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544 U.S. 933

C. A. 7th Cir. Certiorari denied.

25 Ct. Int'l Trade 1226

OPINION I Introduction Wallach, Judge: This case is before the court following the United States Department of Labor's ("Labor" or the "Department") voluntary remand of January 31,2001. Plaintiffs, Former Employees of Barry Cal-lebaut ("Former Employees") filed petitions for transitional adjustment assistance ("TAA") and NAFTA transitional adjustment assistance ("NAFTA TAA"). Following the voluntary remand, Labor denied Plaintiffs' eligibility for both programs. Barry Callebaut USA, Incorporated, Van Leer Division, Jersey City, New Jersey; Notice of Negative Determination on Remand ("Remand Determination"), 66 Fed. Reg. 18116 (Dep't Labor, Apr. 5,2001). For the reasons set forth below, the Remand Determination is remanded to Labor for further investigation. II Background Barry Callebaut Van Leer Division (the "plant") was a manufacturing plant in Jersey City, New Jersey, which produced finished chocolate products and related ingredients. See Plaintiffs' Comments on Defendant's Negative Determination on Remand ("Plaintiffs' Comments") at 4 (fisting the products as including, but not limited to, cocoa butter, chocolate liquor, sugar-free chocolate and chocolate snaps). The plant began laying off employees in late Spring 1999 and closed in April 2000. See id. at 4-5. On July 9, 1999, employees who were slated for lay off applied for TAA, claiming that their previous employer Van Leer was bought by Barry Callebaut (the "company"), and that Barry Callebaut was shifting production to Canada, resulting in their separations. Confidential Administrative Record at 5; see also Plaintiffs' Comments at 5; Investigations Regarding Certifications of Eligibility to Apply for Worker Adjustment Assistance, 64 Fed. Reg. 65728 (Dep't Labor, Nov. 23, 1999). On August 12,1999, after having been laid off, the employees filed a petition for NAFTA TAA. They claimed that the lay offs resulted from shifts in production to and imports from Canada. Administrative Record — Business Confidential Information Supplemental ("Adm. Rec. I") at 1; see also Plaintiffs' Comments at 5; Investigations Regarding Certifications of Eligibility to Apply For NAFTA Transitional Adjustment Assistance, 64 Fed. Reg. 55757 (Dep't Labor, Oct. 14,1999). Labor initiated an investigation in which it sent a NAFTA TAA Confidential Data Request Questionnaire ("NAFTA TAA Questionnaire") to Barry Callebaut. See Plaintiffs' Comments at 5. It obtained questionnaire responses dated October 15,1999, from the company's Human Resources Manager. Adm Rec. I at 8-14; see Plaintiffs' Comments at 5; Defendant's Memorandum in Opposition to Plaintiffs' Comments on Defendant's Negative Determination on Remand ("Defendant's Response") at 3. In its response, the company stated that there was no recent decline in production or increase in imports, and that no shift of production to Canada was planned. Adm Rec. I at 9; see Plaintiffs' Comments at 6; Defendant's Response at 3. Two weeks later, on October 25, 1999, in response to Labor's inquiry about a decline in production at the plant, the company said that production was being shifted to other do mestic plants. Adm Rec. I at 16-17; see Plaintiffs' Comments at 6; Defendant's Response at 4. Labor relied upon the company's unverified questionnaire responses in denying the petitions for TAA and NAFTA TAA. Adm Rec. I at 18-22; see Plaintiffs' Comments at 6-7; Defendant's Response at 4; see also Notice of Determinations Regarding Eligibility to Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment Assistance, 64 Fed. Reg. 72690, 72691 (Dep't Labor, Dec. 28, 1999) (stating that the TAA claim was denied for failure to meet the criterion of an "increaseG of imports of articles like or directly competitive with articles produced by the firm or appropriate subdivision hav[ing] contributed importantly to the separations".); Notice of Determinations Regarding Eligibility To Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment Assistance, 65 Fed. Reg. 5690, 5691 (Dept' Labor, Feb. 4, 2000) (stating that the NAFTA TAA claim was denied because "[i]mports from Canada or Mexico did not contribute importantly to workers' separations. There was no shift in production from the subject firm to Canada or Mexico during the relevant period."). On January 13, 2000, one of the Former Employees, Robert Bloom, requested that Labor reconsider its negative determination. He claimed that 30% or more of production from the plant had been shifted or was in the process of being shifted to Canada, and that equipment was being dismantled and sent to Canada. Adm Rec. I at 40-41; Plaintiffs' Comments at 7. Labor granted his request. Barry Callebaut, USA, Incorporated Van Leer Division Jersey City, New Jersey; Notice of Affirmative Determination Regarding Application for Reconsideration, 65 Fed. Reg. 5690 (Dep't Labor, Feb. 4, 2000). The Department then initiated a second investigation. It sent a letter on January 24, 2000, to the Human Resources Manager requesting additional information. Adm Rec. I at 46-47. The letter laid out Plaintiffs' claims as made in the request for reconsideration. Labor's first question was, "We ask that you respond to the petitioners claims." Id. at 46. In its Februaiy 16, 2000, submission, the company did not respond to this question. Id. at 51. The remaining questions related to production shifts to and imports from Canada and other foreign countries. Id. at 46-47. Labor stated that "[t]he company has responded that it expects to shift some production from Jersey City to Canada in the near future, but to date, no shift has occurred." Barry Callebaut USA, Incorporated, Van Leer Division, Jersey City, New Jersey; Notice of Negative Determination on Reconsideration ("Reconsideration Determination"), 65 Fed. Reg. 13991 (Dep't Labor, Mar. 15, 2000). The company stated that it "did not import any chocolate products or ingredients from Canada" and that "except for cocoa powder, the company did not import any chocolate product or ingredients from any other foreign country." Defendant's Response at 7. This information, like the information from the first investigation, was sent by the Human Resources Manager. See id. Without verifying his response, Labor affirmed its negative determination. See id.; Reconsideration Determination, 65 Fed. Reg. at 13991. Mr. Bloom then filed this suit on behalf of the Former Employees. After Defendant answered, Plaintiffs filed a Motion for Judgment on the Agency Record. In response, Defendant filed a Motion for a Voluntary Remand "for the purpose of allowing the agency to conduct an additional investigation and to make a redetermination as to whether petitioners qualify for certification for" TAA and/or NAFTA TAA. Defendant's Motion for Voluntary Remand at 2. Labor then initiated a third investigation. On February 12, 2001, it requested detailed information from the Accounting Manager of Barry Callebaut, USA, Inc. regarding the organizational structure of the company; the products produced at the Jersey City plant; where production and machinery were shifted once the plant closed; sales, production and imports for each product produced; and the plant's major customers. Adm Rec. II at 3. Labor also asked the company to "provide comments or documentation that would contradict the Department's negative determination" as to worker eligibility. Id. at 4. Labor's request was forwarded to Ms. Isabelle Eysseric, who appears to be the company Spokesperson, and she responded on February 26, 2001. According to a chart she submitted, only [a very small percentage] of the Jersey City plant's production was transferred to the plant at St. Hyacinthe, Quebec, Canada. Id. at 41. The submission indicates that all other production was transferred to other domestic plants. Id. Based upon the unverified information provided by Ms. Eysseric, Labor found that "[a] negligible amount of" production of products formerly produced at the plant "was shifted to Canada." Remand Determination. The three ingredient products produced at the Jersey City plant were chocolate liquor, cocoa butter and cocoa cake. Supplemental Confidential Administrative Record at 42. Labor found that imports of chocolate liquor were negligible, purchases of chocolate cake increased but domestic production also increased significantly, and imports of cocoa butter accounted for a "negligible portion of the company's domestic needs." Remand Determination. The finished products made at the plant were chocolate, sugar-free chocolate and chocolate snaps, and the Department found that the "vast majority" of production of these items "was shifted to other Barry Callebaut domestic loca tions." Id. Based on these findings, Labor affirmed its previous determinations and denied the petitions for TAA and NAFTA TAA. Id. The Motion presently before the court followed. Plaintiffs challenge the denials of their petitions, claiming that Labor conducted an inadequate investigation. Plaintiffs' Comments at 1-2. They argue that Labor failed to "perform a reasoned analysis" of the record evidence, failed to inquire into contradictory information in the record, and "reached material conclusions for which there is no supporting evidence in the administrative record". Id. III Jurisdiction and Standard of Review The court has jurisdiction under 28 U.S.C. § 1581(d) (1994). This case is governed by 19 U.S.C. § 2272 (1994) and 19 U.S.C. § 2395 (1994). 19 U.S.C. § 2272 provides for separated workers to petition for TAA. 19 U.S.C. § 2272 (1994). 19 U.S.C. § 2395 provides for the petitioning by displaced workers for NAFTA TAA and judicial review of Labor's determination on such petitions. 19 U.S.C. § 2395 (1994). That section also provides that the court, "for good cause shown may remand the case to [Labor] to take further evidence." Id. "Good cause exists if the Secretary's chosen methodology is so marred that his finding is arbitrary or of such a nature that it could not be based on substantial evidence." Former Employees of Linden Apparel Corp. v. United States, 13 CIT 467, 469, 715 F. Supp 378, 381 (CIT 1989) (citations and internal punctuation omitted). "A negative determination by the Secretary of Labor denying certification of eligibility for [TAA] will be upheld if it is supported by substantial evidence on the record and is otherwise in accordance with law." Former Employees of Swiss Ind. Abrasives v. United States, 17 CIT 945, 947, 830 F. Supp 637, 639 (1993); see also 19 U.S.C. § 2395(b) (1994). Substantial evidence is something more than a "mere scintilla," and must he enough evidence to reasonably support a conclusion. Primary Steel, Inc. v. United States, 17 CIT 1080, 1085, 834 F. Supp. 1374, 1380 (1993); Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F. Supp. 961, 966 (1986), aff'd, 810 F.2d 1137 (Fed. Cir. 1987). IV Analysis A Labor Erred in Accepting Barry Callebaut's Unverified Questionnaire Response Because it Failed to Analyze Contradictory Evidence That Suggested the Company's Response Was Less Than Truthful. Plaintiffs claim that although Labor conducted three investigations on this matter, "it still has failed to produce substantial evidence that would support denial of Plaintiffs' claims for certification." Plaintiffs' Comments at 13. "Labor's investigation [on remand] did not meet the threshold requirement of reasonable inquiry", Plaintiffs claim, because "Labor blindly accepted, without any verification or follow-up, the scant information provided by [Barry Callebaut]." Id. Defendant claims that "[i]t is entirely appropriate for the Secretary of Labor to accept — without verification — statements received from company officials when nothing in the record suggests that the information provided is inaccurate or unreliable." Defendant's Response at 12. In support of its contention, Defendant cites Local 167, Int'l Molder and Allied Workers' Union, AFL-CIO v. Marshall, 643 F.2d 26 (1st Cir. 1981). In Local 167, the court upheld Labor's negative TAA determination which was based largely on an unverified statement from the subject company. The plaintiff argued that accepting the statement was an abuse of discretion. In upholding Labor's determination, the court stated that We cannot say, however, that the Secretary has shirked his duty to investigate by accepting as credible an authoritative company response to an official query given under a guarantee of confidentiality. The duty of verification proposed by petitioner, which is applicable to customer surveys generally, would greatly increase the investigative burden of the Department of Labor. We note that there are not objective circumstances in this case suggesting that the company gave a less than truthful response, nor does it appear that the company would have financially benefitted from the denial of certification. It was for the Secretary to decide, under these circumstances, whether to credit the Crane Company statement without further checking. Local 167, 643 F.2d at 31-32 (emphasis added). Local 167 does not support the Government's position that it did not need to verify the information provided by Barry Callebaut. Information that Labor should have considered suggested that the company's figures were less than truthful. In responding to Labor's questionnaire on February 26, 