Quieting Title - Proceedings - Jurisdiction. A court having equity powers has inherent jurisdiction to quiet title to land.
 Same - Right of Action - Location of Legal or Equitable Title -Effect. An action to quiet title should not be dismissed for reasons of location of legal title, since the superior title, whether legal or equitable, must prevail.
 Municipal Corporations - Highways - Conveyance of Right-of-Way - Interest Acquired. The title, if any, owned by an eventual successor to a party receiving an interest in land by resolution from county commissioners consisting of a street right-of-way is equitable rather than legal.
 Same - Highways - Nature of Public Interest - Abutting Landowner. The only interest in a -street right-of-way which a county or city acquires is in the nature of an easement for passage and use by the public as a street, with the powers and privileges necessarily implied - the fee remains in the owner of the abutting land.
 Same - Estoppel - Equitable Estoppel - Counties and Cities - Generally. Equitable estoppel may be applied against a city or county to prevent a manifest injustice whether the actions involved are governmental or proprietary, where application of the doctrine does not encroach upon governmental sovereignty, interfere with proper discharge of governmental duties, or curtail an exercise of police power; the conduct of the officials on which the estoppel is sought to be predicated is not fraudulent or illegal, involve public revenue, or violate public policy; and the officials did not act wholly beyond their power and authority.
 Same - Estoppel - Equitable Estoppel - Counties and Cities - Generally. When determining whether a county or city should be estopped to assert a particular right or claim, the distinction must be made between those acts or conduct forming the basis for the alleged estoppel that are ultra vires and void, to which estoppel is inapplicable, and those actions which are within the general powers granted the governing unit and which have merely been exercised in an irregular and unauthorized manner.
«*» Reported in 443 P.2d 833.
 See Ann. 1 A.L.R.2d 338:, 28 Am. Jur. 2d, Estoppel and Waiver § 128.
vires and void, but was merely an irregular and unauthorized manner of exercising the broad powers granted to counties to operate and build roads.
 Same - Contracts With Individuals - Duty of Good Faith. The state and its subdivisions are held to resolute good faith in its business dealings with individuals and should not expect more favorable treatment than is fair between men.
Appeal from a judgment of the Superior Court for King County, No. 614157, Solie M. Ringold, J., entered September 9, 1966. Affirmed.
Action to quiet title. One defendant appeals from a judgment quieting title in the plaintiffs.
A. L. Newbould and E. Neal King, for appellant.
Malcolm S. McLeod, for respondent.
This is an appeal by the defendant, city of Seattle, from a decree quieting the plaintiffs' (respondents') title to a tract of real estate presently lying within the boundaries of the city. This tract of land was placed on the tax rolls by King County in 1935. The taxes were not paid and the county foreclosed its tax lien, purchased the property at the foreclosure sale in satisfaction of its lien and received a deed from the county treasurer, conveying the property to it in October 1951. On November 6, 1952, the county entered into a real-estate contract, pursuant to RCW 84.64.270, by which it agreed to sell the property to the plaintiffs for a purchase price of $1,005. The purchase price was paid by the plaintiffs, and on November 1, 1962, they received the county treasurer's deed conveying the property to them.
«†» Judge Ward is serving as a judge pro tempore of the Supreme Court pursuant to Art. 4, § 2(a) (amendment 38), state constitution.
that the plaintiffs' property was dedicated "to the use of the public forever," as a part of a street on May 6, 1906, when the plat of Lake Shore View Addition to the city of Seattle was recorded in vol. 13 of plats, p. 15, records of King County, by Seaboard Security Company, and that it has at all times since remained, and is now, a street. The city of Seattle claims it acquired this street on extension of the corporate boundaries on March 1, 1953. The trial court held otherwise, and this appeal followed.
The evidence reveals an unusual factual pattern with respect to the title to this tract of land. At the time Seaboard Security Company recorded its plat, it owned Government Lot 2, lying north of the east and west center line of Section 34, Township 26 North, Range 4 East, W.M. in King County. John G. Matthews and wife owned Government Lot 3, adjoining, lying south of this east-west center line. Seaboard Security Company, in platting its property, intended to leave a highway or street (which appeared from the plat to be about 30 feet wide, although its width was not stated on the plat), running east and west between the southernmost platted lots and the center line of the section. This 30-foot strip of land is designated as Indianapolis Street on the recorded plat. A resurvey in 1914 disclosed that the east-west center line of section 34, was approximately 60 feet south of where Seaboard Security Company thought it was when it platted Lake Shore View Addition, making it 60 feet south of its location as shown on the recorded plat. As a result of this error, there was left a tract of land running east and west between the platted lots of the addition and the center line of the section, 90 feet in width, instead of 30 feet in width, as intended by the platters.
v. Parker, 163 Wash. 10, 16, 299 Pac. 354 (1931), we held "that Indianapolis street necessarily occupies the full width of the land between the south line of the south row of lots and blocks and the east and west center line of the section which is established by the center of the section as a monument." The effect of this decision was to make Indianapolis Street, 90 feet wide, instead of 30 feet wide as it appeared on the plat.
"Now, THEREFORE, on recommendation of the engineers of King County, Washington, it is ordered that said proposition of said John G. Matthews be and the same is hereby accepted and the said John G. Matthews has delivered a deed for said tract first above described for highway purposes and the county of King hereby releases and conveys to John G. Matthews in consideration of said deed from said John G. Matthews to said King County for said first described tract that certain strip or tract of ground 30 feet in width commencing at the southwest corner of the southwest block, lot or tract of the Lakeshore View Addition as platted to where said line connects with the James Kiefer Road, being a tract of land 30 feet wide and about 540 feet more or less long.
"PASSED this 12th day of March, 1928. [Signatures]"
The deed from Matthews to King County was not introduced in evidence, but it may be assumed that such deed was delivered because King County constructed the highway now designated N.E. 95th Street, with the center line of the highway along the relocated east-west center line of section 34. The present street is 60 feet wide with 30 feet on each side of the center line of the section.
Resolution 2791 must be construed in accordance with Mr. Matthews' claim of ownership at the time the exchange agreement was consummated. It was the intention of King County by the terms of resolution No. 2791 to grant the original 30-foot strip of land, platted as Indianapolis Street, to Mr. Matthews, and it was Mr. Matthews' intention to convey to the county a 60-foot strip of land for road purposes being 30 feet on either side of the relocated center line of section 34.
property is more particularly described in the trial court's decree quieting title.«2» This describes a strip of land, approximately 60 feet wide, lying between the north marginal line of present N.E. 95th Street, and the southernmost lots of a part of Lake Shore View Addition.
[1, 2] Jurisdiction to grant relief by a decree quieting a claimant's title to land is inherent in a court which exercises equity powers. 44 Am. Jur. Quieting Title § 3 (1942). This state is aligned with those jurisdictions which permit one who has only an equitable title to land to maintain an action to quiet title, even though out of possession. Brodsky v. Nelson, 57 Wash. 671, 107 Pac. 840 (1910); Carlson v. Curren, 48 Wash. 249, 93 Pac. 315 (1908); Brown v. Baldwin, 46 Wash. 106, 89 Pac. 483 (1907); RCW 7.28.010. The superior title whether legal or equitable must prevail. Rue v. Oregon & Washington R.R., 109 Wash. 436, 186 Pac. 1074 (1920); RCW 7.28.120. The plaintiffs' claim, therefore, should not be dismissed as the city claims because King County purported to convey the property to Matthews by means of a resolution rather than a deed, nor should it be dismissed because of any indefiniteness in the description of the land in the tax foreclosure proceedings or in the conveyance by King County to the plaintiffs.
"Beginning at the southwest corner of Lot 10, Block 5, Lake Shore View Addition to the City of Seattle as recorded in Vol. 13 of Plats, page 15, records of said King County, Washington, thence N 88°26'01" W 30.0 feet, more or less, to a point in the center line of 46th Avenue N.E.; thence south 1°43'58" west along the center line of 46th Ave. N.E., extended a distance of 59.64 feet, more or less, to a point on a line which lies 30.00 feet north of the east-west centerline of said Section 34; thence south 88°15'49" east 191.892 feet to a point of curvature; thence along the arc of a 78.103 foot radius curve to the left a distance of 104.862 feet to a point on the south line of said Lot 10, Block 5; thence N 88°26'01" W along the south line of said Lot 10, Block 5 a distance of 237.975 feet, more or less, to the point of beginning of this description; . . . . All bearings based on Washington Coordinate System, North Zone."
examine therefore the equities upon which the plaintiffs rely, and we find that the record discloses the following matters which appeal to the conscience of the court.
