it could be argued that these statements are not without some ambiguity.[93] Yet the overwhelming sense of the *1081 representation, particularly when juxtaposed against the arguments made by counsel for one of AT & T's competitors and that of the Department of Justice, was that AT & T was content to have the Operating Companies inherit the Bell logo and name.[94]
For the reasons stated, the Court will refuse to approve the plan of reorganization unless it is amended to provide for use of the "Bell" name and logo by the Operating Companies (except as provided in Part D infra) and for a prohibition on AT & T's use after January 1, 1984,[95] of the "Bell" name or the word "Bell" in any existing or new corporate name or in connection with the manufacture or marketing of any product or service, or for any other purpose.[96]
D. Limitations on the Operating Companies
The use which the Operating Companies may make of the Bell name and logo requires additional discussion.
First. Under the current version of the plan of reorganization, the "Bell" trademarks are to be assigned to the Central Staff Organization.[97] However, if the CSO were to receive the assignment of the name and logo, it might also have to administer centrally a program of quality control, for lack of reasonable "quality control" could be regarded as working an abandonment of the licensor's registration of its trademark. See Lanham Act, 15 U.S.C. § 1051 et seq.; Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 367 (2d Cir.1959). Such monitoring of the Operating Companies by the CSO would run counter to the notion that it is the Operating Companies which control the CSO, not vice versa. Moreover, each Regional Company must have individual responsibility for giving meaning to the products or services it offers under the name Bell, consistent with trademark and antitrust law. Accordingly, the Court will require that the tradename and trademarks shall pass directly to the Regional Companies, without intervention of the CSO.
Second. With respect to exchange telecommunications, exchange access, and directory advertising, the Operating Companies and the Regional Companies will, by definition, be limited to clearly defined geographic areas, and they will therefore use the name "Bell" only in conjunction with a geographic designation indicating the relevant territory. Likewise, in their corporate names, the Operating and Regional Companies will use "Bell" only in conjunction with a geographic prefix. In the marketing of equipment, however, these companies may wish to compete in places beyond their service territories, particularly with respect to the sale of large-scale telecommunications equipment to business customers. There is no reason why such competition should be *1082 precluded by the imposition of territorial restrictions.[98]
To the extent that an Operating Company sold CPE within its own geographic area, there might be no problem. Confusion would result, however, if hypothetically, Southern Bell, Northwestern Bell, and Pennsylvania Bell all marketed equipment in, say, Chicago, simply as "Bell" products, or if they stamped only the Bell logo on the equipment they sold there. The name "Bell" would in that case have little meaning; both it and the logo might be of dubious legitimacy under trademark law; and each company would run the risk of being sued by Illinois Bell for unfair competition. Accordingly, an Operating Company wishing to trade in another's territory shall not use the name "Bell" without a trade modifier, nor may it use the logo standing alone. See, e.g., Standard Oil Company v. Standard Oil Company, 252 F.2d 65 (10th Cir. 1958); Mister Donut of America, Inc. v. Mr. Donut, Inc., 418 F.2d 838 (9th Cir.1969).[99]
IV
Patents
The issue before the Court is not, as it is with regard to the Bell name and logo, whether the Bell system patents should be assigned to AT & T or to the Operating Companies. AT & T will, in any event, retain ownership of all the patents. The question to be decided is the extent to which the Operating Companies will share in the patents by being granted licenses thereto, and what right these companies should have to grant sublicenses to others.
A. Meaning of the Decree
The plan of reorganization provides that the Operating Companies will be granted royalty-free licenses to use patents[100] now owned by AT & T or to be issued to AT & T within five years after divestiture, to the extent that they relate to exchange, exchange access, and printed directory advertising services.[101] Under the plan, the Operating Companies will not, however, be granted licenses to patents relating (1) to any services which the decree prohibits them from offering (such as inter-LATA service) and (2) to the provision of customer premises equipment. To justify these limitations, AT & T and the Department of Justice rely upon section I(A)(1) of the decree, which provides, inter alia, for the
transfer from AT & T ... to the BOCs ... of sufficient ... rights to technical information to permit the BOCs to perform, independently of AT & T, exchange telecommunications and exchange access functions
and on section VIII(B) which provides that
all facilities, personnel, systems, and rights to technical information owned by *1083 AT & T ... which are necessary for the production, publication, and distribution of printed advertising directories shall be transferred to the separated BOCs.
In the view of these parties, no patent rights need to be granted to the Operating Companies on any basis other than these explicit provisions contained within the "four corners" of the decree. This is erroneous.
When the Court approved the proposed decree on August 11, 1982, it made the approval contingent upon the adoption by the parties of a number of modifications. These modifications, it was made clear at the time, were required only for the most substantial changes or clarifications; with respect to other subjects, the Court stated that it was content to rely upon the parties' representations and promises and its own authority to give them effect during the implementation proceedings, including by its authority to approve or disapprove of the plan of reorganization. Thus, the August 11, 1982 Opinion explained
With respect to a number of subjects, the proposed decree establishes merely general principles and objectives, leaving the specific implementing details for subsequent action, principally by the plan of reorganization.... The parties have also made informal promises, either to each other or to the Court, as to how they intend to interpret or implement various provisions. The Court has decided that its public interest responsibilities require that it establish a process for determining whether the plan of reorganization and other, subsequent actions by AT & T actually implement these principles and promises in keeping with the objectives of the judgment....
For that reason, the Court is requiring that the judgment be modified ... to provide for a proceeding ... in which the Court will determine whether the plan of reorganization is consistent with the decree's general principles and promises (emphasis added).
552 F.Supp. at 224-25.
One of these promises concerned patents. In its August 11, 1982 Opinion, the Court took note of the fact that
AT & T has proposed granting to the Operating Companies, on a royalty-free basis, all existing patents and all patents issued for a period of five years following approval of the proposed decree.
552 F.Supp. at 177 (emphasis added).[102] This statement was not conjured up by the Court; it reflects repeated representations made to it both by AT & T and by the Department of Justice. For example, the Department stated in its Response to Public Comments of May 20, 1982 at 132 that
the reorganization plan will require AT & T to grant royalty-free licenses to the BOCs for all of its existing patents, and for all patents issued for a period of five years following entry of the proposed modification (emphasis added).
See also Department of Justice Response to Public Comments, May 20, 1982, at 38; AT & T Reply to Comments, May 21, 1982, at 123; and see note 105 infra.
These various representations, said the Court in its August 11, 1982 Opinion,
are adequate to support the conclusion that the Operating Companies will possess the necessary patent and technical information resources.[103]
The arguments now made by AT & T and the Department of Justice in support of their claim that the word "all" in their several representations to the Court did not really mean "all," and that in context they meant something else, are disingenuous to say the least.[104]
Both parties base their narrow interpretations on the circumstance that the representations were made at a time when the *1084 proposed decree would have limited the Operating Companies to exchange telecommunications and exchange access services.[105] While this is an accurate depiction of their timing, it does not in the least support the conclusion that the promises were or reasonably should have been regarded as limited to patents which related to these lines of business.
These promises, whatever their timing, were relevant not only to the question of what resources were required to be transferred to the Operating Companies to implement the exchange telecommunications and access service provisions of section I(A)(1), but also to two other issues whether the Operating Companies should receive licenses to patents which they had in substantial part financed, and whether AT & T should be relieved of the obligation, imposed by the 1956 decree, to license its patents to all applicants on a nondiscriminatory basis.
First. There were numerous references throughout the Tunney Act proceedings to the fact that the Operating Companies, by means of the licensing contracts, had contributed substantial amounts to the cost of the research which led to the patents, and this was always regarded by all as at least a possible basis for awarding licenses to the patents to these companies. See, e.g., Department of Justice Response to Public Comments, May 20, 1982, at 38.
Second. The Department of Justice took the position during the Tunney Act proceedings that it was reasonable and in the public interest to relieve AT & T of the patent provisions of the 1956 decree which required it to grant licenses to all comers, foreign and domestic. One basic argument made to buttress the claim of reasonableness was that the fruits of the Bell system research would not simply be lost to the world because the reorganization plan would still require AT & T to grant royalty-free licenses to the Operating Companies for all of its existing patents and for all patents issued for a period of five years following entry of the decree.[106] The Department explained that the effect of such a grant would be that
the BOCs will have the right to sublicense these patents for their own use, including the manufacture of equipment for the BOCs' purchase. Thus, as a practical matter, many AT & T patents issued within the next several years must also be licensed to AT & T's competitors notwithstanding entry of the proposed modification.
. . . . .
Because of the existence of requirements that AT & T license patents heretofore *1085 issued or issued during the next five years, and in view of the BOCs' sublicensing rights, it is apparent that a significant portion, if not all, of such `work in progress' patents will be licensed.... [T]here is no reason to believe that entry of the proposed modification will result in the removal of `work in progress' patents from the pool of AT & T patents generally available to industry.[107]
This expansive description of the proposed distribution of patent rights was not in any way limited, explicitly or implicitly, to section I(A)(1) of the decree or to intra-LATA services. The Justice Department's reference was to the effect of the proposed decree on the mandatory licensing provisions of the 1956 decree and these provisions clearly applied to all Bell System patents (including, of course, the CPE patents).
There is, in view of that history, no reasonable basis for the conclusion that the various references by AT & T and the Department of Justice to "all" patents did not mean just that, or that CPE patents in particular were meant to be withheld from the Operating Companies. Thus, when the decree was modified to authorize the Operating Companies to provide CPE, there was no need again to specify the patent rights incidental to this modification[108] rights which were already guaranteed to the Operating Companies by the parties' representations and by the Court's retention of jurisdiction to give effect thereto. As the Court said with reference to patents and technical information,
When [the plan of reorganization] is submitted ... the Court will evaluate [that plan] to make certain that [the appropriate details] conform to the general principles implied by these assurances.
552 F.Supp. at 177.
AT & T next contends that, if it were required to license all the Bell System patents to the Operating Companies which would then have the right to sublicense these patents to others, it would be required to "give away its technology" (emphasis added).[109] That formulation misstates the issue. Because of their financing of much Bell System research through the licensing contracts, what the Operating Companies will be receiving cannot fairly be described as AT & T's technology;[110] that technology is as much theirs as it is AT & T's. See 552 F.Supp. at 177.[111] Also, as the Court has already noted (see Part II above) all of the assets and all of the liabilities of the Bell System are being distributed between AT & T and the Operating Companies. AT & T cannot assert that, in the context of that distribution, the patents are "its" technology unless it is also prepared to live with the proposition that the liabilities of the Bell System are "its" liabilities. In short, it is entirely appropriate under the decree for *1086 the Operating Companies to receive licenses to the existing patents and to those which will be issued within the next five years.[112]
AT & T and the Department of Justice finally argue that under this rule, the Operating Companies would receive licenses to patents for services which the decree currently prohibits them from offering,[113] and that there could be no justification for such an action. It is not true, however, that even with respect to such subjects as inter-LATA services, the Operating Companies will be entirely barred from entry; they will be in these lines of business as of the very date of divestiture, albeit on a limited scale,[114] and they will therefore be able legitimately to make use of the pertinent patents[115] and the technology they represent.[116] Additionally, the line of business restrictions which will initially apply might in the future be lifted by the Court pursuant to section VIII(C) of the decree, and the patents would be useful to the Operating Companies at that time.[117]
B. Sublicensing by the Operating Companies
It is thus clear that, in view of the representations made by the parties and accepted by the Court as part of the decree, as well as in view of the various supporting considerations (e.g., that the Operating Companies in significant part financed the research which produced the patents), the local companies are entitled to licenses to all the patents secured during the course of their association with AT & T and for five years after the association is dissolved.[118] This does not mean, however, as AT & T assumes and as some of the intervenors strenuously urge, that the Operating Companies may make direct use of the patents with respect to services which are otherwise forbidden to them by the decree. What must be firmly kept in mind is that, since the Operating Companies will not be allowed to enter manufacturing, they will be able to make effective use of the patent licenses only to the extent that they will have the power to grant sublicenses to manufacturers. As explained below, that power will exist with respect to some subjects immediately upon divestiture; with respect to others it is inchoate and its actual exercise will depend upon the removal of the line of business restrictions under section VIII(C).
*1087 The Operating Companies may grant sublicenses consistently with the decree to the extent that they will use the technology covered by the particular patents in their provision of products and services which they are authorized to sell or render.[119] They may not, however, grant sublicenses with respect to any other patents, for two reasons: first, because they may not, absent special permission, engage in new lines of business (sections II(D), VIII(C)), e.g., the sale of patent rights simply as a business venture unrelated to their own use of the technology; and second, because AT & T's manufacturing competitors are not entitled, as such, to the fruits of the Bell System research (552 F.Supp. at 176-77).[120]
On the basis of these principles, it is convenient to consider the sublicensing issue with respect to two distinct categories of products or services those which the Operating Companies will be allowed to market immediately upon divestiture, and those which they will not be permitted to market at that time.
The first of these categories includes, of course, customer premises equipment.[121] In an effort, accordingly, to resolve whether the grant of sublicenses to CPE patents by the Operating Companies to manufacturers of CPE would be used by the local companies in their provision of CPE and whether therefore these companies may sublicense Bell System patents to such manufacturersthe Court has received and considered evidence (in both oral and affidavit form) from the chief executives of the Regional Companies. This evidence indicates that the Operating Companies will use the end products of the sublicenses in several respects.
First. The Operating Companies must have the right to sublicense CPE patents to manufacturers of their choice if they are to develop a CPE product line distinct from that of AT & T. As Thomas Bolger, designated chief executive officer of the Mid-Atlantic Region, has pointed out, if the Operating Companies were not granted rights to CPE patents, "the selection of the vendor to use Bell technology to supply a BOC would be taken from the BOCs and left to AT & T [which] might, or might not, cross-license the vendor with whom BOCs wish to deal."[122] Under such circumstances, the reliance *1088 of the Operating Companies upon Western Electric equipment would be perpetuated, thus impeding competition in the telecommunications equipment markets. It follows, of course, that without CPE patent rights and the ability to market a distinctive product line, the Operating Companies would not be able to provide the "effective counterbalance to AT & T's market strength" in CPE marketing, which the Court sought to establish in modifying the decree. 552 F.Supp. at 192.[123]
Second. If the Operating Companies are able to sublicense CPE patents, they will probably be able to negotiate lower equipment purchase prices and thus to share in the benefits from the Bell System research which they supported for so long.[124] This, in turn, will facilitate greater CPE sales and higher Operating Company revenues, and contribute in the long run to the financial viability of the Operating Companies (and indirectly to stable local telephone rates).[125]
Third. The sublicensing of patents will permit the Operating Companies to benefit from increased competition among their suppliers another development which would tend to reduce the price of CPE purchased by the Operating Companies for resale. To the extent that greater competition among CPE manufacturers[126] and lower wholesale prices paid by the Operating Companies will result in lower retail prices for consumers, the public will benefit as well.
For these reasons, the Court concludes that the sublicensing of CPE patents to manufacturers of CPE would be a legitimate part of the Operating Companies' CPE marketing business.
In contrast to the substantive benefits which would inure to the Operating Companies from the ability to license CPE patents, only one possible adverse effect has been suggested.[127] The Department of Justice contends that Operating Company sublicensing of such patents would be a "step into the manufacturing area," contrary to section VIII(A) of the decree. Such sublicensing, according to the Department, would give the Operating Companies an interest in the success of their manufacturer-sublicensees, and this, coupled with the proprietary interest in the particular technology covered by the sublicense, would create an incentive for anticompetitive acts.[128]
In substance, this argument is but a variation of the claims made by the Department when it opposed the Court's decision *1089 to permit the Operating Companies to enter the CPE market. The Court then rejected the Department's assertion[129] that Operating Company marketing of CPE would result in anticompetitive conduct,[130] because it concluded that the subsidization by the Operating Companies of their retail CPE operations with monopoly-derived revenues was entirely improbable.
There is no good reason and the Department has offered none[131] why the Operating Companies would have a greater incentive or opportunity to engage in such subsidization merely because they will be able to sublicense CPE patents to independent manufacturers.[132] Such an ability would no more facilitate coordination between separate corporations likely to lead to cross-subsidization than the purchasing contracts themselves, nor would the sublicensing of patents make anti-competitive activities any less detectable.[133] See 552 F.Supp. at 191-92.[134]
Finally, it is surely not without significance that the manufacturers of CPE *1090 whom the Department of Justice is ostensibly attempting to protect uniformly support the grant of sublicensing rights to the Operating Companies.
The Court concludes that the Operating Companies may sublicense their Bell System patent rights to manufacturers of CPE where the equipment produced under the sublicenses will be sold to the Operating Companies.
The same rule applies to the services which the Operating Companies will be authorized to perform. Clearly, they may sublicense patents for the manufacture of products which will assist them in providing intra-LATA service. Further, although prohibited from providing inter-LATA service generally, they will be in two relatively small areas of that market: corridor services[135] and Official Services.[136] Under the rationale applied to CPE, sublicenses may therefore be granted to manufacturers for the provision of equipment for the Operating Companies' own use in these two authorized inter-LATA services.[137]
Finally, section VIII(C) of the decree provides that the Court may, in the future, allow the Operating Companies to enter lines of business presently prohibited to them.[138] While, of course, the Operating Companies could not, immediately upon divestiture, sublicense patents useful with respect to such lines of business (see note 120 supra), the patent licenses assigned to them at the time of divestiture will become valuable through the automatic availability of the right to sublicense to the extent that section VIII(C) is successfully invoked in the future.[139]
C. General Considerations
Two additional considerations applicable both to the patent issue and the "Bell" name and logo questions deserve brief mention.
First. The Department of Justice[140] has been opposed to the marketing of CPE by the Operating Companies from the very outset. It was the Department which insisted on a provision in the proposed decree prohibiting such marketing. See, e.g., Brief of the United States, June 14, 1982, at 30. When the Court on August 11, 1982, informed the parties that it would not approve the proposed decree unless that prohibition was eliminated, the Department sought reconsideration the only issue with respect to which it made such an effort. See Memorandum, August 23, 1982. Finally, when the Court denied reconsideration, the Department, on the very date of filing the modified decree, submitted a memorandum in which it expressed "substantial doubts" that the modification allowing the Operating Companies to market CPE was "properly within the Court's authority under the public interest standard or [was] supported by the antitrust theory and the record in these cases."
The decree entered in this case allows the Operating Companies to market CPE. That decree was signed by the two parties, and it was entered as a judgment of this *1091 Court. Whatever may be the views of the Department of Justice or some of its officials regarding the wisdom of the CPE provision, it will be enforced. And the Court will not allow this provision to be stripped of its vitality by artificial restraints which would undermine the competitive position of the Operating Companies in the CPE business vis-a-vis AT & T.[141]
Second. The Court has previously taken note of the recent decision of the Federal Communications Commission concerning access charges. See 1983-1 Trade Cas. ¶ 65,333 at 66,973-75 (April 20, 1983). Briefly, the Court was advised prior to the entry of the decree that whatever subsidy from long distance rates might in the past have been inherent in the local rate structure could and would be preserved by means of access charges levied on interexchange carriers.[142] However, in December of last year, the FCC decided to levy such charges also on individual subscribers.[143]
This access charge decision undermines one of the assumptions underlying the Court's approval of the decree[144] that there would be no impairment of the principle of universal service[145] that is, that everyone, regardless of income, would have access at least to a minimum of telephone service, in recognition of the fact that this service is a necessity rather than a luxury.[146] The FCC's decision unnecessarily[147] jeopardizes this objective.
Whatever its authority or lack of it with regard to this development,[148] the Court may certainly take it into account, as further support for conclusions which are sound for other reasons. In passing upon the tradename, trademark, and patent issues, as well as on various other questions, the Court has done just that (see p. 1121 infra). In each instance, the Court's decision is fully justified by other, specific considerations cited in the text, but in each such instance the Court also found that its decision was buttressed by the need to cope with the threat posed to universal, low-cost, local telephone service.
V
Employees
A. Pension Plan
Two challenges are made to the employee pension provisions of the plan of reorganization.
*1092 1. Union Challenge
The Communications Workers of America (Union)[149] claims that the plan's proposal to divide the Bell System Pension Plan (BSPP) into nine separate plans will materially alter the terms and conditions of employment within the Bell System, and that the plan therefore impermissibly interferes with the Union's right to bargain over pension benefits.
The two current pension plans, the BSPP covering nonmanagement employees and the Bell System Management Pension Plan (BSMPP) covering management employees, have existed in their present form only since 1980. Prior to that time, the many separate companies which constitute the Bell System administered separate pension plans. In October 1980 the plans were aggregated,[150] and even though a formal separation between management and nonmanagement personnel was maintained, the assets of both the BSPP and BSMPP have since 1980 been pooled for investment purposes into one Bell System Trust. The plan of reorganization would divide each integrated plan into nine plans to correspond to the nine entities which inherit AT & T's assets and functions after January 1, 1984.[151]
The Union, which is concerned specifically with the BSPP, offers eight changes it believes this division would cause, but upon examination they reduce to three general categories. First, the Union complains that the plan would phase out the "interchange" provisions in the BSPP governing the portability of service credit from one Bell System company to another. Second, it speculates that each of the nine plans will be financially more risky than the existing central plan,[152] with the result that an employee's benefits may be reduced. Third, the Union maintains that the post-divestiture plans as described in the plan of reorganizationwould treat former employees who are rehired differently from the way they now are treated for pension purposes.[153]
In approving the divestiture and rejecting the Union's request that the decree be modified to provide that it would not preclude continued national bargaining in telecommunications, the Court stated last August:
[T]here is no need for such a modification. There is nothing in the proposed decree or in general principles of law which would preclude or interfere with such bargaining, and there accordingly is no reason whatever why, following the entry of the decree and the reorganization, such bargaining cannot continue as in the past.
[T]he settlement of the lawsuits ... do[es] not involve AT & T's labor relations and, more particularly, [it has] nothing to do with the Communications Workers of America or its relationship with the Bell System. [citations omitted]. It follows that the union, on the one hand, and AT & T, and the divested Operating Companies, on the other, will be entirely free to arrange their mutual labor relationships as the Bell System and the union did in the past, irrespective of the structural *1093 changes that may be brought about by the decree
552 F.Supp. at 210.
The Union cites this language, the labor exception to the Sherman Act, federal labor policy, and the lack of relation between the Bell System Pension Plan and AT & T's alleged anticompetitive conduct as reasons why the Court should not approve the plan's proposed treatment of the BSPP but should commit the future of the BSPP to the results of collective bargaining.
First. The Court observes that the plan of reorganization does acknowledge the role of collective bargaining over pension benefits. AT & T states that
[t]he provisions of this section [regarding pensions] are based on the Bell System's plans and trusts as they currently exist. These plans and trusts may be modified during 1983 or thereafter as a result of collective bargaining or other requirements.[154]
Thus, it does not appear that AT & T is attempting to ride roughshod over the bargaining rights of its employees.
Second. Although AT & T could not materially alter pension benefits unilaterally (see NLRB v. Katz, 369 U.S. 736, 82 S. Ct. 1107, 8 L. Ed. 2d 230 (1962), Bastian-Blessing, Division of Golconda Corp. v. NLRB, 474 F.2d 49 (6th Cir.1973)), this principle and the cases which support it are inapplicable here.[155] We are not dealing here with unilateral employer action in the sense in which it is condemned by the labor laws, but with a break-up of the employer company as part of a comprehensive settlement of a complex antitrust action. See Newspaper Guild of Greater Philadelphia, Local 10 v. NLRB, 636 F.2d 550, 560 (D.C.Cir.1980).
Furthermore, contrary to the Union's assumption, the decree in this case requires far more than a separation of AT & T's telecommunications functions; it requires the complete economic separation of the various components of the Bell System. See, e.g., sections I(A)(1); I(A)(3). It would be entirely inconsistent with the decree to perpetuate a unified pension plan, with the result that employees of the independently owned and functioning Operating Companies would continue to look to AT & T for their pension benefits. As it is, equipment manufacturers are concerned that they may not receive equitable treatment from Central Staff Organization employees due to their alleged emotional ties to their former parent company. Such claims would acquire considerable plausibility if CSO and Operating Company employees believed that they had a continued economic stake in AT & T in the form of their retirement benefits.
At a minimum, the decree requires that the pension assets of employees follow them to their new assignments, and that the Regional Companies develop, as soon as possible, self-sufficient pension plans.[156] Unionemployer *1094 bargaining for a continued, unified pension plan is thus not a viable option. This is a structural matter covered by the decree that is not inconsistent with federal labor policy, for there will be no "changes in coverage, levels, or administration of the plan." Connecticut Light & Power Co. v. NLRB, 476 F.2d 1079, 1082 (2d Cir.1973).[157]
The phasing out of unlimited portability[158] is likewise a natural consequence of divestiture, for it would surely be inconsistent with the independence of the Operating Companies from AT & T and from one another to allow employees to rotate among them as freely as if these companies were related entities.[159] The Court therefore approves AT & T's proposals which would divide the two existing plans into nine separate plans, and the provisions governing the division of pension assets through actuarial studies both before and after divestiture to ensure that the assets will be equitably distributed.
Third. There is merit in the Union's position that the Court need not and should not involve itself in the specific terms of the post-divestiture pension plans beyond their structure. Unlike the threshold issues of the pension plans' division and the elimination of unlimited portability, the precise terms of the pension plans admit of several resolutions each of which would be consistent with the decree.[160] However such non-structural aspects of the pension plans may have been resolved in the past, their resolution is not cast in concrete. Accordingly, they are open for further decision, whether by collective bargaining when the contract governing the current pension plan expires in August 1983, or otherwise as AT & T and the Union see fit. The Court's approval of the plan of reorganization is therefore not to be regarded as an endorsement of whatever AT & T may be planning with respect to post-divestiture pension benefits. To put it another way, there is nothing in the Court's approval of the plan of reorganization (other than the structural and portability matters discussed above) which would in any way impair the obligation of AT & T to bargain in good faith with the Union.
*1095 2. State Objections
The State of Maine and the Maine Public Utilities Commission argue that the plan of reorganization improperly allocates certain pension assets to AT & T. Under the plan, the assets of BSPP and BSMPP would be divided and allocated among the nine post-divestiture entities so that the accrual rates[161] for each of the new plans after divestiture would be approximately the same as will be the rates under the AT & T plans immediately prior to divestiture.
The allocation would be accomplished in two steps: first, there would be coverage of an amount equal to the present value of accrued benefits for each participant; second, all remaining assets the difference between the present value of assets and liabilities would be allocated so that the accrual rates for the post-divestiture pension plans would be approximately the same as the accrual rates in effect for the AT & T plans immediately prior to divestiture. Maine does not quarrel with the first step which, in any event, is required by the Employee Retirement Income Security Act (ERISA) and section 414(a) of the Internal Revenue Code. However, in its view, the assets in excess of those needed to cover accrued benefits[162] should be allocated in proportion to the contributions which produced the excess rather than on the basis proposed by AT & T.
Maine claims that because some 10 to 20 percent of present Operating Company employees will be transferred to AT & T,[163] it is likely that excess assets originally contributed to the pension plans by the Operating Companies will improperly be transferred to the AT & T plan (thus reducing proportionately its pension liabilities).[164]
It may well be true, as Maine contends[165] that the law does not affirmatively require that excess assets must follow the transferred employees from the Operating Companies to AT & T since there is no requirement that employees receive the benefit of excess assets.[166] What is flawed, however, is the State's argument that it is improper for the plan of reorganization to allocate the excess funds in accordance with future payment obligations and contribution levels, and that these funds must be allocated instead in accordance with the contributions made in the past. What this argument overlooks is that while the Operating Companies would be losing excess assets associated with the transferred employees, they would also be losing liabilities, i.e., the benefits the employee will accrue in the future. Under Maine's proposal, entities with higher liabilities after divestiture than before would have fewer pension fund assets to meet their future obligations, requiring a higher funding rate. Conversely, those companies which will have lower pension liabilities after divestiture than before would enjoy a windfall. The most important consideration is the interest of the participants and beneficiaries,[167] and they are best served by the proposed plan.[168]
*1096 B. Employee Transfers
In addition to the one-year true-up period[169] immediately following divestiture during which any employee may be transferred between AT & T and an Operating Company[170] without loss of seniority rights or other benefits,[171] the plan further provides that employees in four specific job categories[172] may be transferred without loss of benefits after the one-year period.[173]
Section I(A)(2) of the decree provides that AT & T and the Operating Companies may continue to share certain facilities, and the plan implements that provision by specifying that the entities "intend to cease sharing network facilities as promptly as is reasonably feasible." Plan of Reorganization at 56. The plan's employee transfer provisions are justified by AT & T on the basis that the job functions of these employees will begin with one entity but will need to be transferred to another as transitory arrangements for the sharing of multi-function facilities are phased out. Response to Objections at 382-83.
The principal objections raised to the plan's grant of transfer rights to the employees are that this may result in fraternization between AT & T and Operating Company personnel, the disclosure of equal access network information to AT & T employees, the perpetuation of loyalty to the Bell System, and the provision by Operating Company personnel of certain inter-exchange services to AT & T but not to other interexchange carriers. See, e.g., Comments of Satellite Business Systems, February 15, 1983, at 65-66, 91.
The intervenors' concerns are not frivolous; however, given the necessity for some sharing of multifunction facilities, the solution adopted in the plan is, in general, a reasonable one. The basic alternative to the provisions for transfers without loss of benefits is a lay-off of the affected employees by one entity to be followed by a (possible) rehire by the other. The Court has no intention whatever of unnecessarily imposing such a hardship on these employees. *1097 Moreover, the entire matter must be kept in perspective: the individuals involved will not be managers or other policy makers but relatively low level employees. It is thus unlikely that manipulation or the disclosure of sensitive information to AT & T will occur. The loss of employment security and the unusual and unnecessary inefficiencies which would be the consequence of a rejection of most of the transfer provisions can therefore not be justified.
There is, however, one exception to this principle. AT & T has not demonstrated why Operating Company personnel should write inter-LATA orders for AT & T for up to 5½ years after divestiture. Such order-writing is purely an interexchange function; it is performed by persons, not "facilities" as that word is used in section I(A)(2); and this service would not be available to any interexchange carrier other than AT & T. Indeed, such order-writing by Operating Company personnel for AT & T could provide the latter with a significant competitive advantage. The Court will not permit sharing of this function, and it will require the deletion of references to such sharing from the plan of reorganization (at pp. 253, 254, 279-80, and 287), unless the benefits are made available to all interexchange carriers.
The Union, unlike the other intervenors,[174] suggests that the Court require modification of the plan to permit unlimited transfers of employees among the post-divestiture Bell System entities. As noted supra, such a provision would be flatly inconsistent with section I(A) of the decree and with the underlying rationale of the judgment that the economic integration among the various Bell System entities must cease. That proposal, too, will therefore be rejected.
VI
Official Services and Other Facilities
With one major exception, the division of network facilities and other assets is reasonable and fully consistent with the decree.
A. Official Services
The Court will not approve the decision made in the plan of reorganization with regard to so-called Official Services. These services represent communications between personnel or equipment of an Operating company located in various areas and communications between Operating Companies and their customers.[175] The plan of reorganization provides that Bell System facilities used in whole or in part for Official Services will be assigned according to the same rules applicable to other transmission facilities; meaning that, if facilities are used solely or predominantly to perform inter-LATA functions, they will be assigned to *1098 AT & T even if the functions constitute Official Services.[176] Additionally, the Department of Justice has indicated to one or more Operating Companies[177] that it would object if they constructed and operated their own inter-LATA facilities to administer Official Services.[178] In the view of the Court, neither the plan's treatment of Official Service facilities nor the position of the Department of Justice is consistent with the principles underlying the decree.
Each Operating Company conducts its authorized operations in several LATAs. In order to achieve operational efficiencies, the four basic categories of Official Service systems[179] have been designed to serve geographical areas which are usually larger than individual LATAs. For example, the so-called "Operational Support System Networks" (see note 179 supra) typically cover an entire state or major portion of a state, permitting the monitoring and controlling of trunks and switches and the routing of traffic from a centralized location. Directory assistance, repair service offices, and business offices likewise serve geographical areas which are larger than individual LATAs.[180]
For the reasons stated below, it makes no sense to prohibit the Operating Companies from using, constructing, and operating on their own the facilities they need to conduct Official Services, whether they be intra-LATA or inter-LATA in character, and to require them instead to lease such facilities from AT & T.[181]
*1099 The Department of Justice recognizes "that the BOCs may have constructed their internal data processing and operational support systems on the assumption that communications links between their facilities would be over BOC-owned facilities,"[182] and further that to require such communications to be "placed on commercial facilities might abruptly increase the BOCs' cost of providing service."[183] Yet, relying solely on the curt rationale that such traffic is correctly classified as inter-LATA, the Department supports the assignment of all existing inter-LATA Official Service facilities to AT & T. This solution is both unwise and unnecessary.
Only two alternatives would be available to the Operating Companies under the current plan, both of them undesirable. One option would be for the companies to redesign their Official Service systems so that none of their internal communications crosses LATA boundaries. This would result in a loss of the operational and cost efficiencies produced by the centralization which currently exists in the local phone system.[184] In effect, a separate, self-contained Operating Company would be created for each LATA a result clearly not contemplated by the decree.
The other option would be to have the Operating Companies' Official Service communications carried by AT & T or another interexchange carrier. See note 181 supra. This alternative would not only be very costly[185] but it suffers from a number of other infirmities. As William Weiss, chief executive-designate of the Midwest Region, points out:
Speed and reliability are critically important with respect to the BOCs' monitoring and controlling of their switches and trunks. BOC operating personnel and computers must have continuous, instantaneous information regarding traffic loads and the operating status of equipment. When traffic overloads or equipment malfunctions occur, they must have the capability to immediately control equipment and reroute traffic. Forcing the BOCs to rely on third parties for official service communications ... could seriously jeopardize the BOCs' fulfillment of their responsibilities to provide intra-LATA communications and exchange access....
Moreover ... [i]n many instances, the BOCs could more efficiently conduct these communications over inter-LATA facilities constructed and owned by the BOCs. The BOCs' ability to deploy new transmission technologies is at least as good and probably better than that of third parties who might provide us with inter-LATA services. The cost of building facilities utilizing those new technologies might be far less than the cost of leasing facilities employing older, and thus higher-priced technologies.
... The critical point is that the BOCs should be free to conduct their official services communications in the optimal *1100 manner, selecting whichever option is the most reliable and cost-efficient.[186]
Such significant burdens should not be imposed on the Operating Companies unless this is clearly required by the decree. An examination of the decree's provisions shows, however, that a prohibition on the maintenance of inter-LATA Official Service facilities by the Operating Companies is required neither by its spirit nor by its letter.
The Operating Companies are prohibited from engaging in intercity, inter-LATA services in order to prevent a recurrence of the alleged anticompetitive practices of AT & T, which was claimed by the government to have used its local monopolies to disadvantage its intercity competitors in a variety of ways. That rationale is wholly inapplicable to the provision of inter-LATA service by each Operating Company for its own internal, official purposes.[187] Only by a highly abstract distinction between services that are once and for all labelled "competitive" or "monopolistic" could that prohibition be applied to the Operating Companies' Official Services. Moreover, it is ironic that a prohibition which grew out of AT & T's dominant competitive position and its alleged misuse of that position is now sought to be applied in such a way as to afford AT & T a substantial financial benefit by giving it the opportunity to carry, for a profit, the Operating Companies' own internal, official communications which these companies are perfectly able to carry themselves and have, indeed, carried themselves in the past.[188]
Nor is so illogical a result required by the strict terms of the decree. While the Operating Companies are prohibited by section II(D)(1) from providing "interexchange telecommunications services," section IV(P) defines "telecommunications services" as "offering for hire of telecommunications facilities" (emphasis added). Obviously, the Official Services are not "for hire." Similarly, the decree prohibits the Operating Companies from engaging in "information services," but it expressly permits them to engage in such services "for the management, control, or operation of a telecommunications system or the management of a telecommunications service." Section IV(J). Further, section I(A)(1) mandates
[t]he transfer from AT & T and its affiliates to the BOCs ... of sufficient facilities [to permit them] to perform, independently of AT & T, exchange telecommunications and exchange access functions, including the procurement for, and engineering, *1101 marketing and management of, those functions. (emphasis added).[189]
In light of these provisions, it is thus not surprising that, contrary to its present position, the Department of Justice stated in its competitive impact statement filed with the Court on February 10, 1982, that the Operating Companies will continue to perform those functions which are "inherent" in exchange communications and exchange access, such as "the ability to engage in the ... management of retained functions." Competitive Impact Statement at 29. Because each Operating Company will perform its authorized services in several LATAs, an inherent part of the management of those services includes official communications which cross LATA boundaries.
For these reasons, the Court rules that an Operating Company shall receive inter-LATA facilities which are used solely or predominantly for the performance of its own Official Service functions. If the use made by an Operating Company of a multifunction facility for the provision of exchange telecommunications, exchange access, and Official Services, predominates in the aggregate (including all such functions) over that made of such facility by AT & T, the multifunction facility is required under section VIII(G) of the decree to be assigned to the Operating Company.[190] The Court further confirms that the decree does not prohibit the Operating Companies from providing their own Official Services, including, if necessary, by the construction of the appropriate inter-LATA facilities.[191]
B. Other
The network assets are being assigned on the basis of whether they provide an exchange function (in which event they are assigned to the Operating Company) or an interexchange function (in which event they go to AT & T); where an asset performs both functions, the assignment depends essentially upon predominant use. Sections I(A)(2), VIII(G); see note 20 supra.
A number of intervenors have objected to one aspect or another of the division of assets provided for under the plan (or to the failure to complete such division in advance of the approval of the plan of reorganization) but the Court finds all such objections (other than those related to Official Services allocations discussed supra) to lack merit.
1. Several intervenors claim that the plan improperly disregards the predominant use test required by the decree. To be sure, the decisive role of that test can most clearly be discerned in the assignment of switching systems, and its role is not as apparent where less complex equipment is involved. That result, however, is not surprising: it would be technically and administratively impossible to assign ownership of each of the thousands of relatively small items in the central offices on the basis of predominant use. What AT & T has proposed instead is to assign equipment bays containing related items of equipment to work areas which, in turn, are assigned to AT & T or the Operating Companies on the basis of predominant use. In the absence of a showing that the assignment of the general work areas as such is not being made on this basiswhich has not been forthcomingthe *1102 Court will accept these provisions of the AT & T plan.[192]
2. The assignment of the private line facilities and other specialized functions (e.g., call completion and local directory assistance) proposed in the plan is likewise consistent with the decree and otherwise appropriate, and it will therefore also be approved.[193]
3. One type of facility about which there has been particular controversy is 800 Service Directory Assistance which several of AT & T's competitors claim properly to belong to the Operating Companies. It is abundantly clear, however, that this particular directory assistance is an interexchange, inter-LATA service which is appropriately assigned to AT & T. If this enhanced service were assigned to the Operating Companies in spite of the fact that it performs interexchange functions, it could be done only on the basis that AT & T's competitors should be afforded the ability, through the medium of the Operating Companies, to offer this service without having to pay for it.[194] If the other interexchange carriers wish to offer long distance directory assistance, they will have to construct the necessary facilities. It is not the purpose of the Court's review of the plan of reorganization to "punish" AT & T or to provide advantages to its interexchange competitors to which they are not legitimately entitled.[195]
The assignment of the network facilities and other assets provided for in the plan of reorganization will accordingly be approved.
VII
LATA Issues
In its April 20, 1983 Opinion on the proposed LATAs (see note 6 supra) the Court requested further information with regard to certain specified LATAs as well as assurances with regard to intra-LATA equal access. Also to be resolved at this time are issues which have been separately briefed respecting traffic between the LATAs and areas served by non-Bell, or independent telephone companies.
*1103 A. Individual LATAs
1. Vermont, Maine, New Hampshire
The Court in its April 20, 1983, Opinion declined to approve New England Telephone's proposed departure of the Maine, Vermont, and New Hampshire LATAs from state boundaries because some 26 border communities would otherwise have been placed in "out-of-state" LATAs.[196] The regulators in these states had expressed concern that these stateline crossings could result in discriminatory treatment of telephone users in these communities, and they requested that these areas be redrawn so that each LATA would correspond precisely to the borders of the particular state. NET has since informed the Court that it withdraws its request for stateline crossings and proposes instead LATA boundaries which conform to state borders. These new LATAs are approved.[197]
NET requests additionally that it be allowed to phase in the new LATA boundaries, so that, in order to minimize costs, the necessary network modifications may be undertaken in conjunction with other system improvements.[198] That request is likewise approved.[199]
2. Worcester
NET has drawn a separate Central Massachusetts LATA in conformity with the Court's April 20, 1983, Opinion, separating Worcester and its surrounding communities from the Boston area and creating a total of three LATAs in Massachusetts, but at the same time it has asked the Court to reconsider whether this third Massachusetts LATA is in the public interest. NET contends that the establishment of a third LATA will prove costly to local ratepayers; will disrupt service in nine towns divided by the new LATA boundary;[200] will decrease the viability of various optional intrastate billing plans which depend upon volume and distance;[201] and may preclude use of a No. 4ESS switch as an access tandem to the possible detriment of AT & T's interexchange competitors. The Massachusetts Department of Public Utilities also urges the Court to reconsider the division of the Eastern Massachusetts LATA into an Eastern and a Central LATA, arguing additionally that the growth of the high technology industry beyond suburban Boston westward toward Worcester has created a single community of interest in central and eastern Massachusetts. The Department of Justice, on the other hand, continues to maintain that the contribution three LATAs would make to a competitive telecommunications environment in Massachusetts outweighs the inconvenience and cost involved in the creation of a third LATA.
The Court has carefully reviewed the filings addressed to eastern Massachusetts, *1104 and it has decided to grant the request of NET for a single LATA for that area. Although NET continues to overestimate the cost to ratepayers of separating the LATA,[202] the other grounds it advances are persuasive. In its most recent filing, NET describes in considerable detail the impact on subscribers whose towns would be split by the new border between the Eastern and Central LATAs. The Court has also been persuaded by the NET and the PUC submissions that the population of this area is sufficiently concentrated and the local telephone network sufficiently integrated that the expense, effort, and customer inconvenience associated with dividing the network would be very substantial, even if NET's estimate of the expense is somewhat exaggerated.[203]
The detail provided by New England Telephone in its May 5 and May 23, 1983, submissions stands in stark contrast to the paucity of supporting documentation in the Department of Justice's filing. The Department offers only its bare conclusion that "the competitive benefits of separating Worcester from Boston outweigh the costs of separation." The Department does indicate that it would consider exceptions to the new boundary to allow NET to continue to serve the divided communities, but NET persuasively counters that since calls within these municipalities are carried by the toll networkbut billed as if the calls were local"it is not clear what exemption could solve [the] problem."
The Court concludes that the palpable expense and inconvenience of separating the LATA outweigh the Department's speculation about benefits to competition,[204] and it will therefore approve the consolidation of Boston and Worcester in a single LATA.
3. New York
The Court accepts the Operating Company's proposal to consolidate Glens Falls and Albany into a single LATA and also to consolidate Utica and Syracuse into a single LATA.[205] To be sure, New York Telephone Co. failed to provide the Court with new information except the revised, lower count of telephones in Glens Falls,[206] but the Department of Justice has advised the Court that it does not believe that the competitive purposes of the decree would be significantly advanced by creating four LATAs rather than two. In view of the Department's general tendency to err on the side of separation in close casesas evidenced, for example, by its position on the proposed Eastern Massachusetts LATAits *1105 failure to advocate such separation here, and the relatively small size of Utica[207] and Glens Falls, the Court is reluctant to impose on New York Telephone Co. total estimated costs of $8.6 million in network reconfiguration.[208]
4. Pennsylvania
Pennsylvania Bell pledges (1) to build a No. 4ESS switch in the Philadelphia LATA and lease access capacity from AT & T in the meantime, (2) to offer access in the Pittsburgh LATA through a DMS-200 switch,[209] and (3) to construct a DMS-200 switch in Harrisburg. Based upon these assurances, the Court will approve the Pennsylvania LATAs.
5. Baltimore
Chesapeake & Potomac Telephone Co. and the Department of Justice ask the Court to make explicit its approval of exceptions requested by C & P to allow eight exchanges in the Baltimore LATA to continue using "Metro FX" service. This service allows telephone subscribers in these exchanges to pay rates for calls to and from Washington, D.C. as if the exchanges were located in the Washington LATA. The exceptions are approved.
Some of the affected exchanges are located in Calvert County, Maryland, whose Chamber of Commerce wrote the Court in late April 1983, concerned that the County's inclusion in the Baltimore LATA would mean disruption of economically necessary discount calling into Washington. The express approval of all FX exceptions requested by C & P should alleviate the County's concerns, for in view of that approval the placement of Calvert County in the Baltimore LATA will not affect its subscribers' rates.
The Court finds, however, that the County's placement in the Baltimore LATA, as initially proposed by C & P and accepted by the Court on April 20, 1983, is reasonable in light of C & P's representation that it would cost over $3 million to reconfigure the County's local network to render it suitable for inclusion in the Washington LATA. According to C & P, this also would "leave idle about $500,000 in facility capacity between these exchanges and Annapolis," Annapolis being the location of the toll center which connects Calvert County exchanges to the long distance network.
6. Winchester
For the reasons stated in the Department of Justice's filing,[210] the Court reconsiders the consolidation of the proposed Winchester and Louisville LATAs; approves the Louisville LATA as originally proposed; and approves the association of the Winchester LATA with the independent area around Lexington served by GTE.
7. Birmingham/Huntsville
South Central Bell's division of the Birmingham LATA into two separate LATAs, as required by the Court's April 20, 1983, Opinion, is approved.
*1106 8. Midwest
The Court approves the inclusion of Kankakee in the Chicago LATA;[211] the Detroit LATA as proposed;[212] the Grand Rapids LATA;[213] the inclusion of Sikestown and Cape Girardeau in the St. Louis LATA;[214] the borders between the Cleveland and Akron-Canton LATAs;[215] the Southeast, Wisconsin LATA as proposed;[216] and the division of the Davenport LATA.[217]
9. Minnesota
Northwestern Bell and the Minnesota Public Utilities Commission request the Court to consolidate the Fargo (North Dakota) and Brainerd (Minnesota) LATAs. The LATAs are now separated by the North Dakota/Minnesota border. Previously the Commission and the Operating Company had been at odds over five communities on the Minnesota side of the border which Northwestern Bell desired to place in the Fargo LATA rather than the Brainerd LATA.
The requested consolidation will be approved. Although it requires an exception to the decree's presumption against LATAs that cross state lines, it will accomplish the Minnesota Public Utilities Commission's objective of ensuring a LATA of adequate population to be attractive to interexchange carriers without requiring Northwestern Bell to incur $9 million in network reconfiguration costs, as would the previous proposal of the Minnesota regulators.[218] The resulting LATA would be of moderate size216,000 subscribers not including those of Independent companies and it would be consistent with the community of interest that spans the Minnesota/North Dakota border.
10. Seattle
The Court approves the inclusion of Bellingham in the Seattle LATA for the reasons stated in the May 5, 1983, filing of Pacific Northwest Bell,[219] and since leasing space on AT & T's No. 4ESS switch would cost the Operating Company approximately $1.2 million more than installing a switch of its own, the Court approves Pacific Northwest Bell's request to provide access in the Seattle LATA through a new 4-wire digital switch.
11. Oregon
Pacific Northwest Bell requests the Court to reconsider its decision to require the establishment of the two LATAs initially proposed for Oregon, and to allow instead a single LATA for the entire state. The State, through its Governor, endorses the request, as does the Oregon Public Utility Commission. Pacific Northwest Bell explains *1107 its change of position as having resulted from a realization that it had proposed two LATAs based on a "conservative" reading of the decree's requirements. The Department of Justice maintains that a single LATA in Oregon would be unreasonable, and the Court agrees. Because of the distance between Eugene and Portland, the two major cities in Oregon, two LATAs configured around these cities are clearly warranted under the general standards applicable to the entire country, and the Court will not reverse its earlier determination.
12. California
The Court approves a tenth LATA in California composed of San Luis Obispo County as a reasonable response to its order of April 20, 1983 that the County's exchanges not be included in the Los Angeles LATA.
13. Pennsylvania-New York-New Jersey Corridors
The Court gave tentative approval to two unique serving arrangements for metropolitan regions which cross state linesthe "limited corridors" running from New York City into five northern New Jersey counties and from Philadelphia into three southern New Jersey counties.
In response to questions posed by the Court, the Operating Companies and the Department of Justice provided additional information about the setting of access charges and customer rates with respect to corridor traffic. Some of the potential competitors of the Operating Companies object to the local companies' plans not to pass on to their end user customers the costs of facilities they do not use in serving them, that is, the costs of the circuits used to connect competitors' points of presence to the local loops. In the case of the corridors, which were sanctioned specifically to preserve for interstate callers in these areas the advantages of the existing local networks, the Operating Companies' policy is reasonable. As New Jersey and Pennsylvania Bell observed, "[t]o do otherwise would require the Operating Companies to compete on the basis of their competitors' costs rather than their own."
The International Communications Association registers a different complaint about the corridors. Rather than to ask for more competition within the corridors, it wants to ensure that the Operating Companies' efficiencies will be passed on to consumers in the lowest rates possible, and it argues that this would more assuredly be accomplished if the corridor areas became LATAs (so that all traffic within a corridor would be intra-LATA). It is difficult to understand what difference this would make since the area would still be interstate and the rates would therefore still be subject to the jurisdiction of the Federal Communications Commission.[220] Furthermore, if the corridor areas were configured into separate LATAs, this would force a reassessment of a number of other LATA boundaries, such as those between Long Island and New York City and New York City and Westchester, or else huge New York-New Jersey and Philadelphia-New Jersey-Delaware LATAs would have to be establishedboth undesirable developments.
For these reasons, the Court approves the two proposed corridors subject to the equal access provisions discussed infra.
B. Intra-LATA Equal Access
With the exception of the New York and Pennsylvania corridors, the Court accepts as reasonable the commitments made by all of the Operating Companies as required by the April 20, 1983, Opinion (1983-1 Trade Cas. ¶ 65,333 at 69,980) to provide equal access for intra-LATA service.
First. Pursuant to the Operating Company commitments, the access offered to interexchange carriers for intra-LATA toll *1108 calls[221] will be equal in technical quality to the access provided to these carriers for inter-LATA calls, meaning that both types of access connections will be performed by the same exchange access facilities (be they access tandems or direct trunks between end offices and interexchange carrier points of presence). The access will be equal also in another respect: subscribers of AT & T and its interexchange competitors alike will not be able to select in advance either AT & T or one of its competitors as a transporter of intra-LATA toll callsthe so-called "presubscription" or "preselection" option. Rather, if a subscriber wishes to place an intra-LATA call through AT & T, MCI, Sprint, Microtel, or one of the other competitive services, he will have to add four digits at the time of dialing (i.e., an access code of "10XX"). If an access code is not dialed, the intra-LATA call will automatically be carried by the Operating Company.
What that means, of course, is that, with respect to intra-LATA traffic, there will be inequalities between all interexchange carriers, on the one hand, and the Operating Companies, on the other. Telephone users will be able to access an Operating Company as they do now, simply by dialing a seven or ten-digit number (depending upon whether an area code is used).[222] To access an interexchange carrier, on the other hand, a telephone user would consciously have to select that carrier and dial the appropriate four-digit access code. Additionally, the Operating Companies (with their proliferation of direct trunks between Class 5 end offices and the concomitant ability to transport calls without the need for switching) may be able to carry their intra-LATA toll calls with higher quality and at less cost than can the competitors carry theirs.
A number of interexchange carriers attack this scheme both on account of the absence, to them, of the presubscription option, and because of the inequalities in facilities between the Operating Companies and their potential intra-LATA toll competitors.
The Court has concluded that, in light of all the circumstances and competing considerations, the position of the Operating Companies is not unreasonable. In approving the consent decree as in the public interest, and in directing the Operating Companies to provide intra-LATA access, it was not the Court's intention to require the decimation of the local telephone networks or to deprive customers of the conveniences and cost benefits which the Operating Companies have succeeded in making available to them.
It would cost approximately $1 billion and take several years to modify the 3,000 Bell end offices so as to permit a telephone user to presubscribe for one carrier for intra-LATA toll calls and another carrier for inter-LATA calls.[223] In the absence of such an expenditurewhich the Court will not requirewhat will be available to the customer in the near future is the option to preselect one telephone company, and one only. If such a customer could select in advance either an interexchange carrier or an Operating Company for intra-LATA calls, many, if not most, telephone users would preselect the former rather than the latter. This is so because of the overriding fact that, under the decree and the plan of reorganization, the interexchange carriers are allowed to carry all toll calls (both inter-LATA and intra-LATA) while the Operating Companies may carry only intra-LATA callsa significant drawback with respect to convenience. Thus, to require the Operating Companies to provide the presubscription option to the interexchange carriers would place the local companies at an almost insuperable disadvantage. This the Court will not do.
*1109 Even if a subscriber cannot or does not presubscribe, he may still designate a particular carrier at the time he makes the actual call (by dialing a specified access code). What if a customer does not do sowhich carrier will get that business? Some suggest that all intra-LATA toll calls should be required to be designated.[224] That, too, will not be required.
To require all callers to use a four-digit access code, in addition to the number to be called, for all intra-LATA toll callsincluding those carried by the local Operating Companywould have the perverse consequence of making intra-LATA, or local toll calls more cumbersome to dial than inter-LATA, or long distance toll calls.[225] This is totally inappropriate. The alternative which the Court will allowis to route all undesignated intra-LATA toll calls to the Operating Company.
This conclusion is buttressed by the consideration that affirmatively to forbid such an arrangement would inappropriately override state regulators' authority to decide what intrastate calling arrangements are best suited to the public interest within their states. In a state such as Florida, where the Public Utilities Commission has sanctioned intrastate competition by granting Microtel a license,[226] the Commission might well decide that intra-LATA competition should be further encouraged by requiring access codes alike for the Operating Company and its competitors, but the Court should not force this outcome. With respect to a state where the future of intra-LATA competition is more uncertain than in Florida, the Court would be even less justified in ordering the Operating Company to make intra-LATA telephone calling inconvenient for everyoneby adding four more digits to every intra-LATA toll call for only speculative offsetting gains. Such a decision ought to be reserved for the state regulators, as several of them have urged.[227]
The unevenness resulting from the Court's decision between the Operating Companies and their competitors does not offend the competitive principles of the decree. The decree mandates that the Operating Companies have primary responsibility for exchange services, and it is appropriate *1110 therefore that they should enjoy the non-access code arrangements with their exchange customers. The competitors are merely secondary suppliers of intra-LATA service, and while they may operate in that market on that basis, they should hardly be given what, in view of the considerations discussed above, would amount to a preferred position. However, if they should truly offer a better price or a better service than the Operating Companies, they should be able to educate their potential customers that it is worth the extra four numbers to take advantage of their offering.
Second. The reverse is true with respect to the so-called corridors.[228] These corridors traverse not only LATA boundaries but also state boundaries, and they thus represent dual exceptions to the decree. They were permitted by the Court in heavily populated metropolitan areas not out of a desire to "[maintain] the position of the Operating Companies in the corridor," as New Jersey Bell and the Bell Telephone Company of Pennsylvania assert, but to maintain for consumers the benefits of what were represented to the Court to be particularly efficient network arrangements.
The decree presumes that the interexchange carriersnot the Operating Companieswill be the primary transporters of interstate, inter-LATA telecommunications. One of the reasons underlying the Court's tentative approval of the corridorswhich would allow the Operating Companies, too, to operate in the markets the corridors representwas that these routes would be fully open to competition. To implement that purpose, the Operating Companies will have to offer complete inter-LATA access to competitors which carry inter-LATA traffic within the corridors,[229] with all that this implies, including the option of presubscription,[230] and the requirement that all calls be designated. The Operating Companies may choose whether they will develop the software that will allow presubscription of more than one carrier, or whether they will offer presubscription of one carrier only.
C. Bell-Independent Traffic
On February 17, 1983, the Operating Companies[231] submitted their proposed classifications of traffic between areas they serve and those served by independent telephone companies (Independents)[232] as either inter-LATA or intra-LATA.
The need for such a process came about because of the proximity of many Bell and Independent areas, and the consequent joint Operating Company/Independent service arrangements which are currently in effect around the country (that is, the Operating Company typically switches traffic *1111 between its end offices and the offices of the Independent, which then routes that traffic to its final destination). If all that traffic were considered to be inter-LATA under the decree, the Operating Companies would be prohibited from participating in such arrangements, and significant, costly network rearrangement would have to be undertaken in order to have all Bell-Independent traffic carried by an interexchange carrier.[233] To avoid such disruptive effects, the Operating Companies were asked to identify those areas where, consistent with the decree's purpose of limiting Operating Company participation in the long distance competitive markets, they should nevertheless be permitted to continue to provide joint service offerings with adjacent independent companies.[234] In addition to determining whether the particular Operating Company may carry such traffic or whether it should be precluded from doing so, the classifications will also be the basis for deciding whether Bell System facilities and assets connecting Bell and Independent territory should be assigned to AT & T or to an Operating Company.
On February 23, 1983, the Court issued an order establishing procedures for the review of the classifications prepared by the Operating Companies. Subsequently, a number of interested parties submitted comments, and AT & T and the Department of Justice filed their own responses.
The classifications, although made by the Operating Companies, are based upon principles and criteria furnished to these companies by the Department of Justice. The fundamental governing principle used by the Department and hence by the Operating Companies was that, for the purpose of determining whether the traffic between an Operating Company and adjacent Independent territory is to be regarded as inter-LATA or intra-LATA, Independent territory was treated as if it were Bell territory. Traffic is thus classified as intra-LATA if it would have been included within a LATA had it been exclusively Bell territory; it is classified as inter-LATA if it would have required the establishment of a separate LATA.
On November 17, 1982, the Department of Justice set forth the criteria by which it would judge the Operating Company determinations.[235] The following types of Bell-Independent traffic were designated as clearly intra-LATA:
(1) traffic within local calling areas and non-optional extended area service (EAS) areas;
(2) intrastate traffic for states with a single LATA;
(3) traffic within a single statistical area; and
(4) traffic between a LATA and Independent exchanges serving non-statistical areas.
The following types of Bell-Independent traffic were designated by the Department as "possibly" intra-LATA:
(1) traffic between a LATA and Independent territory in an adjacent SMSA which includes fewer than 100,000 main or equivalent main stations, or the distance between the core cities of the two areas is less than 25 miles;
(2) traffic between a LATA and Independent territory without a Class 4 switch (or other network considerations); and
(3) traffic between isolated Bell exchanges and an Independent dominated SMSA, provided that the Independent *1112 makes a commitment to provide equal access.
The remaining traffic is regarded under the criteria as inter-LATA.
Reliance upon these criteria by the Department, and hence the Operating Companies, would have the following impact in the two factual circumstances which are predominant with respect to Bell-Independent traffic: (1) an Operating Company LATA may not be associated with an Independent area if the latter constitutes a market of sufficient size and distance from other markets to attract multiple interexchange carrier entry; (2) if, to the contrary, the Independent area has relatively few access lines or if the distance between the Bell and Independent core communities is insubstantial, an association between the Operating Company LATA and the Independent area will be permitted. In a few instances, particularly in Oregon and Washington, traffic was classified as inter-LATA by the particular Operating Company because it elected not to serve the relatively small Independent area in question.[236] In a number of other instances, where the Operating Companies and the Independents agreed that there will be no Operating Company service despite an absence of a prohibition in the decree, the traffic was also classified as inter-LATA for purposes of the division of Bell System facilities.[237]
The two principal objections[238] which have been advanced with respect to the Bell-Independent traffic classifications are first, that in certain instances either too many or too few Independent areas have been associated with Operating Company LATAs; and second, that the classifications unduly curtail the business freedom of the Independents.
First. The Court has considered the various Bell-Independent traffic classifications on the same basis as its earlier consideration of the LATAs.[239] Although it is possible to disagree with particular decisions that were made by AT & T and the Department of Justice in this process, the Court has concluded that in no instance have the *1113 intervenors made a case sufficiently compelling that it calls for a rejection of the classification.[240] The Department's guidelines are reasonable and consistent with the principles of the decree, and these guidelines were properly applied by the Operating Companies.[241]
Second. The "business freedom" claim is largely based upon a misunderstanding concerning the substantive scope of the classification decisions. Contrary to the assumption of some intervenors, the classification of particular traffic as intra-LATA does not have as its consequence that interexchange carriers may not offer service with respect thereto or that the Independents may not directly provide access arrangements to these carriers.[242] The intra-LATA or inter-LATA classificationsin this context as in the context of service within the Bell territories bind only the Operating Companies and affect only their ability to provide service; they do not bind the interexchange carriers or the Independents and they will not in any way affect their ability to provide service.
To be sure, where traffic has been classified as inter-LATA, an Operating Company may not be "associated" with the adjacent Independent territory, and to that extent it may be said that the business freedom of the Independents is being restricted.[243] That, however, is an inevitable consequence of the decree which limits the Bell Operating Companies to intra-LATA service; it cannot be regarded as a defect in the classifications made by the Operating Companies and approved by the Department of Justice. The objections to these classifications, as well as to the classification process, will accordingly be rejected.[244]
The proposed Bell-Independent classifications will be approved.
VIII
Central Staff Organization
Section I(B) of the decree requires the creation of a central organization jointly funded and utilized by the Regional Companies (1) for the purpose of meeting national security and emergency preparedness requirements and (2) for administering such *1114 functions and services as can most efficiently be performed on a centralized basis.[245] Pursuant to these provisions, AT & T has proposed, and the Department of Justice has approved, the creation of an 8,800-person Central Staff Organization (CSO) which would engage in a number of technical and nontechnical functions[246] to replace support which the Operating Companies have until now received from the AT & T General Departments, Bell Laboratories, and Western Electric.[247]
A. CSO Responsibilities
Under the plan of reorganization, the CSO will perform technical services to support the Operating Companies in the "construction, operation, and maintenance of their local exchange networks."[248] AT & T has listed five such technical functions: (1) network planning, which is described as "a long-range function concerned with recommending to the BOCs the optimal direction in which the local networks should evolve";[249] (2) systems engineering, that is, the development of "generic requirements for new systems" which will enable the Operating Companies to "inform vendors of the features and functions that the BOCs want or need in the equipment they purchase"; (3) applied engineering, that is, the testing and evaluation of the products of potential suppliers to determine whether they meet the generic requirements developed by the systems engineers; (4) applied research, involving "state-of-the-art research in switching, signaling, materials and other elements which provide the underpinning for exchange telecommunications"; and (5) information systems support, which will involve "maintaining and enhancing a number of computerbased operations and administrative systems integral to the exchange business."[250]
Among the non-technical functions will be the provision to the Operating Companies of procurement support services,[251] and such other assistance as legal services,[252] regulatory support services, marketing (including billing and sales support) services, financial services, human resources development, and employee relations.
The criticisms leveled at the CSO proposal fall essentially into two categories.[253] First, intervenors representing regulatory and consumer interests contend that AT & T has presented inadequate justification for what is contended to be an overly large and costly organization. Second, potential *1115 equipment suppliers of the Operating Companies claim that the CSO may, in effect, exercise control over many procurement decisions, discriminate in favor of Western Electric products, and, over time, become a second-generation AT & T. After careful consideration, the Court has concluded that these objections are not sufficiently weighty to warrant either the rejection or the modification of the CSO provisions of the plan of reorganization.
B. CSO Size
There is substantial evidence that the CSO is neither too large nor too costly a burden on the Operating Companies. Since these companies will be controlling the CSOnot the other way aroundand since most of the costs of the CSO will not be capable of capitalization, the local companies will have strong incentives to avoid wastefulness in the CSO's operation.[254] In fact, it appears that the total cost of the CSO to the Operating Companies will be considerably less than what they now pay to AT & T for centralized support.[255]
Moreover, and significantly, the chief executives of the Regional Companies, who played an active part in molding the CSO,[256] have given an exceptionally strong endorsement to the size of the organization, its cost, and the responsibilities vested in it by the plan of reorganization.[257] In short, the concern of some of the intervenors that the CSO is an AT & T tool designed to hamper Operating Company progress rather than to assist these companies is not shared by those most directly involved.[258] On this issue, at least, the opinions of the Regional Company managers are entitled to more weight than those of regulators[259] and consumer groups.
Some of the intervenors also question the assignment to the CSO of functions other than those strictly related to national security and emergency preparedness. The decree permits the CSO to perform such functions as "can most efficiently be provided on a centralized basis." Section I(B). It appears obvious that, with respect to the responsibilities which are vested in the CSO *1116 by the plan of reorganization, substantial economies will be realized from centralization. To be sure, AT & T has not provided a quantification of efficiencies and economies, but that is not especially surprising since it is unlikely that detailed cost-benefit comparisons could now be made: the seven Regional Companies are at present only planning to operate in this respect, and the territory is somewhat unchartered. It does not require an army of efficiency experts, however, to conclude that it will be more economical for certain support functions to be performed once rather than seven times over. As the Department of Justice has aptly observed, "it is neither necessary nor useful to engage in extensive second-guessing of the [Operating Companies'] decisions as to what activities can efficiently be centralized."[260]
The Court concludes that the objections regarding size, scope, and cost of the CSO do not warrant disturbing the CSO proposal.
C. Procurement Functions
The objections relating to the CSO's possible involvement in procurement activities have somewhat more substance. The intervenors complain in this respect primarily that standards may be set by the CSO which will favor Western Electric products over those of competitors, and that the testing of products may be biased against Western's competitors.
It seems beyond debate that uniform standards are necessary to ensure high quality in the telephone system, indeed its very survival as a nationwide network.[261] Nor are such standards incompatible with competition. Not all characteristics of products to be purchased by the Operating Companies will be specified in advance; there will be ample room for competitors to meet the generic requirements established by the CSO and still produce products drawing upon their special skills, distinctive styles, and other competitive advantages.
Similar conclusions apply to the testing function to be performed by CSO personnel. AT & T has advised the Court that such personnel will not make product recommendations to individual Operating Companies but will limit themselves to "a scientific and objective testing function." Test results will be made available to both the Operating Companies and the manufacturers, and the latter will be allowed an opportunity to demonstrate the incorrectness of any adverse findings. And it will be up to the Operating Companies, not the CSO, to determine the weight and significance to be accorded to the test results in the making of final procurement decisions.[262] The Court believes that these assurances adequately protect potential vendors.[263]
Some intervenors question more broadly whether objective conclusions are at all possible with respect to such activities as standard-setting, testing, and the like,[264] and that in practice it may not be possible to distinguish sharply between these functions and procurement decision-making. Another intervenor asks who at the Operating Company level would "undertake an independent and intelligent analysis of the technical and other evaluations sent to [these companies] by the CSO" if, as AT & T asserts, there are not enough qualified technical personnel in the Bell System to staff both the Operating Companies and the CSO.[265]
Although these objections are not without some forceparticularly those related *1117 to the somewhat shadowy line between standard-setting and procurementthe Court has decided that, on balance, the advantages to be achieved from the centralization of these various responsibilities outweigh the dangers visualized by the opponents of such a step. The issue reduces itself to an inquiry whether the desirable ends of economy and uniform quality can be achieved without serious risk that the CSO will become an instrument of anticompetitive conduct. In the Court's view, that risk, i.e., the risk of bad faith, is relatively small,[266] for a very basic reason.
There will be no continuing relationship between AT & T and the CSO,[267] and therefore no economic incentive for CSO personnel to favor Western Electric products over those of any other supplier. CSO personnel will, at least indirectly, be working for the Operating Companies; their success in their new employment will be bound up with the success of the local companies;[268] and the Operating Companies are far more likely to flourish by purchasing the best equipment at the best price than by favoring Western Electric products regardless of quality or price. The employees' economic incentives therefore all run in favor of the Operating Companies and against improper favoritism toward Western Electric. Moreover, the testimony of the regional chief executives and their various filings with the Court establish that they intend to make their own procurement decisions, and that they are acutely aware of the spectre of an enforcement action brought by the United States should the CSO act anticompetitively.[269]
In the absence of an economic incentive, much is made of the emotional attachment of CSO personnel to AT & Tthe former employer of many of them. Such an attachment cannot be entirely discounted, at least with respect to some employees and at least in the short run. But it defies all experience with a mobile work force in the United States to assume that, for any length of time, former AT & T personnel will make decisions which will assist their former employer, but now sometime competitor, simply because they used to work there.[270] Certainly the Court would not be justified in vetoing an arrangement agreed to by AT & T, the Operating Companies, and the Department of Justice which is otherwise perfectly sensible and reasonable upon the basis of so speculative an objection.[271]
*1118 The Central Staff Organization is designed to carry out extremely important responsibilities. Not only will it perform the coordination for national defense and other emergency purposes that is vital to the nation's security, but it will also set the standards which will permit telecommunications to continue to operate in an engineering sense as one national network.[272] These responsibilities were in the past performed exceedingly well by AT & T. In the Court's view, it is essential that the break-up of the Bell System and the economic competition which will result from that break-up will not lead to a departure from that high standard or to the development of balkanized regional networks which poorly interconnect with each other to the detriment of all users. The Central Staff Organization will be an important check against deterioration and fragmentation of the existing telephone system.
For these reasons, the Court is strongly committed to the success of the CSO, and it will not weaken that organization, whether in size or in authorized responsibilities, without good cause. The arguments proffered by the intervenors, while they do not, here and there, lack some plausibility, are far from being sufficiently persuasive to provide such a cause. The Court accordingly will approve the Central Staff Organization as it is proposed in the plan of reorganization.
IX
Further Court Proceedings
Several intervenors suggest additional judicial or other proceedings of various kinds beyond those that are expressly provided for in the decree. For example, the State of New Mexico asks that the intervention status of all third parties be continued to permit them to participate in the true-up process following divestiture.[273] The State of California asserts[274] more specifically that a true-up procedure is necessary to ensure the achievement of target debt ratios, pointing out that the plan already contemplates such a procedure with respect to a number of other subjects.[275] American Satellite Company asks for the submission to the Court of detailed information concerning the day-to-day progress in the implementation of the plan of reorganization and requests public disclosure as well as judicial review of all divestiture-related contracts.[276] And the State of Maine urges that the state and local public utilities commissions be allowed to participate in the division of assets between AT & T and the Operating Companies by a court-imposed requirement of the distribution to them of the same kinds of information and monitoring rights possessed by the Department of Justice. The Court will deny all of these and similar requests.[277]
There now is some provision in the decree, albeit on a carefully limited basis, for the retention of jurisdiction by the Court.
Section VII specifies that, upon application of a party or an Operating Company, the Court may issue orders to construe the decree, carry it out, modify it, or enforce it, or to punish violations.[278] At the request of *1119 a number of intervenors, the Court announced the adoption of a procedure which would permit an interested nonparty to initiate enforcement proceedings on its own. But that opportunity was deliberately kept very narrow[279] because, as the Court stated on August 11, 1982, so restricted it strikes a proper balance between the need for some enforcement mechanism not under the direct control of the parties and the necessity of avoiding "constant, unnecessary interference by AT & T's competitors and others with implementation of the reorganization and with the normal operations of AT & T and the divested Operating Companies ... [as well as the necessity not to burden the Court] with innumerable requests for clarification or modification, and with charges of violations." 552 F.Supp. at 219-20.
The Court will not expand these provisions. The difference between the procedures described above and those presently suggested by the intervenors is that the former are designed to be invoked only sporadically, upon the occurrence of some specific incident regarding the decree, while the latter would involve the Court, the intervenors, or both, on a more or less continuing basis in the divestiture process. The Court has no wish to be engaged on a long-range basis in oversight either of the divestiture or of the operations of the various components of the Bell System; such an oversight role would not be consistent with the principle of proper judicial restraint; and the kind of interference which it implies would not be fair to those who will manage AT & T and the Operating Companies.
The Tunney Act requires a court to determine whether certain consent decrees are in the public interest and, in view of the unusual circumstances of this case,[280] this responsibility also required the Court to pass upon the validity of the plan of reorganization under the decree and to allow third party intervenors to participate extensively in the review process. But for the reasons outlined above, this direct oversight should end with the approval of the plan of reorganization.
To be sure, the reorganization process is not complete: the division of assets, the transfer of employees and stock, and the upgrading of the Operating Companies to the status of truly equal access providers have yet to occur. Also, as several intervenors point out, it is possible that those within the Bell complex who will actually implement the reorganization will attempt to depart from the spirit if not the letter of the decree. However, notwithstanding some failures,[281] the parties have not given evidence of bad faith sufficient to impose upon them the rather draconian requirements requested by the intervenors.[282]
*1120 There comes a time, once the basic documents have been approved, when the Court, rather than to superintend on an intensive basis the actual implementation of the reorganization, should, in the interest of keeping judicial involvement to a necessary minimum, leave compliance to the managers of the business interests directly involved, with such oversight as is vested in the Department of Justice by the decree. See, e.g., section VI.[283]
Should the Court's expectations with respect to the good faith and the fidelity of the parties to the letter and the spirit of the decree be disappointed with regard to any particular matter, there will be time enough under section VII, section VIII(I), and the Court's general equity powers, to take appropriate action. Except for such an eventuality, however, the Court's direct oversight role will come to an end with its approval of the plan of reorganization.
X
Conclusion
A. Summary
The Tunney Act imposed upon the Court the responsibility for determining whether the consent decree submitted to it by the parties was "in the public interest." In August of 1982, the Court approved the heart of the decree divestitureas satisfying that standard. At the same time, it determined that its public interest responsibilities required it to pass also on the plan of reorganization, since that plan was to fill in the decree's many interstices and to describe the precise method by which divestiture was to be accomplished.[284] The plan was submitted by the parties, and the Court has since subjected it to thorough scrutiny, on its own and with the assistance of the parties and over one hundred intervenors.[285]
To the extent that it has been free to do so,[286] the Court, in exercising its Tunney Act responsibilities, has sought to achieve three principal objectives: (1) promotion of true and fair competition in the telecommunications long distance and equipment markets, (2) preservation of AT & T as a dynamic force, capable of research, manufacturing, and marketing in technologically advanced fields, and (3) protection of the principle of universal telephone service, accessible to all segments of the population regardless of income.
*1121 In its consideration of the decree, the Court was able to advance all of these objectivesin part by approving various provisions of the proposal submitted by the parties over vigorous objection from others, and in part by requiring the substantial modification of a number of other provisions.[287] When it considered the plan of reorganization, the Court again had all three objectives in mind. However, it became apparent in the course of that consideration that the bulk of the actions which the Court had to take to achieve consistency of the plan with the decree tended primarily to promote the vitality of the Operating Companies[288] and the principle of universal service.[289]
These actions, which are described in detail in the body of the Opinion, include the assignment of the "Bell" name and logo to the Operating Companies (Part III(C) of the Opinion); imposition of the requirement that the Operating Companies be granted licenses to all patents acquired by the Bell System (Part IV(A)), along with appropriate sublicensing rights (Part IV(B)); the grant of authority to the Operating Companies to perform their own Official Services functions rather than to have to lease the necessary facilities from AT & T or other interexchange carriers (Part VI(A)); approval of the establishment of a Central Staff Organization which will give effective logistical support to the Operating Companies (Part VIII); imposition of the requirement that AT & T stand as the ultimate guarantor of the costs of equal access and network reconfiguration (Part I); and the approval of local access and transport areas (LATAs) which avoid substantial, costly network rearrangements (Part VII(A)).
The fundamental purpose of the decree under the antitrust laws is to create conditions which will reduce the cost of telecommunications service to the publicindividual consumers, business, and government.[290]*1122 Competition in the long distance and telephone equipment markets is already bearing fruit in the form of lower prices and wider choices.[291] In the view of this Court, it is not necessary that these favorable developments be accompanied by the imposition of higher rates for local service.
One of the Court's principal aims throughout the public interest process has been to ensure that divestiture would not bring about or contribute to local telephone rate increases. While the parties to this proceeding have acknowledged that this effort was successful and that neither the decree nor the divestiture has caused or will cause local rates to rise,[292] these rates will nevertheless be going up, albeit for reasons unrelated to the reorganization of the Bell System.
As the Court has previously noted, and as it elaborates at p. 1091 supra, decisions taken by federal regulators regarding access charges will have the effect of increasing the cost of local service to residential subscribers. The Court has no authority to countermand those decisions.[293] It does, however, have the authority to take them into accountnot conclusively, certainly, but as support for determinations which are indicated in any event. That is what it has done here. The modifications it is requiring to be made in the proposed plan of reorganization should assist in moderating the pressure for local rate increases, whatever their source.[294]
The telecommunications industry as a whole has a bright future for, as the Court previously observed,[295] we live in an age in which information and its transmission are central to the commonwealth and a flourishing economy. No one can predict which company or group of companies will be able best to take advantage of the opportunities which lie ahead. To a large extent this will depend upon their own efforts and performance,[296] and to a lesser degree upon the wisdom of those who will exercise regulatory authority over various segments of the industry at the federal and local levels. As indicated above (Part IX), the Court's own oversight over the Bell System divestiture process will end with the approval of the plan of reorganization.[297]
AT & T (including Western Electric and Bell Laboratories) as well as the Operating Companies appear to be led by talented managers, scientists, and engineers; moreover, these entities will continue to command immense personal and material resources. There is no reason to believe that the separate parts of the reorganized Bell System will not prosper in the new environment *1123 or that they will fail to contribute significantly to the American economy.
B. Action on the Motions
Motions of AT & T and of the Department of Justice seeking approval of the plan of reorganization are pending.[298] These motions will favorably be acted upon after the Court is advised that the following modifications[299] are agreed to by the parties:[300]
1. If by January 1, 1994, the Operating Companies in the aggregate have not recovered the costs of providing equal access and network reconfiguration (as defined in AT & T's Consolidated Application filed with the Federal Communications Commission on March 1, 1983), plus financing expenses, through their collection of access charges from the interexchange carriers, AT & T will reimburse the Operating Companies in the amount of any remaining deficit. For purposes of this provision, "costs" shall mean the actual costs incurred by the Operating Companies, as distinguished from the estimates in the Consolidated Application. A preliminary accounting will be provided to the Court at the close of the Operating Companies' equal access and network reconfiguration program or by January 1, 1989, whichever is earlier, and a final accounting not later than January 1, 1994.
2. Beginning on the date of divestiture, AT & T will cease to use the word "Bell" in its corporate name and in the names of its subsidiaries or affiliates, other than Bell Laboratories and AT & T's foreign subsidiaries or affiliates; and beginning on the same date, AT & T will cease to use the "Bell" name and the Bell trademarks, or either, on any equipment sold by it in the United States after that date, except for equipment manufactured or purchased by AT & T prior to that date. In the event that substantial efforts have been made by AT & T by November 1, 1983, to acquaint the public with a new name to replace the name "American Bell," and for good cause shown, the Court will extend the use of that name by AT & T for an additional six months following divestiture in connection with the sale, but not the manufacture or purchase, of equipment.
The divested Operating Companies, the Regional Companies, or either, may use the "Bell" name and the Bell trademarks in connection with the services they perform and on equipment they use or sell, and they may use the word "Bell" in their corporate names, provided that the "Bell" name is modified so as to identify the particular company, and provided further that on equipment sold any Bell trademark is accompanied by the corporate name of the respective Operating Company or Regional Company.
3. AT & T will grant to each Operating Company nonexclusive and personal royalty-free licenses to use telecommunications equipment and operational methods covered by all existing patents owned or controlled by AT & T and all other patents issued to AT & T on or before five years after the date of divestiture.
AT & T will grant to each Operating Company the right to sublicense all AT & T patents to manufacturers for use only in providing the Operating Companies with goods and services embodying the inventions of the patents.
*1124 4. In determining whether the use made by an Operating Company of facilities or other assets predominates over that made by AT & T within the meaning of section VIII(G) of the decree, the capacity of a facility or other asset devoted to Operating Company Official Service functions will be included as part of the Operating Company's use. Nothing in the decree precludes an Operating Company from constructing or maintaining facilities or other assets devoted to Operating Company Official Service functions.
5. The Operating Companies will not provide inter-LATA order writing, order typing, or other provisioning exclusively for AT & T.
6. The decree does not relieve AT & T and the Operating Companies from bargaining in good faith with any labor union, except with respect to the division of the Bell System Pension Plan into nine separate plans; the actuarial methodology specified in the plan of reorganization; and the elimination, one year following the date of divestiture, of unlimited portability of service credit.
ON MOTION FOR PARTIAL RECONSIDERATION
I
AT & T has asked for partial reconsideration of the Court's ruling of July 8, 1983, requesting that the Court delete Modification 1[1] which requires that AT & T guarantee the costs of providing equal access and of reconfiguring the network to conform to the LATAs (hereinafter generally referred to collectively as access costs or access expenses). The principal contention supporting the request for an outright elimination of the guarantee provision[2] is that this provision would improperly add to AT & T's obligations under the decree.[3]
As the Court previously pointed out (Opinion of July 8, 1983, 569 F. Supp. 1057 at 1066-68), there are two bases under the decree for requiring AT & T to bear at least part of the cost of access, whether in the form of a guarantee or otherwise. First, although section requires AT & T to transfer to the Operating Companies adequate facilities to enable the local companies to meet the equal access requirements, the transfers of equipment provided for under the plan of reorganization will clearly not be sufficient to achieve that purpose. Second, AT & T consistently represented to the Court that, even though the company would not pay the access expenses directly, it would do so indirectly through the carrier access charges.[4] It now appears, however, that for several reasons discussed in the July 8, 1983 Opinion, the carrier access charges may not be adequate to reimburse *1125 the Operating Companies for these costs. Hence the guarantee required as a prerequisite to the Court's approval of the plan of reorganization.
The argument made by AT & T, and supported by the Department of Justice, that the guarantee would impose an obligation on the company that would be inconsistent with what the parties call the decree's "basic premise"that the access costs be recovered through access charges paid by all interexchange carriers, not merely AT & T[5]thus misses the point, for it fails to consider those features which embody a special AT & T obligation not shared by other carriers: the provisions of section I(A)(1) and the representations made to the Court by AT & T.[6]
All of these subjects were fully explored by the parties and considered by the Court prior to the issuance of the July 8, 1983 Opinion; AT & T's motion adds nothing new on any of the underlying issues; and the Court will therefore deny that motion to the extent that it requests the deletion of Modification 1.
II
The essence of AT & T's argument in support of the attachment of a proviso to the Modification lies in the claim that the Operating Companies and the local regulators would have and might exercise the opportunity to establish access charges that would be insufficient for full cost recovery. The result of such actions would be that the costs would ultimately be recovered from AT & T pursuant to the guarantee. This, according to AT & T, is not the purpose for which the Modification was designed. That understanding is correct.