2001, Barry Callebaut submitted a chart titled "Ex-Van Leer Items — Allocation of Production Per Site Since the Close of Van Leer Factory". The chart, which covers the period of April 17, 2000 to January 27, 2001, fists four factories as producing 100% of the former Van Leer volume. The factories [producing a proportion of chocolate and ingredients are:] St. Hyacinthe, Quebec, Canada - [a proportion] % St. Albans, Vermont, USA - [a proportion]% Pennsauken, New Jersey, USA - [a proportion]% Piscataway, New Jersey, USA - [a proportion]% Adm Rec. II at 41. Based on this information provided by the company, in the Remand Determination, Labor found that production of only a "negligible amount" of the articles produced at the Jersey City plant was moved to Canada. Remand Determination. However, the company's 1999 Annual Report indicates that far more than [a very small percentage] of Van Leer production was moved from Jersey City to Canada. In the Report, Barry Callebaut stated in its Letter From the Management that it had implemented changes to increase efficiency. "An example of efficiency improvements within our Group is the transfer of the higher cost Van Leer U.S. production to more cost-efficient sites in Pennsauken (USA) and St. Hyacinthe (Canada). As a result, the Van Leer factory has been closed." Barry Callebaut, Inc., 1999 Annual Report at 9 ("Annual Report"). The chart provided by the company and its Annual Report appear to be at odds. If the Pennsauken plant took over [the bulk] of the Jersey City plant's production, and St. Albans took over [an additional amount greater than St. Hyacinthe], then the question arises, why does the Annual Report list St. Hyacinthe, with only [a veiy small percentage] of the production, and not St. Albans? The statement in the Annual Report appears intended to show where the production has gone once the Jersey City plant closed. The fact that the company listed St. Hyacinthe implies that it and the Pennsauken plant took over the major portion of production. If indeed the St. Hyacinthe plant only took over [a very small percentage] of production, and the St. Albans plant took over [a greater percentage than St. Hyacinthe], it would seem only logical that the Annual Report would list St. Albans and not St. Hyacinthe. Alternatively, the Annual Report would list all four plants. In any case, the apparent discrepancy between the Annual Report and the submission to Labor suggests that the company was less than truthful in its submission. The Department having failed to analyze the Annual Report and investigate the apparent discrepancies between it and Barry Callebaut's submission to Labor, the court finds good cause to remand this determination to Labor. The Department's acceptance of the unverified information provided by the company, despite the contradictory evidence presented, renders the Remand Determination unsupported by substantial evidence. This matter is remanded to Labor for further investigation into the amount of production which was moved from Jersey City, New Jersey, USA to St. Hyacinthe, Quebec, Canada. Following the factual investigation, Labor is to reevaluate whether sufficient production was relocated to Canada to satisfy the requirements of TAA and NAFTA TAA. B The De Minimis Rule Applies to 19 U.S.C. § 2331 Because to Exempt the NAFTA TAA Program from the De Minimis Rule Would Thwart the Purpose of the Program. Plaintiffs claim that even if Labor is correct and only [a very small percentage] of production was shifted to Canada, the workers should have been certified eligible for NAFTA TAA. Plaintiffs' Comments at 20.19 U.S.C. § 2331, which sets forth the eligibility requirements for NAFTA TAA, states in relevant part: (a) Group eligibility requirements (1) Criteria A group of workers shall be certified as eligible to apply for adjustment assistance under this subpart if the Secretary determines that a significant number or proportion of the workers in such workers' firm have become totally or partially separated, or are threatened to become totally or partially separated, and either— (A) that— (i) the sales or production, or both, of such firm or subdivision have decreased absolutely, (ii) imports from Mexico or Canada of articles like or directly competitive with articles produced by such firm or subdivision have increased, and (iii) the increase in imports under clause (ii) contributed importantly to such workers' separation or threat of separation and to the decline in the sales or production of such firm or subdivision; or (B) that there has been a shift in production by such workers' firm or subdivision to Mexico or Canada of articles like or directly competitive with articles which are produced by the firm or subdivision. 19 U.S.C. § 2331 (1994). Plaintiffs argue that "[t]he statute, which is clear and unambiguous, directs Labor, without qualification, to certify the workers if it determines that there has been a shift in production to Canada of articles like or directly competitive with articles that are produced by the workers' firm in the United States." Plaintiffs' Comments at 20. In other words, "[n]o minimum level [of shifted production] is required." Id. Plaintiffs' argument "ignores the fact that the venerable maxim de minimis non curat lex ('the law cares not for trifles') is part of the established background of legal principles against which all enactments are adopted, and which all enactments (absent contrary indication) are deemed to accept." Wisconsin Department of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214, 231 (1992). "Application of de minimis is par ticularly important in cases where stark, all-or-nothing operation of the statutory language would have results contrary to its underlying purposes." Alcan Aluminum Corporation v. United States, 165 F.3d 898, 903 (Fed. Cir. 1999). The legislative histoiy behind NAFTA TAA shows that the program is intended to benefit displaced workers whose separations were caused by shifts in production to or imports from Canada or Mexico. See H.R. Rep. No. 103-361(1) at 4 (1993), reprinted in 1993 U.S.C.C.A.N. 2552, 2554 ("Title V establishes a NAFTA transitional adjustment assistance program of comprehensive benefits, including training and income support, for workers who may be laid off due to increased U.S. imports from Mexico or Canada or a shift of production to Mexico or Canada, and authorizes State self-employment assistance programs.") (emphasis added). The program is not intended to benefit workers whose separations were not caused by shifts in production to or imports from Canada or Mexico, despite the fact that some production may have been shifted or imports may have increased to some degree. If courts do not apply the de minimis rule to the NAFTA TAA program, Labor will be required to certify workers eligible for NAFTA TAA in situations where no causal link can be made between the production shift and the separations. As this would clearly circumvent the purpose of NAFTA TAA, Plaintiffs' argument fails. C Should Labor Not Perform a Competent and Verified Investigation upon Remand, the Court Will Not Remand for a Fifth Investigation. Plaintiffs argue that "Labor has now had three opportunities to perform a proper investigation — and have failed each time." Plaintiffs' Comments at 13-14. Therefore, they argue that "further remand would be futile" and that "the Court should order Labor to certify the plaintiffs as eligible for trade adjustment assistance." Id. at 14. Plaintiffs rely on Former Employees of Hawkins Oil and Gas, Inc. v. United States Secretary of Labor, 17 CIT 126, 814 F. Supp. 1111 (1993). Plaintiffs' Comments at 14, 20. In that case, Labor had conducted three investigations on the petitions for trade adjustment assistance. The court found that the investigations were inadequate. In ordering the Secretary to certify the workers, the court stated that "Labor has repeatedly ignored the Court's instructions to conduct a more thorough investigation. After three tries the record continues to be scant and Labor has once again failed to substantiate its conclusions. Thus, ordering another remand in this case would be futile." Hawkins Oil, 17 CIT at 130, 814 F. Supp. at 1115. Plaintiffs' argument has merit. In its three opportunities, Labor has failed to conduct adequate investigations in this case. However, the court finds that remand with instructions from the court is appropriate. Labor is instructed to conduct a competent and thorough investigation, and given the evidence that Barry CaQebaut has been less than truthful in its responses to Labor questionnaires, the Department must verify the company's responses. Obtaining a sworn statement from the company official who prepares the responses to Labor's questions is not sufficient verification. Labor's failure to conduct an adequate investigation in accordance with these instructions will be taken as indicative that the Department does not care to perform its duties competently, and the court will not remand for a fifth investigation. V Conclusion This matter is remanded to Labor for further investigation and consideration of the amount of production shifted to Canada from the United States. Specifically, Labor is instructed to investigate the claims made in the chart titled "Ex-Van Leer Items — Allocation of Production Per Site Since the Close of Van Leer Factory", submitted to Labor by Barry Callebaut, and how they conflict with the statements made in the Annual Report. As noted above, should the Department find that the statement made in the chart is truthful, it is instructed to refer this matter to the Securities and Exchange Commission. In its letter requesting additional information, Labor stated that it asked for the remand "so that [it] could satisfy the inadequacies of the [earlier] investigation. Adm Rec. II at 2. Ms. Eysseric's title is not specified in the record. However, in the table of contents to the remand record provided by Defendant, Ms. Eysseric is referred to as Spokesperson. Labor also contacted Mr. Woody Foms, the former Chief Financial Officer for Van Leer and the company contact person listed on the original petition. See Remand Determination. By the time Labor contacted him in this third investigation, Mr. Foms had been separated from the company for "about two years". Adm Rec. II at 51. The memorandum on the record memorializing the certifying officer's conversation with him states that Mr. Foms indicated that "only a small percentage" of chocolate and ingredient production from the Jersey City plant was transferred to Canada, but that the cocoa press and the production for which it is used "probably went to Canada". Id. Labor characterized the information provided by Mr. Forns as not new. Remand Determination. If the company was truthful in its submission to the Department, then it appears that it may have been untruthful in its Annual Report. If upon remand, Labor finds that [the production figure specified for St. Hyacinthe] is the accurate figure, Labor is directed to refer this matter to the Securities and Exchange Commission for investigation into whether a misrepresentation was made to shareholders in the Annual Report. The Securities and Exchange Commission requires publicly traded companies to file annual reports. 17 C.ER. § 240.13a-l (2001). Making a material misrepresentation of fact or materially misleading statement in an annual report to shareholders results in issuer liability. 17 C.F.R. § 240.3b-6(d) (2001) (titled "Liability for Certain Statements By Issuers" and stating that a fraudulent statement is one "which is an untrue statement of a material fact, a statement false or misleading with respect to any material fact, an omission to state a material fact necessary to make a statement not misleading ."); 17 C.F.R. § 240.3b-6(b) (2001) (applying subsection (d) to annual reports to shareholders); 17 C.F.R. § 240.14a-3 (2001) (detailing requirements of annual report); 17 C.F.R. § 240.10b-5 (2001) (it is unlawful to "make any untrue statement of material fact in connection with the purchase or sale of any security."); 17 C.F.R. § 240.12b-20 (2001) (requiring a company to include in a statement or report "further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made not misleading."); see also Securities & Exchange Commission v. General Refractories Co., 400 F. Supp. 1248, 1257 (D.D.C., 1975) ("Investors are entitled to disclosure of material facts. The Commission has made a prima facie showing that annual reports and proxy materials filed with the Commission and disseminated to shareholders were false and misleading and did not contain information required to be contained therein."). The court notes that Congress requires a "significant number or proportion of the workers" be displaced in order for them to be eligible for NAFTA TAA. 19 U.S.C. § 233a (a)(1); H.R. Rep. No. 103-361(1) at 88 (1993), reprinted in U.S.C.C.A.N. 2552,2638. On its face this requirement indicates that Congress requires something more than one worker being displaced. As to this aspect of the statute, Congress has adopted, or at the very least has implicitly not rejected, the de minimis principle. This requirement supports the conclusion that Congress also adopts, or does not reject, the de minimis principle as to the other condition for NAFTA TAA, that production be shifted to Canada or Mexico.