The plaintiffs purchased subject to a local improvement assessment in the sum of $102.02, which they have paid. They have paid real-estate taxes on the property since they purchased it in 1952, including that portion of the taxes assessed by the city of Seattle. Plaintiffs were engaged in filling the ravine on the property when stopped by the city of Seattle and claim to have expended approximately $6,800 in the project. This claim was not controverted nor questioned by the city. They paid to King County the purchase price of $1,005 and the accruing interest over a period of 10 years. The city has never tendered to the plaintiffs any sum whatsoever as reimbursement for any of the sums so expended by them.
Neither can we ignore the further equitable considerations. The platters of Lake Shore View Addition dedicated to the public for a street, a tract of land which was traversed by a ravine, and was therefore, as the county commissioners declared, not "feasible for highway purposes." The county wisely decided to forever abandon the land for street purposes, and was able to exchange such property under its agreement with Mr. Matthews, for a tract of land which served the public purposes. Now, after the successors in title to Mr. Matthews have expended several thousand dollars converting this tract into a valuable piece of property, the city of Seattle, as successor to King County's rights by reason of the extension of the boundaries of the city, seeks to take the property from the present owners. The city took no steps to assert its claimed interest until the filling operations were substantially completed, and the plaintiffs had expended several thousand dollars in the improvement. On oral argument, the city was unable to state that it had any present use for the property.
remains in the owner of the abutting land, and the public acquires only the right of passage, with powers and privileges necessarily implied in the grant of the easement. Puget Sound Alumni of Kappa Sigma, Inc., v. Seattle, 70 Wn.2d 222, 422 P.2d 799 (1967). This rule was applied specifically to a street dedicated to the public through the recording of a plat in Schwede v. Hemrich Bros. Brewing Co., 29 Wash. 21, 69 Pac. 362 (1902). Therefore, the only property right which either the city of Seattle, or King County ever acquired in the tract of land in controversy, was an easement for passage and use for street purposes.
In the instant case, the plaintiffs joined as defendants certain heirs of John G. Matthews "and also all other persons and parties unknown claiming any right, title, estate, lien, or interest in the real estate described in the complaint herein, and against the whole world." In a quiet title action, specific statutory authority is granted to obtain jurisdiction over such unknown owners or claimants and to adjudicate their property rights by in rem proceedings. RCW 4.28.150. Judgment was entered quieting plaintiffs' title against the claim of all such possible claimants to the fee in Indianapolis Street, and the plaintiffs' title to such fee cannot be questioned, and is not now, an issue in this case.
This leaves the city's posture in this case substantially follows. The city's greatest claim to the strip of land, about 60 feet wide and about 200 feet long, which is the subject of this action, is limited to an easement for passage, over terrain, which on account of the ravine and creek traversing the property was found by the King County commissioners not feasible for street purposes and which was exchanged for adjoining property. This transaction resulted in a definite and substantial benefit to the county, and continues to be a benefit to the city. Therefore, the question before this court, is whether this factual situation lends itself to the application of equitable principles.
King County would have. It is the city's contention that equitable considerations must be ignored by this court, because of its claim that the acts of King County in disposing of the property were ultra vires. It is the city's position that equitable estoppel may be invoked against a governmental body or agency only when the governmental act is strictly within the recognized and established powers of government.
It follows from what we have said, that the promise or "agreement" of 1934 was not authorized by our statutes then in force, and was indeed contrary to the policy of those legislative enactments, and, hence, was illegal.
"The nonenforcement of illegal contracts is a matter of common public interest, and a party to such contract cannot waive his right to set up the defense of illegality in an action thereon by the other party. . . . it becomes the duty of the court to refuse to entertain the action. . . . The appellants are not estopped to raise the illegality of the contract because of their course of dealing with respondents under the contract. Validity cannot be given to an illegal contract through any principle of estoppel." It will be noted, however, that in the case cited above the majority found also that equitable rights were not established.
 It is the general rule that the courts will not apply principles of equitable estoppel against the government or government subdivisions under certain situations. These are well summarized in the text statement found in Annot. 1 A.L.R. 2d, 340-41 (1948).
Yet there are many situations and instances in which the sovereign state, and particularly the subordinate governmental agencies, may be and have been held subject to the doctrine of estoppel as any other individual or corporate entity. These situations or instances are sometimes spoken of as exceptions to the rule against applicability of the doctrine of estoppel to government and its subordinate agencies. It is doubtful whether these are true exceptions to rather than integral parts of the rule itself. In many cases the rule of immunity of the state from the doctrine of estoppel is not stated as an absolute, but merely as a qualified, immunity. In other cases the rule is stated as if no immunity exists except in the narrow field where sovereignty would be impaired.
public revenue was dissipated or one which violated public policy.
There remains for consideration, therefore, only the city's contention that equitable estoppel cannot be invoked here because of the claim that the acts of the county commissioners were ultra vires and therefore illegal, or, as the above-quoted text states, were "wholly beyond their power and authority."
Although, as discussed supra § 143, a municipality or other governmental agency cannot be estopped by its ultra vires acts, there is nevertheless a broad distinction to be observed between an irregular exercise of a granted power and the total absence or want of power; and the rule is that a municipality or other governmental agency may be estopped, as right and justice may require, where the act or contract relied on to create the estoppel was within its corporate powers, although the method of exercising the power was irregular or unauthorized. (Footnotes omitted.) This rule has found application in King Cy. v. Commercial Waterway Dist. No. 1, 42 Wn.2d 391, 255 P.2d 539 (1953); Strand v. State, 16 Wn.2d 107, 132 P.2d 1011 (1943); Jones v. Centralia, 157 Wash. 194, 289 Pac. 3 (1930); Seward v. Fisken, 122 Wash. 225, 210 Pac. 378, 27 A.L.R. 1208 (1922); Washington Water Power Co. v. Spokane, 89 Wash. 149, 154 Pac. 329 (1916); Franklin Cy. v.
«3» The requisites of an equitable estoppel are: (1) An admission, statement, or act inconsistent with the claim afterwards asserted; (2) action by the other party on the faith of such admission, statement, or act; and (3) injury to such other party from allowing the first party to contradict or repudiate such admission, statement, or act. See Bignold v. King Cy., 65 Wn.2d 817, 399 P.2d 611 (1965); Moore v. Dark, 52 Wn.2d 555, 327 P.2d 429 (1958); Nelson v. Bailey, 54 Wn.2d 161, 338 P.2d 757 (1959).
Carstens, 68 Wash. 176, 122 Pac. 999 (1912); Spokane Street Ry. v. Spokane Falls, 6 Wash. 521, 33 Pac. 1072 (1893).
"The true principle in such cases is well settled that one cannot do indirectly, what cannot be done directly, and, where there is no power or authority vested by law in officers or agents, no void act of theirs can be cured by aid of the doctrine of estoppel. Where there is power, and it is irregularly exercised, or there are defects and omissions in exercising the authority conferred by law, the doctrine of equitable estoppel may well be applied by courts."
". . . . To have the care of the county property and the management of the county funds and business, and in the name of the county to prosecute and defend all actions for and against the county, and such other powers as are or may be conferred by law."
2. To lay out, discontinue or alter county roads and highways within their respective counties, and do all other necessary acts relating thereto according to law, except within the limits of incorporated cities and towns, whereby the terms of the acts of incorporation, jurisdiction over the roads in the limits of said incorporations is vested in the corporate authorities thereof; . . . .
The above provision has been carried forward into our present code, RCW 36.32.120(2), and was a part of the general powers vested in the county commissioners under the statute forming the basis for the decision in Franklin Cy. v. Carstens, supra.
was an irregular and unauthorized procedure, rather than an ultra vires act.
As I understand the cases cited by the parties, the doctrine of equitable estoppel will not be applied against a governmental body where the act itself is ultra vires.
As I understand it, ultra vires means beyond the power of the governmental body.