The Operating Companies, assured under the guarantee provision of reimbursement from AT & T at the end of the ten-year period specified in the Modification, would have a significant incentive consistently to under-recover access costs prior to that time;[7] the regulators would have a similar incentive to deny full recovery of such costs;[8] and AT & T's competitors would have an incentive to encourage these trends.[9] In the judgment of the Court it is quite likely that, absent some countervailing mechanism, these entities will act on these incentives.
The Court was not unmindful of this contingency when it issued the July 8, 1983 Opinion. Indeed, it was for that reason that it required AT & T and the Operating Companies to file prior to divestiture a description of the accounting methods which would be used for identifying the access costs and for determining whether and when they had been recovered. Opinion at 1068 note 37. The Court had in mind that, if AT & T and the Operating Companies agreed on the procedure and substance with respect to such recovery, there would be no need for further judicial intervention; if these parties did not agree (essentially because of a dispute similar to that generated *1126 by AT & T's present motion) the Court could take steps before divestiture to guard against the contingencies feared by AT & T. By its motion AT & T has brought the issue to a head now, and there is no reason for delaying consideration of this subject.
The July 8, 1983 ruling represents the Court's determination that the somewhat conflicting requirements of the decree[10] can best be harmonized by requiring the Operating Companies to incur the access expenses while requiring AT & T to provide the guarantee embodied in Modification 1. Implicit in that Modification is the principle that AT & T shall guarantee all access costs legitimately incurred and legitimately unrecovered. Equally implicit is the corollary: that AT & T need not provide a guarantee with respect to costs which remain unrecovered as a consequence of actions by Operating Companies or regulators designed improperly to divert such costs to AT & T. The proviso proposed by AT & T would make the latter objective explicit,[11] and it would do soas will now be seenwithout in any way weakening the guarantee itself.
Several of the intervenors[12] argue that the proviso would have the practical effect of nullifying the guarantee obligations. The theory underlying these arguments is that, if due to market forces or substantial bypass by AT & T, there is a shortfall in any one year in the recovery of carrier access charges to pay for the access costs, the Operating Companies will under the proviso be compelled to file, and the regulators will be compelled to approve, a higher tariff the following year, and so on every year until the end of the guarantee period. This process, it is said, would automatically and inevitably relieve AT & T of all obligations on the following basis. If the tariffs were designed so as to recover all necessary costs, there would never be a shortfall; on the other hand, if the tariffs were not designed to recover all necessary costs, they would violate the proviso and AT & T would be discharged of its obligation on that basis.
That analysis misconceives the breadth of the guarantee and the relatively narrow focus of the proviso. As AT & T has pointed out (Reply at 8-9):
The obligation would still require AT & T to stand as the ultimate guarantor of whatever equal access and network reconfiguration costs are allowed in the BOCs' tariffs in the ten years following divestiture. If market conditions ultimately prevent the BOCs from recovering those costs by January 1, 1994despite their inclusion in tariffs intended to produce full recoveryAT & T pays the balance, even as the guarantee would be conditioned by the proviso.
Properly construed, then, the effect of the Modification in combination with the proviso will be to protect AT & T from manipulation by the Operating Companies or the regulators; at the same time, these provisions will not excuse AT & T from the guarantee obligation in the event that there is a shortfall in the recovery of carrier access charges for access cost purposes as a result of market forces or bypass by AT & T.[13] Under the decree and in equity, that is as it should be.[14]
*1127 Questions have been raised by some (e.g., SBS Memorandum at 3) regarding the duration of the guarantee period. Modification 1 envisages the recovery by the Operating Companies of the costs of access within ten years. AT & T and others (e.g., the Department of Justice) have pointed out that under current regulatory directives, many major capital investments must be depreciated over extended periods of time, some in twenty-five years. The Court is thus presented with the choice of either substantially extending the guarantee period or retaining the ten-year period notwithstanding the various existing or proposed depreciation schedules.
After giving the subject careful consideration, the Court has decided to retain the ten-year deadline.[15] Any change in that regard would create unnecessary and inappropriate entanglements between AT & T and the Operating Companies well into the next century.[16] Moreover, depreciation schedules vary, depending not only upon the equipment involved but also upon the practices of the several state and federal regulators, and it would be difficult, if not impossible, to tailor the guarantee to meet all these contingencies. Finally, the various depreciation schedules are not immutably fixed in the law but are subject to change by the regulators.
The choice thus rests with the various regulatory bodies.[17] They may either so adjust the depreciation schedules for equipment used to provide equal access or network reconfiguration as to accommodate the requirements of Modification 1, or they may decline to do so, recognizing that if they elect this course not all the costs may be recovered within a ten-year period and AT & T will be relieved of its obligation to that extent to make up the difference.
The Court denies AT & T's motion for partial reconsideration insofar as it requests that the Court strike Modification 1, but it grants that motion insofar as it requests the addition to the Modification of a proviso.[18]*1128 Accordingly, Modification 1 is hereby amended by the addition of the following language:
Provided, however, that with respect to any Operating Company, AT & T's obligation shall be discharged to the extent that: (a) the Operating Company fails annually to file carrier access tariffs designed to recoup any then-unrecovered equal access and network reconfiguration* costs by January 1, 1994; or (b) any regulatory commission refuses to permit such tariffs to take effect; or (c) regulatory requirements for the depreciation or amortization of equal access and network configuration investment cause any portion of the investment not to be recognized as a cost of ratemaking in periods prior to January 1, 1994.
* To the extent that network reconfiguration costs relate to the BOCs' provision of other services (such as intra-LATA toll), rather than to carrier access services, the BOCs will be required to include such costs in tariffs for those other services which are filed and allowed to become effective in accordance with this proviso, and any amounts thus recovered shall count toward reimbursement of the BOCs' costs of network reconfiguration.
It is the Modification as so amended which AT & T and the Department of Justice will be required to incorporate in the plan of reorganization as a prerequisite to the Court's final consideration and approval of that plan.
ON MOTIONS FOR RECONSIDERATION AND CLARIFICATION
Several motions for reconsideration or clarification of the Court's July 8, 1983, opinion have been filed. This Memorandum disposes of all such motions.[1]
1. MCI Communications Corporation has moved for clarification of Modification 3, which modifies the provisions of the plan of reorganization with respect to patents. MCI argues that computer software is subject to this modification, and that AT & T must grant to the Operating Companies royalty-free license thereto as well as the right to sublicense where the provision of goods and services to these companies is involved.
The Court stated in its July 8, 1983 Opinion that, for purposes of the plan of reorganization, "patents" includes nonpatented technical information. Opinion at 1082 note 100. However, as the Court indicated in the very next sentence of that footnote, it was referring in the technical information context to such information as was funded by the license contract between AT & T and the Operating Companies. Computer software has not been so funded.
More broadly, as the discussion in Part IV of the July 8, 1983 Opinion demonstrates, insofar as technical information (as distinguished from patents) is concerned, the Court was concerned in Modification 3 with the issues raised in the "Patents" section of the plan of reorganization, in particular note 399 at p. 411 of the plan. That footnote flatly states that "[t]he BOCs will not be granted any licenses relating to patents *1129 or any other technical information that relate solely to provision of CPE, inter-LATA service or any BOC services now prohibited by the Decree." The July 8 Opinion made it clear that this restriction was unacceptable under the purposes and principles of the decree and the representations that had been made to the Court. This, in turn, led to the requirement of Modification 3.
Other portions of the plan of reorganization deal with non-patented technical information in completely different contexts. For example, Part II(A)(1) (pp. 341-369 of the plan) discusses in considerable detail the assignment of various types of computer software. It was not the Court's intention to disapprove these portions of the plan sub silentio.[2] Indeed, the two reasons given in the July 8 Opinion for granting to the Operating Companies more extensive patent rights than originally provided for by the plan of reorganization(1) recognition of past contributions to research they had made through the licensing contracts, and (2) the reasonableness of the removal of the mandatory patent licensing provisions of the 1956 decree[3]are not applicable to the type of non-patented, computer software which is the subject of MCI's motion.[4] These parts of the plan were not affected by Modification 3, and they remain in effect.
To the extent that clarification is required to resolve any seeming inconsistency between the Court's reference to technical information in note 100, on the one hand, and its implicit approval of the plan's treatment of non-patented technical information which AT & T did propose to share with the Operating Companies, on the other,[5] it is hereby resolved as described above. MCI's motion will accordingly be denied.
2. Several intervenors ask the Court to reconsider its approval of the assignment of the so-called Account 232 to the Operating Companies and to assign the Account instead to AT & T.[6] That request will likewise be denied. In-place wiring, which is a principal item in Account 232, is as much a "bottle-neck" as are the subscriber access lines.[7] To assign such wiring to AT & T would be to insert AT & T-controlled facilities between the Operating Companies and the subscribers, and such an assignment would thus be entirely inconsistent with the basic purposes of the decree.[8]
Account 232 also includes the capitalized labor costs associated with the installation and testing of customer premises equipment, and a theoretical case could be made that, since under the plan embedded CPE is being assigned to AT & T, so should be this portion of Account 232. However, the Court was and is persuaded by AT & T's argument, for the reasons stated in AT & T's Response to Objections at 154-55, that there is no practical way to separate out the various handling costs.[9] The provision made in the plan of reorganization regarding Account 232 is consistent with the decree and otherwise reasonable, and there is no basis for reconsidering the Court's approval of the plan in this regard.
3. GTE Corporation has petitioned the Court for limited reconsideration of that part of the Court's July 8, 1983 Opinion which approved the Operating Companies' classifications (as either intra-LATA or inter-LATA) *1130 of traffic between their territories and Independent telephone company territories. Opinion of July 8, 1983 at 1110-13. The basis for this request for the reconsideration of nineteen out of hundreds of such classifications is that new information regarding homing and network arrangements was revealed for the first time during the development of the exchange areas under the proposed consent decree in United States v. GTE Corp., Civil Action No. 83-1298, (filed May 4, 1983), which is pending before this Court. See GTE Petition at 2.
Of the nineteen classifications at issue, in eleven instances the relevant Operating Company does not oppose GTE's reclassification proposal.[10] These proposals are reasonable and consistent with the decree, and they will accordingly be deemed incorporated in the plan of reorganization.
Of the remaining eight GTE proposals, in two instances the Operating Company does not oppose a temporary reclassification pending the completion of certain modernization programs (which was the basis for the Operating Company's original proposal).[11] Such a temporary reclassification makes sense in view of current network arrangements, and the Court will approve it for these two areas on such a basis. In another case, permission is hereby granted for the reclassification which GTE proposes, upon completion of the rehoming project.[12]
In two instances, the Operating Company and GTE are in agreement, but the Department of Justice has correctly pointed out that the Operating Company should be permitted, but not required, to service the adjacent area.[13] With respect to the three remaining proposals, the relevant Operating Company opposes the reclassificationat least at this timeand GTE has not demonstrated that the classification as originally proposed by that Operating Company, and approved by the Department of Justice and the Court, is unreasonable or inconsistent with the decree.[14] Accordingly, that part of GTE's motion which relates to these five areas is denied.
4. The Public Service Commission of Kentucky has moved for reconsideration of the Court's decision to deny consolidation of the Winchester and Louisville LATAs. The Commission argues that the incremental loss of intrastate toll revenue that will be occasioned by three LATAs rather than two will require increases in local rates. However, the Commission has failed to note that access charges to be collected from the interexchange carriers can, if set properly, make up for any loss of revenue to South Central Bell. In any event, significant competitive advantages would flow from three LATAs. The Department of Justice has previously argued in favor of three LATAs on this basis; and the Public Service Commission has not demonstrated that *1131 the Court ought to disturb its prior decision that three LATAs are appropriate in Kentucky.[15] The motion is denied.
5. New York Telephone Company has expressed concern that the July 8, 1983 Opinion may have placed territorial restrictions on the Operating Companies' provision of directory advertising services. That concern is unwarranted. As the company correctly surmised, when the Court made mention of activities outside an Operating Company's territory,[16] it was referring to the Bell logo standing alone and the Bell name without a modifier. The decree and the plan do not limit the provision of directory advertising or of customer premises equipment to prescribed geographical territories.
6. The American Council of the Blind, the Paralyzed Veterans of America, and others are concerned about the transfer to AT & T of embedded specialized equipment for the disabled, such as teletypewriters and large button telephones, the price of which may conceivably no longer be subsidized after the transfer. The Court's approval of the decree's provisions regarding embedded CPE is, of course, without prejudice to whatever equitable arrangements may be made among AT & T, the Operating Companies, and the representatives of the disabled regarding continued subsidization of such equipment. See also, The Telecommunications for the Disabled Act, P.L. 97-410 (1982).
7. The Communications Workers of America yesterday for the first time requested that the Court clarify or reconsider language in the July 8, 1983 Opinion which may prohibit portability of pension benefits not only between AT & T and the divested entities but also among the Regional Companies and between them and the Central Staff Organization. See Opinion at 1094. In view of the fact that AT & T and the Union are apparently at the present time engaged in collective bargaining, the Court inquired of AT & T whether it was prepared, on an informal and expedited basis, to express its agreement with the Union's interpretation, but AT & T responded that it could not do so. Accordingly, the issue will be resolved on the basis of briefing in accordance with the usual procedure.
ORDER
Upon consideration of the motion filed by AT & T on April 7, 1983 to approve the Plan of Reorganization, the proposed plan of reorganization as amended, the testimony given, and the oppositions, affidavits, comments, responses, and briefs filed with respect thereto;
It appearing that AT & T on August 3, 1983, agreed to the modifications required by the Court on July 8, 1983, as qualified on July 28, 1983, and it appearing that the Department of Justice has likewise given its assent to such modifications, it is this 5th day of August, 1983,
ORDERED That the motion be and it is hereby granted, and it is further
ORDERED That AT & T's proposed plan of reorganization, dated December 16, 1982, as amended March 14, 1983, March 25, 1983, April 7, 1983, and August 3, 1983, be and it is hereby approved as consistent with the provisions and principles of the decree entered on August 24, 1982.
NOTES
[1] The Department required certain modifications which AT & T accepted.
[2] The Court, of course, considered all the provisions of the plan, including those which were not set down for hearing.
[3] The four issues addressed by counsel were the allocation of the costs of equal access, the distribution of contingent liabilities arising from antitrust suits against AT & T, assignment of the Bell name and logo, and assignment of patents. Three opponents of the plan of reorganization focused on the first two issues: MCI Communications Corp., the Church of Christ et al., and the National Association of Regulatory and Utility Commissioners (NARUC); three opponents focused on the last two issues: Tandy Corp., Black Citizens for a Fair Media et al., and NARUC. AT & T and the Department of Justice argued in favor of the plan of reorganization on all four issues.
[4] Zane Barnes, chief executive-designate of the Southwestern Region, testified about the costs of equal access and the assignment of switching systems. William Weiss, chief executive-designate of the Midwest Region, testified about the apportionment of contingent liabilities and the proposed Central Staff Organization. Thomas Bolger, chief executive-designate of the Mid-Atlantic Region, testified about assignment of the Bell name and logo, and assignment of patents.
[5] The seven Regional Companies will be holding companies for the twenty-two Bell Operating Companies. The Northeast Region will include New England Telephone Co. and New York Telephone Co. The Mid-Atlantic Region will include New Jersey Bell Telephone Co., the Bell Telephone Company of Pennsylvania, the Diamond State Telephone Company, and the Chesapeake and Potomac Telephone Companies of Washington, D.C., Virginia, Maryland, and West Virginia. The Southern Region will include Southern Bell Telephone and Telegraph Co. and South Central Bell Telephone Company. The Midwest Region will include the Ohio Bell Telephone Co., Michigan Bell Telephone Co., Indiana Bell Telephone Co., Illinois Bell Telephone Co., and Wisconsin Telephone Co. The Mountain-Northwest Region will include Northwestern Bell Telephone Co., the Mountain States Telephone and Telegraph Co., and Pacific Northwest Bell Telephone Co. The Far West Region will include the Pacific Telephone and Telegraph Co. and Bell Telephone Company of Nevada. The Southwest Region will include Southwestern Bell Telephone Co. Although the Regional Companies have been identified by geographic designations throughout these proceedings, they will subsequently be adopting formal corporate names. For instance, the Northeast Region has announced that it will call itself NYNEX, while the Mountain-Northwest Region has chosen U.S. West. Except where the distinction appears to be significant, the Regional Companies and the Operating Companies will be referred to herein as the Operating Companies.
[6] On April 20, 1983, the Court tentatively approved the Local Access and Transport Areas (LATAs) within which the Operating Companies' telecommunications services will be confined. See United States v. Western Electric Co. and American Telephone & Telegraph Co., 569 F. Supp. 990 (D.D.C.1983). The LATA applications were technically the first phase of the plan of reorganization. The parties proposed, and the Court accepted, that review of the plan of reorganization be undertaken in two stages for the sake of speed and convenience and because the drawing of geographic boundaries naturally preceded any division of assets between AT & T and the Operating Companies. Remaining issues with respect to the LATAs are considered in Part VII infra.
[7] Both AT & T and the Department have filed motions for approval of the plan of reorganization. Those motions will be acted upon after the required modifications are submitted to the Court.
[8] The equal access obligation takes effect on September 1, 1984, and it will be phased in over a two-year period. By September 1, 1985, the Operating Companies must provide equal access to one-third of their respective access lines, and by September 1, 1986, to the remaining access lines. See Appendix B to the decree.
[9] Under Section II(C) of the decree, the Operating Companies are not required to file their precise plans for providing equal access until six months after divestiture. That date may be unrealistically late because much of the preparation that must be completed by September 1984 cannot be undertaken by the Operating Companies until they are told whether their initial plans are acceptable. See Response of the United States to Public Comments and Action on AT & T's Proposed Plan of Reorganization, filed March 24, 1983 (hereinafter Department of Justice Response to Comments) at 187-88.
[10] These issues bear, inter alia, on the assignment of assets and liabilities between AT & T and the Operating Companies, and they are therefore properly considered as part of the plan of reorganization.
[11] In only one of the seven telephone regions will this not occur. In the Northeast Region, which encompasses New York and New England, AT & T and its competitors will be served from the same switches in the same LATAs. Response of the Northeast Region to the Court's May 17, 1983 Memorandum at 2 n. **.
[12] It is asserted that even the interexchange carriers will not be able to detect any qualitative difference.
[13] Statement of the Operating Companies Supplementing their Responses to the Court's Memorandum of May 17, 1983 Regarding the No. 4ESS Switching Systems (hereinafter Operating Company Supplement) at 2.
[14] The Operating Companies state that identical per call access would be impossible, even if a uniform access configuration were imposed in each LATA, because of "normal variations of electrical characteristics of facility components and installation line-up variations...." Operating Company Supplement at 3.
[15] The Operating Companies are not responsible, of course, for correcting any quality deficiencies that may result from an interexchange carrier's own facilities.
[16] See Department of Justice Response to Comments at 187.
[17] The skepticism of the interexchange competitors relates largely to the kinds of switches the Operating Companies will employ to connect the competing interexchange networks with the local Operating Company networks. See 569 F. Supp. 990.
[18] An end office is the plant into which individual subscribers' telephone access lines feed. It is typically the point of concentration of telecommunications traffic closest to the subscriberi.e., the point of origination or termination and it is decidedly local in character and function. In the Bell System hierarchy of functions, this is the facility which performs the Class 5 function, meaning that from the Class 5 end office a call is either routed directly to another end office through a Class 5 trunk (a "local" call) or it is routed to a Class 4 facility for interconnection with the "toll" network. In a number of sites, the Class 4 and Class 5 functions are located in the same facility. Under the plan of reorganization, all such facilities will be owned by the Operating Companies because of the local nature of the Class 5 function. Plan of reorganization at 16-17.
[19] There are 91 such switches in the Bell System. They were first introduced in 1976 and are large, four-wire digital switches with the capacity to handle almost 700,000 call attempts per hour. Memorandum of the Midwest Regional Holding Company, May 31, 1983, at 3. The DMS-200, DMS-100/200, and the No. 5ESS switches are smaller than the No. 4ESS, but they "provide equivalent transmission and switching characteristics as the No. 4ESS." Response of Donald E. Guinn to the Court's Memorandum of May 17, 1983, at 3 n. *. These four switches are the most advanced of all switches in use today.
[20] Bell System assets will be distributed according to the function they perform. 552 F. Supp. 131 at 206. Those assets performing exchange and exchange access functions will be owned by the Operating Companies; those performing interexchange functions by AT & T and its affiliates. Section I(A)(1). About eighty percent of the Bell System's assets perform one function or the other and hence are classifiable with relative ease. The remaining 20 percent are multifunction assets, providing both exchange and interexchange services. The government proposed, and the Court accepted, that the predominant use test be applied to these assets, that is, the asset will be assigned to the entity whose use predominates. 552 F.Supp. at 207. The Court noted, however, that in certain cases the test would be inappropriate (552 F.Supp. at 207 n. 317) as where a facility primarily used in connection with interexchange services was necessary for the provision of equal access by an Operating Company. See 552 F.Supp. at 200-01; section VIII(G) of the decree.
[21] These are the advanced switches of the type described in note 19 supra and are the switches most readily connected to the four-wire trunks which the interexchange carriers primarily use in their own networks. Pacific and Nevada Bell will use "state of the art digital, four-wire tandems for more than 99 percent of [their] requirements." Response of Donald E. Guinn at 8 n. *. This appears to be true for New York and New England as well. In the remaining five regions, it appears that all switches to be constructed will be four-wire digital tandems. Only in a relatively small number of LATAs do the companies propose to provide access via two-wire switches. This, and the fact that the Department of Justice will continue to study whether two-wire switches can provide suitable access, largely moots the concerns of Satellite Business Systems, Southern Pacific Communications Corp., and MCI Communications Corp. that the Operating Companies would make larger scale use of two-wire switches, necessitating the use of adapters to connect them to the four-wire trunks of the interexchange competitors.
[22] AT & T has consistently maintained that requiring interexchange competitors to hook into two-wire switches via adaptors would not impair the quality of the transmissions, a point which AT & T's competitors have just as consistently challenged. Since the Operating Companies have decided to offer mainly four-wire connections, this dispute is largely moot. See note 21 supra.
[23] E.g., Black Citizens for a Fair Media, et al.
[24] NET states that owning the switches, and presumably leasing space to AT & T, would in these instances be the cheapest alternative. The next best option would be for NET to build its own 4ESS switches, with the most costly alternative being to lease space from AT & T. Response of the Northeast Region, May 31, 1983, at 5-6.
[25] Different values are achieved depending upon the assumptions used.
[26] The expenditure of $20 to $25 million required for the construction of a new switch is not an acceptable alternative.
[27] NET should also indicate whether assignment to it of the Cambridge switch would alter its analysis of the impact of a separate Worcester LATA. Specifically, if NET owns the Cambridge switch would it also want to build a Framingham No. 4ESS switch?
[28] The Court notes that Bell of Pennsylvania has supplanted its proposal to use a 1AESS switch to offer access in Harrisburg (the "Capital" LATA) with a plan to build a DMS-200, 4ESS or comparable four-wire switch by September 1985. Response of the Mid-Atlantic Bell Telephone Companies, May 31, 1983, at 6 n. 6. Bell of Pennsylvania also intends to offer access to the Philadelphia LATA through the existing 4ESS until its own digital switch is in place, assuming that "billing software develops satisfactorily." Id. These plans are hereby approved. The Court accepts Pacific Northwest Bell's proposal to build its own digital switch in Seattle and use direct trunking to provide access pending completion of the switch. See Appendix A to Response of Operating Companies in Mountain-Northwest Region to Court's Memorandum of May 17, 1983.
The suggestion of the Department of Justice that the date for the Operating Companies' formal equal access filings be advanced is a sound one. The Department should consult with the Operating Companies with regard to the timing of an accelerated schedule.
[29] It is obvious that this figure is somewhat low, as is indicated, for example, by the claim of the Mid-Atlantic Region that the estimate of $73 million does not include any of the $30 million it expects to spend on network reconfiguration. Response of the Mid-Atlantic Bell Telephone Companies, May 31, 1983, at 9 n. 10.
[30] AT & T Memorandum, May 23, 1983, at 4 n. **, 5 n. *. This includes putting in place access tandems for interconnection between interexchange carriers' points of presence and the local loops, plus any direct trunks from points of presence to end offices where this is considered more efficient than using access tandems. The exact amount will depend on many factors, including any waivers of the equal access requirements pursuant to Appendix B of the decree.
[31] The primary responsibility lies with the Operating Companies since as part of the divestiture process they will receive the Bell System's local exchange facilities by which equal access will be provided.
[32] It has been clear at least since the decision of the Court of Appeals in MCI Telecommunications Corp. v. FCC, 580 F.2d 590 (D.C.Cir. 1978) (Execunet II)) that AT & T was under an obligation to furnish equal or substantially equal access to its intercity competitors. See also, United States v. Am. Tel. & Tel. Co., 524 F. Supp. 1336, 1356, 1360 (D.D.C.1981).
[33] Indeed, the Mid-Atlantic Region expects to spend $200 million for equal access through 1986, but anticipates that, under the existing separations procedures, about 60 percent of these costs would be allocated to intrastate, not interstate, ratemaking. As the Mid-Atlantic region states:
It may be possible, if regulators agree, to apportion these costs more equitably between the interstate and intrastate jurisdictions. If this does not occur, there is no assurance that state regulators will be able to fix intrastate access rates high enough to recover these costs. If rates are fixed at such level, [interexchange carriers] will have a strong incentive to `forum shop' between interstate and intrastate tariffs and to bypass the BOCs for intrastate access. Even if the bulk of the costs become properly assigned as between interstate and intrastate access, the possibility of by-pass becomes more threatening with each increase in access costs.
Response of the Mid-Atlantic Bell Telephone Companies, May 31, 1983, at 9-10.
AT & T and the Operating Company personnel apparently are working on a proposal to treat equal access and reconfiguration costs as if they were costs of "Special Services Switching Equipment" which, it is asserted, "will avoid the misallocation of costs to the intrastate jurisdiction" and will allocate investment and related expenses on the basis of relative toil minutes, i.e., on the basis of carriers actually using access services. Letter from A. Gray Collins to Howard J. Trienens, filed June 29, 1983, at 2. The FCC would have to approve any such proposal.
[34] The Court, unlike the Federal Communications Commission, does not consider bypass to be an immediate large-scale problem. See transcript June 2, 1983 hearing at 25466.
[35] However, for the reasons stated in note 31 supra, there is no basis for requiring AT & T to pay all of these costs, in addition to the contribution it will make by way of the access charges and the costs of the risks assigned to it herein.
[36] AT & T is entitled, in equity, to count toward reimbursement of these costs all carrier access charges, not only the charges collected from it. If only AT & T's contributions were counted, the Operating Companies, AT & T's interexchange competitors, or both, would reap a windfall.
[37] The Operating Companies shall keep records to isolate those expenses incurred solely for equal access and network reconfiguration as mandated by the decree from expenses they would have incurred in any event. AT & T and the Regional Companies shall, jointly or severally, submit to the Court prior to January 1, 1984, the accounting method that will be appropriate for isolating these expenses and for determining whether and when the costs of equal access and of network configuring have been recovered.
[38] This mechanism has several advantages: it avoids any direct financing partnership between AT & T and the Operating Companies; it requires relatively little monitoring; it gives effect to the access charge tool; it encourages AT & T to work for suitable separations procedures; and it minimizes interference with regulatory commissions.
[39] Contingent liabilities are liabilities which are attributable to pre-divestiture events but do not become certain, and are therefore not booked, until after divestiture. The plan of reorganization defines "net investment" as total assets less reserves for depreciation. AT & T states that it will receive 25 percent of the net investment of the Bell System, and the remaining 75 percent will be assigned to the Operating Companies. AT & T Memorandum, May 23, 1983, at 13 n. *.
[40] The plan provides special allocation rules for contingent liabilities relating exclusively to interstate or intrastate operations or to tax liabilities. See Plan of Reorganization at 188-89. These special rules have either not been specifically challenged by the intervenors, or they have been opposed for the same reasons discussed infra for challenging the general rule for allocating contingent liabilities. See, e.g., NASUCA Memorandum, May 25, 1983, at 10.
[41] Under the plan, AT & T and the Operating Companies will be responsible for the payment of judgments and determinations of liability, regardless whether or not an entity was dismissed from the proceeding by virtue of settlement or otherwise. Plan of Reorganization at 190.
[42] No objections were raised with respect to the contingent liabilities having to do with the Bell System's rates, contracts, torts, or taxes.
[43] CPE is used on subscribers' premises to originate, route, or terminate telecommunications (e.g., telephone sets, answering machines). Section IV(E) of the decree.
[44] See, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S. Ct. 1562, 23 L. Ed. 2d 129 (1969).
[45] See, e.g., Comments of Southern Pacific Communications Co., May 23, 1983, at 15; Comments of MCI Communications Corp., May 23, 1983, at 9.
[46] Because of the integrated nature of the Bell System, it is unlikely that the result would be any different in the private cases brought against that System or its components. In any event, as developed below, it is appropriate to assign the responsibility for the payment of possible judgments now, rather than to leave the issue for resolution for later, on a case-by-case basis. Recognizing this reality, few of the intervenors suggest that the matter be left open until judgments are entered; they argue instead for a fixing of liability now, albeit on a basis different than that assigned by the plan. See pp. 1071-72 infra.
[47] AT & T Reply Memorandum, May 31, 1983, at 18 n. *.
[48] Such sharing would have occurred through the division of revenues process and a general contribution to the expenses of AT & T's General Department, and it is that Department which would have paid any antitrust judgment irrespective of the Bell entity upon which it might have been imposed. Id.; AT & T Response to Objections at 333.
[49] See, e.g., Satellite Business Systems Memorandum, May 23, 1983, at 4.
[50] The plan provides that in December 1983, the Operating Companies and AT & T will enter into an agreement which will identify all then-pending litigation or other proceedings in which a judgment could result in liability to be allocated under the plan. This agreement will identify whether each contingent liability will be shared by AT & T and the Operating Companies under the net-investment formula or whether it will be treated under one of the special allocation rules. Within one month of the institution of any other action or proceeding against AT & T or an Operating Company based on pre-divestiture events, notice must be given to each entity which may be responsible for payments under the plan. Plan of Reorganization at 189-90, 470.
[51] In that case, the defendant corporation had attempted to file a third-party complaint against other companies seeking contribution should it be held liable under the initial complaint. The Supreme Court upheld the lower court's dismissal of the third-party complaint.
[52] To the contrary, the Court concluded that it was for the Congress, not the courts, to decide whether there should be a statutory right to contribution in antitrust cases and how such contribution should be structured. 451 U.S. at 646, 101 S.Ct. at 2069.
[53] Arguing that the agreement between the Operating Companies and AT & T to share contingent liabilities should be deemed void as contrary to public policy, one intervenor cites St. Paul Insurance Companies v. Talledega Nursing Home, Inc., 606 F.2d 631 (5th Cir.1979). See Southern Pacific Memorandum of May 23, 1983, at 16. The St. Paul decision stands only for the proposition that under Alabama law insurance contracts protecting against intentional wrongs are invalid. Not only are such contracts not universally considered void, but any public policy problems from such contracts are avoided here because the agreement among the Bell companies does not relate to future conduct but applies only to liabilities from pre-divestiture events.
Zenith (note 44 supra) is likewise inapplicable because the jurisdictional problems there involved are not present here and because of the contractual agreements discussed infra.
[54] On this basis, since AT & T will receive 25 percent of the net investment of the Bell System, it will be responsible for 25 percent of the contingent liabilities. See note 39 supra.
[55] These intervenors assert (1) that AT & T's future lines of business, not those of the Operating Companies, benefitted from whatever anticompetitive conduct occurred, (2) that the potential liability from alleged anticompetitive conduct bears no necessary relationship to the assets being divided, and (3) that the method prescribed by the plan, coincidentally or otherwise, favors AT & T's interest as against that of the Operating Companies.
[56] See United Church of Christ Reply, May 31, 1983, at 8 (not possible to determine the extent to which Operating Companies and their ratepayers benefitted from AT & T's policies); General Dynamics Telephone System Center, Inc. Response, May 20, 1983, at 8 (alleged antitrust violations did not necessarily inure to the benefit of the Operating Companies "to the same degree" as they did to AT & T).
[57] Because of this problem, California suggests that the test for allocating contingent liabilities should be: which line of business "primarily" stood to benefit from the antitrust violation? State of California Memorandum, May 25, 1983, at 19. New Mexico advocates that where ultimately there remains a dispute about which entity receives the post-divestiture benefit, the matter should be submitted to arbitration. State of New Mexico Reply Comments, April 13, 1983, at 5.
[58] The break-up of the Bell System does not, in a number of respects, involve a neat division of operations and lines of business. For example, the Operating Companies will handle some intercity toll calls especially in some of the larger LATAs and they will also be able to market CPE.
[59] The decree provides that AT & T is to divest the Operating Companies with 45 percent debt ratios (55 percent equity). This ratio represents the 1981 (year end) consolidated debt ratio of the Bell System and was also the System's target debt ratio for the end of 1983. See AT & T Reply Comments, June 29, 1982, at 95-96.
[60] The equity portion of the Bell System's capital structure represents, in effect, the shareholders' reserve against business risks, including contingent liabilities. The possibility that certain contingent liabilities may not become certain or may not be turned into debt does not mean that these contingent liabilities are not business risks which currently encumber equity.
One intervenor (Washington Utilities and Transportation Commission Memorandum, May 25, 1983, at 5) argues that, if the Operating Companies were not assigned any contingent liabilities, they could be considered as receiving too much equity only if all other business risks in the overall Bell System capital structure were equal, and it goes on to state that there is good reason to believe that the Operating Companies will face higher risks because they are removed from certain lines of business by the decree. This argument is too speculative. Even though AT & T will retain some of what have been the more lucrative lines of business in the past, these are the competitive lines of business, and there are some who regard them as riskier than the Operating Companies' monopoly exchange functions. See Fortune, Breaking Up The Phone Company, June 27, 1983, at 81-91.
[61] AT & T could have decided to handle the contingent liabilities problem by one of the following methods, all of which would have led to results similar to the apportionment provided for by the plan of reorganization:
(1) The Bell System could have chosen to pay these liabilities through settlement of the litigation before the decree was entered (or before divestiture occurred), such payment to be funded by debt. The Operating Companies would then be divested with higher debt ratios (perhaps 50 percent) to reflect the higher debt ratio of the Bell System. There would then, of course, be no residual risks to divide.
(2) The Bell System could have purchased insurance, with the premiums funded by debt. Again, this would have pushed the System's debt ratio closer to 50 percent, and the allocation of contingent liabilities would then have become irrelevant since any judgment would have been paid by the insurer.
(3) The Bell System could have self-insured the contingent liabilities with a funded reserve of some $25 billion, which would have been borrowed and held in a separate account. The System's debt ratio would again have risen closer to 50 percent, and whichever entity would have been assigned the contingent liabilities would have received this separate reserve account.
(4) The Bell System could have self-insured by booking the contingent liabilities through transfer of a portion of its equity to an appropriate liability account. The choice then would have been either for AT & T to take all the contingent liabilities and the liability account, or AT & T and the Operating Companies each could have taken a share of both the contingent liabilities and the corresponding liability account.
In essence, AT & T and the Operating Companies decided to select the last option each will receive a share of the contingent liabilities and each will receive more equity than it would have had if one of the other three options had been selected. The only substantive difference between that option and the proposed plan is that the shareholders' equity reserve is not being segregated into a separate liability account. By accepting a share of the contingent liabilities and a higher equity ratio, the Operating Companies are all simply participating in underwriting the System's contingent liabilities. In this way, they are insuring each other, and they will retain any profit which otherwise would have gone to an insurer.
[62] AT & T Memorandum, May 23, 1983, at 11-12.
[63] See testimony of Thomas Bolger, June 2, 1983, transcript at 25603-04; testimony of William Weiss, June 2, 1983, transcript at 25493-94; but see testimony of Zane Barnes, June 2, 1983, transcript at 25487.
The Court notes that it is entirely unlikely that the contingent liabilities could realistically threaten the viability of the Operating Companies. AT & T has suggested that $25 billion in additional liabilities might become certain after divestiture, but it has since hastened to concede that this possibility is extremely remote. Even if this outside contingency came to pass, the Operating Companies could finance their shares with debt, and their debt ratios would then increase from 45 percent to the 50 percent range still the typical debt ratio of independent telephone companies and electrical utilities.
[64] The Court has also considered the various provisions made in the plan of reorganization with respect to other liabilities, reserves, and equity, including tax reserves, depreciation reserves, and long term debt, and finds the treatment of these matters in the plan to be reasonable.
It is appropriate briefly to mention the debt of Pacific Telephone and Telegraph Co., which has been the subject of several submissions both by the Operating Company and by the State of California. Upon consideration of all the documents, the Court has concluded that it will not require a modification of the plan of reorganization with regard to this issue because the plan is not the appropriate vehicle for determining the extent to which the local company's debt problems may have been created by the California regulators as was previously assumed by this Court (552 F.Supp. at 208) as well as by the FCC staff (Staff Analysis of February 11, 1983, at 27-28) and various financial rating services or by AT & T.
The debt equalization scheme which is proposed by California would inappropriately result in inter-regional subsidies and create complex problems leading to new and continuing AT & T entanglements with the Operating Companies. In any event, neither the decree nor the plan of reorganization adversely affects Pacific's financial condition; if anything, they improve it. See Second Supplemental Statement of Donald Guinn, April 7, 1983, at 1. Pacific's interest coverage ratio will be above the level necessary to maintain a Standard & Poor's "A-" rating. Supplemental Statement of Donald Guinn, January 13, 1983, at 2; AT & T Response to Objections at 300-01. While future developments and perceptions cannot be vouchsafed, it appears that Pacific will be divested in as financially a sound condition as its prior history permits.
[65] AT & T and the Operating Companies could not use "common corporate names," however.
[66] The Central Staff Organization to be established by the Operating Companies (see Part VIII infra) was to receive the rights to the existing Bell trademarks for use in connection with lawful Operating Company business except for the marketing of "equipment not supplied by AT & T and its affiliates." The trademarks include not only the encircled bell logo but also the blue and ochre stripes, and other trademarks and service marks used on vehicles, telephone directories, and the like. They will generally be collectively referred to as the Bell "logo."
[67] If only because of the explicit representations made by AT & T's counsel to the Court during the first Tunney Act hearing in June 1982 (see pp. 1080-81 infra), this alternative cannot be seriously entertained.
[68] It stipulated, however, that compensation had to be paid to the Operating Companies for the direct costs of revamping their trademarks and trade names.
[69] AT & T would retain its present rights to trade names and trademarks for use outside the United States.
[70] AT & T could continue to use the name "Bell Laboratories" without modification. AT & T could also continue to use the descriptive phrase "Bell System," albeit with the modifier "American." The amendment further provides that AT & T would conduct an extensive advertising campaign to distinguish its products, names, and trademarks from those of the Operating Companies.
[71] Reply of Tandy Corporation at 8.
[72] This confusion would exist regardless whether the Operating Companies would market CPE under the Bell label. Even if there were no such marketing, customers would still be led to believe that the providers of local exchange, exchange access, and directory advertising services are intimately connected with American Bell, and that AT & T's equipment the only equipment that would be marked "Bell" would be the most adaptable to the local system.
[73] It is on a similar rationale that the Court required modification of the decree to dispel customer confusion arising from joint billing. 552 F.Supp. at 199.
[74] One of the intervenors provided the apt example of a newspaper advertisement proclaiming "NOW YOU CAN BUY GENUINE AMERICAN BELL EQUIPMENT THROUGH THE RETAIL OUTLETS OPERATED BY YOUR LOCAL BELL TELEPHONE COMPANY." Reply of Tandy Corporation at 5. There can be no doubt that consumers would be led to conclude by such an advertisement that these various "Bell" entities are all part of one giant company, and that their equipment was so designed that it would all mesh better than would some other, "foreign" equipment. This would be so if the Bell System had not become fixed in the national consciousness for a hundred years as a single corporation; it is even more true because of that historical fact.
[75] AT & T argues, citing several trademark decisions (e.g., Gould Engineering Co. v. Goebel, 320 Mass. 200, 68 N.E.2d 702 (1946); Gemeinde Bran, Inc. v. Amana Society, 557 F.2d 638 (8th Cir.1977)) that different businesses which "share a common heritage" may use the same mark in separable parts of the business. See Response to Comments at 480-90. That argument lacks merit. Trademark law as it has developed in the context of claims of unfair competition between competing concerns is of dubious applicability to a situation divestiture under antitrust principles where the interests of outside competitors and the public are implicated. Cf. Ford Motor Co. v. United States, 405 U.S. 562, 576 & n. 11, 92 S. Ct. 1142, 1151 & n. 11, 31 L. Ed. 2d 492 (1971). In any event, the lines of businesses of AT & T and the Operating Companies are not separable but related and, in the equipment market, they will be direct competitors. The customer confusion this would foster would delay achievement of a truly competitive CPE industry.
It was for similar reasons that the various oil companies which emerged from the 1911 break-up of Standard Oil have generally been prohibited from doing business under a Standard Oil name or trademark in a territory where Standard Oil denoted another product. See, e.g., Standard Oil Co. (Kentucky) v. Humble Oil & Refining Co., 363 F.2d 945, 951 (5th Cir.1966) ("we think long cumbersome records are no longer necessary to prove the public believes that all of the pseudonyms for Standard Oil belong to the same or related companies").
[76] The various components of the Bell System will, to be sure, be separated from each other in a legal, ownership, and financial sense. But if they were all to support each other in their marketing and promotional efforts, not a great deal will have been gained. Together they would still crowd out all others; together they would still be the colossus of telecommunications.
[77] Use by AT & T of the terms "Bell System" or "American Bell System" is particularly troublesome, for it implies that the system that will be broken up on January 1, 1984 actually survives in the form of AT & T.
[78] It is worth noting also that this confusion is actually being encouraged by AT & T's current advertising which features such phrases as "Bell System" and "Genuine Bell." Indeed, AT & T announced its decision to name its equipment marketing subsidiary "American Bell, Inc." after it had learned of the Department of Justice's objection to the use by AT & T of the word "Bell" in any way which could imply a continuing "endorsement or relationship between the BOCs' monopoly local exchange service and the products and services of AT & T and its affiliates" (letter of September 23, 1982, from William F. Baxter to Howard J. Trienens (Exhibit D to Objections of Tandy Corp., filed February 18, 1983)) and after at least one intervenor in the public interest proceeding before this Court (Tandy Corp.) had similarly complained about such use. AT & T advertising focusing on the word "Bell" has proceeded at a crescendo since the divestiture decision was made.
Because of this history, not much faith can be placed in AT & T's promise to undertake an advertising campaign to educate consumers as to the differences between the new entities. An effective campaign along these lines would be directly contrary to AT & T's interests.
[79] Plan of Reorganization at 415.
[80] See 552 F.Supp. at 201-04.
[81] See Ford Motor Co. v. United States, supra, 405 U.S. at 576 and n. 11, 92 S.Ct. at 1151 and n. 11. AT & T also "owns" a sizable magnitude of liabilities, including the contingent liabilities the responsibility for which will pass in large part to the Operating Companies (see Part II supra), yet it has never taken the position with respect to these liabilities that they constitute its obligation as distinguished from that of the Operating Companies.
[82] The reference to a "common heritage" is puzzling for another reason as well. It is because that common heritage was allegedly used to violate the antitrust laws, and it is presumably because the "common heritage" was so intrinsically anticompetitive, defying less drastic remedies such as injunctions, that this law-suit was filed and this divestiture agreement was made and approved.
[83] Response to Objections at 486-87.
[84] AT & T also claims that the trademark and the tradename Bell belongs to the party which manufactured Bell equipment, i.e., Western Electric Co. However, as one commentator put it,
When one says that a trademark must indicate origin of the goods to which it is applied, it is not intended to [imply] that a trademark can only be used by a manufacturer of the goods.... The origin to which reference is made is the party that introduces the goods on which the mark is used into commerce with the trademark on them and who primarily stands to gain or lose by the acceptable qualities of the goods. It is not even necessary that the public or purchasers know who is the manufacturer of the goods....
E. Vandenburgh, Trademark Law and Procedure at 35 (2d ed).
Moreover, it is undisputed that AT & T has not supplied to the Operating Companies and hence held out to the public only products made by it or its affiliates. See Amended Certification of Thomas E. Bolger, April 6, 1983, at 4.
While certainly a survey of the public would indicate that the name "Bell" and the Bell logo do not connote the same thing to every single person an individual who has written checks monthly to one of the Operating Companies which does not use the name "Bell" in its corporate name may be more likely to think of "Ma Bell" than of a local Operating Company, for instance it cannot be gainsaid that the primary connection between the individual and the Bell System occurred between telephone subscriber and local Operating Company. Assignment of Bell name and logo to the Operating Companies is thus consistent with trademark law.
[85] See, e.g., Statement of Wallace R. Bunn, May 23, 1983; Reply Memorandum of the Midwest Regional Holding Co., May 31, 1983; Supplemental Statement of Zane E. Barnes, April 12, 1983. Here, again, AT & T cannot have it both ways: it cannot relegate the largest share of the Bell System obligations to the Operating Companies yet purport to speak conclusively on behalf of the entire System with regard to the plan of reorganization even where there is a sharp dispute among the various components. See note 81 supra.
[86] See note 43 supra.
[87] The Court repeated this reasoning in its Memorandum of August 23, 1982, denying the Justice Department's motion for reconsideration (at p. 5):
Balanced against the remote contingency that the Operating Companies would engage in anticompetitive conduct is the certainty that they would provide healthy competition for AT & T.... Allowing the Operating Companies to engage in providing CPE will serve as a useful competitive check on AT & T, not only deterring the possibility of anticompetitive behavior but also benefitting consumers by increasing the number of equipment providers in the market place.
[88] August 23, 1982, Memorandum Opinion at 4 n. 7. Since the provision allowing the marketing of CPE was added to the decree at the Court's insistence, it would not be unreasonable to regard the Court's expectations in that regard as the most accurate expression of the decree's "intent."
[89] A substantial amount of testimony at the June 2, 1983, hearing was devoted to this issue.
[90] Letter dated April 13, 1983, from Raymond F. Burke, Vice President and General Counsel-designate of the Northeast region; see also, e.g., Supplement to Sworn Statement of Wallace R. Bunn, chief executive officer-designate of Southeast region; Statement of Thomas Bolger at 2-3.
[91] There is some merit to AT & T's point that its employees have an emotional attachment to the Bell name, and that to them the name's passing may mean the loss of an emblem of pride and perhaps life-long association. The same could be said about employees of the Operating Companies, however.
[92] It is significant also, in antitrust terms, that transfer of the Bell name and logo to the Operating Companies will not eliminate AT & T as a competitor but will yield two competitors where otherwise there might only be one. Cf. United States v. Lever Brothers Co., 216 F. Supp. 887 (S.D.N.Y.1963).
[93] AT & T suggests that it is not, even now, proposing "common corporate names." When the promise was made that there would be no "common corporate names," it would have been difficult to visualize that AT & T promised only that a modifier would be added to the word "Bell" but that otherwise that name would still be used by all of the successor entities of the Bell System. Had not AT & T's counsel hastened to assure the Court that no amendment of the proposed decree was necessary, the Court would have, then and there, insisted upon language which is not susceptible of the current "fine print" argument.
[94] The assignment of the Bell name and logo to the Operating Companies rather than to AT & T is further consistent with those provisions of the decree which distribute assets on the basis of predominant use. As the Department of Justice points out,
[a]ssignment of the Bell logo and marks to AT & T would create relatively more transitional costs, due to the relatively greater number of BOC assets upon which the marks and logo appear, in comparison to those retained by AT & T, e.g., on buildings, trucks, phone booths.
Department of Justice Response to Comments at 155.
[95] The Court will consider postponing the effective date of the prohibition for an additional six months upon a showing by AT & T made by November 1, 1983, that it needs more time to continue a promotional campaign with respect to whatever name it desires to adopt in place of "American Bell." Although to some extent AT & T has created this problem by its recent intensive advertising campaign (see note 78 supra), it is nevertheless appropriate to allow it a reasonable period within which to extricate itself from this situation.
[96] AT & T may, however, continue to use the "Bell" name with respect to its Bell Laboratories and its foreign operations. The Laboratories and the foreign operations will not be in competition with the Operating Companies, and use of the "Bell" name in these contexts will not otherwise be confusing.
[97] See Part VIII infra.
[98] Such restrictions have in other contexts been found to violate the antitrust laws. See, e.g., Ohio-Sealy Mattress Manufacturing Co. v. Sealy, Inc., 585 F.2d 821 (7th Cir.1978).
[99] Whether use of the word "Bell" with an appropriate prefix could pass muster under the law of trademarks and unfair competition outside a particular Regional Company's territory may be expected to depend upon the particular facts of each use (e.g., the precise configuration of the name and logo, the results of customer surveys, and the like). Any decision now on that issue would therefore not only be entirely speculative and premature but it might also be beyond the Court's jurisdiction, and it will accordingly be left to another day and another forum.
[100] "Patents" as used in this Opinion includes non-patented technical information. The parties have agreed that the Operating Companies would be granted rights not only to patents but also to all technical information funded by the license contracts. 552 F.Supp. at 177. The plan as proposed applies only to United States patents; the Operating Companies would receive no rights to foreign patents. Objections to this aspect of the plan are discussed at note 116 infra.
[101] AT & T's original proposal, which was modified at the request of the Department of Justice, would not have permitted the Operating Companies to engage in sublicensing on their own at all but would have required them to request AT & T to perform all sublicensing for them. The parties have since agreed to a modification of this part of the plan, and each Operating Company will now have the right directly to sublicense patents to any firm for use in supplying goods or services to that company, regardless whether the sublicensee is then a party to a license agreement with AT & T. See Department of Justice Response to Comments at 141.
[102] The Court further relied on the fact that "the parties have assured the Court that the Operating Companies will have the right to sublicense the AT & T patents and technical information to those providing them with goods and services." 552 F.Supp. at 177.
[103] 552 F.Supp. at 177. Neither AT & T nor the Department of Justice thereafter contradicted the Court's understanding, whether by a motion for reconsideration or otherwise.
[104] Indeed, the Court is disturbed that representations made by both parties in so clear and unequivocal a fashion are now claimed, after the decree has been entered, to be encumbered by gaping loopholes.
[105] See AT & T May 31, 1983 Memorandum at 24; Department of Justice Memorandum, June 10, 1983, at 3.
The Department of Justice points out that AT & T made the following statement during the Tunney Act proceedings:
[T]he Decree requires that AT & T afford the BOCs sufficient technical information to independently provide exchange telecommunications service and exchange access functions (Decree, § I(A)(I)). In compliance with that provision, AT & T will continue to license to the BOCs on a royalty-free basis existing patents and patents issuing within five years after entry of the Decree. AT & T Reply Comments, May 21, 1982, at 123.
The Department further referred to its May 20, 1982 Response to Public Comments at 38, where it stated:
In addition, AT & T has made a commitment to the Department that it will continue to license to the BOCs, on a royalty-free basis, all existing patents and patents issued within five years of the date of entry of the modification. Such licenses will be for the life of the patent and will include the right to grant sublicensee to others to provide the BOCs with goods and services for the BOCs' own use (emphasis added).
Department of Justice June 10, 1983 Memorandum at 3.
The Department argues that the "own use" limitation is not consistent with an interpretation that these companies would be granted the right to sublicense patents to manufacturers who provided them with products for resale. But the decree grants to the Operating Companies the right to provide CPE, and these companies obviously need to be supplied with products to use in selling CPE to the general public. See infra.
[106] Department of Justice Response to Public Comments, May 20, 1982, at 132.
[107] Id. at 132-33.
[108] The Department of Justice and AT & T also point out that section VIII(B) which authorizes the Operating Companies to provide printed directory advertising services (i.e., Yellow Pages) specifically provides that the technical information necessary to provide such services should be transferred to the Operating Companies. From this premise they argue that since section VIII(A) which authorizes the Operating Companies to provide CPE is silent with regard to the transfer of technical information, the conclusion may be drawn that no transfer of CPE patents to the Operating Companies was intended.
This argument is likewise unpersuasive, since there is another, more plausible explanation for the variation between sections VIII(A) and VIII(B). The language in section VIII(B) concerning technical information is part of a larger provision, similar to section I(A)(1), which was intended to result in the transfer to the Operating Companies of all Bell System assets used in the production of printed directories. See 552 F.Supp. at 194 n. 263. If this provision had been used in the CPE context, it would have effectively assigned to the Operating Companies the embedded CPE and the existing network of retail outlets, contrary to the Court's intent. See 552 F.Supp. at 192 n. 248.
[109] AT & T Response to Objections at 462.
[110] That is, "central" AT & T, as distinguished from the Bell System as a whole.
[111] This is so even if it is assumed, as AT & T asserts, that no expenses have been billed to the Operating Companies for new CPE patents since May 1980. See testimony of Thomas Bolger, designated chief executive of Mid-Atlantic Region, June 2, 1983, transcript at 25594, 25597-98.
[112] With regard to all patents, AT & T will retain ownership and the right to use them in any lawful way it sees fit. None of the licensing requirements in the decree or in the plan of reorganization as required to be modified by the Court changes that fact in any way.
[113] E.g., patents applicable directly to inter-LATA services or to foreign operations.
[114] E.g., in the so-called "corridors" and the Official Services (see pp. 1097 and 1107 infra).
[115] See, e.g., testimony of Thomas Bolger, June 2, 1983, transcript at 25595.
[116] With regard to foreign patents, AT & T argues that since the Operating Companies' exchange operations are confined to this country, the rights to AT & T's domestic patents provide all the patent rights the Operating Companies require to conduct exchange and directory advertising operations. AT & T Memorandum, May 31, 1983, at 24 n. **. However, in the CPE area, at least, foreign patents could be helpful to the Operating Companies even though they will not be operating overseas, for rights to foreign patents will enable them to purchase CPE which is manufactured entirely or in part by foreign companies. See testimony of Thomas Bolger, June 2, 1983, transcript at 25600; Memorandum of Mid-West Regional Holding Company, May 23, 1983, at 19; Memorandum of Mid-West Regional Holding Company, May 31, 1983, at 8.
[117] The Operating Companies would benefit from these rights if any of the line of business restrictions should be lifted at any time during the life of the particular patent, not simply during the five years after divestiture. A lifting of the restrictions, or some of them, during that extended period is certainly conceivable.
[118] It may be noted that requests to modify the proposed plan of reorganization so as to broaden the scope of patent rights granted to the Operating Companies were made by the Mid-west Regional Holding Company (see Reply Memorandum of May 31, 1983); Thomas Bolger, designated chief executive of the Mid-Atlantic Region (see Second Amended Certificate of June 10, 1983); and Wallace R. Bunn, designated chief executive of the Southeast Region (see Statement of May 23, 1983).
[119] See 552 F.Supp. at 177 (Operating Companies may grant sublicenses "to those providing them with goods and services"). Likewise, the Plan of Reorganization at 411-12, as modified by Amendment 34, provides that
AT & T will grant to each BOC the right which no BOC currently has to sublicense such AT & T patents to competing manufacturers for use only in providing the BOCs with goods or services embodying the inventions of the patents, provided that such sublicense does not prejudice AT & T's existing cross license agreements.
[120] Several intervenors have suggested that the plan be modified to allow the Operating Companies to sublicense patents to manufacturers for the provision of goods and services not only to the Operating Companies but also to other purchasers, arguing that such broader sublicensing rights would result in increased royalty payments to the Operating Companies and, due to greater economies of scale, to the reduction in cost of all goods produced by independent manufacturers. See, e.g., Reply of Wang Laboratories, April 13, 1983. The Court will not order such a modification, however, since it would, in effect, permit the Operating Companies to enter the patent licensing business.
[121] AT & T contends that the Operating Companies need not be granted rights to CPE patents in view of the Court's observation that the Operating Companies will enter the CPE market "from a zero base." AT & T Response to Objections at 465 n. * (citing 552 F.Supp. at 192 & n. 248). There is nothing in the Court's language to support AT & T's conclusion; it merely justified the assignment to AT & T of the embedded CPE and the retail outlets.
[122] Second Amended Certificate of Thomas Bolger, June 10, 1983, at 6. When questioned by the Court at the June 2, 1983 hearing as to whether the Operating Companies would use the CPE patents other than merely as a source of revenue, Bolger responded:
I would use them in order to allow me the freedom to make arrangements with suppliers, if I wanted to and if I found that it would be valuable for me to do so, so that I would have additional flexibility to procure CPE for my requirements.... I'm not going to sell the technology. I want to use it to help me enter the CPE market.
Transcript at 25596.
[123] The logic underlying the licensing of all patents to the Operating Companies was to assure their independence from AT & T by providing alternative sources of supply for goods and services which they would use in the businesses which they were authorized to conduct. These companies had long been a captive market for Western Electric, both for telecommunications equipment and for CPE. Operating Company independence from AT & T is therefore crucial to CPE marketing, just as it is with respect to exchange and exchange access functions. With regard to both businesses the Operating Companies will be free to purchase equipment (or services) from suppliers which do not require licenses under AT & T patents; with regard to both businesses it is important, however, that they be able to purchase from alternative sources equipment (or services) which would not be available without sublicenses under AT & T patents.
[124] As indicated, the Operating Companies will be permitted to sublicense CPE patents only in order to enable a manufacturer to provide goods for resale by the Operating Companies. See infra. Thus, any royalty received by the Operating Companies under such sublicenses will, in all probability, be in the form of a reduced wholesale price paid by the Operating Companies to the manufacturer.
[125] See Statement of Wallace Bunn of May 23, 1983 at 5-7; Testimony of Thomas Bolger, June 2, 1983, transcript at 25596.
[126] There is no reason why an Operating Company would sublicense a particular CPE patent to only one manufacturer. See testimony of Thomas Bolger, June 2, 1983, transcript at 25597.
[127] To be sure, another consequence would be that AT & T would acquire additional competitors in the CPE business, but this could hardly be regarded as an "adverse" effect in the context of this antitrust decree designed, in part at least, to open the CPE market to competition.
[128] Department of Justice Response to Comments at 143-44.
[129] At the same time, as the Court made clear, there are abundant reasons why the marketing of CPE by the Operating Companies is in the public interest (552 F.Supp. at 191-92).
[130] See 552 F.Supp. at 192; Memorandum of August 23, 1982.
[131] The Department has not attempted to explain how the grant to the Operating Companies of the right to sublicense CPE patents would increase the potential for cross-subsidization. The Department has, however, given three reasons why in its view discrimination among manufacturers could occur: (1) the sublicensing of patents would increase the Operating Companies' incentive to discriminate against certain vendors because the companies would have an incentive to market only the products of manufacturers operating under the sublicenses; (2) the Operating Companies would have the ability to extract concessions from manufacturers, thus undermining the potential for variety and merit purchasing; and (3) a financial interest in the success of a particular technology would enhance the incentives of the Operating Companies to develop standards through the CSO, which they own and control, to favor such technology. Department of Justice Memorandum, May 31, 1983, at 12-13.
The principal difficulty with these arguments is that there will be no reason for the Operating Companies to sublicense to only one particular manufacturer (and thus to favor that manufacturer's products) and a number of reasons why sublicenses will be granted to a number of manufacturers. See notes 126 supra and 134 infra. Additionally, the type of "concessions" the Operating Companies would extract from their sublicensing rights would be lower wholesale prices, which is hardly anticompetitive or contrary to the selection of vendors based on merit. Finally, if the Operating Companies were able to sublicense Bell System technology, more manufacturers would have access to this technology than if it were tightly controlled by AT & T, and it would be less likely rather than more so that the CSO would set standards that favored only AT & T and Western Electric products. See Independent Data Communications Manufacturers Assoc., Inc. Reply Memorandum, May 31, 1983, at 9 n. 19.
[132] Irrespective whether a sublicense is involved, the Operating Companies will share no common facilities with manufacturers. Further, sublicensing of CPE patents by the Operating Companies is no more a step into manufacturing than is the sublicensing of exchange and exchange access patents designed to provide goods and services to the Operating Companies for their exchange operations yet the Department of Justice does not object to the latter. If Operating Company sublicensing of CPE patents were considered a form of manufacturing violative of the decree, then so presumably would the sublicensing of any patent by an Operating Company to a manufacturer and the promises of AT & T and the Department of Justice made during the Tunney Act proceeding would be reduced to a nullity.
[133] See Memorandum of Midwest Regional Holding Co., May 23, 1983, at 20 n. 20. It is difficult to see how sublicensing of patents would be a "step into manufacturing" likely to produce anticompetitive conduct also because the Operating Companies will, by necessity, have to negotiate with independent equipment manufacturers over a variety of contractual terms (e.g., specification and design terms, volume contracts, trademark licenses) in order to obtain a distinctive line of products for resale.
[134] The Operating Companies will have no economic incentive to engage in discriminatory conduct merely because they will have the ability to sublicense. As they enter the CPE market with a zero market share, their overriding incentive will be to enter into arrangements with as many vendors as is necessary to produce the highest quality, lowest priced products for resale to the general public. And the Operating Company executives have given every indication to the Court that this is precisely what they intend to do.
[135] See p. 1107 infra.
[136] See pp. 1097-1101 infra.
[137] The Operating Companies will be responsible for ensuring that those to whom sublicenses are granted do not exceed the scope of the activities allowed hereunder.
[138] This may be done under that section, if it is demonstrated that "there is no substantial possibility that [an Operating Company] could use its monopoly power to impede competition in the market it seeks to enter."
[139] Until the occurrence of such an event, if ever, the particular patent licenses in the possession of the Operating Companies will simply lie dormant. AT & T will not be injured by the grant to the Operating Companies of licenses to patents which, ultimately, these companies may never utilize. There is also no need, therefore, to fear that the Operating Companies will use their patent rights to "peddle" AT & T technology. AT & T Memorandum May 23, 1982, at 23.
[140] Whether or not AT & T sought the Bell name and patent restrictions or was required or persuaded by the Department of Justice to agree to them, there can be no doubt that they are advantageous to AT & T, for they would, as a practical matter, eliminate competition from the Operating Companies or significantly curtail the effectiveness of such competition.
[141] I.e., restraints which would unnecessarily and improperly deprive the local companies of the necessary and appropriate patent and trademark rights.
[142] That is, charges levied upon the carriers as a prerequisite to their obtaining access to the local loops and hence to the local subscribers.
[143] See In the Matter of MTS and WATS Market Structure, CC Docket No. 78-72 Phase I (adopted December 22, 1982). The FCC also decided to begin this program on January 1, 1984, the date of the reorganization of the Bell System. This effective date makes it appear that the imposition of this burden on consumers is related to the decree herein which clearly it is not (see note 292 infra).
[144] See 552 F.Supp. at 169, 224 n. 376.
[145] Universal service has been mandated by the Congress, and until December of last year it had been a principal policy goal of the Federal Communications Commission.
[146] One might consider, for example, such uses as the ability to reach fire, police, and other emergency services; the need of the elderly to reach physicians, close relatives, or others who might give them aid; and the desire of those in isolated areas of the country for contact with others.
[147] That decision, at bottom, rests upon the proposition that novel bypass technologies may erode the financial health of the Operating Companies, and that increased support from the residential ratepayers will allow these companies to remain competitive. There is no reason to believe that bypass on a large scale is imminent. Further, evolving technology may be expected to result overall in reduced costs. Rather than to serve as a basis for imposing a new burden on local ratepayers, such technology and such reduced costs would better be channelled to benefit all segments of the public, including the local subscribers.
[148] See p. 1122 infra.
[149] Other labor unions are also involved, but they did not submit comments to the Court.
[150] The Union states that the decision to merge the various plans was a subject of collective bargaining, but AT & T disputes this assertion. AT & T Response to Objections at 399.
[151] For pension purposes, these nine entities are AT & T, the Central Staff Organization, and the seven Regional Companies.
[152] For example, the union posits that gains in one Operating Company's assets would no longer be available to compensate for losses in another Company's assets.
[153] A fourth criticism that the distribution of the Trust's assets may be out of synchronization with the distribution of its liabilities, i.e., the accrued benefits of employees is plainly without merit. Elaborate actuarial studies will be performed after employee assignments have been finalized to ensure that pension assets in the appropriate amounts follow each employee. A company would therefore not receive a disproportionate number of employees near retirement without also receiving a proportionately greater amount of pension assets.
[154] Plan of Reorganization at 281 n. 317. Moreover, AT & T and the Union have already bargained over certain effects of divestiture on employees' pension and health benefits, and the results of this bargaining are reflected in the Amended New Entities Arguments dated March 26, 1982, March 30, 1982, and April 5, 1982. See AT & T Response to Objections at 397.
[155] In Katz, the Supreme Court held unlawful an employer's unilateral establishment of new systems of wage increases, sick leave provisions, and merit raises at a time when it was negotiating with the union regarding the same subjects. Bastian-Blessing likewise involved the unilateral termination by the employer of a health insurance plan which had been the subject of collective bargaining. Neither case even remotely resembles the facts of the instant situation.
[156] AT & T proposes to continue to administer the pension plan of any Regional Company that requests such "full service" assistance for a transition period during which the Company would acquire the skills and resources to manage its own pension plan. Regional Companies that request this option would receive their share of pension assets no later than 1987. Plan of Reorganization at 297. The Court approves of AT & T's continued management of a Regional Company's pension plan with the expectations that the Regional Companies choosing this option will have as much authority over their respective plans while they are technically under AT & T's administration as they desire, and that the transition periods will be kept to a minimum. It would be impractical to insist that assets be immediately transferred to a company that does not believe it can prudently manage them. At the same time, continued linkage between AT & T and the Regional Companies is not to be encouraged. In this regard, AT & T proposes to continue managing the Bell System Trust's real estate investments, which amount to approximately $3.1 billion. The Court approves this aspect of the plan, although reluctantly, in view of the nonliquid nature of these assets and the allowance for a Regional Company or AT & T to buy out of the arrangement.
[157] AT & T and the Department of Justice represent that this will be the case: benefit amounts and entitlement and eligibility requirements will not change. The financial performance of the individual plans may vary but the Union has offered nothing but speculation that any such variation would have an actual effect on the level of benefits, particularly since the fair market value of the BSPP and BSMPP trusts exceeds the present value of accrued benefits. Plan of Reorganization at 295 n. 332.
[158] Under the plan, unlimited portability would remain in effect for one year after divestiture, except that employees in certain specified job categories who work on facilities shared by the Operating Companies and AT & T would be granted longer portability entitlements. See infra at 1096. Portability would continue after the one-year "true-up" period among the Operating Companies controlled by each Regional Company.
The Union objects to the elimination of unlimited portability insofar as it overrides a benefit secured previously through collective bargaining. AT & T agrees with the Union that "many of the employee protections to be provided during the true-up period are subject to collective bargaining" (AT & T Response to Objections at 382 n. *) but argues that the decree requires the parties and the Court to set a definite time limit for the true-up period. The Court agrees that the decree's separation between AT & T and the Operating Companies requires the establishment of a fixed true-up period for employee transfers, and it finds that the one year proposed in the plan is reasonable. To the extent that it might be thought that this provision affects collective bargaining rights, such rights are superseded by the Court's power to enforce its decree. Cf. Franks v. Bowman Transportation Co., 424 U.S. 747, 96 S. Ct. 1251, 47 L. Ed. 2d 444 (1976).
[159] See, e.g., Comments of Satellite Business Systems, filed Feb. 15, 1983, at 65.
[160] There is nothing in the provisions of the decree governing, for example, the treatment by the post-divestiture plans of former employees who are rehired, or what rules ought to determine when an employee's pension rights become vested.
[161] An accrual rate is the percentage of total payroll that must be contributed to a plan periodically in order to meet future pension liabilities.
[162] According to AT & T's 1982 Annual Report (p. 38), the fair market value of the pension assets exceeded the present value of accrued benefits by more than $11.5 billion.
[163] This is due to the separation of interexchange and CPE operations from the Operating Companies. Plan of Reorganization at 456 n. 430.
[164] To the extent that some entities (either AT & T or an Operating Company) had proportionately more excess than others, the plan would equalize the extent of any such excess regardless of which Operating Company was the source of the overfunding.
[165] Reply of Maine and Maine PUC, April 13, 1983, at 19.
[166] See, e.g., Washington-Baltimore Newspaper Guild Local 35 v. Washington Star Co., 555 F. Supp. 257 (D.D.C.1982); Rev.Rul. 83-52, 1983-13 I.R.B. 7; see also ERISA § 4044(d)(1).
[167] See ERISA, § 404(a)(1); Donovan v. Bierwirth, 680 F.2d 263 (2d Cir.1982).
[168] There is also no evidence to support the assumption that the Operating Companies will have contributed to excess funds in greater proportion than has AT & T.
[169] See note 158 supra.
[170] It may be noted that all the transfers during the true-up period will be the result of arm's length negotiations between AT & T and the Operating Companies, and there is thus no occasion for either a "post-divestiture re-evaluation plan," judicial involvement, or the appointment of special Operating Company representation, as some have suggested. E.g., Comments of the State of Michigan and Michigan Public Service Commission, Feb. 11, 1983, at 30; Comments on AT & T's Plan of Reorganization of the Public Service Commission of the State of Missouri, February 15, 1983, at 14. It is unclear what representation could be provided by the Court for companies which, after divestiture, will be independent entities. If the true-up process is not being conducted in accordance with the decree and the plan, ample means will be available for corrective action.
[171] The Court expects, as AT & T represents, that the one-year true-up period will not be used for frequent personnel transfers but as a "time for correcting mistakes that are bound to occur in a reorganization of this magnitude." AT & T Response to Objections at 378.
[172] These categories are (1) Operating Company service center employees who will write inter-LATA orders for AT & T under a sharing contract until such time as the contract ends and they are reassigned to AT & T, but no later than 5½ years after divestiture; (2) AT & T operators who will provide intra-LATA Call Completion and Assistance services until Operating Companies establish such systems and they are reassigned to the Operating Companies, but no later than 10½ years after divestiture; (3) Operating Company personnel who will provide circuit provisioning functions for AT & T until AT & T assumes this responsibility, but no later than 5½ years after divestiture; and (4) employees providing installation and maintenance services for "special services" both by AT & T for Operating Companies and vice versa, until the companies provide their own services, but no later than 5½ years after divestiture. AT & T claims that, for various reasons, it would be inefficient for AT & T and the Operating Companies to provide these functions independently immediately upon divestiture. See AT & T Response to Objections at 388 n. *.
[173] Under the plan, the duration of the transfer is limited to the period necessary to accomplish the change of multifunction facilities to exclusively AT & T or Operating Company facilities. This will occur not later than five years and six months after divestiture, except for operator services personnel who may be transferred up to ten years and six months after divestiture. Plan of Reorganization at 287-88. See note 172 supra.
[174] However, the State of New York would permit all employees in shared services to have and exercise transfer rights, as distinguished merely from the four categories of employees listed in the plan.
[175] There is some dispute as to whether Official Services are limited to Operating Company internal communications or whether they include communications between an Operating Company and its customers. See AT & T Response to Objections at 95-96 n. *; Supplemental Affidavit of William Weiss, April 12, 1983, at 9; letter from Raymond Burke, April 13, 1983, at 2 n. *.
The Court concludes that for purposes of the discussion and decision herein "Official Services" must properly include customer communications. As Raymond Burke points out (April 13, 1983 letter at 3 n. *),
no charges apply to communications which AT & T classifies as `official' service ... [and] even where there is a charge for such services as directory assistance, any inter-LATA administrative facilities involved are not `for hire.'
Similarly, Thomas Bolger notes (Amended Certification of April 6, 1983, at 5-6),
a customer in Salisbury, Maryland actually speaks to a directory assistance operator in Baltimore, but that is done solely to facilitate the conduct of these exchange operations in efficient work groups. The customer does not care where his call is answered and he pays no charge for the referral of his call from a local central office to a distant company location for this purpose.
[176] See AT & T Response to Objections at 95-96.
[177] The several communications from the Department of Justice to the Operating Companies may not be entirely consistent with regard to this subject, however.
[178] See Amended Certification of Thomas Bolger, April 6, 1983, at 5; letter from Raymond Burke, April 13, 1983, at 1.
[179] The Operating Companies manage their business through the following complex networks for the transmission of voice and data communications:
(1) The Operational Support System Network is a network of dedicated voice and data private lines used by the Operating Company to monitor and control trunks and switches. These communications links are vital to the proper operation of the network since, for example, they enable Operating Company personnel to measure the maintenance status of trunks and switches and instantly to control equipment and reroute traffic.
(2) The Information Processing Network is a network of dedicated data lines linking the Operating Companies' information system computer. It is used to transmit data relating to customer trouble reports, service orders, trunk orders from interexchange carriers, and other information necessary for carrying out the Operating Companies' business.
(3) Service Circuits comprise a network of largely dedicated voice lines used to receive repair calls and directory assistance calls from Operating Company customers. These communications ensure the maintenance of telephone service and they provide directory assistance to Operating Company customers.
(4) Voice communications are used by the Operating Companies for hundreds of thousands of calls relating to their internal businesses.
Supplemental Affidavit of William Weiss, April 12, 1983, at 11-12.
[180] As Thomas Bolger, designated chief executive of the Mid-Atlantic Regional Company, has pointed out:
In order to reduce costs and maximize efficiency, the BOCs have computer processing centers which receive billing and other data from company locations in a number of LATAs. Similarly, calls from Operating Company customers seeking such services as directory assistance are currently routed between BOC offices to centralized locations in other LATAs.
Amended Certification of Thomas Bolger, April 6, 1983, at 5.
[181] The Department of Justice suggests that where Operating Company facilities are transferred to AT & T under the assignment process, it would be appropriate for AT & T to lease back to the Operating Company those circuits currently dedicated to Official use. However, an Operating Company's ability to lease existing Official Service facilities from AT & T would be limited to the duration specified in the plan of reorganization for shared facilitiesthat is, eight years. See Department of Justice Response to Comments at 35; AT & T Response to Comments at 115; Amended Certification of Thomas Bolger, April 6, 1983, at 5. After this eight-year period, the Operating Companies would have to hire the services of AT & T or other interexchange carriers to meet all their inter-LATA Official Service needs.
[182] Department of Justice Response to Comments at 35. Indeed, ironically, in spite of the fact that most Operating Company Official Service communications are presently conducted over facilities "owned" by these companies themselves, many such facilities would now, under the plan, be assigned to AT & T. Supplemental Affidavit of William Weiss, April 12, 1983, at 10.
[183] Department of Justice Response to Comments at 35. However, that is precisely what will happen in eight years under the Department's scheme. See note 181 supra. Even during this eight-year period, any Official Service demands which cannot be satisfied by existing circuits leased from AT & T would have to be "placed on" commercial facilities of an interexchange carrier.
[184] In recent years, many of the Operating Companies have achieved significant cost savings through the modernization of their internal management processes. Supplement to Sworn Statement of Wallace Bunn, April 7, 1983, at 5 (47,000 internal computer terminals in operation throughout Southeast region alone).
[185] It has been estimated that for the Mid-Atlantic region alone, the total expenditures for all types of inter-LATA Official Services would be approximately $125 million annually. Amended Certification of Thomas Bolger, April 6, 1983, at 6.
[186] Supplemental Affidavit of William Weiss, April 12, 1983, at 13-14. An increasing number of private corporations with operations dispersed over large geographic areas, such as oil companies and electric power utilities, have opted to construct and operate their own circuits by which their administrative communications are transmitted. Letter from Raymond Burke, April 13, 1983, at 2; see also, Amended Certification of Thomas Bolger, April 6, 1983, at 6; Supplement to Sworn Statement of Wallace Bunn, April 7, 1983, at 6.
[187] The Operating Companies are prohibited from providing inter-LATA telecommunications services under the decree for two reasons: the possibility of discriminatory interconnection practices and the possibility of subsidization of interexchange services with revenues from local exchange services. See 552 F.Supp. at 188-89. Neither of these reasons is implicated by the ownership and operation by an Operating Company of its own inter-LATA Official Service network.
[188] There is also a distinct possibility that AT & T might be able to gain competitive advantages from its control over Operating Company official circuits. Compare 552 F.Supp. at 181 (possible advantage to AT & T from control of electronic publishing business).
In arguing that the Operating Companies should be able to construct and operate their own inter-LATA Official Service facilities, Raymond Burke wrote on April 13, 1983, at 4:
Indeed, to the extent that the BOCs would need to purchase materials from facilities vendors in order to construct microwave, fibre, and other facilities for their administrative use, it would appear that competition in such markets would be enhanced. In contrast, the Department's interpretation may create a situation in which the BOCs may, practically speaking, be able to obtain their administrative facilities from only one interexchange carrier AT & T.
[189] AT & T argues to the contrary that section VIII(G) calls for the assignment to it of facilities which perform both intra-LATA and inter-LATA functions if the use for inter-LATA functions predominates. AT & T Response to Objections at 97. However, that section does not speak at all of inter-LATA and intra-LATA functions but states more simply that
facilities ... which serve both AT & T and one or more BOCs shall be transferred to the separated BOCs if the use made by such BOC or BOCs predominates over that of AT & T (emphasis added).
[190] It may be that this provision will not have a significant effect on the assignment of assets because Official Services use may not often tip the scales as between inter-LATA and intra-LATA use. See AT & T Response to Objections at 99.
[191] The Court reaches this question now, rather than after divestiture, so that the Operating Companies may be able to continue their essential network and operational planning.
[192] The Court likewise finds not unreasonable AT & T's decision to consider predominant use as of January 1, 1984, rather than as of some earlier date, as several intervenors have suggested. Network changes are, of necessity, occurring all the time, and most of them appear to have been planned, and partially implemented, for some time, in some instances for years. The suggestion that the January 1, 1984 date gives AT & T an undue opportunity for manipulation is unrealistic and unwarranted.
[193] Several intervenors had originally objected to the plan's assignment of Digital Dataphone Service (DDS) facilities to AT & T. Subsequently AT & T accepted the Department of Justice's position with respect to such facilities, and it now appears that all DDS hubs, which were the focus of the intervenor's objections, will be assigned to the Operating Companies. See Department of Justice Supplemental Response, June 1, 1983, at 7. Additionally, the Department has made a commitment to review the contracts for the sharing of DDS facilities to ensure that the Operating Companies will have the ability to afford equal access to these facilities to all interexchange carriers. Id. at 8 n. *. The Court, therefore, finds the assignment of DDS facilities to be consistent with the decree.
[194] Unlike with respect to some other subjects (e.g., the Cambridge switch discussed at pp. 1065-66 supra) there is no reasonable basis for departing from the predominant use rule.
[195] It should also be noted that the plan of reorganization initially assigned "Charge-A-Call" public telephones to AT & T on the ground that they are used predominantly for inter-LATA communications. However, a number of intervenors, along with several designated chief executives of the Regional Companies, objected to this assignment, arguing that despite the inter-LATA nature of the calls placed over these telephones, they are exchange facilities, having been installed by the Operating Companies as part of the service they provide to the public. The Department of Justice concurred with these objections, and required the plan to be modified to assign Charge-A-Call public telephones to the Operating Companies. See Department of Justice Response to Comments at 82-83. This modification was agreed to by AT & T and has been incorporated into the plan of reorganization. The Court concurs with this modification. Pursuant to the plan as so modified, the Operating Companies will be able to provide users with access to several interexchange carriers, while under the original plan AT & T would have limited access through these public telephones to its own long distance network.
[196] These communities are presently served by NET facilities located outside the particular state, and NET requested the stateline crossings in order to continue these serving arrangements.
[197] The network reconfiguration costs and other network considerations are not so significant as to outweigh the discriminatory treatment of and the inconvenience to residents in these communities.
[198] The regulatory commissions support this request. Additionally, Vermont wishes the Court to declare that these costs ought to be recovered through carrier access charges rather than through local rates. This is, of course, a matter for the regulatory commissions to execute, but the Court's views ought to be apparent from Part I supra.
[199] NET maintains that all necessary modifications could be completed within five years, but Maine's observation that some localities may require less time and others more is sound. NET should submit a detailed request for exemptions to the state regulators and to the Department of Justice.
[200] A larger number of municipalities would be divided, but in all but nine communities EAS routes would enable NET to continue to carry traffic across the border from one side of town to the other.
[201] This factor alone is not significant since it may be expected that interexchange competitors will respond to consumer demand for special billing plans, e.g., for reduced rates on frequently called routes, in substitution or in addition to those offered by the local monopolist.
[202] Most of these costs will be reflected in interexchange carrier access charges, not in the local rate base. Moreover, these costs could be spread over a number of years.
[203] Moreover, one of the factors cutting in favor of separating the LATAthe benefit to interexchange carriers of not having to compete with the Operating Company for calls between the Worcester area and the Boston/New Bedford regionis undermined somewhat by technical access considerations which previously were not entirely clear. If Worcester is in the same LATA as Boston and New Bedford, NET will offer access to interexchange carriers by means of a No. 4ESS switch to be constructed in Framingham. If Worcester is placed in a separate Central Massachusetts LATA, two smaller switches will be built in Framingham and Worcester. NET insists that the existing cross bar switch in Worcester could not be upgraded to serve as an access tandem, and although this assertion is challenged by Southern Pacific Communications Corp., the Court is not prepared to override the Operating Company on so technical a point.
[204] Supporting the Department's position is the fact that the access provided for calls within a single LATA would not include a presubscription option while calls between Worcester and Boston, were each city in a separate LATA, would include such an option. The choice is thus between access via a No. 4ESS switch (see note 203 supra) and a larger area in which presubscription will not be available, on the one hand, and access via an inferior switch and greater availability of presubscription, on the other. Based on the comments the Court has received, it is reasonable to expect that the former would do more for competition than would the latter.
[205] The various requests for exceptions contained in the October 4, 1982 applications also are granted, except that New York Telephone will not be serving Wells, Vermont. See pp. 1102-03 supra.
[206] The revised count is 97,000, as opposed to 200,000.
[207] The Utica area contains 110,000 phones, according to New York Telephone, down from the 120,000 the Company previously reported.
[208] The Court also approves the boundaries of the new Poughkeepsie LATA as proposed by New York Telephone Co.
[209] A small portion of the Pittsburgh LATA, the Greensburg area, will be accessed by a 1AESS, 2-wire machine. This is satisfactory since AT & T and its competitors will all be served by means of this switch, so that there will be no quality differences among them.