55 Cust. Ct. 399

Opinion by Ford, J. It was stipulated that two cases of the merchandise (15 denier monofilament nylon), withdrawn from warehouse for consumption on October 14, 1959, prior to the effective date of T.D. 54997, are properly dutiable, as claimed. The protest was sustained to this extent.

565 U.S. 803

Sup. Ct. Cal. Motion of petitioner for leave to proceed in forma pauperis denied, and certiorari dismissed. See this Court's Rule 39.8.

12 C.M.A. 63

Opinion of the Court Per Curiam: In this case, The Judge Advocate General of the Army has certified to this Court the question whether the board of review was correct in concluding that the law officer erred in refusing to permit a sentence worksheet furnished the court members to be revised to indicate that permissible penalties included an undesirable or general discharge. The certified question is answered in the negative. United States v Phipps, 12 USCMA 14, 30 CMR 14; United States v Plummer, 12 USCMA 18, 30 CMR 18, decided November 18, 1960; United States v Goodman, 12 USCMA 25, 30 CMR 25, decided November 18, 1960. As in the Goodman case, however, the board found that the error was not prejudicial, and affirmed a sentence which included a bad-conduct discharge. While we again note our belief that harm going solely to the question of accused's punitive separation from the service may not be so purged, the fact that we find the law officer's action proper permits us to affirm the board's ultimate decision. United States v Goodman, supra. The decision of the board of review is affirmed.