Now the arrangement contemplated by the 1928 resolution was not beyond the power of the County to enter into, but it certainly was not properly entered into.
The instant case, in principle, is not dissimilar to Edwards v. Renton, 67 Wn.2d 598, 409 P.2d 153 (1965). In that case, the city of Renton made an agreement with the builder of a shopping center, that if the builder would install a traffic signal at the cost of $18,200, at a busy street intersection near the shopping center, the city would reimburse him out of the funds to be included in the budget for the ensuing year. This court held that agreement was illegal because: (1) It constituted, in effect, an agreement by the city to borrow money without statutory authorization. (2) It violated the statute requiring the city to call for bids before letting contracts for such municipal improvements. (3) It violated the statute making expenditure of municipal funds or the incurring of liabilities illegal, if the items of expenditure were not included in the current city budget.
"This court has endeavored to hold municipalities to the same standard of right and wrong that the law imposes upon individuals. Franklin County v. Carstens, 68 Wash. 176, 122 Pac. 999; Coliseum Inv. Co. v. King County, 72 Wash. 687, 131 Pac. 245; State ex rel. Maddaugh v. Ritter, 74 Wash. 649, 134 Pac. 492; Ettor v. Tacoma, 77 Wash. 267, 137 Pac. 820. . . . ."
The court in Edwards v. Renton, supra, found that, notwithstanding the illegal nature of the agreement with the builder, the installation of the traffic signal was within the broad general powers of the municipality, and there was no evidence of "bad faith, fraud or collusion," and that the city's acts were not malum in se, malum prohibitum, or against public policy. The same may be said of King County's actions in 1928. The Edwards case, supra, is based on the doctrine of unjust enrichment. In the instant case, the city of Seattle asks this court to approve the unjust enrichment it would obtain through the plaintiffs' substantial improvements of the lot, and the enrichment obtained by the grant of a usable road right-of-way for one which was then almost worthless. This we will not do.
We have repeatedly held that, in its business relations with individuals, the state must not expect more favorable treatment than is fair between men. State ex rel. Gillett v. Clausen, 44 Wash. 437, 87 Pac. 498; Spokane Street R. Co. v. Spokane Falls, 6 Wash; 521, 33 Pac. 1072; State ex rel. Maddaugh v. Ritter, 74 Wash. 649, 134 Pac. 492; Ettor v. Tacoma, 77 Wash. 267, 137 Pac. 820. The state, in its dealings with individuals, should be held to "resolute good faith." State v. Milk, 11 Fed. 389.
The doctrine of equitable estoppel will be applied against the state or against a municipality or other political entity when acting in its governmental as well as when acting in its proprietary capacity, when necessary to prevent a manifest injustice and the exercise of its governmental powers will not be impaired thereby. 31 C.J.S. Estoppel § 141 (1964). In Bennett v. Grays Harbor Cy., 15 Wn.2d 331, 130 P.2d 1041 (1942), the facts presented did not warrant a finding of manifest injustice, but the rule was correctly stated. It appears unlikely that any state of facts will be presented to this court which would impose more manifest injustice upon a citizen than the disposition which the city seeks of this case.
Governmental immunity from estoppel is a derivative of the doctrine conferring the sovereign entity with immunity from suit without its consent. 28 Am. Jur. 2d Estoppel and Waiver § 123 (1966); Annot. 1 A.L.R. 2d 338, 340 (1949); Hickey v. Illinois Central R.R., 35 Ill. 2d 427, 220 N.E.2d 415 (1966). The legislature of this state has indicated that sovereign immunity in tort actions is no longer desirable or acceptable. RCW 4.92.090. The modern trend in both legislative and judicial thinking is toward the concept that the citizen has a right to expect the same standard of honesty, justice and fair dealing in his contact with the state or other political entity, which he is legally accorded in his dealing with other individuals. Therefore, the rule against estopping a governmental body should not be used as a device by a municipality to obtain unjust enrichment or dishonest gains at the expense of a citizen. State ex rel. Washington Paving Co. v. Clausen, supra; Mallory v. Olympia, 83 Wash. 499, 145 Pac. 627 (1915); Ettor v. Tacoma, 77 Wash. 267, 137 Pac. 820 (1914); State ex rel. Maddaugh v. Ritter, 74 Wash. 649, 134 Pac. 492 (1913); Edwards v. Renton, supra.
The overwhelming equities in favor of the plaintiffs, under the facts of this case, are such that the city must be deemed estopped to assert that its claim to the property is superior to that of the plaintiffs, and the judgment must be affirmed.
FINLEY, C. J., HUNTER and HAMILTON, JJ., concur.
NEILL, J., concurs in the result.


On August 10, 2009, the Louisiana First Circuit Court of Appeal in Transcontinental Gas Pipe Line Corp. v. Louisiana Tax Commission, ruled that Louisiana’s ad valorem tax scheme facially discriminates against natural gas pipeline transportation companies operating in interstate commerce, which violates the Commerce Clause of the United States Constitution.
Transcontinental Gas Pipe Line Corporation, Texas Eastern Transmission Corporation, Florida Gas Transmission Company, Gulf South Pipeline Company, L.P., Centerpoint Energy Gas Transmission Company f/k/a Reliant Energy Gas Transmission and Centerpoint Energy Mississippi River Transmission Corporation f/k/a Mississippi River Transmission Corporation (collectively the “Taxpayers”) are owners of natural gas pipelines located within and without the territorial boundaries of Louisiana. Taxpayers are considered “pipeline companies” as that term is defined in La. Rev. Stat. §47:1851K, that own and owe ad valorem tax on “public service property” as that term is defined in La. Rev. Stat. §47:1851M.
Under Louisiana’s ad valorem tax scheme, the assessed value of “public service property” is 25% of fair market value, as determined by the Louisiana Tax Commission, while the assessed value of property of other similarly situated pipeline companies that operate in intrastate commerce is 15% of fair market value, as determined by local assessors. Pipeline companies that operate solely in intrastate commerce do not meet Louisiana’s definition of “pipeline companies,” so they are not considered as owning “public service property.” With limited exceptions, only pipeline companies that operate in interstate commerce are classified as “pipeline companies” as defined in La. Rev. Stat. §47:1851K and only property owned by “pipeline companies” are considered “public service property.” In other words, property of interstate pipeline companies are assessed at 25% of fair market value, and property of intrastate pipeline companies are assessed at 15% of fair market value.
The Taxpayers each paid their 2005 ad valorem tax assessment under protest and filed suit asserting that “the Louisiana ad valorem tax scheme is unconstitutional, in violation of the Commerce Clause of the United States Constitution, in that it imposes an impermissible burden on interstate commerce by imposing a greater tax burden on interstate natural gas pipeline companies than it does upon intrastate natural gas pipelines companies.” The Taxpayers maintained that the assessment of their properties at 25% of fair market value, as opposed to 15% of fair market value, was in violation of the Commerce Clause of the United States Constitution.
The district court remanded the case to the Louisiana Tax Commission with instructions that the local assessor determine the fair market value of the Taxpayers’ properties for each year at issue and calculate the ad valorem taxes based on 15% of those assessments. The district court did not rule on the constitutionality of La. Rev. Stat. §47:1851 in reaching its decision because it determined that the remedy granted to the Taxpayers avoided a violation of the Commerce Clause of the United States Constitution.
None of the parties were completely satisfied by the remedy granted by the district court. The Taxpayers, assessors and the Louisiana Tax Commission wanted a clear, definitive answer on whether the Louisiana ad valorem tax scheme as it applies to property of interstate pipeline companies is unconstitutional or otherwise illegal. Accordingly, the Taxpayers appealed to both the Louisiana Supreme Court and the Louisiana First Circuit Court of Appeal and the assessors appealed to the Louisiana First Circuit Court of Appeal. The Louisiana Supreme Court dismissed the Taxpayers’ appeal, noting that it did not have jurisdiction over the matter because the district court did not rule on the constitutionality of the statute.