[210] The Department informs the Court that South Central Bell and GTE agree to an association of GTE's Lexington 264,864 main stations and South Central Bell's 165,000 Winchester stations. This association will ensure that the Winchester area will be attractive to interexchange carriersthe primary concern that prompted the Court to require the consolidation of the Winchester and Louisville LATAs. The Louisville LATA has more than enough stations430,000to enable it to stand on its own.
[211] The Court accepts the reasons for this action provided by Illinois Bell, the Illinois Commerce Commission, and the Department of Justice.
[212] The Court agrees in this regard with the reasoning of the Michigan Telephone Company, the Michigan Public Service Commission, the State of Michigan, and the Department of Justice.
[213] This approval is granted for the reasons stated in the Court's April 20 Opinion and the filing of the Department of Justice. The approval is conditioned, however, upon Michigan's undertaking to implement its plans to have certain Michigan Bell exchanges home on the new GTE Three Rivers switch.
[214] This approval is in accordance with the recommendations of Southwestern Bell and the Department of Justice.
[215] This division was required by the Court's April 20 Opinion.
[216] The Court accepts the reasoning of the Wisconsin Telephone Company.
[217] This division was likewise required by the April 20 Opinion.
[218] Northwestern Bell currently serves the five Minnesota border communities from facilities located in North Dakota. Under the previous proposal of the Minnesota Public Utilities Commission, the communities would have been included in the Brainerd LATA, obliging North-western Bell to rewire the communities to facilities on the Minnesota side of the border.
[219] The Department of Justice has withdrawn the reservations it initially expressed over inclusion of the Bellingham area in the Seattle LATA, noting that although the independently served expanse between Bellingham and Seattle is large geographically, it contains only about 20,000 subscribers.
[220] Moreover, to the extent that the rates are set above cost, the presence of competitors in the corridors will exert pressure on the Operating Companies and the FCC to reduce the price of corridor service.
[221] The intra-LATA equal access requirement does not apply to non-toll calls.
[222] The latter would also have to be accompanied by a prefix "1" in those areas where an area code must be distinguished from a local exchange code.
[223] This is because the end office would require revised computer software that could determine when a call was designated for a termination point within its LATA and when it was destined for a point in another LATA.
[224] Microtel, Inc. argues that
with equal access should come a more uniform starting point for intra-LATA competition. We have no illusion that the BOCs will not continue to enjoy significant competitive advantages arising from their historical relationship with customers and their dominant position in the ... market. But those advantages should not be solidified by an additional head start arising from carriage of undesignated intra-LATA traffic.
Opposition dated May 16, 1983, at 14. There is some merit to that argument, particularly in states where the Court approved large LATAs on the expectation that there would not be significant barriers to intra-LATA competition. Microtel's primary state of operation, Florida, is a case in point. The Court allowed the consolidation of three SMSAs to form the Southeast LATA (Miami, West Palm Beach, and Ft. Pierce) with the understanding that there would be intra-LATA competition for calls between these cities.
[225] Due to the availability of presubscription in inter-LATA calls, someone who had preselected an interexchange carrier would not have to dial an access code and he therefore could dial across the country with fewer digits than within his own LATA.
[226] The Commission has under review whether also to license MCI for intrastate telecommunications traffic.
[227] See, e.g., Comments of Maine. The situation may well be different with respect to undesignated inter-LATA calls. It would seem to be inconsistent with the decree for AT & T automatically to receive inter-LATA calls dialed either mistakenly or ignorantly without an access code (for those calls not dialed pursuant to a presubscription). The Operating Companies in that event would have two options: they could prevent an undesignated inter-LATA call from being completed (by obliging the caller to dial again using a proper access code) or they could allocate undesignated calls among all interexchange carriers on the basis of some formula. This subject is not dealt with at all in the plan of reorganization; moreover, the Operating Companies have not yet formulated their own policies, and they have not advised the Court as to the practical implications of various options. The Court will therefore defer a decision on this subject. If the Operating Companies should improperly discriminate among carriers with respect to undesignated calls, remedies will be available through the Department of Justice and the Court.
[228] The corridors, as indicated at p. 1107 supra, run from the five boroughs of New York City into five northern New Jersey counties, and between five Eastern Pennsylvania counties into three southern New Jersey counties.
[229] As evident from the filings, the Operating Companies intend to charge competitors inter-LATA access tariffs even though they would not be receiving inter-LATA-type access.
[230] In the case of the corridors, it is appropriate that the Operating Companies undertake the responsibility for advertising what they claim to be their less expensive, exceptional service and instructing business and residential users on how to take advantage of it. Since many of the users of these routes are businesses, which may be expected to be very cost conscious, the Operating Companies should presumably have little trouble in inducing them to dial four additional numbers (in the event that, as many assume, that Operating Company will not be the one preselected by the user) if that would save them money.
[231] AT & T states that the Operating Companies alone classified the traffic between their respective LATAs and adjacent independent territories, without interference from AT & T. AT & T Response to Comments, March 25, 1983, at 5 n. **.
[232] There are some 1425 independent telephone companies which provide local phone service in 11,000 of the 18,000 local exchanges in the United States. Objections of the United States Independent Telephone Assoc., March 15, 1983, at 2. The geographic areas where the Independents provide service are, in total, larger than those where the Bell Operating Companies provide local service; although the Independent territories are generally more sparsely populated, encompassing only 20 percent of the telephones in the nation.
[233] This would be so even where highly integrated communities are involved.
[234] Under the terminology used by the parties, if a particular Independent territory is considered to be "associated" with the adjacent Operating Company LATA, then telecommunications traffic between these two areas is regarded as intra-LATA and may be handled by the Operating Company. If, on the other hand, a particular Independent territory is considered to be "not associated" with an Operating Company LATA, then the Operating Company would be prohibited under section II(D) of the decree from carrying traffic between the two areas, as this would be regarded as an inter-LATA service.
[235] Letter from James P. Denvir to Jim G. Kilpatric, November 17, 1982, at 3-7.
[236] The Department of Justice as well as the states involved oppose these classifications on the ground that even though the decree cannot impose a requirement that an Operating Company actually provide service to an area which it is permitted to serve, the purpose of the classifications is to define areas which the Operating Companies may serve. In that view, the particular traffic should be classified as intra-LATA and it would then be left to the state and federal regulators to determine whether the Operating Companies or any other carriers should be obligated to serve particular areas. See Department of Justice Response to Comments, April 4, 1983, at 8; State of Oregon Comments, March 15, 1983, at 3-5. The Court finds the position taken by the Department of Justice in this regard to be correct, since it will best ensure that the decree does not unnecessarily intrude upon the jurisdiction of the regulatory commissions to determine service responsibilities within their jurisdictions. Accordingly, the Operating Company classifications are hereby required to be modified to conform to the Department's position.
[237] However, for the purpose of determining whether the Operating Company may serve these areas, the traffic between the two areas will be classified as intra-LATA. Thus, if in the future an Operating Company wishes to provide service to such Independent areas, it will be free to do so. This minor category of classifications is, in essence, simply a request by the particular Operating Company for an exception to the general rule that it be assigned Bell System facilities devoted to intra-LATA service. Instead, AT & T will be assigned these facilities which the Operating Companies do not intend to use. See Department of Justice Response to Comments, April 4, 1983, at 9-10. No objections have been raised with respect to this exception to the general rule for the division of Bell System assets, and it is, therefore, approved.
[238] It has also been argued that the Court should require that an opportunity be afforded the intervenors to seek reclassification of Bell-Independent traffic after divestiture. There is no basis for such a request, and it will be denied along with all other demands for systematic post-divestiture proceedings. See Part IX infra. However, the Bell Operating Companies may, under the decree, subsequently petition the Court for reclassification or for exceptions in regard to service between their own areas and Independent territory.
[239] It is questionable whether, in view of the relatively limited impact of these classifications upon the intervenors (see infra), a level of scrutiny comparable to that employed with respect to the LATA classifications themselves was required.
[240] No objections were raised to the vast majority of Independent exchanges that have been classified as "associated." It is to be noted that only 940 out of the 11,000 Independent exchanges are classified as "not associated" to any Bell Operating Company LATA. Objections of the United States Independent Telephone Assoc., March 15, 1983, at 4 n. *.
[241] In the few instances, such as those discussed in note 236 supra, where the Department of Justice and the Operating Companies took different positions with respect to whether particular traffic should be classified as intra-LATA or inter-LATA, the Court agrees with the position of the Department, and the classifications should, accordingly, be modified to conform to that position.
[242] Several intervenors argue that, although the associations being decided now have limited purposes under the decree, they will be "frozen in time" for state and federal regulatory bodies, common carriers, Independents, and ratepayers. See GTE Comments of March 15, 1983, at 3. There is nothing in the plan of reorganization which the Court is approving which has such wide consequences. If others decide to accept the decisions made herein, that would be their decision; it can hardly be a basis upon which the Court would be justified in rejecting the plan. Nothing in the Court's approval of the Bell-Independent classifications is intended in any way to restrict the regulatory bodies in the exercise of their legitimate authority.
[243] Moreover, regardless whether traffic is classified as intra-LATA or inter-LATA, Independents will have the option of establishing a relationship with an Operating Company whereby the Independent would be the carrier of traffic between its territory and the Operating Company LATA. See 569 F. Supp. 990. If the Independent does not wish to carry such traffic itself, it will alternatively be able to enter into a service arrangement with AT & T (in which case it could continue to interconnect with the same Bell System facilities as are presently used for its interexchange of traffic with Bell territory) or any other interexchange carrier. AT & T Response to Comments, March 25, 1983, at 12.
[244] Similarly, GTE's complaints regarding splintering of trunk groups, duplication of facilities, and stranding of existing facilities are basically inevitable consequences of the decree insofar as it does not permit the Bell Operating Companies to carry interexchange traffic.
[245] Section I(A)(1) permits AT & T to transfer resources to such an entity.
[246] Of the total 8,800, approximately 6,600 staff members would perform technical functions. Plan of Reorganization at 239.
[247] The employees would be transferred from AT & T and its affiliates, transferred from the Operating Companies, or newly hired.
[248] AT & T Response to Objections at 505.
[249] The network planning group within the CSO will also recommend internal network requirements and technical interface standards.
[250] AT & T Response to Objections at 506-12.
[251] There would be 700 procurement support personnel. Plan of Reorganization at 339. The Court expects that this staff will not make substantive procurement decisions.
[252] The Court has some concern that the centralized provision of legal advice on potential antitrust liability might be of questionable propriety and wisdom. William Weiss, designated chief executive of the Midwest Region, testified at the June 2, 1983 hearing that: "I cannot conceive of a corporation the size of mine in the future not wanting to be self-sufficient in areas of liability like antitrust ...." Transcript at 25497. Although this is not a complete answer, the likelihood of antitrust violations through the central legal staff is not sufficiently substantial that elimination of these functions will be required.
[253] The delegation of national security and emergency responsibilities to the CSO is largely unchallenged. The Court has always insisted that legitimate Department of Defense interests be fully protected (552 F.Supp. at 208-209), and the CSO provisions of the plan carry out that objective. The security and emergency responsibilities will be executed by a specialized group within the CSO which will set and enforce technical standards to the extent that security and emergency needs demand that telephone equipment be "capable of being interconnected nationwide." Plan of Reorganization at 418-19.
[254] Several intervenors complain that the plan makes insufficient provision for an Operating Company's withdrawal from the CSO. Complete withdrawal may only take place with five years' advance notice, and an Operating Company may withdraw from a particular function on one year's notice. The chief executives of the Regional Companies support this approach as necessary to ensure the continuing viability of the CSO, and the Court sees no reason to interfere with their judgment.
[255] William Weiss stated that the amount will be three-quarters of the sums previously expended (transcript at 25,500), while AT & T claims that the 8,800 CSO employees should be compared to the 23,000 AT & T employees allegedly now supporting the Operating Companies. Response to Objections at 496 note **.
[256] A task force of Operating Company presidents initially recommended the structure of the CSO. Each regional planner on the task force then conferred with his respective chief executive officer, and a "CSO package" was adopted by these officials in October 1982. Since that time, some functions have been added and others eliminated, and negotiations over the CSO's final form are continuing, without the participation of AT & T. Response to the Operating Companies in the Mountain-Northwest Region, May 31, 1983, at 5; Southeast Region's Response, May 31, 1983, at 3. According to William Weiss, "the presidents ... elected to do only certain things in the central staff, those things that they felt could be done to achieve economies of scale. They excluded from the role of that central staff things that they felt either we could do ourselves with our present organizations and the Operating Companies or that didn't need to be done in the longer term future." Transcript at 25500.
[257] See, e.g., Response of Operating Companies in the Mountain-Northwest Region, May 31, 1983; Response of the Northeast Region, May 31, 1983; Response of the Mid-Atlantic Bell Telephone Companies, May 31, 1983; Southwest Region's Response, May 31, 1983.
[258] The Court has no question that on this subject the chief executives of the Regional Companies communicated to the Court their genuine convictions.
[259] Some of the state regulatory commissions complain that they will be unable to exercise effective control over the costs of the CSO, but this was refuted by testimony at the June 2, 1983, hearing to the effect that the Operating Companies will present their respective shares of the cost of the CSO to the state regulators, so that "[i]t will not escape [their] attention." Transcript at 25,501.
[260] Department of Justice Response to Comments at 162.
[261] There are some features, e.g., network signaling protocols, which will be of no use unless they are agreed to by all the Operating Companies. AT & T Response to Objections at 523.
[262] AT & T Response to Objections at 525-26.
[263] Should it ultimately appear that the CSO deviates from these standards, there will be time enough for the Department of Justice, the Court, or both to take corrective action.
[264] See, e.g., Reply of U.S. Telecommunications Suppliers Association at 7; ITT Reply at 15.
[265] See GTE Reply at 8.
[266] Since the representations made by AT & T in its Response to Objections regarding the limited role of the CSO in setting standards and testing products were critical in persuading the Department of Justice and the Court to approve the CSO as proposed, it is of course essential that the CSO abide by those representations. The Court has considered adopting the suggestion of some (e.g., U.S. Telephone Suppliers Association) that these representations be reduced to a separate contract, but in the interest of avoiding the imposition of yet another set of rules on the Operating Companies, it will not insist on this measure. However, the Court does expect the Operating Companies to use the CSO to further only their own competitive interests, not those of AT & T, and it also expects the Department of Justice to be vigilant in its oversight of the CSO's role in the setting of standards and testing of products.
The plan of reorganization does not limit the CSO to the responsibilities initially entrusted to it. The Court is persuaded that some flexibility is necessary in this regard as well. However, here, too, it expects that the CSO will respect the boundaries between standards and testing, on the one hand, and procurement, on the other. It is in this area particularly that the Court will not hesitate to exercise the powers vested in it by section VIII(I) of the decree should this appear to be warranted.
[267] Whatever sharing contracts that will be in effect will be between the Operating Companies and AT & T, not the CSO and AT & T.
[268] The CSO will not, on its own, manufacture or market any product or service.
[269] See, e.g., Transcript at 25,502.
[270] This conclusion would seem to hold notwithstanding the strong feelings of loyalty which have been fostered and have traditionally existed within the Bell System.
[271] As for the claim that the very establishment of a CSO might give rise to antitrust problems it is well established that a joint technical organization with responsibility for setting standards does not in and of itself violate the Sherman Act. See American Society of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556, 102 S. Ct. 1935, 72 L. Ed. 2d 330 (1982).
[272] The testimony at the trial demonstrated that the application of nationwide standards has contributed substantially to the overall quality of telephone service enjoyed in this country. See, e.g., testimony of Casimir Skrypczak, Transcript at 23854-55.
[273] Reply Comments of the State of New Mexico, April 13, 1983, at 18-19.
[274] Further Comments of the People of the State of California, Feb. 14, 1983, at 65-67.
[275] These include a true-up of certain Operating Company accounts (1) to correct faulty estimates of depreciation reserves, of the assignment of assets and liabilities and of personnel assignments, (2) to correct mistaken personnel assignments and inadvertent work force imbalances, and (3) to accommodate personal hardships. Plan of reorganization at 160-62, 233-34, 277-78. See Part V(B) supra.
[276] Reply Comments of American Satellite Co., April 4, 1983, at 2-4.
[277] See note 283 infra.
[278] The Court subsequently required the adoption of section VIII(I) which permits the Court to undertake the various section VII responsibilities (except that of modifying the decree) sua sponte, rather than merely upon request.
[279] Such a party may serve upon the Department of Justice a request for enforcement. If the Department refuses to take action in response thereto, an application may be made to the Court for the initiation of "further appropriate proceedings." The process was carefully restricted to complaints accompanied by affidavits alleging facts with particularity which, if true, would demonstrate a bad faith refusal by the Department to enforce the judgment. 552 F.Supp. at 220. The Court will in due course issue an implementing order, and it will not entertain enforcement requests which do not follow this route.
[280] E.g., the size of the divestiture, the sketchy nature of the decree itself, and, ultimately, the broad implications of the divestiture upon the entire telecommunications industry.
[281] E.g., the attempts of the Department of Justice, of AT & T, or both, to disavow commitments previously made with respect to patent and trademark rights to be granted to the Operating Companies (see Parts III and IV supra) and the continuing reluctance of the Department to accept as final the decision regarding the marketing of CPE by the Operating Companies. See pp. 73-74 supra. That reluctance gives rise to some concern regarding the Department's willingness and ability to enforce fairly the CPE provisions of the decree (rather than to seek, once again, to pursue its own notions in that regard) and this, of course, casts some doubt upon the Department's overall attitude with respect to the implementation of the decree. However, in these respects, too, the various judicial powers enumerated above are adequate to deal with any recalcitrance, whatever form it may take.
[282] It should also be noted that independent auditors and actuaries will verify compliance by AT & T and the Operating Companies with the requirements of the plan of reorganization regarding the assignment of assets and liabilities. AT & T Response to Objections at 355-60.
[283] For similar reasons, the Court rejects the request of the State of California that the prices charged by Western Electric be controlled for a period following divestiture (Further Comments of the People of the State of California, Feb. 4, 1983, at 41); the request of the State of Missouri to provide special representation for the Operating Companies in the form of an independent attorney (Motion of the State of Missouri for a Hold Separate Order, April 13, 1983); and the request of New York City for the appointment of a Special Master pursuant to Rule 53 (Comments of the City of New York, Feb. 14, 1983, at p. 4). Suggestions similar to these were considered and rejected by the Court prior to the entry of the decree (552 F.Supp. at 166, 220-22). No new grounds have been adduced; indeed, the Operating Companies have not been reticent in recent months to advance their views to the Court, often contradicting those of AT & T. As the Operating Companies progress further on the road to independence, they may be expected to be increasingly strong-willed in protecting their rights vis-a-vis AT & T.
[284] The 471-page plan is a blueprint for the largest corporate reorganization in United States history. The decree itself describes the reorganization process only in the most general terms.
[285] Many of the submissions of the parties and the intervenors (e.g., states, AT & T's competitors, consumer groups) were detailed and voluminous. For example, one intervenorMCI filed a total of over 850 pages of memoranda, exhibits, and other documents, and AT & T's March 1983 Response alone was 617 pages in length. For the first time in the Bell System reorganization process, the Operating Companies participated in the judicial proceedings in their own right. A hearing was held on June 2, 1983, at which the parties, several intervenors, and the chief executives of the Regional Companies gave their views on several particularly controversial issues. See notes 3 and 4 supra.
[286] The Court's powers under the Tunney Act are, of course, limited (see 552 F.Supp. at 151) and in passing upon the plan of reorganization, the Court likewise does not write on a clean slate but must conform to the provisions and principles of the decree itself.
[287] Among the actions which tended to further the cause of competition were the approval of the divestiture from AT & T of the twenty-two "bottleneck" local companies, the prohibition on the entry of these companies into business ventures where their monopoly status might have given them an improper advantage, and the requirement that these companies must provide equal access to all of AT & T's interexchange competitors. The Court also prohibited AT & T for a period of seven years from entering the electronic publishing market.
Actions designed to preserve AT & T's effectiveness included the rejection of proposals which would have required that company to divest itself of Western Electric and Bell Laboratories, prohibited it from utilizing sophisticated "bypass" technologies, and otherwise limited the scope of its operations. The Court also approved the removal of the restrictions imposed upon AT & T by the 1956 consent decree.
The vitality of the Operating Companies and the goal of universal telephone service were promoted, inter alia, by modifications which permitted the entry of the local companies into the printed advertising directory market and customer premises equipment market.
[288] These actions will, of course, to some degree affect existing and potential competitors of AT & T, suppliers of products, and others within and without the telecommunications industry. But in passing upon the plan of reorganization, the Court was principally called upon to decide "internal" matters between AT & T and the Operating Companies, and for that reason it is not particularly surprising that the primary impact of the decision is on the local companies and their financial well-being.
[289] This is not to say that other objectives were not advanced. Thus, the Court approved much of the AT & T plan, and it rejected proposals which would have improperly saddled AT & T with substantial costs, e.g., the direct costs of providing equal access and reconfiguring the network (Part I(C) of this Opinion) and the sole financial responsibility for the Bell System's contingent antitrust liabilities (Part II). In order further to promote competition in telecommunications services, the Court, inter alia, rejected joint use by AT & T and the Operating Companies of the name "Bell" (Part III(A)), required the access the Operating Companies provide to AT & T's competitors to be of sufficiently high quality so that voice and data customers will be unable to detect any difference (Part I(A)), and required the provision of equal access in the intra-LATA field and the densely populated "corridors" in the New York-New Jersey-Philadelphia areas (Part VII(B)). In the interest of protecting the rights of AT & T employees, the Court made explicit that with respect to various subjects (e.g., pension benefits) the decree does not relieve AT & T of its obligation to bargain collectively. (Part V(A)).
[290] Cost reductions need not, and in the Court's view will not, be achieved at the expense of quality and reliability. See Part VIII of the Opinion where the Court approved the setting of uniform standards so as to maintain the quality of the telephone network.
[291] A number of interexchange carriers and telephone equipment manufacturers and dealers have entered these fields or have vastly expanded their operations. The result has been that the prices of long distance service and customer premises equipment are falling and that telephone and related apparatus are becoming available in unprecedented varieties. These trends may be expected to continue and, indeed, to accelerate.
[292] See, e.g., Department of Justice Supplemental Memorandum, June 10, 1983, at 8 (decree will not, and has not, caused adverse effects on local rates); AT & T Response of May 5, 1983, at 10-21 (local rates are going up but not because of divestiture); see also, Response of the Federal Communications Commission, June 13, 1983, at 4 n. 5 (FCC decision not a product of divestiture since Commission had proposed customer access charges well before Court accepted decree).
[293] See 47 U.S.C. § 402.
[294] Requests for rate increases by local telephone companies are apparently sought to be justified in some instances by references to the divestiture. Such reliance is unjustified. See note 292 supra.
[295] 552 F.Supp. at 164-65.
[296] See, e.g., Fortune, Breaking Up The Phone Company, June 27, 1983.
[297] The Court assumed control of this case in the summer of 1978. Pretrial proceedings were designed and announced in September of that year (461 F. Supp. 1314), and they took a little over two years to complete. Trial began in January 1981, and it was within weeks of completion when, in January 1982, the parties settled the case by the consent decree referred to above.
[298] Issues relating to the LATAs are not a part of the plan of reorganization as such. However, the Court expects compliance with the decisions made with respect to such issues in the Opinion of April 20, 1983, and the present Opinion. It also expects the parties to comply with the other directions contained in these two documents.
[299] All such modifications will supersede the existing provisions of the plan of reorganization to the extent of any inconsistency.
[300] Section VIII(J) of the decree provides that the plan of reorganization "shall not be implemented until approved by the Court as being consistent with the provisions and principles of the decree." The Court considers that the plan will not be consistent with the decree until modified as required herein.
[1] This Modification reads as follows:
If by January 1, 1994, the Operating Companies in the aggregate have not recovered the costs of providing equal access and network reconfiguration (as defined in AT & T's Consolidated Application filed with the Federal Communications Commission on March 1, 1983), plus financing expenses, through their collection of access charges from the interexchange carriers, AT & T will reimburse the Operating Companies in the amount of any remaining deficit. For purposes of this provision, "costs" shall mean the actual costs incurred by the Operating Companies, as distinguished from the estimates in the Consolidated Application. A preliminary accounting will be provided to the Court at the close of the Operating Companies' equal access and network reconfiguration program or by January 1, 1989, whichever is earlier, and a final accounting not later than January 1, 1994.
[2] Other points made by AT & T essentially relate to the request for a proviso to the Modification and are considered under II infra.
[3] AT & T also claims that the issue was not briefed or otherwise considered prior to the Court's decision on July 8, 1983, but this claim is difficult to understand. Dozens of memoranda with supporting materials were submitted to the Court on the question whether the access costs should more appropriately fall on AT & T or on the Operating Companies, and this was also one of the subjects on which argument and testimony were adduced at the June 2, 1983 hearing.
[4] While all interexchange carriers will pay such access charges, AT & T, as the largest carrier, will contribute the lion's share.
[5] AT & T Memorandum at 3-4; Department of Justice Response at 2.
[6] Moreover, as the National Association of Regulatory Utility Commissioners (NARUC) points out,
[i]t would be fundamentally unfair if AT & T, whose interstate toll operations were sheltered by the refusal to provide equal access, should be allowed to unload the massive costs of complying with the decree upon the BOCs.
Response at 2. On this basis, the Court also rejects AT & T's demand that it strike the reference in the July 8, 1983, Opinion to AT & T's prior obligation to provide equal or substantially equal access. Motion at 6-7 note *. If this issue should arise in other, private litigation, the tribunals having jurisdiction will, of course, draw their own conclusions based on their understanding of court and FCC precedents.
[7] This would lower rates and thus stimulate usage, and it would also tend to divert the equal access obligation from the local companies to AT & T.
[8] The resulting lower intra-LATA toll rates would obviously be popular with the public the regulators serve.
[9] To the extent that AT & T, as a result of the guarantee, ultimately paid for the costs of providing equal access, its competitors would be relieved of the obligation of paying for that access through interexchange access charges.
[10] Compare, e.g., section I(A)(1) with Appendix B.
[11] Essentially, the protection of AT & T is accomplished in the proviso by the clauses relieving AT & T of its obligation if the Operating Companies fail to file access charge tariffs designed to recover all costs included within the guarantee, or if the regulators refuse to allow such tariffs to take effect.
[12] E.g., Maine, p. 2; NARUC, pp. 4-7; GTE, p. 7; SBS, p. 2.
[13] In the event that at the conclusion of the guarantee period, there is a dispute as to the cause of any shortfall, the Court will resolve that dispute as provided for on p. 1068 of the Opinion of July 8, 1983.
[14] The proviso proposed by AT & T includes a footnote which reads as follows:
To the extent that network reconfiguration costs relate to the BOCs' provision of other services (such as intra-LATA toll), rather than to carrier access services, the BOCs will be required to include such costs in tariffs for those other services which are filed and allowed to become effective in accordance with this proviso, and any amounts thus recovered shall count toward reimbursement of the BOCs' costs of network reconfiguration.
Network facilities to be constructed will, of course, be used in part for services other than interexchange access (e.g., for intra-LATA access or intra-LATA toll services), and accordingly a portion of the investment in these facilities will normally be recovered from services other than such access. On this basis, it is appropriate, therefore, that any funds received by the Operating Companies from these other sources be counted toward AT & T's reimbursement obligation. It was for this reason that the Court required in its July 8, 1983 Opinion that the Operating Companies keep records to isolate access expenses from expenses they would have incurred in any event (Opinion at 1068 note 37), and it is on the same basis that it approves the inclusion of this footnote.
It should be noted that this provision will not compel regulators to determine that any portion of network reconfiguration costs relates to services other than carrier access services; it simply provides that if the regulators make such determinations, AT & T will be protected from having to pay under the guarantee even though, in reality, there was no deficit.
[15] The Court recognizes that one consideration cuts the other way: a ten-year schedule, as California points out (Opposition at 7), may inflate the Operating Companies' annual access costs in the near term. However, that increase in costs must be kept in perspective. Even if $3 billion will have to be recovered in the ten-year period, the total amount would still only be two percent of the over $150 billion that is estimated to be collected by the Operating Companies in access charges. See Department of Justice Response, Attachment B at 6. Thus, the effect on rates of a ten-year recovery period vs. some longer period would not be substantial, and even that effect could further be mitigated by the regulators.
[16] For the same reason, the Court rejects the suggestion of the United Church of Christ (Opposition at 8) that AT & T be relieved of the guarantee only to the extent that the Operating Companies may be able to recover costs after 1994.
[17] This solution also appropriately meets concerns expressed by the Federal Communications Commission (Comments at 2) and by NARUC (Response at 5) that the Court's decision might improperly interfere with the authority of the regulators.
[18] Several of the intervenors propose various measures in other areas of the plan of reorganization in order to counterbalance what they regard as the effects of the proviso. Thus, California proposes (Opposition at 9-10) that the Court assign the so-called "Account 232" to AT & T, and MCI suggests (Opposition at 3) that the Court's modification with respect to patent licensing will have a beneficial impact on the recovery of the access costs. The plan of reorganization, as it was required to be modified in the July 8, 1983 Opinion, is carefully balanced to achieve the decree's purposes and objectives. The proviso is not sufficiently significant to call that balance into question and thus to provoke reconsideration of other aspects of the plan.
California also suggests (Opposition at 5-6) that
[t]hroughout the nation, BOCs are presenting regulatory authorities with rate increase proposals requesting not only substantial increases in total revenue but also drastically restructured rate designs, featuring 100 to 300 percent increases in basic monthly rates ..., occasional reductions in toll rates [and] substantial customer access line charges ....
To the extent that these requests are claimed to be based on the divestiture as presently structured, they have no justification.
[1] To the extent that motions or individual arguments made in motions are not addressed herein, they either raise issues which were previously fully considered or are deemed to lack merit for other reasons. However, the Operating Companies' proposed provision of cellular radio services across LATA boundaries, which is not part of the plan of reorganization but constitutes a request for an exception under Section VIII(C) of the decree, will be considered at a later time.
[2] The provisions in the plan regarding computer software represent complex arrangements some of which were substantially modified by AT & T following Department of Justice objections. See, e.g., Response of Department of Justice to Comments at 144-52.
[3] Opinion of July 8, 1983 at 1084-85.
[4] See AT & T Response to Objections at 426-29.
[5] I.e., technical information not related to CPE, inter-LATA service, or other Operating Company services prohibited by the decree.
[6] The Court did not discuss this issue in the July 8, 1983, Opinion, but it was considered. Opinion at 1061 note 2, and at 3.
[7] Much inside wiring is wire that is embedded in conduits, and it is not replaceable by, nor often even accessible to, the customer.
[8] See Litton Systems, Inc. v. Am. Tel. & Tel., 700 F.2d 785 (2d Cir.1983).
[9] See also, the FCC's treatment of this issue, Amendment of Part 31 (Uniform System of Accounts), CC Docket No. 79-105, 85 F.C.C.2d 818, 823-30 (1981).
[10] These proposals relate to the following areas: Indiana-Lafayette; Oklahoma-Guymon; South Carolina-Florence; Illinois-Olney; Illinois-Macomb; Pennsylvania-Erie; Texas-Texarkana; Kentucky-Winchester; Michigan; Oregon; and Washington. With respect to the last three areas, the respective Operating Company has indicated that the classifications in these states are already being revised as required by the Court's July 8, 1983 Opinion, and that they will therefore be consistent with the GTE proposals. Response of the Operating Companies to GTE Petition at 6-7.
[11] The proposals in this category relate to the areas of Illinois-Bloomington and Illinois-Kewanee. Response of the Operating Companies to GTE Petition at 4, 7.
[12] This will enable the association of the Chesapeake exchange with the Columbus LATA when the exchange is rehomed in 1984.
[13] These two proposals relate to Indiana-Terre-Haute and West Virginia-Bluefield.
[14] These proposals relate to the following areas: Illinois-Chicago; Ohio-Medina; and California-Oxnard. With respect to the last of these areas, Pacific Telephone has indicated that it is presently discussing the resolution of this matter with the Department of Justice. Response of the Operating Companies to GTE Petition at 3. As the Court indicated in the Opinion of July 8, 1983, the Bell Operating Companies may, under the decree, subsequently petition the Court for reclassification or for exceptions in regard to service between their own areas and Independent territory. Opinion of July 8, 1983 at 1112 n. 238.
[15] South Central Bell is neutral on this issue.
[16] July 8, 1983 Opinion at 1081.
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751 S.W.2d 248 (1988)
John Glenn RIDEAU, Appellant
v.
The STATE of Texas, Appellee.
No. 09-87-195 CR.
Court of Appeals of Texas, Beaumont.
May 11, 1988.
*249 Douglas M. Barlow, Beaumont, for appellant.
Tom Maness, Criminal Dist. Atty., and R.W. Fisher, Asst. Criminal Dist. Atty., Jefferson County, Beaumont, for appellee.
OPINION
BURGESS, Justice.
A jury found appellant guilty of the offense of aggravated robbery. Punishment was assessed by the court at fifteen years in the Texas Department of Corrections. Appeal has been perfected to this court.
Appellant complains the prosecutor improperly commented during voir dire examination upon the trial judge's opinion of the facts of the case. The comment complained of is as follows:
[The State]: Now, let me tell you what I anticipate a little bit about the facts, to make sure, to see if of [sic] you actually know anything about this.
The Judge told you it happened on October sixteenth, in Jefferson County. As a matter of fact, it happened at Calder and Ewing. The victim in this case... came in from out of town, it was about midnight ... and he was held up and his money was taken and his watch was taken.
Is anybody familiar with those facts back then, or think you might be familiar with those facts?
Prosecuting attorneys must be very cautious not to bring before the jury any reference to the presumed opinion of the trial judge on any fact issue. McClory v. State, 510 S.W.2d 932, 934-35 (Tex.Crim.App. 1974). The prosecutor in this case overstepped the bounds of proper voir dire examination. However, appellant concedes the trial judge never made reference to when, or even if, the offense occurred; had defense counsel objected to the prosecutor's statement, the judge could easily have reminded the jury he had made no such statement and instructed them to disregard the prosecutor's comment, curing the error. Failure to object at trial waives error. Esquivel v. State, 595 S.W.2d 516, 522 (Tex. Crim.App.), cert. denied, 449 U.S. 986, 101 S. Ct. 408, 66 L. Ed. 2d 251 (1980). Appellant's first point of error is overruled.
Next, appellant contends the trial court compromised his right to the presumption of innocence. During voir dire, the following exchange occurred:
[Defense Counsel]: You haven't heard much from the District Attorney on the issue of guilt or innocence. That's why they have two sides. That's why I have the opportunity to talk to you now.
I would present to each and every one of you, today, a fact. It's the law, also. John Glenn Rideau is innocent. Right now he's innocent. He's
[The State]: Your Honor, I object. It's a presumption of innocence.
The Court: Sustained. Restate it, [defense counsel].
[Defense Counsel]: I had planned to, Your Honor.
He is innocence [sic], because he's presumed innocent, under the laws of the State and of our country.
Do each and every one of you understand the presumption of innocence? Nod your heads, if you do.
*250 Appellant argues on appeal, "The presumption of innocence, if it is to have any meaning at all, must mean that an accused is innocent until such time as evidence to the contrary is presented.... The Trial Court was in error in sustaining the State's objection, thereby implying that Appellant was not innocent."
Admittedly, the concept of "presumption of innocence" is difficult to explain to a jury. In her zeal, appellant's trial counsel incorrectly explained the maxim so as to convey to the jury that appellant was, in fact and in law, innocent at that time. The presumption of innocence does not itself "make" the defendant innocent. Instead, the presumption serves as a reminder to the jury of the state's burden to prove its case and as a caution that they are to consider nothing but the evidence in passing upon the accused's guilt. 1 R. Ray, Texas Law of Evidence Civil and Criminal sec. 88 (Texas Practice 3rd ed. 1980).
By sustaining the prosecution's objection, the court in no way implied appellant was not innocent. The court merely required defense counsel to restate her explanation of the concept of presumption of innocence so as to stay within its purview. Appellant's second point of error is overruled.
Finally, appellant complains of an argument made by the prosecutor during the guilt/innocence phase of the trial, as follows:
[O]ne of the most important things in a person's life, in a criminal defendant's life, and I told you about you can subpoena whoever you want to come testify that this alibi"I bought a watch from somebody,"you know, that person is not here, and that's a person that, maybe, you see around. He's on the street, but he's not here to tell you that, "Oh, yeah, I sold a watch." You know, you have to wonder about that.
Appellant contends the prosecutor's statement constituted a comment on appellant's failure to testify.
The prosecutor's comment, heard in context with the evidence, referred to defendant's failure to call as a witness the man from whom he allegedly bought his watch. The comment was neither manifestly intended as, nor of such a character that the jury would naturally and necessarily take it to be, a comment on his failure to testify. Griffin v. State, 554 S.W.2d 688, 691 (Tex.Crim.App.1977). At any rate, appellant failed to object to the comment, waiving any error on appeal. See Losada v. State, 721 S.W.2d 305, 313 (Tex.Crim. App.1986). Appellant's third point of error is overruled.
The judgment of the trial court is affirmed.
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569 F. Supp. 404 (1983)
G. BAUKNECHT GmbH, Plaintiff,
v.
ELECTRONIC RELAYS, INC., et al., Defendants.
No. 82 C 3745.
United States District Court, N.D. Illinois, E.D.
July 15, 1983.
*405 James K. Toohey, Ross, Hardies, O'Keefe, Babcock & Parsons, Chicago, Ill., for plaintiff.
Thomas I. Matyas, Rosenthal & Schanfield, Chicago, Ill., for defendants.
MEMORANDUM OPINION AND ORDER
SHADUR, District Judge.
G. Bauknecht GmbH ("Bauknecht") sues Electronic Relays, Inc. and ERI-Energy, Inc. (collectively "ERI"), ERI President Joseph Pascente ("Pascente") and ERI employee Barbara Breibach ("Breibach"). Bauknecht's Complaint has two counts:
1. Count I is a diversity[1] claim for conversion, challenging ERI's refusal to refund a very large overpayment Bauknecht mistakenly sent to ERI in connection with a purchase order for two samples of an ERI-manufactured electronic device.
2. Count II asserts a claim against all defendants under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68.
In turn defendants filed a Counterclaim seeking damages for breach of contract. Both sides have filed various motions, three of which are fully briefed and thus ready for disposition:
1. defendants' motion to strike the May 7 and July 1, 1982 affidavits ("Bormann Affidavits") of Gerrald Bormann ("Bormann"), an employee of Bauknecht's Legal Department;
2. Bauknecht's Fed.R.Civ.P. ("Rule") 56 motion for summary judgment on Count I; and
3. Bauknecht's motion to strike defendants' Counterclaim and jury demand.
For the reasons set forth in this memorandum opinion and order, this Court grants in part defendants' motion to strike the May 7 Bormann Affidavits, denies (albeit regretfully) Bauknecht's motion for summary judgment and grants its motion to strike the Counterclaim and the jury demand.
Facts[2]
In response to an ERI advertisement, Bauknecht representative Hoffmann ("Hoffmann") sent a letter to ERI (P.Aff. Ex.A, received by ERI May 21, 1981) requesting a sample of ERI's Power Factor Controller (the "Controller") for possible *406 use in the Bauknecht-manufactured lines of freezers and refrigerators. Pascente's May 28 reply letter (P.Aff.Ex.B) said Bauknecht must pay for samples on a COD basis or by letter of credit. Bauknecht's June 26 telex to Pascente (B. May 7 Aff.Ex. 1) ordered two sample Controllers and asked for a price quotation and order acknowledgement by telex. On June 30 and again on July 1, Breibach sent identical confirming telexes (P.Aff.Ex.C; B. May 7 Aff.Ex.A) (emphasis only in the July 1 telex):
PRICE FOR 2 UNITS OF PB2403-1 IS 34.95 EACH. AIR PARCEL POST CHARGES (WITH INSURANCE) IS 20.00USD. THEREFORE, ENTIRE ORDER IS 89.90USD.
DELIVERY WILL BE 2-4 WKS AFTER RECEIPT OF PAYMENT. WE WILL ACCEPT EITHER CASH IN ADVANCE OR BANK TRANSFER.
FOR BANK TRANSFER PLS ISSUE TO AMERICAN NTL BANK OF CHICAGO, OUR ACCOUNT NO IS 186384. PLS ADVISE WHICH METHOD OF PAYMENT U CHOOSE.
On July 3 a clerk in Bauknecht's accounting department caused Bauknecht's bank (inadvertently according to Bauknecht)[3] to wire $89,900 rather than the $89.90 to that ERI account. Bauknecht's banking transaction document (B. May 7 Aff.Ex. 3) contained the following entry:
2 Units of P8 2433-
Power Factor Controller
US $89.900,
On that same day Pascente allegedly received a telephone call from Hoffmann, an assertion hotly contested by Bauknecht. According to P.Aff. ¶ 7:
On July 3, 1981, I received a telephone call from Mr. Hoffmann of BAUKNECHT. Mr. Hoffmann identified himself by saying that he was calling for BAUKNECHT and that his company had just recently ordered two samples of Power Factor Controllers, and he said that he wanted to purchase another 2,500 units. I told Mr. Hoffmann that with our packaging for shipments there were 134 units to each pallet and that was the best way to ship. Therefore, I said to Mr. Hoffmann that 19 pallets would come the closest to his 2,500 figure, and that the total figure would then be 2,548 units. I told Mr. Hoffmann that the unit price was the same as for the sample, $33.95 [sic], and that we should allow about $3,000.00 for shipping. Mr. Hoffmann said that he wanted the units and was purchasing such units at that price and that he needed the units as soon as possible. I then told him that full payment in advance by letter or credit or cash was required by company policy in conformity with the prior letter and telex, and that no work or shipment would take place without such full payment. Mr. Hoffmann said that that was fine. Mr. Hoffmann then said that he wanted 12 sets of literature for a possible new German distributorship with a potential of 50,000 units annually. We then said goodbye to each other. Since I have a habit of taking notes of my telephone conversations, I made notes during my telephone conversation with Mr. Hoffmann, and a true and correct copy of such notes is attached hereto as Exhibit D.[4]
P.Aff. ¶ 8 says ERI immediately proceeded to fill that 2,548 unit order (by making substantial purchases of needed supplies and initiating the manufacturing process itself) when it received the $89,900 on July 7.
On July 10 Hoffmann sent to Breibach confirmation of Bauknecht's order for two Controllers at the originally-quoted price of $34.95 per unit and $20.00 postage. According *407 to P.Aff. ¶ 9, on July 24 an invoice (P.Aff.Ex.E) was purportedly sent to Bauknecht, confirming receipt of payment for the 2,546 additional units supposedly ordered by Hoffmann during the alleged July 3 conversation:
Quantity Description Unit Amount
Ordered Price
2546 POWER FACTOR CONTROLLER
Change order increase order as
follows
PB2403-1 240VAC 3HP
Single Phase $33.95 $86,436.70
Order paid in full-bank transfer of 89,810.10USD
to American National Bank of Chicago
Estimated Air Freight 4000 pounds $3,000.00
__________
Credit Allowance $ 373.40
That invoice promised delivery by September 28.
On August 5 Hoffmann sent a telex (B. July 1 Aff. ¶ 5, incorporating Cplt.Ex.CC) to Breibach. Bauknecht's copy of that telex again unequivocally confirmed its order of two Controllers:
RE OUR ORDER NBR. 043290 OF JULY 10TH
WE ORDERED TWO POWER FACTOR CONTROLLERS TYPE PB 2403-1 BUT DIDN'T RECEIVE THEM UNTIL NOW. YOU PLEASE MAY CONFIRM OUR ORDER AND DISPATCH THEM AS SOON AS POSSIBLE
As received by ERI the telex (P.Aff.Ex.G) was somewhat scrambled, though it expressly referred to Bauknecht's July 10 telex purchase order (which was for only two units):
RE OUR ORDER NBR. 043290 OF JULY 10TH
WE OR
DERED TWO T
HO POWER FACTOR CONTROLLERS TYPE
PB 2403-1
BUT DIDN'T RECEIVE THEM UNTIL NOW.
YOU PLEASE MAY CONFIRM OUR ORDER AN
D DISPATCH AS SOON AS
POSSIBLE
Later that same day Breibach sent a return telex (B. July 1 Aff. ¶ 6, incorporating Cplt.Ex. DD), which referred to Bauknecht's July 10 order and stated "SORRY FOR DELAY UNITS ARE SHIPPING TODAY VIA A.P.P." ERI shipped two Controller units, not 2,000 or 2,548 units.
On August 12 ERI mailed an invoice (B. May 7 Aff.Ex. B) confirming shipment of two Controllers per Bauknecht's July 10 purchase order at a unit price of $34.95 for a total of $89.90 (including $20.00 in postal charges). Significantly that invoice states, "Paid in fullbank transfer of $89.90 USD to American National Bank of Chicago."
On September 3 Pascente sent the following telex (B. July 1 Aff. ¶ 7, incorporating Cplt.Ex. EE) to Bauknecht according to Bauknecht, the first clue ERI had been sent $89,900 rather than $89.90:
WE HAVE SHIPPED 2 UNITS AGAINST YR ORDER OUR W/O NO 11020 FOR 2546 UNITS. THE BALANCE OF YR ORDER WILL BE SHIPPED IN 10 WEEKS.
*408 By return telex that same day, Bauknecht informed Pascente and Breibach (B. July 1 Aff. ¶ 8, incorporating Cplt.Ex. FF):
EXCUSE, THERE IS A MISUNDERSTANDING. OUR BOOK-KEEPING DEPARTMENT REMITTED INSTEAD OF USD 89.90 USD 89 900.00.
WE DON'T NEED 2546 PIECES BUT ONLY THE 2 UNITS ORDERED.
PLEASE REMIT THE DIFFERENCE OF USD 89 810.10 BACK TO DRESDNER BANK AG, STUTTGART ACCOUNT NO 9 008 676
Bauknecht has since made numerous unsuccessful demands for repayment.
Motion To Strike Bormann Affidavits
In principal part the two affidavits tendered by Bormann are devoted to laying the foundation for admitting, under the routine business record exception to the hearsay rule (Fed.R.Evid. 803(6), "Rule 803(6)"), the various documents furnished in support of Bauknecht's summary judgment motion. Bormann's May 7 Affidavit contains two other assertions as well:
1. Paragraph 7 states, "In German trade and practice, the full stop designates one thousand; whereas, in the United States, it is a decimal point designating a break between dollars and cents."
2. Paragraph 8 says, "Due to the accountant's lack of familiarity with United States trade practice, a check in the amount of $89,900.00 was issued in payment of the invoice...."
Defendants contend Bormann lacks personal knowledge to testify as to any of the matters in the Affidavits. That argument is groundless except as to Bormann's competency to attest to B. May 7, Aff. ¶ 8:
1. Paragraph 2 in each Bormann Affidavit contains averments of personal knowledge, presumptively sufficient to render Bormann "a custodian or other qualified witness" whose testimony can satisfy the prerequisites of Rule 803(6). In fact Bormann even authored some of the documents in question, as defendants concede. In any event, in the absence of any indication of those documents' lack of trustworthiness or authenticity, Bormann's failure to elaborate in greater detail as to the basis of his firsthand knowledge does not justify striking that portion of his affidavit.
2. As a German national Bormann certainly has personal knowledge of the significance of the "full stop" in German practice.[5]
By contrast Bormann's statement of the accountant's reasons for wiring $89,900 rather than $89.90 to ERI has to be inadmissible hearsay. B. May 7 Aff. ¶ 8 will therefore be stricken.
Summary Judgment on Count I
Count I charges ERI with conversion of all but $89.90 of the $89,900 forwarded by Bauknecht to ERI. Under Illinois law a cause of action for conversion has four elements:
1. an unauthorized and wrongful assumption of control, dominion or ownership by a person over the personalty of another;
2. plaintiff's right in the property;
3. plaintiff's absolute and unconditional right to immediate possession of the property; and
4. demand for possession by the plaintiff.
Hoffman v. Allstate Insurance Co., 85 Ill. App. 3d 631, 634, 40 Ill. Dec. 925, 927, 407 N.E.2d 156, 158 (2d Dist.1980). Of course the fourth element is satisfied here. But the parties bitterly dispute the fundamental premise of the other three propositions Bauknecht's entitlement to the $89,810.10.
Bauknecht advances two reasons for summary judgment:
1. Its contractual commitment to purchase ERI's controllers was limited to *409 two sample units at a total price of $89.90.
2. Its clerk mistakenly transferred $89,900 instead of the $89.90 actually owed because of his misunderstanding of the dollars and cents decimal designation.
ERI counters that the Pascente Affidavit, coupled with the purported July 24 invoice, supports a reasonable inference ERI was contractually entitled to all but perhaps $400 of the $89,810.10 in dispute:[6]
1. P.Aff. ¶ 7 claims Bauknecht, via its agent Hoffmann, orally agreed to purchase an additional 2,546 units (at an additional cost of $89,436.70) on July 3 the same day Bauknecht wired $89,900 to ERI.
2. That oral agreement falls within an exception to the UCC Statute of Frauds, Ill.Rev.Stat. ch. 26, § 2-201(1) ("Section 2-201(1)"), because the July 24 invoice constituted "a writing in confirmation of the contract and sufficient against the sender .... [and no] written notice of objection to its contents [was] given within ten days after it [was] received" by Bauknecht (Section 2-201(2)).[7] Bauknecht's receipt of that invoice can be reasonably inferred (for Rule 56 purposes) from the statement in P.Aff. ¶ 9 that the document was sent to Bauknecht.
ERI insists such evidence suffices to create a "genuine issue" that defeats Bauknecht's summary judgment motion. Bauknecht retorts the uncontroverted documents tendered in this case compel the conclusion (as a matter of law) such evidence is spurious and thus incapable of giving rise to a "genuine" factual issue even when reasonable inferences (especially as to Pascente's demeanor at trial) are indulged in defendants' favor. See DeLuca v. Atlanta Refining Co., 176 F.2d 421, 423 (2d Cir.1949) (summary judgment granted because the supporting evidence could not conceivably be refuted by the production of any conflicting evidence), cert. denied, 338 U.S. 943, 70 S. Ct. 423, 94 L. Ed. 581 (1950); 10A Wright and Miller, Federal Practice and Procedure § 2727, at 163-65, 170 ("And, although the court should refrain from assessing the probative value of the material presented, evidence in opposition to the motion that clearly is without any force is insufficient to raise a genuine issue" and "[T]he evidence offered must have the force needed to allow a jury to rely on it and the court may disregard an offer of evidence that is too incredible to be believed."). But *410 that notion is really not suited to what this case would require treating a detailed (not merely vague or conclusory) affidavit as "too incredible to be believed" (that is, as perjurious).
True enough, Bauknecht is certainly correct in pointing out the evidentiary poverty of defendants' position. Were the present record being weighed in the scales rather than being examined for the presence of any factual issue, the result could not be in doubt all the circumstantial evidence compels the conclusion the alleged oral contract is non-existent, at the same time substantiating Bauknecht's explanation for its transmission of the $89,900:[8]
1. B. May 7 Aff.Ex. 3, the banking transaction document authorizing the $89,900 payment, convincingly supports Bauknecht's claim the employee who filled out that form mistakenly converted the intended $89.90 into a wholly unintended $89,900:
(a) That document expressly shows the authorized payment was for two Controller units.
(b) Its accompanying entry, "US $89.000,-" also suggests the cause of the clerical error: Bauknecht's employee likely added a "0" to the $89.90 in the belief the period was a "thousands" indicator in conformity with German practice. That is all of a piece with the clerk's inverted use of the period and comma, which indicates his mistaken belief that such punctuation served the same function in denoting sums of money in both United States and German currency.
2. ERI's purported July 24 invoice shows the $89,900 payment exceeded (by $373.40) the amount due for both the two sample units and the additional 2,546 units supposedly ordered. That itself strongly implies the payment was not made as consideration for the alleged oral contract. Were Pascente's account of the supposed telephone call factual, the logical expectation would have been Bauknecht's payment of the correct amount, not a rounded figure (which "just happened" to be exactly 1,000 times the agreed-upon price including postage for the agreed-upon two units).
3. All the post-July 3 communications and course of dealings between the parties are also instructive:
(a) Just one week after the alleged oral contract was made, Hoffmann (the one who allegedly entered into that contract) sent a telex that confirmed only the original order for the two sample Controllers. That telex's conspicuous silence as to the claimed 2,546 unit purchase order belies its very existence, for any purchasing agent with a modicum of business prudence would have taken that occasion to make at least some mention of it.
(b) Again on August 5 Hoffmann sent another telex indicating Bauknecht had not received the two Controllers previously ordered. That telex too illuminates Bauknecht's ignorance of any oral contract with ERI. Concededly the telex received by ERI was garbled, containing the word and non-word
"TWO T ."
HO
But the odd addition of
T
"HO"
in the transmission process obviously does not affect any inference drawn from the telex message Hoffmann attempted to convey. Nor does it lend any credence to the alleged oral contract:
(1) Pascente's asserted oral contract was for 2,546 additional units, not 2,000 units.
*411 (2) Bauknecht's August 5 telex expressly referred to the July 10 telexed purchase order, which was for the two sample units.
(3) Most importantly, Breibach's own August 5 reply telex, which said the ordered goods were being shipped immediately, coupled with the fact that only two units were actually shipped, demonstrates defendants realized
"TWO T "
HO
meant simply "two."[9]
(c) In light of Bauknecht's practice of carefully documenting its $89.90 order, its failure to issue even a single document verifying the $89,810.10 order reinforces the doubt any such order was ever placed.
4. No business is likely to purchase large quantities of a component part to be incorporated in the final product (freezers and refrigerators in this case) for the first time without having seen or used any samples. That abnormal conduct is rendered even more abnormal by the sequence of an admitted original order for a very small sample to check its suitability, allegedly followed by an extremely large order before the samples were even delivered.
5. ERI's alleged July 24 invoice is also highly suspect:
(a) There are several indications of its lack of authenticity of its having been fabricated after August 12:
(1) Every externally verifiable ERI document through August 12 (the June 30 and July 1 telexes, the August 5 telex and the two-unit shipment, and the August 12 invoice reflecting that shipment and only the $89.90 "paid in full" amount) uniformly spoke simply of the two units and the $34.95 unit price. Only after August 12 did any verifiable document reflect another number (the September 3 telex spoke of "2546 units"). In that context the "July 24 invoice" sounds a wholly false note.
(2) ERI's "July 24 invoice" referred to "ERI Work Order No. 11020-02," while the unquestioned August 12 invoice covered "No. 11020-01." Had a July 24 invoice actually existed on August 12, and had that July 24 invoice really referred to a second work order, surely the later August 12 invoice would not have read as though it were the only then-outstanding order (note the invoice form has spaces for "Quantity order," "Quantity shipped" and "Quantity back ordered").
(3) ERI's September 3 telex simply referred to its "w/o ["work order"] no. 11020 for 2546 units." How so, when the supposedly pre-existing "July 24 invoice" (actually a work order form) showed the 2546 units as having been ordered under "ERI Work Order No. 11020-02"? And it will not wash to say "11020" was intended to encompass both alleged orders, for then the telex would have referred to "hav[ing] shipped 2 units against yr order our w/o no. 11020 for [2548 not 2546] units."
(4) Though the August 5 invoice for the two units actually shipped was indeed an "invoice" form (prenumbered and thus chronologically verifiable), the "July 24 invoice" was actually a "work order" form with no preprinted number (hence easily predated, with no means of verification).
(5) Had Pascente really had the July 3 conversation with Hoffmann (just two days after the two-unit commitment was made at $34.95 per unit), there would be no rational explanation for his setting what he acknowledged as the "same" unit price at $33.95 for the asserted 2546 unit order. It should be remembered that only Pascente's allegedly contemporaneous notes *412 (P.Aff.Ex. D), the "July 24 invoice" and the 1983 Pascente Affidavit mention the peculiar $33.95 figure all of them internal (that is, unconfirmed) documents.[10]
(6) P.Aff.Ex. D reflects an astonishing level of prescience. Bearing a July 3 date and assertedly prepared contemporaneously with the alleged phone call that day, it refers to "Order Paid in Fullbank transfer of $87,810 USD..." (the same language that appeared on the "July 24 invoice" obviously $89,900 less the $89.90 applicable to the two units). Yet not a word in the alleged Pascente-Hoffmann telephone conversation referred to a funds transfer of an even $89,900 rather than the right amount as assertedly quoted by Pascente.
(b) Even were the existence of the "July 24 invoice" plausible, there would remain the question whether it was ever sent to or received by Bauknecht one of the prerequisites of the Section 2-201(2) exception to the UCC Statute of Fraud requirements:
(1) ERI's alleged transmission of the July 24 invoice is inconsistent with defendants' treatment of the original two-unit order, as to which defendants' first acknowledgment occurred after shipment.
(2) Bauknecht's failure to mention the July 24 invoice in any subsequent communication (including the August 5 telex) is strongly probative of its non-receipt of that document. Its immediate response to the first uncontroverted communication hinting at the existence of the oral contract (the September 3 telex) underscores the significance of that factor.
This discussion has not sought to be exhaustive. That task will be left to those with better facilities for investigation.[11] Certainly a substantial argument can be made for the proposition that ERI's "evidence ... is too incredible to be believed." Nonetheless, taking (as a Rule 56 motion requires) all inferences in defendants' favorthin though their position appears this Court cannot foreclose further factual inquiry by granting Bauknecht a judgment at this stage:[12]
*413 1. Bauknecht's banking transaction document does not alone conclusively establish clerical oversight as the reason for Bauknecht's $89,900 payment to ERI. After all, the document did authorize the payment of "US $89.900,-." And Bauknecht's clerk's use of the period and comma is arguably consistent with defendants' contention that transfer of the $89,900 was intended and not accidental.
2. Bauknecht's (and for that matter ERI's) failure to acknowledge the alleged oral contract in the pre-September 3 communications (excluding the purported July 24 invoice) is not fatal to defendants' position as a matter of law. It could perhaps be argued both sides ignored the claimed 2,546 unit purchase order during that period because delivery was supposedly scheduled for September 28.
3. Serious questions as to the authenticity of the July 24 invoice or its transmission to Bauknecht[13] still require the resolution of disputed facts.
4. Apart from the difficulties of reconciling it entirely with the purported July 24 invoice, the August 12 invoice is consistent with both sides' positions: It merely confirms the shipment of the two Controllers and acknowledges receipt of the $89.90 bank transfer.
5. Bauknecht's failure to tender any affidavit or deposition testimony from (a) Hoffmann, (b) the clerk responsible for paying the $89,900 or (c) any other Bauknecht official with personal knowledge as to the non-existence of the oral contract or the reason for the $89,900 payment leaves the field to the Pascente Affidavit, dubious though it may be.[14]
In sum, this Court must reluctantly deny Bauknecht's summary judgment motion because of the existence of genuinely disputed issues of material fact. If however it ultimately develops that the strong suspicions evoked by the matters discussed in this opinion are justified in fact, defendants should recognize the possibility of being assessed for fees as well as damages.[15]
Motion To Strike Jury Demand and Counterclaim
Resolution of both aspects of this motion requires a brief excursion into the case's procedural background. On July 2, 1982 the Complaint was served on defendants. On August 18, 1982 defendants filed their Answer, which included affirmative defenses based on the alleged oral contract. Two months later defendants filed an Amended Answer. On February 8, 1983 defendants filed a Second Amended Answer and Counterclaim. That responsive pleading was the first one to include a jury demand. Defendants' alleged Counterclaim is also based on the alleged oral contract and involves the same issues already raised by defendants' affirmative defenses.
1. Counterclaim
Rule 13(f) prescribes the standards under which originally omitted counterclaims can be pleaded by amendment:
*414 When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counterclaim by amendment.
As 6 Wright & Miller § 1430, at 153 makes clear, courts are exceedingly liberal in allowing a party to plead a counterclaim omitted from an earlier pleading, particularly where as here the counterclaim is said to be compulsory under Rule 13(a).
One way to look at defendants' delinquency here is in terms of their failure to satisfy their Rule 13(f) burden. Nothing in ERI's memorandum suggests their omission resulted from "oversight, inadvertence, or excusable neglect...." Nor does ERI contend the "justice requires" standard warrants retention of the Counterclaim.
But there is an even more basic flaw in defendants' position: They have really not asserted a counterclaim at all. They have the $89,900. If they are correct in their position, they already have all the relief to which the law would entitle them:
1. Under UCC § 2-708 (which governs a seller's damages for non-acceptance or repudiation by the buyer), ERI would be entitled to the greater of (a) the difference between the market price at the time and place of tender and the unpaid contract price and (b) the profit ERI would have realized from full performance by Bauknecht, plus (c) any "incidental damages" under UCC § 2-710.
2. ERI has already received the "greater" component of damages, for on its own theory it has concededly received the full contract price (and hence full performance) from Bauknecht.
3. There is no claim of any "incidental damages" arising from Bauknecht's breach. That is scarcely surprising, for Bauknecht never breached the oral contract. Even under defendants' version of events, Bauknecht merely repudiated the asserted oral contract after fully performing its supposed obligation payment of the contract price.
4. Nor can the attorneys' fee element of the Counterclaim's prayer for relief be characterized as "incidental damages." That UCC concept is limited to expenses incurred by the seller in retrieving and reselling the goods refused by the repudiating buyer. Moreover, defendants' prayer for attorneys' fees (even if supported by law, a showing not yet made) merely echoes a like claim already in the Answer.
It would be a distortion to label as a "counterclaim" a pleading that adds nothing to the issues already in suit and that would provide the claimant nothing it does not already have.[16] To the skeptic it might appear defendants tendered their pleading as a means of asserting an untimely jury demand not previously made. That poses the next issue for this opinion.
2. Jury Demand
Under Rule 38(b) any party desiring a jury trial on an issue must make a written request "at any time after the commencement of the action and not later than ten days after the service of the last pleading directed to such issue." As both sides recognize, defendants have no right to a jury trial unless their Second Amended Answer and Counterclaim represents the "last pleading directed to such issue." To trigger a new ten-day period, that amended pleading must raise for the first time the issue as to which a jury trial is sought. See 5 Moore's Federal Practice § 38.41, at 38-364 to 38-365.
It plainly does not do that. As already pointed out, the Second Amended Answer and its non-Counterclaim rehash the same contract issues embraced by the earlier filed affirmative defenses. That kind of attempted bootstrapping is hardly enough to satisfy the "last pleading" requirement. Accord, Leighton v. New York, Susquehanna & W. Ry., 36 F.R.D. 248 (D.C.N.Y.1964).
*415 But that is not the end of the matter, for Rule 39(b) permits "the court in its discretion upon motion [to] order a trial with a jury of any or all issues" despite the lack of a timely demand. To qualify for discretionary relief, the delinquent party must furnish an adequate justification for his tardiness. Though case law is split as to what constitutes a sufficient excuse, even the most lenient approach (to which our own Court of Appeals subscribes, see Merritt v. Faulkner, 697 F.2d 761, 766, 767 (7th Cir. 1983)) requires a showing of inadvertence. See also Williams v. Lane, 96 F.R.D. 383 at 387 (N.D.Ill.1982).
Defendants have not even proffered that as the reason for their untimely demand. Instead they argue their constitutional right to a jury cannot be forfeited unless prejudice to Bauknecht is established. That argument misapprehends the applicable standards. Any inquiry as to prejudice will be triggered (if at all) only after a party furnishes an adequate excuse for his or its delinquency. See Pawlak v. Metropolitan Life Insurance Co., 87 F.R.D. 717, 719 (D.C. Mass.1980).
Accordingly defendants' jury demand must be stricken. This ruling however is without prejudice to a renewed jury demand if accompanied with proof (in affidavit form) of an adequate excuse.
Conclusion
Paragraph 8 of the May 7 Bormann Affidavit is stricken. Bauknecht's motion for summary judgment is denied. Its motion to strike the Counterclaim is granted. Its motion to strike defendants' jury demand is granted, without prejudice to reassertion of that demand on an appropriate showing.
NOTES
[1] Bauknecht is a German corporation, and the two corporate defendants are both Illinois-based, as are the individual defendants.
[2] Except as otherwise noted, this factual account reflects uncontroverted documentary evidence. For that purpose, reference is made wherever possible to Exhibits to the Feb. 8, 1983 Pascente Affidavit ("P.Aff."). References to the Bormann Affidavits are cited "B.Aff."
[3] Continental (including German) usage is the precise obverse of the United States practice of using periods (or "full stops") and commas in numbers: Where we use commas (as in $9,000,000) they use periods ($9.000.000), and where we use a period to indicate a decimal point (as in $5,689.98) they use a comma ($5.689,98).
[4] To corroborate his affidavit Pascente has submitted a purportedly contemporaneous memorandum of that telephone conversation. P.Aff.Ex. D.
[5] Indeed, the continental usage described in n. 3 is so widely known this Court could well take judicial notice of it.
[6] ERI has pleaded that contractual theory as both an affirmative defense and counterclaim.
[7] Defendants also suggest the applicability of two other exceptions to the UCC Statute of Frauds, neither of which hinges on the existence of a subsequent confirmatory writing:
1. Section 2-201(3)(a) exempts oral contracts for goods that "are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business ... [provided] the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement. ..." P.Aff. ¶ 13 certainly suffices to create a genuine disputed issue as to the substantiality of ERI's performance before being notified of repudiation (see n. 10, suggesting the possibility ERI had notice as early as July 10 one week after the alleged oral contract was made). But there is no evidence whatever the Controllers were not "suitable" for sale to others. Indeed the undisputed record confirms Bauknecht never asked ERI to conform the goods to any particular specifications. It simply ordered Controllers ERI had offered in its advertisements to the public at large.
2. Section 2-201(3)(c) insulates from the Statute of Frauds oral contracts concerning "goods for which payment has been made and accepted or which have been received and accepted." This exception of course turns on one of the issues as to which Bauknecht contends there is no genuine dispute: whether the $89,900 payment served as consideration for the additional 2,546 units allegedly ordered. For summary judgment purposes that issue is inextricably intertwined with the issue as to the oral contract's very existence. To the extent the latter issue is found to be a genuine dispute, the former must be similarly regarded. Assuming an oral contract was actually formed July 3, Bauknecht's transfer of $89,900 that same day creates a reasonable inference that payment was intended as consideration, notwithstanding the documentary and affidavit evidence attributing the payment to clerical error.
[8] Bauknecht's attribution of its $89,900 payment to a clerical misunderstanding is fundamentally inconsistent with defendants' contract theory, which asserts Bauknecht deliberately paid that sum as consideration for the oral purchase order (P.Aff. ¶ 14). Defendants would be hard pressed to argue Bauknecht entered into the oral contract after its discovery of the excessive payment so that defendants could repay Bauknecht in the form of goods rather than currency. It is clear beyond dispute (1) Bauknecht's clerk authorized the bank to wire the funds the same day the alleged oral contract was executed and (2) the bank did not actually transmit the funds until several days later. See P.Aff. ¶ 9 (July 7); B. May 7 Aff.Ex. 3 (July 10).
[9] Arguably the August 5 and July 10 telexes (and perhaps the July 10 telex alone) alerted defendants as to Bauknecht's ignorance (or renunciation) of the oral contract. Under those circumstances, even were the oral contract enforceable Bauknecht would not be accountable for the production costs (or other damages) incurred by defendants after they were put on notice.
[10] Only Pascente really knows the explanation of the many disparities in ERI's story. But a little calculation may give some hint as to the origin of the odd $33.95 number. ERI packages its Controller units 134 to the pallet (that was the alleged origin of the 2548-unit quantity, comprising 19 pallets and coming closest to the claimed 2500-unit telephone order by Hoffmann). If $89,900 (the amount Bauknecht sent ERI) is divided by the originally-quoted $34.95 price, the quotient works out to 2572 units. That comes very close to the 2548 figure; and it could rationally explain why, with $89,900 in hand and wanting to develop a cover story to keep that windfall, ERI might transmit (as it did) a September 3 telex referring to 2546 units. But with the telex having gone out, a problem would seem to present itself when ERI later found it necessary to flesh out its story: There is just no room for the normal shipping charges within the matrix of the two now-non-changeable figures ($89,900 and 2546) and the original $34.95 unit price. How then develop a plausible explanation that takes shipping costs into account? Voila lop off $1 per unit to $33.95! Only a "minor" discrepancy remains $33.95 is really not the "same" price as $34.95. Like so much of defendants' presentation, this whole thing seems to have the ring of "Oh, what a tangled web we weave, when first we practise to deceive." Scott, Marmion, canto VI, stanza 17.
[11] Defendants' final memorandum on the current motion concludes:
The Reply Memorandum of Plaintiff is replete with misstatements and wrongful accusations. However, the Defendants will not burden this Honorable Court with a discussion of all of these misstatements and wrongful accusations. The documents, affidavits, and memorandums speak for themselves and this Honorable Court can draw its own conclusions.
This opinion has accepted that invitation, and though this Court expresses no ultimate views on the subject, it scarcely needs to spell out the potential implications of the matters discussed in the text. They certainly call out for further inquiry. Accordingly this opinion is being sent to the United States Attorney's office with the request that the factual and legal issues be examined for any possible violations of the criminal laws.
[12] No Seventh Circuit authority has been found applying the "too incredible" approach to reject admissible evidence creating an issue of material fact. Instead the uniform teaching of our Court of Appeals is that matters of credibility must not be resolved on a summary judgment motion. See discussion in Thornton v. Evans, 692 F.2d 1064, 1074-75 (7th Cir.1982).
[13] Bauknecht's receipt of the July 24 invoice is really irrelevant for current Rule 56 purposes in any event. As already explained in n. 7, a finding that the oral contract's existence is genuinely controverted necessarily implies a genuine dispute as to whether the $89,900 was intended as payment for the additional 2,546 units. And a finding it was so intended would enable the alleged oral contract to withstand Statute of Frauds assault on this summary judgment motion.
[14] Even were the assertion in B. May 7 Aff. ¶ 8 attributing the $89,900 to clerical error founded on personal knowledge, its admissibility would not alter the outcome. Because the clerical oversight explanation is incompatible with the existence of an oral contract, the evidence creating a factual issue on the latter subject necessarily raises a genuine issue on the former as well.
[15] Bauknecht also raises Rule 11 in the course of its arguments. Defendants' counsel, members of a reputable law firm, of course must recognize their responsibility to do more than accept at face value the kind of presentation offered up by Pascente. At this point this Court must assume defendants' counsel have discharged their responsibilities in that respect and can make the certificate implicit in Rule 11 in good faith.
[16] This implies no ruling as to the result if defendants were to offer allegations that "arise out of the transaction or occurrence that is the subject matter of [Bauknecht's] claim" (Rule 13(a)) and seeks relief not already encompassed within their answer.
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751 S.W.2d 721 (1988)
Glen J. ELLIS, Individually and as Trustee, and Lucille Thagard Ellis, as Trustee, Appellants,
v.
MORTGAGE AND TRUST, INC., Randall C. Sweet, Donna Sweet, Raymond Claude Miles, Donna Jo Miles, First Funding Investment, Inc., Earl J. Armbruster, Doris R. Armbruster, Sertex Properties and Don Taylor, Appellees.
No. 2-87-222-CV.
Court of Appeals of Texas, Fort Worth.
June 8, 1988.
*722 Thompson, Coe, Cousins & Irons, Scott Patrick Stolley, Dallas, for appellants.
Law, Snakard & Gambill, Walter S. Fortney and Mark S. Pfeiffer, Fort Worth, for appellees.
Before FENDER, C.J., and HILL and KELFNER, JJ.
OPINION
FENDER, Chief Justice.
Appellants Glen J. Ellis and Lucille Thagard Ellis brought a trespass to try title suit against appellees Mortgage and Trust, Inc., Randall C. Sweet, Donna Sweet, Raymond Claude Miles, Donna Jo Miles, First Funding Investment, Inc., Earl J. Armbruster, Doris R. Armbruster, Sertex Properties, and Don Taylor. Appellants moved for partial summary judgment, and appellees responded with a motion for summary judgment. The district court denied appellants' motion for partial summary judgment, and granted appellees' motion for summary judgment.
We affirm.
In September 1978 appellants Glen J. Ellis and the Glen J. Ellis, Jr. Trust and the Dawn Belen Ellis Trust entered into a joint venture agreement with Dayton Financial Corp. (Dayton).[1] In December of 1982 appellants sued Dayton for a breach of a joint venture agreement and breach of fiduciary duties. The lawsuit, among other items, requested a dissolution of the joint venture, a temporary restraining order against Dayton restraining it from tranferring joint venture assets, and an award of money damages. Appellants did not file a notice of lis pendens on their original petition, which would have encumbered the joint venture lots as to subsequent purchasers.
On December 21, 1982, the court denied appellants' motion for temporary injunction. In light of the denial of their motion for temporary injunction, appellants amended their petition on December 23, 1982, and requested "[a] constructive trust on all joint venture assets or the proceeds thereof" held by Dayton. At the same time, appellants filed a notice of lis pendens regarding their alleged one-third interest in the joint venture assets.
On December 1, 1981, even before appellants filed the Dayton suit and the lis pendens, appellees First Funding Investment, Inc., Raymond Claude Miles, and Donna Jo Miles had purchased the lots at issue, those lots subsequently described in the notice of lis pendens, from Dayton. The remaining appellees purchased their lots from Dayton after the filing of the Dayton suit and the lis pendens.
Thereafter, in December of 1985 appellants filed a third amended original petition, asking for money damages and a constructive trust on the lots themselves. Appellants took a default judgment against Dayton. Hon. Judge Street awarded appellants damages in the principal sum of $247,399.00 together with prejudgment interest, attorneys' fees, and accountant's fees. Judge Street further found and declared that as of December 1, 1981, specified lots which were assets of the joint venture were to be held by Dayton as constructive trustees for the benefit of appellants, and that these lots were the ones later sold by Dayton without the consent of appellants. At the time of the default judgment, all of the lots in question had been conveyed away.
In August of 1986 appellants brought this suit against appellees, the present owners of the lots in question. The suit alleged that the default judgment awarded them by Judge Street not only awarded them money damages equal to their one-third (1/3) interest in the joint venture assets, but also fee simple title to the entire lots by virtue of a constructive trust. Appellees' motion for summary judgment was granted, and this appeal ensued.
*723 Appellants' first point of error asserts that the trial court erred in failing to grant a partial summary judgment in favor of appellants. Appellants' second point of error asserts that the trial court erred in granting a summary judgment in favor of appellees. An order overruling or denying a motion for summary judgment is not a proper subject for appeal. Novak v. Stevens, 596 S.W.2d 848, 849 (Tex.1980). Therefore, appellants' point of error one is overruled.
In a summary judgment case, the issue on appeal is whether the movant met his burden for summary judgment by establishing that there exists no genuine issue of material fact and that he is entitled to judgment as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979); TEX.R. CIV.P. 166a. The burden of proof is on the movant, and all doubts as to the existence of a genuine issue as to a material fact are resolved against him. Great American R. Ins. Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d 41, 47 (Tex.1965). Therefore, we must view the evidence in the light most favorable to the nonmovant. See id.
In essence, appellants argue they proved the elements of an action in trespass to try title: superior title out of a common source. In the alternative, appellants argue appellees failed to negate an essential element of appellants' claim. Appellees do not dispute that both parties claim title from a common source, but do dispute appellants' claim to superior title. Appellants claim that they have superior title to the lots in question by virtue of a default judgment granted to them in the Dayton case.
A judgment is construed in the same manner as are other written instruments, and is construed as it is written. Permian Oil Co. v. Smith, 129 Tex. 413, 73 S.W.2d 490, 497-98 (1934); 47 TEX.JUR. 3d Judgments sec. 85 (1986). The determinative factor is the intention of the court. Adams v. Adams, 214 S.W.2d 856, 857 (Tex.Civ.App.-Waco 1948, writ ref'd n.r. e.). If, taken as a whole and construed according to well-known rules, a judgment is unambiguous, no room is left for interpretation, and it is the duty of the court to declare the effect thereof in light of the literal meaning of the language used. Id. Nevertheless, even if the language used in the judgment is ambiguous, it is a fundamental rule that the writing will be construed most strictly against the party who drafted it. Rep. Nat. Bank v. Northwest Nat. Bank, 578 S.W.2d 109 (Tex.1978); Smith v. McMillan, 352 S.W.2d 871 (Tex. Civ.App.-Houston 1961), aff'd, 363 S.W.2d 437 (Tex.1962). TEX.R.CIV.P. 305 states that "[c]ounsel of the party for whom a judgment is rendered shall prepare the form of the judgment to be entered and submit it to the court."
The relevant portion of the Dayton default judgment reads as follows:
The Court further finds and declares that as of December 1, 1981, the lots listed in the attached and incorporated Exhibit A were assets of the joint venture, that Defendants thereafter held those lots as constructive trustees for the benefit of Plaintiffs, and that the lots were later sold without the consent of Plaintiffs.
IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that Plaintiffs have and recover from Defendants Dayton Financial Corporation and Dayton Financial Corporation of Dallas, jointly and severally, the principal sum of $247,399.00, prejudgment interest of $61,043.16, attorney's fees of $67,500.00, accountant's fees of $35,350.00, and all court costs, with simple interest on all of those amounts at 10% per annum from the date of judgment until paid.
IT IS, FURTHER ORDERED, ADJUDGED AND DECREED that Defendants will be granted a credit against the attorneys' fee award as follows: (1) a $17,500.00 credit if there is no appeal to the Court of Appeals, (2) a $7,500.00 credit if there is an appeal to the Court of Appeals, but no application for writ of of [sic] error is made to the Supreme Court of Texas, or (3) a $4,500.00 credit if there is an appeal to the Court of Appeals and application for writ of error is made to the Supreme Court of Texas, but *724 the application for writ of error is not granted.
A judgment is something more than the findings of fact, it is the sentence of law pronounced by the court on the facts found. Speer v. Stover, 711 S.W.2d 730, 734 (Tex.App.-San Antonio 1986, no writ) (per curiam). The recitations preceding the decretal portion of the written instrument do not suffice to complete the rendition of the judgment. Chandler v. Reder, 635 S.W.2d 895, 897 (Tex.App.-Amarillo 1982, no writ) (opinion on reh'g). Although reasons and findings are proper inclusions in a judgment, the reasons given form no part of the judgment rendered. Id.
In the case at bar, the only reference to a constructive trust occurs prior to the decretal portion of the default judgment and is introduced by the words "further finds and declares." The decretal portion of the default judgment begins with, "IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that Plaintiffs have and recover from Defendants" and is followed by the breakdown of the money damages. In the context of the whole judgment the reference to the constructive trust appears to be a recitation of factual findings or reasons given by the court for its judgment.
The findings of fact and conclusions of law entered by the trial court in the Dayton case is consistent with the interpretation of the default judgment set forth above. Finding of fact number 38 states that the net value of the joint venture assets was $642,198. Conclusion of law number 8 states that appellants were entitled to one-third of the net assets, after their $50,000 initial investment was deducted. Subtracting $50,000 from $642,198 equals $592,198. This figure divided by three is $197,399.33. When appellants' $50,000 initial investment is added to this sum, the final figure is $247,399.33. Conclusion of law number 9 states, "Defendants are indebted to Glen J. Ellis and the trusts in the sum of $247,399.00." The default judgment in the case awarded appellants exactly that amount. The findings of fact and conclusions of law nowhere mention a constructive trust.
These findings of fact and conclusions of law reflect the trial court's decision to award appellants money damages equal to their one-third interest in the proceeds of the sale of the property. To the extent that the court found that a constructive trust existed, such finding is the justification for the court awarding appellants money damages. Moreover, if the language of the judgment appears to create a trust-like obligation on the parties, this obligation is discharged in the decretal portion of the judgment which awarded damages to appellees equivalent to one-third of the proceeds from those lots.
In light of our ruling that appellees did not receive a superior title by means of an alleged constructive trust contained in the Dayton default judgment, appellants' argument pertaining to notice of a constructive trust given by appellants' lis pendens is moot. Point of error two is overruled.
Under point of error three, appellants argue that the trial court erred in granting a summary judgment in favor of appellee Don Taylor. Appellants argue that Taylor's affidavit which states he never owned any interest in the lots is contrary to his original answer in which he plead not guilty. Appellants have waived this argument since they failed to raise it in the trial court. City of Houston, 589 S.W.2d 671; TEX.R.CIV.P. 166a(c).
Additionally, appellants claim Taylor's proof is insufficient to support a summary judgment because it was based on the testimony of two interested witnesses, Taylor's counsel and Taylor. Again appellants have waived this argument for failure to raise it at trial. City of Houston, 589 S.W.2d 671. Nevertheless, the affidavits are proper summary judgment evidence even though both are alleged interested witnesses, because the evidence is clear, positive, and direct, otherwise credible and could have been readily controverted. See TEX.R.CIV.P. 166a(c). Point of error three is overruled.
Appellants assert in their last point of error that summary judgment should not have been granted in favor of appellee *725 Sertex Properties because there was no summary judgment evidence presented by either party concerning Sertex Properties. However, appellants raised no arguments whatsoever in response to appellees' motion for summary judgment on behalf of appellee Sertex Properties. Therefore, appellants waived their argument with respect to Sertex Properties. See TEX.R. CIV.P. 166a(c) and (e). Point of error four is overruled.
The trial court's summary judgment is affirmed. All court costs are assessed against appellants.
FENDER, C.J., and HILL and KELTNER, JJ.
NOTES
[1] Appellants Glen J. Ellis and Lucille Thagard Ellis are the co-trustees of the Glen J. Ellis, Jr. Trust and the Thagard Ellis Trust.
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269 Md. 544 (1973)
307 A.2d 663
FLESTER ET AL.
v.
THE OHIO CASUALTY INSURANCE COMPANY
[No. 314, September Term, 1972.]
Court of Appeals of Maryland.
Decided July 27, 1973.
The cause was argued before MURPHY, C.J., and McWILLIAMS, SINGLEY, SMITH, DIGGES and LEVINE, JJ.
Charles C. Bowie, with whom were Brault, Scott & Brault on the brief, for appellants.
Francis L. Young, with whom were Brown & Young on the brief, for appellee.
LEVINE, J., delivered the opinion of the Court.
Whether appellant (Flester) was covered by automobile liability insurance for his 1956 Ford Thunderbird on May 10, 1970 is the ultimate question presented by this case. He appeals from a judgment of the Circuit Court for Prince George's County (McCullough, J.) declaring that such coverage was not provided by appellee (Ohio Casualty) for an accident occurring on that date.