540 U.S. 954

C. A. 5th Cir. Certiorari denied.

264 U.S. 450

Mr. Justice Sutherland delivered the opinion of the Court. This is an action to recover the amount of certain taxes levied for the fiscal years 1913 and 1914 and paid under protest. The court below sustained a demurrer to the amended complaint, and, plaintiff electing to stand thereon, entered judgment of dismissal. Reversal of the judgment is sought here on the ground that the taxes were assessed and collected in contravention of the due process and equal protection clauses of the Fourteenth Amendment and of § 5219, U. S. Rev. Stats. Under the Colorado statute, R. S. Colo. 1908, c. 122, a bank is required to make a list of its shares, stating their market value, and of its shareholders for the information of the county assessor, who is thereupon'directed to assess such shares for taxation in all respects the same as similar property belonging to other corporations and individuals. § 5754, 5756. If any taxpayer is of the opinion that his property has been assessed too high, or otherwise illegally assessed, he may appear before the assessor and have the same corrected. § 5639. The County Commissioners of each county are constituted a Board of Equalization, with power to adjust and equalize the assessment among the several taxpayers; with reference to which any dissatisfied taxpayer may be heard. § 5761. The State Tax Commission, created in 1911, is authorized to supervise the administration of and enforce the tax laws, and exercise supervision over county assessors and boards of equalization, to the end that all assessments be made relatively just and uniform and at their true and full cash value. Comp. L. Colo. 1921, c. 155, § 7334, par. 1. The Commission may raise or lower the assessed value of any property, first giving notice to the owner thereof and fixing a time and place for hearing. Id. par. 7. Authority is conferred upon the Commission to receive complaints and examine into all cases where it is alleged that property has been fraudulently, or improperly or unfairly assessed. § 7336. It shall, on or before the first day of October of each year, increase or decrease the valuation of the property in any county by such rate per cent, or such amount as will place the same on the assessment roll at its full and true cash value, § 7352; and must thereupon transmit to the State Board of Equalization a statement of the amount to be added or deducted. § 7353. It then becomes the duty of the State Board of Equalization to examine the abstracts of assessment submitted by the Commission, and certify to the county assessor of each county a record of its action thereon. § 7354. The Commission is required to be in session every day except Sundays, and may hold sessions anywhere in the State. § 7330. The essential averments of the complaint may be shortly stated: Plaintiff made and delivered to the County Assessor of Weld County the statement required by law. The Assessor thereupon fixed the value of its shares, as well as that of the shares of other banks-within the county, at their full cash and market value; but fixed the assessed value of the property of the remaining taxpayers in the county at 61%, for 1913, and 80%, for 1914, of such cash and market value. The County Board of Equalization accepted this assessment without change. The Assessor thereupon transmitted to the Tax Commission the abstracts required by law. The Tax Commission determined that the property of the county as a whole had been underassessed, and recommended a horizontal increase of 63% in 1913 and 25% in 1914, as necessary to bring it to the full cash value. This determination was approved by the State Board of Equalization and the County Assessor was directed to make the increase, with the result, as alleged, that plaintiff's assets, and those of all other banks in the county, were in fact assessed at an amount 63% in excess of their value for the year 1913 and 25% in excess thereof for the year 1914. In other counties of the State, either no- increase of valuation was made or the increase was comparatively small. The result was that the banks of Weld county were assessed and compelled to pay upon a valuation grossly in excess of that put upon other property in the same county and likewise in excess of that put upon other banks in other counties of the State. It does not appear from the complaint that plaintiff applied to any of the taxing authorities to reduce the assessment of its property or correct the alleged inequalities, prior to the final levy of the tax; but sometime after such levy had been completed, it made application for abatement and rebate, which application was approved by the County Board but disallowed by the State Tax Commission. We are met at the threshold of our consideration of the case with the contention that the plaintiff did not exhaust its remedies before the administrative boards and consequently cannot be heard by a judicial tribunal to assert the invalidity of the tax. We are of opinion that this contention must be upheld. The Supreme Court of Colorado, in a suit brought by this plaintiff against the County Assessor, involving the same tax for 1913, and presenting the same questions here involved, sustained the refusal of a lower court to enjoin the collection of the tax, and held: (a) That the flat increase made by the Tax Commission was in strict conformity with the state statutes; (b) That this action being approved by the State Board of Equalization constituted a final assessment; (c) That under the statute the plaintiff was bound to know the authority of these taxing agencies in the premises and that they were required to meet at certain places, on certain days, and complete their labors within designated dates; and (d) "With full knowledge of the respective powers of these several boards to make corrections in assessments and adjustments in equalization, essential to bring about a complete and equitable assessment of all property within the state, it remained inactive until long after the tax was laid, when it applied for an abatement or rebate of the tax. The aforesaid tribunals were open to plaintiff in error prior to the laying of the tax, but it refrained from seeking relief therein, and may not now complain." First National Bank v. Patterson, 65 Colo. 166, 172-173. The effect of this is to hold that an administrative remedy was in fact open to plaintiff under the statutes of the State, and by this construction, upon well settled principles, we are bound. McGregor v. Hogan, 263 U. S. 234; Farncomb v. Denver, 252 U. S. 7, 10; Londoner v. Denver, 210 U. S. 373, 374; Price v. Illinois, 238 U. S. 446, 451; Western Union Tel. Co. v. Gottlieb, 190 U. S. 412, 425. Plaintiff seeks to excuse its failure to apply to the County Board for an equalization by saying that this was a public duty of the Board and not a private remedy; and Greene v. Louisville & I. R. R. Co., 244 U. S. 499, 521, is relied upon as authority. The most cursory examination of that case, however, will disclose its inapplicability. There the divergent assessments were made by two assessing boards, neither having control or supervision of the other; and it was held that complainants, whose property had been assessed by one of these boards, were not entitled, under the Kentucky statutes, to complain to the other board that its assessments were too low. A very different question is presented here, where the same board has affirmed both assessments, is expressly vested by statute with the power of equalization and may exert its power at the instance of anyone aggrieved. Hallett v. County Commissioners, 27 Colo. 86, 93; Barnett v. Jaynes, 26 Colo. 279, 282. It is urged further that it would have been futile to seek a hearing before the State Tax Commission because, first, no appeal to a judicial tribunal was provided in the event of a rejection of a taxpayer's complaint; and, second, because the time at the disposal of the Commission for hearing individual complaints was inadequate. But, aside from the fact that such an appeal is not a matter of right, but wholly dependent upon statute, 2 Cooley on Taxation, 3d ed., p. 1393, we cannot assume that if application had been made to the Commission proper relief would not have been accorded by that body, in view of its statutory authority to receive complaints and examine into all cases where it is alleged that property has been fraudulently, improperly or unfairly assessed. Collins v. City of Keokuk, 118 Iowa, 30, 35. Nor will plaintiff be heard to say that there was not adequate time for a hearing, in the absence of any effort on its part to obtain one. In any event the decision of the State Supreme Court in the Patterson Case, that such remedies were, in fact, available, is controlling here. It is contended, however, that the decision in that case turns upon the point that plaintiff had an adequate remedy at law, and not that it had lost its right by neglecting to seek an administrative remedy. It is true the court, after the statement quoted above, proceeds to say that plaintiff cannot have relief in equity, but this seems to be put forth as an independent ground for affirming the judgment below. It follows the unqualified statement that plaintiff, having refrained from seeking the administrative relief open to it, "may not now complain;" and is introduced by the words (p. 174): " But apart from this, if the tax was not legally laid, plaintiff in error could, upon payment thereof, recover the same from the county under the provisions of § 5750 R. S. 1908." It is not suggested that in so doing the requirement, already broadly recognized, that administrative remedies must be exhausted as a necessary prerequisite to a judicial challenge of the tax, could be dispensed with. And, accepting the decision-of the state court that such remedies were, in fact, open and available under the Colorado statutes, it could not be dispensed with. McGregor v. Hogan, supra; Farncomb v. Denver, supra, p. 11; Stanley v. Supervisors of Albany, 121 U. S. 535; Petoskey Gas Co. v. Petoskey, 162 Mich. 447, 452; Township of Caledonia v. Rose, 94 Mich. 216, 218; Hinds v. Township of Belvidere, 107 Mich. 664, 667; Ward v. Alsup, 100 Tenn. 619, 746. Plaintiff not having availed itself of the administrative remedies afforded by the statutes, as construed by the state court, it results that the question whether the tax is vulnerable to the challenge in respect of its validity upon any or all of the grounds set forth, is one which we are not called upon to consider. The judgment of the District Court is accordingly Affirmed.

355 U.S. 839

C. A. 8th Cir. Certiorari denied.

465 U.S. 1076

Disbarment entered.