The Louisiana First Circuit Court of Appeal, in addressing the constitutionality issue, held that Louisiana’s ad valorem tax scheme facially discriminates against natural gas pipeline transportation companies operating in interstate commerce in violation of the Commerce Clause of the United States Constitution. In an attempt to remedy the violation, the court held that La. Rev. Stat. §47:1851K, which defines “pipeline companies,” must be stricken in its entirety and the reference to “pipeline companies” in the definition of “public service properties” in La. Rev. Stat. §47:1851M, must also be stricken. As to the aggrieved parties’ proper remedy, the court held that remanding the case to the Louisiana Tax Commission so that it can allow local assessors to assess the value of the properties for the year at issue and to calculate taxes based on 15% of those assessments is a “just and equitable” remedy.
As a result of the removal of the aforementioned unconstitutional provisions, properties owned by all natural gas pipeline companies, those operating interstate and intrastate, will be classified as “other properties” and will be assessed at 15% of fair market value as determined by the local assessors. It is expected that the Louisiana Tax Commission and the various assessors involved in the lawsuit will appeal the First Circuit’s decision to the Louisiana Supreme Court.


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In the Matter of Maria M. VENUS, Petitioner–Appellant, v. Ryan BRENNAN, Respondent–Respondent.
D.J. & J.A. Cirando, Esqs., Syracuse (Elizabeth Dev. Moeller of Counsel), for Petitioner–Appellant. Frank H. Hiscock Legal Aid Society, Syracuse (Philip Rothschild of Counsel), for Respondent–Respondent.
Deborah A. Bellomo, Attorney for the Child, Syracuse, for Victoria E.B.
PRESENT: SMITH, J.P., PERADOTTO, CARNI, SCONIERS, AND WHALEN, JJ.
Petitioner mother commenced this proceeding seeking to modify the parties' joint custody order by granting the mother permission to relocate from Syracuse to the New York City area with the parties' child. Before the commencement of this proceeding, the parties stipulated that all proceedings seeking modification of the prior custody order would be determined by a referee or judicial hearing officer (stipulation), and thus a hearing on this matter was held before a referee. Following the hearing, Family Court, inter alia, denied the mother's petition seeking permission to relocate with the parties' child.
We agree with the mother that the court's determination lacks a sound and substantial basis in the record and that she met her burden of establishing by a preponderance of the evidence that the proposed relocation is in the child's best interests ( see Matter of Parish A. v. Jamie T., 49 A.D.3d 1322, 1323, 853 N.Y.S.2d 795;see generally Matter of Tropea v. Tropea, 87 N.Y.2d 727, 740–741, 642 N.Y.S.2d 575, 665 N.E.2d 145). Here, the mother established by a preponderance of the evidence that the relocation will benefit the child economically and emotionally inasmuch as the relocation will increase the mother's earning potential and will enable her to spend more time with the child. Additionally, the mother has agreed to maintain a visitation schedule that will foster the child's relationship with the father, to transport the child to and from Syracuse, and to pay any related transportation costs ( see Parish A., 49 A.D.3d at 1323, 853 N.Y.S.2d 795;see also Matter of Butler v. Hess, 85 A.D.3d 1689, 1690–1691, 926 N.Y.S.2d 240,lv. denied17 N.Y.3d 713, 2011 WL 4978944;Matter of Scialdo v. Cook, 53 A.D.3d 1090, 1092, 862 N.Y.S.2d 238). We therefore reverse the order insofar as it denied the mother's petition seeking permission to relocate with the child, and we remit the matter to Family Court to establish an appropriate visitation schedule for the father.
The mother further contends that the Attorney for the Child (AFC) was ineffective on the grounds that the AFC did not present any witnesses or submit any evidence at the hearing, did not advocate a position in her written closing argument and did not request a Lincoln hearing. We reject that contention. We conclude that, under the circumstances presented here, the failure of the AFC to present evidence at the hearing, without more, does not constitute ineffective assistance ( see Matter of Grabiel V., 59 A.D.3d 1132, 1133, 873 N.Y.S.2d 840,lv. denied12 N.Y.3d 711, 2009 WL 1309352). The AFC actively participated in the hearing by cross-examining the parties and witnesses, and there is no requirement that she submit a position in her written closing argument. Additionally, there is no indication that the AFC would have succeeded in obtaining a Lincoln hearing even had she requested one given the age of the child, who was five at the time of the hearing ( see generally Matter of Farnham v. Farnham, 252 A.D.2d 675, 677, 675 N.Y.S.2d 244).
Finally, the mother's contention that the Referee lacked jurisdiction to hear this matter because the mother was not represented by counsel when she signed the stipulation is without merit inasmuch as there is no requirement that she be represented when signing a stipulation ( see Matter of Stearns v. Stearns, 11 A.D.3d 746, 747, 783 N.Y.S.2d 686;see generally Gibson v. Gibson, 284 A.D.2d 908, 909, 726 N.Y.S.2d 195).
It is hereby ORDERED that the order insofar as appealed from is unanimously reversed on the law without costs, the petition is granted, and the matter is remitted to Family Court, Onondaga County, for further proceedings.


I'm looking forward to the Data Transparency conference today in Washington, DC, organized by +Hudson Hollister. You already know this if you've been following this blog, or my tweets (@arihersh), or have had the good fortune to speak with me about legislative data recently.
I will be presenting on [participating in] a panel on legislative data, moderated by +The Cato Institute's Jim Harper (Amazon.com says: if you like this blog, you might like Jim's Open Bills project).
The core of my presentation will be the proposal from my previous post for Congress to launch Operation Clean Desk. Here, I want to give some morsels of historical perspective on the codification process.
The first law enacted after adoption of the Constitution was "An Act to regulate the time and manner of administrating certain Oaths" in 1789. (Check wikipedia or the Statutes At Large, 1789-1799, page 23, if you don't believe me.) Parts of that Act still survive in Title 2, Sections § 21, § 22, and § 25, and Title 4, § 101 and § 102, of the United States Code.
If you take a look at section 25, for example, it is drawn from Chapter 1, section 2 of that first Act, and was amended by an act in 1948. If Congress wants to amend it again (say to allow the Oath of Office to be administered electronically), it would likely have to cross-reference that original act, and the 1948 amendment. That is true even though in practice the law is almost always referred to as 2 U.S.C. § 2. So in effect you would have 3 references in the amendment (1789, 1948 and U.S. Code). By contrast, if Congress wanted to amend Title 4, § 101, it could do so directly without reference to the earlier act. Why? Because Title 4 has been enacted by Congress. How do I know? Look for the asterisk in this list of U.S. Code titles.
There have been many attempts at codification of U.S. law over the years, starting with the first official codification, the Revised Statutes of the United States (1876, wikipedia link). The U.S. Code structure was first established by Congress in 1926 and the Law Revision Counsel-- an official office to compile the code and prepare codification bills, was established in 1974 (2 USC 285). In nearly 100 years since the Code was first created, about half of the titles have been enacted.
There are currently 8 codification projects prepared or in preparation for Congressional enactment. Technology, and political will, can accelerate this historical project. That would be a tremendous legacy for Congress and a great step forward for government transparency.


The plaintiff in this action brought suit against former Attorney General John Ashcroft and several other federal officials in their individual and official capacities, claiming that he was unlawfully detained and his freedom was otherwise infringed by the federal government.
On March 16, 2003, the plaintiff, Al-Kidd, was arrested and detained as a material witness in a terrorism case in the U.S. District Court for the District of Idaho. The underlying case was against another person, for visa fraud and false statements to U.S. Officials. Al-Kidd was held for 15 days in several different detention centers and treated as a terrorist suspect. On March 31, 2003, the Court ordered the plaintiff released on the condition that he live with his wife at her parents' home in Nevada. The Court confiscated his passport, barred him from applying for a new one and limited his travel to four states. He was required to report to probation officers and subjected to home visits. The plaintiff's material witness warrant was only dismissed 15 months later, when the defendant in the terrorist trial was acquitted of all major charges.
In a complaint filed in the District of Idaho on March 14, 2005, the plaintiff alleged that his treatment was part of a policy of the United States government in the aftermath of September 11, 2001 to use the federal material witness statute in an unlawful manner. The plaintiff stated that individuals were arrested on material witness warrants without probable cause that they had information germane to a criminal proceeding, and were unnecessarily detained for long periods of time in poor conditions. The material witness statute was used to hold suspected terrorists when the government had not established probable cause to arrest the individual for a crime. The plaintiff claimed that his treatment violated the Bail Reform Act (18 U.S.C. § 3144), the Fourth Amendment and Fifth Amendments of the US Constitution, and constituted unlawful arrest and detention under 42 U.S.C. § 1983. The plaintiff sought declaratory relief, expungement of all records relating to his unlawful arrest, and compensatory and punitive damages. The plaintiff was represented by private counsel and the ACLU.