In April 1969, Ohio Casualty issued to Flester a policy covering two automobiles, a 1962 Ford Fairlane and the Thunderbird. That policy was effective from April 21, 1969 to April 21, 1970. Having decided to relegate the Thunderbird to "classic car" status, Flester called his insurance agent (Marton) in August 1969 and requested that it be removed from the policy; and that it be replaced by a *546 1967 Mercury Cougar. This was accomplished by a written endorsement to the policy effective on August 7, 1969.[1]
On August 10, 1969 just three days after it had been added to the policy the Cougar was heavily damaged in an accident. As a consequence, Flester found it necessary to reactivate the Thunderbird. These developments were reported by Flester to Marton on August 11. On that same day, Marton mailed an accident report to the insurer, and also furnished a copy to Flester. The final sentence in that report states: "While the Cougar is being repaired, this agency is binding coverage on Mr. Flester's 56 Ford Hdtop [the Thunderbird] which was just removed from policy." (emphasis added). Marton says Flester informed him that he planned to have the Cougar repaired and returned to use. On that basis, Marton states, it was agreed that the agency "would temporarily bind coverage" on the "Thunderbird during the period of repairs on the '67 Cougar."
Flester's version concerning that part of the conversation differs slightly, as shown by the following excerpts from his testimony:
"Q What did you tell Mr. Marton as to that?
A He asked me if I thought the car would be repaired to that point. I told him then I didn't think so; that I thought the car was a total loss.
"Q And was there any conversation concerning the 1956 Thunderbird? A He said, yes, he said, I could drive that car and the company would bind coverage on it until the car was repaired or replaced.
* * *
"Q Did you notify the agency that your 1967 Mercury Cougar, which was involved in the *547 accident of August 1969, was repaired or not? A No, because it never was repaired.
* * *
"Q Did you tell Mr. Marton that it wasn't to be repaired or something along that line? A I don't ever recall telling them that it was not, no." (emphasis added).
Shortly after the accident was reported to Ohio Casualty, it paid to Flester the sum of $2115 as the fair market value of the Cougar immediately prior to the accident. He then elected to repurchase the car for its salvage value which was fixed at $170. As the cost of repairs would have exceeded the $2115, the car was declared a total loss.
Marton testified he learned from Flester in late August that he had decided to replace the Cougar rather than repair it. As he recalls, Flester had either located another 1967 Cougar or was searching about for one. Flester indicated that these arrangements would be completed within a week of that discussion. Nothing further transpired, however, and in October Marton puts it between the 9th and 15th the latter called Flester, who then led him to believe that he was still negotiating for another 1967 Cougar. The only remaining personal contact Marton had with Flester prior to the May 1970 accident was in December 1969. On that occasion, Marton visited the automobile parts establishment at which Flester was employed to make some purchases. Other than that the replacement had not yet been acquired, nothing further was said. Marton, in any event, is quite emphatic in stating that after Flester revealed his plan to replace rather than repair the Cougar, the binder was only intended to cover the Thunderbird for the period of time required to purchase another Cougar ten days to two weeks.
Flester says and this is borne out by Marton's records that at no time between August and the May 10, 1970 accident was he told by Marton or anyone on behalf of Ohio Casualty that the Thunderbird was not covered, or that the *548 binder was withdrawn. In October he received a premium notice which he paid.[2] He also recalls that they did have one more conversation subsequent to August, in which Flester said he was still looking for a Cougar, and Marton told him to report when he succeeded. On the other hand, Flester used the Thunderbird continuously through the remainder of 1969 and early 1970 until the second accident apparently without the knowledge of Marton or Ohio Casualty.
In early April of 1970, a renewal policy issued by Ohio Casualty effective for one year beginning April 21 was forwarded by Marton to Flester. That policy listed as the two insured vehicles the Ford Fairlane and the same Cougar which had been damaged. The Thunderbird was not mentioned. Flester says that he never examined that policy and, therefore, did not notice what cars were listed in the typewritten schedule. For that matter, neither did Marton. Flester says his sole concern was the premium which he promptly paid. This indifference on Flester's part was not unprecedented; he also testified that he had never read the accident report which specified that Marton was binding the Thunderbird while the Cougar was "being repaired."
On May 10, 1970, while Flester was operating the Thunderbird with one William D. Maske (Maske) riding as a passenger, it was involved in an accident. As a result, Maske sustained personal injuries and brought suit against Flester. Whether the latter was covered by Ohio Casualty for that claim, as we noted at the outset, is the ultimate question posed by this case. If the accident had no other positive consequences, it seems to have awakened Flester to the contents of his policy. Marton says that when Flester reported the accident on May 13, the latter also requested that the Thunderbird be added to the policy and that the Cougar be eliminated. Curiously enough, this was accomplished by a written endorsement dated May 18, effective on May 13.
*549 To further add to the strange sequence of events, on May 25, 1970 Ohio Casualty filed with the then Department of Motor Vehicles an SR-21 form signifying that it had insured the Thunderbird for the May 1970 accident. This action was rescinded sometime later by Ohio Casualty, which claimed that the form had been filed inadvertently. A fitting climax to this unusual chronology was Flester's purchase in June 1970 of another 1967 Cougar, which was then added by written endorsement to the existing policy.
At the conclusion of the trial, Judge McCullough declared that the Thunderbird was not covered by Ohio Casualty for the May 10, 1970 accident; and therefore it was neither required to defend the action brought by Maske against Flester, nor liable for any judgment which might be rendered in that suit. In doing so, he concluded that there was an oral binder issued by Ohio Casualty's agent with the intent to cover the Thunderbird while the Cougar was being repaired or until it was replaced; that the binder was effective until the issuance of the April 1970 policy, but not thereafter. We think Judge McCullough decided the case correctly, and we shall affirm the judgment.
In urging reversal, Flester contends: (1) That the trial judge erred in ruling that the oral binder did not cover the May 10, 1970 accident; and, in any event, (2) that the court should have reformed the April 1970 policy to conform with the oral binder.
(1)
Flester advances his initial contention in two parts. First, he argues that the parties entered into an oral contract on August 11, 1969 which was new and separate from any written policy, and had its own termination date; and that this contract was in effect on the day of the May 1970 accident. In short, he maintains that an oral contract of insurance was entered into which was to cover the Thunderbird until the damaged Cougar was replaced by another; and since this did not occur until June 1970, the oral contract was operative until the latter date. Hence, he argues, Ohio Casualty's action in denying coverage for the *550 Thunderbird amounted to a cancellation of insurance without the prior notice required by Maryland Code (1957, 1968 Repl. Vol.) Art. 48A, § 240A and Code (1957, 1967 Repl. Vol.) Art. 66 1/2, § 142, which were then in effect.
The second facet to his principal contention is that the court below erred in ruling that the policy issued in April 1970 "was the written policy contemplated by the oral binder"; and that the binder therefore merged into that written policy. In effect, he contends that since the written policy issued in April 1970 omitted any reference to the Thunderbird, it was not "the policy with respect to which [the binder] was given." Since, for this reason, there was no merger of the binder into the 1970 written policy, he claims that it survived issuance of the latter, and covered the accident.
We think that the two issues, as framed by Flester, overlap to some extent; and we shall consider them together as part of the larger question, i.e., whether the oral binder afforded coverage to Flester for the May 1970 accident. The parties and the trial judge seem to have been in agreement that the conversation of August 11, 1969, between Flester and Marton, resulted in a commitment on behalf of Ohio Casualty which, in the parlance of the insurance world, is called a binder. The term has been frequently defined by the authorities, and there is general accord over its meaning. In 44 C.J.S., Insurance, § 49, it is stated:
"The term `binder' has a well-known significance in the parlance of insurance contracts, and a binder or a binding slip is merely a written memorandum of the most important terms of a preliminary contract of insurance intended to give temporary protection pending the investigation of the risk of insurer, or until the issuance of a formal policy; a contract of insurance in praesenti, temporary in its nature, intended to take the place of an ordinary policy until one can be issued...." (emphasis added).
See 43 Am.Jur.2d, Insurance, § 216; 12 Appleman, *551 Insurance Law and Practice, § 7221 (1943); 1 Couch on Insurance 2d, § 14:26 (1959).
Binders have long been recognized in Maryland as a present temporary contract of insurance between the parties, Simpson v. Prudential Ins. Co., 227 Md. 393, 177 A.2d 417 (1962); Mutual Fire Insurance Co. of Montgomery County v. Goldstein, 119 Md. 83, 86 A. 35 (1912).[3] And, while often evidenced by a binding slip or memorandum, they may exist orally, Mutual Fire Insurance Co. of Montgomery County v. Goldstein, supra; Insurance Co. v. Ryland, 69 Md. 437, 16 A. 109 (1888); 1 Couch on Insurance 2d, § 14:32 (1959). These principles have been codified as Code (1957, 1972 Repl. Vol.) Art. 48A, § 379, which provides:
"Binders and temporary insurance.
"(a) Binders or other contracts for temporary insurance may be made orally or in writing, and shall be deemed to include all the usual terms of the policy as to which the binder was given together with such applicable endorsements as are designated in the binder, except as superseded by the clear and express terms of the binder.
"(b) No binder shall be valid beyond the issuance of the policy with respect to which it was given.
"(c) This section shall not apply to life or health insurances." (emphasis added).
While the definition of an insurance binder appears to be reasonably well settled, it is the unique factual situation presented here which tends to complicate the issues. What may be viewed as the ordinary use of a binder in the context of automobile insurance is described in 7 Am.Jur.2d, Automobile Insurance, § 3:
"Frequently, for the purpose of convenience or expediency so that the owner of an automobile may operate it before obtaining the formal policy of *552 insurance, an oral contract of insurance is entered into, or a binding slip, also called a `binder,' is issued, for the purpose of insuring the vehicle until the actual issuance and delivery of the policy to the insured. As in the case of other types of insurance, it is settled generally that such a contract is valid and binds the insurer until the issuance and delivery of the policy agreed upon." (emphasis added).
Clearly, what occurred in this case differs from the commonly-accepted situation outlined above. The underlying thrust of Flester's appeal is the contention that the parties on August 11, 1969 entered into a separate oral contract, not one which was to terminate upon the issuance of a written policy, but rather upon the replacement of a vehicle which was, itself, not covered by the oral agreement.
Although the factual situation here poses no problem concerning the commencement of coverage, since binders form a present contract of insurance, Simpson v. Prudential Ins. Co. and Mutual Fire Insurance Co. of Montgomery County v. Goldstein, both supra, and become effective immediately, 12 Appleman, Insurance Law and Practice, § 7221 (1943), ascertainment of the duration here is another matter.
By its very definition, a binder is intended to be temporary; and some states have even enacted statutes restricting the length of time during which a binder may remain in force, see Turner v. Worth Insurance Company, 106 Ariz. 132, 472 P.2d 1 (1970) (90 days); Foundation Reserve Insurance Co. v. Kennedy, 79 N.M. 382, 444 P.2d 293 (1968) (15 days); Citizens Casualty Co. of New York v. Hackett, 17 Utah 2d. 304, 410 P.2d 767 (1966) (150 days); Eastern Shore of Virginia Fire Ins. Co. v. Kellam, 159 Va. 93, 165 S.E. 637 (1932) (30 days); Rowell v. Georgia Casualty & Surety Co., 109 Ga. App. 631, 136 S.E.2d 917 (1964) (90 days). No such statutory period exists in Maryland; nor did the binder in question here specify a termination date. In such *553 situations elsewhere, the binder's coverage has been held to extend until issuance of the formal policy, Hurd v. Maine Mut. Fire Ins. Co., 139 Me. 103, 27 A.2d 918, 923 (1942); Reishus v. Implement Dealers Mutual Insurance Co., 118 N.W.2d 673 (N.D. 1962); Carew, Shaw & Bernasconi v. General Casualty Co., 189 Wash. 329, 65 P.2d 689 (1937), or until the passage of a reasonable time to investigate the risk and communicate a rejection to the applicant, Hurd v. Maine Mut. Fire Ins. Co. and Eastern Shore of Virginia Fire Ins. Co. v. Kellam, both supra; Epstein v. Great American Insurance Co., 54 Tenn. App. 447, 392 S.W.2d 331 (1965); 44 C.J.S., Insurance, § 230; 43 Am. Jur.2d, Insurance, § 218. In 9 Couch on Insurance 2d, § 39:207 (1962), it is stated:
"Since parol contracts of insurance usually cover the time necessarily elapsing between the placing of the insurance and the issuing of the policy, the duration is ordinarily for such period of time as is a reasonable one under the circumstances for the issuance of a formal policy. The preliminary or temporary contract is therefore effective until either superseded by a policy, when issued, or terminated by a rejection of the application, and notice thereof to the insured, or by the expiration of the time specified in the preliminary or temporary contract, or of a reasonable time, when none is specified." (emphasis added).
As we have stressed, the outcome of the August 11 discussion between Flester and Marton does not reflect the concept of a typical automobile insurance binder, i.e., temporary insurance designed to afford protection for a relatively brief time span. This period usually covers the interval between the application for the insurance and the issuance of a formal policy. It is in this context that binders are normally regarded as expiring "upon the issuance of the policy." While the agreement in this case may not fit into one of the conventional molds, it is no less a binder. The thread that runs through the various definitions of this term is the temporary coverage that is provided by the insurer.
*554 Here, the issuance of a new policy covering the Thunderbird was never intended; the binder was only given "with respect to" the policy already in existence. In other words, the binder was intended by the parties to be effective, as Judge McCullough said, during "a period of time when either the Cougar would have been replaced or repaired." With the passage of the relatively short time period intended for either eventuality, however, and without any word from Flester, the binder's existence terminated upon the expiration of the policy which it had temporarily modified. At that point, it was "superseded" by the formal policy issued on April 21, 1970. That Flester failed to note what automobiles were listed in that policy does not defeat its operativeness, and he is bound by its description of the insured vehicles, Bitting v. Home Ins. Co., 161 Md. 56, 64, 155 A. 329 (1931); Miller v. Home Ins. Co. of N.Y., 127 Md. 140, 147, 96 A. 267 (1915); Bakhaus v. Caledonian Ins. Co., 112 Md. 676, 695, 77 A. 310 (1910).
Under the view we adopt here, there could not have been an independent insurance contract covering the Thunderbird, to expire on some future date when the Cougar was ultimately replaced. That argument is contrary to the concept of temporary coverage inherent in the binder, and would, in effect, establish an oral policy of indefinite duration. As Judge McCullough so aptly observed, under this view "the binder goes on and on and on, it would, in effect, still be in force today."
There being no separate contract insuring the Thunderbird, the argument that there was a cancellation or refusal to renew, notice of which was required by either Art. 48A, § 240A or former Art. 66 1/2, § 142, is lacking in merit. There was no cancellation or refusal to renew on April 21, 1970. On the contrary, there was a renewal of the 1969 policy, with precisely those vehicles described as had been covered immediately before the temporary binder was given.
The conclusion that the binder covering the Thunderbird was merely a temporary modification of the policy issued in April 1969 is similarly dispositive of Flester's subsidiary contention: That the trial judge erred in holding that Ohio *555 Casualty's issuance of the policy in April 1970 effected a merger of the binder.
(2)
Flester insists that he should prevail, in any event, by a reformation of the insurance policy; that it may "conform with the oral contract," and thus reflect the intention of the parties.
In so contending, Flester assumes a formidable task, for reformation is not granted lightly. As Judge Prescott said for the Court in Moyer v. Title Guarantee Co., 227 Md. 499, 177 A.2d 714 (1962):
"The request for the reformation of a written instrument is one for unusual relief, and when granted, it differs from rescission, cancellation or annulment of the document. Unlike these, the instrument remains in force and effect, but in a modified, or changed form; hence, before granting the high remedy of reformation, the proof must not only establish that the written agreement was not the agreement intended by the parties, but also what was the agreement contemplated by them at the time it was executed.... Before performing the difficult and delicate task of reforming an agreement after the parties have solemnized it by reducing it to writing and executing the same, this Court has consistently required proof of the highest order. In Keedy v. Nally, 63 Md. 311, 316 [1885], Judge Alvey, for the Court, said that the plaintiff, `must not only show clearly and beyond doubt that there has been a mistake, but he must also be able to show with equal clearness and certainty the exact and precise form and import that the instrument ought to be made to assume, in order that it may express and effectuate what was really intended by the parties.'.. . Again in White v. Shaffer, 130 Md. 351, 360, 99 A. 66 [1917], it was stated: `"Not only must a mutual mistake be shown, *556 but the precise agreement which the parties intended but failed to express must be proven beyond a reasonable doubt. Second Nat'l Bank v. Wrightson, 63 Md. 81 [1885]; Bouldin [Boulden] v. Wood, 96 Md. 336 [332] (53 A. 911) [1903]. And the evidence required for this purpose must be of the strongest character and the proof must be convincing."' The Court, in Brockmeyer v. Norris, 177 Md. 466, 473, 10 A.2d 326 [1940], quoted, with approval, this passage from Pomeroy: `"Courts of equity do not grant the high remedy of reformation upon a probability, nor even upon a mere preponderance of evidence, but only upon a certainty of the error."' See also Hubble v. Somerville, 187 Md. 418, 422, 50 A.2d 565 [1947]; Urquhart v. Alexander, 218 Md. 405, 411, 147 A.2d 213 [1958]." 227 Md. at 504 (emphasis added).
More recently, we quoted Moyer with approval in Housing Equity Corp. v. Joyce, 265 Md. 570, 580-81, 290 A.2d 769 (1972).
From these and other authorities emerges the fundamental principle that although courts exercising equity powers may reform an instrument to conform it to the intention of the parties, Mattingly v. Houston, 235 Md. 54, 200 A.2d 160 (1964); Painter v. Delea, Att'y, 229 Md. 558, 184 A.2d 913 (1962), a written document will be reformed when and only when there is a mutual mistake of fact, or a mistake is made by one of the parties accompanied by fraud, duress or other inequitable conduct practiced on the person making the mistake by another party, Housing Equity Corp. v. Joyce; Mattingly v. Houston; Painter v. Delea, Att'y; Moyer v. Title Guarantee Co., all supra.
Since there is no claim of fraud, duress or other inequitable conduct made here, we consider only whether there was a mutual mistake between the parties that resulted in the April 1970 contract as written. "`In other words, it must be conclusively established that both parties understood the contract as it is alleged it ought to have been *557 expressed, and as in fact it was, but for the mistake alleged in reducing it to writing.'" Automobile Ins. Co. v. Shapiro, 151 Md. 383, 387, 135 A. 163 (1926) (emphasis added).
Exposed to the stringent requirements which must be met if the "high remedy of reformation" is to be granted, Flester's claim of mutual mistake simply does not withstand scrutiny. Even if we assume arguendo that he intended to have the Thunderbird covered by the April 1970 policy and the proof in this regard is tenuous at best there would be merely a unilateral mistake. The subsequent filing of the SR-21 form which was later withdrawn is hardly sufficient to establish that Ohio Casualty intended to cover the Thunderbird when it issued the policy. Nor is the heavy burden met by the evidence that the damaged Cougar was listed as an insured vehicle. Flester concedes that he had no contact with either Marton or Ohio Casualty after December. And, while Ohio Casualty was aware of the heavy damage sustained by the Cougar, it was never told whether that car had been disposed of, replaced or repaired. From such meager evidence, a mistaken omission of the Thunderbird cannot be found. In sum, the claim of mutual mistake, on which Flester rests his case for reformation, is unsupported by the high degree of proof required in such circumstances.
Upon this record, dominated as it is by a novel succession of events, Judge McCullough ruled correctly in declaring that the 1956 Ford Thunderbird was not covered in the accident by the insurance policy issued on April 21, 1970; and in refusing to reform that contract.
Judgment affirmed; appellants to pay costs.
NOTES
[1] Although we have referred to Marton, in the vernacular, as Flester's "insurance agent," it is undisputed that Marton's father, through whom the insurance here involved was placed, was at all times material to this case an agent of Ohio Casualty; and, as such, was authorized to sell insurance and give binders, oral or written, for automobile coverage.
[2] All premium notices directed to Flester, and paid by him, were for the automobiles described in applicable policies or written endorsements thereto.
[3] For a discussion of binders in general usage, see Note, Enforceability of Temporary Binders Issued by Life Insurance Companies, 22 Md. L. Rev. 230 (1962).
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63 N.J. 351 (1973)
307 A.2d 571
JOHN R. BUSIK, PLAINTIFF-RESPONDENT,
v.
JOSEPH M. LEVINE, DEFENDANT-APPELLANT. A-92 GILMA GIRALDO (BUSIK), PLAINTIFF-RESPONDENT,
v.
JOSEPH M. LEVINE, DEFENDANT-APPELLANT. DONALD F. FOLEY AND LILLIAN FOLEY, HUSBAND AND WIFE, PLAINTIFFS-RESPONDENTS,
v.
UNITED ENGINEERS & CONSTRUCTORS, INC. AND PUBLIC SERVICE ELECTRIC AND GAS CO., DEFENDANTS-APPELLANTS. A-93
The Supreme Court of New Jersey.
Argued February 20, 1973.
Decided July 6, 1973.
*355 Mr. Richard J. Carroll argued the cause for appellant Levine (Mr. Louis J. Pantages, of counsel; Messrs. Gleeson, Hansen and Pantages, attorneys).
Mr. Donald F. Stevens argued the cause for appellant United Engineers and Constructors, Inc. (Messrs. Beggans and Stevens, attorneys).
Mr. Dino D. Bliablias argued the cause for intervenor National Association of Independent Insurers (A-92) (Mr. Kenneth J. McGuire, on the brief; Messrs. Stein, Bliablias and Goldman, attorneys).
Mr. Robert S. Johnson argued the cause for respondent Giraldo (Busik) (Messrs. Johnson and Johnson, attorneys; Mr. Samuel Chiaravalli appeared for respondent John R. Busik).
Mr. Patrick D. Conaghan appeared for respondents Foley (Mr. Donald D. Campbell, on the brief).
The opinion of the Court was delivered by WEINTRAUB, C.J.
These cases involve the validity of R. 4:42-11(b), adopted on December 21, 1971 and effective on January 31, 1972, which authorizes prejudgment interest in tort actions. The accidents here involved occurred before the rule was adopted, but the cases came to trial after the effective date of the rule. Interest as provided in the rule was included in the judgments. We certified defendants' appeals before they were argued in the Appellate Division.
The principal charge is that prejudgment interest is a matter of "substantive" law and as such beyond the constitutional grant to the Supreme Court of the power to "make rules governing * * * the practice and procedure" in all courts, Art. VI, § 2, ¶ 3. Hence, it is argued, we trespassed upon the legislative domain in adopting the rule, in breach of the principle of separation of powers embodied in Art. *356 III, § 1, of the Constitution. The argument is supplemented with the proposition that defendants were thereby deprived of the opportunity to be heard required by due process of law.
The rule was upheld in Riley v. Savary, 120 N.J. Super. 331 (Law Div. 1972), but that case did not come to us for review.
I
Although it is said with respect to interest on claims that "in this country interest is generally of statutory origin," Consolidated Police and Firemen's Pension Fund Commission v. City of Passaic, 23 N.J. 645, 653 (1957), the contrary is true in our State. The Legislature has dealt with usury; that is, it has fixed the upper limit of the interest for which an ordinary loan may be made, see N.J.S.A. 31:1-1, but there is no statute dealing with interest upon other obligations or claims or with interest upon judgments. The controlling rules have always been and remain judge-made. See Jersey City v. O'Callaghan, 41 N.J.L. 349, 353-354 (E. & A. 1879); Verree v. Hughes, 11 N.J.L. 91, 92 (Sup. Ct. 1829); Erie Railway Co. v. Ackerson, 33 N.J.L. 33, 36 (Sup. Ct. 1868); Simon v. New Jersey Asphalt and Paving Co., 123 N.J.L. 232, 234 (Sup. Ct. 1939); Cohrs v. Igoe Brothers, Inc., 71 N.J. Super. 435, 448 (App. Div. 1962).
And, briefly, these are the rules which the courts of this State developed: As to interest upon judgments, the practice permitted collection at the "legal" rate, that is, at the rate permitted to be contracted under the usury statute to which we have referred. With respect to prejudgment interest, our courts of law assessed interest, if the demand was liquidated, at the same "legal" rate on the assumption that the creditor could have earned such interest if his obligor had paid him what was due, see Jersey City v. O'Callaghan, supra, 41 N.J.L. at 354, but declined to allow interest on claims that were unliquidated. The justice of that limitation has *357 been questioned, as we will develop in a moment. Our courts of equity allowed or withheld interest or fixed the rate as justice dictated. See Small v. Schuncke, 42 N.J. 407, 415-416 (1964); Agnew Co. v. Paterson Board of Education, 83 N.J. Eq. 49, 67-70 (Ch. 1914), affirmed o.b., 83 N.J. Eq. 336 (E. & A. 1914); Jardine Estates, Inc. v. Donna Brooks Corp., 42 N.J. Super. 332, 340-341 (App. Div. 1956); Dial Press, Inc. v. Phillips, 23 N.J. Super. 543, 551-552 (App. Div. 1952), certif. denied, 12 N.J. 248 (1953); McGlynn v. Schultz, 90 N.J. Super. 505, 529-530 (Ch. Div. 1966), affirmed, 95 N.J. Super. 412 (App. Div. 1967), certif. denied, 50 N.J. 409 (1967); Brown v. Home Development Co., 129 N.J. Eq. 172, 178 (Ch. 1941).
In this setting we adopted R. 4:42-11 which reads:
"Interest: Rate on Judgments; in Tort Actions.
(a) Rate. Judgments, awards and orders for the payment of money and taxed costs shall bear interest at 6% per annum from the date of entry, except as otherwise ordered by the court.
(b) Tort Actions. In tort actions, including products liability actions, the court shall include in the judgment interest at 6% per annum on the amount of the award from the date of the institution of the action or from a date 6 months after the date of the tort, whichever is later. The contingent fee of an attorney shall not be computed on the interest so included in the judgment."
It will be noted that paragraph (a) deals with interest upon judgments. We dealt in that rule with post-judgment interest because the Legislature had amended the usury statute, N.J.S.A. 31:1-1, to permit the rate upon ordinary loans to go as high as 8% if the Commissioner of Banking and Insurance so provides. By adopting paragraph (a), we advised the bar and the clerks of the courts that judgments would continue to carry interest at the rate of 6%, in accordance with our prior practice. That paragraph has not drawn fire, although the constitutional challenges addressed to paragraph (b) would be no less appropriate if they have substance. We could have waited until some litigant raised the issue, but we thought it good sense and good administration *358 to inform all concerned through the vehicle of a rule incorporated in our rules of civil practice. As we have said, our doing so has not excited criticism. It is subparagraph (b), relating to prejudgment interest, which is attacked.
We repeat there is no conflict with any statute; there is no statute on the subject. Nor can it be doubted that the Court has the power and the continuing responsibility to change these judge-made rules of law as justice may require. In short, had the proposition in paragraph (b) been announced in a case of A against B, there could be no claim that the Court lacked the power or in any way transgressed upon the area constitutionally allotted to the Legislature. Thus it is not our power to act that is questioned; it is the method we chose to exercise that power.
But if we erred in adopting that method (we will demonstrate in Point II below that we did not), this litigation would not end. For plaintiffs here are entitled to ask for the same result which the challenged rule provides. They cannot be denied their due merely because we mistakenly expressed our view in a rule of court. The underlying issue is thus before us. The merits have been argued fully, and the litigants thus afforded a hearing. Nothing new, however, emerged. This is not surprising, for the subject is not new, and was fully explored at a public hearing before we adopted the rule.
We turn then to the merits. Interest is not punitive, Wilentz v. Hendrickson, 135 N.J. Eq. 244, 255-256 (E. & A. 1944); here it is compensatory, to indemnify the claimant for the loss of what the moneys due him would presumably have earned if payment had not been delayed. We mentioned earlier the judge-made limitation that interest should not be allowed if the claim was unliquidated. That limitation apparently rested upon the view that a defendant should not be deemed in default when the amount of his liability has not been adjudged. But interest is payable on a liquidated claim when liability itself is denied, even in good faith, Kamens v. Fortugno, 108 N.J. Super. 544, 552-553 (Ch. *359 Div. 1970). The fact remains that in both situations the defendant has had the use, and the plaintiff has not, of moneys which the judgment finds was the damage plaintiff suffered. This is true whether the contested liability is for a liquidated or for an unliquidated sum. For that reason, the concept of a "liquidated" sum has often been strained to find a basis for an award of interest.
It is said there is now, in general, a willingness to allow interest on unliquidated claims as justice may dictate. 22 Am. Jur.2d, Damages, § 181, pp. 259-260. In upholding the retrospective application of a New York statute providing for interest in contract actions upon unliquidated damages, the United States Supreme Court observed that "The statutory allowance is for the purpose of securing a more adequate compensation by adding an amount commonly viewed as a reasonable measure of the loss sustained through delay in payment," and that "It has been recognized that a distinction, in this respect, simply as between cases of liquidated and unliquidated damages, is not a sound one." Funkhouser v. J.B. Preston Co., 290 U.S. 163, 168, 54 S. Ct. 134, 136, 78 L.Ed. 243, 246 (1933).
So also, a refusal to allow interest in tort matters has been criticized. See Moore-McCormack Lines v. Amirault, 202 F.2d 893 (1 Cir.1953). It is questioned whether justice is thereby done as between parties to the suit. But beyond their interest, there is also a public stake in the controversy, for tort litigation is a major demand upon the judicial system. Delay in the disposition of those cases has an impact upon other litigants who wait for their turn, and upon the taxpayers who support the system. And here there is a special inducement for delay, since generally the claims are covered by liability insurance, and when payment is delayed, the carrier receives income from a portion of the premiums on hand set aside as a reserve for pending claims. See In re Insurance Rating Board, 55 N.J. 19 (1969). Hence prejudgment interest will hopefully induce prompt defense consideration of settlement possibilities. In that *360 meaningful way, prejudgment interest bears directly upon the judicial machinery and the problems of judicial management. It is this facet, added to the consideration of justice between the litigants, which warrants our holding that prejudgment interest be payable in these matters.
The proposition we thus accept is not uniquely ours. There are a number of States which so provide by statute. See Colorado: Rev Stats. 1963, Ann., § 41-2-1; Louisiana: LSA-R.S. 13:4203; Michigan: Stat. § 27A.6013, M.C.L.A. § 600.6013, New Hampshire: RSA § 524:1-b (Supp.); New York: CLPR § 5001(a) (damages to property); North Dakota: § 32-03-05; Oklahoma: 12 Okla. St. Ann. § 27(2); Rhode Island: Gen. Laws, § 9-21-10. We add, parenthetically, that it is of no moment that there the principle was established by the Legislature. As we have already noted, the subject of interest on claims rests wholly in case law in our State, and, assuming as we do for the moment that the issue is one of substantive law, the power and responsibility of the judiciary to deal with the subject in the absence of a statute cannot be questioned.
We see no strength in the assertion that the allowance of interest duplicates some element of damage or constitutes a payment with respect to damages not yet experienced. The jury is not instructed to add interest to its verdict in tort cases. In any event an instruction to the jury can obviate the risk. And with respect to the criticism that a verdict may embrace losses not yet suffered, the answer is that a verdict necessarily anticipates future experience, and the interest factor simply covers the value of the award for the period during which the defendants had the use of the moneys to which plaintiffs are found to be entitled. We think the equities are met when the date for the commencement of liability for interest is fixed as set forth in paragraph (b) of R. 4:42-11 (the rule here under attack).
The question arises whether our holding that prejudgment interest be paid should be imposed retrospectively. We see no reason not to apply the usual rule that judge-made *361 law is retrospective. Under our holding plaintiffs merely receive what in justice is their due, and defendants are required to turn over a gain they received at the plaintiffs' expense. We note that where liability for prejudgment interest was established by statute, the statutes were held to be "remedial" and hence applicable to actions brought before the statute's effective date, and this notwithstanding the usual rule that statutes operate prospectively. Pepin v. Beaulieu, 102 N.H. 84, 151 A.2d 230 (Sup. Ct. 1959); Foster v. Quigley, 94 R.I. 217, 179 A.2d 494 (Sup. Ct. 1962); Kastal v. Hickory House, Inc., 95 R.I. 366, 187 A.2d 262 (Sup. Ct. 1963); Ballog v. Knight Newspapers, Inc., 381 Mich. 527, 164 N.W.2d 19 (Sup. Ct. 1969); see also Wilcoxon v. Sun Oil Co., 49 Misc.2d 589, 267 N.Y.S.2d 956 (Sup. Ct. 1966).
Finally we add that we see no merit in the proposition advanced by the intervenor, that the usual insurance policy, which provides for payment of interest upon a judgment, does not cover prejudgment interest and therefore we should not impose such liability. It is enough to say the carrier's obligation to pay the judgment plainly includes the obligation to pay the constituent elements of damage incorporated in that judgment, among which, of course, is the item of prejudgment interest.
II
For the reasons given in "I" above, the question whether this Court exceeded its power when it adopted R. 4:42-11(b) is academic. The underlying merits have been reached and decided. Nonetheless we will state why we believe the adoption of the rule was consonant with proper judicial performance.
A
Defendants point out that the rule-making power granted the Supreme Court in Art. VI, § 2, ¶ 3, relates to *362 "practice and procedure," and from this grant defendants would infer that this constitutional provision inferentially dictates the mode whereby the Supreme Court may make "substantive" law. But the constitutional provision is what it purports to be a grant of power with respect to "practice and procedure." It does not purport to deal with substantive law or to prescribe a format for the discharge of the Court's responsibility as to that topic. Limitations of course do exist, but they arise, not from the cited secton of the Constitution, but from the nature of the judicial process and of the Court's responsibility.
Nor, for that matter, is the constitutional grant of power with respect to "practice and procedure" a mandate that that subject may be dealt with only in a rule-making process. Many matters of practice and procedure repose in case law. Sometimes the procedures established in a judicial opinion will later be embodied in a formal rule of practice and procedure.[1] Commonly they are not.[2] Or a formal rule may expressly call for a case-by-case exposition, as for example, R. 4:4-4(i) relating to service of process which expressly leaves the outer reaches of substituted service to "due process of law." Indeed the most valued rights upon which life, liberty, and property depend are "procedural" and are embedded in the Constitutions of the United States and of this State. Although those rights are procedural, the courts have not chosen to particularize those rights by way of a rule-making process. Cases are legion which expound their *363 meaning and the consequences of infringement. And, finally, a matter of practice may be prescribed in an administrative directive.[3]
The constitutional grant of rule-making power as to practice and procedure is simply a grant of power; it would be a mistake to find in that grant restrictions upon judicial techniques for the exercise of that power, and a still larger mistake to suppose that the grant of that power impliedly deprives the judiciary of flexibility in the area called "substantive" law.
B
"Substantive" law of course is regularly established in cases brought before the Court. But there is no constitutional mandate that a court may not go beyond what is necessary to decide a case at hand. Whether an issue will be dealt with narrowly or expansively calls for a judge's evaluation of many things, including the need for guidance for the bar or agencies of government or the general public. To that end, the Court may express doubts upon existing doctrines, thereby inviting litigation, or may itself raise an issue *364 it thinks should be resolved in the public interest, or may deliberately decide issues which need not be decided when it believes that course is warranted. So a court may decide an issue even though the litigation has become moot, again in the public interest. John F. Kennedy Memorial Hospital v. Heston, 58 N.J. 576, 579 (1971); Board of Education, East Brunswick Tp. v. East Brunswick, 48 N.J. 94, 109 (1966); Delaware River and Bay Auth. v. International Org., etc., 45 N.J. 138, 142 (1965); Cooke v. Tramburg, 43 N.J. 514, 516 n. 1 (1964); State v. Perricone, 37 N.J. 463, 469 (1962), cert. denied, 371 U.S. 890, 83 S.Ct. 189, 9 L.Ed.2d 124 (1962).
Defendants refer to the statement in Winberry v. Salisbury, 5 N.J. 240, 248 (1950), cert. denied, 340 U.S. 877, 71 S. Ct. 123, 95 L.Ed. 638 (1950), that "While the courts necessarily make new substantive law through the decision of specific cases coming before them, they are not to make substantive law wholesale through the exercise of the rule-making power" (emphasis ours). There can be no quarrel with that proposition, but one might note in passing that Winberry is a classic example of a deliberate decision upon a far-reaching issue, involving the respective powers of the Supreme Court and the Legislature, which no doubt could have been avoided but which the majority believed should be decided then in the public interest.
C
And finally, it is simplistic to assume that all law is divided neatly between "substance" and "procedure." A rule of procedure may have an impact upon the substantive result and be no less a rule of procedure on that account. Speaking of the proposition that a court may not promulgate rules governing substantive law in the exercise of their rule-making power, Professors Levin and Amsterdam agreed that "rational separation is well-nigh impossible." "Legislative Control over Judicial Rule-making: A Problem in Constitutional *365 Revision," 107 U. Pa. L. Rev. 1, 14-15 (1958). See also State v. Otis Elevator Co., 12 N.J. 1, 24 (1953) (Jacobs, J. dissenting). As said in Hanna v. Plumer, 380 U.S. 460, 471, 85 S. Ct. 1136, 1144, 14 L.Ed.2d 8, 16-17 (1965), "The line between `substance' and `procedure' shifts as the legal context changes. `Each implies different variables depending upon the particular problem for which it is used.'" One context is conflict of laws; another is retrospective application of statutes; and a third is law-making, the subject at hand.
As to conflict of laws, the traditional approach was to decide whether the issue was "substantive" or "procedural," the law of the forum to be applied if the matter was "procedural." The Restatement (2d) of Conflict of Laws (1971), comment b to § 122, p. 352, correctly discards that approach and goes directly to the question whether the law of the forum should be applied with respect to each particular subject.[4] As to a conflicts issue, the forum would prefer to apply rules with which it is familiar, thus to avoid the inherent margin of error when the forum tries to decide what *366 another jurisdiction would likely do. On the other hand, if the ultimate result is permitted to turn upon the forum selected, there are the evils and injustices of forum-shopping.
When the context is retrospective application of a statute, the values involved are different, for then the target is whether some right or liability is so "vested" as to make it unjust to change the rules. Morin v. Becker, 6 N.J. 457, 464-471 (1951); Pennsylvania Greyhound Lines, Inc. v. Rosenthal, 14 N.J. 372, 380-388 (1954). In Rosenthal, in which the Joint Tortfeasors Contribution Law was applied to a payment made after the statute was enacted but upon a judgment which antedated that law, it was aptly said (p. 382):
* * * It was pointed out by Lehman, C.J., that "changes of form are often closely bound up with changes of the substance," and "nice distinctions are often necessary," but in the end "it is in considerations of good sense and justice that the solution must be found."
And, finally, in the context of rule-making, other factors may come into play. The Court may be spurred by the needs of the judicial system measured, not only by the private interests of all litigants, but also by the interest of the public. Or the Court, mindful of the problem of exclusivity and its impact upon the delicate relations among the co-equal branches of government, may be reluctant to move or to go as far as it would if the Legislature retained the power to disagree.
To illustrate, what is the statute of limitations? For conflict of laws purposes, it is usually said to be "procedural," meaning that the law of the forum will be applied, Marshall v. Geo. M. Brewster & Sons, Inc., 37 N.J. 176, 179-182 (1962); see Restatement (2d) of Conflict of Laws (1971) § 142, although even there the just course may be to apply the law of another State if the parties were there throughout its period of limitations and the suit was brought after that *367 period had run.[5] In the context of retrospective application of a statute, there may be no substantial reason to refuse to apply a change in a period of limitations retrospectively so long as a barred cause of action is not thereby revived or an existing cause of action is not thereby barred without a fair opportunity to sue. But when we turn to the third context, whether the statute of limitations is within the Court's rule-making power, the considerations may well be different. We need but say that thus far it has not been suggested that this subject matter is "procedural" within the meaning of our constitutional provision. On the other hand, time for appeal, which much resembles a statute of limitation, may confidently be said to come within the Court's rule-making power. R. 2:4.
What is "evidence"? It arguably is "procedural," "substantive" or a hybrid. It smacks of "procedure" insofar as it controls what may enter the mix, but it is quite "substantive" as an ingredient of the end product, the judgment. Some rules of evidence, particularly those relating to privileges, may themselves be thought to generate rights or values of a "substantive" cast. In the context of conflict of laws, evidence generally would be for the forum. Restatement (2d) of Conflict of Laws (1971) § 138 adopts that view, with, however, certain exceptions. In the context of retrospective application of a statute, it would likely again be "procedural" in most respects. But the third context, the respective powers of the legislative and judicial branches, brings other values into view.
We participated in a process whereby a code of evidence was adopted "wholesale," to use a word in the quotation above from Winberry. The rules of evidence were adopted cooperatively by the three branches of government under the *368 Evidence Act, 1960 (L. 1960, c. 52; N.J.S.A. 2A:84A-1, et seq.) after the Supreme Court and the Legislature conducted their separate studies. Under the statutory arrangement, some of the rules, notably those embodying privileges, were fixed in the statute itself while other rules, prepared by the Court after consideration at a Judicial Conference, were filed with the Legislature to become effective unless disapproved by a joint resolution signed by the Governor. Thus we did not pursue to a deadlock the question whether "evidence" was "procedural" and therefore, according to the Winberry dictum, the sole province of the Supreme Court. Nor were we deterred by the spectre of the criticism that, if "evidence" is "substantive," it was unseemly or worse for the Court to participate in the "wholesale" promulgation of substantive law. The single question was whether it made sense thus to provide for the administration of justice, and the answer being clear, we went ahead.[6] We add that the United States Supreme Court, which does not have a constitutional grant of rule-making power as to practice and procedure, is pursuing a similar project in cooperation with the Congress. 18 U.S.C.A. §§ 3402, 3771, 3772 (1964); 28 U.S.C.A. §§ 2072, 2075 (1958).
D
What then is "interest"? As we have said, it is compensatory as to the parties and represents "damages" for delay in payment. "Damages" constitute a "remedy." And "remedy" promptly connotes "procedure." 1 Am. Jur.2d, Actions, § 6, p. 546. But in the context of conflict of laws, the majority view is that "damages" go to the substance, i.e., that it would disserve the values involved to apply the *369 law of the forum rather than the law of the place of the wrong.[7] 22 Am. Jur.2d, Damages, § 3, pp. 15-16. The Restatement (2d) of Conflict of Laws (1971), §§ 145 and 171, espouses that view. Prejudgment interest may be deemed to be part of the damages occasioned by the initial wrong, although one might say that such interest is a remedy for a second wrong, i.e., the delay in payment. Upon the latter view the situs of that wrong might arguably be the forum. The Restatement (2d) of Conflict of Laws (1971), § 171, comment c, would apply to prejudgment interest the same rule applicable with respect to the basic damages to determine "whether the plaintiff can recover interest and, if so, at what rate for a period prior to the rendition of judgment as part of the damages for a tort."
Upon that approach, the statutes providing for prejudgment interest would not be applied to a foreign cause of action. This is the view usually taken. See Sylvania Electric Products v. Barker, 228 F.2d 842, 850-851 (1 Cir.1956), cert. denied, 350 U.S. 988, 76 S. Ct. 475, 100 L.Ed. 854 (1956); Moore-McCormack Lines v. Amirault, supra, 202 F.2d at 896-897; Ryan v. Ford Motor Co., 334 F. Supp. 674 (E.D. Mich. 1971); New Amsterdam Casualty Co. v. Soileau, 167 F.2d 767 (5 Cir.1948), cert. denied, 335 U.S. 822, 69 S. Ct. 45, 93 L.Ed. 376 (1948); Williams v. Petroleum Helicopters, Inc., 234 So.2d 522 (La. Ct. App. 1970), cert. denied, 256 La. 371, 236 So.2d 501 (Sup. Ct. 1970); but see Glick v. White Motor Co., 458 F.2d 1287, 1293 n. 13A (3 Cir.1972). But when the context is the retrospective application of such a statute, the statute is generally deemed to be "remedial" and "procedural" and hence to apply to a preexisting cause of action not yet reduced to *370 judgment.[8] We have already referred to decisions so holding and repeat the citations for the convenience of the reader.[9]Pepin v. Beaulieu, 102 N.H. 84, 151 A.2d 230 (Sup. Ct. 1959); Foster v. Quigley, 94 R.I. 217, 179 A.2d 494 (Sup. Ct. 1962); Kastal v. Hickory House, Inc., 95 R.I. 366, 187 A. 2d 262 (Sup. Ct. 1963); Ballog v. Knight Newspapers, Inc., 381 Mich. 527, 164 N.W.2d 19 (Sup. Ct. 1969); see also Wilcoxon v. Sun Oil Co., 49 Misc.2d 589, 267 N.Y.S.2d 956 (Sup. Ct. 1966). We refer again to Funkhouser v. J.B. Preston Co., supra, 290 U.S. 163, 54 S. Ct. 134, 78 L.Ed. 243, in which it was held that a statute imposing interest upon unliquidated damages in contract matters could constitutionally be applied to a preexisting transaction. The Court said (290 U.S. at 167, 54 S.Ct. at 135, 78 L.Ed. at 245-246):
* * * The contractual obligation of appellants was to take and pay for the described articles, and the law, in force when the contract was made, required that in case of breach appellants should make good the loss sustained by the appellee. The ascertainment of that loss, and of what would constitute full compensation, was a matter of procedure within the range of due process in the enforcement of the contract. (Emphasis added.)
With respect to our immediate context the making of rules of law it may be noted that the New York statute *371 involved in Funkhouser, the case just cited, was a section of the Civil Practice Act of New York, thus evidencing a legislative evaluation that the subject was "procedural." So also, in five of the eight States which provide by statute for prejudgment interest in tort matters (p. 360 of this opinion), the statutes are included among laws dealing with procedure. One State (North Dakota) places the statute under "Judicial Remedies," while another (Colorado) includes it under "Damages" in the substantive law portion of the laws.
In the light of the foregoing it surely cannot be said to have been palpably inappropriate to think of prejudgment interest as a matter of procedure in the context of law-making. The question was of general concern, affecting many thousands of pending tort actions. The issue could have been raised in any of those cases, at the instance of the litigant or on the court's own motion. Had the issue been raised that way, all litigants would have been bound by the result notwithstanding that they were not heard upon the merits. One of the consequences of the stubborn myth that courts do not make law is the continuing failure to develop a technique whereby all may be heard who are interested in a legal proposition and might contribute to an informed decision. In this respect the rule-making approach is clearly superior. Here all interests were heard at a public meeting. Surely the litigants themselves lost nothing in that process. And when there is added the signal fact that the rule, while serving the cause of justice as between litigants, has the equally important objective of expediting the disposition of cases, thereby to advance the welfare of all litigants and the welfare of the taxpayers who must support the system, we have no doubt of the propriety of the course we followed. The rule concerns the practice and procedure in the courts in any view of that subject notwithstanding that the rule has also a "substantive" impact upon the dollar result. It made sense to invoke the rule-making process in such circumstances. It was a responsible exercise of our responsibility.
*372 In Crudup v. Marrero, 57 N.J. 353 (1971), there was involved still another rule which, although having a dollar impact upon the litigants, was nonetheless beamed toward the effective management of the judicial system. The rule, R. 4:58-1, et seq., deals with offers of judgment and provides for interest and counsel fees on the basis of the relationship between the verdict and a pretrial offer of settlement. The issue in the case was whether the rule applied to the Unsatisfied Claim and Judgment Fund. In holding that it did, we said (p. 361):
At any rate, the factors described above stimulated adoption of the Offer of Judgment rules with which we are now concerned. It is a remedial measure in operation on a test basis and designed to produce early out-of-court settlements. As already pointed out, the broad language does not exclude any negligence or unliquidated damage case from their operation. The Unsatisfied Claim and Judgment Fund has a very substantial number of such cases in the trial lists throughout the State. Every time it tries a case that could and fairly should be settled without trial, disposition of other pending actions, some of which must be tried, is delayed. Accordingly, in our judgment, in the ordinary situation the Fund must be regarded as subject to the Offer of Judgment rules. "Interest" to the extent that it may be imposed under those rules is within the Fund's statutory authorization to pay interest. But even if the statute contained no such authority, the grant of interest under the rules is well within the inherent powers of this Court. The same is true with respect to the grant of counsel fees up to $750. As a procedural sanction they are likewise within our broad constitutional power, and as such they are within the statutory provision for costs. Compare Red Devil Tools v. Tip Top Brush Co., Inc., 50 N.J. 563, 576 (1967); Vargas v. A.H. Bull Steamship Co., 25 N.J. 293, 296 (1957), cert. den. 255 U.S. 958, 78 S.Ct. 545, 2 L.Ed.2d 534 (1958).
This quotation refers to "costs" and "counsel fees." Quite obviously both have a dollar impact upon litigants. Yet "costs" are characterized as "essentially procedural," John S. Westervelt's Sons v. Regency, Inc., 3 N.J. 472, 479 (1950), even though statutes still deal with the subject (see N.J.S.A. 22A:2-2, 3, 9, 10 and 11). And as to "counsel fees," which no less than "interest" or "costs," have a "substantive" dollar impact, the subject has been consistently *373 held to be one of practice and procedure within the constitutional grant of power to the Supreme Court and is governed by R. 4:42-9. John S. Westervelt's Sons v. Regency, Inc., supra, 3 N.J. at 479; Liberty Title & Trust Co. v. Plews, 6 N.J. 28, 44 (1950); Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 495 (1952), cert. denied, 344 U.S. 838, 73 S. Ct. 25, 97 L.Ed. 652 (1952); State v. Otis Elevator Co., 12 N.J. 1, 5 (1953); see Alcoa Edgewater No. 1 Fed. Credit Union v. Carroll, 44 N.J. 442 (1965), and Red Devil Tools v. Tip Top Brush Co., Inc., 50 N.J. 563, 576 (1967).
It is insisted we cannot uphold the rule for prejudgment interest without also deciding whether the rule comes within the Winberry dictum that the Court's authority as to practice and procedure is exclusive. We see no need to meet that issue. The sole question is whether the Court may treat the subject by a rule rather than by a judicial decision despite the substantive aspect of the subject. The issue of exclusivity involves a touchy matter, the relations among the three branches of government. It will be time enough to talk about exclusivity when there is an impasse and no way around it.[10] A coordinate branch should not invite a test of strength by proclamation. Our form of government works best when all branches avoid staking out the boundaries which separate their powers.
III
The final question is whether the rule denies equal protection because it is limited to tort actions.
*374 We see no serious issue. To begin with, tort actions are a distinctive class of litigation having a special impact upon the administration of the judicial system in terms of volume. They are distinctive too insofar as overall there is insurance coverage permitting carriers to invest for gain portions of the premiums allocated to the reserve for pending claims. Further, problems of this kind may be met in stages or on the basis of intensity. Hence it is no solid objection that a rule, whether announced in a judicial opinion or in a rule of court, does not go as far as it might. See New Jersey Chapter, American Institute of Planners v. New Jersey State Board of Professional Planners, 48 N.J. 581, 601-603 (1967), appeal dismissed, 389 U.S. 8, 88 S. Ct. 70, 19 L.Ed.2d 8 (1967). Finally the adoption of the rule does not foreclose holders of other unliquidated claims from contending the circumstances which attend their scene are so like the circumstances here involved that interest should also be allowed to them.
The judgments are affirmed. Mr. Justice Jacobs and Mr. Justice Proctor join in this opinion.
HALL, J. (concurring in result).
The matter of interest on claims before judgment and on judgments is one of those gray areas, like rules of evidence, which has both procedural and substantive aspects. Whether such areas should be called procedural or substantive for purposes of the exercise of this court's rule-making power may well turn more on history and tradition, as between the legislative and judicial branches in the particular field, than on pedantic legal analysis. The Legislature of this state has never acted generally in the area of pre-judgment and post-judgment interest and the matter has historically been left to the judiciary. My view is that, especially in the light of this history, the subject matter of R. 4:42-11 has sufficient procedural aspects justifying the court's adoption of it in the first instance.
It seems to me, however, that it would be more appropriate in the future for rules proposed by the court in these overlapping *375 areas to be worked out in advance cooperatively between the three branches of government, as was done so successfully in the case of the evidence rules. The court would still retain exclusive power in those fields in which there can be no reasonable contention that substantive law is predominantly involved, as well as, of course, in the areas of administration of the courts and admission to and regulation of the bar. The Legislature, by L. 1970, c. 258, N.J.S.A. 2A:84A-39.1 to -39.6, has provided an adaptable mechanism for this process by creating a permanent legislative commission called the State Rules of Court Review Commission[1] "to study and review * * * any rule of court in effect, or proposed, which the commission considers may call for legislative action to aid in the achievement of the intended purpose, or the solution of a problem, by means of amendatory, supplemental, revisory or new legislation." N.J.S.A. 2A:84A-39.3. Indeed, in the light of the substantive aspects of R. 4:42-11, the Commission might well review and consider it with the court, with the view to making a recommendation to the Legislature thereon. In this particular situation I would defer to ultimate legislative action. In the meantime, the rule should stand.
The other opinions filed herein consider also the power of this court to make substantive law by rule. In the view I have expressed, I do not reach this question beyond saying that, regardless of any right of the court to change the common law by various mechanisms, I presently believe it at least inappropriate and unwise to do so by general rule outside of the framework of a particular case before us. For example, the Legislature has recently adopted comparative negligence, L. 1973, c. 146. (This statute contains procedural as well as substantive features, but it is predominantly substantive.) *376 I am convinced it would not have been fitting for the court to have enacted the principle by rule, although it might properly have done so in deciding an appeal.
I would affirm the judgments under review on the basis expresed above.
Justice Sullivan joins in this opinion.
CONFORD, P.J.A.D., Temporarily Assigned, dissenting.
I would modify the judgments in these cases to strike the items of prejudgment interest for the following reasons:
1. R. 4:42-11(b), providing for prejudgment interest in tort cases, is predominantly of a substantive nature, not within the category of practice and procedure governable by rules to be promulgated by this Court under Article VI, Section II, paragraph 3 of the 1947 Constitution.
2. This appeal is not an appropriate vehicle for the Court to employ to adopt the substance of the cited rule in the purported exercise of the court's power to change the common law by the adjudicative process.
3. If it were appropriate for the court to consider adoption of a rule of the general nature of R. 4:42-11(b) in the course of this appeal, I would oppose its adoption, primarily because the rule is mandatory, and I believe any such rule should be permissive and discretionary with the trial court.[1]
I.
This Court's rule-making power is declared by the Constitution as follows:
*377 The Supreme Court shall make rules governing the administration of all courts in the State and, subject to law, the practice and procedure in all such courts. * * *. (Art. VI, § II, par. 3)
On the face of that language the grant of general rule-making power to the court extends only to practice and procedure. If, therefore, a rule ordaining that the recovery of a tort judgment shall be attended by allowance of interest on the award of damages antecedent to the date of the judgment is not within the common acceptance of the term "practice and procedure", the Court was without authority to promulgate it.
The general antonym of practice and procedure is substantive law. In Winberry v. Salisbury, 5 N.J. 240, 247-248 (1950), this court defined the latter term in the present context as that law "which defines our rights and duties", as distinguished from "pleading and practice, through which such rights and duties are enforced in the courts". By considered dictum, the court declared that the phrase, "subject to law," in the constitutional text did not mean that the Legislature could override rules of practice and procedure adopted by the court but rather that it meant that the rule-making power "must not invade the field of the substantive law as such". (Id. at 248). It was observed that, "[w]hile the courts necessarily make new substantive law through the decision of specific cases coming before them, they are not to make substantive law wholesale through the exercise of the rule-making power." Ibid.[2]
*378 These observations are not of mere historical interest in the present framework. As the opinion of the plurality shows, the boundaries between practice and procedure and substantive law are often hazy and the categories are not always easily compartmentalized. But the Constitution contemplates that such boundaries shall be recognized and given heed every time the court promulgates a rule purporting to regulate practice and procedure. They surely must be staked out if a rule is subjected to constitutional challenge, as here. While I am of the view that the instant subject matter prejudgment interest on a tort award is in the area of damages and therefore on principle clearly assimilable to the field of substantive right rather than procedure, the plurality, while holding to the contrary, at least confesses its doubts on the subject: "* * * it surely cannot be said to have been palpably inappropriate to think of prejudgment interest as a matter of procedure in the context of law-making." (Emphasis added.) If there is any doubt, the court in my view should take into consideration in resolving it the constitutional consequences in terms of Winberry. Those consequences are that in making a considered determination, on express challenge of the point, as here, that an already adopted rule is in the procedural field, the court is also automatically perforce of Winberry staking out the subject matter as exclusively its own and off-limits to the other branches of government. In that light, it would seem to me unthinkable that the rule should be considered procedural, as I cannot *379 conceive any justification under our democratic system for a view that the legislative branch of the government would ever be powerless to ordain whether or to what extent prejudgment interest should be added to a tort (or, for that matter, contract) award. That recent legislatures have not regarded the subject as beyond their purview is clearly evidenced by N.J.S.A. 59:9-2, subd. a. See note 1, supra.
The plurality opinion purports not to be making such a determination of exclusivity of jurisdiction in the Court, describing the issue as a "touchy matter." But the determination of court exclusivity as to practice rules has already been made for this State in Winberry and George Siegler Co. v. Norton, supra; there has been no evidence to indicate that the Court contemplates an overturning of Winberry in the foreseeable future, indeed to the contrary; and the general public and the other branches of government are entitled to view Part II of this decision and Winberry, taken together, as constituting a doctrine that legislating prejudgment interest is the exclusive preserve of the Court. That prospect, it seems to me, is rife with the portent of general misgivings, better avoided as against the alternative of later adjudicative adoption of the principle, if still deemed desirable, rather than by rule-making, so that the Legislature can assuredly have the last word on it.[3]
In the light of the foregoing, the fact noted in the plurality opinion that a few cases have held prejudgment interest "remedial" in the sense that, where a rule therefor has been legally adopted, it has not been thought unfair to apply it *380 to actions begun before adoption, should bear little weight in deciding whether such an interest rule is procedural rather than substantive for purposes of a principle of state constitutional dimension requiring it to be categorized as one or the other. More consonant with the policy considerations mentioned above inherent in the Judicial Article and its interpretation in Winberry concerning such a choice is the line of authority cited in the plurality opinion for the principle that damages (including interest) is substantive in relation to rules of choice of law. So, too, is the precept that interest is substantive for purposes of application of state rather than federal law in diversity cases. See 36 C.J.S. "Federal Courts" § 189(8), p. 496 (1960); New Amsterdam Casualty Co. v. Soileau, 167 F.2d 767, 771-772 (5 Cir.1948), cert. den. 335 U.S. 822, 69 S. Ct. 45, 93 L.Ed. 376 (1948). The measure as well as the right of recovery would clearly appear to the litigants to pertain to the substance of their rights or privileges. Even prior to the recent example of legislative initiative on prejudgment interest contained in the New Jersey Tort Claims Act (see note 1 supra), our own decisions had strongly suggested the traditional control by the legislature over interest. See Consolidated Police, &c., Pension Fund Commn. v. Passaic, 23 N.J. 645, 651-652, 653 (1957). Thus court and legislature have conjointly regarded the subject as basically substantive.
It is of course evident that even aside from Winberry the court does not under the Constitution have power to promulgate rules other than for practice, procedure and administration of the courts. But the subsistence of Winberry argues for judicial moderation in selecting subject matter for rule-making, with an eye toward avoiding areas heavily laden with such substantive aspects, deeply interlaced with pervasive public policy, as are presented by the subject here of concern.
For all the reasons stated I would strike R. 4:42-11(b) as beyond the constitutional rule-making power of the Court.
*381 II
I pass to consideration of Part I of the plurality opinion, which, as I understand it, concludes that assuming arguendo that the rule in question is substantive and therefore should not have been promulgated as a rule of court, the court should nevertheless appraise its merit in the court's judicial capacity, which extends to alteration of substantive law. I do not know the extent, if any, to which the resolution of the plurality to take that course may be influenced by its alternative decision, expressed in Part II of the opinion, that the rule is sufficiently procedural to have justified its promulgation as a rule of court. For my part, having concluded the rule should be stricken, I would abstain in this case from consideration of its merits as a modification of the common law to avoid even a remote inference by the parties or the public that the result is basically a ratification of the improperly adopted rule. I would await such fresh case, if any, in which the desirability of the general principle might be advanced as an incident to the prosecution of the litigation, as contrasted with these cases, where the issue basically presented to the trial courts was the validity vel non of the promulgation of the specific rule.
This may seem like marching the soldiers up the hill and marching them down again without doing battle, but the philosophical implications of the matter go further. If the course here taken is acceptable, then the fundamental principle that courts cannot make substantive law "wholesale" by rule-making (Winberry, supra, 5 N.J. at 248) is susceptible of erosion since, in the case of any like future challenge to a court rule as substantive, the court might employ the instant decision as a precedent and, as here, adopt the substance of the rule "judicially", thereby effectively albeit unintentionally circumventing the constitutional proscription.
The distinction between law-making by a court as a quasi-legislature (rule-making) and law-making by a court in the *382 course of adjudication of causes between parties is fundamental to Anglo-American political science and to our Judicial Article. It should not be lightly elided. Our Constitution implicitly accepts the course of change in the common law through the judicial process. Such change is not, however, an avowed objective of that process but rather the incidental residue of the decisions of concrete controversies between litigants, as cogently developed in the dissenting opinion of Justice Mountain. The prime business of the court on an appeal, in my view, is to decide the case rather than to formulate or change the law. The court's consideration whether doing justice in the particular and like cases requires a change in the old or the formulation of new substantive doctrine, see State v. Culver, 23 N.J. 495, 505 (1957), is ordinarily subjected to the crucible of opposing argument by a specific litigant whose purse is affected by the proposed change. This factor, in addition to the judicial sense that long-range public acceptance of judge-made changes in the law is largely dependent on the gradualness of such changes, cf. Falcone v. Middlesex Co. Medical Soc., 34 N.J. 582, 596 (1961) (per Jacobs, J.), is, I believe, integral to the survival of law-making through the adjudicative process in our political system.
Judicial law-making by promulgation of rules of court, on the other hand, is purposeful and avowed policy-making in gross, not essentially distinguishable in nature from the functioning of the elected legislative body. It is highly useful and appropriate in relation to practice and procedure in the courts. It is unacceptable and repugnant to our institutions in the substantive area. The relative efficiency or inefficiency of law-making by rule promulgation as compared with adjudication, discussed in the plurality opinion, is, I think, quite irrelevant to the underlying constitutional and political questions implicated.
These considerations would impel me to build a prophylactic wall between the necessary adjudication herein that R. 4:42-11(b) is invalid rule-making and the unnecessary embarkation *383 in this particular appeal on the inquiry whether we should "judicially" adopt the substance of the rule. I would refrain from the latter.
III
Were it necessary to decide whether the substance of the rule should be embraced judicially by the Court as a matter of substantive law, I would conclude in the negative, at least as to the rule as drawn.[4] The primary objection to it is its mandatory nature. There would be no serious objection to the principle of prejudgment interest if its application were subject to the discretion of the trial court in the particular case, as continues to be the rule on interest in equity and in relation to unliquidated damages in contract cases. See Small v. Schuncke, 42 N.J. 407, 415-416 (1964); Consolidated Police, &c., Pension Fund Commn. v. Passaic, supra, 23 N.J. at 655. The justice of making the defendant pay the claimant for the use of the money declared due during the pendency of the action is as pertinent to the contract or equitable obligor as to the tort obligor. Yet the sanction of interest remains discretionary in the former instances. And for good reason! Experience teaches that in many situations the winner of a money award is nevertheless denied costs by the court because of equities the other way. Why disarm the trial judge of discretion to deny, or to allow only partial prejudgment interest in tort cases when a comparable balance of equities points in that direction?
As one of numerous illustrations which might be afforded, there might be intervening appeals between institution of action and final judgment, inordinately protracting the interest-payment period under the rule, yet where the occasion for the appeal was not attributable to acts of the defendant but to those of the trial court of the plaintiff. Defendant may even *384 have prevailed on such appeals. Must interest be nevertheless inexorably awarded the plaintiff for the entirety of the intervening period before final judgment without the tempering discretion of the judge? Or suppose the defendant tenders at the outset a settlement offer which the plaintiff unreasonably refuses. Under the rule as framed this is irrelevant to the accrual of the interest. Cf. R. 4:58-3.
The main rationale advanced for the rule is that it merely transfers to the plaintiff interest which defendant or his insurer was drawing on money which theoretically was due the plaintiff the moment the tort took place or the action instituted. But not all tort defendants are insured; many are insured for substantially less than the trial award; and many, who are not insured at all or are insufficiently insured, may be relatively impecunious. Torts encompass not only automobile and product liability cases, but defamation, malicious prosecution, interference with economic opportunity, household negligence and miscellaneous other causes of action where insurance may well be non-existent, spotty or inadequate, and where defenses may be advanced in good faith. In such instances the defendant may not have actually earned interest on the award during the intervening period, or on the total amount of the award, and allowance of prejudgment interest on the whole award could well operate oppressively or unfairly. Surely discretion should be reposed in the trial court in all cases to control the matter.
It is difficult to resist the impression that the impelling motivation for adoption of the rule was clearance of trial dockets in automobile and kindred insured-tort situations by imposing coercive pressure on insurance companies to settle cases early. But beyond the observation above that others than insurers may be penalized by the rule, it does not seem fair to assume, as does the rule, that only defendants or their insurers are responsible for unreasonable failures of litigants to arrive at pretrial settlements. The rule may well operate to encourage unreasonable recalcitrance on the part of some plaintiffs. It is a blunderbuss which strikes its objects indiscriminately *385 and without necessary regard to the justice of its effect in particular cases. In my view it does not, as drawn, subserve justice or promote the interests of calendar control in a justifiable manner. It is, moreover, potentially inconsistent with the policy of R. 4:58-3 (settlement offer of party not a claimant).
MOUNTAIN, J., dissenting.
I find myself unable to agree with the result reached by the majority and with certain of the views expressed in the plurality opinion. I shall address myself first to the conclusion of the majority that the matter of prejudgment interest is properly the subject of the exercise by this Court of its rule making power.
R. 4:42-11(b)[1] provides that in tort actions there shall be included in the judgment, interest at 6% per annum on the amount of the award from the date of the commencement of the suit or from a date 6 months after the date of the tort, whichever is later. The majority concludes that this represents a proper exercise of this Court's rule-making power. I, on the other hand, am convinced that it transcends this power, and should not be allowed to stand as an ongoing rule of court.
The source of this Court's power to promulgate rules of court appears in our Constitution.[2]
The Supreme Court shall make rules governing the administration of all courts in the State and, subject to law, the practice and procedure in all such courts. [N.J. Const. Art. VI, § 2, par. 3]
*386 The power is carefully confined to the areas of judicial administration and of practice and procedure in the several courts of the State. It goes no further. Substantive law, or anything touching substantive law, is clearly excluded. That the exclusion is not explicitly stated is quite understandable. It simply did not occur to the draftsmen of the Constitution that a claim would ever be made that the Supreme Court could, by its own rule, effect a change in the substantive law.[3]
Our constitutional grant of rule-making power was definitively interpreted in Winberry v. Salisbury, 5 N.J. 240, (1950), cert. den. 340 U.S. 877, 71 S.Ct. 123, 95 L.Ed. 638 (1950). This Court there held that the words, "subject to law," were to be interpreted as referring to "substantive law as distinguished from pleading and practice," 5 N.J. at 247, and that as so interpreted "the rule-making power of *387 the Supreme Court is not subject to overriding legislation, but is confined to practice, procedure and administration as such." 5 N.J. at 255. The decision left this Court as the final arbiter with respect to matters of practice and procedure. A rule of court as to any such matter would prevail over a legislative enactment. George Siegler Co. v. Norton, 8 N.J. 374 (1952). But it was carefully pointed out, and certainly well understood, that this judicial pre-eminence was confined to matters of practice, procedure and judicial administration. Legislative supremacy in the field of substantive law stood unchallenged. "[T]hey [the courts] are not to make substantive law wholesale through the exercise of the rule-making power." Winberry v. Salisbury, supra, 5 N.J. at p. 248. Winberry was one of the most important and certainly one of the most widely discussed decisions that this Court has ever handed down. It was not, at the time, universally accepted. See Note, The Rule-Making Power: Subject to Law? 5 Rutgers L. Rev. 376 (1951). It was criticized academically. Kaplan and Greene, The Legislature's Relation to Judicial Rule-Making: An Appraisal of Winberry v. Salisbury, 65 Harv. L. Rev. 234 (1951). It was equally strongly defended. Pound, Procedure Under Rules of Court in New Jersey, supra, 66 Harv. L. Rev. 28 (1952). My own view of the matter is that Winberry has stood the State in good stead. It has permitted the judiciary to develop rules of practice and procedure that are as uniform as possible among the various courts and so flexible as not to impede the reaching of a just result in any particular case, rules that facilitate judicial administration in the interest of litigants and the public generally and that are being constantly scrutinized and readily changed to meet the demands of altered conditions or unforeseen problems. It is no criticism of the Legislature to express a doubt that so much could have been done there. But I can find nothing in Winberry to justify what the Court has done here. On the contrary, as I shall endeavor to set forth, the lines of demarcation between *388 what is proper for this Court to do and what should be solely matter of legislative concern have been ignored and to a considerable extent obliterated. We have trespassed upon the field of substantive law in a purported exercise of the rule-making power and that, at least in my view, we have no right to do.
That the imposition of prejudgment interest is a rule of substantive law seems entirely clear. It effects a change in the law of damages and this is a field of substantive and not procedural law. More importantly, the law of damages forms part of the law of remedies. The award of damages is the remedy most commonly applied in courts of law. Equity affords a greater variety of remedies rescission, reformation, specific performance, injunction, to name but a few. Surely the body of rules with respect to these and other like remedial devices is substantive law. To illustrate the difference between substance and procedure as applied to a particular remedy, Dean Pound observed in his article in defense of Winberry,
Cases in which injunctions may be granted are a matter of substantive law. The details of procedure in seeking, granting and dissolving them are within the province of the courts. [66 Harv. L. Rev. at 46]
Our Legislature has forbidden courts to issue injunctions in cases involving labor disputes. N.J.S.A. 2A:15-51, et seq. Yet this legislative check upon the free use of the remedy by way of injunction has not called forth any challenge that it usurps this Court's power to deal with matters of procedure. And it is highly unlikely that it will. So with the other remedies mentioned. When and under what circumstances they are to be applied is matter of substantive law. Professor Lynch, in a recent article that is germane to the issue before us, has said.
No one would seriously argue that the power to surcharge for a specific sum or the power to enjoin is a matter of practice and procedure. *389 The surcharge and injunction are devices to accomplish the ends of justice. They are specific remedies. [Lynch, The New Jersey Supreme Court and the Counsel Fees Rule: Procedure or Substance and Remedy? 4 Seton Hall L. Rev. 19, 34 (1972)]
A remedy by way of surcharge is essentially the same as a remedy by the award of damages. And the imposition of prejudgment interest directly affects the amount of a plaintiff's award. Clearly the rule has changed substantive law.
Or the point may be approached differently. It is said in many cases that laws which fix duties, establish rights and create liabilities are substantive in character, while those which merely prescribe the manner in which rights may be exercised and liabilities enforced in a court are procedural. The rule we are considering certainly creates a new liability. Viewed in this light as well, it is substantive in nature.
At the threshold of any consideration of the proper exercise by the judiciary of its rule-making power is the need to determine the appropriate philosophical viewpoint which should characterize such an exercise. As the plurality opinion very correctly states, there is often no clear line between what is substantive and what procedural. When faced with such a problem, what should be the posture of the courts? They should, in my opinion, defer to the legislature if the matter under consideration can in any clear way be deemed to affect substantive law. There should be a studied deference to what I believe to be a legislative supremacy in all such matters. While I recognize that strict "compartmentalization of power along triadic lines"[4] can probably be achieved only by the political theorist in an exposition of the doctrine of the separation of powers, yet it does remain clear that, while courts share in the work of defining the nature of substantive rights and liabilities when law is determined in the exercise of the adjudicatory process, such definition not only lies at the very heart of the legislative process, but is an area of governance where the legislature clearly has the last word.
*390 Courts in other states seem to have been consistently conscious and in some instances perhaps overly conscious of the importance of maintaining and protecting legislative supremacy in the field of substantive law against any improper intrusion by judicial exercise of the rule-making power. Thus the Supreme Court of Florida deferred to legislation as superseding a conflicting rule of court in the matter of the form of procedure on appeal from an agency to a court, State v. Furen, supra, and the Appellate Court of Indiana adopted the view that a statute enumerating the grounds for a new trial took precedence over a rule of court upon the same subject; the court said, "[t]he prescribing of these grounds does not involve a matter of procedure, and no court by decision or rule can modify this statute." Farmers Mutuals Insurance Co. v. Wolfe, 142 Ind. App. 206, 233 N.E.2d 690, 692 (1968). While these holdings may seem unduly restrictive of the rule-making power and would presumably not be followed in New Jersey, they do nonetheless evince a deference to the importance of legislation which merits recognition. Perhaps more significant to the present issue is the case of State v. Michael, 2 Md. App. 750, 237 A.2d 782 (Ct. of Spec. App. Md. 1968). It was there suggested that limitations on actions might be altered by the judicial rule-making process. The court vigorously rejected the proposal, saying that
... the grant of rule making power to the Court of Appeals of Maryland by Section 18A of Article IV of the Maryland Constitution is for the purpose of regulating "practice and procedure." We know of no authority that a statute of limitations comes within such a grant. [237 A.2d at 785]
Although the statute of limitations, as the plurality opinion points out, is sometimes considered procedural, notably for conflict of laws purposes, it has so many substantive features that the decisive position taken by the Maryland court seems eminently correct. Finally, in State v. Bull, 249 A.2d 881 (Me. 1969) the Supreme Judicial Court of Maine was *391 called upon to resolve an apparent conflict between a rule of court and a statute touching the proper form of an indictment. While finding that the rule prevailed, the court was nevertheless moved to say,
The defendant argues that the Supreme Judicial Court in promulgating rules of criminal procedure has no authority to alter or change substantive criminal law. We hasten to agree that the rule-making power is so limited. [249 A.2d at 884]
A frank recognition of legislative supremacy in the field of substantive law, taken together with the limitations upon our rule-making power that are fixed by the Constitution and carefully explicated in Winberry should induce this Court to refrain from any exercise of judicial rule-making that may clearly affect substantive law.
This brings me to a further important ground upon which I disagree with the views which here prevail. Throughout much of Part II of the plurality opinion is woven the thread of argument that because the prejudgment interest rule could be adopted in any case coming before the Court where the issue was raised or could be identified, it therefore follows that it may be the subject matter of a rule of court. This argument, I most respectfully submit, inextricably confuses two entirely disparate processes stemming from two quite separate and distinct grants of power.
The rule-making power limited as it is to matters touching the administration of the courts and to those of practice and procedure is, in its exercise, very akin to the legislative process. In the formulation of a rule of court, ideally and often actually, experts are consulted, committees study the proposal and submit reports, and various views are sought at Judicial Conferences as well as elsewhere. Finally the rule is adopted. Experience may dictate later revision. In any event the end product is a rule which will apply with undifferentiated force to any of an indefinite number of situations that may later be found to fall within its ambit. The power to undertake this non-adjudicative process *392 of rule-making stems from Article VI, § II, par. 3 of the Constitution, which is set forth above.
The rendering of an advisory opinion is a form of non-adjudicative judicial lawmaking akin in many respects to the promulgation of a rule. Consider the following critical factors that have been suggested as characterizing the advisory opinion, each of which in greater or less degree is also relevant in the consideration of the process in which a court engages in the formulation of a rule, especially were it to trench upon substantive law.
(a) The sheer multiplication of matters to which attention must be directed, and the resulting dispersion of thought, when a legal proposition is being formulated in the abstract;
* * * * * * * *
(c) The importance, in the judicial development of law, of a concrete set of facts as an aid to the accurate formulation of the legal issue to be decided the weight, in other words, which should be given to the maxim, ex facto ius oritur;
(d) The importance of an adversary presentation of evidence as an aid to the accurate determination of the facts out of which the legal issue arises;
(e) The importance of an adversary presentation of argument in the formulation and decision of the legal issue;
(f) The importance of a concrete set of facts in limiting the scope of the legal determination and as an aid to its accurate interpretation;
(g) The diminished scope for the play of personal convictions or preferences with respect to public policy when decision is focused upon a definite legal issue derived from a concrete set of facts;
(h) The value of having courts function as organs of the sober second thought of the community appraising action already taken, rather than as advisers at the front line of governmental action at the stage of initial decision;
(i) The importance of all the factors enumerated in maximizing the acceptability of decisions, and the importance of acceptable decisions. [Hart and Wechsler, The Federal Courts and The Federal System (2nd ed. 1973) 67.]
Attention is drawn to these factors, indicative of handicaps under which courts labor when they seek to propound rules of law other than in the course of the adjudicative process, not so much to demonstrate that the handicaps exist although this fact is not irrelevant as to demonstrate the *393 truly real and significant differences in the processes that are followed in the exercise of the two quite disparate types of judicial law-making.
How strikingly different from the process of rule making is the adjudicative process.[5] Here a concrete set of facts is presented to the court by identified litigants. In this specific context the issue is precisely delineated. The varied effects of competing rules of law upon the litigants before the court bcome apparent. Evidence and argument are presented through the adversary system. Precedents are studied as to soundness and pertinence. A rule of law emerging from such a context carries with it the evidences of its birth, an especially important consideration when its applicability vel non to a different set of facts is later before a court for decision. The power to undertake this process of law making in the course of adjudicating actual cases stems from Article VI, § 1, par. 1 of the Constitution, which reads as follows:
The judicial power shall be vested in a Supreme Court, a Superior Court, County Courts and inferior courts of limited jurisdiction. The inferior courts and their jurisdiction may from time to time be established, altered or abolished by law.
It is this allocation of judicial power to the courts, including the Supreme Court, that carries with it the power to make new law in the exercise of the adjudicatory process. The development of new law in this latter fashion is an attribute and function of the judicial power.
Thus this Court has been endowed by the Constitution with two separate and entirely distinct powers through the exercise of each of which law may be made. The course and method to be pursued in the exercise of one power are entirely *394 different from those called into play by the exercise of the other. There is no room for merger or overlap; the two powers, and the manner of their separate exercise, are discrete and distinct.
A further point deserves comment with respect to judicial law making in the course of deciding cases. It is elementary but perhaps worth repeating that here the power of courts to change the law is confined to those areas uncontrolled by legislative enactment. If the legislature has spoken, and the statute is neither unconstitutional nor impermissibly vague, the only function of the court is to interpret the enactment and give it effect. A judge-made law, so reached in the course of adjudication, may in turn be rejected by the legislature; so, too, a judicial interpretation of a statute which the legislature finds unsatisfactory can be altered by an amendatory enactment making clear the legislative intent which the court has failed to perceive. In short, judge-made law, adopted in the course of adjudicating controversies, is at all times subject to legislative supervision and change. The legislature clearly has the last word.
But this is not so as to rules properly promulgated pursuant to the rule-making power of the Supreme Court. As to such rules in this State the Court has the last word.[6] Since this power is properly confined to practice and procedure, it must be assumed that before promulgating a rule the Court has reached a decision that it is moving in the field of adjective law. But if mistakenly, as I believe here to have been the case, the Court should exercise its rule-making power to in fact affect substantive law, it would appear that by so doing it has removed from the reach of our Legislature a matter which is its rightful concern. It needs little imagination to envision the conflicts between coordinate *395 branches of government which thus portend. Surely this Court should be deeply and sincerely solicitous to avoid any such unseemly confrontation.
For the reasons stated I believe the adoption of the rule of court we are considering to have exceeded the constitutional powers of this Court and accordingly would direct that it be expunged.
I now address myself to Part I of the majority opinion where the Court takes up the issue of prejudgment interest as a matter of adjudication in this case. Perhaps not surprisingly it chooses to adopt a rule exactly the same as the rule previously promulgated. This reveals, I think, the fatuity of adopting a rule as to prejudgment interest in the context of these cases. The only rule as to prejudgment interest that was considered by counsel or the Court was the rule already adopted and here under attack. No alternatives to the existing rule were even suggested. What in effect has been done is to ratify and confirm as law a rule which improvidently came to life in an exercise of rule-making. This awkward and artificial judicial technique has nothing, in my opinion, to recommend it. We should have examined all phases of the problem rather than consider only the rule laid before us. For instance, is not the better rule that which pertains in equity, that the matter of the imposition of interest be left to the sound discretion of the trial judge in each case? I tend at the moment to think it is. Should the rule also apply to unliquidated contract claims? Can it fairly and justly be applied to all tort claims, as for instance, those for defamation? These and other questions should have been posed and answered before we altered the law in this important respect. I am not in favor of adopting any rule at all with respect to prejudgment interest upon the record before us and in the adjudication of this case.
Both as to the conclusions reached in Part I and Part II of the plurality opinion I respectfully dissent and vote to *396 strike the interest components from each of the judgments entered below and to direct that R. 4:42-11(b) be expunged from our rules of court.
HALL and SULLIVAN, JJ., concur in result.
For affirmance Chief Justice WEINTRAUB and Justices JACOBS, PROCTOR, HALL and SULLIVAN 5.
For reversal Justice MOUNTAIN and Judge CONFORD 2.
NOTES
[1] For example, the procedure outlineed in New Jersey Dept. of Health v. Roselle, 34 N.J. 331 (1961), for the handling of contempt matters was thereafter incorporated in the formal rule, R. 1:10. In State v. Abbott, 36 N.J. 63, 77-78 (1961), we dealt with the problem of offers of proof in criminal matters and thereafter incorporated the suggested practice in R. 1:7-3.
[2] For example, in State v. Guido, 40 N.J. 191, 199-200 (1963), we suggested a procedure to deal with the problem of the recalcitrant witness.
[3] In State v. Pontery, 19 N.J. 457, 468 (1955), it was said by way of dictum that the prosecutor could not effectively waive the death penalty and thus take that issue out of the case. That proposition affected procedure, and quite obviously "substance" too in terms of the impact upon the individual. We prepared an administrative memorandum, In re Waiver of Death Penalty, 45 N.J. 501 (1965), which we directed to be published both in the New Jersey Law Journal and in the official New Jersey Reports for "the information of the bench, the bar and the public," in which we said (p. 502):
Since it is not likely that the Supreme Court will have occasion in a litigated case to express itself on the subject, the Supreme Court, after careful consideration of the matter, has concluded that in the public interest and in the interest of the fair and expeditious administration of criminal justice it should advise all judges by means of this administrative memorandum that it does not subscribe to the dictum in the Pontery case.