313 U.S. 568

Petition for writ of certiorari to the Circuit Court of Appeals for the Seventh Circuit denied.

525 U.S. 1157

C. A. 4th Cir. Certiorari denied.

12 Cust. Ct. 308

Opinion by Cole, J. The merchandise was classified and claimed dutiable at the same rates and under the same paragraphs as similar merchandise covered by the decision in Quong Yuen Shing Co. v. United States (31 C. C. P. A. 43, C. A. D. 247). In accordance with stipulation of counsel and on the authority of said cited case, the record in which was incorporated heroin, the merchandise at bar was found to contain salt and was therefore excluded from paragraph 5. The protests were sustained to this extent.

252 U.S. 574

Per Curiam. Dismissed for want of jurisdiction upon the authority of § 237 of the Judicial Code, as amended by the Act of September 6, 1916, c. 448, § 2, 39 Stat. 726.

33 Cust. Ct. 408

Opinion by Oliver, C. J. In accordance with stipulation of counsel that the merchandise consists of celluloid reindeer similar in all material respects to those the subject of Abstract 56902, the claim of the plaintiff was sustained.

510 U.S. 1024

C. A. 8th Cir. Certiorari denied.

153 Ct. Cl. 638

MaddeN, Judge, delivered the opinion of the court: In these three cases the facts have been stipulated by the parties. All the cases present the same question of law and this opinion will apply to all of them. There is3 in the case of the Texas Company, an additional problem not involved in the other two cases. That problem will be adverted to in dne course. The plaintiffs seek to recover Federal income taxes which they were required to pay because the Government fixed the cost basis, of ships owned by them, at a lower figure than that which the plaintiffs say was the correct figure, and thereby reduced the amount of the deduction for depreciation to which the plaintiffs claim they were entitled for the years in question. The case of Socony Mobil Oil Company, Inc. is, in its essentials, typical of the three cases, and the facts of that case will be used in this discussion. The word plaintiff, when used without qualification, will refer to that plaintiff. During the war years 1942,1943,1944, and 1945 the plaintiff bought from the United States Maritime Commission twelve ships, and paid for them a total of $28,204,659.59, mostly in cash but partly in old ships traded in by the plaintiff to the Commission. On March 8, 1946, the Merchant Ship Sales Act of 1946, 60 Stat. 41, 50 U.S.C. App. (1952 ed.) § 1735 ff., became effective. Section 1742 of the above Code citation is section 9 of the Act, which section is important in these cases. The 1946 Act as a whole provided for the sale by the Government of ships which had been constructed for it. It prescribed formulae for setting "statutory sales prices" at which such ships would be offered for sale. In its section 9 it provided that purchasers of ships which had been sold by the Government before March 8,1946, could apply to the Maritime Commission for an adjustment of the price which they had paid. If the adjustment was granted, a part of the higher price which they had paid would be refunded to them. Section 9 cited above prescribes in detail the items which were to be adjusted if a prior purchaser applied for adjustment. The section is long and complicated and will not be reprinted in this opinion. Subsection (b) of section 9 says: Such adjustment shall be made, as hereinafter provided, by treating the vessel as if it were being sold to the applicant on the date of the enactment of this Act, and not before that time. The several paragraphs of subsection (b) provide for credits to be given by the Commission to the purchaser, and other credits to be given by the purchaser to the Commission, all of which credits shall enter into the adjustment. Paragraph (4) provides that the Commission shall credit the purchaser with the amount by which the price paid by the purchaser exceeded the statutory sales price set under the 1946 Act. Paragraph (5) provides that the Commission shall credit the purchaser with interest at Sy2 percent per annum on the excess of the original purchase price over any trade-in allowance received, from the date of the original purchase to the date of the 1946 Act. Paragraph (6) provides that the purchaser shall credit the Commission with the amount of charter hire which the United States had paid to the purchaser for the use of the vessels between the time of the purchase and the date of the Act, and that the Commission shall credit the purchaser with the charter hire which the United States would 'have paid for the use of the traded-in ships for the same period. Paragraph (8) provides that there shall be deducted from the charter hire credits in favor of the Commission the amount of Federal taxes paid by the purchaser upon the charter hire received from the Government but now credited back to the Government pursuant to paragraph (6). It also provides that there shall be deducted from the credits in favor of the purchaser the amounts by which the purchaser's Federal taxes have been reduced, during the interim period, by taking deductions for depreciation and amortization on the ships. The specific provision about such interim depreciation and amortization is in subsection (c) (1) of section 9. Subsection (b) (8) says: If, after making such subtractions, the sum of the credits in favor of the applicant exceeds the sum of the credits in favor of the Commission, such excess shall be paid by the Commission to the applicant. In the case under discussion, that of Socony Mobil Oil Company, the computation based upon the respective credits in favor of the plaintiff and the Commission showed a net credit in favor of the plaintiff of $4,615,243.23, which sum the Commission paid to the plaintiff. These cases, as we said at the outset, require us to determine the correct basis on which the plaintiffs were entitled to compute depreciation, for the tax years in question, upon the ships bought by them from the Maritime Commission before the enactment of the Merchant Ship Sales Act of 1946, the price of which ships was readjusted pursuant to the provisions of section 9 of that Act. The Government's contention is that the basis of the ships is their "statutory sales price" as set by the 1946 Act. If a person who had bought no ships from the Commission before March 8,1946 had bought these ships from the Commission after that date, he would have paid the statutory sales price for them, and that would have been his cost and his basis for depreciation. If these plaintiffs, having bought the ships in question before 1946, had decided not to apply for a readjustment of their prior purchases, which they were permitted to do by section 9 of the Act, but to leave the prior transaction undisturbed and to buy some additional ships at the reduced prices of the 1946 Act, they would have paid the statutory sales prices for the additional ships, and that would have been their cost and their basis of depreciation for the additional ships. They could have gone on taking depreciation on the prior purchased ships on their high cost basis. In determining whether to apply for a readjustment of its prior ship purchases, the plaintiff Socony Mobil Oil Company could set its accountants to work with the several credit and debit provisions of the paragraphs of section 9. Their computations would show that, taking all the items into account, a section 9 readjustment would bring the company a check for $4,615,243.23. There would be, then, no difficulty in reaching a decision to apply for a section 9 readjustment. The application was made and the check was received. Our task is to determine how much the ships cost the plaintiff. The plaintiff says that it paid $28,204,659.59 for the ships; that it got back $4,615,243.23 in the section 9 readjustment ; that its cost was, therefore, $23,589,416.36. It concedes that that cost should be reduced by $6,565,741.95 for a reason not here in dispute, which leaves a net cost, claimed by the plaintiff, of $17,023,674.41. The Government's position is that the plaintiff's cost was the statutory sales price of the ships which, the parties agree, was $19,804,682.30. It would deduct from that amount the undisputed $6,565,741.95 referred to above, and arrive at the figure of $13,238,940.35. The difference of $3,784,734.06 between the cost figures arrived at by the parties is the amount on which, the plaintiff asserts and the Government denies, depreciation is deductible for Federal tax purposes. Section 23 of the Internal Eevenue Code of 1939, 26 U.S.C. (1952 ed.) § 23, permits a deduction for depreciation of property used in the taxpayer's trade or business. Section 113 of the Code, 26 U.S'.C. (1952 ed.) § 113, says: The basis of property shall be the cost of such property. It would seem that if one has bought property and paid $10,000 for it, and the seller later offers to readjust the price, according to a complicated formula, and when the computation is completed, the seller gives back to the buyer $3,117.24, the property has cost the buyer $6,882.76. That being, in fact, his cost, it would seem to be his basis for computing depreciation, if the property is depreciable for tax purposes. The Government does not deny that the plaintiff's depreciation should be based upon its cost. But it says that the plaintiff's "cost" for this tax purpose is not the difference between what it originally paid and what it got back in the section 9 readjustment. That means that the Government's asserted "cost" is not the economic, dollars-and-cents cost, but an artificial figure, legally deemed, for this tax purpose, to be the cost