On January 23, 2006, the defendants filed three separate motions to dismiss. In his motion to dismiss, the Alexandria, Virginia, sheriff responsible for the plaintiff while in custody at the Alexandria Detention Center, alleged lack of personal jurisdiction in the Idaho District Court. On July 19, 2006, the claims against the sheriff were severed and transferred to the Eastern District of Virginia and his motion was subsequently denied as moot. The United States filed a motion to dismiss that was denied except as to the plaintiff's claim of false imprisonment based upon the delay in his transfer. The court found there was no basis for the false imprisonment claim because the plaintiff was arrested pursuant to a lawfully issued material witness warrant and because constitutional claims are not cognizable under the Federal Tort Claims Act.
Former Attorney General John Ashcroft, the former warden of the Oklahoma Federal Transfer Center, and several FBI agents (known collectively as the "Federal Defendants") filed a separate motion to dismiss. The Federal Defendants argued that the court lacked personal jurisdiction over Ashcroft and the warden, that Ashcroft was entitled to absolute prosecutorial immunity as to plaintiff's arrest under the material witness warrant, that the Federal Defendants were entitled to qualified immunity, and that there was no private right of action under 18 U.S.C. §§ 3142 and 3144. The District Court of Idaho (Judge Edward J. Lodge) denied this motion to dismiss.
The U.S. Supreme Court then granted certiorari and, in a May 31, 2011, opinion written by Justice Scalia, reversed. The Supreme Court found that the Ninth Circuit erred in considering Attorney General Ashcroft's subjective intent for detaining Al-Kidd under the material witness statute. The Supreme Court held that Ashcroft had not violated clearly established law and thus was entitled to qualified immunity. The case was remanded to the Ninth Circuit for further proceedings consistent with the Supreme Court decision. 131 S.Ct. 2074.
On remand, on August 3, 2011, the Ninth Circuit reversed the district court's denial of Ashcroft's motion to dismiss and remanded the matter to the district court for proceedings consistent with the Supreme Court's Opinion. Al-Kidd v. Ashcroft, 653 F.3d 982 (9th Cir. 2011).
On remand, both the plaintiff and the two FBI agent moved for summary judgment. On June 18, 2012, Magistrate Judge Mikel Williams of the District of Idaho issued a report and recommendation on the cross motions for summary judgment. Judge Williams recommended that the plaintiff's motion be granted with respect to the first FBI agent and that the defendant's motion be denied. With respect to the second FBI agent, Judge Williams concluded that additional factual review need to occur before he could decide if the second FBI agent was not entitled to qualified immunity. Al-Kidd v. Gonzales, No. 1:05-CV-00093-EJL, 2012 WL 4470852 (D. Idaho June 18, 2012).
The plaintiff and the US also cross-moved for summary judgment on the claims under the Federal Tort Claims Act. On June 26, 2012, Judge Williams issued a report and recommendation that the plaintiff's motion be granted in part and denied in part. Judge Williams granted the motion for his false imprisonment claims, but denied the motion for his abuse of process claim. Judge Williams denied the US's motion completely. Al-Kidd v. Gonzales, No. 1:05-CV-00093-EJL, 2012 WL 4470860 (D. Idaho June 26, 2012).
On September 27, 2012, District Judge Edward Lopez reviewed Judge Williams's report and recommendations for the claims against the two FBI agents. Judge Lopez granted the plaintiff's motion for summary judgment as to the first FBI agent, but denied the plaintiff's motion as to the second FBI agent. Judge Lopez granted the second FBI agent's motion for summary judgment. Al-Kidd v. Gonzales, No. 1:05-CV-093-EJL-MHW, 2012 WL 4470776 (D. Idaho Sept. 27, 2012). Judge Lopez also reviewed Judge Williams's report and recommendations for the claim against the U.S. Judge Lopez affirmed Judge Williams's recommendation, granting in part and denying in part the plaintiff's motion for summary judgment and denying the defendant's motion for summary judgment. Al-Kidd v. Gonzales, No. 1:05-CV-093-EJL-MHW, 2012 WL 4470782, at *6 (D. Idaho Sept. 27, 2012).
The first FBI agent appealed the denial of qualified immunity. However, the parties reached a settlement agreement on December 30, 2014. On January 6, 2015, the parties entered a joint motion to dismiss the appeal. On January 13, 2015, the parties a entered a joint motion to dismiss all remaining claims and stipulated that the court would retain jurisdiction to enforce the terms of the settlement agreement. The agreement itself was not shared with the court. According to an ACLU press release, the government agreed to pay Al-Kidd $385,000.
Plaintiff Description An American citizen detained as a witness in a terrorism case and thereafter given limited travel privileges under a material witness warrant.


From August 30, 2016 through December 19, 2016, the U.S. Food and Drug Administration (FDA) inspected your facility located at 7884 S. Quincy St. Willowbrook, Illinois. During the inspection, our investigator found a number of violations of the current Good Manufacturing Practice (cGMP) in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements regulation, Title 21, Code of Federal Regulations, Part 111 (21 CFR 111). These violations cause your dietary supplements to be adulterated within the meaning of section 402(g)(1) of the Federal Food, Drug, and Cosmetic Act (the Act) [21 U.S.C. § 342(g)(1)] in that they have been prepared, packed, or held under insanitary conditions that do not meet cGMP regulations for dietary supplements.
In addition, we have reviewed your product labeling collected during the inspection and your websites at http://www.liferising.com/index.html and http://www.liferising.com/know/guide/guide.html. Based on our review, we have concluded that your products are in violation of sections 403, 505(a), and 502(f)(1) of the Act [21 U.S.C. §§ 343, 355(a), and 352(f)(1)] and regulations implementing the food labeling requirements of the Act, which are found in Title 21, Code of Federal Regulations, Part 101 (21 CFR 101). You can find the Act and FDA regulations through links on FDA’s website at www.fda.gov.
FDA reviewed your websites at the Internet addresses http://www.liferising.com/index.html and http://www.liferising.com/know/guide/guide.html in April 2017 and has determined that you take orders there for the products “Stomach Regulator,” Fang Feng Formula,” Skin Regulator,” Regulate Liver,” Circulation Regulator, “ Pancreas Support,” “Lung Regulator,” “Pure Tea,” “Liver Regulator-2,” “Licorice, Wheat & Date,” “Spleen Support-GPT,” “Spleen Regulator,” “Circulation Maintenance,” “Lung Support-Y,” “Liver Regulator-2,” and Lung Support.” We have also reviewed the product labeling for “Stomach Regulator,” Fang Feng Formula,” and “Licorice, Wheat & Date” collected during the inspection referred to above. The claims on your website and product labeling establish that the products are drugs under section 201(g)(1)(B) of the Act [21 U.S.C. §321(g)(1)(B)] because they are intended for use in the cure, mitigation, treatment, or prevention of disease. As explained further below, introducing or delivering these products for introduction into interstate commerce for such uses violates the Act. You can find the Act and FDA regulations through links on FDA’s home page at www.fda.gov.
Your products are not generally recognized as safe and effective for the above referenced uses and, therefore, the products are “new drugs” under section 201(p) of the Act [21 U.S.C. § 321(p)]. New drugs may not be legally introduced or delivered for introduction into interstate commerce without prior approval from FDA, as described in sections 301(d) and 505(a) of the Act [21 U.S.C. §§ 331(d), 355(a)]. FDA approves new drugs on the basis of scientific data and information demonstrating that the drug is safe and effective.
Your products “Liver Regulator-2,” “Licorice, Wheat & Date,” “Spleen Support-GPT,” “Spleen Regulator,” “Circulation Maintenance,” “Lung Support-Y,” “Liver Regulator-2,” and Lung Support,” are intended for treatment of one or more diseases that are not amenable to self-diagnosis or treatment without the supervision of a licensed practitioner. Therefore, it is impossible to write adequate directions for a layperson to use your products safely for their intended purposes. Accordingly, “Liver Regulator-2,” “Licorice, Wheat & Date,” “Spleen Support-GPT,” “Spleen Regulator,” “Circulation Maintenance,” “Lung Support-Y,” “Liver Regulator-2,” and Lung Support” fail to bear adequate directions for their intended use and, therefore, the products are misbranded under section 502(f)(1) of the Act [21 U.S.C. 352(f)(1)]. The introduction or delivery for introduction into interstate commerce of these misbranded drugs violates section 301(a) of the Act [21 U.S.C. 331(a)].