We thought that step was sensible and within the obligation and authority of the judiciary.
[4] The comment reads:
Substance procedure dichotomy. The courts have traditionally approached issues falling within the scope of the rule of this Section by determining whether the particular issue was `procedural' and therefore to be decided in accordance with the forum's local law rule, or `substantive' and therefore to be decided by reference to the otherwise applicable law. These characterizations, while harmless in themselves, have led some courts into unthinking adherence to precedents that have classified a given issue as `procedural' or `substantive', regardless of what purposes were involved in the earlier classifications. Thus, for example, a decision classifying burden of proof as `procedural' for local law purposes, such as in determining the constitutionality of a statute that retroactively shifted the burden, might mistakenly be held controlling on the question whether burden of proof is `procedural' for choice-of-law purposes. To avoid encouraging errors of that sort, the rules stated in this Chapter do not attempt to classify issues as `procedural' or `substantive'. Instead they face directly the question whether the forum's rule should be applied.
[5] "Borrowing" statutes, adopted in some States, establish the exception just suggested to the rule of the forum. We have just reached the same conclusion as a matter of decisional law in Heavner v. Uniroyal, Inc., 63 N.J. 130 (1973).
[6] The agenda at the Judicial Conference held on May 24-25, 1973 included the subjects of polygraph and voiceprint. We thought it appropriate to gather whatever information we could, without deciding the format of such action, if any, which we may take.
[7] But the answer may be otherwise when the foreign event concerns only citizens of the forum or citizens of States other than the State of injury. See Pfau v. Trent Aluminum Co., 55 N.J. 511, 523-524 (1970).
[8] Our prejudgment interest rule is thus retrospective. See "Notice to the Bar," 95 N.J.L.J. 349 (April 13, 1972); American Metal Co. v. Fluid Chemical Co., 121 N.J. Super. 177, 183 (Law Div. 1972).
[9] A somewhat parallel case is Jersey City v. O'Callaghan, supra, 41 N.J.L. 349. The suit was for the refund of an illegal assessment. At the time of the wrong the usury statute provided for 7% interest but the rate was later lowered to 6%. The Court of Errors and Appeals accepted the proposition that a reduction in the usury rate would not affect an express agreement to pay the higher rate, but held that, since in the absence of such an agreement interest was a matter of damages, the measure should reflect the statutory change. Hence interest was allowed at 7% to the effective date of the statutory amendment and at 6% thereafter.
[10] In some instances our rules expressly accept statutory provisions relating to the same subject matters. See R. 4:27-2; R. 4:42-8(a); R. 4:52-7; R. 4:59-1; R. 4:83-1. After the adoption of the prejudgment interest rule here involved, the Legislature enacted the New Jersey Tort Claims Act, N.J.S.A. 59:1-1, et seq., which provides in N.J.S.A. 59:9-2a that "No interest shall accrue prior to the entry of judgment against a public entity or public employee." We have approved an amendment to our rule of Court which will except that situation.
[1] My understanding is that this Commission is not presently operative by reason of the failure to appoint half of its members, which can and should be promptly rectified.
[1] Since the argument of the appeal the court has amended R. 4:42-11(b), effective September 10, 1973, to render it consistent with the New Jersey Tort Claims Act, L. 1972, c. 45, which became effective July 1, 1972. That act provides that "No interest shall accrue prior to the entry of judgment against a public entity or public employee." N.J.S.A. 59:9-2a. The merits of the rule as thus amended have not been argued on the appeal, and I take no position on it, not having been assigned to the Court when the amendment was adopted.
[2] Many objective students of the subject have thought that the majority in Winberry misread the actual intent of the 1947 Constitutional Convention and its Committee on the Judiciary in declaring the rule-making power of the court not subject to overriding or original action by the Legislature in relation to practice and procedure. See Kaplan & Greene, "The Legislature's Relation to Judicial Rule-Making: An Appraisal of Winberry v. Salisbury", 65 Harv. L. Rev. 234 (1951); and the concurring opinion of Justice Case (5 N.J. at 255). But see Pound, "Procedure under Rules of Court in New Jersey", 66 Harv. L. Rev. 28 (1952). However, the dictum in Winberry was transmuted into virtual holding in George Siegler Co. v. Norton, 8 N.J. 374, 381-382 (1952), and the Court has never since retreated from the position of exclusivity in the Court over practice and procedure. See also State v. Otis Elevator Co., 12 N.J. 1, 12 (1953); Sattelberger v. Telep, 14 N.J. 353, 369-370 (1954); State v. Haines, 18 N.J. 550, 556-557 (1955). I therefore think that view must be posited as correct for purposes of this case. Were the court's jurisdiction over practice and procedure not exclusive, the inter-branch tension I foresee as possibly incident to the instant decision, see infra, would be lessened. If the Legislature knew it always had the last word as to a court rule, whether procedural or substantive, it would be less likely to be concerned over what might seem to it overreaching by the court in a given area.
[3] The point made in the text is not rendered less relevant by the circumstance that the Legislature has acted on one aspect of the subject of prejudgment interest in Section N.J.S.A. 59:9-2(a) of the New Jersey Tort Claims Act (see note 1 supra) or that the court has amended R. 4:42-11(b) to accord therewith. Court deference to legislation in selected instances does not derogate from Winberry exclusivity; inter-branch tension may persist; and the advisability of judicial abstention from rule-making in so substantive an area is not lessened.
[4] See note 1, supra.
[1] Set out fully in the plurality opinion.
[2] The Constitution is not the only source of rule-making power. Courts have the inherent right to adopt rules governing the practice to be followed before the particular court and the manner in which cases shall there be tried. I do not understand it to be argued, however, that reliance is here being placed upon this inherent right, or that the latter is in any way thought to exceed the constitutional grant of power cited above. For a brief history of the exercise by courts in England and in this country of rule-making power pursuant to inherent right, see Pound, Procedure Under Rules of Court in New Jersey, 66 Harv. L. Rev. 28, 35-36 (1952).
[3] Nor do I know of the claim having been made at any time prior to the adoption of the rule here under discussion. In a leading article upon this subject, cited and quoted in the plurality opinion, the authors have this to say:
Nothing could be clearer than the fact that courts in the exercise of the rule-making power have no competence to promulgate rules governing substantive law. [Levin and Amsterdam, Legislative Control Over Judicial Rule-Making: A Problem in Constitutional Revision, 107 U. Pa. L. Rev. 1, 14 (1958)]
Here the experience in a sister state is instructive. The Constitution of the State of Florida provides that
[t]he practice and procedure of all courts shall be governed by rules adopted by the Supreme Court. [Fla. Const., Art. V, § 3, F.S.A.]
As in our Constitution there is no explicit statement that the power does not extend to the area of substantive law. But the Supreme Court of Florida has held that there is implicit in the constitutional grant a limitation that rules must not abridge, enlarge or modify the substantive rights of any litigant. To do so, the court pointed out, would be to ignore the doctrine of the separation of powers and to trespass upon ground exclusively reserved for legislative action. State v. Furen, Fla., 118 So.2d 6 (1960).
Commenting upon Winberry v. Salisbury, infra, Dean Heckel said, Obviously, when a court is given rule-making power over practice and procedure in the courts, it is not given power in the area of substantive law. [Heckel, Constitutional Law, Survey of the Law of New Jersey, 1950-1951, 6 Rutgers L. Rev. 27, 30 (1951)]
[4] Landis, The Administrative Process (1938) 2.
[5] I am, of course, in complete accord with the view of the majority that courts, in the course of deciding cases, make law. The continuing widespread belief to the contrary is indeed a "stubborn myth." "I take judge-made law as one of the existing realities of life." Cardozo, The Nature of the Judicial Process, 10.
[6] "The only state to assert for its Supreme Court uncontrolled and uncontrollable rule-making power is New Jersey." Levin and Amsterdam, supra, at 24.
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751 S.W.2d 236 (1988)
Domingo V. GARCIA, Appellant,
v.
William M. ALLEN, Jr., M.D., Appellee.
No. 04-87-00414-CV.
Court of Appeals of Texas, San Antonio.
April 29, 1988.
Rehearing Denied June 14, 1988.
John W. Donovan, Gano & Donovan, Houston, for appellant.
James A. Williams, Kevin J. Keith, Bailey & Williams, Dallas, for appellee.
Before BUTTS, REEVES and CHAPA, JJ.
OPINION
BUTTS, Justice.
Plaintiff Domingo V. Garcia appeals an adverse jury verdict. He sued William M. Allen, Jr., M.D. for negligent medical care and treatment. Allen was treating Garcia for a fractured heel which developed an infection. The significant issue was whether *237 plaintiff had signs and symptoms of an infection when treated by the doctor on April 30, 1982. The court excluded the proffered testimony of Martha and James Pendelton, and the exclusion forms the basis of this appeal.
The two points of error are that the trial court abused its discretion, first, by ruling that plaintiff failed to bring an interrogatory answer forward with the names and address of the possible witnesses, thereby failing to supplement answers to interrogatories and, second, by prohibiting plaintiff from calling Martha and James Pendleton as fact witnesses at trial.
Plaintiff's theory of recovery was that he suffered from a post-surgery infection that was draining and malodorous when he was examined by the defendant on April 30, 1982, and the doctor's actions at that time constituted negligence. It was undisputed that defendant provided follow-up care to plaintiff after his heel surgery. This included the April 30, 1982 office visit during which defendant dressed the wound. Allen testified that at that time, the pressure sore, caused by the foot swelling and pressing against the inside of the cast, was healing with no draining or odor present. In contrast, plaintiff and his roommate, Carlton Ingram, both testified that on April 30th the sore was an open draining wound with a foul odor. The jury found that the defendant was not negligent.
Defendant's interrogatory number six, filed December 13, 1983, requested plaintiff to:
6. Please list the names and addresses of any witnesses to the occurrence made the basis of this suit or other persons having knowledge of any of the relevant facts concerning the occurrences made the basis of this suit.
Five months later plaintiff filed his response:
The defendant, the physicians mentioned in answers to interrogatories and other medical personnel in my medical records.
No mention was made of the names and address for the two Pendletons who are now described as "critical witnesses to appellant's (plaintiff's) case."
In a hearing outside the presence of the jury, plaintiff contended the interrogatory answer had been supplemented by his own deposition testimony, taken May 30, 1985. However, an examination of the deposition testimony shows he simply referred to the Pendletons as being among people who had visited him during his initial hospitalization for the heel surgery and that they subsequently were among those who complained of an odor emitted by his foot. No address was provided in the deposition, and it was stated that they were temporarily "overseas traveling." The deposition discloses no express statement that plaintiff intended that information to serve as a supplemental answer to his interrogatory answers previously filed in the case.
Having failed to provide the names and address in his initial answers to defendant's interrogatory, it was incumbent upon plaintiff to provide this information in a supplemental interrogatory answer "not less than thirty days prior to the beginning of trial." TEX.RULE CIV.PROC. Rule 166b(6)(a).
Plaintiff objects on appeal that defendant's interrogatory was "overly broad, vague and ambiguous." TEX.RULE CIV.PROC. 168(6) expressly requires a party to serve written objections to specific interrogatories or portions thereof on or before the date on which answers are due. Objections not made by this time are waived as a matter of law unless an extension of time has been obtained by agreement or order of the court or good cause is shown for failure to object within the thirty day period. Independent Insulating Glass/Southwest, Inc. v. The Honorable Judge John Street, 722 S.W.2d 798, 802 (Tex.App.-Fort Worth 1987, writ dism'd); See also Hobson v. The Honorable Louis Moore, 734 S.W.2d 340, 341 (Tex.1987) (failure to timely object to interrogatories as requesting privileged information constituted a waiver of the privilege). Failing to timely object constitutes waiver of the objection advanced for the first time on appeal.
*238 If a party answering an interrogatory does not object to the form of the question, then later tries to call a witness that was not revealed to the opposing party, the trial court should disallow the testimony of the witness unless "good cause" can be shown for the failure to supplement. Gutierrez v. Dallas Independent School Dist., 729 S.W.2d 691, 693 (Tex.1987); Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298 (Tex. 1986); Yeldell v. Holiday Hills Retirement & Nursing Center, Inc., 701 S.W.2d 243, 246-247 (Tex.1985).
Once it is shown that a party did not timely make necessary supplements to its answers to interrogatories, the sanction against use of that witness is automatic. Gutierrez, supra at 694. The automatic exclusion may be overcome, however, if the party offering the testimony can demonstrate "good cause" as to why the answers were not supplemented. Id. citing Morrow, 714 S.W.2d at 298.
In this case plaintiff's bills of exception with the Pendletons testifying failed to show any evidence of good cause as to why the answers to the interrogatory were not supplemented. The testimony revealed that plaintiff had asked the Pendletons on at least two occasions about giving a deposition in support of his cause of action and that these requests were made about a year apart. Further it was shown that plaintiff was aware that the Pendletons lived around the corner from the Carlton Ingram house in which plaintiff lived. Mrs. Pendleton described their relationship with the plaintiff as "very close friends" and displayed knowledge of his initial injury and subsequent treatment made the basis of his cause of action. The evidence suggests that at all relevant times plaintiff had the knowledge and ability to provide defendants with the names and address of the Pendletons. These facts weigh against plaintiff's burden to show good cause why his interrogatory answers were not supplemented. See Town of South Padre Island v. Jacobs, 736 S.W.2d 134, 142-143 (Tex. App.-Corpus Christi 1986, no writ).
Even if the district court did commit error by excluding the testimony, it was not reasonably calculated to cause nor did it probably cause rendition of an improper judgment because the excluded testimony was already before the jury through other witnesses.
The bills of exception for the Pendletons show they would have testified, on the basis of periodically observing plaintiff during the times in question, that his pressure sore was draining and had an offensive odor.
The condition of plaintiff's pressure sore as actively draining and giving off a foul odor was presented to the jury by plaintiff's own testimony and that of his roommate Ingram. The testimony of Ingram was in greater detail and depth than that offered by the Pendletons. He testified that he assisted the plaintiff on a daily basis with the care of the injured foot, drove plaintiff to Dr. Allen's office on April 30, 1982, and further testified that on that date the sore was draining and had a foul odor. It is significant that despite the fact that Ingram also was not identified in plaintiff's answer to the interrogatory, the court did allow his testimony after learning of its nature in the bill of exception.
The exclusion of the testimony as a sanction for failure to disclose the identification of the witnesses was not an abuse of discretion. Morrow, 714 S.W.2d at 298 citing Downer v. Aquamarine Operations, Inc., 701 S.W.2d 238 (Tex.1985) cert. denied 476 U.S. 1159, 106 S. Ct. 2279, 90 L. Ed. 2d 721 (1986). In addition, exclusion of cumulative evidence is not reversible error. Reina v. General Accident Fire & Life Assurance Corp., 611 S.W.2d 415, 417 (Tex.1981); Whitener v. Traders & General Ins. Co., 155 Tex. 461, 289 S.W.2d 233, 236 (1956). The points of error are overruled.
The judgment is affirmed.
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751 S.W.2d 208 (1988)
Domingo Castro ALFARO, et al., Appellants,
v.
DOW CHEMICAL, et al., Appellees.
No. 01-87-00700-CV.
Court of Appeals of Texas, Houston (1st Dist.).
March 24, 1988.
Rehearing Denied June 16, 1988.
Charles S. Siegel, Russell W. Budd, Baron & Budd, Dallas, for appellants.
Burt Ballanfant, Jose Berlange, and Walter Conrad, Michael L. Samford, Baker & Botts, Houston, for appellees.
Before WARREN, DUGGAN and LEVY, JJ.
OPINION
WARREN, Justice.
This is an appeal from the trial court's "forum non conveniens" dismissal of appellants' suit.
Appellants are all Costa Rican residents. Appellee Dow Chemical ("Dow") is a Delaware corporation with its principal place of business located in Midland, Michigan. Appellee Shell Oil Company ("Shell") is a Delaware corporation with its principal place of business located in Houston, Texas. Both Dow and Shell are authorized to do business in Texas.
Appellants' suits claim that while working for Standard Fruit on a banana plantation in Costa Rica, they were required to handle DBCP, a pesticide manufactured and furnished to Standard Fruit by Dow and Shell; that their handling of the DBCP caused them physical and mental damages, including irreversible sterility; and that appellees were liable for damages under the theories of products liability, strict liability, and breach of warranty.
Appellees contested the jurisdiction of the Texas trial court and, alternatively, contended that the cause should be dismissed under the forum non conveniens doctrine.
The trial court found that it had jurisdiction under Tex.Civ.Prac. & Rem.Code Ann. § 71.031 (Vernon 1986), but dismissed the cause for forum non conveniens.
In a single point of error, appellants claim that forum non conveniens dismissal is precluded by § 71.031, which provides:
Act or Omission Out of State
(a) An action for damages for the death or personal injury of a citizen of this *209 state, of the United States, or of a foreign county may be enforced in the courts of this state, although the wrongful act, neglect, or default causing the death or injury takes place in a foreign state or country, if:
(1) a law of the foreign state or country or of this state gives a right to maintain an action for damages for the death or injury;
(2) the action is begun in this state within the time provided by the laws of this state for beginning the action; and
(3) in the case of a citizen of a foreign country, the country has equal treaty rights with the United States on behalf of its citizens.
(b) All matters pertaining to procedure in the prosecution or maintenance of the action in the courts of this state are governed by the law of this state.
(c) The court shall apply the rules of substantive law that are appropriate under the facts of the case.
In four cross-points of error, Shell claims:
(1) that the court erred in finding that it had jurisdiction over the case;
(2) that the court erred in holding that plaintiffs had established a prima facie cause of action against Shell; and
(3) that the evidence was legally and factually insufficient to show that plaintiffs had complied with the requirements of § 71.031.
We must first determine whether the trial court had jurisdiction, because forum non conveniens does not apply unless there is jurisdiction. Cole v. Lee, 435 S.W.2d 283 (Tex.Civ.App.-Dallas 1968, writ dism'd).
Shell and Dow are both foreign corporations licensed to do business in Texas. As such, they are not residents. H. Rouw Co. v. Railway Express Agency, 154 S.W.2d 143 (Tex.Civ.App.-El Paso 1941, writ ref'd).
All plaintiffs are citizens of Costa Rica, and the events giving rise to their cause of action all occurred in Costa Rica.
Although there is little Texas nexus in our case, § 71.031 gives appellants the right to sue in Texas if: (1) Costa Rica affords appellants a like action; (2) the action is brought in Texas within the time provided by our laws; and (3) Costa Rica has equal treaty rights with the United States on behalf of its citizens.
There is little dispute among the parties as to (1) and (3) above, but whether the suit was brought within the Texas limitations period is fiercely contested.
Both Shell and Dow admit selling DBCP to Standard Fruit in Costa Rica, but Shell claims that it made its last delivery in 1970, and Dow claims that it made its last delivery in 1978. Appellants filed suit in 1984.
Tex.Civ.Prac. & Rem.Code Ann. § 16.003 (Vernon 1986) (formerly art. 5526), requires that suits based upon negligence or strict liability must be brought not later than two years after the cause of action accrues.
Tex.Bus. & Com.Code Ann. § 2.725 (Vernon 1968) provides that an action for breach of warranty must be brought within four years after the action accrues. A cause of action in tort arises when the injury and its cause are discovered. Robinson v. Weaver, 550 S.W.2d 19 (Tex.1977); Corder v. A.H. Robins Co., 692 S.W.2d 194 (Tex.App.-Eastland 1985, no writ).
A cause of action for breach of warranty accrues on the date of tender of delivery of the product. Garcia v. Texas Instruments, Inc., 610 S.W.2d 456 (Tex.1980).
Appellees claim that appellants failed to file suit within the Texas statute of limitations, and therefore did not meet the requirement of subsection (a)(2) of § 71.031. Appellants dispute this claim.
Each party submitted controverting affidavits and discovery in support of its position on the limitations issue. It is apparent that there were numerous fact questions raised by both sides. However, the right to a trial by jury does not attach to a preliminary determination of jurisdiction. Bearden v. Texas Co., 41 S.W.2d 447, 458 (Ct.Civ.App.1931), aff'd, 60 S.W.2d 1031 (Tex.Comm'n.App.1933). Therefore, the trial judge was authorized to make a preliminary decision on the existence of jurisdiction over the subject matter of this suit.
*210 We must assume that appellants' allegations concerning their cause of action are true, absent an assertion by the appellees that they are not made in good faith and are made solely to confer jurisdiction. Brannon v. Pacific Employers Ins. Co., 148 Tex. 289, 294, 224 S.W.2d 466, 469 (1949). Based on appellants' allegations in the record before this Court, the trial court did not err in finding that it had jurisdiction to hear the case.
Appellees' cross-points are overruled.
Appellants' point of error raises the question of whether § 71.031, which creates jurisdiction for personal injury and wrongful death claims arising outside the State, precludes a trial court from invoking the common-law doctrine of "forum non conveniens" in an appropriate situation.
The pertinent language of subsection (a) provides that, "An action may be enforced in the courts of this state...."
Appellants claim that their statutory right to maintain suit in a Texas district court is not subject to dismissal for forum non conveniens. Appellees maintain that the statute does not deprive the court of discretion to dismiss the case for forum non conveniens.
The Texas Supreme Court has consistently declined to address this question. In Flaiz v. Moore, 359 S.W.2d 872, 876 (Tex. 1962), the court concluded its opinion with the following notation:
It should be pointed out that we have not considered or attempted to decide in this case: (1) the extent to which the forum non conveniens principle is recognized in Texas; (2) whether Article 4678 [predecessor of 71.031] is mandatory and deprives the court of any discretion where considerations relating to either the parties or the subject matter indicate that the controversy should be submitted to and determined by another forum; (3) whether the absence of party connections with the forum may be raised by the trial court on its own Motion; and (4) where the burden of proof lies when the doctrine of forum non conveniens is properly invoked.
In Francis v. Herrin Transportation Co., 432 S.W.2d 710 (Tex.1968), the court expressed no opinion as to the merit of a forum non conveniens plea, and referred the reader to its Flaiz decision.
More recently, in Couch v. Chevron International Oil Co., 672 S.W.2d 16 (Tex. App.-Houston [14th Dist.] 1984), writ ref'd n.r.e. per curiam, 682 S.W.2d 534 (Tex.1984) (op. on reh'g), the Supreme Court affirmed the appellate court, but reiterated that the applicability of forum non conveniens to § 71.031 is an open question.
Each party claims that the language of the statute supports its position. Appellees argue that the use of the words "may be enforced" indicates that the legislature recognized the trial court's discretionary power to dismiss. However, we agree with appellants that the legislature did not intend to require a plaintiff to bring suit in a Texas court, but merely to allow him to bring suit in Texas. Use of the words "shall" or "must" would have the undesired effect of limiting a plaintiff's choice of venue. Therefore, the "may" language is not dispositive.
However, we do think it relevant that the statute provides that an action may be "enforced" in a Texas court, rather than merely allowing an action to be "brought" in this State. This could indicate a legislative intent that foreign plaintiffs be allowed not only to file suit in a Texas court, but to remain in a Texas court throughout the enforcement of the action through execution.
Although the Texas Supreme Court has not decided this question, it has evidenced an opinion that § 71.031 preempts the forum non conveniens doctrine.
Couch v. Chevron International Oil Co. was an appeal of the dismissal of a Jones Act suit in state court. The 14th Court of Appeals stated that article 4678 did not give a foreign plaintiff an absolute right to bring an action in the Texas courts, and was not intended to apply to all wrongful death claims. The court then noted that the case was brought under the Jones Act, and upheld the dismissal, noting that the Texas Wrongful Death Act, of which article *211 4678 was a part, yields to the exclusivity of federal maritime law. The supreme court refused the writ application, no reversible error, but noted, "Although the court of appeals reached the correct decision, that part of its opinion pertaining to article 4678 and `forum non conveniens' is dicta. Thus, the applicability of forum non conveniens to an article 4678 cause of action is an open question." 682 S.W.2d at 535.
It is relevant to our decision to note that nothing in the court of appeals' decision required the supreme court to disavow it in an opinion. The appellate decision specifically recognized that, "[t]he Texas Supreme Court has ... expressly reserved the decision as to the extent to which the doctrine is applicable under Article 4678." 672 S.W.2d at 18. The logical conclusion from the supreme court's statements is that that court disagreed with the appellate court's assertion that "Article 4678 does not give a foreign plaintiff an absolute right to bring his cause of action in the Texas courts." 672 S.W.2d at 17.
Further indicia of the likely position of the supreme court on this question is the court's action in McNutt v. Teledyne Industries, Inc., 693 S.W.2d 666 (Tex.App.- Dallas 1985, no writ). In that case, the court of appeals held that forum non conveniens dismissal was available under article 4678. The supreme court granted writ of error, 29 Tex.Sup.Ct.J. 66 (Nov. 20, 1985), but the case settled prior to oral argument. The supreme court then voluntarily issued a judgment letter setting aside the judgments of the trial court and the court of appeals.
Although these actions by the supreme court are not definitive of any particular statutory interpretation of § 71.031, we think they lend credence to appellants' position that the statute preempts a forum non conveniens plea. (See Judge Gee's interesting observations in Exxon Corp. v. Chick Kam Choo, 817 F.2d 307, 315-316 (5th Cir.1987)).
Although we are of the opinion that public policy considerations favor allowing Texas district courts to exercise at least some limited discretion in deciding whether Texas is the most appropriate forum for cases brought under § 71.031, our construction of the statute and the apparent inclination of the Texas Supreme Court on this question require a holding that § 71.031 provides a foreign plaintiff with an absolute right to maintain a death or personal injury cause of action in Texas, without being subject to forum non conveniens dismissal.
Reversed and remanded.
DUGGAN, J., dissenting.
DUGGAN, Justice, dissenting.
It is difficult for me to believe that the Texas legislature intended by § 71.031 to permit all foreigners who imagine themselves aggrieved by American entities or individuals operating in foreign countries, but also doing business in Texas, to maintain their tort suits in Texaswithout the slightest regard for nexus or convenience.
To hold that no plea of forum non conveniens will be allowed, regardless of inconvenience and potential unfairness, will no doubt subject the statute to well-deserved due process attacks.
The majority correctly states that the Texas Supreme Court has not spoken decisively on the issue in the succession of cases enumerated in the majority opinion. I believe the reason for this is that our highest court recognizes the potential for unfairness that could follow a sweeping abolition of the doctrine of forum non conveniens, and wisely intends that the doctrine remain in place as a tool for trial courts' use in the sound exercise of judicial discretion.
Two of the most instructive intermediate court opinions to explicitly recognize the doctrine of forum non conveniens were written by intermediate level appellate judges who later became distinguished justices on the Supreme Court of Texas. Flaiz v. Moore, 353 S.W.2d 74 (Tex.Civ. App.-San Antonio 1962), rev'd on other grounds, 359 S.W.2d 872 (Tex.1962) (Judge Pope); and Forcum Dean Co. v. Missouri Pacific R.R. Co., 341 S.W.2d 464 (Tex.Civ. *212 App.-San Antonio 1960, no writ) (Judge Barrow.) It is interesting to note that no intermediate court opinion has ever repudiated the doctrine.
Unless litigants are afforded some relief in cases where a trial in Texas would be grossly unfair, it is not far-fetched to imagine that the following ditty might become the number one hit song in Yugoslavia by 1990:
I cain't prove no Texas Nexus.
I got hurt near home in Zren-Ja-Neen.
Still I filed my suit in Texas.
They ain't got no forum non conveen [sic].
(With apologies to George Strait and the author of "All My Exes Live in Texas," and with credit to lyricist/briefing attorney Kate Hall of this Court.)
I respectfully dissent.
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751 S.W.2d 289 (1988)
Robert HODDESON, M.D., Appellant,
v.
CONROE EAR, NOSE AND THROAT ASSOCIATES, P.A., Appellee.
No. 09-88-030 CV.
Court of Appeals of Texas, Beaumont.
May 19, 1988.
Joan M. Herring and Matthew D. Shaffer, Wood Lucksinger & Epstein, Houston, for appellant.
Tim Herron, Crews & Herron, P.C., Conroe, for appellee.
OPINION
DIES, Chief Justice.
This is an appeal from an order issuing a temporary injunction. This court granted a stay of the injunctive relief granted. Both parties have filed a joint motion waiving oral argument, asking us to consider the appeal immediately, which we herewith proceed to do.
Appellee, Conroe Ear, Nose and Throat Associates, P.A. ("Conroe ENT"), owned entirely by Dr. M. James Dyke, hired Appellant, Dr. Robert Hoddeson. These two physicians comprised all of the physicians working with Conroe ENT, which has three offices in Montgomery County, including one in The Woodlands, a rapidly growing area in the south part of the county rather near to the Houston area. The Woodlands has a hospital which has filed an amicus curiae brief in support of Appellant's position.
When Appellant went to work for Conroe ENT, he executed the following agreement:
"Upon the termination of this Agreement for any reason, Employee agrees that he shall not compete with Company in Montgomery County, Texas in that he shall not practice medicine there as an individual, a partner, an employee of a professional association, an employee of a hospital or in any other manner for five (5) years after such termination. Employee agrees that such geographical limitation and such time limitation are reasonable. However, in the event that they are determined by a court of law not to be reasonable, it shall be reduced to that determined by the court of law to *290 be reasonable. The parties hereto agree that Company shall be entitled to injunctive relief in such case."
Conroe ENT terminated the agreement two and one-half years later, then sought and obtained the temporary injunction alluded to above, prohibiting Appellant from practicing medicine in Montgomery County, Texas.
Appellant has several points of error, but for the purposes of this opinion, we need only address whether, under the facts of this case, the law will permit a non-competition injunction. Briefly, the facts are: Dr. Hoddeson is a board certified ear, nose and throat specialist. Appellee has three offices in Montgomery County, but apparently, Appellant does most of his work in The Woodlands area. At least he is the only ear, nose, and throat specialist on the staff of the hospital there, and last year, he performed 142 surgeries there, contrasted with 13 performed by his employer. The record shows that in his two and one-half years association with Appellee, Appellant vastly increased his patient load, with most of it coming directly to him and not from Appellee. The record also shows that referring physicians are governed by the skills and qualifications of the receiving physician, rather than his associations. Appellee did not impart trade secrets, specialized training or confidential information to Appellant. Covenants suppressing competition have never been favored in Texas, see Unitel Corp. v. Decker, 731 S.W.2d 636 (Tex.App.-Houston [14th Dist.] 1987, no writ), but we think it is accurate to state that since Hill v. Mobile Auto Trim Inc., 725 S.W.2d 168 (Tex.1987), such covenants receive added scrutiny.
The Hill court laid down four criteria which such covenants not to compete must meet if they are to survive court scrutiny:
1. The covenant must be necessary for the protection of the promisee. "That is to say, the promisee must have a legitimate interest in protecting business goodwill or trade secrets."
2. The covenant must not be oppressive to the promisor, as courts are hesitant to validate employee covenants when the employee has nothing but his labor to sell.
3. The covenant must not be injurious to the public, since courts are reluctant to enforce covenants which prevent competition and deprive the community of needed goods.
4. The promisee must give consideration for something of value.
While in some respects this covenant not to compete for five years[1] violates each of the four categories, let us briefly focus our attention on number three. The proof shows, without question, that to deny Appellant the right to practice medicine would be injurious to the public, and especially to those in The Woodlands area. As in Hill, "[t]his restrictive covenant is plagued by a lack of reasonableness." Id. at 171. And, as in Hill, the covenant is oppressive to Appellant because "he is now prevented from using his previously acquired skills and talent to support him and his family...." Id. at 172. Appellant's talents are his own. "Absent clear and convincing proof to the contrary, there must be a presumption that he has not bargained away the future use of those talents." Id. The covenant before us was designed primarily to limit competition or restrain the right to engage in a common calling and "[is] not enforceable." Id. (citing Robbins v. Finlay, 645 P.2d 623, 627 (Utah 1982)).
There are two competing interests in a covenant not to compete. The first, of course, is the protection of the investment made by many employers in their employees, such as training. The second is that employees be free to exercise their skills. In our case, Appellant received no training or skills from Appellee. The covenant was solely to protect Appellee from competition. See Note, Sakowitz v. Steck: Texas Looks at Covenants Not to Compete, 38 BAYLOR L.REV. 211 (1986). In the scrutiny of such a covenant, the interests of the public *291 must also be considered. Matlock v. Data Processing Sec., Inc., 618 S.W.2d 327, 329 (Tex.1981). And, in the case we review, the interests of the public are clearly not in enforcing the covenant not to compete. See Duffner v. Alberty, 19 Ark.App. 137, 718 S.W.2d 111, 112 (1986). In such a determination, the three interests involvedthe employer's, the employee's, and the public'smust be balanced. "In the absence of special circumstances, a covenant which has as its sole purpose the elimination of competition is not reasonable." Hospital Consultants, Inc. v. Potyka, 531 S.W.2d 657, 663 (Tex.Civ.App.-San Antonio 1975, writ ref'd n.r.e.).
We hold the covenant not to compete in question void and, thus, dissolve the temporary injunction.
BROOKSHIRE, Justice, dissenting.
This dissent is respectfully filed.
Basically this is a dispute between medical doctors who are specialists. The dispute is over a covenant not to compete which is contained in an employment agreement between Dr. Hoddeson and Conroe Associates. Conroe Associates is a professional association headed by James Dyke, M.D. The full, correct name of Conroe Associates is Conroe Ear, Nose and Throat Associates, P.A. (Conroe ENT), which was established in 1972. Conroe ENT operates in the Conroe area, in The Woodlands area, and in Harris County in the F.M. 1960 and IH 45 area.
The Appellant, Dr. Hoddeson's starting salary for his initial employment position was $100,000. This salary was one of the principal conditions of the employment agreement. The non-compete agreement provides that upon termination for any reason Hoddeson agreed that he would not compete with Conroe ENT in Montgomery County in that he shall not practice medicine there in any capacity for five years after the termination. Hoddeson affirmatively agreed that the geographical limitation and the time limitation were both reasonable. There is a specific provision that the parties to the agreement consent that the company shall be entitled to injunctive relief in case this part of the agreement is broken or breached. Hoddeson carefully consulted with his own independent attorney concerning the terms and provisions of the employment agreement. After full consultation he signed the employment agreement. In my opinion, the practice of a medical specialty such as ear, nose and throat medicine, known as otorhinolaryngology, is not a common calling. This medical specialty requires highly, specially trained and experienced physicians.
The case at bar is certainly distinguishable from Hill v. Mobile Auto Trim, Inc., 725 S.W.2d 168 (Tex.1987). There, Mobile Auto Trim sold car trim franchises; equipped vans were driven to car dealerships to make repairs at the dealership premises. Mobile Auto Trim had sold a franchise to Hill for about $42,000 plus a 5% commission on his gross sales or revenues. The non-compete agreement covered a seven county area.
It has long been established that geographical limitations and time limitations on the promisor's ability to compete must be reasonable. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (Tex.1960). The question of whether a covenant not to compete is a reasonable one has recently been determined to be a question of law for the trial court. Hill v. Mobile Auto Trim, Inc., 725 S.W.2d at 170 (Tex.1987); Henshaw v. Kroenecke, 656 S.W.2d 416, 418 (Tex.1983).
There are four tests to determine if an agreement or covenant not to compete is deemed reasonable. First, the covenant must be necessary for the protection of the promisee wherein the promisee has a legitimate interest in protecting his business goodwill. Second, the covenant must not be oppressive to the promisor. Here the courts have reasoned that they did not want to enjoin employees from working who had nothing but their labor to sell. Third, the covenant must not be injurious to the public. Finally, the non-competitive agreement should be enforced if the promisee has given something of value. These four criteria are set out in Hill v. Mobile Auto Trim, Inc., 725 S.W.2d at 170. As I *292 read the record, four are shown in the case at bar. In my opinion the non-competitive agreement limitations are reasonable. They certainly are reasonable as to the geographic area. I would hold that a limitation of a three year period would be more reasonable than the five year period provided for.
In Bergman v. Norris of Houston, 734 S.W.2d 673 (Tex.1987), a former employer sought an injunction preventing Tracy Bergman from competing for three years within a fifteen mile radius of a certain business location. In Bergman, id., the Supreme Court held in substance that hair stylists were engaged in a common calling and hence, the covenants not to compete were unenforceable as to hair stylists. I respectfully submit that there is a meaningful difference between the works of hair stylists and the practice of otorhinolaryngology.
Physicians and medical specialists, such as the real parties in interest here, ought to have the right of freedom of contract including the freedom to make employment contracts and agreements containing reasonable non-compete agreements. The court in Bergman writes that barbering, however labeled, is to be considered a common calling. The court also holds that whether an employee is engaged in the common calling is to be decided from the facts of each case.
There is another matter worthy of our consideration, I opine. The Conroe ENT was started a number of years ago with Dr. Dyke acting as the founding physician. There was no patient base and an office staff had to be developed. The Conroe ENT has been carefully built up as a specialized medical facility over many years. Dr. Hoddeson signed the contract with no mental stress or duress applied. From the first Dr. Hoddeson started seeing an average of eight patients a day in the Woodlands and an additional eight patients a day in Conroe, making an average of about sixteen patients a day. The record tends compellingly to demonstrate that for a new physician, a specialist of his type beginning practice by seeing sixteen patients a day, is astounding.
The agreement also allowed for the Appellant to buy into the practice by purchasing stock in the "company". In fact, there is a special paragraph and provision in the agreement permitting the employee doctor to purchase the stock in the "company".
There existed an additional facility located in Harris County. This facility involved the signing of a year's lease and the moving of furnishings including increased cost of medical malpractice insurance because the facility was located in Harris County rather than Montgomery County. A part of the motivation for establishing this new facility was because of the desire of Dr. Hoddeson.
Some evidence exists that the Appellant has seriously entertained several job opportunities outside of Montgomery County and some others in other states. Appellant had a pending offer to buy into a practice in Georgia which he was still seriously considering at the time of the hearing.
The record reflects that a hospital in Atlanta was currently bidding for the services of the Appellant. The Appellant has been told unequivocally by the hospital in Georgia that it would like to have him aboard. He stated that Atlanta was and is acceptable to him and his wife. Dr. Hoddeson said Atlanta is less humid than the coastal regions of Texas. We find:
Q. Is it safe to say that a person with your training, experience, qualifications, and credentials, which are outstanding, you pretty well have your choice of anywhere you want to go?
A. I think any physician probably has that choice.
Q. I am not talking about a general practitioner. I am talking about someone like yourself, with your credentials, your special qualifications, that you have better than average potential to go anywhere you want to.
A. I would like to think that's true.
The Appellant will, I think, not be unemployed.
*293 I think the record easily demonstrates that there are and will be sufficient eye, nose and throat specialists to serve in the Montgomery County area, including The Woodlands Community Hospital. Certainly, the trial judge had a right to believe under this record that The Woodlands Community Hospital would not be understaffed if Dr. Hoddeson departed. From the record as a whole before us, I would opine that the Appellee has a reasonable, legitimate and ethical interest to protect in keeping those patients that have for a number of years been served by the Conroe ENT. The patient base was an asset that took many years to build up.
Again, under the entire record, the trial court below certainly did not abuse its discretion by issuing the temporary injunction. The record shows sufficient evidence of strong probative force that the applicant-appellee would certainly suffer injury and damages and it had a reasonable and probable basis prevailing on the merits. All the reasonableness tests were met as to geography. I would, under the contract, reduce the time limitation to three years. See Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (1960). In his injunction the District Judge found that the Conroe ENT will suffer irreparable harm. I agree. Certainly I would find that the Appellant is not engaged in a common calling.
Dr. Hoddeson had been a graduate of a recognized school of dentistry. He graduated second in his class at the School of Dentistry, making an enviable record. He was in the top ten in his graduating class at the University of Texas Medical School in Galveston. Thereafter, he had one year residency in general surgery and then a four year residency in ear, nose and throat medicine. He is fully qualified in the highly specialized field of otorhinolaryngology. Such indepth training accomplished by Dr. Hoddeson with exceedingly great academic honors and brilliant scholarship achievements are a very, very far cry from training for hair styling or painting trim on automobiles, which are useful and honorable callings. I opine that the applicant for the injunction, being Appellee, lucidly established probable right under the employment agreement. In my opinion the agreement is a valid and binding covenant not to compete. Also, probable injury and large resulting damages are shown by the economic adverse results of Dr. Hoddeson's act in offering to take care of the Appellee's patients and in the fact that the Appellant has already set up a competing practice in Montgomery County. The Appellee is not required to establish that it will absolutely finally prevail in the litigation. Oil Field Haulers Ass'n v. Railroad Commission, 381 S.W.2d 183 (Tex.1964); Lambda Construction Co. v. City of Alice, 729 S.W.2d 377 (Tex.App.-San Antonio 1987, no writ).
Furthermore, the Appellee has a reasonable and valid interest in protecting its professional reputation and goodwill and business goodwill in Montgomery County. These are valid interests that the Appellee has endeavored with hard work and ethical conduct over a period of sixteen years to establish and enhance.
Appellant could definitely practice his excellent specialty in Harris County, which lies adjacent to Montgomery County to the south. Only a small creek separates the two counties. Appellant has had serious conversations and discussions with The Woodlands Hospital. These discussions concern the Appellant's admitting patients and actually working on a regular basis in The Woodlands Hospital which is in the extreme south end of Montgomery County. The hospital has encouraged the doctor to do this, which apparently he is now doing. The record tends to reveal that an executive or person in administrative capacity at The Woodlands Hospital had offered to pay Dr. Hoddeson's attorneys' fees for litigation to eviscerate the covenant not to compete. There is a clear possibility that the attorneys' fees involved in this litigation incurred by Appellant will not be paid by him.
As I read the record, The Woodlands Hospital has given strong, practical encouragement to the Appellant to pursue this litigation to overturn the covenant not to compete.
*294 I respectfully submit that one problem of really important public policy is presented in this case. Under the court's decision today, it seems improbable, if not impossible, for young medical graduates either in the field of general medicine or in a highly specialized field of medicine to be able to have freedom of contract to go into an established clinic at a high (maybe not so high for the medical profession) salary of $100,000 a year. Many other emoluments or "perks" are also frequently offered. Such "perks" include the payment of the premiums for medical malpractice insurance, substantial loans to buy expensive, comfortable housing, dues in clubs and golf courses, and other like "perks".
Furthermore, the trial court found that Dr. Hoddeson having opened a competing practice in Montgomery County will take existing patients from Conroe ENT and further that in the Appellant's setting up an office and practice in Montgomery County will actually cause economic harm and loss of goodwill to the applicant Appellee, resulting in immediate and irreparable loss, injuries and damages to Appellee.
The parties had specially asked us to decide the case on the record before us as if it had been tried on the merits. I can find no findings of fact and conclusions of law. We have been asked to deal with this appeal as if the case had been fully tried upon the final merits. Without any findings of fact or conclusions of law, either requested or filed, before us, the judgment of the court below must be affirmed if the judgment can be upheld on any legal or equitable theory that finds support in the evidence. Lassiter v. Bliss, 559 S.W.2d 353 (Tex.1977).
Certainly the trial bench below, sitting as a Chancellor in equity had a right and a duty to balance the equitiesthat is, all the equities. The district judge also had a right and a duty to weigh the evidence of the witnesses and to evaluate the witnesses and their testimony. In Texas, we boast of having a perfectly blended system of law and equity. Under this record, we certainly should not reverse; we certainly should not reverse the Judge-Chancellor. In balancing the equities among other doctrines, the Chancellor below probably reasoned that the Appellee as promisee furnished to Dr. Hoddeson a highly valuable consideration in signing the employment agreement. Dr. Hoddeson was given full access to an established medical practice and a large number patient clientele at no cost to himself. His salary was clearly adequate. Appellant was not obliged and did not pay overhead expenses involving the maintaining of the medical practice and facilities. Dr. Hoddeson had available to him from the first day expensive medical equipment, office equipment and a trained and adequate staff. According to one cogent version of the evidence which the trial Chancellor had a right to believe, Dr. Hoddeson saw approximately sixteen patients per day at once. He would not have seen sixteen patients per day had he started his own private practice. Under this record the Chancellor had a right and a duty to weigh all of the evidence and testimony. The "Keeper of the King's conscience" obviously decided that the Appellee had fully sustained its burden in meeting the four tests under Hill v. Mobile Auto Trim, Inc., 775 S.W.2d at 170, and Unitel Corporation v. Decker, 731 S.W.2d 636, 640 (Tex.App.- Houston [14th Dist.] 1987, no writ). The Chancellor in this case also kept the good conscience of his community, city and county. Historically, the Chancellor was a man of the cloth, a well respected churchman. He consulted his own sense of right dealing and fair dealing as applied to the litigants. The "clean hands" doctrine was before him. I would vote to affirm.
NOTES
[1] It goes without saying that to enjoin a physician from practicing in a certain county for five years effectively, and for all practical purposes, denies permanently the citizens of that county the services of the enjoined physician.
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751 S.W.2d 428 (1988)
Bruce SADEK, Plaintiff-Appellant,
v.
NASHVILLE RECYCLING CO., A Tennessee Corporation, Mark Sheridan, and Wayne Adams, Defendants-Appellees.
Court of Appeals of Tennessee, Middle Section, at Nashville.
March 9, 1988.
Petition to Rehear Denied May 23, 1988.
*429 Edward Hiland, Nashville, David King, Franklin, for plaintiff-appellant.
Ed R. Davies, Nashville, William Nelms, Murfreesboro, for defendants-appellees.
Petition to Rehear Denied by Supreme Court May 23, 1988.
OPINION
TODD, Presiding Judge.
The plaintiff has appealed from a directed verdict and judgment dismissing his suit against the captioned defendants for malicious prosecution.
The only issue presented on appeal is the correctness of the directed verdict.
Plaintiff and the defendant, Nashville Recycling Company, are competitors in the business of recycling used cooking fat obtained from restaurants and other large users of cooking fat. Defendants, Mark Sheridan and Wayne Adams are officers of Nashville Recycling Company.
In general, the method of operation of recyclers is to negotiate an agreement with a user of fat whereby the recycler's containers are placed on the user's premises so that the user may dump his waste fat into such containers. Periodically, the recycler will pick up filled containers, pay the user for the contents, and place empty containers on the premises.
One of the suppliers or "customers" of plaintiff was Richard Drury, owner of Kentucky Fried Chicken of Murfreesboro, Tennessee. At some time prior to May 18, 1978, plaintiff's wife received a telephone *430 call from Mr. Drury requesting that Mr. Sadek retrieve his container from Kentucky Fried Chicken and pay for 3/4 drum of grease therein. Mr. Drury also stated that he was changing recycling services and would thereafter do business with Nashville Recycling Company. On May 18, 1978, plaintiff went to the premises of Kentucky Fried Chicken at about 4:30 a.m. He found two of his own drums, one empty and one 1/3 full of grease. He also found drums belonging to Nashville Recycling Company with grease in them. Mr. Sadek testified that he transferred enough grease from the Nashville Recycling drum to his own drum to fill his drum 3/4 full. Shortly after leaving the premises of Kentucky Fried Chicken, plaintiff was stopped by a police officer, who was accompanied by the defendant Wayne Adams, and who ordered him to go to the police station. Upon arrival at the police station, plaintiff was arrested upon a warrant signed by Wayne Adams and released upon $500.00 appearance bond. Thereafter, the General Sessions Judge "bound over" defendant to the Grand Jury, requiring him to give an appearance bond to appear in Criminal Court.
Even though defendants have admitted the successful termination of the prosecution, plaintiff still bears the burden of proving that the prosecution was initiated without probable cause. This remains unproven. Indeed, the reverse is proven. Plaintiff admits that he removed a quantity of grease from a container marked as the property of Nashville Recycling Company and put said removed grease into his own (plaintiff's) container on his truck before driving away from the scene. It is difficult to conceive of a set of circumstances which would constitute more probable cause to believe that larceny had been committed.
Nevertheless, plaintiff proposes a bizarre explanation by which he seeks to negative the direct evidence of probable cause.
Plaintiff alleges, but does not prove, that he was "set up", or entrapped. It is not denied that the defendants hired a police officer to watch the scene of the removal of the grease and that one of the defendants accompanied the officer. It is not denied that defendants suspected the plaintiff of other thefts and that they hoped to catch him in the act. Certainly the owner of property cannot be faulted for watching his property to catch a thief and to enlist the aid of police in this endeavor. Such surveillance does not prevent observed larceny from being larceny or prevent actual observation of apparent larceny from being probable cause to prosecute for larceny.
Plaintiff further alleges, but does not prove, that the grease which he apparently stole was not stolen, but belonged to him. The basis of this allegation is that plaintiff's wife told him that Mr. Drury, owner of Kentucky Fried Chicken, had told her that plaintiff was to pay him for 3/4 drum of grease. From this double hearsay, the jury (and this Court) are expected to infer that Mr. Drury had placed 3/4 drum of grease in plaintiff's container. Even if this inference (or surmise) be indulged, the question is whether the 3/4 drum of grease became the property of plaintiff when placed in plaintiff's container or when it was later paid for (after being taken away by plaintiff). Plaintiff insists that the grease which he took out of defendants' container did not belong to defendants because it had not been paid for. If this be true, then the grease missing from plaintiff's container did not belong to plaintiff but to Mr. Drury until plaintiff paid Mr. Drury for it.
Where a buyer places his container on the premises of the seller for the purpose of receiving fungible goods, when the seller places such fungible goods in the container of the buyer, such goods have been "identified to the contract" and the buyer thereby receives title, or at least a "special interest" in the goods. See T.C.A. §§ 47-2-401, 47-2-501. Rawls v. Patterson, 60 Tenn. (1 Baxt.) 372 (1872); Barker v. Reagan, 51 Tenn. (4 Heisk) 590 (1871); Bush v. Barfield, 41 Tenn. (1 Cold.) 92 (1860).
Accordingly, if the employees of Mr. Drury placed some grease in the container of plaintiff, that grease would doubtless be appropriated or identified to the contract and would become the property of *431 plaintiff. By the same token, grease placed in the container of defendants' would become their property.
Indulging the inference or surmise that the grease allegedly missing from plaintiff's container was his (plaintiff's), plaintiff is not thereby relieved of his guilt of theft, for the grease which he took from the container of defendant was the property of defendant.
Plaintiff insists that he did not take the property of defendants, but that he took grease belonging to Mr. Drury which had not yet become the property of defendants. Plaintiff argues that, since he was expected to pay Mr. Drury for 3/4 drum of grease, he had a right to take 3/4 drum of Mr. Drury's grease so as to get what he was to pay for. This reasoning is baseless for, as previously demonstrated, the grease in defendants' container was not Mr. Drury's but defendants'.
An even more bizarre excuse is offered by plaintiff as follows:
In a malicious effort to discredit and malign plaintiff, defendants conspired to induce plaintiff to incriminate himself. The plan, as conceived (but not proved) by plaintiff was that, having ascertained that there was 3/4 drum of grease in plaintiff's container and that Mr. Drury had notified plaintiff that he was expecting plaintiff to pay for 3/4 drum of grease, defendants removed the 3/4 drum of grease from plaintiff's container to the container of defendants and placed a pickle bucket for plaintiff's convenience in refilling his container from that of defendants. With the exception of the presence of the pickle bucket, no other elements or actions of the conspiracy are proven. There is simply no other evidence to support this theory of plaintiff.
Actual malice is a circumstance supporting an action for malicious prosecution, but mere expressions of ill will will not support an imaginary conspiracy such as that proposed by plaintiff.
Malice alone is insufficient to sustain an action for malicious prosecution because a person actuated by malice may nevertheless profer a well-founded accusation and have justifiable reason for the prosecution of the cause. Wheeler v. Nesbitt, 65 U.S. 544, 24 Howard 544, 16 L. Ed. 765 (1860).
The action for malicious prosecution is only intended to apply to cases where criminal accusation has been made against an innocent man through malice, and in the absence of even a fair and reasonable probability of its truth. Raulston v. Jackson, 33 Tenn. (1 Sneed) 128 (1853).
An action for malicious prosecution will not lie at the instance of the guilty party. Upon proof of actual guilt, the existence of probable cause is conclusively presumed. In an action for malicious prosecution, notwithstanding his acquittal in the original prosecution, the plaintiff must be regarded as tendering the issue of his innocence, and must fail in his action if that innocence is disproved, whether the prosecutor acted from malicious motives or not and whether or not he knew of the facts establishing the plaintiff's guilt. Miller v. Martin, 10 Tenn. App. 149 (1929) and authorities cited therein. See also 54 C.J.S., Malicious Prosecution § 66(b) p. 590; 52 Am.Jur.2d Malicious Prosecution § 176, p. 236, § 180, p. 299.
A plaintiff's verdict cannot be based upon speculation, conjecture, guesswork, a mere spark, glimmer or scintilla of evidence. Daniels v. White Consol. Industries, Inc., Tenn. App. 1985, 692 S.W.2d 422; Bowers v. Potts, Tenn. App. 1981, 617 S.W.2d 149, and authorities cited therein.
A case does not have to be submitted to a jury where there is a mere spark or glimmer of evidence. There must be some evidence of a material and substantial nature. Moon v. Johnston, 47 Tenn. App. 208, 337 S.W.2d 464 (1960) and authorities cited therein.
The judgment of the Trial Court is affirmed. Costs of this appeal are taxed against the plaintiff-appellant. The cause is remanded to the Trial Court for such further proceedings, if any, as may be necessary and proper.
Affirmed and remanded.
*432 LEWIS, J., concurs.
KOCH, J., concurs separately.
KOCH, Judge, concurring.
I concur with the majority's opinion only insofar as it pertains to the existence of probable cause.
In order to succeed in a malicious prosecution action, the plaintiff must prove that the defendant lacked probable cause when it initiated the criminal prosecution against the plaintiff. Kinnard v. Frierson, 190 Tenn. 304, 306, 229 S.W.2d 348, 349 (1950). Based upon my independent evaluation of the proof, I have determined that reasonable minds could only conclude that the defendants had a good faith belief that the plaintiff had stolen their used cooking fat when they initiated the criminal prosecution against him.
Having failed to prove the lack of probable cause, the plaintiff has failed to prove all the elements of his case. It follows that the trial court's decision to grant the defendants' motion for directed verdict was correct.
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63 N.J. 402 (1973)
307 A.2d 598
SHELL OIL COMPANY, A CORPORATION OF THE STATE OF DELAWARE, PLAINTIFF-APPELLANT,
v.
FRANK MARINELLO, DOING BUSINESS AS GARDEN SHELL STATION, PLAINTIFF-RESPONDENT. FRANK MARINELLO, DOING BUSINESS AS GARDEN SHELL STATION, PLAINTIFF-RESPONDENT
v.
SHELL OIL COMPANY, A CORPORATION OF THE STATE OF DELAWARE, DEFENDANT-APPELLANT.
The Supreme Court of New Jersey.
Argued June 4, 1973.
Argued June 5, 1973.
Decided July 11, 1973.
*404 Mr. William Simon, of the District of Columbia bar, argued the cause for appellant (Mr. Michael W. Graney, of the District of Columbia bar, and Mr. Andrew S. Polito, on the brief; Mr. Michael M. Levy, Messrs. Howrey, Simon, Baker & Murchison, of the District of Columbia bar; Mr. Michael D. Loprete, Messrs. Mattson, Madden, Polito & Loprete, attorneys).
Mr. Joseph R. Mariniello, argued the cause for respondent (Messrs. Fierro, Fierro and Mariniello, attorneys).
The opinion of the Court was delivered by SULLIVAN, J.
This case involves the interpretation of a lease and a dealer agreement entered into between Shell Oil Company (Shell) and Frank Marinello (Marinello), one of its service station operators, and a determination of the extent of Shell's right to terminate such lease and agreement.
Shell, a major oil company, is a supplier of motor vehicle fuels and automotive lubricants under the trade name "Shell." It also supplies tires, batteries and accessories (TBA) to its dealers for resale. Its products are sold in hundreds of Shell service stations through the State. Many of the service station locations are controlled by Shell through long-term leases. In the past, Shell's practice has been not to operate these stations itself, but to lease the station premises to an operator with whom it enters into a dealer or franchise agreement.
This is essentially the relationship before us for consideration. Shell controls a service station located at Route #5 and Anderson Avenue, Fort Lee, Bergen County. In 1959 it leased the station to Marinello,[1] and at the same time entered *405 into a written dealer agreement with the lessee. The original lease was for a one-year term and was regularly renewed in writing for fixed terms. The last lease between Shell and Marinello is dated April 28, 1969 and runs for a three-year term ending May 31, 1972, and from year-to-year thereafter, but is subject to termination by Marinello at any time by giving at least 90 days notice and by Shell at the end of the primary period or of any such subsequent year by giving at least 30 days notice.
The dealer agreement, also originally for a one-year term, was renewed in writing so as to coincide with the existing lease. Each agreement provided that Shell would supply its products to the dealer for resale at the Route #5 service station in question. The last dealer agreement is also dated April 28, 1969, and is for a three-year term ending May 31, 1972 and from year-to-year thereafter, but is subject to termination at any time by giving at least 10 days notice.
By letter dated April 14, 1972, Shell notified Marinello that it was terminating the aforsesaid lease and the dealer agreement effective May 31, 1972. Marinello immediately filed suit in the Superior Court, Chancery Division, seeking to have Shell enjoined from taking its proposed action, and asking for reformation of the "agreement" between the parties so as to show a joint venture. Shell on its part, on June 1, 1972, filed a summary dispossess complaint in the District Court for possession of the service station premises alleging that Marinello was holding over and remaining in possession without the consent or permission of Shell.
On motion, the dispossess action was transferred to the Superior Court (N.J.S.A. 2A:18-60) where it was consolidated with and tried with the Chancery suit. After a nine-day trial a decision was rendered in favor of Marinello. The trial court's opinion is reported at 120 N.J. Super. 357.
In its decision the trial court dealt with three primary issues. It held (1) the newly enacted Franchise Practices Act, N.J.S.A. 56:10-1 et seq., effective December 21, 1971, *406 did not apply to the previously executed renewals of the lease and dealer agreement between Shell and Marinello; (2) there was an implied covenant in said lease and agreement on the part of Shell not to terminate the relationship without good cause, and these instruments must be reformed to include such covenant; and (3) Marinello had substantially performed his obligations to Shell under these agreements.
Although not necessary to its decision, since it not only granted reformation, but also found that Shell did not have good cause to terminate the lease and dealer agreement, the trial court sustained Marinello's defense of unclean hands in the dispossess action by finding that Shell was guilty of improper and illegal marketing practices (a) by discriminating against Marinello in the tank-wagon prices it charged him, and (b) by tying in increased TBA sales on Marinello's part to a renewal of the lease. These practices were found by the trial court to be violations of the New Jersey Unfair Motor Fuels Act, N.J.S.A. 56:6-19 et seq., and the Robinson-Patman Price Discrimination Act, 15 U.S.C.A. § 13.
Shell appealed from the judgment entered in the consolidated actions. While the appeal was pending unheard in the Appellate Division we ordered direct certification to this Court. R. 2:12-1.
We are in full agreement with the basic determination of the trial court that Shell had no legal right to terminate its relationship with Marinello except for good cause, i.e., the failure of Marinello to substantially comply with his obligations under the lease and dealer agreement. However, we conclude that it was unnecessary to have granted specific reformation of the lease and dealer agreement. The same end result is reached from consideration of the instruments themselves, the relationship between Shell and Marinello created thereby, and the public policy of this State affecting such relationship.
For this reason it is unnecessary for us to deal with the question of reformation, as such, as well as the ancillary issues *407 of parol evidence and the statute of frauds. By the same token, we need not review the trial court's finding that Marinello had established the defense of unclean hands in the dispossess suit filed by Shell. Since our conclusion is that Shell has not shown good cause to terminate its relationship with Marinello, we do not reach the question of equitable defense. See Vineland Shopping Center, Inc. v. DeMarco, 35 N.J. 459 (1961).
Shell argues that its lease of the service station premises to Marinello is independent of its dealer agreement with him, and that its legal rights as a landlord under the lease are absolute and cannot be restricted. This is pure sophistry. The two contractual documents are but part of an integrated business relationship. They were entered into simultaneously, have the same commencement and expiration dates, and expressly refer to the Route #5 service station premises.
These instruments, and the business relationship created thereby, cannot be viewed in the abstract. Shell is a major oil company. It not only controls the supply, but, in this case, the business site. The record shows that while the product itself and the location are prime factors in the profitability of a service station, the personality and efforts of the operator and the good will and clientele generated thereby are of major importance. The amount of fuel, lubricants and TBA a station will sell is directly related to courtesy, service, cleanliness and hours of operation, all dependent on the particular operator.
Marinello testified that when the station was offered to him in 1959 he was told by the Shell representative that the station was run down, but that a good operator could make money and that if he built up the business his future would be in the station. Shell's own witnesses admitted that it was Shell's policy not to terminate its relationship with a lessee-dealer except for good cause, which was described as not running the station in a good and businesslike manner.
*408 Viewing the combined lease and franchise against the foregoing background, it becomes apparent that Shell is the dominant party and that the relationship lacks equality in the respective bargaining positions of the parties. For all practical purposes Shell can dictate its own terms. The dealer, particularly if he has been operating the station for a period of years and built up its business clientele, when the time for renewal of the lease and dealer agreement comes around, cannot afford to risk confrontation with the oil company. He just signs on the dotted line.
Where there is grossly disproportionate bargaining power, the principle of freedom to contract is non-existent and unilateral terms result. In such a situation courts will not hesitate to declare void as against public policy grossly unfair contractual provisions which clearly tend to the injury of the public in some way. Henningsen v. Bloomfield Motors, Inc. 32 N.J. 358, 403-404 (1960).
In Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 553-554 (1967) we said:
"Courts and legislatures have grown increasingly sensitive to imposition, conscious or otherwise, on members of the public by persons with whom they deal, who through experience, specialization, licensure, economic strength or position, or membership in associations created for their mutual benefit and education, have acquired such expertise or monopolistic or practical control in the business transaction involved as to give them an undue advantage. Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, pp. 388-391 (1960). Grossly unfair contractual obligations resulting from the use of such expertise or control by the one possessing it, which result in assumption by the other contracting party of a burden which is at odds with the common understanding of the ordinary and untrained member of the public, are considered unconscionable and therefore unenforceable. * * * The perimeter of public policy is an ever increasing one. Although courts continue to recognize that persons should not be unnecessarily restricted in their freedom to contract, there is an increasing willingness to invalidate unconscionable contractual provisions which clearly tend to injure the public in some way. (Citing cases)."
Applying the foregoing to the case before us, it is clear that the provisions of the lease and dealer agreement *409 giving Shell the right to terminate its business relationship with Marinello, almost at will, are the result of Shell's disproportionate bargaining position and are grossly unfair. That the public is affected in a direct way is beyond question. We live in a motor vehicle age. Supply and distribution of motor vehicle fuels are vital to our economy. In fact, the Legislature has specifically concluded that the distribution and sale of motor fuels within this State is affected with a public interest. N.J.S.A. 56:6-19(c).
It is a fallacy to state that the right of termination is bilateral. The oil company can always get another person to operate the station. It is the incumbent dealer who has everything to lose since, even if he had another location to go to, the going business and trade he built up would remain with the old station.
The relationship between Shell and Marinello is basically that of franchise. The lease is an integral part of that same relationship. Our Legislature in enacting the Franchise Practices Act, has declared that distribution and sales through franchise arrangements in New Jersey vitally affect the general economy of the State, the public interest and the public welfare. N.J.S.A. 56:10-2. The Act prohibits a franchisor from terminating, cancelling or failing to renew a franchise without good cause which is defined as the failure by the franchise to substantially comply with the requirements imposed on him by the franchise. N.J.S.A. 56:10-5.
The Act does not directly control the franchise relationship herein since Marinello's last renewal antedates the effective date of the statute. N.J.S.A. 56:10-8. However, the Act reflects the legislative concern over long-standing abuses in the franchise relationship, particularly provisions giving the franchisor the right to terminate, cancel or fail to renew the franchise. To that extent the provisions of the Act merely put into statutory form the extant public policy of this State. Cf. In re Arens, 41 N.J. 364, 384-387 (1964).
Even on this basis, Shell contends that it had good cause to serve notice of termination on Marinello. Its representatives *410 testified that Marinello did not keep the station in a neat, clean condition, and that frequent complaints to him about station appearance went unheeded. They also said that Marinello did not keep the station open the required period of hours, and that gasoline sales volume for the past three years had become stagnant.
Marinello, on the other hand, produced proof that the appearance of his station was good and the volume of gasoline pumped over the past three years was excellent for a neighborhood station. He said that his hours of operation since 1959 had been 6:30 A.M. to midnight. He asserted that he tried keeping open for 24 hours for a short while, but neighbors complained and Shell told him to stop. He attributed his present difficulties with Shell to his refusal to accede to Shell's request that he lower his price from 3¢ to 5¢ a gallon during an area "gas war." (Marinello said he would have had to absorb a loss from 2¢ to 4¢ a gallon.) He also said that he was told by the assistant district manager for Shell that one of the reasons his lease was not being renewed was he did not buy enough TBA.
The trial court found that Marinello had substantially performed his obligations in a satisfactory manner and had not given Shell any just cause to terminate the lease and franchise. The record amply supports this finding and conclusion. We will not disturb it.
We hold (1) that the lease and dealer agreement herein are integral parts of a single business relationship, basically that of a franchise, (2) that the provision giving Shell the absolute right to terminate on 10 days notice is void as against the public policy of this State, (3) that said public policy requires that there be read into the existing lease and dealer agreement, and all future lease and dealer agreements which may be negotiated in good faith between the parties, the restriction that Shell not have the unilateral right to terminate, cancel or fail to renew the franchise, including the lease, in absence of a showing that Marinello has failed to substantially *411 perform his obligations under the lease and dealer agreement, i.e., for good cause, and (4) that good cause for termination has not been shown in this case.
Based on the foregoing, Marinello's franchise, including his lease, would have legal existence for an indefinite period, subject to his substantially performing his obligations thereunder. We are not called upon to decide whether the relationship is so personal it would not survive Marinello's disability or death. We also reserve the question of the particular remedy to which Marinello would be entitled (injunctive relief or compensatory damages) should Shell in good faith opt to operate the station itself.
The lease and dealer agreement, of course, would be subject to revision to conform with current Shell dealer operational practices for the area. The good faith of the parties and the reasonableness of their respective positions in the negotiations would determine the existence of good cause should the negotiations fail and Shell give notice of termination.
The judgment of the trial court is modified so as to conform with this opinion, and, as modified, is affirmed.
For modification and affirmance Chief Justice WEINTRAUB, Justices JACOBS, PROCTOR, HALL, MOUNTAIN, SULLIVAN and GARVEN 7.
For reversal None.
NOTES
[1] The original lease and dealer agreement included Marinello and a partner. The partnership was dissolved in 1965 and Marinello continued as the sole tenant and dealer with Shell's approval.
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569 F. Supp. 399 (1983)
William OROSHNIK, Plaintiff,
v.
Richard SCHWEIKER, Secretary of HHS, Defendant.
Civ. No. 82-739.
United States District Court, D. New Jersey.
July 14, 1983.
*400 Gluck & Tobin, by James Fiore, Elizabeth, N.J., for plaintiff.
W. Hunt Dumont, U.S. Atty. by Lorraine Gerson, Asst. U.S. Atty., Newark, N.J., for defendant.
Freeman & Bass by Joel M. Solow, Newark, N.J., for applicant Freeman & Bass.
OPINION
BIUNNO, Senior District Judge.
Oroshnik filed complaint here to review the final decision of the Secretary of H.H.S. denying him retirement or old-age benefits under the Social Security Act for the year 1979. The review was under 42 U.S.C. § 405(g), and was successful. A judgment in favor of plaintiff was dated November 9, 1982, filed November 10, 1982, and entered November 12, 1982. It was silent in respect to either costs or attorneys fees.
Thereafter, the firm of Freeman & Bass, Esq. filed a notice of motion on June 10, 1983, addressed to the U.S. Attorney, for the allowance of attorney's fees. The motion was accompanied by copies of papers submitted to H.H.S. detailing the services rendered and time involved in representing claimant before the agency, correspondence indicating a request to HHS for attorneys fees and a statement of position indicating the amount of the past due benefits, that 25% of that amount had been retained, and that the application should be made to the court in the first instance. There was also an affidavit in respect to services rendered in the proceedings here. All of these papers, presumably, were intended to comply with the practice specified by the U.S. Court of Appeals in the exercise of its supervisory function, and recorded in cases such as Lindy etc. v. American Radiator, etc., 540 F.2d 102 (CA-3, 1976); Merola v. Atlantic, etc., 515 F.2d 165 (CA-3, 1976) and Hughes v. Repko, 578 F.2d 483 (CA-3, 1978).
The difficulties with the motion are manifold. The major difficulty is that by substitution dated August 31, 1982 and filed September 20, 1982, the firm of Freeman & Bass, Esqs. was replaced by the firm of Gluck & Tobin, Esqs. who made the presentation, and drafted the final judgment. Thus the first question is whether Freeman & Bass, Esqs. have any standing, i.e., can be recognized or heard, as the attorneys applying for the allowance of fees.
There can be only one attorney of record. This is true in all proceedings, civil or criminal, in both the State and Federal courts in this district. A party may have as many lawyers working on his case as he wishes, presumably so long as he is willing and able to pay them, or can stir them into championing his cause. They may do research, or interviews, or consultation, or drafting of documents, or serve any other function. But to handle the case in court, only one lawyer (or one firm of lawyers) may serve as attorney of record. Any other who appears in court to speak, whether to present argument, question witnesses or address jurors, can do so only on an "of counsel" basis to the attorney of record. This is fundamental.
Since the firm of Freeman & Bass, Esqs. is no longer the attorney of record in this case, they cannot make an application for the allowance of attorneys fees. The application for that purpose would need to be made on their behalf by the attorney of record.
The second difficulty is that the court lacks authority to make any allowance of fees here for services rendered before the Secretary. The basis for allowing the fees is found in 42 U.S.C. § 406, subsection (a) dealing with the regulation of fees before the agency and subsection (b) dealing with fees for "such representation", obviously meaning representation before the *401 court. The amount allowable in the aggregate, however divided, is 25% of the past benefits recovered. See, e.g., Morris v. Soc. Sec. Admin., 689 F.2d 495 (CA-4, 1982).
Unlike the attorneys fees allowable under other statutes, such as 42 U.S.C. § 1988, or under the Equal Access to Justice Act, 28 U.S.C. § 2412(b), the fees authorized to be set by 42 U.S.C. § 406 are not amounts to be paid by the adversary in addition to the damages recovered under the judgment. Instead, the amounts set (subject to the maximum of 25% aggregate) are amounts authorized to be paid by the claimant/client to the lawyer out of the recovery of "past-due benefits to which the claimant is entitled by reason of such judgment."
The third difficulty is that the affidavit of the claimant/client out of whose past benefits the allowance (when authorized) is paid, opposes the allowance on the ground that he was dissatisfied with the services of Freeman & Bass, Esqs., and asked that Gluck & Tobin, Esqs. be substituted, which they were. This raises a question whether this court should make any allowance to the Freeman & Bass firm for representation before the court, to be paid out of the client's pocket.
There is also a second motion, returnable July 25, 1983, by the Gluck & Tobin firm seeking the allowance of attorneys fees for services rendered in representation before this court, supported by affidavit detailing the services and the time. By oral motion under Rule 7(b)(1), hearing on it was advanced so that both could be heard on July 11, 1983.
This application is not open to the three difficulties in the way of the Freeman & Bass motion. The applicant is the attorney of record, the application does not seek allowance for services except before this court, and the claimant/client is satisfied with the services and willing to have such fee as the court may set paid out of the recovery of past benefits (subject to the 25% maximum).
However, it faces other difficulties and these are common with further difficulties with the Freeman & Bass application.
The first of these is that the court has no information about the arrangements made with the claimant/client for compensation, subject to the statute, at the first engagement, or at the time of the substitution, or between the two law firms. In the typical case where attorneys fees are allowed (and to be paid in addition to any judgment) there are many different ways in which the presentation comes up. There may be one lawyer or law firm throughout but with more than one individual working on the case; or there may be an attorney of record rendering services as well as some other lawyer serving in another capacity in the litigation, and so on. Sometimes the allowance is made to one lawyer or firm who, in turn, allocates a proper portion to some other lawyer or firm in compliance with the Code of Professional Responsibility, see, especially DR-2-107. When the court is informed of the arrangement between the lawyers and with the party, it may make the allocation itself. In any case, those are matters usually dealing with amounts to be paid by someone other than the client and do not necessarily set the amount to be paid by the client in addition to the allowance to be paid (if at all) by the adversary.
Here, the statute controls the entire amount to be paid by the client, and limits payment in the aggregate to 25% of the past-due benefits recovered. Thus, the usual pattern is not helpful.
The other difficulty common to both motions is that of timeliness. If the motion be one to alter or amend the judgment it is governed by Rule 59, F.R.Civ.P. and paragraph (e) thereof calls for service not later than 10 days after entry, a time which may not be enlarged under Rule 6(b), F.R.Civ.P. That question came up in White v. New Hampshire, etc., 455 U.S. 445, 102 S. Ct. 1162, 71 L. Ed. 2d 325 (1982) in connection with an application for attorneys fees under 42 U.S.C. § 1988, where the allowance is authorized "as part of the costs". The court felt that reflected an intention on the part of Congress to bring the application on through Rule 54(d), F.R.Civ.P., and it said *402 that the district courts were free to set time limits by virtue of local rule.
That analysis is not helpful here because General Rule 23 of this District sets a 30 day limit for an application for costs, after which costs are taken as waived. While that time limit is no doubt serviceable where attorneys fees are allowable as part of the costs, it is doubtful that it applies here because the enabling statute, 42 U.S.C. § 406(b), makes the fees allowable "as part of the judgment", which seems to bring the application within Rule 59(e) when the judgment is silent about fees. This is not the case with costs, which are allowed to the prevailing party as of course when the judgment is silent, see Rule 54(d), F.R. Civ.P.
Relief may be available under Rule 60, F.R.Civ.P., but the moving papers are silent in this regard. Also, since the allowance, if made, does not increase the expense to the United States, the Secretary has taken no position on these unsettled questions.
The timeliness question is further complicated by the different forms in which a claimant may be successful in the court proceedings or before the Secretary.
When the Secretary denies benefits, and the judicial review culminates in a judgment vacating the final decision and remanding for further proceedings, it is doubtful that the court could pass on an application for fees other than to say that a reasonable allowance is $X., or so much thereof as does not exceed 25% of the then past-due benefits, if ultimately allowed. This would be no more than a contingent or hypothetical disposition because it is only rarely that such a case later returns after remand. If, on remand, the claim is still denied, no fee at all would be allowable.
On the other hand there are instances where it is possible to say, within the narrow scope of review, that the denial was erroneous and that the claim should have been allowed, as was the case here. In those proceedings, there is nothing more to be done or decided by the Secretary beyond calculating the past benefits and future benefits (which may be in different monthly sums). Yet, the court has no way of knowing at the time judgment is entered what the past benefits will be and so cannot calculate the 25% limit.
This is much like what occurred in Morris v. Soc. Sec. Admn., 689 F.2d 495 (CA-4, 1982). There, the judicial review culminated in a remand. On the further proceedings before the Secretary, the claim was eventually allowed, as was an attorneys fee for successful representation before the agency, under 42 U.S.C. § 406(a). Since the allowance was for less than 25% of the past benefits, application was then made to the court for an allowance for representation there, and this was allowed but limited to the difference between the fee set by the Secretary for services there, and the 25% aggregate limit set by the statute. While the case unfortunately is silent on the matter of time limits for applications to the court, it is obvious that the application would have been untimely under any standard except one measured from the time when the amount of the past benefits was first set, thus making it possible to calculate the 25% limit.
Under these circumstances, the best that can be said is that the statute leaves timeliness of the application to be dealt with by local rule, as in White, supra. Contrast the Equal Access to Justice Act, which requires that the application for fees and other expenses be submitted "within thirty days of final judgment in the action", 28 U.S.C. § 2412(d)(1)(B). That statute does not apply here because the subject is covered by 42 U.S.C. § 406(b).
Turning to the certification of services by Freeman & Bass, Esqs., the original attorneys of record, it shows itemization of services and time totalling 3.75 hours from the preparation and filing of the complaint in this court through the execution and filing of the substitution of attorney, over the period from March 2, 1982 to September 20, 1982. Time thereafter, which involved learning the outcome, receiving and reviewing the decision of the court, amounts to 0.75 hours and cannot be counted since *403 plaintiff/client derived no benefit therefrom having any relation to the outcome or the amount of his past-due benefits.
The certification sets out no information about the usual and customary hourly rate of the attorney who rendered the services. Judging from the nature, extent and simplicity of the papers filed (the complaint is a single typewritten page, and the substitution is a printed form with blanks), the sum of $150. seems to be a reasonable sum for representation before the court by Freeman & Bass. (3 hours at $50. per hour).
The certification also states that the original retainer agreement made November 12, 1980 was for a "fee of 25% of all past due benefits received by the plaintiff", and it is asserted that these amount to $2,066.80, of which $516.70 is being withheld by the Social Security Administration for possible application to attorney fees if allowed by the court.
Of course, this description is to be read in the context of the provisions of 42 U.S.C. § 406, under which it means that the client agreed to pay a reasonable attorney's fee, in such amount as might be determined by the agency or by the court, as the case may be, payable only in the event that the outcome was successful and even then subject to a maximum of 25% of the past-due benefits to which the claimant was entitled. Future benefits that may ensue play no part in the calculation.
The certification of the substituted attorneys, Gluck & Tobin, Esq., details services totalling 27 hours in connection with the proceedings before this court. Of this total, time involved in sending a copy of the ruling here to the former attorney, discussing it with him, conferring with the client and engaging in phone and telephone communications with the former attorneys and negotiating their fee claim, must be excluded as this time relates to an aspect having nothing to do with the outcome of the case or establishing the past-due benefits to which claimant was entitled by reason of the suit here. These items aggregate 2.25 hours, and their deduction leaves a net time of 24.75 hours. The items appear reasonable, the papers filed or submitted reflect the effort involved, and the court is naturally aware of the time involved in coming to court on the date set for oral argument, waiting to be reached, and presenting argument.
This second certification discloses that the agreed rate arrived at with plaintiff was $95. per hour. Of course, this is also to be read in the context of 42 U.S.C. § 406, as outlined above. In comparison with the $50. per hour rate used for the relatively simple tasks performed up through substitution, the rate agreed on appears reasonable since a higher level of professional skill was called for during the briefing and argument stages. The court sets the amount of $2,351.25 as a reasonable allowance for the services rendered in this court by Gluck & Tobin, Esqs.
The combined sum of $150. and $2,351.25, or $2,501.25, is treated as an allowance to the attorney of record, Gluck & Tobin, Esqs., who are authorized to divide the same with Freeman & Bass Esqs., by paying them $150.00 thereof.
However, these figures are necessarily tentative since the base on which the 25% limit must be calculated is not known at this time.
The original claim for retirement insurance benefits, filed December 7, 1978 at the Plainfield Branch Office shows that it was filed not only for Mr. Oroshnik, but, by checking the "Yes" box on page 3, it was also filed to protect his wife's right to social security benefits as she was already 62 and was eligible on his earnings record. See Exh. 1, Transcript pp 77-80. Also, the decision of the ALJ mailed September 22, 1981 dealt with both Mr. Oroshnik's benefits and his wife's benefits, and while it was a denial generally for the calendar year 1979, it did find an entitlement to benefits for the months of March, June, August and October, which amount to a combined recovery for both of $1,462.10 compared to the earlier complete denial.
Presumably, application may be made to the Social Security Administration under 42 *404 U.S.C. § 406(a) for an allowance based on that figure as the base for the 25% maximum for services before the agency, but the court has no voice in that aspect and expresses no opinion on it. However, if that sum is one successfully recovered in the proceedings before the agency, it will need to be deducted from the total amount of past-due benefits to which Mr. & Mrs. Oroshnik were entitled to receive by reason of the judgment here. The amount cannot be counted twice.
The attorney of record will accordingly need to obtain a certification from the Social Security Administration to establish the amount of the past-due benefits to which Mr. & Mrs. Oroshnik became entitled by reason of the judgment here, as of the date the judgment was entered, which was November 12, 1982. No benefits accruing or payable thereafter are to be included since they are future benefits after judgment, not past-due benefits.
The controls and limitations placed in 42 U.S.C. § 406 at various times are shown by the legislative history to reflect a concern by Congress that claimants be protected against any obligation to pay other than reasonable fees, and in no event not more than 25% of past-due benefits. The court takes care to see that this objective is achieved.
No order fixing the precise allowance can be entered until the certification is received. A form of order may be submitted at the same time the SSA certification is served on the U.S. Attorney and filed. In the event that the 25% limit be less than the amounts mentioned above, after deduction for such past-due benefits for which entitlement was established by the agency decision, then the allowance shall be reduced to that limit, and the authority to divide with the original attorney of record shall be prorated accordingly.
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307 A.2d 757 (1973)
Agatha M. LEE, Appellant,
v.
Bernard N. LEE, Appellee.
No. 6649.
District of Columbia Court of Appeals.
Argued February 28, 1973.
Decided July 20, 1973.
*758 Jess Joseph Smith, Upper Marlboro, Md., pro hac vice, member of the bar of the State of Md., with whom Arthur J. Whalen, Jr., Washington, D. C., was on the brief, for appellant.
Bruce R. Harrison, Seat Pleasant, Md., for appellee.
Before NEBEKER, YEAGLEY and HARRIS, Associate Judges.
YEAGLEY, Associate Judge:
The wife appeals from a judgment granting to the appellee-husband an absolute divorce on the ground of voluntary separation for more than one year,[1] awarding custody and child support to the wife-appellant and ordering a division of their real property, one house located in the District of Columbia, one in Maryland and twelve lots. The two houses were rental properties, the family having last resided together in a house owned by appellant's now deceased mother. We affirm.
The parties lived together as man and wife from the time of their marriage on December 30, 1956, until sometime between January 15 and January 28, 1968, at which time they mutually agreed to separate. They have lived separate and apart continuously from that date without cohabitation. During their marriage one child was born on August 21, 1957.
In 1968, after the separation, appellant filed an action for custody and child support, which she was granted. On March 22, 1969, appellee filed an action in Superior Court for an absolute divorce on the ground of voluntary separation for more than one year. Appellant filed a counterclaim for absolute divorce on the ground of desertion and asked for a division of the jointly owned property and for an increase in child support.