though it is not in fact the cost. Congress could, of course, have provided that a former purchaser of ships who desired to take advantage of the readjustment of price offered Mm by section 9 should, as a condition of the readjustment, obligate Mmself to compute future depreciation on a basis other than actual cost. Congress could have done this expressly, or by writing a text from which such an implication would necessarily result. Congress has not done so expressly, and we do not find that it has shown an intent to do so. A bill was considered and rejected by the House of Eep-resentatives wMch would have, if enacted, supported the Government's position. See H.E. 3603,79th Cong., 1st Sess. Instead, the House of Eepresentatives passed a bill containing a section which was essentially like the one which was finally enacted as section 9. See H.E. 3603, 79th Cong., 1st Sess., in the Senate, October 3 (Legislative Day, October 2) 1945 (as passed by the House on October 2, 1945). The Senate, however, enacted a bill containing a section which was similar to the one which had been rejected by the House of Eepresentatives. See section 9 of H.E. 3603, 79th Cong., 1st Sess., in the Senate, December 4 (Legislative day,. October 29) 1945. That bill contained a section 9 (e) (1) which provided: If an adjustment in the purchase price of a vessel is made under this Section, the income and excess profits taxes of the vessel owner under the Internal Eevenue Code for the taxable year within which the delivery of the vessel was made to the purchaser and for subsequent taxable years, shall be redetermined. For such purposes of redetermination the vessel shall be considered as having been acquired at the adjusted purchase price, and the income and deductions attributable to such vessel shall be determined as if this Section had been in effect on the date of such delwery. (Emphasis, supplied.) If this Senate bill had become law, the Government's position in these cases would be clearly correct. But in conference between the two houses, the House's version was adopted, with changes not here important, and that version was enacted as section 9. See House of Eepresentatives Conference Eeport No. 1526, 79th Cong., 2d Sess., to accompany H.E. 3603, dated February 6, 1946. The Conference Eeport makes no mention of the omission of section 9(e) (1) of the Senate bill, quoted above, but does, at page 17, mention one modification which the conference had made in the House-enacted bill. The modification had to do with the year of taxability of the amount credited by the Commission to the prior purchaser as interest on his overpayment. This legislative history shows that the committees of Congress gave minute attention to the tax consequences, current and future, of the readjustment authorized by section 9. The bill as enacted by the Senate had in it an express provision that the statutory sales price should be the basis for future depreciation. The conference omitted this provision, and the Act as passed omitted it. There is no room for an implication that Congress, having considered and omitted it, showed, by other parts of section 9, an intent to retain it. The Treasury took the position which the Government takes here, that the statutory sales price is the correct basis for depreciation. Mimeograph 6366,1949-1 Cum. Bull. 270. In 1950 the 81st Congress, 2d Session, passed H.R. 3419, which would have amended section 9(b) by adding the following paragraph at its end: From and after March 8, 1946 (the date of enactment of the Act), the cost basis of a vessel in respect of which the price adjustment is made shall be the undepreciated original purchase price reduced by the net amount of such adjustment in favor of the applicant resulting from the application of all of the foregoing provisions of this subsection. The two Congressional committees which had considered section 9(b) when it was originally enacted considered the quoted amendment and explained in their reports that the position taken by the Treasury had made clarifying legislation necessary. See House of Representatives Report No. 1342, 81st Cong., 1st Sess., p. 2 and Senate Report No. 1915, 81st Cong., 2d Sess., p. 2. An expression of opinion as to the meaning of a statute, made some four years after the enactment of the statute by the same Congressional committee which had considered that statute at the time of its enactment, is an important circumstance for consideration in interpreting the statute. Sioux Tribe of Indians v. United States, 316 U.S. 317, 329. The President vetoed H.R. 3419. His veto message is in 96 Cong. Rec. pp. 15,791-2. The fact that the bill was vetoed does not detract from its weight as evidence of the intent of Congress and its committees in their drafting of section 9 (b) in the 1946 Act. Section 9, in its subsection (c) (2), provides that if the Government charters a ship of which the price has been readjusted under section 9, it shall not pay more per annum than 15 percent of the statutory sales price, and that if the Government loses a ship so chartered it shall not pay more than the statutory sales price, properly depreciated, for the lost ship. We see nothing in these provisions except evidence that Congress was aware, in minute detail, of the problems that would be presented by section 9 readjustments, and provided specific solutions of those problems in the statute, and did not leave them open for judicial interpretation. The readjusted price which the plaintiffs had to pay for their ships in order to take advantage of the readjustment offered them by section 9 was more than the statutory sales price. Neither the express terms of the statute, those terms in their context, nor the relevant legislative history indicate a legislative intent that the basis for depreciation of these ships should be an artificial, legally constructed figure different from their actual mathematically computed cost. In the case of Barber Oil Corporaton v. Manning, 135 F. Supp. 451 (D.N.J.1955), the court rejected the Government's position, which was the same as its position in the instant cases. As we said at the beginning of this opinion, there is an additional problem involved in the case of the plaintiff Texaco, Inc. That plaintiff's suit relates to its tax years 1946, 1947, 1948, and 1949. The Government has pleaded the statute of limitations as to the years 1946 and 1947. Timely claims for refund for those years were filed by the plaintiff. The Commissioner mailed statutory notices disallowing the claims. Section 8772(a) (2) of the Internal Revenue Code of 1939, 26 U.S.C. (1952 ed.) § 3772(a) (2), provides that suits on such claims must be filed within two years after the date of the mailing of the notice of disallowance. But section 3774(b) (2) provides that the Commissioner of Internal Revenue and a taxpayer may make an agreement that the running of the statute of limitations shall be suspended during the pendency in court of a test case involving the question which has arisen between the Commissioner and the taxpayer. In the instant case Texaco, Inc. and the Commissioner made an agreement that the running of the statute "is hereby suspended from the date the Commissioner signs this agreement to the date of final decision" in the case of Barber Oil Corporation v. John Manning, then pending in the United States District Court for the District of New Jersey. The Barber Oil case was the case cited above. Manning was a former Collector of Internal Revenue. At the time this agreement was made, the District Court had rendered an initial decision against the Government in the Barber Oil case, with an opinion, as cited above. Thereafter the parties to that case settled it by agreement and presented to the court a stipulation that it had been so settled and that the plaintiff's petition should be dismissed with prejudice. The court endorsed such an order upon the stipulation. If the suspension of the running of the statute of limitations was lifted on the day of the signing of the order, the plaintiff's suit was filed too late, as to the years 1946 and 1947. The plaintiff says that the "final decision" of the Barber Oil case, within the meaning of its agreement, did not take place until 60 days after the District Court's decision, 60 days being the time within which appeals may be taken from District Court decisions to the United States Courts of Appeals. The Government says that the District Court's order dismissing the case was the final decision because the plaintiff's petition was, with the plaintiff's consent, dismissed with prejudice. Of course neither party could have appealed from this order, without a showing of fraud or mistake, and the case was, in fact, finally terminated. When the Commissioner made his suspension agreement with the plaintiff, he must have contemplated using the Barber Oil case as a test case. Section 3774(b) (2) referred to above, came into the Revenue laws as section 608 of the Revenue Act of 1928, 45 Stat. 874. Its purpose, as stated in the Senate Finance Committee Report, Senate Report No. 960, 70th Cong., 1st Sess., was to "prevent a multiplicity of suits" while a test case was pending. The Commissioner, when the Barber Oil case was decided against the Government, was in a position to pursue the test of the law by appealing to the United States Court of Appeals. Instead, the case was settled. We are not informed of the terms of the settlement, but it may be surmised that the Government paid some substantial sum to escape from the District Court's adverse decision. It seems that such a premature termination of what was expected to be a test case would not have been anticipated