Even if the products listed above did not have disease claims which make them drugs, the dietary supplement products are adulterated. The August 30, 2016 through December 19, 2016 inspection of your facility revealed the following significant violations of the cGMP requirements for dietary supplements. These violations cause your dietary supplement products to be adulterated under section 402(g)(1) of the Act in that they have been prepared, packed, or held under conditions which do not meet the cGMP regulations for dietary supplements.
1. You failed to establish specifications for each dietary supplement that you manufacture for the identity, purity, strength, and composition of the finished batch of the dietary supplement, and for limits on those types of contamination that may adulterate, or that may lead to adulteration of, the finished batch of the dietary supplement to ensure the quality of the dietary supplement, as required by 21 CFR 111.70(e). Specifically, during the inspection you stated to our investigators that you do not have established finished product specifications for any of your dietary supplement products.
Once you have established product specifications, you must determine whether the specifications have been met as required by 21 CFR 111.75(c).
We have reviewed your response letters, dated December 30, 2016 and April 17, 2017. You state that you have created records of established specifications for the finished dietary supplement products; however, you did not provide documentation regarding the established finished product specifications for your firm’s finished dietary supplement products. We intend to verify the adequacy of your corrective action at a future inspection.
2. You failed to establish and follow written procedures for the responsibilities of the quality control operations, including written procedures for conducting a material review and making a disposition decision and for approving or rejecting any reprocessing, as required by 21 CFR 111.103.Specifically, during our inspection, it was observed that you do not have any written quality control operation procedures, including procedures that describe how you conduct a material review and make a disposition decision for components or finished dietary supplements that failed to meet specifications, a deviation or unanticipated occurrence during the manufacturing, packaging, labeling or holding operations. Further, you do not have any documentation to support the review and disposition of components used to manufacture your dietary supplements at the Willowbrook, IL facility, nor do you have any documentation to support the review and disposition of any of your finished dietary supplements into commerce.
Aside from the finished dietary supplement products you manufacture, your firm also holds and distributes dietary supplement products under your firm’s name that are manufactured by (b)(4). located in (b)(4); therefore, your firm has an obligation to know what and how manufacturing activities are performed so that your firm can make decisions related to whether your packaged and labeled dietary supplement products conform to established specifications and whether to approve and release the products for distribution [See 72 Fed. Reg. 34752, 34790 (June 25, 2007)].
Although a firm may contract out certain dietary supplement manufacturing operations, it cannot contract out its ultimate responsibility to ensure that the dietary supplement it places into commerce (or causes to be placed into commerce) is not adulterated for failure to comply with dietary supplement cGMP requirements (see United States v. Dotterweich, 320 U.S. 277, 284 (1943) (explaining that an offense can be committed under the Act by anyone who has “a responsible share in the furtherance of the transaction which the statute outlaws”); United States v. Park, 421 U.S. 658, 672 (1975) (holding that criminal liability under the Act does not turn on awareness of wrong doing, and that “agents vested with the responsibility, and power commensurate with that responsibility, to devise whatever measures are necessary to ensure compliance with the Act” can be held accountable for violations of the Act). In particular, the Act prohibits a person from introducing or delivering for introduction, or causing the delivery or introduction, into interstate commerce a dietary supplement that is adulterated under section 402(g) for failure to comply with dietary supplement cGMP requirements (see 21 U.S.C. 342(g) and 331(a)). Thus, a firm that contracts out some or all of its operations must establish a system of production and process controls to ensure the quality of the dietary supplement and that the dietary supplement is packaged and labeled as specified in the master manufacturing record (21 CFR 111.55). The quality control personnel must ensure that the manufacturing, packaging, labeling, and holding operations ensure the quality of the dietary supplement and that the dietary supplement is packaged and labeled as specified in the master manufacturing record (21 CFR 111.105).
We have reviewed your response letters, dated December 30, 2016 and April 17, 2017. You state that you have created procedures for the responsibilities of the quality control operations for conducting a material review and making a disposition decision of the raw materials, components or finished dietary supplements received; however, you did not provide any documentation that you have established these procedures or that they are implemented into your operations. We intend to verify the adequacy of your corrective action at a future inspection.
3. You failed to prepare and follow a written master manufacturing record for each unique formulation of dietary supplement that you manufacture, and for each batch size, to ensure the uniformity in the finished batch from batch to batch, as required by 21 CFR 111.205(a). Specifically, during the inspection you stated to our investigators that no manufacturing records are prepared when manufacturing dietary supplement capsule product at the Life Rising Corporation Willowbrook, IL facility.
We have reviewed your response letter, dated December 30, 2016. You state that you will implement a system of production and process controls that covers all stages of manufacturing, packaging, labeling and holding of dietary supplements to ensure the quality of the dietary supplement. You state in the signed affidavit that all production of teas and capsules at Life Rising Corporation has been discontinued as of 08/01/2016 and you plan to resume production of your dietary supplements at a future date. You must have a written master manufacturing record for each unique formulation of dietary supplement that you manufacture and follow it for each batch size to ensure uniformity in the finished batch from batch to batch, as required by 21 CFR 111.205(a). The master manufacturing record for a particular formulation and batch size would be completed prior to resuming manufacturing operations for the dietary supplement product at the Life Rising Corporation Willowbrook, IL facility.
4. You failed to prepare a batch production record every time you manufacture a batch of a dietary supplement, as required by 21 CFR 111.255(a). Specifically, during the inspection you stated to our investigators that no manufacturing records are prepared when manufacturing dietary supplement capsule product at the Life Rising Corporation Willowbrook, IL facility.
We have reviewed your response letter, dated December 30, 2016. You state that you will implement a system of production and process controls that covers all stages of manufacturing, packaging, labeling and holding of dietary supplements to ensure the quality of the dietary supplement. You state in the signed affidavit that all production of teas and capsules at Life Rising Corporation has been discontinued as of 08/01/2016 and you plan to resume production of your dietary supplements at a future date. When you resume production of a unique formulation and batch size of a dietary supplement, you must make and keep batch production records for every such batch of a dietary supplement that you manufacture at the Life Rising Corporation Willowbrook, IL facility, as required by 21 CFR 111.255.
5. You failed to establish written procedures for holding and distributing operations, as required by 21 CFR 111.453. Specifically, you have not established written procedures for holding and distributing operations.
We have reviewed your response letters, dated December 30, 2016 and April 17, 2017. You state that you have created written procedures for holding and distributing operations; however, you did not provide any documentation of these written procedures. We intend to verify the adequacy of your corrective action at a future inspection.
6. You failed to establish and follow written procedures to fulfill the requirements related to product complaints, as required by 21 CFR 111.553. Specifically, you have no written procedures for the review and investigation of product complaints, nor do you have records documenting the complaints you have received, your response, or any investigation which may have been performed. Once you establish the necessary written procedures, you must make and keep records for the review and investigation of product complaints, in accordance with 21 CFR 111.570.
We have reviewed your response letters, dated December 30, 2016 and April 17, 2017. Your response did not provide evidence product complaint procedures have been established, as required by 21 CFR 553. We intend to verify the adequacy of your corrective action at a future inspection.
7. You failed to calibrate instruments and controls used in the manufacturing of your dietary supplements, as required by 21 CFR 111.27(b). Specifically, blenders, scales, and balances were used in the manufacturing of your dietary supplement products without any calibration being performed.
We have reviewed your response letters, dated December 30, 2016 and April 17, 2017. You state that you have created written procedures to address the requirements for the manufacturing and packaging of dietary supplements; however, you did not provide any documentation of these written procedures. We intend to verify the adequacy of your corrective action at a future inspection.