On March 7, 1972, the court granted the husband an absolute divorce on the ground of voluntary separation for more than one year and denied the wife's request for a divorce on the ground of desertion. A division of the real property was ordered with the appellant-wife getting the rental house *759 in Maryland, the husband getting the rental house in the District of Columbia, and the parties each getting six of the twelve unimproved lots in Maryland. The court also increased the child support from $125 to $150 per month.
Appellant raises three issues on appeal:
(1) Whether the court erred in not granting the divorce on the ground of desertion;
(2) Whether the court erred in making an equal division of the real property; and
(3) Whether the court erred in not granting more child support than it did.
Appellant contends that since she did not initially voluntarily separate from the husband, the trial judge erred in not granting the divorce to her on the ground of desertion by the husband, and for the further reason that she attempted reconciliation during the time of separation. As a consequence, she argues that even if the initial separation was voluntary, it became involuntary on her part during the separation.
The trial court found and we agree that the initial separation was voluntary. However, at trial both parties testified that appellant had at one time contacted appellee approximately three months after the initial separation and requested that he return home, but he refused to do so.
One of the essential elements that must be established by the party moving for a divorce based upon voluntary separation is that the separation was voluntary for the statutory period.[2]
In each case the trial judge must decide from all the testimony whether the spouse who disputes that the separation was voluntary did in good faith manifest a real desire to continue the marriage status. "Manifest" connotes a plain or open showing of a desire to resume the marital relationship which must be directed to the petitioning party. . . .[3]
The appellant's own testimony on cross-examination shows that her request that the appellee returned home was not intended as an invitation to resume the marital relationship. In answer to the question: "Did you ask your husband to return and resume the marriage?" she responded, "Well, I did not ask him to return to resume the marriage. I asked him if he would return to the home frankly, for the benefit of the child." [Tr. at 46.]
It is clear from the foregoing testimony that appellant did not "manifest" a desire to resume the marital relationship and thus did not exhibit the "plain or open showing" that is necessary to change the characterization of the separation.
In regard to appellant's contention that she had been deserted by her husband we have said previously:
In order to establish desertion, it must be shown that there was "a voluntary intentional abandonment of one party by the other, without cause or justification and without the consent of the party abandoned." In the present case the record reveals that the husband consented to if, in fact, he did not compel his wife's departure from the marital abode. . . . (Citations omitted.) [Novak v. Novak, D.C.App., 212 A.2d 341, 342 (1965).]
This case is similar except here it was the wife who agreed to the departure. Since the separation stands as being voluntary, we hold that the trial court did not commit *760 error in refusing to grant appellant an absolute divorce on the ground of desertion.
Appellant secondly contends that it was error to divide the real property equally among the parties. Our Code provides that the trial court has in its exercise of sound discretion the right to divide the real property "in such manner as seems equitable, just, and reasonable". D.C.Code 1967, § 16-910. Both parties were employed and the court made a finding that the parties contributed equally to the purchase and upkeep of the properties. The court had before it the relevant details, including the cost of the properties, the cost of maintenance, the source of payments and the unpaid balance on each mortgage. Each case must be decided on its own particular circumstances and the record here reflects that there was ample evidence to support the court's findings. We are satisfied that the trial court considered all relevant factors and we cannot say that it abused its discretion in attempting to divide the property equally. Leibel v. Leibel, D.C.App., 190 A.2d 821 (1963); Lundregan v. Lundregan, D.C.Mun.App., 176 A.2d 790 (1962). Cf. Mumma v. Mumma, D.C.App., 280 A.2d 73, 75 (1972).
Lastly, the appellant contends that the trial court did not grant a fair increase in child support. In this area, as in the division of property, the court has wide discretion which will not be disturbed except for a clear abuse of that discretion.[4] The trial court had before it adequate financial information as to each party, and data regarding the expenses of caring for the minor child, and considered all such information in making its determination as to reasonable child support. On this record we cannot say that the award for child support was an abuse of the discretion that necessarily must be lodged in the trial court.
Affirmed.
NOTES
[1] D.C.Code 1967, § 16-904.
[2] Henderson v. Henderson, D.C.App., 206 A.2d 267 (1965).
[3] Id. at 269.
[4] Dawson v. Dawson, D.C.App., 193 A.2d 70 (1963).
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63 N.J. 287 (1973)
307 A.2d 78
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
ANN MARIE CHAMBERS, DEFENDANT-APPELLANT. STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
DORIS VACCA, DEFENDANT-RESPONDENT. STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
VIOLA CANFORA, DEFENDANT-APPELLANT. STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
KATHERINE E. PURSGLOVE, DEFENDANT-APPELLANT. STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
DOROTHY COGLIANO, DEFENDANT-APPELLANT. STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
DOROTHY C. VERSACE, DEFENDANT-APPELLANT.
The Supreme Court of New Jersey.
Argued May 8, 1973.
Decided June 26, 1973.
*290 Mr. Edward Roy Rosen, Deputy Attorney General, argued the cause for the State of New Jersey (Mr. John A. Brogan, and Mr. Alfred J. Luciani, Deputy Attorneys General, on the brief; Mr. George A. Kugler, Jr., Attorney General of New Jersey, attorney).
Mr. Herman J. Ziegler argued the cause for appellant Canfora and respondent Vacca.
Mrs. Annamay T. Sheppard argued the cause for respondent Vacca and amicus curiae American Civil Liberties Union.
Mr. Benjamin Asbell argued the cause for appellant Pursglove (Messrs. Asbell, Ambrose, Ergood & Asbell, attorneys).
Mr. Harlan L. Schlossberg appeared for appellant Cogliano (Mr. Avrom J. Gold on the brief; Messrs. Mandelbaum, Mandelbaum & Gold, attorneys).
*291 Ms. Jane G. Kleinfeld, Asst. Deputy Public Defender, appeared for appellant Versace (Ms. Susan T. Sinins, Assistant Deputy Public Defender, on the brief; Mr. Stanley C. Van Ness, Public Defender, attorney).
Mr. Charles Camp Cotton appeared for appellant Chambers.
The opinion of the Court was delivered by SULLIVAN, J.
These six cases, consolidated on appeal and certified while pending unheard in the Appellate Division, are a sequel to State v. Costello, 59 N.J. 334 (1971) wherein the Court questioned the constitutionality, on equal protection grounds, of the present New Jersey statutory provisions for the custodial sentencing of female criminal offenders insofar as they require the sentencing of a female offender for an indeterminate term in a situation where a male offender would be sentenced to State Prison for a minimum-maximum term for the same offense.[1] The statutory provisions in question are set forth in full in Costello and need only be summarized.
Generally, all female offenders who are given custodial sentences (except those sentenced to a county jail, penitentiary or workhouse), are sentenced to the Correctional Institution for Women for an indeterminate term not to exceed five years or the statutory maximum for the crime if that is less. (A female convicted of murder or manslaughter must be sentenced for a minimum-maximum term, unless the sentence is for life.) If the statutory maximum for the particular crime is longer than five years the court may impose an indeterminate sentence greater than five *292 years and up to the statutory maximum for the crime. Within these limits, the actual length of time to be served by a particular female inmate is determined entirely by the institution's board of managers, who may end the term at any date between commitment and the applicable maximum.
A male offender, on the other hand, even though convicted of a similar crime, if he is sentenced to State Prison receives a minimum-maximum term (except for life imprisonment) and is subject to release under specified statutory standards. The disparity is discussed by Justice Hall in Costello as follows:
"* * * First, in the case of males, minimum and maximum terms are fixed by the judge and the maximum may be less than the statutory maximum permitted for the particular crime. In the case of females, the sentence must be for an indeterminate term with the maximum fixed by N.J.S.A. 30:4-155 at five years or that prescribed by the statute governing the particular crime if such is less than five years. The sentencing judge may not prescribe a lesser maximum (State v. Lavender, 113 N.J. Super. 576 (App. Div. 1971)), but he may, pursuant to the cited section, for good cause, direct a greater maximum up to that authorized by the statute governing the crime. Second, the minimum-maximum sentences of male inmates of the state prison are reduced for `continuous orderly deportment' in accordance with a schedule prescribed in N.J.S.A. 30:4-140. Comparable inmates of the women's institution receive no such benefit. (As to sentence credits for work performed, see N.J.S.A. 30:4-92.) Third, male inmates of the state prison are eligible for parole consideration by the State Parole Board when a certain statutorily designated portion of the sentence has been served. N.J.S.A. 30:4-123.10 and 123.12. (This does not, of course, mean that every inmate will be released on parole when he is first eligible for consideration.) There is no such provision relating to inmates of the women's institution; as to them, as we have said, release and consideration therefor is entirely in the hands of the board of managers without any statutory directions or guidelines." 59 N.J. at 342-343.
As an example of what can happen under the two statutory schemes, Justice Hall pointed to the female defendant Costello who had pleaded guilty to bookmaking and two ancillary charges and received the mandatory indeterminate sentence.
*293 "* * * Defendant could be held on the bookmaking conviction for as long as five years (although it is most unlikely that she would be). A first offender male, convicted of the same crime, would likely receive a state prison sentence of not less than one nor more than two years. He could not be confined for more than two years, less good behavior and work credits, and, assuming maximum such credits, would be eligible for parole, and, considering the nature of the offense, quite likely paroled in 4 months and 28 days. See Administrative Office of Courts, Sentencing Manual for Judges (July 1971 edition), Appendix B." 59 N.J. at 343.
In Costello, 59 N.J. at 345, we said that the statutory provisions for disparate sentencing based on sex fell into the category of special treatment given a selected class which "impinges seriously on fundamental personal interests" and required a substantial justification empirically grounded to the greatest extent possible. However, we recognized that the question had been raised for the first time on appeal and without any record. We concluded that the issue could not properly be determined on the bold approach of an attack on the face of the statutory scheme and that the State should have the opportunity to present formal proofs in support of its thesis that the statutory scheme rests on a solid basis from the standpoint of both societal benefit and the welfare of the females themselves. Accordingly, we remanded for a full adversary hearing to be followed by appropriate findings and conclusions.
Following the remand defendant Costello cooperated with the prosecuting authorities, see 59 N.J. supra at 346, and was resentenced to the Camden County jail for a term of three months so that in her case the constitutional issue became moot. However, the same question has been raised in each of the six appeals now before us. All six cases involve females who had either pleaded guilty to gambling charges or were tried and found guilty of gambling offenses. Five of the six female defendants were over 30 years of age. One, defendant Versace, was under 30 years of age. All of them received custodial sentences for an indeterminate term.
*294 In one of the cases, Vacca, the defendant challenged the constitutionality of her indeterminate sentence by a petition for post-conviction relief and a full adversary, Costello-type hearing was held at which the State sought to establish a legal basis for the disparate sentencing schemes. At the conclusion of the hearing the trial court, in summary, found there was an absence of empirical data to justify the State's position. He declared the indeterminate sentencing scheme under N.J.S.A. 30:4-155 relating to women over 30 years of age to be unconstitutional[2] and ordered that defendant Vacca be resentenced for a minimum-maximum term. The State has appealed this order and decision. In the other five cases the defendants prosecute appeals challenging the constitutionality of the disparate statutory sentencing schemes. As heretofore noted, all these appeals have been consolidated.
For reasons hereinafter set forth, we conclude that the statutory provisions (N.J.S.A. 30:4-155) for the sentencing of a female offender to an indeterminate term are unconstitutional in a situation where a male offender convicted of the same offense would be sentenced to State Prison for a minimum-maximum term.[3]
As we noted in Costello, supra, 59 N.J. at 344, a number of jurisdictions have held that disparate sentencing schemes based on sex are not constitutionally invalid. The rationale of these decisions is that female criminals were more amenable and responsive to rehabilitation and reform than males, but might require a longer period of confinement in a different type of institution. One case holds to the contrary, *295 finding no "reasonable and justifiable difference or deterrents between men and women which would justify" disparate sentencing schemes. Commonwealth v. Daniel, 430 Pa. 642, 243 A.2d 400, 404 (1968).
At the post-conviction hearing in Vacca, the State attempted to satisfy the burden of showing a substantial empirically grounded justification for the disparate statutory sentencing schemes. Evidence was presented as to the physical facilities available and how the program for female inmates operates, its aim being rehabilitation. It was shown that female inmates are easier to control and require less security measures. However, almost all the witnesses agreed that there was no sound penological basis justifying indeterminate sentences for females and minimum-maximum sentences for males for the same offense. The real thrust of the State's proofs was that indeterminate sentences were preferable for both males and females since they provided both an incentive as well as an opportunity to achieve rehabilitation. It was suggested that a statistically lower rate of recidivism for females showed they were more amenable to rehabilitation. However, the validity of this conclusion was rendered questionable because of variances in the method of compiling statistics for males and females respectively. Most of the witnesses affirmatively stated that they could find no basis for concluding that it takes longer to rehabilitate females than to rehabilitate males, or that females were better subjects for rehabilitation than males.
The State contends, on the basis of statistical data, that females sentenced to indeterminate terms do not actually serve longer sentences than males do for the same offense. In truth, the available data does not support the State's position, but, even if it were the fact, the potentiality for a particular female serving a longer sentence than a male for the same offense would be present.
Generally, legislative selection of a class for special treatment can be justified where there is some rational basis *296 between the classification and the object sought to be achieved. However, certain classifications by their very nature are inherently suspect and will be subjected to close judicial scrutiny as to whether a fundamental constitutional right is being impaired. Graham v. Richardson, 403 U.S. 365, 376, 91 S. Ct. 1848, 1854, 29 L.Ed.2d 534, 544 (1971).
Here involved is confinement in a penal institution a restraint on one's liberty, one of the most basic human rights. The proposition that a female offender, for the same offense, can be lawfully confined longer than a male solely because she is a female would be unconstitutional on its face. The rationale for the classification and the different sentencing procedure that females are better subjects for rehabilitation, thereby justifying a potentially longer period of detention for that purpose finds little or no support, empirical or otherwise, in the record. Cf. Frontiero v. Richardson, 411 U.S. 677, 93 S. Ct. 1764, 36 L.Ed.2d 583 (1973); Reed v. Reed, 404 U.S. 71, 92 S. Ct. 251, 30 L.Ed.2d 225 (1971).
Analyzing the proofs, the most that has been shown is that there are differences in the emotional behavior of men and women. However, basically, there are no innate differences in capacity for intellectual achievement, self-perception or self-control, or the ability to change attitude and behavior, adjust to social norms and accept responsibility.
To the extent the provisions of N.J.S.A. 30:4-155 provide for disparate sentencing of female offenders, they violate the equal protection clause of the Fourteenth Amendment of the United States Constitution and are hereby declared to be void. A female offender must receive the same sentencing treatment a male offender would receive for the same offense. Moreover, where a sentence fixing a minimum-maximum term is imposed on a female, she shall be entitled, in addition to work credits, to have remitted from her sentence, for continuous orderly deportment, the progressive *297 time credits indicated in the schedule in N.J.S.A. 30:4-140.[4]
The history of sentencing statutes shows that special sentencing treatment for women is an outgrowth of a change in the legislative attitude toward youthful offenders. Prior to 1895 all persons convicted of a crime were sentenced to State Prison for a definite term. No distinction was made because of age or sex. In 1895 a separate reformatory for young males between the ages of 16-30 was established. L. 1895, c. 357, and by L. 1901, c. 104, it was provided that the court in sentencing to the Reformatory should not fix or limit the duration of sentence. The basis for the establishment of a facility other than State Prison for youthful offenders with confinement for an indefinite term was the hope that the associations there, together with suitable treatment and training, would more likely foster rehabilitation. See State v. Horton, 45 N.J. Super. 44, 47-48 (App. Div. 1957). Termination of confinement (subject to the statutory maximum term for the offense) was dependent, inter alia, upon accomplishment of rehabilitation. In re Zienowicz, 12 N.J. Super. 563, 571 (Cty. Ct. 1951).
The foregoing type of special treatment was applied to women by L. 1910, c. 72, which established a Reformatory for Women, ordered the transfer of all women from State Prison to the new facility, and required that the court in sentencing to the Reformatory for Women not fix or limit the duration of sentence.
In 1911 a minimum-maximum term sentence was introduced and made applicable to all sentences to State Prison, L. 1911, c. 191. However, women were no longer confined there.
*298 Thus it will be seen that the special sentencing provided for women was a departure from the original statutory plan of equal sentencing treatment for both men and women. In striking down that departure as a denial of equal protection we are left with a sentencing scheme applicable to every person regardless of sex.
This brings us to the question of the proper disposition of the six cases before us. In five of the six cases, Chambers, Vacca, Canfora, Pursglove and Cogliano, the female defendants were over 30 years of age and were sentenced to serve custodial sentences at the Correctional Institution for Women. Since a male defendant over 30 years of age given a custodial sentence for the same crimes would be sentenced for a minimum-maximum term at State Prison, these defendants are to be resentenced and given sentences for minimum-maximum terms. In one of these five cases, Canfora, the defendant was originally sentenced for a term of 1 to 2 years at the Correctional Institution for Women. This sentence was declared illegal by the Appellate Division and defendant was then resentenced for an indeterminate term at the same institution. In resentencing this defendant pursuant to the mandate of this Court, the trial court should be cognizant of the minimum-maximum term originally imposed.
In the sixth case, Versace, the female defendant was under 30 years of age at the time she was originally sentenced for an indeterminate term at the Correctional Institution for Women. On her appeal the Appellate Division remanded the matter to the trial court to determine whether, if she had been a male, she would have received an indeterminate reformatory sentence or a minimum-maximum State Prison sentence. See Costello, supra, 59 N.J. at 342, n. 3. On the remand the trial court stated that if she had been a male, under the circumstances, it would have imposed a sentence of 1 to 1 1/2 years at State Prison. The foregoing requires that this defendant be resentenced for *299 a minimum-maximum term at the Correctional Institution for Women. In doing so, the sentencing judge should be cognizant of the minimum-maximum term the trial court said it would have imposed had defendant been a male.
Next, we consider the question of other female offenders sentenced to serve or serving custodial intermediate sentences at the Correctional Institution for Women. Females convicted of murder or manslaughter are given minimum-maximum terms unless their sentences were for life. Of the remaining offenders, not all of them are eligible to have their indeterminate sentences changed to minimum-maximum terms, and some, even though they may fall within the scope of this opinion, may prefer to stay with the indeterminate sentences imposed. The choice is theirs.
The State is to give prompt written notice to each female sentenced to serve, or now serving, an indeterminate sentence at the Correctional Institution. If the female was more than 30 years of age at the time of sentencing, she shall be notified that she has the right to be resentenced for a minimum-maximum term, but must make application therefor. within 60 days after receipt of the notice. If the female was under 30 years of age at the time of sentencing, she shall be notified that she has the right to apply to the trial court for a determination whether, had she been a male, she would have been sentenced to the Reformatory Complex or State Prison. Said application must be made within 60 days after receipt of the notice. If it is determined that the sentence would have been to State Prison, she shall be resentenced for a minimum-maximum term.
Finally, we consider future sentencing of female offenders. The standard must be equal treatment without regard to sex. A female offender under 30 years of age given a custodial sentence at the Institution shall receive an indeterminate sentence in a situation where, if she were a male, she would have been sentenced to the Reformatory Complex. If the sentence for a male would have been to State Prison, *300 the female shall be sentenced for a minimum-maximum term at the Institution. Females more than 30 years of age and sentenced for a custodial term to the Institution, shall have a minimum-maximum fixed. (Females convicted of murder or manslaughter are now required to be sentenced for minimum-maximum terms unless a life sentence is imposed. N.J.S.A. 30:4-155).
Appellants Chambers, Pursglove, Cogliano and Versace also argue that the custodial sentences imposed on them are manifestly excessive. We have reviewed the record in each case, including the presentence report, and conclude that the imposition of a custodial sentence on each of these defendants is not unduly punitive.
CONFORD, P.J.A.D., Temporarily Assigned (concurring).
I join the opinion of the Court, but would add the following. The rationale of the plurality opinion of the United States Supreme Court in Frontiero v. Richardson, 411 U.S. 677, 93 S. Ct. 1764, 36 L. Ed. 2d 583 (1973), satisfies me that where an interest of the magnitude of freedom from or minimization of penal incarceration is concerned an individual female cannot constitutionally be given more severe sentencing treatment for the same offense than that by law accorded males as a class on the basis of any characteristics thought or even proved to be applicable to females generally, or as to most of them.
I would therefore join in the decision of the court even if the record here justified the factual conclusion that most female offenders, or female offenders generally, are better subjects for rehabilitation than males, or less recidivist, or that a longer period of detention would promote the chances for rehabilitation of female offenders generally as opposed to male offenders generally.
In State v. Vacca for affirmance Chief Justice WEINTRAUB, Justices JACOBS, PROCTOR, HALL, MOUNTAIN and SULLIVAN, and Judge CONFORD 7.
*301 For reversal None.
In all other cases for affirmance and remand with directions Chief Justice WEINTRAUB, Justices JACOBS, PROCTOR, MOUNTAIN and SULLIVAN, and Judges CONFORD and COLLESTER 7.
For reversal None.
NOTES
[1] Male offenders between the ages of 15 and 30 years convicted of a crime punishable by imprisonment in State Prison may be sentenced to the Youth Correctional Institutional Complex under certain circumstances. Such a sentence is for an indeterminate term similar in effect to sentences imposed on females.
[2] The trial court's reasoning would also invalidate indeterminate sentencing of women between the ages of 16 and 30 years who, if they were male, would have been sentenced to State Prison for a minimum-maximum term.
[3] We do not have occasion to consider whether disparate sentencing based on age has 14th Amendment implications.
[4] The proposed New Jersey Penal Code eliminates disparate sentencing based on sex. All persons are treated alike for purposes of sentencing. Only separate places of confinement, whether reformatory or imprisonment, are required. The Code does permit special sentencing of young adult offenders based on their age. See generally Section 2C, Chapter 43.
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269 Md. 583 (1973)
307 A.2d 683
STATE OF MARYLAND
v.
KRAFT
[No. 344, September Term, 1972.]
Court of Appeals of Maryland.
Decided July 30, 1973.
Certiorari denied May 13, 1974.
The cause was argued before MURPHY, C.J., and BARNES, McWILLIAMS, SINGLEY, SMITH, DIGGES, and LEVINE, JJ.
George A. Eichhorn, III, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Gary Melick, Assistant Attorney General, and Joseph D. Weiner, State's Attorney for St. Mary's County, on the brief, for appellant.
Neal P. Myerberg for appellee.
Certiorari denied, Supreme Court of the United States, May 13, 1974.
SMITH, J., delivered the opinion of the Court. MURPHY, C.J., and McWILLIAMS AND LEVINE, JJ., dissent and LEVINE, J., filed a dissenting opinion in which MURPHY, C.J., and McWILLIAMS, J., concur at page 618 infra.
The sole question presented in this case is the validity of a search warrant, whether the affidavit properly established probable cause. The Court of Special Appeals in Kraft v. State, 16 Md. App. 347, 297 A.2d 328 (1972), held the warrant should not have been issued. We granted certiorari in order that we might consider the question, particularly in the light of our holding in State v. Edwards, 266 Md. 515, 295 A.2d 465 (1972). For reasons which we shall set forth, we conclude the Court of Special Appeals erred in its holding.
The warrant in question was issued upon the basis of the application and affidavits of two deputy sheriffs of St. Mary's County. The application was for a warrant to search a residence in Lexington Park, St. Mary's County, said to be *585 "occupied by one; Betty (Blaylock) Kraft, and one David Thompson." At trial the rental agreement between the landlord and Mr. Thompson and Mrs. Kraft was placed in evidence. The information contained in the affidavit submitted to obtain the search warrant was as follows:
"That on or about 1 September 1971, one; Peter Fletcher, a known and convicted Heroin user was seen at this apartment. Further that on the 3RD of October 1971, information from a reliably established informant, who is responsible for eleven narcotics arrests, states that the Thompson subject is making trips to the Wash. D.C. area twice weekly to obtain narcotics, and is transporting them back into the County. Further, this informant states that he has personally observed the Thompson subject with 100 units of LSD on the 2ND of October 1971.
"Further, that on 4 October 1971, information from a second informant, who has provided reliable information to this Dept. for the past six months, and who has also purchased LSD and other narcotics from the Thompson [sic] in the past states that he had seen large quantities of LSD and amphetamines in the Thompson apt. on 3 October 1971. Further, on 6 October 1971, this same informant states that he personally observed a large quantity of LSD, described as; White Lightnings, and Orange Paradise, in a tin can in the refrigerator in the Thompson apt.
"The Kraft subject residing at this address is known by Dept. Clarke to be an admitted user of Heroin."
The Court of Special Appeals in striking down the warrant said in pertinent part:
"In the instant case the assertion that the first informant `is responsible for eleven narcotics arrests,' unsupported by further detail would not *586 enable the magistrate to conclude that that informant was credible or his information reliable. He was not told whether the cases had been tried or, whether they had resulted in acquittals or convictions. The magistrate was not informed whether materials found at the time of the arrests corresponded with the information supplied by the informant. He was not apprised as to the police assessment of the value of the information furnished by the informant, e.g., whether it amounted to more than an underworld rumor which, to be of any value, would have to be corroborated by independent information. The magistrate was not informed whether the informant's previously furnished information had always proved correct. See concurring opinion of Moylan, J. in Dawson v. State, 14 Md. App. 18, 284 A.2d 861 at 870.
"Referring to the second informant, it is clear the `reliable information' is too general to support reliability under Moore v. State, [13 Md. App. 711, 284 A.2d 614 (1971)]. The affidavit further says that the second informant has `purchased LSD and other narcotics from the [sic] Thompson in the past.' While admission of crime by an undisclosed informant may be an element to consider in determining that informer's credibility, U.S. v. Harris, [403 U.S. 573 (1971),] here the assertion of generally related criminal activity in the indefinite past cannot lend credibility to an informant who is baldly alleged to be reliable. [Citing cases in the Court of Special Appeals.] As to remoteness in time, see, Johnson v. State, 14 Md. App. 721, 288 A.2d 622.
"Although the statement `[t]hat on about 1 Sept. 1971, one; Peter Fletcher, a known and convicted Heroin user was seen at this apartment,' would add some slight support to the informants' information, unfortunately the statement is deficient in that the *587 observer is not identified. We cannot make the assumption that the observer was one of the affiants; the affiants could well have received this information from others. The final statement that `[t]he Kraft subject residing at this address is known by Dept. Clarke to be an admitted user of Heroin' is as bald and unilluminating an assertion as the statement `entitled to no weight' that `William Spinelli is known to this affiant and to federal law enforcement agents and local law enforcement agents as a bookmaker, an associate of bookmakers, a gambler, and an associate of gamblers.' Spinelli v. United States, [393 U.S. 410 (1969)]. See Grimm v. State, 7 Md. App. 491, 256 A.2d 333. Here, there is absolutely nothing to indicate the source of the officer's `knowledge' concerning the `Kraft subject.'
"The credibility of an unnamed informant is at best, suspect. Where, as here, the informers were not shown to be reliable, and there are no legally competent facts, circumstances or observations to add to their information, we cannot say that a prudent and cautious man would be justified in finding probable cause to believe that an offense was being committed at the residence sought to be searched. Grimm v. State, 6 Md. App. 321, 251 A.2d 230. Of course, the allegations of personal observations by each of the unnamed informants would have supported the finding of probable cause had their reliability in some way been established, or their information corroborated." Id. at 351-52.
We approach our evaluation of this affidavit bearing in mind the old quotation that "a man's house is his castle";[1] that in an effort to protect future citizens of this great country from abuses known in the past many of our forebears insisted as a condition to ratification of the Constitution of the United States that there should be added *588 to that document the amendments commonly called the "Bill of Rights"; that under one of those amendments to that Constitution, the Fourth, "[t]he right of the people to be secure in their ... houses ... against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized"; and that what we are here concerned with is the delicate balancing of the rights of the individual on the one hand to be secure in his home and on the other the right of society in the person of the sovereign to pursue violators of the law.
In essence, the issue here is whether there was probable cause for the issuance of the warrant, a term defined by Chief Judge Brune for this Court in Dean v. State, 205 Md. 274, 284, 107 A.2d 88 (1954), as less than certainty of truth, but more than suspicion or possibility. It is conceded that if this affidavit satisfies the various tests previously laid down by the Supreme Court of the United States, probable cause is established. In our evaluation of this affidavit in comparison with affidavits in other cases we must remember the comment in State v. Kasabucki, 52 N.J. 110, 244 A.2d 101 (1968):
"[N]o mathematical formula exists for application either by a trial or appellate court in deciding whether a search warrant was supported by probable cause. Each case depends upon a sensitive appraisal of the circumstances shown to the issuing judge." Id. at 117-18.
We shall also bear in mind the comment of the Supreme Court in June of this current year in Cady, Warden v. Dombrowski, 413 U.S. 433, 93 S. Ct. 2523, 37 L. Ed. 2d 706 (1973), "The ultimate standard set forth in the Fourth Amendment is reasonableness."
In Aguilar v. Texas, 378 U.S. 108, 111, 84 S. Ct. 1509, 12 L. Ed. 2d 723 (1964), it was pointed out that the preference for *589 a warrant is so marked that less persuasive evidence will justify the issuance of a warrant than would justify a warrantless search or warrantless arrest. Mr. Justice Goldberg there said for the Court:
"Thus, when a search is based upon a magistrate's, rather than a police officer's, determination of probable cause, the reviewing courts will accept evidence of a less `judicially competent or persuasive character than would have justified an officer in acting on his own without a warrant,' [Jones v. U.S., 362 U.S. 257, 270, 80 S. Ct. 725, 4 L. Ed. 2d 697 (1960),] and will sustain the judicial determination so long as `there was substantial basis for [the magistrate] to conclude that narcotics were probably present....'" Id. at 111.
In fact, he went on to quote from the opinion of Mr. Justice Jackson in Johnson v. United States, 333 U.S. 10, 13-14, 68 S. Ct. 367, 92 L. Ed. 436 (1948), where the Court said that the public is protected by "requiring that those inferences be drawn by a neutral and detached magistrate instead of being judged by the officer engaged in the often competitive enterprise of ferreting out crime."
In United States v. Ventresca, 380 U.S. 102, 85 S. Ct. 741, 13 L. Ed. 2d 684 (1965), Mr. Justice Goldberg again spoke for the Supreme Court, saying:
"[T]he Fourth Amendment's commands, like all constitutional requirements, are practical and not abstract. If the teachings of the Court's cases are to be followed and the constitutional policy served, affidavits for search warrants, such as the one involved here, must be tested and interpreted by magistrates and courts in a commonsense and realistic fashion. They are normally drafted by nonlawyers in the midst and haste of a criminal investigation. Technical requirements of elaborate specificity once exacted under common law pleadings have no proper place in this area. A *590 grudging or negative attitude by reviewing courts toward warrants will tend to discourage police officers from submitting their evidence to a judicial officer before acting.
"This is not to say that probable cause can be made out by affidavits which are purely conclusory, stating only the affiant's or an informer's belief that probable cause exists without detailing any of the `underlying circumstances' upon which that belief is based. See Aguilar v. Texas, supra.... However, where these circumstances are detailed, where reason for crediting the source of the information is given, and when a magistrate has found probable cause, the courts should not invalidate the warrant by interpreting the affidavit in a hypertechnical, rather than a commonsense, manner. Although in a particular case it may not be easy to determine when an affidavit demonstrates the existence of probable cause, the resolution of doubtful or marginal cases in this area should be largely determined by the preference to be accorded to warrants. Jones v. United States, supra, at 270." Id. at 108-09. (Emphasis added.)
This was followed by Spinelli v. United States, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637 (1969), where Mr. Justice Harlan referred to:
"the established propositions that only the probability, and not a prima facie showing, of criminal activity is the standard of probable cause, Beck v. Ohio, 379 U.S. 89, 96 (1964); that affidavits of probable cause are tested by much less rigorous standards than those governing the admissibility of evidence at trial, McCray v. Illinois, 386 U.S. 300, 311 (1967); that in judging probable cause issuing magistrates are not to be confined by niggardly limitations or by restrictions on the use of their common sense, United States v. Ventresca, 380 U.S. 102, 108 (1965); and that their determination of *591 probable cause should be paid great deference by reviewing courts, Jones v. United States, 362 U.S. 257, 270-271 (1960)." Id. at 419.
In Aguilar the Court said:
"Although an affidavit may be based on hearsay information and need not reflect the direct personal observations of the affiant, Jones v. United States, 362 U.S. 257, [80 S. Ct. 725, 4 L. Ed. 2d 697,] the magistrate must be informed of some of the underlying circumstances from which the informant concluded that the narcotics were where he claimed they were, and some of the underlying circumstances from which the officer concluded that the informant, whose identity need not be disclosed, see Rugendorf v. United States, 376 U.S. 528, [84 S. Ct. 825,] was `credible' or his information `reliable.'" Id. at 114.
Not to be overlooked in the process of evaluation is the affidavit in Jones v. United States, 362 U.S. 257, 80 S. Ct. 725, 4 L. Ed. 2d 697 (1960), referred to by the Supreme Court in Aguilar as a proper affidavit.[2]
*592 In United States v. Harris, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723 (1971), although a majority of the Court could not agree on any one opinion, its judgment sustained the validity of an affidavit which said:
"Roosevelt Harris has had a reputation with me for over four years as being a trafficker of nontaxpaid distilled spirits, and over this period I have received numerous information [sic] from all types of persons as to his activities. Constable Howard Johnson located a sizeable stash of illicit whiskey in an abandoned house under Harris' control during this period of time. This date, I have received information from a person who fears for their [sic] life and property should their name be revealed. I have interviewed this person, found this person to be a prudent person, and have, under a sworn verbal statement, gained the following information: This person has personal knowledge of and has purchased illicit whiskey from within the residence described, for a period of more than 2 years, and most recently within the past 2 weeks, has knowledge of a person who purchased illicit whiskey within the past two days from the house, has personal knowledge that the illicit whiskey is *593 consumed by purchasers in the outbuilding known and utilized as the `dance hall,' and has seen Roosevelt Harris go to the other outbuilding, located about 50 yards from the residence, on numerous occasions, to obtain whiskey for this person and other persons." Id. at 575-76.
The Court of Special Appeals in this case seemed to be of the opinion that the sworn statement that the "reliably established informant" was "responsible for eleven narcotics arrests" did not adequately satisfy the test of credibility, that there should have been submitted information reflecting whether the cases had been tried or whether they had resulted in acquittals or convictions, and that the district judge should have been informed whether materials found at the time of arrest corresponded with the information supplied by the informant. It must be remembered in reviewing nearly any affidavit that there may occur to those conducting the review matters which they would have preferred to be inserted, questions they would have liked answered, just as the average third base bleacher fan or Monday morning quarterback can advise, often in substantial detail, how a baseball or football game might have been played to better advantage. The fact, however, that such questions arise in the mind of a reviewing court does not in and of itself mean the affidavit is defective, any more than the bleacher fan's adverse comment upon a manager's strategy necessarily means that the fan is right and the manager wrong, because the true test is whether it meets the standards enunciated by the Supreme Court, not whether it is drawn as the reviewing court would have preferred for it to be drawn. So long as human beings are involved, different persons will have different reactions to a given situation and often will have varying solutions to a given problem. This Court has never laid down a rule that it must be shown that convictions stemmed from an arrest in order for one informant to be deemed reliable, nor, so far as we have been able to ascertain, has the Supreme Court laid down such a rule. The reasons why the Court of Special Appeals erred in requiring *594 a specification of convictions are well summed up in United States v. Gazard Colon, 419 F.2d 120 (2d Cir.1969), and State v. Cannon, 292 A.2d 219 (R.I. 1972). After all, a prudent officer would hardly be expected to swear under oath that a person providing information leading to an arrest was reliable if that information proved so unreliable that it was the cause of an acquittal. In Gazard Colon the same principles were involved as here, however the issue was not the validity of a search warrant, but the validity of a warrantless arrest and subsequent search of an automobile. The court there said:
"The appellant argues that, unless the prior information on which the agents based their conclusion as to the informer's reliability led to convictions, it may not be considered dependable. But this is not so. A variety of factors having nothing to do with the truth and dependability of the informer's story may prevent a conviction, and it would be highly technical and unnecessary to make this a prerequisite. If such previous disclosures led to arrests and the discovery of narcotics, the trier is justified in finding that the agents properly considered such past experiences with the informer as factors supporting the reliability of what the informer said to them relative to the investigation then being pursued. See Smith v. United States, 123 U.S. App. D.C. 202, 358 F.2d 833 (1966), cert. denied 386 U.S. 1008, 87 S. Ct. 1350, 18 L. Ed. 2d 448 (1967)." Id. at 122.
In Cannon the affidavit stated that information came to the affiant from "a reliable, confidential informant whose information in the past ha[d] resulted in the arrest" of certain named individuals in three separate raids. No statement was made as to whether there were convictions. The court further described the affidavit:
"Continuing, the affidavit then sets forth that the informant told the affiant on February 7, 1970 that *595 he was friendly with defendant; that defendant was a user of marihuana; that on February 6, 1970 defendant told the informant that he and a friend were `going to Boston to pick up some grass that night'; that when the informant expressed a wish to purchase some marihuana defendant suggested that they meet at his residence the next morning; that he accepted that invitation and on the following day went to defendant's apartment at about 11 a.m.; that defendant went into what appeared to be his mother's bedroom, reached behind a bureau, and `brought out a brown paper bag with a red elastic around it'; that defendant opened the bag and took from it some `* * * plastic envelopes filled with a brownish substance and asked the informant how much he wanted to buy'; that he purchased one of those envelopes for $20; that defendant `* * * then closed the paper bag, which appeared * * * to contain a large number of plastic bags filled with the same substance'; that he then left defendant's apartment and soon thereafter met with the affiant; that he gave the affiant `a plastic bag containing what appeared * * * to be marihuana'; and that the affiant then `performed a Narcodal test on the substance in the bag' and that the `test produced a violet color, indicating the presence of marihuana.'" Id. at 220-21.
The court said that the affidavit "viewed as required under Ventresca, indicates that the informant based his tip upon his own observations and that he described to the affiant `underlying circumstances' which clearly justified the conclusion that marihuana would be found at defendant's apartment." In passing to the issue of "whether the disclosure of the `underlying circumstances' in [that] case provided the affiant with a substantial basis for believing that the informant, or what he had to say, was truthworthy," the court rejected a contention that Aguilar did "not permit a predication of `credibility' solely upon prior *596 tips if those tips led only to arrests and not to convictions," it being contended by the accused that "an arrest is a `mere accusation' which, unless followed by a conviction, is a legally insufficient verification of an informer's truthworthiness." The court said:
"[T]here is ample authority which accepts less than prior information leading to a conviction as a good reason in law for relying upon the credibility of a nameless informant. They arrive at that conclusion because they recognize that `[a] variety of factors having nothing to do with the truth and dependability of the informer's story may prevent a conviction * * *,' United States v. Gazard Colon, 419 F.2d 120, 122 (2d Cir.1969), and therefore they do not tie dependability to a conviction, but insist only that the affiant's faith in the informant's dependability rests on a firm foundation. This seems to us to be a sound rule, and one which is particularly apt in a case such as this where the informant's personal observations were set out in such complete detail as to have led the magistrate almost ineluctably to the conclusion that the objects of the proposed search would be found at the place where the informant said they were.
"In sum, then, our application of the relevant and controlling principles causes us to conclude that the District Court judge, when he authorized the search, was performing `his detached function' and was not serving `merely as a rubber stamp for the police.' United States v. Ventresca, supra, 380 U.S. at 109, 85 S.Ct. at 746, 13 L.Ed.2d at 689." Id. at 223.
In the process of futher evaluating the affidavit here, we shall examine a number of cases around the country to ascertain what has been said under similar, but not identical, circumstances.
In United States v. Rich, 407 F.2d 934 (5th Cir.1969), cert. denied 395 U.S. 922 (1969), a search warrant was upheld where the affiant described his confidential informant as *597 one "who has on repeated occasions in the past furnished reliable and credible information."
In United States v. Kidd, 407 F.2d 1316 (6th Cir.1969), the court said of the affidavit:
"He based his belief, as recited in the affidavit, `on information furnished him by a confidential and reliable source which [had] proved to be reliable on many occasions in the immediate past;' and on the fact `that said reputable and confidential informant stated to [him] on today that he saw on today moonshine whiskey in the possession of the [appellant] * * *.'
* * *
"Applying these criteria [of Aguilar] to the instant case, it is evident that the affidavit did afford the County Judge a substantial basis for concluding that the property sought was located at the premises described. The affidavit recited that the informant stated to the agent that he had seen the whiskey on appellant's premises on the day of its execution, and the agent informed the magistrate that the informant had `proved to be reliable on many occasions.' Accordingly, issuance of the search warrant was proper." Id. at 1317.
In United States v. Hood, 422 F.2d 737 (7th Cir.1970), cert. denied 400 U.S. 820 (1970), the court said:
"The affidavit sworn by Radde and Cole was the only material presented upon which the Commissioner could make a finding of probable cause. The affidavit contained the following allegations: that a reliable informant had seen tractors which affiants knew to be stolen on the premises of Frigid Food's terminal in Westville, Indiana; that the informant had `on various occasions in the past furnished information leading to the recovery of similar type stolen property'; that *598 another informant, believed by affiants to be reliable, stated that employees of Frigid Food were engaged in stealing tractors and that he personally observed one of the stolen tractors on Frigid Food's premises; and that another informant, believed to be reliable, observed the use of many tractors known to him to be stolen in Frigid Food's operations.
* * *
"With respect to the reliability of the informants, the officers swore that one of the informants had, `on various occasions in the past furnished information leading to the recovery of similar type of stolen property.' This representation alone perhaps constitutes a sufficient underlying circumstance to meet the Aguilar requirement. Jones v. United States, 362 U.S. 257, 271, 80 S. Ct. 725, 4 L. Ed. 2d 697 (1960). We need not rest our ruling, however, on this solitary statement. The informant's reliability was further strengthened by the hearsay information furnished by the other two informants since their statements tended to corroborate the hearsay supplied by the first informant. In Rugendorf v. United States, 376 U.S. 528, 84 S. Ct. 825, 11 L. Ed. 2d 887 (1964), the Supreme Court sustained a finding of probable cause based upon an affidavit containing interrelated hearsay information from a number of undisclosed informants. The affidavit contained representations that each informant had supplied the FBI with reliable information in the past. There, as here, the interlocking nature of the secondhand information from several sources fortified the reliability of each informant.
"One difference between Rugendorf and the instant case must be noted. With reference to two of the informants in the case at bar the officers said only that they believed them to be reliable without *599 giving reasons for their belief. Were we to appraise the reliability of these two informants independently, a challenge to their reliability could properly be raised. However, these informants' reliability must be considered in the context of the information supplied by them as well as by the informant whose reliability was vouched for by reference to past occurrences. When thus considered, the insufficient basis offered in the affidavit for the reliability of the latter two informants becomes less significant and does not bar the use of their information for corroborative purposes when determining the reliability of the first informant.
"For the reasons stated, the requirements set forth in Aguilar are fully met and a sufficient basis existed for the Commissioner to issue the search warrant." Id. at 738-40.
In United States v. Shipstead, 433 F.2d 368 (9th Cir.1970), there was a contention that an affidavit was "conclusory and inadequate." The affidavit said in pertinent part:
"`And that the facts tending to establish the foregoing grounds for issuance of a Search Warrant are as follows: Within the last two days, a reliable informant went into the above address and purchased from an occupant approximately 1 gram of methamphetamine. The informant reported that the occupants of the house were in the process of manufacturing methamphetamine. LWS This informant has supplied law enforcement officers with information over the last five or six months which has resulted in three arrests. The informant noted that within the above address were a number of test tubes, burners and other chemistry apparatus.'" Id. at 371.
The court said:
"The requirements of Aguilar v. Texas, 378 U.S. *600 108, 84 S. Ct. 1509, 12 L. Ed. 2d 723 (1964), and Spinelli v. United States, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637 (1969), govern the sufficiency of the affidavit. First, with respect to the requirement that facts be stated from which the magistrate may reach an independent judgment of reliability, we think the averment `This informant has supplied law enforcement officers with information over the last five or six months which has resulted in three arrests' is legally sufficient. Convictions rather than arrests need not be alleged to support reliability. Presumably the law has been obeyed and the arrests were based on probable cause which the affidavit states was supplied, at least in part, by the informant. United States v. Colon, 419 F.2d 120 (2nd Cir.1969).
"We also see no merit in the suggestion that the arrests must have been for drug violations to support reliability. It may well be that a narcotic informer's experience is customarily with narcotics violations, but information leading to arrest for theft, rape, treason or any offense is just as much a statement of experience supporting reliability as an arrest for a drug offense." Id. at 372.
In United States v. Buonomo, 441 F.2d 922 (7th Cir.1971), cert. denied 404 U.S. 845 (1971), the defendant made an attack on the affidavit as failing to meet the criteria of Spinelli. The court said:
"Defendant complains that the affiant Chicago Police Officer William Alexander, relied on information from an informant who is described only as having supplied reliable information in the past with no details to guide the State Court judge who issued the search warrant." Id. at 928-29.
It pointed out that in Aguilar "the affiant characterized the informant only as `credible' not as the source of reliable information in the past," and that in Spinelli "underlying *601 circumstances were lacking. There was no indication that the informant had personal knowledge. The affiant had observed the defendant engaged only in innocent activity." The court then went on to say:
"Here Officer Alexander said the informant related being with defendant whom he knew, in defendant's home, the preceding day, where he observed a large quantity of counterfeit motor vehicle titles from Illinois, Indiana and Michigan and where he, himself, was offered such titles for sale. We find in this affidavit sufficient support for the establishment of probable cause and issuance of the warrant. See United States of America v. Ventresca, 1965, 380 U.S. 102, 109, 85 S. Ct. 741, 13 L. Ed. 2d 684 where the Court holds that recital of some of the underlying circumstances in the affidavit is essential, but that where these circumstances are detailed, where reason for crediting the source of information is given and where a magistrate has found probable cause, reviewing courts should not invalidate the warrant by hypertechnical rather than commonsense interpretation. Angelini v. Illinois Bell Telephone Co., 7 Cir.1969, 418 F.2d 111, 115, cert. den. 397 U.S. 1040, 90 S. Ct. 1361, 25 L. Ed. 2d 651." Id. at 929.
In Jones v. Crouse, 447 F.2d 1395 (10th Cir.1971), cert. denied 405 U.S. 1018 (1972), an individual had been convicted in the state courts and brought a proceeding in the federal courts for a writ of habeas corpus. There was a challenge to the validity of the search warrants involved. The court said:
"The statements which set out the underlying circumstances in the affidavits here involved satisfy the test laid down by the Supreme Court. The material statements found in the July 18, 1966, applications are as follows: `This is the only substantial robbery loss occurring shortly before * * * Jones was, according to several informants who *602 have been reliable in the past, in possession of a large sum of money, and affiant is informed by a person whose truthfulness he has reason to believe, that * * * Jones stated in connection with the sack of money he had that he shot those two "M____ F____'s" in the head.' The July 20, 1966, application to search the Shadybrook premises also had added to it that `Informants states (sic) that * * * Jones had a large sum of money at his residence: * * *.'
"The above quoted statements seem to fulfill the first standards of the Aguilar test which requires the affiant to inform the magistrate of how the informant arrived at his conclusion. It has been held that the test is satisfied if a sufficient statement has been made which relates how the informant has gathered his information. United States v. Mendoza, 433 F.2d 891, 894 (5th Cir.1970). For the statements of affiant to be sufficient the test only requires that `some' of the underlying circumstances be set out in the affidavit. The statements of affiant here, while general in nature, do relate how the informant got his information. They explain that the informants knew the money would be found where they claimed because of the bag of money Appellant had in his possession and also by his comments relating to the robbery. This is satisfactory since `(t)echnical requirements of elaborate specificity * * * have no proper place in this area.' United States v. Beck, 431 F.2d 536, 538 (5th Cir.1970). United States v. Ventresca, 380 U.S. 102, 85 S. Ct. 741, 13 L. Ed. 2d 684 (1965).
"The second requirement of the test demands that the magistrate be informed of the underlying circumstances which led the affiant to believe the undisclosed informant was `credible' and his information was `reliable.' This requirement is also held to be satisfied by the statements in the affidavits. All three affidavits stated that the *603 evidence was presented by informers `who have been reliable in the past * * * whose truthfulness he [affiant] has reason to believe.' These statements made by affiant created a substantial basis for crediting the hearsay, and established probable cause to search. Factual statements of past reliability are sufficient basis `for the magistrate to gauge independently the reliability of the informer.' United States v. Mendoza, supra. The Supreme Court in the case of United States v. Ventresca, supra, stated that it is not required that the affidavit, which is based on hearsay evidence, set out that the affiant made direct personal observations so long as the affiant informs the magistrate of the underlying circumstances that led him to believe the informant `* * * "whose identity need not be disclosed * * * was `credible' or his information `reliable.'"' The Court went on to say that `where these circumstances are detailed, where reason for crediting the source of the information is given, and when a magistrate has found probable cause, the courts should not invalidate the warrant by interpreting the affidavit in a hypertechnical, rather than a commonsense, manner,' Id. at 109, 85 S.Ct. at 746." Id. at 1398-99.
In United States v. Guinn, 454 F.2d 29 (5th Cir.1972), cert. denied 407 U.S. 911 (1972), two search warrants were challenged. One was based upon an affidavit executed by a sergeant in the Texas Rangers. He described the premises in some detail, said that he had received information that certain individuals were involved in conducting a gaming table, and then said:
"This source of information and different sources relate that the aforementioned persons continued to keep and exhibit these gaming tables and are at the present time keeping and exhibiting these gaming tables and same are located and situated in the room immediately adjoining the front door of said *604 house above described. The sources of information relate that they have been to this location on three occasions and have actually participated in the gaming above described.
"Both of the aforementioned sources of information are familiar with the undersigned and other members of the Texas Department of Public Safety.
"This same information regarding the illicit keeping and exhibiting of gaming tables above described conducted by the above mentioned individuals has been given to the undersigned and to other members of the Texas Department of Public Safety.
"To disclose the name of the aforementioned would endanger their lives. Affiant can only advise that on previous occasions these sources have given information regarding illicit gambling operations that was found to be correct and thereby the undersigned does believe that there is now an illicit gaming operation being conducted in the above described premises which is not a private residence occupied by a family." Id. at 33-34.
Judge Wisdom said for that court:
"After the Supreme Court decision in United States v. Harris, 1971, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723, we have no doubt that the affidavit was sufficient to support a finding of probable cause.
"In Harris, a warrant authorizing a search of the defendant's premises was issued on the basis of a federal tax investigator's affidavit. The Supreme Court held the affidavit sufficient, distinguishing Aguilar v. Texas, 1964, 378 U.S. 108, 84 S. Ct. 1509, 12 L. Ed. 2d 723 and Spinelli v. United States, 1969, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637, and relying on Jones v. United States, 1962, *605 362 U.S. 257, 80 S. Ct. 725, 4 L. Ed. 2d 697. The affidavit submitted in the instant case has the elements found to be important in Harris and more. First, the affidavit in the case at bar contains `ample factual basis for believing the informant,' 403 U.S. at 579, 91 S.Ct. at 2080, even though the informant is unnamed. The informants related to the affiant that they had seen gambling tables and gambling equipment on at least three occasions while the informants were participating in the gambling. In Harris, the Court relied on `personal and recent observations by an unidentified informant of criminal activity, factors showing that the information had been gained in a reliable manner.' 403 U.S. at 579, 91 S.Ct. at 2080. An important factor was the informant's statement that he had personal information of illicit whiskey because he had purchased some. Second, the affiant in the instant case states that his informants had on other occasions given information regarding illicit gambling operations that was found to be accurate. In Harris, the affiant merely stated that the informant was `prudent.' See also Aguilar v. Texas, 1964, 378 U.S. 108, 84 S. Ct. 1509, 12 L. Ed. 2d 723; Spinelli v. United States, 1969, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637; Jones v. United States, 1962, 362 U.S. 257, 80 S. Ct. 725, 4 L. Ed. 2d 697. Third, the affiant in the instant case stated that the information related by his unnamed informants was corroborated by other sources. This factor was absent in Harris but present and important in Jones, supra. See also Aguilar v. Texas, supra; Spinelli v. United States, supra. Finally, although the present affiant does not relate, as was the case in Harris, personal knowledge of the defendants' reputation, we do not read Harris as requiring such a statement in view of other `substantial basis for crediting the hearsay.' 403 U.S. at 581, 91 S.Ct. at 2080. See Aguilar v. Texas, 1964, 378 U.S. 108, *606 114-115, 84 S. Ct. 1509, 12 L. Ed. 2d 723; Jones v. United States, 1962, 362 U.S. 257, 80 S. Ct. 725, 4 L. Ed. 2d 697." Id. at 34-35.
In United States v. Crawford, 462 F.2d 597 (9th Cir.1972), the court pointed out that the affidavit "with respect to the specificity of the information provided the magistrate who was called upon to issue the search warrant" "far surpasse[d] the affidavit of the officers in Aguilar," that the defendant conceded this point, "but contest[ed] the sufficiency of the disclosure of the affidavit as to `some of the underlying circumstances' of the unidentified informant's credibility or the reliability of his information." The informant was described as "a confidential informant [with] whom [the affiant had] worked with on previous occasions and whose prior information ha[d] proved valid...." The court said:
"There is nothing in Aguilar v. Texas, supra, which gives any support to the contention that these two propositions are wholly independent of one another. We are constrained to hold they are not and that one may furnish support to the other, at least with respect to the affidavit at hand. Read as a whole, the affidavit which Agent Roberts has presented to the magistrate is as factual as that held sufficient in Jones v. United States, 362 U.S. 257, 80 S. Ct. 725, 4 L. Ed. 2d 697 (1960), and furnished the magistrate with probable cause to issue the warrant. The rather detailed statement of the underlying facts which led Agent Roberts to conclude that the narcotics were where he stated them to be, lend themselves in support of the credibility of the information and the reliability of his information.
"Unlike Spinelli v. United States, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637 (1969), the affidavit here does explain how the informant came by his information.
"It is not simply a bare statement that the Customs Agent believed the informant. The agent's *607 own sworn statement of his dealings with the informant, when combined with the other details in the affidavit, were sufficient to justify the magistrate's conclusion as to probable cause to issue the warrant.
"Agent Roberts might well have spelled out in more detail his contacts with the informant which caused him to conclude reliability and we would recommend greater detail in the future. Nevertheless, as was stated in United States v. Harris, 403 U.S. 573, 583, 91 S. Ct. 2075, 2082, 29 L. Ed. 2d 723, 733 (1971), `. .. we decline to apply it [Spinelli v. United States, supra] to preclude a magistrate from relying on a law enforcement officer's knowledge of a suspect's reputation.'" Id. at 599.
In United States v. Sultan, 463 F.2d 1066 (2nd Cir.1972), an FBI agent submitted an affidavit reciting that an involuntary petition in bankruptcy had been filed by creditors of a corporation, that investigation by the affiant revealed that a certain individual was still a principal officer of the bankrupt, and that the affiant had been supplied with information by a cousin of that individual in which he said the officer of the bankrupt corporation told the cousin that on a certain day "merchandise and assets of the bankrupt" were being concealed at a specified place. The district court held the affidavit did not meet the requirements of Aguilar, that there be some showing of the trustworthiness of the informant himself, however, the Court of Appeals held "that the affidavit on its face fulfilled the constitutional requirement that it be issued only on a showing of probable cause."
In Huff v. Commonwealth, 213 Va. 710, 194 S.E.2d 690 (1973), the affidavit said in pertinent part:
"(d) That from as many as three different reliable sources, the Winchester Police Department has received information that the said James D. Huff is dealing in and with the unlawful *608 distribution of Controlled Drugs; that these informants are not known to each other as informers and each has a different connection with the said James D. Huff; and that their individual reliability is established by reason of their position in connection with the said James D. Huff, affording each of them the opportunity to learn of his activities, and by reason that much of the information given by one is corroborated by the information given by one or both of the others." Id. at 693 of 194 S.E.2d.
It further recited complaints of an unusual number of vehicles in the area "on certain evenings and at various hours, sometimes ranging beyond midnight," observation by the affiant of the residence and "an unusual amount of traffic in the vicinity of this address at different times during the evenings of his observation," with persons observed who went into the dwelling, stayed only a few minutes and then returned to their cars, driving off, some such individuals having been known to the affiant as "unlawful users of controlled drugs," that one of the previously mentioned reliable sources reported having overheard a conversation indicating that the accused was "making a trip that night to pick up `the stuff,'" believed to mean "marijuana, hashish and/or heroin" and that subsequent observation of the address showed a number of people stopping at the residence, going in for a few minutes and then departing, some of those persons having "been established by the said investigation to be unlawful users of Controlled Drugs and one who has been repeatedly reported as an unlawful distributor thereof." In upholding the validity of the warrant the court said:
"The Manley [v. Commonwealth, 211 Va. 146, 176 S.E.2d 309 (1970),] list is not an exclusive or preclusive list. The informant's credibility can be established in other ways. When several informants are involved, when they are unknown to each other as informants, and when the *609 information furnished by one corroborates the information furnished by another, the enhanced reliability of the information lends credibility to the informants. Here, the informants' collective information was further corroborated and the informants' credibility further reinforced by information gathered from personal police surveillance. See Draper v. United States, 358 U.S. 307, 79 S. Ct. 329, 3 L. Ed. 2d 327 (1959)." Id. at 694 of 194 S.E.2d.
It further said:
"Putting ourselves in the shoes of the issuing magistrate and reading the June 2 affidavit for its commonsense import, we find that Huff had been identified repeatedly by reliable informants as a distributor of controlled drugs; that he had repeatedly distributed drugs to known drug users from his residence; that his unlawful conduct was so frequent, recurrent and persistent as to form a pattern of criminal practice which provoked repeated complaints of neighbors; that this pattern had continued over a long period of time; and that it was still in process on a recent date. The commonsense conclusion to be drawn from such facts is that the pattern of criminal practice probably was yet continuing on the date of the affidavit; that it would probably continue until the warrant was executed; and that drugs would probably be found at that time in Huff's residence." Id. at 696 of 194 S.E.2d.
In Manley v. Commonwealth, 211 Va. 146, 176 S.E.2d 309 (1970), the affidavit said:
"2. The material facts constituting probable cause for issuance of the search warrant. I have received information from a reliable informant who states that he was at the apartment of Melvin Lloyd Manley, 313 West 27th Street, this past week *610 and he saw a large quantity of marijuana (a narcotic drug) in a chest in the front room and also some marijuana was in a dresser drawer in the middle room. My informer also states that in the past month he has smoked marijuana in the apartment * * * and in the past month he has made two purchases of marijuana from Melvin Lloyd Manley." Id. at 147-48.
The court said:
"We next consider whether the affidavit meets the second requirement of the test, that of credibility or reliability.
"Where the accuracy of the information received from a confidential informant is not supported by other sources known or stated to be accurate or from corroborated facts known or discovered by the affiant personally or from other official or reliable reports, the officer-affiant must present in his affidavit a substantial factual basis for crediting the informant's story.
"A mere allegation that the affiant has `received information from a reliable informant' has been held insufficient to show that the informant was credible, or that his information was reliable. See Riggan v. Virginia, 384 U.S. 152, 86 S. Ct. 1378, 16 L. Ed. 2d 431 (1966) (reversing 206 Va. 499, 144 S.E.2d 298).
"The most commonly accepted and approved allegation to substantiate reliability is that the informer is a person of known and proven reliability and has furnished information to law enforcement officers which has been instrumental in procuring convictions. But the credibility of the informer or the reliability of his information may be shown in other ways. Reliability may be found in an informant's statement of facts as an `eyewitness.' McCreary v. Sigler, 406 F.2d 1264, 1269, cert. denied, 395 U.S. 984, 89 S. Ct. 2149, 23 *611 L.Ed.2d 773 (8th Cir.1969). In People v. Montague, 19 N.Y.2d 121, 278 N.Y. Supp.2d 372, 224 N.E.2d 873, cert. denied, 389 U.S. 862, 88 S. Ct. 116, 19 L. Ed. 2d 130 (1967), the reliability standard was said to have been met where the affidavit in sufficient detail established that the informer was speaking with personal knowledge and relating his own participation with that of the suspects in their illegal activities. In the concurring opinion of Mr. Justice White in Spinelli, 393 U.S. at 425, 89 S.Ct. at 593, 21 L.Ed.2d at 649, it is said:
`* * * But if, for example, the infomer's hearsay comes from one of the actors in the crime in the nature of an admission against interest, the affidavit giving this information should be held sufficient.'
"Here the affidavit established that the informant was stating facts based on his own personal knowledge and was relating his participation in defendant's illegal activity. His statements were admissions against interest. These facts certainly show a substantial basis for the officer-affiant to state that the informant was reliable and for a neutral and detached magistrate to conclude that the informant's information was reliable and that probable cause existed for the issuance of the warrant. Probability, and not a prima facie showing, of criminal activity is the standard for determining probable cause. Hence we hold that the reliability standard of Aguilar and Spinelli was met." Id. at 150-51.
In State v. Perry, 59 N.J. 383, 283 A.2d 330 (1971), as the court put it:
"[The officer's] affidavit sets forth in pertinent part:
* * * information received by him from a reliable informant, who has in the past given *612 reliable information leading to arrests, that stolen property can be located at the apartment of Norman Perry, 872 Hunterdon St. 3rd floor. Property consisting of the following, monies, jewelry, doctors bag, Narcotics (barbititates [sic] and narcotic paraphernalia).
On March 20, 1968 the undersigned was informed by said informant that monies, jewelry doctor's bag, and narcotic (barbititates [sic] and narcotic paraphernalia), taken during assault and robberies, Larcenies, CC# 15720 and 15721, which proved to be in fact true. 872 Hunterdon St. is a three family house, located next to 870 Hunterdon St., which is a one family house owned by a Mr. & Mrs. O'Connell. 872 Hunterdon St. is a gray house." Id. at 387-88.
The Appellate Division had upheld Perry's contention that the affidavit did not show that the informant was credible and did not sufficiently state the underlying circumstances from which the informant concluded that the defendant possessed contraband. The New Jersey Supreme Court said:
"Since the affidavit showed that the unnamed informant was known to be trustworthy and the information he gave the police was of the sort which in common experience may be recognized as having been obtained in a reliable way, we hold that probable cause was established that the defendant was the possessor of stolen goods." Id. at 394.
There was further discussion of the significance of the inclusion in the affidavit of the references to the other criminal proceedings ("CC#15720 and 15721"). After discussion of that point the court said:
"In any event, we do not think the inclusion of CC# 15720 and 15721 materially affected a showing of probable cause. As we have said earlier in this *613 opinion, the tip contained diversified detail from a reliable informant which was sufficient in itself for the issuance of the search warrant.
"We hold that the affidavit upon which the warrant was issued was constitutionally sufficient." Id. at 395.
In evaluating the sufficiency of the affidavit to support the warrants we must bear in mind that Judge Markell pointed out for the Court in Bratburd v. State, 193 Md. 352, 356, 66 A.2d 792 (1949), that in considering the warrant "we may at least consider the experience and special knowledge of the police officers who [were] applicants for search warrants," and that in U.S. v. Harris, Mr. Chief Justice Burger said:
"We cannot conclude that a policeman's knowledge of a suspect's reputation something that policemen frequently know and a factor that impressed such a `legal technician' as Mr. Justice Frankfurter [referring to Jones v. U.S., 362 U.S. 257, 80 S. Ct. 725, 4 L. Ed. 2d 697 (1960)] is not a `practical consideration of everyday life' upon which an officer (or a magistrate) may properly rely in assessing the reliability of an informant's tip." Id. at 583.
Before analyzing the affidavit in this case, a word is in order relative to the matter of observation reported in an affidavit. In his concurring opinion in Spinelli Mr. Justice White addressed himself to the matter of detailed observations, stating:
"Detailed information may sometimes imply that the informant himself has observed the facts. Suppose an informant with whom an officer has had satisfactory experience states that there is gambling equipment in the living room of a specified apartment and describes in detail not only the equipment itself but the appointments and furnishings in the apartment. Detail like this, if *614 true at all, must rest on personal observation of either the informant or of someone else. If the latter, we know nothing of the third person's honesty or sources; he may be fabricating a wholly false report. But it is arguable that on these facts it was the informant himself who has perceived the facts, for the information reported is not usually the subject of casual, day-to-day conversation. Because the informant is honest and it is probable that he has viewed the facts, there is probable cause for the issuance of a warrant." Id. at 425-26 of 393 U.S.
This was after having previously said:
"If the affidavit rests on hearsay an informant's report what is necessary under Aguilar is one of two things: the informant must declare either (1) that he has himself seen or perceived the fact or facts asserted; or (2) that his information is hearsay, but there is good reason for believing it perhaps one of the usual grounds for crediting hearsay information. The first presents few problems: since the report, although hearsay, purports to be first-hand observation, remaining doubt centers on the honesty of the informant, and that worry is dissipated by the officer's previous experience with the informant. The other basis for accepting the informant's report is more complicated. But if, for example, the informer's hearsay comes from one of the actors in the crime in the nature of admission against interest, the affidavit giving this information should be held sufficient." Id. at 425 of 393 U.S.
We turn to the case at hand knowing that although we have quoted from many cases, no case is a carbon copy of another and, therefore, any given case may be distinguished in some form or manner from another. Nevertheless, a pattern may be derived from the cases cited as to *615 interpretations placed upon the Supreme Court's pronouncements in the search and seizure area, a pattern which shows, in accordance with the Supreme Court's mandate in Spinelli, "in judging probable cause issuing magistrates [have] not [been] confined by niggardly limitations or by restrictions on the use of their common sense, ... and that their determination of probable cause [has been] paid great deference by reviewing courts...." The pattern shows a liberality generally in evaluating the judgment of the disinterested judicial officer interposed between the police and the citizenry greater than that shown in this case by the Court of Special Appeals.
The affidavit starts off with the sworn statement by the applicants that "a known and convicted Heroin user was seen at this apartment" on September 1, 1971. This can only mean seen by one of the affiants since they swore to the statement. Then follows the statement that on October 3 "a reliably established informant ... responsible for eleven narcotics arrests" said that one of the occupants of the apartment was making trips to the District of Columbia area "twice weekly to obtain narcotics, and is transporting them back into the county," followed by the statement that the informant had seen Thompson "with 100 units of LSD," on October 2, the day before his statement to the affiant. A combination of the informant's personal observation, and the police officer's evaluation of that informant as "a reliably established informant, ... responsible for eleven narcotics arrests" was, in our opinion, sufficient for the district judge in issuing the search warrant to rely upon that portion of the information. The affidavit did not stop there. Thus, the district judge in evaluating this information submitted was not obliged to make his determination upon that information alone. The affidavit went on to state that on the following day, October 4, information reached the officers from yet another informant who had "provided reliable information [to them] for the [preceding] six months...." That person, in an admission against penal interest, stated that he had "purchased LSD and other narcotics from the Thompson [sic] in the past." That informant *616 corroborated the first by advising that on October 3, the day after the first informant had seen Thompson with 100 units of LSD, the second informant "had seen large quantities of LSD and amphetamines in the Thompson Apt." This then is followed by information from the second informant gleaned but two days after the first information from that informant that the second informant "personally observed a large quantity of LSD, described as; White Lightnings, and Orange Paradise, in a tin can in the refrigerator in the Thompson Apt." In Manley v. Commonwealth, 211 Va. 146, 150, the court said that "[r]eliability may be found in an informant's statement of facts as an `eyewitness.'" The detail relative to the tin can in the refrigerator properly could be considered and relied upon in the evaluation of the affidavit in support of the search warrant. This is then followed by the statement that Mrs. Kraft, who also resided at the address, was known by one of the officers "to be an admitted user of Heroin." Obviously, if Mrs. Kraft admitted to Deputy Sheriff Clark that she was a heroin user that would be a factor that could be considered. The affidavit is ambiguous in that regard in that it could be interpreted as meaning that her reputation in the community is that of an admitted user of heroin, but it seems clear from Harris that this reputation may be relied upon.
The affidavit must be considered as a whole, not in its isolated parts. As Mr. Justice Fortas observed in his dissent in Spinelli, it "should not be judged as an entry in an essay contest." It must be borne in mind that the average police officer out in the day to day activities of law enforcement called upon to supply information to obtain a search warrant is not possessed of all of the educational background, legal knowledge, and experience of a judge or a long time practitioner in the field of criminal law. The detail contained in this affidavit with its description by one informant of a specified number of units of LSD observed by him on one day, corroborated by a statement from a second informant that on the following day he saw "large quantities of LSD and amphetamines" in the apartment, followed by a third *617 observation as set forth in the statement of that second informant that three days later he saw large quantities of LSD which he proceeded to describe by type, indicating its location in the refrigerator, is substantially greater than the detail to be found in the affidavit upheld by the Supreme Court in Harris. Indeed, its detail is at least the equal of that in Jones cited with approval by the Supreme Court in Aguilar. Viewing the affidavit as a whole and bearing in mind the admonition of Mr. Justice Goldberg in Ventresca that such affidavits "must be tested and interpreted by magistrates and courts in a commonsense and realistic fashion," the district judge issuing the warrant could well conclude that the objects of the proposed search could be found at the place where the second informant said they were. It should be remembered that the sum total of the activity observed and reported by the informants here was not innocent activity. We note that the "circumstances are detailed, ... reason for crediting the source of the information is given, and ... a [district judge] has found probable cause," conditions laid down in Ventresca. Accordingly, we conclude the search warrant should be permitted to stand, heeding the suggestion of the Supreme Court that "the courts should not invalidate the warrant by interpreting the affidavit in a hypertechnical, rather than a commonsense, manner" and that "the resolution of doubtful or marginal cases in this area should be largely determined by the preference to be accorded to warrants."
Other points were raised by Mrs. Kraft in her appeal to the Court of Special Appeals which were not considered by that court since it believed the issue of the validity of the search warrant to be dispositive of the entire case. Upon the remand, that court will give consideration to those other points.
Judgment reversed and case remanded to the Court of Special Appeals for further consideration.
*618 Levine, J., dissenting:
Whatever may be the immediate impact of the majority's decision, its opinion will be read to mean that either of these bald statements, referring to an unnamed informer in an application for a search warrant, is alone sufficient to satisfy the "credibility-reliability" test enunciated in Aguilar v. Texas, 378 U.S. 108, 114, 84 S. Ct. 1509, 12 L. Ed. 2d 723 (1964): "a reliably established informant, who is responsible for eleven narcotics arrests"; or an informant "who has provided reliable information ... for the past six months." With this holding I cannot agree. For reasons that follow, therefore, I respectfully dissent.
Although the majority suggests that the view it adopts here enjoys widespread support, that claim does not withstand analysis if we examine many of the cases upon which it relies.
United States v. Harris, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723 (1971), the most recent case decided by the Supreme Court on this question, is not supportive. First, whether the majority opinion there establishes a binding precedent is seriously open to question. Divided into three parts, it was adopted as the judgment of the Court by only a bare majority of five members. A total of four Justices joined in Parts I and III, and only three joined in Part II. Because a total of five joined in the judgment, the decision of the court below was overturned; but a total of four members joined in the dissenting opinion authored by Justice Harlan. Thus, no one of the three parts was adopted by a majority of the Court. See People v. Anderson, 389 Mich. 155, 205 N.W.2d 461, 467 (1973) and cases therein cited.
It was in Part II joined in by only three members of the Court that Spinelli v. United States, 393 U.S. 410, 89 S. Ct. 584, 21 L. Ed. 2d 637 (1969), was criticized for rejecting as "bald and unilluminating" the assertion that the suspect was known to the affiant as a gambler. Thus, notwithstanding the statement in Harris, the holding in Spinelli was properly applied by the Court of Special Appeals, in this case, to the final sentence in the affidavit.
*619 Secondly, it should be emphasized that in none of the cases cited by the majority, including Harris itself, is it suggested that Aguilar and Spinelli have been somehow overruled; or that there has been any retreat by the Supreme Court from the principles articulated in those two cases. To the contrary, both continue to be cited extensively with approval while held to be distinguishable from the facts in Harris.
Thirdly, quite apart from the fact that this case is distinguishable from Harris, the latter can be reconciled with Aguilar and Spinelli. As Judge Thompson noted for the Court of Special Appeals, there was no "reliable information to corroborate the informants," just as there was not in Aguilar. In Harris, however, a law enforcement officer other than the affiant had previously "located a sizeable stash of illicit whiskey in an abandoned house under Harris' control during this period of time." Thus, it is perhaps arguable that the informer's tip was "corroborated by independent sources" in accordance with Spinelli. There, the Court considered whether, in light of the affidavit's failure there to meet the "two-pronged test" of Aguilar, it was sufficiently corroborated, nevertheless, by independent investigative efforts of the FBI. In concluding that it was not, the Court referred to Draper v. United States, 358 U.S. 307, 79 S. Ct. 329, 3 L. Ed. 2d 327 (1959), as providing "a suitable benchmark" for making that determination.
United States v. Rich, 407 F.2d 934 (5th Cir.1969), cited by the majority, is an excellent case in point for demonstrating how independent investigation may enable an affidavit in part based on information obtained from an unidentified informer to satisfy the test prescribed in Spinelli. Suffice it to say that Rich, being clearly distinguishable, provides no support for the majority opinion.
Similarly, United States v. Crawford, 462 F.2d 597 (9th Cir.1972), cited by the majority for support, fails to do just that, and is distinguishable. For example, the suspects [of narcotics violations] were alleged to be "presently lodged" in the residence of one of the confidential informants.
*620 In United States v. Hood, 422 F.2d 737 (7th Cir.1970), it was alleged by the affiant that "one of the informants had, `on various occasions in the past furnished information leading to the recovery of similar type of stolen property.'" This underscores the very point at issue here. The Court of Special Appeals, correctly, in my view, has consistently stressed the distinction between informers whose information has led merely to arrests as in this case or convictions. The rationale for this distinction is too clear to require extended comment. One bespeaks "credibility-reliability" of an informer, the other does not. I do not, however, suggest that information leading to a conviction is a sine qua non for crediting an informer. The point to be emphasized is that where, as in Hood, supra, information previously furnished by an informer leads to the recovery of stolen property, it suggests "probability" in much the same manner as a conviction does.
The facts in United States v. Sultan, 463 F.2d 1066 (2d Cir.1972), are also distinguishable from those here, and call into question whether Aguilar was even applicable there. Clearly, it affords no support for the majority here. There, the informer, a cousin of the suspect, told a federal agent where merchandise was being illegally concealed from the Trustee in Bankruptcy. As Judge Moylan said, while concurring in Dawson v. State, 14 Md. App. 18, 34, 284 A.2d 861 (1971): "That a very different rationale exists for establishing the credibility of named citizen-informers than for establishing that of the more suspect and anonymous police-informer is widely acknowledged in recent case law." There can be little doubt from reading the affidavit here that the informers were of the "more suspect and anonymous" type, rather than "citizen-informers."
State v. Cannon, 292 A.2d 219 (R.I. 1972) does not, as contended, support the majority. While it speaks of an informer whose information previously led to arrests, the affidavit details those arrests by listing the names of those arrested, as well as the date, place, and the charges lodged against them. The case aptly demonstrates how detail may be employed to satisfy the "credibility-reliability prong."
*621 In United States v. Gazard Colon, 419 F.2d 120 (2d Cir.1969), which involved a warrantless arrest, narcotics agents, under circumstances reminiscent of the facts in McCray v. Illinois, 386 U.S. 300, 87 S. Ct. 1056, 18 L. Ed. 2d 62 (1967), made independent observations after receiving information from an informer, but prior to arresting the suspect. Those independent observations of the narcotics agents amply reinforced the informer's information so as to provide probable cause for the arrest.
Finally, Huff v. Commonwealth, 213 Va. 710, 194 S.E.2d 690 (1973), presents a situation in which the observations by police all detailed in the affidavit supply the independent corroborating evidence found to be lacking in the FBI surveillances chronicled in the Spinelli affidavit.
In sum, each of the cases mentioned above all relied upon by the majority can be squared with the decision below and my reading of Aguilar, Spinelli and Harris.
Upon what, then, does the majority rest its holding that the affidavit here satisfies the "credibility-reliability prong?" First, it relies upon the initial sentence, "Peter Fletcher, a known and convicted Heroin user was seen at this apartment." Although the Court of Special Appeals was unwilling to assume correctly, I think "that the observer was one of the affiants [since, for example,] the affiants could well have received this information from others," the majority is quite willing to infer from the same statement that it "can only mean seen by one of the affiants." (emphasis added).
But even apart from that unwarranted assumption, the majority errs in even considering that sentence while applying the "credibility-reliability" test of Aguilar to the informers. It is the second prong of Aguilar, whether there are "underlying circumstances from which the officer concluded that the informant... was `credible' or his information `reliable'" that confronts us here. And I fail to see how the presence of a known drug user, even if observed by the affiant, elevates the credibility of the informer to the level prescribed by Aguilar.
*622 Secondly, apparently sensing that the reference to the first informer as having been "responsible for eleven narcotics arrests" is insufficient, the majority infuses it with credibility derived from the remainder of the affidavit "as a whole." In doing so, it paints with too broad a brush.
The affidavit says, concerning the second informer, merely that he "has provided reliable information to this Dept. for the past six months." This, even more profoundly than the description of the first informer, exemplifies the kind of conclusory statement which the Supreme Court refused to sanction in Aguilar and Spinelli. To credit this conclusion does violence to the central theme expressed in Aguilar that "the court must still insist that the magistrate perform his `neutral and detached function and not merely serve as a rubber stamp for the police.'" 378 U.S. at 111.
Thirdly, the majority proceeds upon the erroneous premise that the information provided by the informers can be considered in testing their veracity. Nothing in Aguilar, Spinelli or Harris supports that proposition. As Justice Harlan, dissenting in Harris, so aptly stated:
"It is not possible to argue that since certain information, if true, would be trustworthy, therefore, it must be true. The possibility remains that the information might have been fabricated. This is why our cases require that there be a reasonable basis for crediting the accuracy of the observation related in the tip. In short, the requirement that the magistrate independently assess the probable credibility of the informant does not vanish where the source of the tip indicates that, if true, it is trustworthy." 403 U.S. at 592.
Judge Will, dissenting in part from the decision in United States v. Hood, supra, put it more succinctly in referring to the same type of "bootstrap" reasoning adopted by the majority there when he stated:
"But nothing plus nothing plus nothing is still nothing." 422 F.2d at 744. While we are not called upon to so decide, the *623 information attributed to the informers in the affidavit here goes no further than to possibly meet the first part of the "two-pronged test."
All that remains in the affidavit is the statement that the "Kraft subject ... is known by Dept. Clarke to be an admitted user of Heroin." Reliance for crediting that statement is founded on Harris, and it is indeed misplaced. To be sure, Chief Justice Burger, for the Court, in Part II of his opinion refers to a similar statement there as one upon which an "officer (or a magistrate) may properly rely in assessing the reliability of an informant's tip." 403 U.S. at 583. That statement, taken at face value, might well cast doubt upon what the Court had previously said in Spinelli, were it not that only three members of the Court, as we noted earlier, joined in Part II.
In Spinelli, Mr. Justice Harlan stated for the Court what I still regard as the controlling principle:
"[T]he allegation that Spinelli was `known' to the affiant and to other federal and local law enforcement officers as a gambler and an associate of gamblers is but a bald and unilluminating assertion of suspicion that is entitled to no weight in appraising the magistrate's decision. Nathanson v. United States, 290 U.S. 41, 46, 54 S. Ct. 11, 12, 78 L. Ed. 159 (1933)." 393 U.S. at 414.
The statement here, regarding the Kraft subject being "an admitted user of Heroin" is further attenuated by the concession of the majority that it is ambiguous in being subject to the interpretation that she admitted her drug use to some unnamed person other than the affiant.
The affidavit here clearly violates the fundamental precept enunciated in Aguilar by failing to reflect "some of the underlying circumstances from which the officer concluded that the [informants were] `credible' or [their] information `reliable.'" 378 U.S. at 114. As such, it permitted the necessary inferences to be drawn by the police rather than by a "neutral and detached magistrate." I think the Court of Special Appeals correctly decided this case and, for *624 the reasons outlined above, I would affirm its judgment. I am authorized to state that Chief Judge Murphy and Judge McWilliams concur in this opinion.
NOTES
[1] Sir Edward Coke, Institutes III (1644).
[2] That affidavit was:
"Affidavit in Support of a U.S. Commissioners Search Warrant for Premises, 1436 Meridian Place, N.W., Washington, D.C., apartment 36, including window spaces of said apartment. Occupied by Cecil Jones and Earline Richardson.
"In the late afternoon of Tuesday, August 20, 1957, I, Detective Thomas Didone, Jr. received information that Cecil Jones and Earline Richardson were involved in the illicit narcotic traffic and that they kept a ready supply of heroin on hand in the above mentioned apartment. The source of information also relates that the two aforementioned persons kept these same narcotics either on their person, under a pillow, on a dresser or on a window ledge in said apartment. The source of information goes on to relate that on many occasions the source of information has gone to said apartment and purchased narcotic drugs from the above mentioned persons and that the narcotics were secreated [sic] in the above mentioned places. The last time being August 20, 1957.
"Both the aforementioned persons are familiar to the undersigned and other members of the Narcotic Squad. Both have admitted to the use of narcotic drugs and display needle marks as evidence of same.
"This same information, regarding the illicit narcotic traffic, conducted by Cecil Jones and Earline Richardson, has been given to the undersigned and to other officers of the narcotic squad by other sources of information.
"Because the source of information mentioned in the opening paragraph has given information to the undersigned on previous occasion and which was correct, and because this same information is given by other sources does believe that there is now illicit narcotic drugs being secreated [sic] in the above apartment by Cecil Jones and Earline Richardson.
"Det. Thomas Didone, Jr.,
Narcotics Squad, MPDC.
"Subscribed and sworn to before me this 21 day of August, 1957." Id. at 378 U.S. 114.
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751 S.W.2d 860 (1988)
DALLAS COUNTY APPRAISAL DISTRICT and Dallas County Appraisal Review Board, Petitioners,
v.
INSTITUTE FOR AEROBICS RESEARCH, Respondent.
No. C-6750.
Supreme Court of Texas.
June 15, 1988.
Rehearing Denied July 13, 1988.
Pete G. Smith, Sallinger, Nicholas, Jackson Kirk & Dillard, Dallas, and Roy L. Armstrong, McCreary, Veselka, Beck & Allen, Austin, for petitioners.