by Texaco, the other party to the suspension agreement. Unless the Government advised it of the settlement, it would have had to be most diligent in watching the District Court's judgment docket in order to file its suit in time after the "final decision" of the test case. We think that when the Commissioner has entered into an agreement for the suspension of the statute of limitations until the final decision in a test case, and thereafter participates in the frustration of the purpose of the agreement by preventing the test case from going to a decision on the merits, a fair interpretation of the agreement makes the suspension run until the earlier of the following two events: (1) The other party to the agreement has had notice of the premature termination of the test case, or (2) the time for an appeal would have expired, if the problem intended to be tested had been decided by the court in which the test case was pending. The plaintiffs are entitled to recover, with interest as provided by law, and judgments will be entered to that effect. The amounts of recovery will be determined pursuant to "Rule 38(c). It is so ordered. Need, Justice (Bet.), sitting by designation; DtjReee, Judge; LaRAmoke, Judge, and Jones, Chief Judge, concur. FINDINGS OE PACT The court makes findings of fact, based upon the stipulations of the parties, and the briefs and argument of counsel, as follows: Nos. 168-59 and 169-59 1. Plaintiff Socony Mobil Oil Company, Inc., is a corporation organized under the laws of the State of New York and having its principal office in New York, New York. 2. (a) Plaintiff duly filed its Federal income tax return for the year 1946 with the Collector of Internal Revenue (now District Director of Internal Revenue) — Lower Manhattan District, New York, N.Y., and on or before the date fixed by law for payment of taxes in installments, paid income taxes for the year 1946 in the amount of $16,703,308.58 shown to be due on its return to the Collector of Internal Revenue. (b) Upon examination and audit of plaintiff's income tax return for 1946, the Commissioner of Internal Revenue determined a deficiency in income tax for that year in the amount of $4,812,511.68 plus interest in the amount of $868,748.06. The final payment with respect to this deficiency was made by plaintiff on November 29, 1956, together with interest as provided by law. 3. (a) Within the time required by law, plaintiff filed its Federal income tax return for the year 1947 with the Collector of Internal Revenue (now District Director of Internal Revenue) — Lower Manhattan District, New York, N.Y., and on or before the date fixed by law for payment of taxes in installments, paid income taxes for the year 1947 in the amount of $30,705,177.26 shown to be due on its return to the Collector of Internal Revenue. (b) Upon examination and audit of plaintiff's income tax return for 1947, the Commissioner of Internal Revenue determined a deficiency in income tax for that year in the amount of $2,962,621.20 plus interest in the amount of $972,534.50. The final payment with respect to this deficiency was made by plaintiff on November 29, 1956, together with interest as provided by law. 4. In the years 1942, 1943, 1944, and 1945, plaintiff purchased from the United States Maritime Commission 12 vessels pursuant to Section 509 of the Merchant Marine Act, 1936, c. 858,49 Stat. 1985, 46 U.S.C. (1952 ed.) § 1159. The total purchase price of the 12 vessels was $33,112,069.59, of which $24,974,659.59 was paid in cash. The balance of $8,137,410 was paid through an allowance for 12 vessels traded in and delivered to the Commission. No gain was recognized for Federal income tax purposes on the trade-in of the 12 vessels traded in by reason of Section 510 (e) of the Merchant Marine Act, 1936, 46 U.S.C. (1952 ed.) § 1160(c). The adjusted cost basis of the 12 vessels traded in was $1,519,528.55. 5. The vessels, upon delivery to plaintiff, were chartered by the Government until various dates in 1945 and 1946. At various times during the charters, the Government paid charter hire to plaintiff. On its Federal income tax returns for the years 1942-46, plaintiff reported all such charter hire as income and deducted depreciation expense in respect of the 12 vessels. 6. On March 8,1946, Congress enacted the Merchant Ship Sales Act of 1946, c. 82, 60 Stat. 41, 50 U.S.C. App. (1952 ed.) § 1735, hereinafter referred to as "the Act". Under Section 4 of the Act, citizens of the United States were given the right to purchase from the United States Maritime Commission war-built vessels at the statutory sales price defined in Section 3(d). Purchasers were required to pay at the time of sale at least 25% of the statutory sales price and the balance was payable in not more than twenty equal annual installments with interest at 3*4% per annum. The Government asserts and plaintiff does not deny that by January 15, 1951, 843 ships had been sold under Section 4 of the Act. Plaintiff does not, however, consider it relevant to this proceeding that citizens of the United States purchased ships from the Maritime Commission after March 8, 1946, under the Act. 7. In 1947, plaintiff bought two vessels from the Commission under Section 4 of the Act. For each vessel, plaintiff paid an amount equal to the statutory sales price, as defined in the Act, and has treated that amount, with adjustments required by law, as the cost of the vessels for tax purposes. 8. Under Section 3(d) of the Act, the statutory sales prices of the 12 vessels purchased by plaintiff totaled $19,804,682.30. 9. If another taxpayer had purchased from the Commission on March 8,1946, under Section 4 of the Act, 12 vessels identical to those here in question, except for improvements or additions made by plaintiff, that taxpayer would have had to pay to the Commission the statutory sales price of $19,804,682.30. The cost of the vessels for Federal income tax purposes would have been $19,804,682.30. Plaintiff does not consider it relevant that another taxpayer would have had to pay the statutory sales price for vessels if it had purchased them from the Commission on March 8, 1946. 10. Section 9 of the Act authorizes adjustments for certain sales of vessels to citizens made prior to March 8, 1946. Plaintiff filed with the Commission applications under Section 9 for an adjustment in the price of each of the 12 vessels purchased in 1942-1945. The applications were approved and an agreement for adjustment was entered into by plaintiff and the Commission under date of April 18, 1952. A copy of that agreement and the memoranda and schedule attached thereto are attached as Exhibit 1 to the stipulation filed by the parties, and are by reference made a part of these findings. 11. Section 9(b) of the Act provides that plaintiff and the Commission be given certain credits. Section 9(b)(8) provides that if the credits in favor of the applicant exceed the credits in favor of the Commission, such excess shall be paid by the Commission to the applicant. In this case, there was an excess in favor of the applicant (plaintiff) of $4,615,243.23. On June 27, 1952, the Commission paid this amount to plaintiff without interest. 12. Pursuant to Exhibit 1, plaintiff's trade-in allowance on the 12 vessels traded in was reduced by $4,907,410.00, from $8,137,410.00 to $3,230,000.00. 13. The credits which gave rise to the payment of $4,615,243.23 were as follows: (a) Section 9(b) (4) provides that plaintiff shall be credited with the excess of the sum of the cash payments made upon the original purchase price of the vessels, plus a readjusted trade-in allowance for vessels traded in, over the statutory sales prices of the vessels under the Act. Under this subparagraph plaintiff was credited with an amount determined as follows: Cash payment on original pur- chase_$24,974,659.59 Readjusted trade-in allowance- 3,230, 000. 00 Total_ $28,204, 659. 59 Less statutory sales price_ 19, 804, 682.30 Total credit_ $8, 399, 977.29 (b) Section 9(b) (5) provides that, for each vessel purchased, the purchaser shall be given a credit equal to interest at the rate of 3%% per annum on the original purchase price of the purchased vessel, less any trade-in allowance, from the date of delivery to March 8,1946. By virtue of this provision, plaintiff was allowed credits totaling $2,315,627.75. (c) Section 9(b)(6) provides that for each vessel purchased, the Commission shall be allowed a credit equal to the charter hire paid to the purchaser for use of the vessel under any charter party made prior to March 8, 1946. By virtue of this provision, the Commission was allowed credits totaling $11,242,249.25. (d) Section 9(b) (6) also provides that, for each vessel purchased, the purchaser shall be allowed a credit of the amount that would have been paid by the United States as charter hire for bare boat use of the vessel traded in on the original purchase for the period from the date on which the vessel traded in was delivered to the Commission to March 8, 1946. By virtue of this provision, plaintiff was allowed credits totaling $3,978,797.57 for this hypothetical charter hire. (e) Section 9 (b) (8) provides that a credit shall be allowable to the purchaser if an overpayment of taxes results from the application of Section 9(c) (1) and a credit shall be allowable to the Commission if a deficiency results from the application of Section 9 (c) (1). Section 9(c) (1) provides that the purchaser's Federal income taxes shall be recomputed on the following assumptions: (1) Depreciation and amortization on the vessels up to March 8,1946, shall not be allowable; (2) Charter hire credited to the Commission under Section 9(b) (6) was never received by the purchaser,; (3) Amounts credited to the purchaser under Sections 9(b) (5) and 9(b) (6) were income for the taxable year in which falls March 8,1946. Becomputation of plaintiff's taxes under these provisions resulted in a calculated overpayment of $1,506,445.05, and an underpayment of $343,355.18. (f) Becapitulating, the credits under Section 9 (b) were as follows: In favor of plaintiff: Subparagraph Amount (a)-$8, 399,977.29 (b)-2, 315, 627. 