1. Your DHZC-2 Blood Circulation Regulator (Lower Abdomen) tablet, Brain-ECM capsule, TT Side Regulator tablet, and SHT Chest Relief capsule products are misbranded within the meaning of section 403(y) of the Act [21 U.S.C. § 343(y)] in that the labels fail to bear a full domestic address or domestic phone number through which the responsible person (as described in section 761) may receive a report of a serious adverse event with such dietary supplement.
2. Your DHZC-2 Blood Circulation Regulator (Lower Abdomen) product is misbranded within the meaning of section 403(s)(2)(C) of the Act [21 U.S.C. § 343(s)(2)(C)] because the label fails to identify the part of the plant (e.g., root, leaves) from which each botanical dietary ingredient in the product is derived, as required by 21 CFR 101.4(h)(1).
3. Your Brain-ECM capsules product is misbranded within the meaning of section 403(i)(2) of the Act [21 U.S.C. § 343 (i)(2)] because the product is contained in capsules, but the capsule ingredients are not listed on the label, as required by 21 CFR 101.4(g).
1. You failed to identify each unique lot within each unique shipment of packaging in a manner that allows you to trace the lot to the supplier, the date received, the name of the packaging, the status of the packaging, and to the dietary supplement that you distributed, as required by 21CFR 111.160(d)(1). Specifically, during the inspection it was observed each unique shipment of packaging was not identified in a manner that allows for traceability to the dietary supplement that was ultimately packaged and distributed.
2. Although your SHT Chest Relief capsule product declares the ingredient “Red rooted sage” and your TT Side Head Regulator tablet product declares the ingredient “Chinese thoroughwax” and these names are consistent with names noted in Herbs of Commerce, 1st edition, 1992, we note that there is a more up-to-date edition, Herbs of Commerce, 2nd edition, 2000. We also note that 21 CFR 101.4(h) has not been updated with respect to the later edition of Herbs of Commerce.
3. FDA analysis of finished product samples of your DHZC-2 Blood Circulation Regulator (Lower Abdomen) tablet product collected on June 28, 2016, Brain-ECM capsule product collected on September 14, 2016, SHT Chest Relief capsule product collected on October 13, 2016, and TT Side Regulator tablet product collected on October 20, 2016 confirmed the presence of high levels of lead in all of the products. We acknowledge that you have voluntarily recalled your DHZC-2 Blood Circulation Regulator (Lower Abdomen) tablet, Brain-ECM capsules, TT Side Regulator tablet, and SHT Chest Relief capsule products related to these analytical findings. Please continue provide this office with the status of your activities of this on-going recall and any action plan you have to prevent this from reoccurring.
As the importer of record, it is your responsibility to ensure that imported products meet all requirements of the Act and the regulations, which include holding the product intact until it is released by FDA. Your firm also has an ongoing responsibility to ensure that all import brokers, consignees and others working with you hold the imported product intact until such time as FDA releases it or authorizes it to be exported or destroyed. Introduction into or receipt in interstate commerce of any article that is adulterated or misbranded is a violation of the Act. This violation may result in regulatory action without further notice such as seizure, detention without physical examination of shipments, debarment, injunction and prosecution. In addition, failure to promptly correct this situation and prevent future premature distribution of imported products may result in requiring that future shipments be held in secured storage. Secured storage will be under the supervision and direction of the U.S. Customs Border Protection, such as in a bonded warehouse. You will be responsible for all costs incurred in secured storage.
Section 743 of the Act [21 U.S.C. 379j-31] authorizes FDA to assess and collect fees to cover FDA's costs for certain activities, including reinspection-related costs from the responsible party of the domestic facility. A reinspection is one or more inspections conducted subsequent to an inspection that identified noncompliance materially related to a food safety requirement of the Act, specifically to determine whether compliance has been achieved. Reinspection-related costs means all expenses, including administrative expenses incurred in connection with FDA's arranging, conducting, and evaluating the results of the reinspection and assessing and collecting the reinspection fees [21 U.S.C. 379j-31(a)(2)(B)]. For a domestic facility, FDA will assess and collect fees for re-inspection-related costs from the responsible party for the domestic facility. The inspection noted in this letter identified noncompliance materially related to a food safety requirement of the Act. Accordingly, FDA may assess fees to cover any re-inspection-related costs.
Refer to the Unique Identification Number (CMS# 516209) when replying. If you have any questions about the content of this letter, please contact Ms. Crivellone via email at lauren.crivellone@fda.hhs.gov or by phone at (312)-596-4157.


Petitioner corporation received cash and other property from certain community groups as inducements to the location or expansion of petitioner's manufacturing operations in the communities. The cash so received (which was less than the amounts expended for local factory buildings and equipment) was not earmarked or segregated, but was deposited in petitioner's general bank account. The values of buildings so received were charged to a building account. Both cash and other property so received were credited to surplus.
1. Under § 113(a)(8)(B) of the Internal Revenue Code, petitioner was entitled to deductions on account of depreciation on property acquired from community groups or acquired with cash received from such groups, to the extent that the property was acquired after December 31, 1920. Detroit Edison Co. v. Commissioner, 319 U. S. 98, distinguished. Pp. 339 U. S. 589-591.
2. Under § 718(a)(1) and (2) of the Internal Revenue Code, petitioner may also include the value of such contributions from community groups in equity invested capital. LaBelle Iron Works v. United States, 256 U. S. 377, distinguished. Pp. 339 U. S. 592-593.
The case is stated in the first paragraph of the opinion. The decision below is reversed, p. 339 U. S. 593.
This proceeding seeks redetermination of petitioner's excess profits tax, computed by the invested capital method, for the fiscal years ended 1942 and 1943. [Footnote 1] The issues arise from the payment of cash and the transfer of other property to petitioner by certain community groups as an inducement to the location or expansion of petitioner's factory operations in the communities. Petitioner claimed, and the Commissioner disallowed, (1) a deduction from gross income for depreciation on the property contributed and on the full cost of property acquired in part with contributed cash or equivalent funds, and (2) inclusion of the total value of the contributions in petitioner's equity invested capital. The Tax Court reversed the Commissioner's ruling in part. 10 T.C. 291, 1948. The Court of Appeals for the Eighth Circuit held with the Commissioner on all issues. 175 F.2d 305, 1949. We granted certiorari, 338 U.S. 909 (1950), in view of an asserted conflict between the decision below and that of the Court of Appeals for the Third Circuit in Commissioner v. McKay Products Corp., 178 F.2d 639 (1949), rev'g the Tax Court, 9 T.C. 1082 (1947).
exceeding ten years agreed upon in an earlier contract. No restriction was imposed in any instance as to the use which petitioner might make of the property contributed or acquired with cash, or of the proceeds if the property should be disposed of, after expiration of the required period of operation. The Tax Court assumed performance by petitioner according to the terms of the agreements, and the Court of Appeals did not differ. In the case of eleven contracts, the stipulated period for performance had expired prior to the taxable years in question.
The single transaction which was not based upon such contractual obligations involved a $10,000 cash bonus paid in 1914, according to the minutes of petitioner's board of directors, "as a part of . . . organization expenses in starting the factory" in the particular town.
The cash sums received by petitioner from the groups were not earmarked for, or held intact and applied against, the plant acquisitions in the respective communities, but were deposited in petitioner's general bank account, from which were paid general operating expenses and the cost of all assets acquired, including factory buildings and equipment in the towns involved. The cash payments were debited to cash account on the assets side of petitioner's ledger and were credited to earned surplus either upon receipt or after having first been assigned to contributed surplus. The values of the buildings acquired were set up in a building account on the assets side and were credited to surplus. [Footnote 5] In every instance, the cash received by petitioner from a community group was less than the amount expended by it for the acquisition or construction of the local factory building and equipment.
the buildings transferred by the community groups and on the full cost of the buildings and equipment acquired or enlarged in the communities from which it had received cash. Petitioner also included the total of $971,031.01 in cash and other property in its equity invested capital.
The Commissioner disallowed depreciation deductions with respect to the buildings transferred (in the value of $85,471.56) and the properties acquired with cash to the extent paid to petitioner by the groups (in the value of $885,559.45). [Footnote 6] In computing the amount of depreciation to be allowed, the Commissioner deducted that portion of the cost of the buildings, land, and machinery which was paid with such contributed cash or equivalent funds. [Footnote 7] The Commissioner, in making such reductions, allocated the cash contribution to each item, such as buildings, land if any had been purchased, and machinery in the proportion of the total cost of such item to the total cost of the project. The Commissioner also disallowed inclusion in equity invested capital of the total assets transferred, reducing such capital as computed by petitioner by $971,031.01.