B. Prater Monning, Gardere & Wynne, Dallas, for respondent.
OPINION
GONZALEZ, Justice.
This is an ad valorem tax case in which the Institute for Aerobics Research (the *861 Institute), has sued for an exemption from taxation under section 11.23(h) of the Property Tax Code. On motion for summary judgment, the trial court granted the Institute an exemption from ad valorem taxation. The Dallas County Appraisal District and the Dallas County Appraisal Review Board (petitioners) appealed. The court of appeals dismissed the appeal for want of jurisdiction on the basis that the petitioners did not file an appeal bond. 732 S.W.2d 735. We reverse the judgment of the court of appeals and remand the cause to that court.
Rules 40 and 46 of the Texas Rules of Appellate Procedure require that every appellant file an appeal bond "unless excused by law." The petitioners assert that the Texas Property Tax Code provides such an excuse. We will address the status of each of the two petitioners separately, considering the arguments as they pertain to the appraisal district first.
The petitioners assert that section 42.28 of the Property Tax Code excuses the appraisal district from the requirement of filing an appeal bond. Section 42.28 states:
A party may appeal the final judgment of the district court as provided by law for appeal of civil suits generally, except that an appeal bond is not required of the chief appraiser, the county, the State Property Tax Board, or the commissioners court.
Section 42.28 does not expressly include appraisal districts in its list of parties exempted from filing cost bonds in the court of appeals. Nevertheless, the petitioners contend that the exemption of the chief appraiser implicitly exempts the appraisal district as well. We need not decide the correctness of this contention, for we hold that the exemption of the county implicitly exempts the appraisal district.
This court has held that the governmental agency of an entity which is excused by law from the requirement of filing an appeal bond is itself excused. Board of Adjustment v. Stovall, 147 Tex. 366, 216 S.W.2d 171, 174 (1949); Teacher Retirement System v. Duckworth, 153 Tex. 141, 264 S.W.2d 98 (1954), aff'g, 153 Tex. 141, 260 S.W.2d 632 (1953). See also City and County of Dallas Levee Improvements Dist. v. Carroll, 263 S.W.2d 307, 308 (Tex. Civ.App.-Dallas 1953, writ ref'd n.r.e.). Because the appraisal district is a governmental agent of the county for purposes of appraising property for ad valorem taxation, we hold that the exemption granted by the legislature to the counties of this state from filing an appeal bond inures to their appraisal districts as well.
No purpose would be served by requiring an appraisal district to file appeal bonds. As a political subdivision, an appraisal district is funded by tax dollars, and no doubt exists concerning its ability to pay any cost that might legally be assessed against it.[1] It would be rather incongruous to exempt the county from the requirement of filing an appeal bond, but then to hold that the legal entity through which the county performs its governmental function must itself post an appeal bond. The undesirable state of having public funds tied up in litigation militates against such a holding.
Having determined that the appraisal district is excused from filing an appeal bond, we next decide whether the appraisal review board is likewise exempt. Texas courts have held that when a political subdivision or governmental entity is exempt from filing an appeal bond, its governmental board is also exempt. Board of Adjustment v. Stovall, 216 S.W.2d at 174; Board of Trustees v. Deer Run Properties, Inc., 616 S.W.2d 337, 339-40 (Tex.Civ.App.-San Antonio 1981, no writ). The Dallas County Appraisal Review Board performs a governmental function as the appraisal district's Board of Equalization. Its members are appointed by the appraisal district. Tex.Prop.Tax Code Ann. § 6.41 (Vernon 1982). Furthermore, the policy reasons expressed above for granting the appraisal district an exemption from filing an appeal bond apply with equal force to its appraisal *862 review board. Accordingly, the review board acquires the same legal status as the appraisal district for purposes of filing an appeal bond.
For these reasons, we hold that the petitioners are exempt from filing an appeal bond. The judgment of the court of appeals is reversed and the cause is remanded to the court of appeals for consideration of the other points of error.
ROBERTSON, J., dissents.
KILGARLIN, J., files a dissenting opinion in which PHILLIPS, C.J., and WALLACE, J., join.
ROBERTSON, Justice, dissenting.
The majority concludes that the appraisal district and the appraisal review board need not file an appeal bond pursuant to section 42.28 of the Texas Property Tax Code. Because the majority ignores a settled principle of law in the area of statutory construction, I respectfully dissent.
The statute in question could not be clearer. In the context of appealing a district court's judgment on property tax matters, the legislature plainly states that there are only four (4) instances when an appeal bond is not required. In weaving an intricate web of legal implications and presumptions to support its conclusion, the majority blinks away a settled principle of statutory constructionExpressio unius est exclusio alterius. In other words, when a statute enumerates one or more persons or entities, it is considered to exclude persons or entities not specifically enumerated. As stated by this court:
The rule expressio unius est exclusio alterius is a sound one, frequently applied in the construction of statutes, and is applicable [to this case]. The inclusion of the specific limitation excludes all others.
Harris County v. Crooker, 112 Tex. 450, 458, 248 S.W. 652, 655 (1923); see also State v. Mauritz-Wells Co., 141 Tex. 634, 639, 175 S.W.2d 238, 241 (1943).
Inasmuch as the statute in question specifically lists the four (4) instances when an appeal bond is not required, I would likewise hold, as did the court of appeals, that the statute expressly excludes the appraisal review board and the appraisal district. For this reason, I dissent from the majority's disposition of this case.
KILGARLIN, Justice, dissenting.
I join in Justice Robertson's dissenting opinion but write separately to amplify my disagreement with the court. Section 42.28 of the Property Tax Code only exempts "the chief appraiser, the county, the State Property Tax Board, or the commissioners court" from ordinary security requirements under Tex.R.App.P. 40 and 46. The legislature provided no exemption for appraisal districts and appraisal review boards, and the court should not inject its own notions of "policy" in contravention of the clear language of the statute.
In an effort to circumvent the clear legislative delineation of those "excused by law" from filing an appeal bond, the court pronounces an appraisal district to be a "governmental agent of the county." 751 S.W.2d at 861. This the court does with complete aplomb even though it subsequently acknowledges by footnote that Tex.Prop.Tax Code Ann. § 6.01(c) makes an appraisal district "a political subdivision of the state."
To say that an appraisal district is the agent of the county is to totally ignore section 6.03(c) of the Code. That section provides that the five-member board of directors of the district is appointed by the governing bodies of the incorporated cities and towns and of the school districts participating in the appraisal district. If anyone's agent, the appraisal district would logically be the agent of the municipalities and school districts.
The Property Tax Code provides many indications that the legislature understood and intended that only those persons and entities listed in section 42.28 would be exempt from filing appeal bonds. This can be seen in the numerous and precise code references to various persons and entities. For example, under §§ 42.031 and 1.04(12), the county as a taxing unit is entitled to *863 appeal an order of the appraisal review board determining a challenge by the county. Under § 42.03, a county may appeal certain orders of the State Property Tax Board. Under § 42.02, the chief appraiser is entitled to appeal certain orders of the appraisal review board if he has written approval of the appraisal district board of directors. Sections 6.01 and 6.41 specifically establish and define appraisal districts and appraisal review boards.
In light of the statutory scheme as a whole and its precise references to various persons and entities, I conclude that the legislature intended only those parties specifically listed in section 42.28 to be exempt from filing an appeal bond. No appeal was perfected under Tex.R.App.P. 40(a)(1), and I would therefore affirm the court of appeals' judgment of dismissal. Any incongruities created by section 42.28 are matters for legislative, not judicial, correction. I accordingly dissent from the court's decision to remand this cause to the court of appeals.
PHILLIPS, C.J., and WALLACE, J., join in this dissenting opinion.
NOTES
[1] The Property Tax Code has specifically recognized that "[a]n appraisal district is a political subdivision of the state." Tex.Prop.Tax Code Ann. § 6.01(c) (Vernon 1982).
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751 S.W.2d 878 (1988)
Lyndon Roy HAYNIE, Appellant,
v.
The STATE of Texas, Appellee.
Nos. 022-87, 023-87 and 024-87.
Court of Criminal Appeals of Texas, En Banc.
June 15, 1988.
John H. Hagler, Dallas, for appellant.
Henry Wade, Former Dist. Atty., and John Vance, Dist. Atty., and Mary Jo Kain, Karen Becak, and David Jarvis, Asst. Dist. Attys., Dallas, Robert Huttash, State's Atty., Austin, for the State.
Before the Court en banc.
OPINION ON APPELLANT'S PETTIONS FOR DISCRETIONARY REVIEW
TEAGUE, Judge.
The record before us reflects that Lyndon Roy Haynie, henceforth appellant, with another unidentified individual, robbed three other individuals at gunpoint outside their residence. One of the victims was murdered and the other two were wounded. Appellant was charged with and convicted in a consolidated jury trial of committing all three offenses. The jury also assessed punishment at life imprisonment for each offense. Appellant appealed his convictions to the Dallas Court of Appeals, asserting, inter alia, that (1) "The jury instructions regarding parole and good [conduct] time were unconstitutional" and (2) "The ex post facto application of the jury instructions regarding parole and good *879 [conduct] time was unconstitutional." Appellant argued that the trial court erred in submitting to the jury over his objection an instruction on the parole law as provided in Art. 37.07, § 4, V.A.C.C.P., because the statute was unconstitutional as it violated the separation of powers doctrine contained in Art. II, § 1, of the Texas Constitution. Appellant also argued that the jury instruction violated the ex post facto clause of Art. I, § 16, of the Texas Constitution in that the offenses he was charged with committing were committed prior to the effective date of the statute. The court of appeals disagreed with appellant, overruling the above points of error as well as the others he presented, and affirmed the trial court's judgment of conviction in an unpublished opinion. See Haynie v. State, (Tex. App.-5th, Nos. 05-86-00131-133-CR, December 2, 1986). In overruling the above points of error, the court of appeals relied upon, as its authority, two of its decisions, Rose v. State, 724 S.W.2d 832 (Tex.App.-5th 1986), and Joslin v. State, 722 S.W.2d 725 (Tex.App.-5th 1986), which had rejected similar attacks on the constitutionality of the statute. We granted appellant's petition for discretionary review in order to make the determination whether the court of appeals correctly overruled appellant's above points of error.
Since granting appellant's petition for discretionary review, this Court reversed that part of the court of appeals opinion of Rose v. State, supra, which upheld the statute. See Rose v. State, 752 S.W.2d 529 (Tex.Cr.App., 1987), which held that the statute is unconstitutional because it violates both the separation of powers provision and the due course of law provision of the Texas Constitution. This Court granted motion for rehearing on its own motion in Rose, Id., and handed down another opinion which adhered to but clarified what it had stated and held on original submission.
This Court affirmed the court of appeals' judgment in Rose, supra, but did so only because it found that the error in instructing the jury in accordance with the unconstitutional statute was harmless. This Court also expressly held that in determining whether reversible error had occurred, because the jury had been given the fatal statutory parole law instruction, a harmless error analysis as required by Rule 81(b)(2), Tex.R.App.Pro., must be conducted. After conducting that analysis, this Court found that given the facts of that cause that went to the assessment of appellant's punishment by the jury, life imprisonment, the error in giving the jury the statutory parole law instruction was harmless. However, in this case that analysis has not yet been made.
As previously pointed out, the court of appeals ruled that Art. 37.07, § 4(a), supra, was not unconstitutional. We have now determined otherwise. Therefore, we sustain appellant's contention that the statute providing for the parole law instruction is unconstitutional. However, under this Court's decision of Rose, supra, it is still necessary that a harmless error analysis be made in order to make the determination whether, beyond a reasonable doubt, the error in the charge made no contribution to appellant's conviction or to the punishment that was assessed by the jury in this cause: life imprisonment. We find that the court of appeals is the proper court to first make that determination, using what we stated in Rose, supra, as its guidelines.
Therefore, the judgment of the court of appeals is vacated and this cause is ordered remanded to that court so that it can make the determination under Rule 81(b)(2) whether or not, beyond a reasonable doubt, the error made no contribution to appellant's conviction or to the punishment that was assessed.[1]
McCORMICK and WHITE, JJ., dissent.
DISSENTING OPINION ON APPELLANT'S PETITION FOR DISCRETIONARY REVIEW
ONION, Presiding Judge, dissenting.
I, first of all, dissent to the remand. Second, I again call attention to the fact *880 the error is charge error and not some other kind of error. The harm analysis should be made under Almanza v. State, 686 S.W.2d 157, 160 (Tex.Cr.App.1985) (Opinion on State's Motion for Rehearing).
The rule-making authority of this Court as to appellate procedure is not absolute. See Acts 1985, 69th Leg., ch. 685, p. 2472 (H.B. 13). Section 9 of said House Bill 13 limits the authority of this Court to designate for repeal certain laws and to replace them with rules of appellate procedure. Articles 36.14 through 36.19, V.A.C.C.P., are not among those laws. These statutes are still outstanding and authoritative. Article 36.14, supra, requires the trial judge to give to the jury a written charge "distinctly setting forth the applicable law." The review of the charge on appeal is governed by Article 36.19, supra. In Almanza, supra, this Court, in interpreting Article 36.19, supra, set forth the harm analysis to be used where there is error in the court's charge. Thus, Almanza controls over any rule of appellate procedure adopted by this Court within its limited authority.
NOTES
[1] Of course, this Court expresses no opinion as to whether, under Rule 81(b)(2), the error was harmless beyond a reasonable doubt.
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124 N.J. Super. 373 (1973)
307 A.2d 121
STANLEY OLEN, PLAINTIFF-APPELLANT,
v.
SARAH OLEN, DEFENDANT-RESPONDENT.
Superior Court of New Jersey, Appellate Division.
Argued June 12, 1973.
Decided June 27, 1973.
*374 Before Judges KOLOVSKY, MATTHEWS and CRAHAY.
Mr. Stanley Olen, appellant, argued pro se.
Mr. Andreas A. Boyadjis, attorney for respondent, filed a statement in lieu of brief.
PER CURIAM.
At the conclusion of a trial of this action for divorce held on September 14, 1972, at which both parties were represented by attorneys, the trial court ruled:
I am satisfied that the testimony supports the allegations of the complaint, that the defendant is guilty of willful and continuous desertion for more than 12 months prior to the filing of the complaint and on a counter claim that there has been a separation for more than 18 months; the parties having lived in separate habitations and there being no reasonable prospect for reconciliation. Therefore, there will be a judgment on the complaint and on the counter claim dissolving the marriage.
The determination here, Mr. Boyadjis, is merely that the desertion is willful and continuous but there will be the privilege reserved to *375 introduce the issue of marital fault including the right to cross examine the plaintiff on your part and Mr. Dalena's right to cross examine the defendant with regard to any reasons of marital fault as they may relate to property distribution.
On October 19, 1972, the court heard and granted a motion by defendant requiring plaintiff to answer interrogatories and to submit to examination on depositions. At the same time the court granted a motion by plaintiff's attorney to be relieved as counsel.
Although plaintiff had notice that the last mentioned motions were to be argued on October 19, 1972, he did not appear. He says that he arrived in the courtroom after the motions had been heard and decided. On October 30, 1972 he filed, without leave of court, a "notice of appeal" to this court from the several rulings made by the trial court on October 19, 1972.
By motion returnable October 27, 1972, defendant's attorney moved to settle the form of the judgment of divorce. Although the affidavit filed by defendant's attorney states that he served a copy of the proposed judgment on plaintiff, plaintiff denies that he received it. In any event, the motion was granted and the judgment of divorce in the form annexed thereto was signed on November 1, 1972.
However, the final judgment so entered recited only the court's finding that defendant had proved a cause of action entitling her to a divorce under the 18 month provision of the Divorce Act and,
"Ordered and Adjudged that pursuant to the statute in such case made and provided, the marriage between the parties is dissolved."
Instead of taking the proper course of moving in the trial court for an amendment of the final judgment, so that it would embody all the determinations made by the trial court at the hearing of September 14, 1972, plaintiff, on November 10, 1972, filed an amended notice of appeal dated November 8, 1972 in this court, appealing from the final judgment.
*376 Plaintiff's appeal from the order granted at the hearing of October 19 and signed on November 10, 1972 requiring him to submit to depositions is without substance. The court did not abuse its discretion in entering that order. Further, the issue is moot since plaintiff complied with the order and testified after this court, on December 1, 1972, denied plaintiff's application for a stay and permitted the scheduled deposition to proceed.
However, plaintiff is correct in his contention that the judgment of divorce should have recited not only the court's finding that defendant had proved her counterclaim, but also its finding that plaintiff had proved, as alleged in his complaint, a cause of action for divorce based on defendant's willful and continuous desertion for more than 12 months.
The judgment of divorce should therefore be amended, nunc pro tunc as of November 1, 1972, to embody all the findings and conclusions quoted above of the trial court at the end of the September 14, 1972 hearing.
Plaintiff notes that defendant died on December 22, 1972 and contends that we should rule "that no divorce has been in effect until a Corrected Final Judgment is filed." The contention is advanced with the apparent hope that acceptance thereof would permit plaintiff to successfully urge that since he has survived his wife he is the sole owner of property which they had held by the entireties, instead of being limited to a claim as a tenant in common under the settled rule that "an absolute divorce * * * converts an estate by the entirety into a tenancy in common." DiSanto, et al. v. Adase, 116 N.J. Super. 226, 228 (App. Div. 1971).
Even were we to disregard (1) the fact that a judgment of divorce was entered and (2) plaintiff's unexplained failure to apply to the trial court before his wife died and before an appeal was taken for an amendment of the judgment, there is no justification for or merit to plaintiff's contention.
Even if no judgment had been entered before defendant wife's death, the court would be called upon to enter a judgment, *377 nunc pro tunc as of the date of its ruling, in accordance with its findings and conclusions. Clark v. Van Cleef, 75 N.J. Eq. 152, 157 (Ch. 1908); Bugbee v. Van Cleve, 100 N.J. Eq. 263, 271 (Prerog. 1926); Vogler v. Vogler, 98 N.J. Eq. 421, 425 (Ch. 1925); Annotation, Divorce Suit Death of Party, 104 A.L.R. 654, 664 (1936).
"The general rule * * * is that, if the facts justifying the entry of a decree were adjudicated during the lifetime of the parties to a divorce action, so that a decree was rendered or could or should have been rendered thereon immediately, but for some reason was not entered as such on the judgment record, the death of one of the parties to the action subsequently to the rendition thereof, but before it is in fact entered upon the record, does not prevent the entry of a decree nunc pro tunc to take effect as of a time prior to the death of the party." [104 A.L.R. 664]
The cause is remanded to the trial court for entry, nunc pro tunc as of November 1, 1972, of an amended final judgment as above provided. In all other respects the judgment and order appealed from are affirmed.
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751 S.W.2d 473 (1988)
STEVES SASH & DOOR COMPANY, INC., Petitioner,
v.
The CECO CORPORATION, Respondent.
No. C-5706.
Supreme Court of Texas.
January 27, 1988.
*474 Thomas H. Crofts, Jr. and John R. Locke, Groce, Locke & Hebdon, San Antonio, for petitioner.
Leonard J. Gittinger, Gittinger & Gittinger, San Antonio, for respondent.
OPINION
RAY, Justice.
This case involves usurious interest charged for failure to pay part of a sworn account. The trial court rendered judgment for the seller, Steves Sash and Door Company, Inc., and a take-nothing judgment on buyer's counterclaim of usury. The court of appeals reversed and rendered judgment for the buyer, Ceco Corporation, on its usury counterclaim. The court of appeals accordingly applied the statutory penalty for usury, Tex.Rev.Civ.Stat. art. 5069-1.06, and ordered that the seller forfeit $55,251.50 "principal," cancellation of the outstanding balance of $16,451.45, a $2,000.00 penalty, pre-judgment and postjudgment interest, and attorneys' fees. 714 S.W.2d 322.
The primary points of usury law presented by this appeal are the definition of "principal" under art. 5069-1.06(2), and whether pre-judgment interest is recoverable in a usury case. We hold that in the limited context of forfeiting principal as a statutory penalty for usury, "principal" means that amount upon which interest is charged or earned. We, therefore, modify the judgment of the court of appeals and render judgment that the seller forfeit as principal $13,454.70, that amount upon which the usurious interest was charged. We further hold that pre-judgment interest is not recoverable on penalty damages for usury. Accordingly, that portion of the court of appeals' judgment which awarded pre-judgment interest is reversed.
In this case, Ceco Corporation purchased doors from Steves Sash & Door Company, Inc. for installation in the new San Antonio Hyatt Regency Hotel which was then under construction. As the doors were manufactured, they were delivered to Ceco, and an invoice would issue for each shipment. The total purchase price for all the doors was $71,702.95. Invoices to Ceco indicated that amounts not paid within thirty days would be subject to service charges, computed beginning thirty days after the invoice date.
When Ceco failed to pay timely, Steves brought suit on the sworn account to recover the unpaid balance of $16,451.45. At the filing of the lawsuit, Ceco had already paid $55,251.50, $41,796.80 upon which no interest was charged, and $13,454.70 upon which $245.69 in interest was charged.
Ceco answered Steves' suit and brought a counterclaim. Among other allegations, which have no bearing on the points before us on appeal, Ceco alleged that Steves had engaged in usurious credit practices. Specifically, Ceco alleged that Steves' invoice number 731 charged $245.69 in interest on a principal of $13,454.70 for a period when no interest was due. According to the terms of the invoice, no interest was supposed to be charged for the first thirty days after that invoice. Interest was to begin to accrue at the expiration of the grace period on the balance. However, the $245.69 interest charged by invoice 731 was for interest on the thirty-day grace period. Ceco thus reasoned that Steves had engaged in usurious credit practices and asked for the statutory remedy, that Steves forfeit its principal.[1]
*475 The case was tried to a jury. The trial court rendered judgment for Steves on the sworn account, for attorneys' fees, post-judgment interest, and court costs based on the jury's verdict. The trial court rendered a take-nothing judgment on Ceco's counterclaims.
The court of appeals reversed and rendered judgment in favor of Ceco. It held that as a matter of law, a usurious charge appears on the face of the invoice documents. Therefore, the court of appeals reversed the trial court's take-nothing judgment on Ceco's counterclaim for usury, and rendered judgment for Ceco. The court further rendered judgment that Ceco recover pre-judgment interest on the usury claim. The court of appeals also reversed the trial court's judgment that Steves recover damages and attorneys' fees on the sworn account. Steves complains that the court of appeals erred in ordering Steves to forfeit more than the statutory penalty for usury. Art. 5069-1.06(2) provides that if more than double the allowed amount of interest is charged, all principal will be forfeited. Applying art. 5069-1.06(2), the court of appeals ordered Steves to forfeit the original balance of $41,796.80, which had already been paid by Ceco and upon which no interest was charged. The court of appeals further ordered Steves to forfeit the remaining unpaid balance of $16,451.45, also upon which no interest was charged.
Steves admits that the usurious charge was made in error, but says that it should not forfeit the entire amount of the purchase. Instead, it should forfeit as principal the sum of $13,454.70, the amount upon which the $245.69 in interest was charged. In essence, Steves says that "principal" under the usury statutes does not necessarily mean the original amount of the purchase. Steves contends that principal is that amount upon which the interest is charged or earned.[2]
We agree. In arriving at this definition, we look to the definitions set out by the legislature in the usury statutes. Tex. Rev.Civ.Stat.Ann. art. 5069-1.01 (Vernon 1987). While a definition for "principal" is not set out, "interest" is defined. Since "principal" and "interest" are correlative terms, we can determine the definition of one by examining the other. See generally Commercial National Bank of Shreveport v. Parsons, 144 F.2d 231, 240 (5th Cir.1944); Christian v. Superior Court of San Diego County, 122 Cal. 117, 54 P. 518, 519 (1898). The statutes define "interest" as "the compensation allowed by law for the use or forbearance or detention of money...." Tex.Rev.Civ.Stat.Ann. 5069-1.01(a) (Vernon 1987). Interest and principal are synergistic words which imply one another, and by necessity, principal must be that amount which is used, forborne, or detained, and upon which the interest is charged. See also Black's Law Dictionary 1073 (5th ed. 1979). As applied to this case, Steves must forfeit that amount upon which excessive interest was charged, $13,454.70, and not the entire original balance. Usury, or "interest in excess of the amount allowed by law," art. 5069-1.01(d), was upon $13,454.70 and not the entire amount of the purchase.
Applying the penalty for usury under 5069-1.06(2), the court of appeals ordered Steves to forfeit as principal the sum of all *476 purchases by Ceco from Steves. We do not believe that 5069-1.06(2) intends such an extreme result. We recognize that since the time of the Code of Hammurabi (around 1800 B.C.), legislatures have imposed exceedingly harsh penalties for usury. See generally Note, The Federal Monetary Control Act of 1980: A Step Toward Deregulation of State Usury Laws, 83 W.Va.L.Rev. 509, 510, (1981). The Bible suggests that the penalty for usury is exclusion from heaven or death. See Psalms 15:1-5; Ezekiel 18:13. However, the the Texas Legislature has been more forgiving in its penalties for usury. Under our statutes, while a party may be excluded from heaven for usury, we do not believe that the legislature intended that he forfeit as principal more than that amount upon which interest was charged. Accordingly, we hold that principal is that amount upon which interest is charged or earned, and render judgment that Steves forfeit as principal $13,454.70.
Steves further contends that it is entitled to a net recovery on the sworn account after an offset of the $15,454.70 penalty for usury: the $2,000.00 penalty under 5069-1.06(1) rendered by the court of appeals, and the $13,454.70 penalty of principal under 5069-1.06(2). We agree, and therefore reverse the judgment of the court of appeals to reinstate the jury verdict for Steves on the unpaid account. That jury verdict of $16,451.45 is offset by the sum of the penalties for usury, $15,454.70.
Steves argues that Ceco's pleadings did not provide fair notice of its claim for usury. Steves contends that it was not prepared to meet this particular usury claim. Had it known that Ceco's complaint was that interest was charged for an interest-free period, it would have raised the defense of bona fide error or mistake. On this point, we affirm the holding of the court of appeals that Steves received fair notice. Ceco's First Amended Original Counterclaim was filed one and a half years before the trial of this case. That pleading specifically refers to invoice number 731. It states that the invoice reflects an interest charge from August 31, 1981 to September 30, 1981, that the interest charged is in excess of twice the amount allowed by law, and thus is usurious on its face. This allegation should have alerted Steves of Ceco's claim. If Steves considered the pleading obscure or non-specific, Steves had the right to file special exceptions to clarify Ceco's counterclaims. Tex.R.Civ.P. 90 and 91. By failing to file special exceptions, Steves waived any defect in Ceco's pleadings, and the pleadings must be construed in favor of the pleader. See Roark v. Allen, 633 S.W.2d 804, 809-810 (Tex.1982).
Steves next complains that the court of appeals erred in rendering judgment for Ceco for prejudgment interest. We agree that prejudgment interest is not recoverable on usury penalty damages. The spectrum of penalties for usurious practices is listed in art. 5069-1.06. Forfeiture of principal, attorneys' fees, and criminal sanctions are among the penalties, and yet prejudgment interest is not listed. Since usury statutes are penal in nature, they must be strictly construed. Home Savings Association of Dallas County v. Crow, 514 S.W.2d 160 (Tex.Civ.App.-Dallas 1974), affirmed, 522 S.W.2d 457 (Tex. 1975). Under a strict construction analysis of 5069-1.06, prejudgment interest is not recoverable.
While we hasten to point out that this court's holding in Cavnar is limited to cases sounding in tort, we believe that to award prejudgment interest to the victim of usury would also not be in keeping with any of the usual reasons for awarding prejudgment interest, such as for the lost use of money or to compensate an injury. See generally, Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 552 (Tex. 1985). The penalty in usury cases given to the "usuree" is a boon or a windfall which he is allowed to receive as a punishment to the usurious lender, not as interest for the use of the borrower's money. See generally Saskill v. 4-B Acceptance, 139 Ill. App. 3d 143, 93 Ill. Dec. 653, 487 N.E.2d 97 (1985), in which the Illinois Court recognized that "the legislative goal of the [Illinois *477 usury act] is to impose a civil penalty on the lender not compensate the debtor." Id. at 99. Moreover, in commercial law, it is the usurer's money which is held, not the borrower's. A successful claim of usury may allow the borrower to avoid a debt he might otherwise owe. Therefore, we reverse the judgment of the court of appeals on this point and hold that prejudgment interest is not recoverable on penalty damages for usury.
Steves' final point is that the court of appeals erred in rendering judgment for attorneys' fees to Ceco because the evidence is legally insufficient to support the jury's findings. We need not reach the merits of this point because Steves failed to preserve its error below. In Aero Energy, this court reiterated the five ways to preserve a "no evidence" point of error: (1) a motion for instructed verdict; (2) a motion for judgment notwithstanding the verdict; (3) an objection to the submission of the issue to the jury; (4) a motion to disregard the jury's answer to a vital fact issue; or, (5) a motion for new trial. Aero Energy, Inc. v. Circle C Drilling Co., 699 S.W.2d 821, 822 (Tex.1985). A review of the record reveals that while Steves did make a motion to disregard jury findings, that motion made no mention of the jury's findings on attorneys' fees. Further, while Steves did object to issue nine, the objection was not a "no evidence" or "legal insufficiency" objection.[3] Tex.R.Civ. P. 274 dictates that a party must point out distinctly the matter to which he objects and the grounds of his objection or the complaint is waived.
Ceco raises numerous cross points in its response brief in an effort to prevent rendition. Generally, they are complaints of hearsay and exhibits which the court should not have allowed, abuse of discretion allegations because the trial court allowed a late pleading amendment, refused to permit an unnamed witness to testify, denied a motion for continuance, and objections to the charge. Since these cross-points have no bearing on the resolution of this case because they do not prevent rendition, they are denied.
Accordingly, we modify the judgment of the court of appeals as to the amount which Steves must forfeit for usurious practices, and as modified, affirm the judgment that Steves forfeit the principal, $13,454.70. We also affirm the court of appeals' rendition of a $2,000.00 penalty pursuant to 5069-1.06(1). Steves is entitled to a net recovery on the sworn account. To that end, we reverse the court of appeals' decision in part to reinstate the jury verdict of $16,451.45 on the sworn account, which is offset by the $2,000.00 penalty for usury under 5069-1.06(1), and the $13,454.70 penalty for usury under 5069-1.06(2). Since Ceco may not recover prejudgment interest against Steves, we also reverse that portion of the judgment of the court of appeals and render judgment that Ceco take nothing in pre-judgment interest. Relief sought by Ceco in its cross-points is denied.
NOTES
[1] Section 1.06(1)-(2) provides:
(1) Any person who contracts for, charges or receives interest which is greater than the amount authorized by the Subtitle, shall forfeit to the obligor three times the amount of usurious interest contracted for, charged or received, such usurious interest being the amount the total interest allowed by law, and reasonable attorney fees fixed by the court except that in no event shall the amount forfeited be less than Two Thousand Dollars or twenty percent of the principal, whichever is the smaller sum; provided, that there shall be no penalty for any usurious interest which results from an accidental and bona fide error.
(2) Any person who contracts for, charges or receives interest which is in excess of double the amount of interest allowed by this Subtitle shall forfeit as an additional penalty, all principal as well as interest and all other charges and shall pay reasonable attorney fees set by the court; provided further that any such person violating the provisions of this section shall be guilty of a misdemeanor and upon conviction thereof shall be punished by fine of not more than One Thousand Dollars. Each contract or transaction in violation of this section shall constitute a separate offense punishable hereunder.
Tex.Rev.Civ.Stat.Ann. art. 5069-1.06(1)-(2) (Vernon 1987).
Since no interest was due for the period, Ceco and the court of appeals reasoned that $245.69 was more than double the amount owed, that is more than two times zero.
[2] We caution that this case is greatly confined by the facts before us. Here, the principal upon which interest was charged is not the same amount as the original balance. Often those two figures are the same because interest is charged on the entire balance, in which event the "principal" to be forfeited would be the original balance.
[3] For the relationship among "legal insufficiency" "No evidence," "insufficient as a matter of law," see M. O'Connor, Appealing Jury Findings, 12 Hou.L.Rev. 65, 66 (1975). In this case it was not entirely clear from its briefs whether Steves was making a "no evidence" or "as a matter or law argument." However, since Steves relied on Harmes, a "no evidence" case, the arguments were construed accordingly. See Harmes v. Arklatex Corp., 615 S.W.2d 177 (Tex.1981).
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751 S.W.2d 229 (1988)
HERITAGE LIFE INSURANCE COMPANY, Appellant,
v.
HERITAGE GROUP HOLDING CORPORATION, Appellee.
No. 05-87-00570-CV.
Court of Appeals of Texas, Dallas.
April 27, 1988.
Rehearing Denied June 9, 1988.
*231 Kelly Akins, Janet E. Atkins, Dallas, for appellant.
Blair G. Francis, Dallas, for appellee.
Before HOWELL, STEWART, and ROWE, JJ.
ON MOTION FOR REHEARING
ROWE, Justice.
The opinion of this Court of February 16, 1988, is withdrawn, and the following opinion is substituted.
After a summary judgment in favor of Heritage Group Holding Corporation (Buyer), Heritage Life Insurance Company (Seller) appeals the judgment returning $10,000 in earnest money to Buyer. Seller asserts that the trial court erred in granting Buyer's motion for summary judgment and in denying Seller's motion for summary judgment. Buyer asserts a "cross-point" challenging the jurisdiction of this Court based on an untimely filed cost bond.
For the reasons stated below, we overrule the jurisdictional challenge and decide the appeal on its merits. We hold that the summary judgment proof establishes beyond dispute that Buyer is not entitled to return of the $10,000 earnest money. Accordingly, we reverse the summary judgment in favor of Buyer and render summary judgment in favor of Seller that Buyer take nothing. Seller's claim for attorney fees, asserted in an improperly brought declaratory judgment action, is denied.
This case evolves from the proposed sale of Heritage Life Insurance Company of Texas (Heritage of Texas) by Seller to Buyer by way of a 100 percent stock buyout. The initial contract of sale was executed by the Seller and by Clyde Fortenberry and C.H. McCoy who later assigned their rights to Buyer, a corporation owned 75 percent by McCoy and 25 percent by Fortenberry. The contract, in various sections, provided for a $250,000.00 sale price, compliance with the Texas insurance laws, a $10,000.00 earnest money deposit by the Buyer, and optional rescission by either party if approval of the sale was not given by the Texas Insurance Commission by July 15, 1985, later extended to September 20, 1985. It is uncontroverted that the Commission's approval was not gained by September 20, 1985, at which time Buyer demanded return of the earnest money. Seller refused to return the earnest money; and, consequently, this suit was brought.
Before reaching the substantive matters on appeal, we first address Buyer's jurisdictional "cross-point." Rule 41 of the Texas Rules of Appellate Procedure[1] requires the cost bond to be filed no later than 90 days after the judgment is signed when a motion for new trial has been made. The filing of a cost bond is required under Rule 40 in order to perfect an appeal. In this case Seller failed to timely file its bond but applied for an extension of time to so file within 15 days as per Rule 41(a)(2). Buyer opposed Seller's motion, but this Court granted the motion following its traditional holdings in this area. In its brief on appeal, Buyer reargues this ruling by way of a "cross-point." We reaffirm our previous ruling.
Rule 41(a)(2) allows an appellate court to extend the time to file the cost bond if the bond is "filed not later than fifteen days after the last day allowed and, within the same period, a motion is filed in the appellate court reasonably explaining the need for such extension." The controversy in this case concerns what constitutes a "reasonable explanation." The Texas Supreme Court has held that "reasonably explaining" means "any plausible statement of circumstances indicating that failure to file within the [prescribed time period] was not deliberate or intentional, but was the result of inadvertence, mistake or mischance." Meshwert v. Meshwert, 549 S.W.2d 383, 384 (Tex.1977). In the case at bar, it appears that Seller's attorney miscalculated the due date by not properly applying Rule 41's "90 days from judgment" rule but by applying *232 instead the repealed rule which calculated the due date from the order denying a motion for new trial. Although the attorney may have been mistaken as to the applicable law, it is clear that the mistake was not deliberate or intentional. Therefore, we hold that an attorney's miscalculation of the date upon which a cost bond is due stemming from a mistake in law is a "reasonable explanation" sufficient to satisfy Rule 41(a)(2). United States Fire Insurance Co. v. Stricklin, 547 S.W.2d 338, 340 (Tex.Civ.App.-Dallas 1977, no writ).
Buyer relies on the case of Home Insurance Co. v. Espinoza, 644 S.W.2d 44 (Tex.App.-Corpus Christi 1982, writ ref'd n.r.e.), which directly opposes our holding in this case. Under similar facts, the Corpus Christi Court held that the failure to timely file a cost bond resulting from an attorney's failure to adequately familiarize herself with the basic rules of appellate procedure does not constitute a reasonable explanation as a matter of law. Id., at 45. We view the Corpus Christi Court as following the "reasonable diligence" standard. This standard was rejected by Justice Guittard in his dissenting opinion in Sloan v. Passman, 538 S.W.2d 1, 1 (Tex.Civ.App.- Dallas 1976) (Guittard, J., dissenting, approved in United States Fire Insurance Co. v. Stricklin, 547 S.W.2d 338 (Tex.Civ. App.-Dallas 1977, no writ)). Justice Guittard followed the "Craddock" standard of inadvertence, mistake, or mischance. This same language was used by the Texas Supreme Court in Meshwert, 549 S.W.2d at 384. Under Mershert, Stricklin, and Sloan, the "reasonable explanation" required by Rule 41(a)(2) focuses on a lack of deliberate or intentional failure to comply. See Meshwert, 549 S.W.2d at 384. Anything short of deliberate or intentional noncompliance falls within the area of inadvertence, mistake, or mischance. Consequently, we decline to follow Espinoza and overrule Buyer's "cross-point."
We now turn to Seller's substantive points of error. Seller complains in point of error number one that the trial court erred in granting summary judgment for Buyer. In point of error number two, Seller asserts that the trial court erred in denying summary judgment for Seller. Since both of these points of error concern the same facts and legal issues, we address them concurrently.
The rights and obligations of the parties in this case are controlled by the contract. The contract covers nine pages but has six clauses relevant to this appeal. Section 1.1[2] provides that 100% of the stock of Heritage of Texas will be transferred. Section 3.4[3] provides that Buyer will acquire title to all assets of Heritage of Texas. Section 5.1[4] provides that the sale is subject to the approval of the Commissioner of Insurance of the State of Texas and that Article 21.49-1 of the Texas Insurance Code will be complied with. Section 5.2(b)[5] provides that Buyer's obligations are conditioned on there being no material breaches of Seller's representations and warranties. *233 Section 7.1[6] provides that if the approval by the Commissioner of Insurance is not secured by July 15, 1985 (later extended to September 30, 1985), either party may terminate the agreement. Section 11.1[7] provides for the disposition of $10,000 in earnest money.
The record reveals that approval by the Commissioner of Insurance was never obtained. It also reveals that, prior to the section 7.1 approval cut-off date, Buyer made a decision to no longer attempt to comply with the Commissioner's required disclosures due to the high cost of such compliance. In addition, the record reveals that during the same time period Seller notified Buyer that it planned to continue selling insurance in Texas under Seller's (parent company) name; and, therefore, it questioned whether the Commissioner would allow Buyer to continue using the Heritage of Texas (subsidiary) name since the names were so similar.
Buyer's motion for summary judgment and its defense on appeal centers around sections 7.1 and 11.1 of the contract which give an option to rescind with full reimbursement if the Commissioner of Insurance has not approved the sale prior to a specified date. Buyer contends that the proper construction of these sections mandates the return of its earnest money no matter what caused the Commissioner not to approve the sale. We disagree with this construction.
Neither party has pleaded ambiguity in this case; therefore, the construction of the contract is a question of law for the courts. Westwind Exploration, Inc. v. Homestate Savings Association, 696 S.W.2d 378, 381 (Tex.1985). Buyer would have this Court look to sections 7.1 and 11.1 wearing blinders. However, to ascertain the true intent of the parties, courts must consider the entire writing, giving effect to all provisions of the contract. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). "No single provision taken alone will be given controlling effect." Id. We must read sections 7.1 and 11.1, therefore, in conjunction with section 5.1 which sets out the effect of the Texas insurance laws on this contract.
Section 5.1 appears in the contract under the heading "Representations and Warranties by Buyer" and is the first provision which specifies that the agreement is subject to approval of the Commissioner of Insurance. Section 5.1, however, also provides that this approval will come "after full compliance with all of the conditions precedent required by Article 21.49-1 of the Texas Insurance Code ..." (emphasis ours). Article 21.49-1(5) of the Texas Insurance Code Annotated (Vernon 1981) itemizes the filing requirements to be met by persons seeking to obtain control of a domestic insurer, including the filing of financial statements of the buyers. Since this Court must favor that construction of a contract which gives effect to every clause as used by the parties, Westwind Exploration, Inc., 696 S.W.2d at 382, we view section 5.1 as modifying both sections 7.1 and 11.1. When the sections are thusly integrated, Buyer becomes affirmatively obliged to file all documents authorized by article 21.49-1 which the Commissioner requests as being relevant to his decision of approval. The record reflects that Buyer willfully failed to furnish the Commissioner with certain financial information he requested, *234 to wit: five years of audited financial statements from both McCoy and Fortenberry.
The willful failure to comply with the requests of the Insurance Commissioner precludes Buyer from relying on the Commissioner's failure to approve the sale. Rich v. McMullan, 506 S.W.2d 745, 747 (Tex.Civ.App.-San Antonio 1974, writ ref'd n.r.e.); Sargent v. Highlight Broadcasting Co., 466 S.W.2d 866, 867 (Tex.Civ. App.-Austin 1971, no writ); and see Sanderson v. Sanderson, 130 Tex. 264, 109 S.W.2d 744, 749 (Tex.Comm'n App.1937, opinion adopted).
The Rich case involved a real estate sale that was conditioned on the buyer's obtaining a loan. The San Antonio Court held that the seller could not defend against a suit for specific performance by alluding to the fact that the buyer never obtained a loan when the seller did not comply with the bank's request for access to the property, the bank's access being necessary in order to appraise the property as part of the bank's loan approval process. Rich, 506 S.W.2d at 747. The Sargent case involved a sale of a business which was made dependent on the approval of the Federal Communications Commission. When one party to the sale failed to execute the documents necessary to obtain approval of the Commission, that party was precluded from relying on the fact that the Commission had not approved the sale. Sargent, 466 S.W.2d at 867.
In this case Buyer made an affirmative decision to stop and did stop complying with financial information requests of the Insurance Commissioner prior to the September 30, 1985, optional termination date. This willful nonperformance by Buyer of its obligation under the contract negated any possibility of approval by the Insurance Commissioner and brought into play the equitable principle that one may not profit by his own wrong. Accordingly, we hold that in its action for return of the earnest money under the sales contract Buyer cannot be heard to assert that the Insurance Commissioner's approval was never obtained. See 31 C.J.S. Estoppel § 59(d)(1964); 17 Am.Jur.2d Contracts § 427 (1964); see RESTATEMENT (SECOND) OF CONTRACTS § 245 (1981).
Buyer argues under its good faith contentions that its refusal to comply was justified by the burdensomeness of the requests. Buyer asserts that the requiring of five years of audited financial statements from both McCoy and Fortenberry was so burdensome as to be unreasonable. It is axiomatic that a contractual obligation cannot be avoided simply because the obligation becomes more burdensome than anticipated. Alamo Clay Products, Inc. v. Gunn Tile Company of San Antonio, Inc., 597 S.W.2d 388, 392 (Tex.Civ.App.- San Antonio 1980, writ ref'd n.r.e.); Mahrer v. Mahrer, 510 S.W.2d 402, 405 (Tex.Civ. App.-Dallas 1974, no writ). Furthermore, there is a presumption that a party who enters a contract did not assume an obligation that he could not perform. Rich v. McMullen, 506 S.W.2d 745, 748 (Tex.Civ. App.-San Antonio 1974, writ ref'd n.r.e.). Thus mere burdensomeness is not a justificationthe burden must be so great as to be unreasonable under those particular circumstances which exist.
Article 21.49-1(5)(c)(3) of the Texas Insurance Code Annotated (Vernon Supp. 1988) requires that corporate buyers provide five year's audited financial statements. However, the requirements for individual buyers may be more or less stringent since such is left to the discretion of the Commissioner. It is not unreasonable to require an individual to provide the same information that he knows a similarly placed corporation is required to file.
In addition, Buyer argues that it is entitled to return of its $10,000.00 earnest money deposit because Seller anticipatorily breached the sales contract by notifying Buyer not to expect Seller's authorization for full use of the acquired corporation's name. Section 1.1 of the contract provided that Buyer was to acquire 100% of the stock of Heritage of Texas. This ordinarily means that Buyer acquired title to all assets of Heritage of Texas, including a property right in its name. The contract, however, *235 is silent regarding the effective use of that name.[8]
Since neither party pleaded ambiguity in the contract, the ramifications of silence in the contract is a question of law for the courts. Westwind Exploration, Inc., 696 S.W.2d at 381. Section 9.1 of the contract specifies that the document "contains the entire Agreement between Seller and Buyers with respect to the subject matter hereof..." Although the contract expressly warrants good and marketable title to all corporate assets, it does not warrant their future value or usefulness. Consequently, we hold that upon transfer of the agreed title, Seller had no further obligations with respect to the assets. To hold otherwise would be to read provisions into the contract which the evidence will not support as having been bargained for by the parties. Seller did not anticipatorily breach the contract when it notified Buyer that it would not protect the use of the Heritage of Texas name because no such protection is afforded by the terms of the contract.
The final support of Buyer's summary judgment is an equitable argument of unjust enrichment. However, the contract in section 11.1 specifically and expressly controls the distribution of the earnest money in this case. Therefore, the equitable remedy is not available. LaChance v. Hollenbeck, 695 S.W.2d 618, 620 (Tex. App.-Austin 1985, writ ref'd n.r.e.); Morales v. Dalworth Oil Co., Inc., 698 S.W.2d 772, 774 (Tex.App.-Fort Worth 1985, writ ref'd n.r.e.).
For the reasons stated above, the trial court improperly granted summary judgment for Buyer, and Seller's first point of error is sustained. For the same reasons, the trial court improperly denied summary judgment for Seller that Buyer take nothing with respect to its earnest money claim. We hold that as a matter of law Buyer was under an obligation to file all documents required by the Commissioner of Insurance, that the filing requirements imposed by the Commissioner were not overly burdensome, and that Buyer's willful refusal to so file forfeits its rights to the earnest money. Further, we hold that since the contract did not cover the protected use of the Heritage of Texas name, Seller did not anticipatorily breach the contract by notifying Buyer that use would not be authorized. Accordingly, to the extent Seller's second point of error seeks rendition of a summary judgment that Buyer take nothing, such point of error is sustained.
Seller also complains by its second point of error that the trial court erred in dismissing its counterclaim for declaratory judgment under which it was entitled to attorney fees. TEX.CIV.PRAC. & REM. CODE ANN. § 37.009 (Vernon 1986). The Declaratory Judgment Act, however, is not available to settle disputes already pending before a court. Johnson v. Hewitt, 539 S.W.2d 239, 240-241 (Tex.Civ.App.-Houston [1st Dist.] 1976, no writ); Joseph v. City of Ranger, 188 S.W.2d 1013, 1014 (Tex.Civ.App.-Eastland 1945, writ ref'd w.o.m.). Seller's counterclaim in this case sought a declaratory judgment that Buyer had breached its duties under the contract and that Seller was entitled to keep the $10,000 earnest money. This counterclaim merely restates Seller's defenses to issues already raised under Buyer's action for return of the earnest money. Thus, Seller is not entitled to relief under the Declaratory Judgment Act in the form of a counterclaim. The identical conclusion was heretofore reached by this Court in Narisi v. Legend Diversified Investments, 715 S.W.2d 49, 51-52 (Tex.App.-Dallas 1986, writ ref'd n.r.e.). In Narisi we recognized that a counterclaim under the Declaratory Judgment Act, presenting no new controversies *236 but brought solely to pave an avenue to attorney fees, was not proper. However, the party's failure to specifically object to the award of attorney fees precluded the appellate court from granting relief. In our current case, the trial court properly denied Seller's claim on attorney fees, and we follow Johnson, Joseph, and Narisi in overruling Seller's contention in its second point of error that the trial court erred by dismissing its counterclaim for attorney fees.
The trial court's summary judgment in favor of Buyer is reversed, and judgment is here rendered that Buyer take nothing. Seller's claim for attorney fees is denied.
NOTES
[1] All subsequent citations to rules will refer to the Texas Rules of Appellate Procedure unless stated otherwise.
[2] Section 1.1 provides:
Seller agrees that at the closing hereunder, Seller will sell, transfer and deliver to the Buyer for consideration hereinafter provided, one hundred percent (100%) of the outstanding stock of Heritage.
[3] Section 3.4 provides:
Seller represents and warrants that Heritage will have good and marketable title to all of its properties and assets, including those reflected in the aforesaid financial statement attached hereto.
[4] Section 5.1 provides:
This entire Agreement is subject to the prior approval by the Commissioner of Insurance of the State of Texas after full compliance with all of the conditions precedent required by Article 21.49-1 of the Texas Insurance Code known as the Insurance Holding Company System Regulatory Act, and this instrument shall not be construed as an agreement to acquire control of a domestic insurer prior to compliance with the prerequisites of said Insurance Holding Company System Regulatory Act.
[5] Section 5.2 provides:
The obligations of Buyers under this agreement are subject to fulfillment of each of the following conditions prior to and at the Closing:
(b) There shall not have been any material breach of the representations or warranties of Seller contained in this Agreement.
[6] Section 7.1 provides:
Upon written approval of this Agreement and transaction by the Commissioner of the Texas State Board of Insurance, closing of this Agreement shall take place within ten days therefrom, or a longer period of time mutually acceptable to all parties, for preparation and execution of all closing documents.... If the securing of such approval by the Commissioner of Insurance has not been accomplished by July 15, 1985, either party hereto may at their option terminate this Contract by giving the other party notice of such termination.
[7] Section 11.1 provides:
... If the approval of the Commissioner of the Board of Insurance of the State of Texas is obtained and Buyers fail to perform their obligations under this Agreement, the Ten Thousand Dollars ($10,000.00) earnest money will be forfeited to Seller. If the Commissioner of the Board of Insurance of the State of Texas does not approve this Agreement, the Ten Thousand Dollars ($10,000.00) earnest money will be returned to Buyers.
[8] Mere acquisition of an asset does not guarantee that the asset will have any useful value. In this case, it was forseeable that the split in ownership between parent and subsidiary would diminish the utility of the subsidiary's name for any future insurance business in Texas. The parent had a noticeably similar name and was engaged already in the same business. More importantly, the Insurance Commissioner of Texas, and not the parent, would ultimately decide what name Buyer could use in its new business. Despite these obvious factors, the written contract under review does not allude to any matters directly pertinent to Buyer's continued use of the subsidiary's name.
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569 F. Supp. 589 (1983)
W.A. WRIGHT, INC., a Corporation of the State of New Jersey, and A.C. Excavating, Inc., formerly known as Wrightway Excavation Co., Inc., a Corporation of the State of New Jersey, Plaintiffs,
v.
KDI SYLVAN POOLS, INC., a Delaware corporation, Defendant.
Civ. A. No. 81-0032.
United States District Court, D. New Jersey.
August 9, 1983.
*590 John A. Yacovelle, Somerdale, N.J., for plaintiffs.
Evans, Koelzer, Osborne, Kreizman & Bassler by Harry V. Osborne, II, Red Bank, N.J., for defendant.
*591 OPINION
COHEN, Senior District Judge:
In this breach of contract action, the jury returned a verdict in favor of plaintiffs, W.A. Wright, Inc. (Wright) and A.C. Excavating, Inc. (A.C. Excavating), and against defendant KDI Sylvan Pools, Inc. (KDI). In response to Special Interrogatories prepared by the Court with the consent of counsel, the jury determined that KDI wrongfully terminated its two separate contracts with Wright and A.C. Excavating without good cause. Wright was awarded compensatory damages in the amount of $86,768.00, and punitive damages in the amount of $7,500.00; A.C. Excavating was awarded compensatory damages in the amount of $28,396.00, and punitive damages in the amount of $7,500.00.
Upon return of the jury's verdict, but prior to this Court's entry of judgment, oral application was made on behalf of both plaintiffs for an assessment of prejudgment interest against defendant on the awards of compensatory damages. Plaintiffs seek interest from November 30, 1980, the end of the 1980 season, to the present, on the ground that they have been wrongfully deprived of monies due them during that period. This oral motion, taken under advisement by the Court pursuant to Fed.R.Civ.P. 7(b)(1), is now, inter alia, the subject of this Opinion.
Also presently before the Court is a motion by defendant for a new trial[1] pursuant to Fed.R.Civ.P. 59. Specifically, KDI alleges that (1) consideration by the jury of the issue of punitive damages resulted in a miscarriage of justice, because it was not supported by the evidence and was contrary to the laws of the State of New Jersey; (2) the award of damages constituted error because the verdict was against the weight of the evidence and was the result of an improper charge to the jury on the issue of punitive damages; and (3) plaintiffs' amendment to their complaint filed upon leave of this Court after the close of their case and during the presentation of defendant's case, unfairly surprised KDI and prejudiced its ability to defend the action, because the sole witness who could have rebutted the allegations contained therein was unavailable.
For the reasons set forth below, we shall grant plaintiffs' motion for prejudgment interest, and deny defendant's motion for a new trial.
At all times pertinent hereto, plaintiffs were engaged primarily in the construction of swimming pools. The principals in both companies were William A. Wright and his wife, Patricia. On or about February 14, 1980, each plaintiff entered into a separate agreement with defendant KDI which together form the basis of their complaint.
In the contractor agreement between plaintiff Wright and defendant KDI, the latter agreed to recommend Wright for all decks or terrace work on pools sold out of defendant's Cherry Hill, New Jersey office during the 1980 season. In the subcontractor agreement, simultaneously entered into between plaintiff A.C. Excavating and KDI, the former was to perform all excavation work on Sylvan pools sold out of the Cherry Hill office during the same period. The parties estimated that there would be "between 85 and 100 digs." Plaintiffs' Exhibit 1. KDI terminated both contracts on May 16, 1980, prior to the expiration of the 1980 season. Plaintiffs thereafter filed the instant action,[2] seeking both compensatory and punitive damages.
*592 Counts I and II of plaintiffs' complaint alleged that they performed or substantially performed all of their deck and excavating work in a good and workmanlike manner, and that the defendant breached both contracts by terminating them without good cause. In Count III of their complaint, plaintiffs each sought punitive damages, originally on the ground that defendant wrongfully interfered with their business relationships with their customers, by making false and malicious statements thereto. After the close of their case at trial, and during the presentation of defendant's case, plaintiffs withdrew their claims in Count III, and moved, pursuant to Fed.R.Civ.P. 15(a), for leave to amend the complaint to substitute a new basis for the punitive damage claims.
The amended third count alleged that defendant intentionally sought to injure plaintiffs in the conduct of their business, by entering into the contracts at issue with full knowledge that those agreements violated a consent decree of the Court of Common Pleas of Montgomery County, Pennsylvania. The decree was issued pursuant to an action brought by Anthony Industries, Inc. (Anthony), a competitor of KDI, against KDI and several of its employees, seeking to restrain them from engaging in unfair business practices. See Anthony Industries, Inc. v. KDI Sylvan Pools, Inc., et al., No. 79-23298 (Pa.C.P. Montgomery County, filed January 21, 1980); see also Plaintiffs' Exhibit 45. The decree provided that for a specified period of time, neither Anthony nor KDI would solicit for employment anyone currently employed by the other. It also prohibited either party from unlawfully interfering with the other's business relationships with its contractors or subcontractors, during the same period. See Plaintiffs' Exhibit 45. In the instant case, plaintiffs alleged that KDI knew it was prohibited from entering into the contracts at issue, because plaintiffs were, at that time, under contract to do similar work for Anthony.
Defendant opposed plaintiffs' Rule 15 motion on two grounds. First, KDI claimed, the motion was untimely and prejudicial because the allegations contained in the proposed third count were not raised in the final pretrial order, and leave to amend was being sought long after plaintiffs' case had been completed. Therefore, defendant maintained, it was being unfairly surprised by new allegations to which it was unable to prepare an adequate defense. Second, defendant argued, plaintiffs' claims for punitive damages should be stricken because, under New Jersey law, punitive damages are not recoverable in a breach of contract action.
Oral argument by counsel for both parties was heard, and plaintiffs were granted leave to amend their complaint. An opinion was placed on the record, in which we considered and rejected both of defendant's arguments in opposition to plaintiffs' motion.
As to defendant's claim of untimeliness and unfair surprise, we ruled that Fed.R. Civ.P. 15(a) provides this Court with broad discretionary authority to permit a party to amend its pleading, even after the close of its case at trial. We further held that the defendant here was in no way prejudiced by the amendment at issue, because it was fully aware of the circumstances which formed the basis thereof.
As to the punitive damages issue, we determined that damages are generally not recoverable in this state in contract actions unless the facts of the case fit within the scope of a recognized exception to this general rule. Sandler v. Lawn-a-Mat Chemical & Equipment Corp., 141 N.J.Super. 437, 451, 358 A.2d 805, 813 (App.Div.), certif. denied, 71 N.J. 503, 366 A.2d 658 (1976); see also Mayer v. Development Corp. of America, 541 F. Supp. 828, 861-62 (D.N.J.1981). However, we further found that New Jersey courts also permit an award of punitive damages where there exists such an aggravated set of circumstances that punitive damages are appropriate notwithstanding the contract form of the action, even *593 though it may be beyond the scope of the recognized exceptions. Id. Finally, we determined that under the facts of this case, defendant's wanton disregard of a court order, and its conduct prior to and thereafter, constituted sufficiently egregious circumstances to warrant submission of plaintiffs' punitive damage claims to the jury.
PLAINTIFFS' MOTION FOR PREJUDGMENT INTEREST
Both contracts in this action provide that they shall be interpreted in accordance with the laws of Pennsylvania. See Plaintiffs' Exhibit 1, ¶ 13, and Plaintiffs' Exhibit 2, ¶ 13. These provisions arguably raise the threshold issue whether the law of Pennsylvania or New Jersey applies herein.
This action was tried to a jury in a New Jersey district court. A conflict of laws issue was not raised in the pleadings or response thereto, or during any of the pretrial discovery proceedings. Defendant's trial brief cited the contract provisions in question, but noted that Pennsylvania and New Jersey law were indistinguishable on all relevant issues. During the trial, all matters pertinent thereto were disposed of in accordance with the laws of New Jersey, including plaintiffs' in litem motion to amend their complaint that is now, inter alia, the subject of defendant's Rule 59 motion.
In diversity cases, the district court must apply the choice of law rules of the forum state. Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 494, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477 (1941). On the issue of damages, New Jersey's choice of law rule is that "the state whose law governs the substantive legal questions also governs the prejudgment interest issue." Draper v. Airco, Inc., 580 F.2d 91, 98 (3d Cir.1978), relying on Busik v. Levine, 63 N.J. 351, 307 A.2d 571 (1973). In their respective memoranda, in support of and in opposition to plaintiffs' motion, the parties concur that as applied to the facts of this case, there is no real distinction between the prejudgment interest laws at issue. Compare N.J.R. 4:42-11(b) with Pa.R.Civ.P. 238. Under these circumstances, we find no genuine dispute as to the applicable state law, and we shall proceed to resolve the matters now before us under the laws of New Jersey.
New Jersey law permits the recovery of prejudgment interest in tort actions as a matter of right. N.J.R. 4:42-11(b). In other actions, where the claim is for liquidated or unliquidated damages, prejudgment interest is awarded in accordance with equitable principles. See, e.g., Bak-A-Lum Corp. of America v. Alcoa Building Products, 69 N.J. 123, 131, 351 A.2d 349, 353 (1976) (liquidated and unliquidated damages); Rova Farms Resort v. Investors Insurance Co., 65 N.J. 474, 506, 323 A.2d 495, 512 (1974) (liquidated damages); Small v. Schuncke, 42 N.J. 407, 416, 201 A.2d 56, 60 (1964) (liquidated damages); Deerhurst Estates v. Meadow Homes, Inc., 64 N.J.Super. 134, 153, 165 A.2d 543, 554 (App.Div.1960), certif. denied, 34 N.J. 66, 167 A.2d 55 (1961) (unliquidated damages); Jardine v. Donna Brook Corp., 42 N.J.Super. 332, 341, 126 A.2d 372, 377 (App.Div.1956) (unliquidated damages); Kamens v. Fortugno, 108 N.J. Super. 544, 548-49, 262 A.2d 11, 15 (Ch.Div. 1970) (liquidated damages). But see McDonald v. Mianecki, 159 N.J.Super. 1, 25-26, 386 A.2d 1325, 1338-39 (App.Div.1978), aff'd, 79 N.J. 275, 398 A.2d 1283 (1979).
In the case at bar, plaintiffs seek prejudgment interest on that portion of the verdict which awarded them compensatory damages for the lost profits they sustained as a result of defendant's wrongful termination of their respective contracts. The value of their claims, which was contested by the defendant at all times pertinent hereto, was left to the discretion of the jury based upon the evidence presented. Under these circumstances, we find the claims to be liquidated.
New Jersey courts generally award prejudgment interest on claims for unliquidated damages only when "consideration of justice and fair dealing so demand." Buono Sales, Inc. v. Chrysler Motors Corp., 449 F.2d 715, 723 (3d Cir.1971); see also Coleco *594 Industries, Inc. v. Berman, 423 F. Supp. 275, 323 (E.D.Pa.1976) (applying New Jersey law), modified on other grounds, 567 F.2d 569 (1977); cert. denied, 439 U.S. 830, 99 S. Ct. 106, 58 L. Ed. 2d 124 (1978); Deerhurst Estates, supra, 64 N.J.Super. at 153, 165 A.2d at 554; Jardine Estates, Inc., supra, 42 N.J.Super. at 341, 126 A.2d at 377. However, the New Jersey Supreme Court has, on at least one occasion, applied equitable principles and awarded prejudgment interest on a claim for unliquidated damages. In Bak-A-Lum Corp. of America, supra, defendant manufacturer was found liable for failing to notify plaintiff of its intention to terminate their exclusive distributorship agreement, which by its terms permitted termination thereof without cause only on reasonable notice. 69 N.J. at 129, 351 A.2d at 351. The court held that defendant breached an implied covenant of dealing in good faith by persuading plaintiff to place a large order and expand its warehouse facilities predicated solely on continuation of the exclusive distributorship, with full knowledge that it secretly intended to terminate that agreement shortly thereafter. Id. at 130, 351 A.2d at 352. The court determined that under these circumstances, 20 months was a reasonable period of notice, and awarded plaintiff damages for lost profits and prejudgment interest from the date notice should have been given. Id. at 131, 351 A.2d at 352.
We find the facts in Bak-A-Lum Corp. of America to be substantially similar to the instant action. Therefore, the reasoning applied by the Supreme Court of New Jersey in that case is equally applicable here. The jury's determination that the defendant's conduct in this case merited two awards against it of punitive damages supports a finding that the equities herein clearly lie with the plaintiffs.
The Supreme Court of New Jersey has held that the purpose of an award of prejudgment interest is "compensatory, to indemnify the claimant for the loss of what the moneys due him would presumably have earned if payment had not been delayed." Busik, supra, 63 N.J. at 359, 307 A.2d at 575. Plaintiffs here were deprived of lost profits in the amounts of $86,768.00 and $28,396.00, respectively. They contend, and we agree, that had defendant not breached the contracts at issue, they would have earned and been in possession of those profits on or about November 30, 1980, the close of the 1980 season. For all the foregoing reasons, therefore, we find that plaintiffs Wright and A.C. Excavating are each entitled to interest, on their compensatory damage claims, at the rate of 12% from November 30, 1980 to May 23, 1983, the date of entry of judgment. See N.J.R. 4:42-11(b); Simons v. Saaz, 147 N.J.Super. 143, 370 A.2d 889 (App.Div.1977).
DEFENDANT'S MOTION FOR A NEW TRIAL
Fed.R.Civ.P. 59(a) provides that:
a new trial may be granted to all or any of the parties and on all or part of the issues (1) in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States; ....
It is axiomatic that the decision to grant or deny a motion for a new trial, pursuant to Rule 59, is within the sound discretion of the trial court. Zegan v. Central Railroad Company of New Jersey, 266 F.2d 101, 104 (3d Cir.1959); see generally 6A J. Moore, Moore's Federal Practice § 59.05(5) (2d ed. 1982). It is equally well established that a new trial will not be granted "unless it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done." Lewis v. Kepple, 185 F. Supp. 884, 887 (W.D.Pa.1960), aff'd per curiam, 287 F.2d 409 (3d Cir.1961); see generally 11 C. Wright and A. Miller, Federal Practice and Procedure § 2803 (1973).
Defendant asserts that it is entitled to a new trial on the issue of damages, on the ground that the awards of punitive damages were unsupported by the evidence, and contrary to the laws of this state.
*595 Defendant previously raised, and this Court rejected, its argument that New Jersey does not permit recovery of punitive damages in contract actions under any circumstances. Defendant now alleges that our determination was based on the erroneous assumption that a special fiduciary relationship existed between the parties. However, as we previously noted, New Jersey law permits recovery of punitive damages in contract actions where the claim therefor is based on sufficiently egregious circumstances. See Sandler, supra, 141 N.J.Super. at 451, 358 A.2d at 813; see also Mayer, supra, 541 F.Supp. at 861-62. Our decision to submit plaintiffs' claims for punitive damages to the jury in this case was not based, as defendant contends, on a finding that it breached a special fiduciary relationship with plaintiffs. Rather, it was based solely on the uncontroverted evidence that defendant entered into the contracts at issue with full knowledge that such action violated the court order previously discussed. The jury's awards of punitive damages were within its discretion, and eminently reasonable under the circumstances of this case. We find nothing contained in defendant's brief in support of its motion to warrant a reversal of those decisions.
Defendant also argues that it is entitled to a new trial on the issue of damages because the verdict was against the weight of the evidence, and resulted from an improper charge to the jury on the punitive damages issue. Specifically, defendant contends that the awards of compensatory damages were erroneously based on a finding that there were 100 pools sold out of the Cherry Hill office during the 1980 season. KDI maintains that the proofs presented at trial indicated that only 85 pools were sold during the relevant time period.
We find this argument meritless. The excavation contract provided that "estimated work for 1980 [was] within 85 to 100 digs." Plaintiffs' Exhibit 1. The sales manager of defendant's Cherry Hill office, whose deposition testimony was read into the record, estimated that there were 90 digs. Although evidence was also presented that 85 digs were performed, it was entirely within the province of the jury to consider all the evidence, weigh the credibility of the witnesses, and calculate a verdict based on the determination that 100 pools were sold.
Defendant additionally claims that once the jury was instructed by this Court that it had the discretion to award punitive damages, it felt free to go beyond the proofs presented in awarding compensatory damages. This argument is both speculative and wholly unsupported by the record. The Special Interrogatories returned by the jury clearly establish that it separately and painstakingly calculated the respective awards of compensatory and punitive damages at issue. Therefore, we find that the verdict was neither against the weight of the evidence, nor the result of any improper charge.
Finally, defendant argues that plaintiffs' in litem amendment to their complaint unfairly surprised KDI and prejudiced its ability to defend this action. Defendant's motion for a new trial as to the issue of liability appears to rest upon this ground. See infra note 1.
After plaintiffs were granted leave to amend their complaint, they presented a rebuttal witness, A. Richard Gerber, Esquire (Gerber). Gerber represented Anthony as local counsel in the Montgomery County action, and signed the consent decree pursuant thereto in his representative capacity. Subpoenaed by plaintiffs to appear before this Court, Gerber testified as to the facts giving rise to the decree. He further testified that his clients' concern that the decree was being violated during the spring of 1980 resulted in two conferences in the chambers of the Honorable Mason Avrigan, the former judge of the Court of Common Pleas, who presided over the aforementioned action.[3]
*596 In the brief in support of its motion, defendant alleges that plaintiffs should not have been permitted to present Gerber as a witness on their behalf, because his testimony was predicated solely on the amended third count of plaintiffs' complaint. If leave to amend the complaint was erroneously granted, defendant reasons, it follows that any testimony occasioned by that amendment was inadmissible.
We find defendant's argument on this point completely specious. We previously rejected KDI's claim that this Court improperly granted plaintiffs leave to amend their complaint during the trial. More importantly, however, Gerber's testimony was occasioned not by the amendment to the complaint, but by the cross examination testimony of Howard Wertman, during the presentation of defendant's case. Wertman, an employee of KDI, testified that he was formerly employed by Anthony Pools, and was a named defendant in the Montgomery County action. He admitted, during cross examination, that he knew of the court decree at issue prior to entering into the contracts with plaintiffs, but denied that those contracts were terminated because of the decree. The decree was then admitted into evidence. Therefore, Gerber's testimony would have been admissible even if plaintiffs had not amended their complaint.
Defendant further contends that it was surprised by Gerber's testimony, and prejudiced by his statement that a conference in Judge Avrigan's chambers took place in the spring of 1980, because it was unable, on such short notice, to present any witnesses who might have impeached Gerber's credibility as a witness on that point. In support of this claim, defendant has submitted two affidavits, one by Arthur Lefkoe, Esquire (Lefkoe), who represented KDI in the Montgomery County action, the other by Judge Avrigan. Lefkoe's affidavit provides that he was unable to appear before this Court during the trial, because he was recuperating from treatment for a detached retina, and therefore unavailable. He indicates that had he been able to testify, he would have refuted Gerber's testimony that a meeting before the Judge was held in the spring of 1980, because he has no recollection thereof. Judge Avrigan's affidavit simply states that although such a meeting may have occurred, he has no reference to it in his file.
Defendant's claim of unfair surprise and prejudice is wholly unsupported by the circumstances herein. Gerber was named as a person with relevant knowledge in a letter dated September 23, 1982 from counsel for plaintiffs to counsel for defendant, amending plaintiffs' Answers to Interrogatories. Therefore, KDI knew, approximately seven months prior to trial, that plaintiffs might present Gerber as a witness. Nevertheless, KDI inexplicably made no request for any information pertinent thereto.
Defendant places much weight on the alleged misstatement by Gerber that a meeting took place in the judge's chambers in the spring of 1980, which was immediately prior to the termination of the contracts at issue. However, neither of the affidavits submitted in support of its motion actually refute that statement. Although defendant urges this Court to infer from the affidavits that the meeting never took place, neither Lefkoe nor Judge Avrigan deny that it occurred. They simply assert that they have no recollection thereof, or documentation to show that it was held on a particular date. Indeed, their affidavits suggest only that judges and attorneys are, on occasion, less than meticulous record keepers.
We disagree completely with defendant's assertion that the jury verdict in this case turned largely on Gerber's testimony, thereby resulting in prejudicial error. The jury need not have relied on Gerber's testimony at all to reach the verdict it did. The consent decree speaks for itself. Moreover, the jury could have reasonably inferred from the cross examination testimony of Howard Wertman that the defendant abruptly and wrongfully terminated the contracts *597 at issue, because despite Wertman's assertion to the contrary, it knew it violated the consent decree, and feared the consequences of a possible contempt proceeding.
Throughout the course of this trial, this Court carefully observed the manner and demeanor of all the witnesses, listened to their testimony, and considered all the evidence pertinent hereto. We are unable to find that Gerber's testimony, and the jury's reliance thereon, either unfairly surprised KDI, or prejudiced its ability to defend this action.
It is well settled that a motion for a new trial on the ground of surprise will be denied when the movant failed to seek a continuance during the trial. Melanson Co. v. Hupp Corp., 391 F.2d 902, 903 (3d Cir. 1968); Moylan v. Siciliano, 292 F.2d 704, 705 (9th Cir.1961). Gerber's uncontroverted testimony established that in addition to Lefkoe, KDI was also represented at the conference in Judge Avrigan's chambers by James Garrity, Esquire (Garrity). Defendant fails to explain why, at the conclusion of Gerber's testimony, it sought no continuance to enable Garrity, Lefkoe, Judge Avrigan or any other witness to appear before this Court. Moreover, although defendant claims that Lefkoe was physically unable to appear on its behalf during the trial, this situation in no way precluded defendant from seeking a continuance to obtain his testimony, or from deposing Lefkoe during the trial and submitting his deposition testimony into evidence. Having failed to do so prior to entry of judgment, defendant may not now seek to reopen the issues in this case.
For all the foregoing reasons, plaintiffs' motion for prejudgment interest shall be granted, and defendant's motion for a new trial shall be denied. The Court shall enter an appropriate order.
NOTES
[1] We note, at the outset, that defendant is unclear as to the type of relief it seeks herein. Its brief in support of its motion is encaptioned "Brief of Defendant, K.D.I. Sylvan Pools, Inc., in Support of a Motion for New Trial on the Issue of Damages." However, the concluding sentence of that brief "requests that a new trial be granted as to both the issue of liability and the issue of damages." We will assume, for purposes of this Opinion, that defendant seeks a new trial on both issues.
[2] Plaintiffs originally filed suit in state court. See W.A. Wright, Inc. and A.C. Excavating, Inc. v. KDI Sylvan Pools, Inc., No. L-16141-80 (filed November 22, 1980, N.J.Sup.Ct.Law Div.) It was subsequently removed to this Court, pursuant to 28 U.S.C.A. § 1446(d) (West Supp. 1983), by petition of defendant filed January 5, 1981. The Court's jurisdiction is based on 28 U.S.C.A. § 1332 (West Supp.1983).
[3] Although defendant appears to maintain that only one conference took place in Judge Avrigan's chambers, Gerber testified that more than one such conference was held. Transcript of Testimony of A. Richard Gerber at pp. 23-24.
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569 F. Supp. 1378 (1983)
GENERAL FOODS CORPORATION, a Delaware Corporation, Plaintiff,
v.
Harland E. PRIDDLE, Secretary of the Kansas State Board of Agriculture; Brace Rowley, Dairy Commissioner of the State of Kansas; and the Kansas State Board of Agriculture, Defendants,
Associated Milk Producers, Inc., and Mid-America Dairymen, Inc., Intervenors.
No. 82-4111.
United States District Court, D. Kansas.
August 9, 1983.
*1379 Burditt & Calkins, Chicago, Ill., George M. Burditt & Robert G. Epsteen, Fisher, Patterson, Sayler & Smith, Donald Patterson, Topeka, Kan., Michael J. Quillinan, General Foods Corp., White Plains, N.Y., for plaintiff.
Kenneth Wilke, Topeka, Kan., for defendants.
Boyer, Donaldson & Stewart, Wichita, Kan., for intervenors.
MEMORANDUM AND ORDER
ROGERS, District Judge.
This is an action brought by the plaintiff, General Foods Corporation, to enjoin the defendants, Harland E. Priddle, Secretary of the Kansas State Board of Agriculture, Brace Rowley, Dairy Commissioner of the State of Kansas, and the Kansas State Board of Agriculture, from prohibiting the sale of their frozen whipped toppings with dairy ingredients within the State of Kansas under the provisions of the Kansas filled *1380 dairy products act (FDPA), K.S.A. 65-725 et seq. This opinion represents the findings of fact and conclusions of law in this case in accordance with F.R.Civ.P. 52.
In 1965, after many years of research, plaintiff introduced a product called Cool-Whip, a frozen non-dairy whipped topping designed to be used as a garnish on desserts or to be mixed with other dessert products in the home for special recipes. The topping is prepared by homogenizing non-dairy ingredients: sodium caseinate, vegetable oil, sugar, emulsifiers and stabilizers. It is a wholesome product which clearly identifies its ingredients on its label. The product resembles whipped cream, a dairy product, in color, consistency and taste. It was developed to serve essentially the same function as whipped cream. However, it is also different from whipped cream in several ways. It is packaged and sold in different containers. Cool-Whip is sold in bowl-shaped tubs while whipped cream is generally sold in aerosol cans or in milk cartons in its pre-whipped state. Further, since Cool-Whip is a frozen product, it is sold in the freezer section of the grocery store while whipped cream is sold in the refrigerated area where other dairy products are sold. Finally, Cool-Whip and other non-dairy whipped toppings have a much longer shelf life than whipped cream. The public has enthusiastically accepted Cool-Whip and its similar competitive products. Plaintiff's sales of Cool-Whip have grown to $125 million annually with a Kansas sales volume of over $3 million.
In the early 1980's, frozen whipped toppings with dairy ingredients were developed for the first time. The use of dairy products was considered to be an improvement in the product because of improved flavor and texture. Nonetheless, the product remained essentially the same as non-dairy whipped toppings in terms of color, taste and consistency. The new product was also packaged and marketed in almost the identical manner as non-dairy whipped toppings. The labels of these new products clearly indicated that they contained dairy ingredients. The new products remained completely wholesome. In 1982, plaintiff planned to introduce its two new frozen whipped toppings with dairy productsDover Farms Whipped Topping and Cool-Whip Extra Creamy Whipped Toppinginto Kansas. Plaintiff's officials met with Kansas officials, including defendant Rowley, regarding the planned introduction of Dover Farms into the state. The discussions centered around whether the FDPA applied and thus prohibited the sale of plaintiff's product in the State of Kansas. At the time of the discussions, state officials failed to reach a determination on the issue and plaintiff went ahead with its nationwide campaign to introduce Dover Farms. Plaintiff planned to introduce the product to the public during strawberry season. On February 8, 1982, the Dover Farms product was released in Missouri and Kansas. Thereafter, defendant Rowley advised the plaintiff that Dover Farms was in violation of the FDPA and began notifying wholesalers and retailers that this product could not be sold in Kansas. On May 14, 1982, the plaintiff filed the instant lawsuit. Plaintiff sought injunctive and declaratory relief under 42 U.S.C. §§ 1983, 1985 and 1986. Plaintiff sought to enjoin the defendants from prohibiting the sale of their whipped toppings with dairy products within the State of Kansas.
On May 19, 1982, this court, after a hearing, issued a temporary restraining order preventing the defendants from prohibiting the sale of plaintiff's two new products in Kansas until the court could consider plaintiff's motion for a preliminary injunction. Thereafter, on June 7, 1982, the court heard evidence on plaintiff's motion for a preliminary injunction. At that time, the Associated Milk Producers, Inc., and the Mid-America Dairymen, Inc., moved to intervene in this case and their motions were sustained. At the hearing, it was agreed by the parties that the evidence presented at the earlier hearing on plaintiff's motion for a temporary restraining order could be considered by the court in determining plaintiff's preliminary injunction motion. It was further stipulated by the parties, pursuant to F.R.Civ.P. 65(a)(2), that the merits of plaintiff's complaint would be consolidated with the preliminary injunction motion.
*1381 Before considering the arguments of the parties, it is first necessary to set forth the various pertinent provisions of the FDPA. K.S.A. 65-728 makes it unlawful for any person to manufacture, sell, exchange, or offer for sale or exchange any "filled dairy product." The penalty for a violation of the FDPA, as set forth in K.S.A. 65-729, is a fine not to exceed five hundred dollars or by imprisonment not to exceed one year or both. A "filled dairy product" is defined as follows:
[A]ny milk, cream or skimmed milk or any combination thereof, whether or not condensed, evaporated, concentrated, frozen, powdered, dried or desiccated, or any food product made or manufactured therefrom, to which has been added, or which has been blended or compounded with, any fat or oil other than milk fat, or any solids other than milk solids, except sweeteners, stabilizers and flavorings, so that the resulting product is in imitation or semblance of any dairy product, including but not limited to, milk, sour cream, butter cream, skimmed milk, ice cream, ice milk, whipped cream, flavored milk or skim milk drink, dried or powdered milk, cheese, cream cottage cheese, ice cream mix, sherbet, condensed milk, evaporated milk, or concentrated milk: Provided, however, That this term shall not be construed to mean or include: (1) Any distinctive proprietary food compound not readily mistaken for a dairy product, when such compound is customarily used on the order of a physician and is prepared and designed for medicinal or special dietary use and prominently so labeled; (2) any dairy product flavored with chocolate or cocoa, or the vitamin content of which has been increased, or both, where the fats or oils other than milk fat contained in such product do not exceed the amount of cocoa fat naturally present in the chocolate or cocoa used and the food oil, not in excess of one-hundredth of one percent of the weight of the finished product used as a carrier of such vitamins; or (3) oleomargarine, when offered for sale and sold as and for oleomargarine.
K.S.A. 65-727(b).
The purposes of the FDPA are contained in K.S.A. 65-726:
Filled dairy products resemble genuine dairy products so closely that they lend themselves readily to substitution for or confusion with such dairy products and in many cases cannot be distinguished from genuine dairy products by the ordinary consumer. The manufacture, sale, exchange or offering for sale or exchange of filled dairy products creates a condition conducive to substitution, confusion, deception, and fraud, and one which if permitted to exist tends to interfere with the orderly and fair marketing [of] foods essential to the well-being of the people of this state. It is hereby declared to be the purpose of this act to correct and eliminate the condition above referred to; to protect the public from confusion, fraud, and deception; to prohibit practices inimical to the general welfare; and to promote the orderly and fair marketing of essential foods.
In seeking to enjoin the defendants from prohibiting the sale of its new products in Kansas under the FDPA, plaintiff advances a number of arguments. First, plaintiff contends that the FDPA is not applicable to its new products. Second, plaintiff argues that the FDPA violates the due process clause of the fourteenth amendment because of its vagueness. Third, plaintiff asserts that the FDPA violates the equal protection clause of the fourteenth amendment because it has no substantial relationship to its purported purpose. Finally, plaintiff contends that the FDPA violates Article I, Section 8 of the Constitution because it imposes an undue burden on interstate commerce. Defendants, of course, contend that the FDPA is applicable to plaintiff's new products and that the FDPA is constitutional as a valid exercise of the state's police power. Defendants argue that they are immune from suit here by virtue of the eleventh amendment. They also argue that the plaintiff has failed to establish the existence *1382 of a conspiracy pursuant to 42 U.S.C. §§ 1985 and 1986. The intervenors have raised the question of whether the court should defer to the state courts on the issue of whether the FDPA is applicable to plaintiff's new products. The other arguments made by the intervenors are similar to those raised by the defendants.
The court shall first consider the abstention issue raised by the intervenors. The intervenors assert that the court should defer to the state courts on the issue of the applicability of the FDPA to the plaintiff's new whipped toppings. It is apparent that the intervenors are arguing for the application of the abstention doctrine enunciated in Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643, 85 L. Ed. 971 (1941). Pullman stands for the general proposition that a federal court ordinarily should refrain from deciding a case in which state action is challenged on federal constitutional grounds if the case can, given a particular resolution of an "unclear" question of state law, be decided on a state law ground. 17 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4242, p. 449 (1978). While ambiguity in a state's law and the likelihood of avoiding constitutional adjudication are both necessary for Pullman abstention, they are not always sufficient since abstention is a matter of discretion for federal courts. Baggett v. Bullitt, 377 U.S. 360, 375, 84 S. Ct. 1316, 1324, 12 L. Ed. 2d 377 (1964). Federal courts should normally defer to the state courts where the state law is (1) "unclear" but (2) "reasonably susceptible" of an interpretation that would make adjudication of the plaintiff's federal constitutional claim unnecessary. Babbitt v. United Farm Workers National Union, 442 U.S. 289, 307, 99 S. Ct. 2301, 2313, 60 L. Ed. 2d 895 (1979). As the following discussion of the applicability of the FDPA to plaintiff's products indicates, we do not find that the state law is unclear and thus we shall not abstain on the issue.
The court shall now discuss the applicability of the FDPA to plaintiff's products. Plaintiff has made two arguments in this case regarding the application of the FDPA. Plaintiff argued initially in this case that the FDPA was not applicable to its whipped toppings with dairy products because these products were not dairy products to which non-dairy fats, oils or solids had been added, but rather, were non-dairy products to which dairy products had been added. See Complaint ¶ 21, p. 5, Doc. # 1; Exhibit A to Affidavit of Murray Sayer, p. 2, Doc. # 4. Plaintiff also argued that the FDPA was not applicable to its new toppings because the new products were not "in imitation or semblance of any dairy product". The former argument has either been dropped or combined with the latter argument. See Plaintiff's Reply Brief, p. 9, Doc. # 43. In any event, the court shall consider both arguments. The court must note that plaintiff's arguments have some appeal; yet, when thoroughly considered, they must be rejected.
Since the FDPA does contain criminal penalties, it must be regarded as a penal statute. In National Cooperative Refining Association v. Board of McPherson County Commissioners, 228 Kan. 595, 597, 618 P.2d 1176 (1980), the rules for the construction of penal statutes are set forth:
The fundamental rule of statutory construction, to which all others are subordinate, is that the purpose and intent of the legislature governs when that intent can be ascertained from the statute. State ex rel. Stephan v. Lane, 228 Kan. 379, 390, 614 P.2d 987 (1980); Nordstrom v. City of Topeka, 228 Kan. 336, Syl. ¶ 1, 613 P.2d 1371 (1980); State v. Luginbill, 223 Kan. 15, 19, 574 P.2d 140 (1977).
....
Penal statutes must be statutorily construed in favor of the persons sought to be subjected to their operations. The rule of strict construction simply means that ordinary words are to be given their ordinary meaning. Such a statute should not be so read as to add that which is not readily found therein or to read out what as a matter of ordinary English language is in it. State v. Luginbill, 223 Kan. at 19, 574 P.2d 140, relying upon State v. Bishop, 215 Kan. 481, 483, 524 P.2d 712 *1383 (1974) and State, ex rel., v. American Savings Stamp Co., 194 Kan. 297, 300, 398 P.2d 1011 (1965).
Plaintiff contends that for a product to be subject to the FDPA it must come within each of the following requirements: (1) it must initially be a dairy product; (2) non-dairy fats, oils or solids must be added to or blended or compounded with that dairy product; and (3) the final product must be an imitation or semblance of a dairy product. Here, plaintiff argues that since its new products were non-dairy products to which dairy products have been added then the first two requirements of the FDPA are not met. It appears that plaintiff's above-mentioned construction of the FDPA is based upon the following language of K.S.A. 65-727(b) defining a filled dairy product: "any milk, cream or skimmed milk or any combination thereof, whether or not condensed, evaporated, concentrated, frozen, powdered, tried or desiccated, or any food product made or manufactured therefrom, to which has been added ... any fat or oil other than milk fat, or any solids other than milk solids ..." (emphasis added). However, as correctly pointed out by the defendants, plaintiff's construction of the statute ignores the phrase following "to which has been added" which reads "or which has been blended or compounded with." Giving the ordinary meaning to the words of the statute, the court finds it to be clear that the legislature intended a filled dairy product to contain a combination of a dairy ingredient and a non-dairy fat or oil with no difference being recognized for the manner in which the non-dairy and dairy ingredients are combined. The act of blending or compounding does not contemplate a mixture in any specific order. This is defendant Rowley's interpretation of the statute and we find it to be proper. Thus, we find no merit to plaintiff's first argument regarding the applicability of the FDPA.
We shall now consider the plaintiff's arguments regarding whether its new toppings are an imitation or semblance of a dairy product. It is the contention of the plaintiff that its new products are an imitation and semblance of only one category of products, a frozen non-dairy topping such as Cool-Whip. Plaintiff asserts that its two new toppings do not imitate or resemble whipped cream, a dairy product. Plaintiff bases its argument upon the following differences between its new whipped toppings and whipped cream: (1) whipped cream is sold in aerosol cans while whipped toppings are sold in tubs; (2) whipped cream is sold in the refrigerated area of grocery stores with other dairy products while whipped toppings are sold in the frozen foods area with products such as frozen pies, vegetables and juices; and (3) whipped cream contains approximately twice the amount of calories as whipped toppings. Defendants contend that, based on the various factors utilized by the Dairy Commissioner to determine whether a filled dairy product is an imitation or semblance of a dairy product, plaintiff's new toppings do imitate or resemble whipped cream. The factors considered by the Dairy Commissioner include the labeling of the product, the use of the product by the consumer, and any physical resemblance of the product to a known dairy product.
Plaintiff relies upon Coffee-Rich, Inc. v. Kansas State Board of Health, 192 Kan. 431, 388 P.2d 582 (1964) for support of its argument on the "imitation or semblance" issue. Plaintiff contends that this phrase should be construed as it was in Coffee-Rich. A thorough review of Coffee-Rich demonstrates the flaws in plaintiff's argument.
In Coffee-Rich, the Kansas Supreme Court faced the issue of whether Coffee-Rich, a non-dairy coffee enricher and whitener, was an imitation of milk, half and half or cream and thus in violation of a Kansas statute providing that a food is misbranded if it is an imitation of another food and does not bear a label containing the word "imitation" preceding the name of the food imitated. The court concluded that Coffee-Rich was not an imitation of milk, cream or half and half. Rather, it found that Coffee-Rich was a new and different food product having its own unique characteristics. Concerning the issue of *1384 whether Coffee-Rich was an imitation of another food, the Court stated:
We reach the unescapable conclusion that Coffee-Rich is not an imitation of cream or half-and-half and that it is a new and distinct food product having characteristics unique unto itself. Coffee-Rich is no more an imitation of cows' cream, half-and-half, or any other dairy product than nylon is an imitation of silk, saccharin an imitation of sugar, or Crisco an imitation of lard. Those products, and Coffee-Rich, are separate, distinct, individual products developed as a result of modern scientific and technical advances and inventions. They are products sui generis. (Midget Products, Inc. v. Jacobsen, supra [140 Cal. App. 2d 517, 295 P.2d 542 (1956)].)
192 Kan. at 438, 388 P.2d 582.
Relying on Coffee-Rich, plaintiff argues that its new products are sui generis in that they have been developed as a result of modern scientific and technical advances and inventions. Plaintiff asserts that there is no such food item as a "genuine" frozen whipped cream available for purchase by the consumer.
We do not find Coffee-Rich persuasive under the circumstances of this case. The language of the statute involved in Coffee-Rich is different from the language used in the FDPA. In Coffee-Rich, the key determination under the statute was whether the product in question was an "imitation" of another food product. Here, the statute requires that a product containing dairy and non-dairy ingredients be an "imitation or semblance of any dairy product." Thus, the FDPA contains the additional words "or semblance." We believe the use of the words "or semblance" broadens the meaning of the definition of a filled dairy product beyond that prohibited by the statute in question in Coffee-Rich. In Coffee-Rich, the Court found that Webster's Dictionary defined imitation as "That which is made or produced as a copy; an artificial likeness; a counterfeit; simulating something superior ..." 192 Kan. at 435, 388 P.2d 582. Funk & Wagnall's Standard Dictionary defines semblance as "1. A mere show without reality; pretense. 2. Outward appearance. 3. A likeness or resemblance." The Court in Coffee-Rich recognized the difference between imitation and semblance when they stated: "The word "imitation" imparts more than mere resemblance or similitude." 192 Kan. at 437, 388 P.2d 582. This distinction was also recognized in Coffee-Rich, Inc. v. Commissioner of Public Health, 348 Mass. 414, 204 N.E.2d 281, 285 (1965), where the court stated:
We are aware of the usual connotations of the word "imitation" which are elaborately expounded by the plaintiff and which might have persuaded courts in other jurisdictions to hold Coffee-Rich or products like it as outside the statutory meanings of the word. See Coffee-Rich, Inc. v. Kansas State Bd. of Health, 192 Kan. 431, 437-438, 388 P.2d 582; Dairy Queen of Wis. Inc. v. McDowell, 260 Wis. 471, 476-477, 51 N.W.2d 34, 52 N.W.2d 791. But see, United States v. 651 Cases, More or Less, of Chocolate Chil-Zert, D.C., 114 F. Supp. 430, 432-433. However, our statute speaks not simply of "imitation," but of "imitation or semblance" (emphasis supplied). We are thus concerned, as we were in Aeration [Processes, Inc. v. Commissioner of Public Health, 346 Mass. 546, 194 N.E.2d 838 (1963)], with actual or apparent resemblance or similarity. See Webster's Third New Intl. Dictionary at p. 2062.
In sum, we do not find the Coffee-Rich decision persuasive on the issue of whether plaintiff's new whipped topping products are an "imitation or semblance" of a dairy product.
Plaintiff further relies upon the testimony of defendant Rowley for support of its argument that its new products are not an "imitation or semblance" of whipped cream. At one point during his testimony, on cross-examination, Dairy Commissioner Rowley did state that he thought plaintiff's new products were an imitation or semblance of non-dairy whipped toppings and not an imitation or semblance of aerosol whipped cream or pure pack whipping cream. These responses were in direct contradiction to his previous testimony. The court is at a loss *1385 to explain these contradictory answers except to note that Rowley was perhaps focusing on the frozen nature of plaintiff's new products in accord with plaintiff's counsel's line of questioning. A review of defendant Rowley's entire testimony makes it clear that he found plaintiff's new whipped toppings with dairy ingredients to resemble whipped cream and thus come under the provisions of the FDPA. The court simply does not find the one instance in which plaintiff's counsel received favorable answers from the defendant to be persuasive in light of his overall testimony.
The evidence showed that plaintiff's new whipped toppings were quite similar to whipped cream in color, taste and consistency. Further, plaintiff's new products were used for the same purposes as whipped cream. The labels of these products show a substance topped with a strawberry that looks very similar to whipped cream. It was the testimony of plaintiff's own expert witness, Louise Hartman, a home economist, that Dover Farms does resemble whipped cream and is used in the same manner as genuine whipped cream. The court recognizes that there are differences between plaintiff's new products and whipped cream. However, we reach the unescapable conclusion that Dover Farms Whipped Topping and Cool-Whip Extra Creamy Whipped Topping are semblances of whipped cream, a dairy product. We would be stretching the common understanding of the word "semblance" if we were to find that plaintiff's new products did not resemble whipped cream. Accordingly, we find that the provisions of the FDPA are applicable to plaintiff's new whipped toppings.
Having determined that the FDPA is applicable to plaintiff's whipped toppings, we must now consider the other contentions put forth by the parties. With regard to most of the arguments made by the parties, the court has recently received considerable assistance on these matters by virtue of a well-written opinion by the Kansas Supreme Court on January 14, 1983, in Strehlow v. Kansas State Board of Agriculture, 232 Kan. 589, 659 P.2d 785 (1983).
In Strehlow, the distributors of a filled dairy product, "Imitation Lowfat Dry Milk," brought an action against the Kansas State Board of Agriculture challenging the constitutionality of the FDPA. The trial court, in an opinion by the Honorable Terry Bullock, had found that the provisions of the FDPA as applied to plaintiff's product violated the equal protection clause of the fourteenth amendment. The Supreme Court affirmed. A review of the Court's decision is enlightening.
The Supreme Court noted the stated purposes of the FDPA contained in K.S.A. 65-726 but also found perhaps another unwritten goal of the FDPA:
One nonstated objective may be the economic protectionist aspect of the act which many consider as legislation to promote and protect the dairy industry. The fact that the industry does have an economic interest in the preservation of the restrictions imposed by the FDPA is borne out by the filing of an amici brief by Associated Milk Producers, Inc., and Mid-America Dairymen, Inc., cooperative marketing associations formed to market the milk and milk products of their member producers.
232 Kan. at 593, 659 P.2d 785.
In resolving the issue before it, the Court stated:
Can it be said that Imitation resembles genuine dairy products so closely that it lends itself readily to substitution for or confusion with such dairy products and in many cases cannot be distinguished from genuine dairy products by the ordinary consumer? Can it be said the sale, etc. of Imitation creates a condition conducive to substitution, confusion, deception, and fraud and a condition which if permitted to exist tends to interfere with the orderly and fair marketing of foods essential to the well-being of the people of this state? K.S.A. 65-726. We think both questions must be answered in the negative. To hold otherwise is to say that the Kansas consumer is unable to intelligently identify the product he is purchasing or to assess its value and make price and *1386 nutritional distinctions even when the product is clearly labeled as being an imitation of the real thing and even though the label clearly discloses the ingredients of the product and its nutritional value. The very statutes that the defendant seeks to rely upon belie any such finding. The exceptions for chocolate-flavored products and oleomargarine clearly recognize the ability of the consumer to recognize and properly identify the product. Very few products come to mind which are so designed and marketed to compete with another product as oleomargarine. It is sold in the marketplace from the same refrigerated food departments as real butter. It is colored to resemble butter. It is packaged to resemble butter, even to the extent of being sold in the traditional ¼ pound sticks and one-pound bricks identical to butter. It is an obvious substitute for butter, is marketed as such and is far more likely to be confused with butter than Imitation is with whole milk or any other non-filled milk product. Yet our statutes indicate that any confusion, deception, fraud or substitution is avoided when the package is "plainly labeled as `oleomargarine' or `margarine.'" K.S.A. 65-639. Again the legislature appears to have recognized the native intelligence of the Kansas consumer when it allowed the sale of ice milk (K.S.A. 65-720) and frozen dairy desserts (K.S.A. 65-720a and b) so long as properly noticed or labeled.
Id. at 600-601, 659 P.2d 785.
The Court then pointed out an example of the irrationality of the FDPA:
One of the most obvious examples that comes to any coffee drinker's mind is the small individual serving of "cream" found in nearly every restaurant. Two of the popular brands in the Topeka area are Meyer's Half & Half, a dairy product, and Royal Danish Coffee Creamer, a non-dairy product. Coffee Creamer is sold in obvious competition with other dairy products such as Meyer's Half & Half and is intended as a substitute or replacement for the real dairy product. Coffee Creamer, however, is legal as it has no milk products among its ingredients, yet if the real thing, any milk product however slight, is added to the Coffee Creamer it becomes illegal under K.S.A. 65-727(b). The result is totally ridiculous and bears absolutely no reasonable relationship to the objectives set forth by the legislature in 65-726. Likewise, the ban of Imitation, which is clearly labeled and not misleading, because it contains some amount of milk by-products when presumably it would be legal if it did not, is an unreasonable classification which will not pass constitutional muster.
Id. at 601-601, 659 P.2d 785.
The Court concluded:
All that has been said in this opinion and the authorities cited and quoted about various filled milk statutes applies equally to our filled dairy products act which goes even further than the early statutes and singles out specific types of products for special treatment.
Inasmuch as the issue before us is limited to a determination of whether K.S.A. 65-727(b) is unconstitutional as to the product Imitation, we make no determination at this time as to the unconstitutionality of the Act in toto. We have no hesitancy in finding that K.S.A. 65-727(b) as applied to Imitation is an unconstitutional violation of plaintiff's right to due process and the equal protection of the law
Id. at 604, 659 P.2d 785.
We shall follow the lead of the Kansas Supreme Court. In Strehlow, the Court noted the great number of cases which have dealt with the constitutionality of filled dairy laws. We will not repeat the discussion of those cases but would only note that, like the Kansas Supreme Court, we find those cases holding that filled dairy laws are unconstitutional persuasive in this case. All of the reasons stated by the Strehlow court for finding the FDPA unconstitutional as applied to the product in question there are equally applicable to the products in question here. Thus, for the reasons stated by the Kansas Supreme Court and based on the cases cited therein, we find that the FDPA violates the equal protection *1387 and due process clauses of the fourteenth amendment.
Whatever purposes that the courts in the past found to justify the filled dairy laws are no longer viable today. Labeling laws, such as K.S.A. 65-665, obviate the need for such statutes as the FDPA. Problems of fraud and deception regarding filled dairy products are a thing of the past. As the court in Milnot Co. v. Richardson, 350 F. Supp. 221, 225 (1972) stated:
The possibility of confusion, or passing off, in the marketplace, which justified the [Federal Filled Milk Act, 21 U.S.C. § 61 et seq.] in 1944, can no longer be used rationally as a constitutional prop to prevent interstate shipment of Milnot. There is at least as much danger with imitation milk as with filled milk, and actually no longer any such real danger with either.
Defendants did note one situation where labeling laws do not adequately protect the consumer from fraud and deception. Defendants asserted that plaintiff's products could be served in restaurants and institutional settings without notice to the customer that the products were not whipped cream. The court notes that the evidence showed that the plaintiff's products are not sold in the manner suggested by the defendants but, even if they were, we would find no merit to defendants' argument. We are in agreement with the comments of the court in Coffee-Rich, Inc. v. Commissioner of Public Health, supra, 204 N.E.2d at 288, which rejected the argument advanced by the defendants:
The defendants contend, however, that the "reasonableness" of totally prohibiting the sale of Coffee-Rich to prevent "fraud, deception and confusion becomes abundantly clear from a consideration of the possible uses of this product." They argue that "[a]lthough * * * the * * * product is at present sold only in retail markets * * *, there is no adequate means of preventing a common victualer or other institutional user from purchasing large quantities of `Coffee-Rich' and selling it under the guise of cream." But whatever the consequences of such possible fraudulent action, they need not be visited on the manufacturer who makes a wholesome product and in no way misleads any reasonable person as to its nature. The defendants' reasoning, if upheld, would sanction an embargo on the sale of plainly labeled horsemeat, for example, on the ground that institutional users might buy it and serve it in the guise of beef. Similarly, the sale of harmless artificial sweeteners could be prohibited on the ground that restaurateurs who purchase them might fraudulently substitute them for sugar in food and drink which they prepare for customers.... [A] less arbitrary approach to protect consumers from fraud and confusion, and a particularly obvious one, would be to penalize those who actually practice the deception rather than the guiltless producer or distributors of Coffee-Rich and, indirectly, those consumers who want to purchase the product precisely because it is a nondairy product.
In sum, we are in agreement with the Kansas Supreme Court that the Kansas consumer is able to intelligently identify the product he is purchasing and assess its value and make nutritional distinctions when the label clearly discloses the ingredients of the product and its nutritional value.
The irrationality of the FDPA is demonstrated by the very facts of this case. Cool-Whip, a non-dairy whipped topping, which closely resembles whipped cream, is legal in Kansas because it contains no dairy products. Dover Farms and Cool-Whip with real cream, whipped toppings which also closely resemble whipped cream, are illegal in Kansas because they contain dairy products. This result is absurd and bears absolutely no reasonable relationship to the objectives set forth by the legislature in K.S.A. 65-726.
In light of the court's finding that the FDPA violates the equal protection and due process clauses of the fourteenth amendment, we find it unnecessary to consider the other arguments made by the plaintiff. It is also unnecessary to consider plaintiff's motion to amend its complaint in which it sought to add its argument on the vagueness *1388 of the FDPA. The court finds the plaintiff has failed to establish the existence of conspiracy pursuant to 42 U.S.C. § 1985(3). Further, since plaintiff has failed to establish a conspiracy under § 1985, then its claim under 42 U.S.C. § 1986 must also fail. Hahn v. Sargent, 388 F. Supp. 445 (D.Mass.1975), aff'd, 523 F.2d 461 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S. Ct. 1495, 47 L. Ed. 2d 754 (1976). The court notes that plaintiff's claim under § 1985(3) suffers from several problems but we find it unnecessary to engage in a discussion of these problems because plaintiff may obtain its desired relief under § 1983.
Finally, we shall examine defendants' contentions of immunity under the eleventh amendment. Defendants argue that they are entitled to immunity under the eleventh amendment. Plaintiff contends that the eleventh amendment neither bars the instant suit nor the relief sought.
The law on this issue is summarized in Florida Department of State v. Treasure Salvors, Inc., ___ U.S. ___, ___, 102 S. Ct. 3304, 3314-15, 73 L. Ed. 2d 1057 (1982):
A suit generally may not be maintained directly against the State itself, or against an agency or department of the State, unless the State has waived its sovereign immunity. Alabama v. Pugh, 438 U.S. 781 [98 S. Ct. 3057, 57 L. Ed. 2d 1114]. If the State is named directly in the complaint and has not consented to the suit, it must be dismissed from the action. Id., at 782 [98 S.Ct. at 3058].
....
The Eleventh Amendment does not bar all claims against officers of the State, even when directed to actions taken in their official capacity and defended by the most senior legal officers in the executive branch of the state government. In Ex parte Young, 209 U.S. 123 [28 S. Ct. 441, 52 L. Ed. 714], the Court held that an action brought against a state official to enjoin the enforcement of an unconstitutional state statute is not a suit against a State barred by the Eleventh Amendment. In response to the argument that the official in such a case could act only as an officer of the State and that the suit therefore could be characterized only as an action against the State itself, the Court explained:
The act to be enforced is alleged to be unconstitutional, and if it be so, the use of the name of the State to enforce an unconstitutional act to the injury of complainants is a proceeding without the authority of and one which does not affect the State in its sovereign or governmental capacity. It is simply an illegal act upon the part of a state official in attempting by the use of the name of the State to enforce a legislative enactment which is void because unconstitutional. If the act which the state Attorney General seeks to enforce is a violation of the Federal Constitution, the officer in proceeding under such enactment comes into conflict with the superior authority of that Constitution, and he is in that case stripped of his official or representative character and is subjected in his person to the consequences of his individual conduct. The State has no power to impart to him any immunity from responsibility to the supreme authority of the United States." Id., at 160 [28 S.Ct. at 454].
There is a well-recognized irony in Ex parte Young; unconstitutional conduct by a state officer may be "state action" for purposes of the Fourteenth Amendment yet not attributable to the State for purposes of the Eleventh. Nevertheless, the rule of Ex parte Young is one of the cornerstones of the Court's Eleventh Amendment jurisprudence. See Edelman v. Jordan, 415 U.S. 651, 663-664 [94 S. Ct. 1347, 1356-1357, 39 L. Ed. 2d 662]; Quern v. Jordan, 440 U.S. 332, 337 [99 S. Ct. 1139, 1143, 59 L. Ed. 2d 358].
Also see Patsy v. Florida Board of Regents, 457 U.S. 496, 530-31 n. 17, 102 S. Ct. 2557, 2576 n. 17, 73 L. Ed. 2d 172 (1982) (Powell, J., dissenting).
As recognized in Treasure Salvors, absent waiver by the State of Kansas of sovereign immunity, the instant action *1389 against the Kansas State Board of Agriculture is barred by the eleventh amendment. The court finds no such waiver and thus this defendant shall be dismissed from the case. Plaintiff's claims against the individual state officials are not barred by the eleventh amendment because plaintiff has contended that the actions of these state officials are unconstitutional.
One contention for dismissal of defendant Priddle was made by counsel for the defendants as an eleventh amendment argument. As indicated above, defendants' counsel's reliance on the eleventh amendment is misplaced. However, the argument asserted is meritorious and requires dismissal of defendant Priddle. Counsel for the defendants had argued that defendant Priddle should be dismissed because he has no connection with the administration and enforcement of the FDPA. Indeed, K.S.A. 65-730 provides that the Dairy Commissioner in Kansas is directed to administer and supervise the enforcement of the FDPA. The evidence failed to show any involvement in the administration or supervision of the FDPA by defendant Priddle and thus he shall be dismissed from this action.
To summarize, the court finds that plaintiff's new products are subject to the provisions of the FDPA. The court further finds that the FDPA is unconstitutional as a violation of the equal protection and due process clauses of the fourteenth amendment and therefore the plaintiff is entitled to relief under 42 U.S.C. § 1983. Defendants Kansas State Board of Agriculture and Harland Priddle are dismissed from this action for the reasons set forth in this opinion. Defendant Rowley is entitled to judgment on plaintiff's claims under 42 U.S.C. §§ 1985 and 1986.
IT IS THEREFORE ORDERED that the Kansas filled dairy products act, K.S.A. 65-725 et seq., is declared in violation of the equal protection and due process clauses of the fourteenth amendment of the United States Constitution. Judgment, pursuant to 42 U.S.C. § 1983, shall therefore be entered for the plaintiff in this case. Defendant Brace Rowley is hereby permanently enjoined from enforcing or attempting to enforce the Kansas filled dairy products act.
IT IS FURTHER ORDERED that defendants Kansas State Board of Agriculture and Harland Priddle be dismissed from this action.
IT IS FURTHER ORDERED that judgment be entered for defendant Rowley on plaintiff claims under 42 U.S.C. §§ 1985 and 1986.
IT IS SO ORDERED.
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307 A.2d 756 (1973)
Murdaugh Stuart MADDEN, Appellant,
v.
D. C. TRANSIT SYSTEM, INC., Appellee.
No. 6691.
District of Columbia Court of Appeals.
Argued March 5, 1973.
Decided July 20, 1973.
Murdaugh Stuart Madden, pro se.
Vincent H. Cohen, Washington, D. C., for appellee.
Before GALLAGHER, PAIR and YEAGLEY, Associate Judges.
PER CURIAM:
This appeal is from an order dismissing a complaint for assault and battery allegedly committed by D. C. Transit System, Inc. (appellee) through its employees. Upon consideration of the record, the briefs and of the oral argument of counsel, we affirm.
In the complaint filed in the United States District Court for the District of Columbia on January 14, 1971, appellant alleged *757 that, while standing first on the traffic island near the northeast corner of 16th and K Streets, N. W. and, shortly thereafter, at the southeast corner of the same intersection, he was assaulted by fumes and offensive oily substances which appellee permitted to spew from two of its buses. Demanding damages in the sum of $70,000, appellant alleged further that appellee was aware that the by-products complained of were regularly discharged from its buses and that for this reason such acts were intentional.
Answering the complaint, appellee denied any liability in the matter urging specifically that the complaint failed to state a cause of action upon which relief could be granted.[1] The United States District Court for the District of Columbia certified the cause to the Superior Court and, after the completion of discovery procedures, the action was dismissed the court holding that, absent a showing of malice, willfulness or specific wrongful intent, appellee could not be held liable for the acts alleged.
An essential element of the ancient tort of assault is the intentional putting another in apprehension of an immediate and harmful or offensive conduct. See Restatement (Second) of Torts §§ 21, 22 (1965). Accord, 6 Am.Jur. (Second) Assault and Battery §§ 4, 109 (1963); C.J.S. Assault and Battery § 10(a)(1) (1968). Absent any such allegation of apprehension, the complaint, insofar as it alleged an assault, was clearly deficient.
The complaint was deficient also in respect to the alleged battery. Not only did appellant fail to allege the essential elements of an assault, but he failed also to allege intent one of the essential elements of the tort of battery. Restatement (Second) of Torts § 16(2) (1965). See also 1 Harper and James, Law of Torts § 3.3 (1956 ed.). Appellant contends nevertheless that his allegations of wanton and malicious conduct were sufficient to satisfy the requisite intentionality. We disagree. Such allegations were nothing more than legal conclusions which the court was not bound to accept. Pauling v. McElroy, 107 U.S.App.D.C. 372, 373-374, 278 F.2d 252, 253-254, cert. denied, 364 U.S. 835, 81 S. Ct. 61, 5 L. Ed. 2d 60 (1960).
Appellant has not cited this court to any authority which supports the cause of action he sought to maintain, and we decline to create for him a cause of action. Because we have been unable to find in the allegations of the complaint the requisite intentionality which inheres in a claim for assault and battery, the judgment of the court below is
Affirmed.
NOTES
[1] Super.Ct.Civ.R. 12(b)(6).
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307 A.2d 550 (1973)
Paul J. WALLER and Mary Ann Waller, his wife, Plaintiffs,
v.
J. E. BRENNEMAN COMPANY, a Pennsylvania corporation, and John H. Eby, Sr., Defendants.
J.E. BRENNEMAN COMPANY, a Pennsylvania corporation, Defendant and Third-Party Plaintiff,
v.
G & H STEEL SERVICE, INC., a foreign corporation, Third-Party Defendant.
Superior Court of Delaware, New Castle.
June 11, 1973.
*551 James P. D'Angelo and William H. Bennethum, Wilmington, for plaintiffs.
Alfred M. Isaacs of Flanzer & Isaacs, Wilmington, for defendant and third-party plaintiff.
James T. McKinstry of Richards, Layton & Finger, Wilmington, for third-party defendant.
STIFTEL, President Judge.
Motion by the third-party defendant, G & H Steel Service, Inc. ("G & H") to dismiss the third party complaint of J. E. Brenneman Company ("Brenneman") for failure to state a claim.
The third-party action arises from the following factual situation. Brenneman, the general contractor on a repair project involving the St. George's Bridge in Delaware, entered into a subcontract with G & H on August 31, 1971. Plaintiff Paul J. Waller was an employee of G & H and was injured at the St. George's jobsite on December 17, 1971, when he was struck by a concrete conveyor operated by Brenneman's employee, John H. Eby, Sr. ("Eby"). Waller received compensation benefits from G & H under the Workmen's Compensation Law.
Waller brought an action against Brenneman and Eby alleging the negligent operation of the concrete conveyor. Brenneman, in turn, filed a third party action against G & H for indemnification in the event that plaintiffs Paul J. Waller and his wife are successful in their negligence action against Brenneman. Its claim of right to indemnification is based on (1) an express indemnification provision of the subcontract and (2) an implied agreement to indemnify arising from the alleged breach of a covenant to perform the work in a workmanlike manner. G & H has moved to dismiss and raises two arguments in support thereof.
G & H's first argument is based on Section 10 of the subcontract which provides, in pertinent part, as follows:
"Section 10. Indemnification. The Sub-contractor further specifically obligates himself to the Contractor in the following respects, to wit:
* * * * * *
(b) To indemnify the Contractor against and save him harmless from any and all claims, suits or liability from injuries to property, injuries to persons, including death, and from any other claims, suits or liability on account of any act or omission of the Sub-contractor, or any of his officers, agents, employees or servants; ..."
G & H contends that this language does not effectively indemnify Brenneman against the consequences of its own negligence. Brenneman's first argument is in the alternative: (1) The above provision does require indemnification for liability arising from Brenneman's negligence and (2) the facts of this case fall squarely within the indemnification provision since Brenneman's liability arises from an act or omission of G & H or of its employee Waller.
In Delaware, contracts relieving a party of its own negligence are not favored. Pan American World Airways, Inc. v. United Aircraft Corp., 3 Storey 7, 163 A.2d 582. Such contracts are strictly *552 construed and will not be interpreted to provide indemnification unless so expressed in clear terms. Pan American World Airways, Inc. v. United Aircraft Corp., supra, 163 A.2d at 587. Intention that indemnitee be immunized from his own negligence must be unmistakably clear from the language of the agreement. Hollingsworth v. Chrysler Corporation, 8 Storey 234, 208 A.2d 61.
The language of the indemnification clause recited above is not clear enough to provide for indemnification where Brenneman may be liable because of its own negligence. The provision, by its own terms, limits the obligation to indemnify to "act[s] or omission[s] of the Subcontractor or any of his officers, agents, employees or servants". The provision is limited to G & H's negligent acts or omissions; it does not include Brenneman's own negligent acts. Thus, the language does not immunize Brenneman from its own negligent acts causing damages, and I so hold. The contractual provision requiring G & H to maintain Workmen's Compensation and Employer's Liability insurance does not help Brenneman's argument. If anything, it supports the above construction since it merely evidences an intention that G & H should legally protect itself (not Brenneman).
In Brenneman's second leg of the alternative argument, it directs attention to the language that G & H obligates itself to indemnify Brenneman against "any... liability from ... injuries to persons ... on account of any act or omission of the Sub-contractor, or any of his officers, agents, employees or servants;...", and argues that this case falls within the indemnification provision since it claims that Brenneman's liability arises from an act or omission of G & H or its employee, Waller. The pleadings infer a dangerous condition existed on the bridge, which caused the injuries and damages to plaintiffs, of which G & H was aware, but in spite of its knowledge permitted Waller to work there.
This argument overlooks the fact that any liability of Brenneman to the Wallers is conditioned upon a finding of negligence on the part of Brenneman or its employee, Eby. Brenneman can be held liable only if it is found to have been independently negligent in the operation of the concrete conveyor. Such a finding must be made before the question of indemnification can arise. If it is assumed that G & H's alleged act was also a proximate cause, such act or omission would be a concurrent contributing cause. Thus, does the indemnification provision include the situation where Brenneman's and G & H's acts or omissions are concurrent contributing causes?
The indemnification provision, as noted above, speaks only in terms of liability to Brenneman arising from G & H's acts or omissions. It does not employ language from which an intent to indemnify resulting from concurrent acts or omissions of Brenneman and G & H can be construed. Since such an intent is not distinct, I hold that Brenneman has no right to indemnification under the terms of the provision. See, generally, Walters v. Rao Electrical Equipment Co., 289 N.Y. 57, 43 N.E.2d 810 (Ct.App.N.Y.1942), and Employers' Mutual Liability Insurance Company of Wisconsin v. Griffin Const. Co., 280 S.W.2d 179 (Ct.App.Ky.1955).
* * * * * *
G & H's second argument is that Brenneman's second claim that an implied agreement to indemnify arises from the breach of the express covenant to perform the work in a workmanlike manner is precluded by the express indemnification provision. In short, G & H contends that since Brenneman and G & H included an express indemnification provision in the subcontract, that agreement controls and no additional right to indemnification can be implied. G & H also contends that implied agreements to indemnify only arise *553 where the third-party plaintiff stands in the position of the owner of the premises.
Brenneman says that the present factual situation falls within the rule established in Diamond State Telephone Company v. University of Delaware, Del.Supr., 269 A.2d 52 (1970). Brenneman notes that the subcontract contains an express covenant by G & H to perform its work in a workmanlike manner and alleges a breach of this covenant by G & H's failure to stop work after it knew or should have known of the existence of a dangerous condition. Brenneman argues that an implied agreement to indemnify arises from the alleged breach of this express covenant.
What effect does the presence of an express indemnification clause have on the existence of an implied agreement to indemnify?
Where a written contract exists which includes a specific indemnification provision setting forth the rights and duties of the parties, the specific provision should govern and the courts should not enlarge the right to indemnification by implication. See, generally, Eazor Express, Inc. v. J. R. Barkly, 441 Pa. 429, 272 A.2d 893, 895 (1971), and County of Alameda v. Southern Pacific Company, 55 Cal. 2d 479, 11 Cal. Rptr. 751, 757, 360 P.2d 327 (1961). Brenneman and G & H specifically outlined their rights and duties as to indemnification in the subcontract. This provision should govern; no additional right of indemnification should be implied from the breach of an independent provision of the subcontract.
Since no implied agreement to indemnify arises, no decision is necessary at this time on whether the indemnitory theory should be limited only to owners of premises.
Brenneman is not entitled to indemnification under either the express indemnification provision or under any implied agreement. G & H's motion to dismiss must be granted.
It is so ordered.
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751 S.W.2d 515 (1987)
HOLLAND MORTGAGE AND INVESTMENT CORPORATION, Appellant,
v.
Floyd BONE and Rhonda Bone, Appellees.
No. 01-86-00420-CV.
Court of Appeals of Texas, Houston (1st Dist.).
April 30, 1987.
*516 John L. Carter, Vinson & Elkins, Houston, for appellant.
George Pain, Houston, for appellees.
Before JACK SMITH, DUGGAN and COHEN, JJ.
JACK SMITH, Justice.
This is an appeal from a suit to recover damages from the builder of a home and the mortgage company that financed the purchase. A jury found breaches of warranty, negligence, and violations of the Deceptive Trade Practices Act by Monroe, the builder, and two violations of the Deceptive Trade Practices Act (DTPA) by the appellant (the lender). The trial court entered a $33,000 judgment against Monroe and the appellant, jointly and severally. The appellant alleges six points of error.
In February of 1979, the appellees contracted to purchase a house for $86,900 from Bud Monroe Building Co. Appellant provided the financing for this purchase. In May of 1979, the house flooded. The appellees complained to Monroe and remedial measures were taken to cure the problem. The house flooded again in May of 1980, November of 1981, and October of 1984. In May of 1982, the appellees brought suit against Monroe and Kickerillo Company, the developer of the subdivision, claiming that their home was built too low or that the lot had been improperly contoured, which resulted in flooding of the *517 house during heavy rains. In December of 1982, the appellees joined the appellant as a defendant in the suit after learning that Bud Monroe Building Co. was no longer in business.
In its first point of error, the appellant contends that the appellees' claims against it were barred by the two-year statute of limitations.
Citing Brooks Fashion Stores, Inc. v. Northpark National Bank, 689 S.W.2d 937 (Tex.App.-Dallas 1985, no writ), and Marcotte v. American Motorists Insurance Co., 709 F.2d 378 (5th Cir.1983), the appellant asserts that the two-year statute of limitations is applicable because the appellant was not a party to the written contract of which the appellees complain, and any cause of action regarding the appellant would, therefore, have to be based on oral misrepresentations made by the appellant. The appellees, on the other hand, assert that the four-year statute of limitations is the proper limitations period governing the present facts because their claims against the appellant grow out of transactions in writing.
The DTPA, as amended August 27, 1979, provides for a two-year statute of limitations period for actions brought under the Act. This two-year statute of limitations was to be applied prospectively only. Tex. Bus. & Com.Code Ann. sec. 17.56A (Vernon Supp.1987). The claims in the instant case arose prior to the 1979 amendment; therefore we must look to the statutes governing other claims to determine the applicable limitation period. Since appellees' claims do not arise out of a contract between the parties or a tort, the former Tex.Rev.Civ. Stat.Ann. art. 5529 (Vernon 1958) provides the applicable limitation period. This article prescribes a four-year statute of limitations. Therefore, appellees' cause of action against the appellant was not barred.
Appellant's first point of error is overruled.
Appellant contends in its second point of error that the appellees did not seek or acquire goods and services from the appellant, and therefore were not consumers who could assert a cause of action under the DTPA.
Whether or not a plaintiff is a "consumer" under the DTPA is a question of law to be determined by the trial court from the evidence, and the trial court will not submit issues to the jury as violations of the DTPA if it has determined that the plaintiff is not a consumer. Reed v. Israel Nat'l Oil Co., Ltd., 681 S.W.2d 228 (Tex.App.- Houston [1st Dist.] 1984, no writ). In the instant case, it can be presumed that the trial court determined that the appellees were consumers under the Act because the trial court submitted issues to the jury as to violations of the DTPA by appellant, and denied appellant's j.n.o.v. motion on that basis. The appellant contends that the trial court erred in entering judgment under the DTPA because the appellees were not "consumers."
In order to prevail on an action brought under the DTPA, one must be a "consumer." Kennedy v. Sale, 689 S.W.2d 890 (Tex.1985); Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169 (Tex.1980). A "consumer" is defined in the Act as "an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services ..." Tex.Bus. & Com. Code Ann. § 17.45(4) (Vernon Supp.1987). "Goods" are defined as "tangible chattels or real property purchased or leased for use." Tex.Bus. & Com.Code Ann. § 17.45(1) (Vernon Supp.1987). "Services" include "work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods." Tex.Bus. & Com.Code Ann. § 17.45(2) (Vernon Supp.1987). The goods or services sought or acquired by the consumer must form the basis of the DTPA complaint. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539 (Tex.1981).
The appellees contend that they are consumers because their objective in borrowing the money from the appellant was the purchase of the house. Appellant relies on Riverside National Bank v. Lewis, 603 S.W.2d 169 (Tex.1980), which appeared to exempt lenders from the Act, and held that *518 a person who seeks to borrow money in order to refinance a loan on his car is not a consumer because the transaction does not involve the acquiring of a good or service. However, as explained in La Sara Grain v. First National Bank of Mercedes, 673 S.W.2d 558, 566 (Tex.1984), subsequent decisions by the Supreme Court have limited Riverside to its facts, i.e., the extension of credit unrelated to a specific acquisition. In Knight v. Int'l Harvester Credit Corp., 627 S.W.2d 382, 389 (Tex.1982) and Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 707 (Tex.1983), the Supreme Court concluded that borrowers were consumers because the loans in question were used for the purchase of a truck (Knight) and a house (Flenniken), items which are encompassed in the definition of "goods" under the Act.
In summary, if the borrower's "objective" in borrowing the money is the purchase or lease of goods or services, he may be a consumer under the Act. La Sara Grain, 673 S.W.2d at 567; Irizarry v. Amarillo Pantex Fed. Credit Union, 695 S.W.2d 91 (Tex.App.-Amarillo 1985, no writ); Martin v. Lou Poliquin Enterprises, Inc., 696 S.W.2d 180 (Tex.App.-Houston [14th Dist.] 1985, writ refused n.r.e.). This is especially true where the lender and seller "were so inextricably intertwined in the transaction as to be equally responsible for the conduct of the sale." Knight, 627 S.W.2d at 389.
Both Knight and Flenniken were distinguished in Wynn v. Kensington, 697 S.W.2d 47 (Tex.App.-Austin 1985, no writ) because there was no evidence of any "tie-in" relationship between the manufacturer and the lender under the facts of Wynn. Wynn had purchased a mobile home which contained excessive levels of formaldehyde, and she filed suit against the lender, the manufacturer of the mobile home, the retail seller, and others based on product liability and deceptive trade practices. The Austin Court of Appeals held that without evidence of a "tie-in" relationship between the manufacturer and the lender, Wynn could not rely on Knight or Flenniken as a basis for proceeding against the lender.
In the present case, the appellees have established some evidence of a "tie-in" relationship between the builder of the house and the lender. Sales representatives for the builder recommended that the appellees use the appellant mortgage company, and they arranged an appointment for the appellees to file an application for the loan with the appellant. Further, the earnest money contract executed by the builder and the appellees provided for an inspection by the lending agency and also provided that after the final inspection by the lending agency, the builder's obligations would be complete.
We conclude that because there is some evidence of a "tie-in" relationship between the builder and the appellant, the trial court did not err in deciding that the appellees were "consumers" as to all parties who sought to enjoy the benefits of the sale.
We overrule appellant's second point of error.
In its third point of error, appellant claims that Special Issue No. 11 was not supported by the pleadings and should not have been submitted to the jury.
The complained of issue reads as follows:
Do you find from a preponderance of the evidence that Defendant Holland Mortgage Company represented that the Bone residence:
a) had characteristics which it did not have, or
b) was of a particular quality when it was not.
Answer "We do," or "We do not." (The jury answered "we do".)
The record reflects that the plaintiff's sixth amended petition contained the following:
15. By virtue of a written Earnest Money Contract dated February 2, 1979, between Bud Monroe Building Company and Plaintiffs herein, Holland Mortgage Company has the duty to inspect and approve the residence as having been contructed [sic] in accordance with good building practices. Defendant Holland Mortgage Company made representations *519 and warranties that such residence had been constructed in accordance with good building practices which representations were false as said residence had not been constructed in accordance with good building practices, thereby breaching its warranty to plaintiffs. Defendant Holland Mortgage Company was also negligent in making such inspection and approval that the residence was constructed in accordance with good building practices, which negligence was a proximate cause of plaintiffs' damages, hereinafter mentioned.
16. Defendant Holland Mortgage Company has been guilty of an unconscionable course of action against plaintiffs by virtue of the allegations above and, in addition, because said defendants, acts and practices took advantage of the lack of knowledge, ability, experience, or capacity of plaintiffs to a grossly unfair degree and resulted in a gross disparity between the value received by plaintiffs and what was paid by plaintiffs in the transaction herein described.
Appellant contends that the pleadings do not support the submission of the special issue and the issue does not "restrict inquiry to representations made to the plaintiffs but allows the jury to speculate and guess that representations made to others may require an affirmative answer to Special Issue No. 11." However, we do not find that the pleading restricts the representations and warranties by Holland to the appellees as the appellant contends.
It is well settled that in an action brought under the DTPA, the plaintiffs do not have to plead the particular subdivisions of the Act upon which they relied. Padre Island Inv. Corp. v. Sorbera, 677 S.W.2d 90, 94 (Tex.App.-San Antonio 1984, writ dism'd); U.S. Steel Corp. v. Fiberglass Specialties, 638 S.W.2d 950, 955 (Tex.App.-Tyler 1982, no writ). In Weitzel v. Barnes, 691 S.W.2d 598 (Tex.1985), the Supreme Court held that the plaintiff's pleading was sufficient wherein it was alleged that the defendants had represented to them that equipment and systems in the home were within building specifications. If there was a pleading defect, appellant could have properly attacked it by special exceptions.
With regard to the special issue submitted to the jury, we find that the form of the issue submitted was proper and was supported by the pleadings. Issues in a deceptive trade practice case for 17.46(b) violations should be submitted in terms as close as possible to those actually used in the statute. Brown v. Am. Transfer & Storage Co., 601 S.W.2d 931 (Tex.1980), cert. denied, 449 U.S. 1015, 101 S. Ct. 575, 66 L. Ed. 2d 474 (1980).
Tex.Bus. & Com. Code Ann. § 17.46(b)(5) and (7) (Vernon Supp.1986) provide that the following are deceptive acts or practices: "representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he does not" and "representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another." The issue submitted in the instant case closely follows the wording of the statute with alterations or deletions to conform the issue to the pleadings and the evidence.
Tex.R.Civ.P. 277 gives the trial court discretion to submit issues broadly, and Tex. R.Civ.P. 279 authorizes the court to submit the controlling issues made by the written pleadings and the evidence. Furthermore, variance between pleadings and proof has rarely been the source of harmful error. Brown v. Am. Transfer, 601 S.W.2d at 937. To be reversible error, the variance must be substantial, misleading, constitute surprise, and be a prejudicial departure from the pleading. Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183 (Tex.1977).
We find that special issue No. 11 was supported by the pleadings. The appellant's third point of error is overruled.
The appellant's final three points of error are no evidence points. In its fourth point, the appellant asserts that there was no evidence to support the jury finding that the appellant represented that the residence *520 had characteristics which it did not have or was of a particular quality when it was not. Its fifth point of error asserts there was no evidence that the appellant's actions in connection with the loan transaction were "unconscionable actions or courses of action." The appellant also asserts in its sixth point of error that there was no evidence that its actions were a producing cause of damage to the appellees.
No evidence points can only be sustained if the record discloses one of the following: (a) a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence establishes conclusively the opposite of the vital fact. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex.L.Rev. 361, 362-363 (1960).
In considering these no evidence points, we must consider only the evidence tending to support the finding, giving effect to all reasonable inferences that may be drawn therefrom, and disregarding all conflicting evidence. Glover v. Texas Gen. Idem. Co., 619 S.W.2d 400 (Tex.1981); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). When evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61 (Tex.1983). The test to be applied in the no evidence/scintilla evidence rule is that if reasonable minds cannot differ from the conclusion that the evidence offered to support the existence of a vital fact lacks probative force, it will be held to be the legal equivalency of no evidence; however, there is some evidence, more than a scintilla, if the evidence furnishes some reasonable basis for differing conclusions by reasonable minds as to the existence of the vital fact. Id. at 63. We have reviewed the record to determine if the appellees' claims are supported by any evidence.
Regarding the appellant's fourth point, it is not controverted that the appellant made no specific oral or written representations to either of the appellees, nor made any inspection report to the appellees. However, appellees contend that appellant's inspection of the house and the subsequent loan disbursement constituted an implied representation that the house was built in accordance with good building practices and in a workmanlike manner. There is no evidence to show that the appellees were deceived or misled by an inspection prior to the time they purchased the house because they did not receive a copy of such inspection, or even know if the inspection ever took place.
The evidence establishes that the appellees selected the house and signed the earnest money contract before they contacted the appellant for a loan. The earnest money contract provided that "seller agrees to erect the house in accordance with good building practices, and final inspections and approval by the lending agency shall constitute complete performance by the seller of all of its obligations hereunder." The appellees testified that they read the earnest money contract and believed the lender would inspect the house although the inspection was never discussed with the appellant or the builder. The earnest money contract did not identify what type of inspection was to take place and the appellant was not named in the contract, nor a party to it.
Appellant's representative testified that the inspection was ordered for March 15, 1979, the same day as the closing on the house, and that it was a "walk-through" inspection for the benefit of the lender, in order to assure that the property was worth the loan amount. The undisputed evidence shows that the appellant requested a copy of the earnest money contract only in order to verify the sale price of the house, to insure that the loan was not for a larger amount, and to obtain a legal description of the property.
The appellees contend that because the inspection constituted complete performance by Monroe of all its obligations under *521 the earnest money contract, and because the appellant's representative testified that the inspection certified the property was being completed in a "workmanlike manner," appellant misrepresented the characteristics and quality of the house. However, the record clearly shows no representations were made by the appellant to the appellees, and we hold that no duty arises to disclose information of which appellant was unaware. See Lone Star Ford, Inc. v. McGlashan, 681 S.W.2d 720 (Tex.App.- Houston [1st Dist.] 1984, no writ). Appellees' testimony indicated that at the time of the inspection no sod was planted in the yard of the house. They also testified that it was only after the appellees purchased the house and planted sod, that the slab of the house fell below the natural grade. The appellees also testified that they were aware of the problem at the time of purchase, and knew the house was at or slightly above the natural grade.
We find no evidence that the appellant represented that the house had characteristics which it did not have, or was of a particular quality, when it was not.
The appellant also contends that there is no evidence that its actions in connection with the loan were "unconscionable" because no act or practice of the appellant resulted in a "gross disparity between the value received and the consideration paid." We agree.
Although the appellant's representative testified that an appraisal was performed in 1979 and there were "no problems" with this appraisal, no expert testimony was presented as to the value of the house in 1979 at the time of its purchase. The only expert testimony presented evidence as to the value of the house in 1982, 1984, and 1986. In Chastain v. Koonce, 700 S.W.2d 579 (Tex.1985), the Supreme Court held that the purchaser failed to show unconscionability under the gross disparity in value test under the DTPA where no expert testimony was presented as to the value of the property at the time of purchase. Even if we assume that the $6,000 damages found by the jury was the difference in 1979 between the value received and the consideration paid, this is not a "gross disparity" as a matter of law because it constitutes less than 7% of the $86,900 consideration paid.
We sustain appellant's fourth and fifth points of error. Accordingly, we need not address the appellant's sixth point of error or the appellees' two crosspoints.
The judgment of the trial court against the appellant is reversed, and judgment is rendered that appellees take nothing against the appellant, Holland Mortgage and Investment Corporation. Costs in this Court and in the district court are assessed against appellees.
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225 Pa. Super. 1 (1973)
Sargent
v.
Sargent, Appellant.
Superior Court of Pennsylvania.
Argued March 26, 1973.
June 14, 1973.
Before WRIGHT, P.J., WATKINS, JACOBS, HOFFMAN, SPAULDING, CERCONE, and SPAETH, JJ.
*2 Wallace H. Webster, Jr., with him Perkin, Webster & Christie, for appellant.
Charles J. Fonzone, with him Martin J. Karess, and Walker, Thomas & Karess, for appellee.
OPINION BY HOFFMAN, J., June 14, 1973:
In this appeal, we must decide whether the lower court erred in finding a Mexican divorce decree devoid of extraterritorial effect and adjudging appellant liable for the support of the wife-appellee in the amount of twenty dollars a month.
Loretta C. Sargent, the appellee, filed the instant action in support for herself and two children on March 2, 1972, in the Northampton County Court of Common Pleas. A full hearing was held before the Honorable Michael V. Franciosa on July 10, 1972. The following facts were adduced at this hearing:
Appellant and appellee were married on July 4, 1955. There were two children born of this marriage, both of whom have always resided with the appellee. Sometime between October 1, 1967 and October 16, 1967, the parties separated, appellee leaving the marital residence at 1033 North Ott Street in Allentown. On October 17, 1967, appellant left the residence and the State, and traveled to Mexico. On October 23, 1967, appellant instituted a suit for "Necessary Divorce against his wife in the First Civil Court of the Bravos District, State of Chihuahua, Republic of Mexico." Appellee was personally served with process on October 30, 1967 in Pennsylvania. She did not appear at the *3 proceedings. On November 21, 1967, appellant obtained a decree in divorce from the Mexican court.
On November 19, 1967, appellant obtained employment at Lockheed Aircraft Corporation in Sunnyvale, California, where he took up residence. Appellant then traveled to Allentown, Pennsylvania, where he visited with prospective in-laws and returned with Virginia Webster to Sunnyvale, where on December 9, 1967, Miss Webster and appellant were married. Appellant continued to reside with his second wife in Sunnyvale until May 30, 1969, at which time he was transferred to Lockheed's subsidiary, Lockheed Electronics, in Plainfield, New Jersey, where he has continued his employment to the present date. Appellant and his second wife moved to Stirling, New Jersey, where they lived until November, 1970. They then moved to 2712 Auburn Avenue in Easton, where they and two children born of this second marriage now live.
Appellee discovered appellant was living in California and promptly filed a support petition for herself and her two children. The California Superior Court, on August 1, 1968, ordered the appellant to pay $100.00 per month for the two children only, making no provision for the support of the first wife. The record discloses that appellant has faithfully made monthly payments through the California court, and is currently not in arrears.
When appellant moved, appellee filed a similar proceeding in New Jersey, which was dismissed without prejudice on May 24, 1971 for want of prosecution. The instant suit in the Northampton County Court resulted in an Order of the Court dated November 6, 1972. The order decreed that "the Mexican Divorce decree having been found devoid of extraterritorial effect for the reasons set forth . . . Defendant is adjudged liable for support of the Plaintiff . . . at the rate of twenty ($20.00) dollars per month." The amount set by the *4 California court for the support of the children was not modified. It is from the Order of Court that this appeal is taken.
The Full Faith and Credit Clause binds only the States of the Union and does not apply to decrees of the courts of foreign countries. Aetna Life Insurance Co. v. Tremblay, 223 U.S. 185 (1912). "Mexico is a sovereign state and the judgments of its courts are entitled to the respect everywhere accorded the judgments of the courts of sovereign states until those judgments are invalidated in the proper manner in the courts of another jurisdiction. `Foreign judgments are recognized and enforced in this country because of the comity due by one nation to another and to its courts and decrees': 15 R.C.L., page 907, section 388; Hilton v. Guyot, 159 U.S. 113. It is true that a foreign divorce may be attacked collaterally by the defendant spouse where his or her rights are involved. . . . The right to impeach collaterally a decree of divorce made in another state by showing fraud or want of jurisdiction has been frequently recognized." (Citations omitted.) Commonwealth ex rel. Yarnell v. Yarnell, 313 Pa. 244, 250-251, 169 A. 370 (1933). This Commonwealth, for the most part, has refused to recognize a Mexican divorce in a situation where a defendant spouse has not joined in the Mexican proceeding. Commonwealth ex rel. Allison v. Allison, 151 Pa. Super. 369 (1943); Commonwealth ex rel. v. Manzi, 120 Pa. Super. 360 (1936); Commonwealth v. MacMaster, 88 Pa. Super. 37 (1926). Our Supreme Court has, however, afforded recognition of a Mexican divorce where the plaintiff was actually domiciled in Mexico and the cause of divorce did not offend the policy of the Commonwealth. Commonwealth ex rel. Yarnell v. Yarnell, supra.
An absolute prerequisite to judicial recognition of an out-of-state divorce is that the plaintiff must have *5 resided in the state or country for a minimum period of residency as determined by local authority and that the residency be accompanied by "domiciliary intent", i.e., an intent to remain in the foreign jurisdiction. DiMilia v. DiMilia, 204 Pa. Super. 188, 203 A.2d 382 (1964); Fishman v. Fishman, 167 Pa. Super. 428, 74 A.2d 682 (1950). This requirement is jurisdictional and cannot be waived by the acts of the parties. Yohey v. Yohey, 205 Pa. Super. 329, 208 A.2d 902 (1965).
In the instant case, there is no doubt that the plaintiff-appellant went to Mexico for the express purpose of obtaining a divorce, and that he had no intention to remain in Mexico beyond the period necessary to come under the jurisdiction of the Mexican courts.[1] Furthermore, the evidence discloses that appellant took up residence in California a month after he left the marital domicile. There, on November 19, 1967, prior to the award of the divorce decree from the Mexican court, appellant obtained employment with Lockheed. The record is, therefore, patently devoid of evidence of domiciliary intent with regard to appellant's brief residence in Mexico. Having failed to demonstrate sufficient "domiciliary intent" in Mexico, our court on *6 collateral review could properly find the foreign decree invalid for want of jurisdiction.
Appellant argues that, even should his divorce decree be subject to attack, his first wife, the appellee herein, should be estopped from raising the validity of the decree by reason of laches. As a broad general rule, the validity of a divorce decree cannot be questioned by the spouse who obtains it, and a husband or wife who remarries on the strength of the divorce is estopped to deny its validity. Commonwealth v. Case, 200 Pa. Super. 200, 189 A.2d 756 (1963); Commonwealth ex rel. Allison v. Allison, supra. The doctrine of laches has uniformly been applied to those situations where the party seeking to attack the decree himself participated in a collusive divorce. Romanski Estate, 354 Pa. 261, 47 A.2d 273 (1946).
In this jurisdiction, however, laches has never been a defense in a proceeding to declare void a decree in divorce for want of jurisdiction, where the moving party did not actively take part in the obtaining of the divorce. See, Loiacono v. Loiacono, 179 Pa. Super. 387, 116 A.2d 881 (1955). Quoting Melnick v. Melnick, 147 Pa. Super. 564, 580, 25 A.2d 111 (1942), the Court in Loiacono, supra at 392, stated: "There is no statute of limitations, or presumption of discharge, as to marital status or the marriage relation. In Cline Est., 128 Pa. Super. 309, 194 A. 222, a married woman went to live with a man not her husband and cohabited with him and was recognized by him as his wife for twenty-six years, until his death, bearing him six children, her lawful husband being alive and undivorced all the time. The passing of the years did not change her marital status nor make her relationship with her paramour lawful, or her children by him legitimate, notwithstanding her husband took no steps to preserve his marital relation. In the celebrated case of Haddock v. Haddock, supra, the husband *7 left his wife in New York in 1868, settled in Connecticut in 1877, where he obtained a divorce in 1881, based on constructive, not actual, service. The wife brought an action of divorce from bed and board in New York in 1899, thirty-one years after he left her and eighteen years after his Connecticut divorce, and obtained personal service on him, and the decree of the Supreme Court of New York granting such divorce and alimony, affirmed by the Court of Appeals, was affirmed by the Supreme Court of the United States."
The instant case should likewise permit a support action by the first wife, despite the fact that the Mexican divorce was obtained over five years ago. Appellee was not a party to the Mexican divorce. She was served constructively, and did not make an appearance or answer process. She attempted on two prior occasions to institute support actions in California and New Jersey. While she obtained an order of support with respect to the minor children, not until the order of Northampton court, did appellee have a prior determination as to her own right of support.
Appellant admits that he went to Mexico for the sole purpose of obtaining a divorce, and that at no time did he intend to remain in Mexico beyond the period necessary to come within the court's jurisdiction. Under no pretext can the Mexican divorce gain validity as against the collateral attack of the absent spouse.
As we find no indication of collusive participation on the part of appellee, laches should not be invoked to estop appellee's claim. Despite the fact that appellant has remarried and had two children by the second marriage, we cannot breathe life into the Mexican decree where such vitality is lacking.
Order of the court below is affirmed.
NOTES
[1] The plaintiff testified in the following manner regarding his trip to Mexico: "Q. How long were you in Mexico? A. Approximately a week. Q. A week. Did you have employment in Mexico? A. No, I did not. Q. What was the purpose of your trip to Mexico? A. My purpose was to establish residence in the State of Mexico for obtaining a divorce. Q. And only for that purpose? A. For Mexico? Q. Yes. A. That's correct other than economical reasons. I couldn't establish residence in another state because of economical reasons. Q. Because of economical reasons? A. Yes. It's too expensive. Q. Too expensive. So you went to Mexico, realizing that you would leave as soon as the minimum residence requirements were established; is that correct, sir? A. That I would leave Mexico? Q. Yes. A. That's correct. Q. Did you ever intend to remain there indefinitely? A. In Mexico? Q. Yes. A. No, I did not."
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751 S.W.2d 295 (1988)
PETROLEUM WHOLESALE, INC., Relator,
v.
John McClellan MARSHALL, Judge, 14th Judicial District Court of Dallas County, Texas, Respondent.
No. 05-88-00078-CV.
Court of Appeals of Texas, Dallas.
May 23, 1988.
R. Brent Cooper, John A. Scully, James Gregory Marks, Dallas, for relator.
Frank L. Branson, Paul N. Gold, George (Tex) Quesada, Dallas, for respondent.
Before WHITHAM, McCLUNG and STEWART, JJ.
STEWART, Justice.
Relator Petroleum Wholesale, Inc. ("Petroleum"), seeks a writ of mandamus to compel the Honorable John McClellan Marshall, Judge of the 14th Judicial District Court of Dallas County, Texas, to vacate an order disqualifying the entire law firm of Cowles & Thompson, attorneys at law, from representing it in certain pending litigation. We granted Petroleum's motion for leave to file its petition for writ of mandamus,[1] the parties have briefed the *296 issues, and we have heard oral argument. For the reasons given below, we deny Petroleum's petition for writ of mandamus.
Bertha Faye Marsden sued Petroleum, along with other defendants, on a wrongful death claim. She retained the law firm of Frank L. Branson, P.C. ("Branson"), attorneys at law, to represent her. Her action, styled Marsden v. Petroleum Wholesale, Inc., et al., was docketed in the 14th Judicial District Court under cause number 87-11466. Petroleum retained Cowles & Thompson to represent it, and, in due course, Cowles & Thompson filed a general denial on behalf of Petroleum. During this entire time, Branson employed Scott M. Lewis, a licensed attorney at law, as an associate. There is no dispute that, while at Branson, Lewis did not personally work on the Marsden case but did participate in confidential discussions concerning the Marsden litigation, Branson's strategy therein, the strengths and weaknesses of the case, and the potential for settlement negotiations. After Petroleum filed its general denial, however, Lewis started negotiating with Cowles & Thompson for employment there. About five weeks after Cowles & Thompson had appeared in the Marsden litigation on behalf of Petroleum, Lewis accepted a position with Cowles & Thompson. There is no dispute that Lewis personally is disqualified from any representation of Petroleum in the Marsden litigation.
About a week after Lewis started work at his new firm, Branson moved to disqualify the entire firm of Cowles & Thompson from representing Petroleum. The trial court conducted a two-day hearing. Cowles & Thompson presented evidence that it had effectively isolated Lewis within the firm from contact with any other attorney handling the Marsden litigation, by taking the steps described below.
Cowles & Thompson removed the Marsden files from the central file room and kept them under lock and key in their own storage room; only the lead counsel for the Marsden case had access to the key. Cowles & Thompson also removed the files of any other matter pending between it and Branson, as Cowles & Thompson's adversary counsel, to the locked storage room. In all, there were some twenty-two such cases pending in which Cowles & Thompson represented a defendant being sued by a plaintiff that Branson represented (the "Branson cases"). Lewis was instructed not to discuss the Marsden case, or any of the other Branson cases, with anyone else at Cowles & Thompson. Cowles & Thompson instructed all its shareholder attorneys, its associate attorneys, and its support staff that no one was even to mention any of the Branson cases in Lewis' presence; if Lewis by chance overheard any discussion of a Branson case, he was to make his presence known to the discussants immediately, who were then to cease their conversation. Any violation would result in the violator's termination from Cowles & Thompson. Finally, everyone, from the senior attorneys to the support staff, was instructed not to leave any part of the files of any Branson case unattended on desks or other places where a casual passerby might happen upon them. Cowles & Thompson stressed that these enumerated procedures were established and in place before Lewis actually joined the law firm, so that Lewis never had an opportunity to be exposed to any activity within that firm concerning the Branson cases.
Cowles & Thompson vigorously contends that it implemented an effective screening device that rebuts any presumption of shared confidences implicit in Disciplinary Rule 4-101(B) under Canon 4 and that refutes any appearance of impropriety under Canon 9 of the Texas Code of Professional Responsibility.[2] It further argues that, when the trial court declined to accept its defense that it had effectively screened *297 Lewis from sharing any of Marsden's confidences with the other members of the firm, the trial court ruled, in legal effect, that an irrebuttable presumption exists that there will be disclosure of confidential communications between a disqualified lawyer and other members of his new firm. It contends that this holding is contrary to Texas case law, to the Texas Rules of Professional Conduct, to federal case law, and to the law of our sister states. Thus, it asserts that, by refusing even to consider the possibility of constructing an effective screening device under the facts of this case, the trial court abused its discretion.
Cowles & Thompson maintains that there are two issues for this Court to resolve, and it frames them thusly: (1) whether Texas law authorizes the use of a "Chinese wall" to avoid vicarious disqualification of a large law firm employing a disqualified lawyer; and (2) whether Cowles & Thompson, as counsel for Petroleum, has established an effective "Chinese wall." A "Chinese wall" is a device erected by a law firm intended to "quarantine" a new member with confidential information received from an adversary of one of the firm's clients. Among the factors that other courts have considered in determining the efficacy of such a quarantine are: (1) the size of the firm; (2) the extent of departmentalization within the firm; (3) prohibitions against discussion of the action with the new member; and (4) exclusion of the new member from relevant files, participation in the action, and sharing in firm earnings from the action. Manning v. Fort Deposit Bank, 619 F. Supp. 1327, 1329 (W.D.Tenn.1985), appeals dism'd, 798 F.2d 469 & 470 (6th Cir.1986).
Chinese walls are often used to screen ex-government officials and attorneys who wish to move into private practice. The policy underlying the use of the screen in that situation is to ensure government agencies a constant supply of well-qualified attorneys, who can be confident that they will be employable after their government service is finished. Amoco Chemicals Corp. v. MacArthur, 568 F. Supp. 42, 47 (N.D.Ga.1983). There is no doubt that Chinese walls are accepted in some jurisdictions and in some situations. The functions of this device are to rebut the presumption of shared confidences arising under Canon 4 between an attorney and the other members of his firm and to reduce or eliminate the appearance of impropriety prohibited by Canon 9. Thus, we must determine whether Texas law authorizes use of a Chinese wall under our facts, where an attorney has actual knowledge of a former client's confidences concerning a particular case and his new firm is representing his former client's adversary in the same suit.
The trial court relied on Canon 9 as one of its grounds for disqualifying Cowles & Thompson. We now address the propriety of that ruling. Under Canon 9, to determine whether the challenged lawyer or firm has avoided "even the appearance of professional impropriety", movant for disqualification must show that:
... there is a reasonable possibility of the occurrence of [a] "specifically identifiable appearance of improper conduct" and that the likelihood of public suspicion or obloquy outweighs the social interest" in obtaining counsel of one's choice.
In Re Corrugated Container Antitrust Litigation, 659 F.2d 1341, 1345 (5th Cir. 1981) (cites omitted). Violations of other canons may be used to fulfill the requirement of a specific impropriety. Id. Therefore, we must determine whether Cowles & Thompson's representation of Petroleum would violate some Canon other than Canon 9. Branson argues that such representation would violate Canon 4; Cowles & Thompson argues that an effective Chinese wall avoids violation of Canon 4.
This case appears to be one of first impression for Texas state courts. The only opinion from a Texas state court that Branson brings to our attention is Dillard v. Berryman, 683 S.W.2d 13 (Tex.App.-Fort Worth 1984, no writ). Relying on Canon 9, the Dillard Court disqualified an entire law firm from defending a client in a civil assault case because one attorney, who was district attorney before he joined the firm, had had confidential conversations *298 with the plaintiff when he had sought criminal prosecution for the assault. Petroleum maintains that Dillard is distinguishable, however, because, in that case, the disqualified law firm had not even attempted to construct a Chinese wall around the attorney who was individually disqualified, thereby negating or reducing any appearance of impropriety.
Petroleum relies on a federal district court decision in Lemaire v. Texaco, Inc., 496 F. Supp. 1308 (E.D.Tex.1980), appeal dism'd, 640 F.2d 382 (5th Cir.1981), for its position that Texas case law permits a "Chinese wall" as a device by which an entire law firm can avoid the harsh result of vicarious disqualification when it laterally hires an attorney who is personally disqualified from representing a client of that firm. We note that we receive decisions from our sister federal courts with respectful consideration, although (with the exception of the Supreme Court of the United States on questions of federal law) such decisions are in no way binding upon us. Barstow v. State, 742 S.W.2d 495, 501 n. 2 (Tex.App.-Austin 1987, no writ).
In Lemaire, a lawyer representing an oil company as defendant in a complex commercial suit changed law firms and began working for the firm representing the plaintiffs in the same suit. The court found that, before accepting the new position, the lawyer "went to great lengths to insure that he would have no connection with any facet of this lawsuit." 496 F.Supp. at 1309. The lawyer made certain that he would receive no part of any fees collected in the case and that he would not share in its expenses; he refused to discuss the underlying litigation with any member of his new firm and testified that he had no knowledge of the status of the case; and he assured the court that his nonparticipation would continue to be strictly observed. Id. The testimony also showed that there was no other firm in the area that was qualified or even willing to take on, for the plaintiff, litigation of the magnitude involved. Id. Citing Novo Terapeutisk Laboratorium A/S v. Baxter Travenol Laboratories, Inc., 607 F.2d 186 (7th Cir.1979) (en banc), and Brennan's, Inc. v. Brennan's Restaurants, Inc., 590 F.2d 168 (5th Cir.1979), the trial court held that the presumption of shared confidences between the disqualified lawyer and other members of his new firm is rebuttable; that the presumption was clearly rebutted under the evidence; and that a Canon 9 challenge to plaintiffs' counsel's continued representation was too weak a basis for their disqualification, because any appearance of impropriety was greatly outweighed by the plaintiffs' right to have counsel of their choice.
We are left with one Texas state court's decision (strenuously urged by Marsden) that Canon 9, standing alone, suffices to disqualify all members of a challenged attorney's new firm from representing movant's adversary when the challenged attorney's personal disqualification is based on actual knowledge of movant's confidences, and one Texas federal district court's decision (strenuously urged by Petroleum) that an effective Chinese wall reduces the appearance of impropriety and under the facts of that case plaintiffs' right to counsel of their choice greatly outweighed the appearance of impropriety prohibited by Canon 9. Clearly, more analysis is needed.
Branson argues that the Lemaire decision is not authoritative because it was dismissed on appeal, has never been cited by another Fifth Circuit or Texas case, and was implicitly overruled by a later Fifth Circuit decision in In Re Corrugated Container Anti-Trust Litigation, 659 F.2d 1341 (5th Cir.1981). However, we note that In Re Corrugated Container dealt with the presumption of shared confidences between the attorneys who personally handled the aggrieved client's case and the other members of their firm at the time of that representation. The court held that this presumption applied in that case even though the partnership was later dissolved. Hence, we disagree that In Re Corrugated Container impliedly overruled the Lemaire decision because the latter is distinguishable on its facts. Lemaire dealt with the presumption of shared confidences between an attorney who personally handled an aggrieved client's case and the other *299 members of his new firm, not the other members of the firm of which he was a member at the time he represented the aggrieved client. In addition, In Re Corrugated Container did not involve a Chinese Wall. However, we do recognize that the Lemaire court had to weigh the additional factor of there being no other local counsel available to plaintiff in determining whether plaintiffs' right to counsel outweighed any appearance of impropriety. This factor is not present in our case.
Next Petroleum contends that the Texas Rules of Professional Conduct allow the use of a Chinese wall. However, Petroleum relies on the provisions of the proposed Texas Rules which will be submitted to State Bar members in a referendum on November 1, 1988. We hold that the trial court did not abuse its discretion in refusing to consider the proposed rules because they are not yet in effect. To the contrary, the trial judge was well within his discretion in relying on current rules and in fact had a duty to apply the rules of professional conduct as written. Bert Wheeler's, Inc. v. Ruffino, 666 S.W.2d 510, 513 (Tex. App.-Houston [1st Dist.] 1983, orig. proceeding).
Petroleum also cites Kesselhaut v. United States, 214 Ct. Cl. 124, 555 F.2d 791, 793 (1977) (per curiam), in support of its position that, if no actual wrongdoing has occurred, the erection of a Chinese wall is permissible. It is true that the Kesselhaut Court acknowledged that the disqualification of an entire law firm is:
entirely too harsh and should be mitigated by appropriate screening such as we now have here, when truly unethical conduct has not taken place and the matter is merely one of the superficial appearance of evil, which a knowledge of the facts will dissipate.
555 F.2d at 793. The facts, however, before the Kesselhaut Court were altogether different from those now before us. In Kesselhaut, the individual attorney was personally disqualified on the basis of imputed knowledge gained as a general counsel for the Federal Housing Administration. After his retirement from that agency, he worked, part-time, for a law firm representing certain other attorneys who had done legal work for the Federal Housing Administration and who, as plaintiffs, were urging a claim for attorneys' fees that the administration disputed. Thus, the grounds for disqualifying the firm involved double imputation: imputing to members of the firm the imputed knowledge of the individual attorney. The court held that under those facts the screening procedure used by the firm was sufficient to avoid disqualification of the other members of the firm. In short, Kesselhaut did not involve an attorney whose personal disqualification was based on actual knowledge of a former client's confidences; hence, it is distinguishable on its facts from our case.
We note that the Fifth Circuit has refused even to apply the presumption of shared confidences to disqualify new partners of an attorney who is vicariously disqualified through his former partners representing certain clients. American Can Company v. Citrus Feed Co., 436 F.2d 1125 (5th Cir.1971); accord, State Bar of Texas, Comm'n on Interpretation of the Canons of Ethics, Op. 453, reported at 51 TEX.B.J. 293 (1988). The court in the Citrus Feed Co. case rejected the double imputation theory, but it expressly declined to determine whether the new partners would have been disqualified if the individual attorney's disqualification had been based on actual knowledge rather than imputed knowledge, which is precisely the situation before this Court.
Two presumptions give rise to the doctrine of vicarious disqualification under Canon 4. The first is an irrebuttable presumption that a client gives confidential information to an attorney actively handling the client's case. In Re Corrugated Container Litigation, 659 F.2d at 1347. The second is that an attorney who obtains such confidences shares them with other members of the attorney's firm, because of the interplay among lawyers who practice together. United States v. Kitchin, 592 F.2d 900, 904 (5th Cir.1979) (per curiam), cert. denied, 444 U.S. 843, 100 S. Ct. 86, 62 L. Ed. 2d 56 (1979). In other words, under *300 the second presumption the actual knowledge of the individual attorney is imputed to the other firm members. In the case at bar, Cowles & Thompson acknowledges that confidential information concerning the Marsden litigation had actually been given to Lewis; therefore the second presumption is not necessary as a basis for Lewis' disqualification, and he is disqualified based on his actual knowledge rather than his imputed knowledge. Thus, we do not have a double imputation situation before us. Cowles & Thompson argues, however, that its construction of a Chinese wall successfully rebuts the second presumption as it relates to Lewis and his new firm: that Lewis, admittedly knowing certain of Marsden's confidences, will not be able to share those confidences with his present fellow lawyers. We disagree.
There is no dispute that Lewis participated in confidential discussions, while employed at Branson, concerning the Marsden litigation, even if Lewis personally did not directly work on that litigation. The circumstances of Lewis' employment with Branson were similar to those described by another court:
[I]t was the common and established practice for the [seven] members of that firm [that the individually disqualified attorney had left] to discuss, within the office, and particularly at lunch, the facts and merits of the various legal matters being handled by them individually.
EZ Paintr Corp. v. Padco, Inc., 746 F.2d 1459, 1461 (Fed.Cir.1984) ("Chinese wall" held ineffective to rebut presumption of disqualified attorney's sharing of former client's confidences with other firm members).
We have carefully considered the other case authority relied on by Cowles & Thompson. Many of the cited cases can be distinguished on their facts or on the differences in the applicable local law. Although the Lemaire case has similar facts, we decline to follow its conclusion that the presumption of shared confidences between a private attorney with actual knowledge and other members of his new firm is rebuttable. To the contrary, we hold that the erection of a Chinese wall will not rebut the presumption of shared confidences when an attorney in private practice has actual knowledge of a former client's confidences in relation to a particular suit and he thereafter undertakes employment with a firm representing an adversary of the former client in that same suit. Accordingly, we further hold that to allow Cowles & Thompson to represent Petroleum in this case would be a violation of Canon 4. Therefore, the specifically identifiable impropriety required by the first prong of the Canon 9 test has been met.
We turn now to the second prong of the Canon 9 test in which we must determine whether the likelihood of public suspicion of the legal profession outweighs the social interest of Cowles & Thompson's continued representation of Petroleum. We first note that, contrary to Lemaire, Petroleum does not contend that no substitute counsel is available, a factor which may have tipped the scales in favor of refusing to disqualify plaintiffs' counsel in Lemaire. However, we must still decide whether Cowles & Thompson's erection of a Chinese wall reduces the appearance of impropriety to the extent that the likelihood of public suspicion is outweighed by Petroleum's social interest in retaining counsel of its choice. We conclude that when an attorney accepts employment with a firm representing an adversary of his former client in the same suit, with actual knowledge of his or her former client's confidences in that suit, such an appearance of impropriety arises that not even an effective Chinese Wall can allay public suspicion of the legal profession, especially in a case involving only private attorneys.
In Kesselhaut, the court found that no "truly unethical conduct" had occurred and that "a knowledge of the facts [would] dissipate" "the superficial appearance of evil." 555 F.2d at 793. But the public could easily acquire such a knowledge of the facts in that case (i.e., that the attorney who was personally disqualified had been employed with a governmental agency in a supervisory capacity, without actually being involved in the day-to-day handling of *301 any specific case). The attorney's job responsibilities with the governmental agency would be a matter of public record. Because the individual attorney's disqualification was based on imputed knowledge, Kesselhaut simply did not involve any reasonable possibility that the individually disqualified attorney's actions would arouse public suspicion that an impropriety might have occurred.
In the instant case, in contrast to Kesselhaut, Lewis has been privy to confidences concerning the Marsden litigation. The facts available to dissipate any appearance of impropriety under Canon 9 would be only those facts establishing the efficacy of the Chinese wall, erected entirely internally within Cowles & Thompson. Those facts, however, remain solely within the collective knowledge of Cowles & Thompson's attorneys and employees. Under these circumstances, the erection of a Chinese wall does little to dissipate the public's perception of the appearance of professional impropriety, because, in the end, the public has no way of knowing whether a breach in the Chinese wall might ever occur. See Cheng v. GAF Corp., 631 F.2d 1052 (2d Cir.1980) (while the extent of the disqualified attorney's exposure to confidential disclosures of former client through informal discussions or general strategy conferences had admittedly not been conclusively determined, a Chinese wall was held ineffective to avoid the appearance of impropriety).
Nevertheless, Petroleum insists that no actual impropriety under Canon 4 has occurred or will occur in this case. Actual impropriety, however, is not the proper test. See In re Corrugated Container Antitrust Litigation, 659 F.2d 1341, 1344-45 (5th Cir.1981); Church of Scientology of California v. McLean, 615 F.2d 691, 693 (5th Cir.1980).
We agree with the Dillard court that "it is the relationship of the attorneys to the parties and to each other that controls, not whether they have actually engaged in conduct which would create a conflict." Dillard v. Berryman, 683 S.W.2d at 15. As we have previously held, we have a specifically identifiable impropriety, i.e., the possible violation of Canon 4's prohibition against disclosing a former client's confidences. (See Canon 4, Ethical Consideration 4-6 (the obligation to preserve a client's confidences continues after the termination of a lawyer's employment.)) We do not question that no actual impropriety has occurred; we conclude only that the general public has no means of any kind to verify independently the lack of any impropriety.
Petroleum next argues that, because Canon 5 explicitly compels the vicarious disqualification of an entire law firm when one of its members is personally disqualified (see Disciplinary Rule 5-105(D)), the absence of a similar provision in Canon 4 mandating the vicarious disqualification of a law firm means that Canon 4 permits the erection of a Chinese wall to avoid the appearance of any impropriety specifically identified under Canon 4. Our issue is not whether Canon 4 ever permits a Chinese wall; it is whether Canon 4 permits a Chinese wall under the specific facts of this case. We have concluded only that, under our facts, a Chinese wall will not rebut the presumption of shared confidences under Canon 4.
We hold, therefore, that when an attorney in private practice has actual knowledge of the confidences of a former client in a particular case, and he or she undertakes employment with a law firm representing a party whose interests in that identical case are adverse to that former client, the construction of a Chinese wall does not refute the appearance of professional improprietythe possible disclosure of the former client's confidences which is prohibited by Canon 9 of the Texas Code of Professional Responsibility. In such a case, the entire new firm must be disqualified from representing the adversary of the challenged attorney's former client. In light of this holding, we do not reach the factual question of the effectiveness of the Chinese wall which Cowles & Thompson erected.
Under our rulings, the trial court was not acting in contravention of Texas law when it declined to adopt Petroleum's Chinese *302 wall defense under the facts of this case. A writ of mandamus will issue only when "the trial court's order is so arbitrary, unreasonable, or based upon so gross and prejudicial an error of law as to establish an abuse of discretion." Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex.1985). Consequently, the trial court did not abuse its discretion in disqualifying Cowles & Thompson from representing Petroleum.
Accordingly, Petroleum's petition for writ of mandamus is denied.
NOTES
[1] We have previously recognized a petition for writ of mandamus as an appropriate method to review a trial court's action on a motion to disqualify. See Gilbert McClure Enterprises v. Burnett, 735 S.W.2d 309, 310-11 (Tex.App.-Dallas 1987, orig. proceeding).
[2] SUPREME COURT OF TEXAS, RULES GOVERNING THE STATE BAR OF TEXAS art. X, sec. 9 (Code of Professional Responsibility) (Vernon 1973 & Vernon Supp.1988) (hereinafter cited as Texas Code of Professional Responsibility).
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