". . . the assets received . . . are being used by the taxpayer in the operation of its business. They will in time wear out, and, if [the taxpayer] is to continue in business, the physical plant must eventually be replaced. Looking as they do toward business continuity, the Internal Revenue Code's depreciation provisions -- and especially those which provide for a substituted, rather than a cost basis -- would seem to envision allowance of a depreciation deduction in situations like this. . . . "
"it overtaxes imagination to regard the farmers and other customers who furnished these funds as makers either of donations or contributions to the Company."
"(1) actual cash paid in, (2) the actual cash value of tangible property paid in other than cash, for stock or shares . . . at the time of such payment . . . and (3) paid in or earned surplus and undivided profits used or employed in the business. . . ."
To the extent that petitioner acquired property involved in this controversy after December 31, 1920, it is entitled to deductions on account of depreciation under § 113(a)(8)(B). It also may include the value of the contributions from community groups in equity invested capital under § 718(a)(1) and (2). The judgment of the Court of Appeals is reversed, and the case remanded with directions to remand to the Tax Court for further proceedings in conformity with this opinion.
MR. JUSTICE BLACK agrees with the Court of Appeals, and would affirm its judgment.
The tax in controversy is imposed under the excess profits tax provisions of the Second Revenue Act of 1940, 54 Stat. 974, 975, as amended, I.R.C. § 710 et seq. The tax is levied upon excess profits net income remaining after allowance of a $5,000 specific exemption and an excess profits credit representing a normal profit. The Act permitted computation of the credit on the basis either of average income over a base period or of "invested capital," which includes equity invested capital and 50 percent of borrowed capital. The excess profits tax provisions of the Act were repealed in 1945. 59 Stat. 556, 568.
"If the property was acquired by gift after December 31, 1920, the basis shall be the same as it would be in the hands of the donor or the last preceding owner by whom it was not acquired by gift . . . ;"
"If the property was acquired after December 31, 1920, by a corporation . . . (B) as paid-in surplus or as a contribution to capital, then the basis shall be the same as it would be in the hands of the transferor. . . ."
". . . The equity invested capital for any day of any taxable year . . . shall be the sum of the following amounts, reduced as provided in subsection (b) --"
"(1) . . . Money previously paid in for stock, or as paid-in surplus, or as a contribution to capital;"
"(2) . . . Property (other than money) previously paid in (regardless of the time paid in) for stock, or as paid-in surplus, or as a contribution to capital. . . . ;"
"(4) . . . The accumulated earnings and profits as of the beginning of such taxable year. . . ."
54 Stat. 974, 982, 26 U.S.C. (1940 ed.) § 718(a)(1, 2, 4).
The value of the land upon which the buildings were located was not included in petitioner's books, and is unimportant for this proceeding.
Both courts below and the Commissioner have expressly assumed, as petitioner asserts, that the receipts of property and cash were not taxed as income.
The Commissioner does not deny that such deductions were disallowed for the first time in 1943, following the decision in Detroit Edison Co. v. Commissioner, 319 U. S. 98 (1943).
The amount thus disallowed on account of depreciation was $22,472.60 for the fiscal year ended 1942 and $24,307.10 for the fiscal year ended 1943. There was no determination by the Commissioner of a deficiency in petitioner's normal tax for either year.
The Tax Court relied at this point upon McKay Products Corp. v. Commissioner, 9 T.C. 1082 (1947), which followed Frank Holton & Co. v. Commissioner, 10 B.T.A. 1317 (1928), and A.C.F. Gasoline Co. v. Commissioner, 6 B.T.A. 1337 (1927), decided under earlier excess profits tax laws, and Liberty Mirror Works v. Commissioner, 3 T.C. 1018 (1944), involving § 718. The opinions in Frank Holton & Co. and Liberty Mirror Works regarded LaBelle Iron Works v. United States, 256 U. S. 377 (1921), as controlling.
For this result, the Court of Appeals cited Detroit Edison Co. v. Commissioner, 319 U. S. 98 (1943); Commissioner v. Arundel-Brooks Concrete Corp., 1945, 152 F.2d 225, and its own prior decision in C. L. Downey Co. v. Commissioner, 172 F.2d 810 (1949). In affirming on the invested capital issue, the Court of Appeals relied in part on LaBelle Iron Works v. United States, note 8 supra, and on the Detroit Edison case.
See O'Meara, Contributions to Capital by Non-Shareholders, 3 Tax L.Rev. 568, 572 (1948).
No suggestion is made by the Commissioner that, because the transfers were the subject of contract, they were not "contributions" within the statute.
See, e.g., Current Problems in Accounting -- Proceedings of the Accounting Institute, 941, p. 20 (Revised Statement by American Accounting Association of Accounting Principles underlying Corporate Financial Statements); Guthmann and Dougall, Corporate Financial Policy 525 (1940); Harvey, Some Indicia of Capital Transfers under the Federal Income Tax Laws, 37 Mich.L.Rev. 745, 747, n. 6 (1939); Marple, Capital Surplus and Corporate Net Worth 12, 136-137 (1936). Cf. Magill, Taxable Income 389 (Rev.Ed.1945); 1 Mertens, Law of Federal Income Taxation § 5.14 (1942); Texas & Pac. R. Co. v. United States, 286 U. S. 285, 286 U. S. 289; Lykes Bros. S.S. Co., Inc., 42 B.T.A. 1395, 1401 (1940), aff'd, 1942, 126 F.2d 725, 727; Helvering v. Claiborne-Annapolis Ferry Co., 1938, 93 F.2d 875, 876.
"In respect of property acquired by a corporation after December 31, 1920, from a shareholder as paid-in surplus, or from any person as a contribution to capital, the basis of the property in the hands of the corporation is the basis which the property would have had in the hands of the transferor if the transfer had not been made. . . ."
The provision of § 113(a)(8)(B), Revenue Act of 1932, in which the term "contribution to capital" first appeared in federal revenue legislation, was reenacted without change in the Act of 1934 and, following the above interpretation in the regulations, in the Acts of 1936 and 1938 and in the Internal Revenue Code.
Commissioner v. Arundel-Brooks Concrete Corp., 152 F.2d 225 (1945), relied upon by the court below, involved only the issue whether the full cost of a concrete mixing plant, the construction of which was financed in part by payments from a nearby supplier of a raw material used in mixing concrete, was depreciable to the taxpayer; there was no "contribution to capital" issue, the only question being one of cost basis. However, the payments in that case were made in consideration of services rendered. The construction of the concrete plant directly benefited the supplier of raw materials by insuring the use of its sole product by the taxpayer; the supplier was also served through a business affiliation with the parent of the wholly owned taxpayer in the form of an exclusive marketing arrangement which saved the supplier the expense of a sales organization. See Arundel-Brooks Concrete Corp. v. Commissioner, 129 F.2d 762 (1942).
See Brewster, The Federal Excess Profits Tax, 110-111 (1941).
Treas.Reg. 109, § 30.718-1; Treas.Reg. 112, § 35.718-1.
The Commissioner agrees that the term "contribution to capital" is used with the same meaning in §§ 113(a)(8)(B) and 718(a).
See 2 Montgomery's Federal Taxes -- Corporations and Partnerships -- 1946-47, p. 372.
In Southern Pac. Co. v. Edwards, 57 F.2d 891 (1932), the court held that a capital donation originating with a nonstockholder was includable in invested capital as "paid-in surplus" under the 1917 Act. However, contributions to capital account from outsiders are often thought of as contributed or donated capital surplus, rather than as paid-in surplus, see e.g., Hoagland, Corporation Finance 555 (3d Ed.1947); we think that, for this reason among others, Congress added the term "contribution to capital" to the excess profits tax provisions of the 1940 Act, as it had to the Revenue Acts (§ 113(a)(8)) since 1932, to indicate that contributions from outsiders intended as additions to capital should be included in the computation. See S.Rep. No.665, 72d Cong., 1st Sess. 27-28 (1932); H.R.Rep. No.1492, 72d Cong., 1st Sess. 13 (1932).