75 (d)-3, 978, 797.57 (e)-1, 506, 445. 05 Total _ $16,200,847.66 In favor of the Commission : Subparagraph Amount (c)_$11,242,249.25 (e)_ 343,355.18 Total 11, 585, 604.43 Net credit in favor of the plaintiff_ $4, 615, 243.23 The net credit in favor of plaintiff in the amount of $4,615,243.23 is set forth in the agreement of April 18, 1952 (see Finding 10). 14.Defendant contends that plaintiff paid to the Commission that statutory sales price of the 12 vessels as follows: Total cash paid on purchase of vessels_$24, 974, 659. 59 Less cash credited to plaintiff as shown in Finding 13 (a)_ 8, 399, 977.29 Total _ $16,574,682.30 Readjusted trade-in allowance_ 3, 230, 000. 00 Statutory sales prices_ $19, 804, 682. 30 15.Plaintiff contends that its adjusted tax cost basis for these 12 vessels is as follows: Cash paid on purchase of vessels_$24,974, 659. 59 Tax-depreciated cost of vessels traded in_ 1,519, 528.55 Original purchase price_$26,494,188.14 Refund of portion of purchase price received from Commission_ 4,615,243. 23 Net purchase price of 12 purchased vessels_$21, 878, 944. 91 Miscellaneous uncontroverted adjustments to net purchase price: Unrecognized gains on involuntary conver-sions_ (5, 023, 567. 38) Capital additions to vessels_ 168,296. 88 Adjusted cost basis_$17, 023, 674.41 Defendant submits that the adjusted cost basis of the 12 vessels is $13,238,940.35, which is equal to the statutory sales prices of $19,804,682.30, adjusted as stated in Finding 16. 16.In computing plaintiff's income tax for 1946 and 1947, the Commissioner of Internal Eevenue allowed plaintiff a deduction for depreciation on the 12 vessels in question. The Commissioner used as the basis for depreciation the statutory sales prices of the vessels (which totaled $19,804,-682.30) adjusted downward on account of (1) unrecognized gain of $1,710,471.45 realized on the trade-in of 12 vessels and (2) payments of $5,023,567.38 made upon the 12 vessels from funds deposited in a construction reserve fund, and adjusted upward on account of certain improvements and betterments in the amount of $168,296.88 made to the 12 vessels in question. Plaintiff does not challenge the correct ness of these adjustments but submits that the Commission erred in using the statutory sales prices as the cost of the vessels. 17. Plaintiff filed timely claims for refund of the amount of tax 'here in controversy for the years 1946 and 1947. Copies of the claims are attached as Exhibits 2 and 3 to the stipulation filed by the parties, and are by reference made a part of these findings. 18. The claims for refund were informally rejected by the Commissioner of Internal Revenue prior to April 16, 1957, and on that date plaintiff signed and duly filed Waiver of Registered Mail Notification of Claim Disallowance, Treasury Department Form 2297. 19. Plaintiff and defendant agreed that the trial in this proceeding be limited to the issues of law and fact relating to the right of plaintiff to recover, reserving the determination of the amount of recovery and the amount of offsets, if any, for further proceedings under Rule 38(c). Nos. 49-58, 50-58^ 327-58, and 328-58 1. Plaintiff Texaco Inc. is a corporation organized under the laws of the State of Delaware and having its principal office at 135 East 42nd Street, New York 17,, New York. Plaintiff was formerly known as The Texas Company, and by amendment of its Certificate of Incorporation filed with the Office of the Secretary of State of the State of Delaware on April 30, 1959, changed its name to Texaco Inc. effective May 1, 1959. 2. (a) Plaintiff duly filed its Federal income tax return for the year 1946 with the Collector of Internal Revenue (now District Director of Internal Revenue), Austin, Texas, and on or before the date fixed by law for payment of taxes in installments paid income taxes for the year 1946 in the amount of $15,760,821.62. (b). Upon examination and audit of plaintiff's income tax return for 1946, the Commissioner of Internal Revenue determined a deficiency in income tax for that year in the amount of $701,321.61. This deficiency together with interest as provided by law was paid by plaintiff between April 10 and June 2, 1950. Thereafter, certain claims for refund were allowed to plaintiff by the Commissioner of Internal Revenue and income tax and interest in the amount of $160,920.77 was refunded or credited to plaintiff. 3. (a) Within the time required by law, plaintiff hied its Federal income tax return for the year 1947 with the Collector of Internal Revenue (now District Director of Internal Revenue), Austin, Texas, and on or before the date fixed by law for payment of taxes in installments plaintiff paid income taxes in the amount of $22,960,685.88 shown to be due on its return to the Collector of Internal Revenue. (b) The Commissioner of Internal Revenue upon examination and audit of plaintiff's income tax return for the year 1947 proposed a deficiency in income tax for that year in the amount of $465,962.39. This deficiency together with interest thereon in the amount of $75,521.17 was assessed in March 1951. This assessment was satisfied by a payment of $510,922.37 to the Collector of Internal Revenue on April 9, 1951, and an abatement of $30,516.59. A second deficiency assessment of $14,078.30 together with interest thereon was satisfied by a credit. Income tax of $10,142.47 with interest thereon was credited or refunded to plaintiff. 4. (a) Within the time required by law plaintiff filed its Federal income tax return for the year 1948 with the Collector of Internal Revenue (now District Director of Internal Revenue), Austin, Texas, and on or before the date fixed by law for payment of taxes in installments plaintiff paid income taxes in the amount of $40,549,089.34 shown to be due on its return to the Collector of Internal Revenue. (b) The Commissioner of Internal Revenue upon examination and audit of plaintiff's return proposed a deficiency in income tax for the year 1948 in the amount of $975,287.53. This deficiency together with interest thereon as provided by law was paid by plaintiff to the Collector of Internal Revenue on or about November 26, 1951. Thereafter, income tax in the amount of $10,405 with interest thereon was refunded to plaintiff. 5. (a) Within the time required by law plaintiff filed its Federal income tax return for the year 1949 with the Collector of Internal Revenue (now District Director of Internal Revenue), Austin, Texas, and on or before the date fixed by law for payment of taxes in installments plaintiff paid income taxes in the amount of $16,873,530.91 shown to be due on its return to the Collector of Internal Revenue. (b) The Commissioner of Internal Revenue upon examination and audit of plaintiff's return proposed a deficiency in income tax for the year 1949 in the amount of $849,340.98. That deficiency together with interest thereon as provided by law was paid by plaintiff to the Collector of Internal Revenue on November 26, 1951. Thereafter, income tax in the amount of $1,677.97 with interest thereon was refunded to plaintiff. 6. In 1943 and 1944, plaintiff purchased from the United States Maritime Commission seven type T2-SE-A1 tank vessels pursuant to Section 509 of the Merchant Marine Act, 1936, c. 858, 49 Stat. 1985, 46 U.S.C. (1952 ed.) § 1159. ' The total purchase price of the seven vessels was $20,134,180.85 of which a certain amount was paid in cash and $2,498,580 was paid through an allowance for four vessels traded in and delivered to the Commission. No gain was recognized for tax purposes on the trade-in of the four vessels by reason of Section 510(e) of the Merchant Marine Act, 1936, 46 U.S.C. (1952 ed.) § 1160(c). The balance of the purchase price was represented by mortgages on the seven vessels. As of March 8, 1946, cash payments made by plaintiff totaled $5,501,823.56 and the balance of plaintiff's mortgage indebtedness was $12,133,727.29. 7. Upon delivery of the vessels to plaintiff, they were chartered by the Government until various dates in 1945. At various times during the charters, the Government paid charter-hire to plaintiff. On its federal income tax returns for the years 1943-1945, plaintiff reported the charter-hire as income and deducted depreciation for the seven vessels. 8. On March 8,1946, Congress enacted the Merchant Ship Sales Act of 1946, c. 82, 60 Stat. 41, 50 U.S.C. App. (1952 ed.) § 1735, hereinafter referred to as "the Act." Under Section 4, citizens of the United States were given the right to purchase from the United States Maritime Commission war-built vessels at the statutory sales price defined in Section 3(d). Purchasers were required to pay at the time of sale at least 25% of the statutory sales price and the balance was payable in not more than twenty equal annual installments with interest at 3y2% per annum. By January 15, 1951, 843 ships had been sold under Section 4 of the Act. Plaintiff does not consider it relevant to this proceeding that citizens of the United States purchased ships from the Maritime Commission after March 8, 1946, under the Merchant Ship Sales Act of 1946. 9. In 1947 and 1948, plaintiff bought five vessels from the Commission under Section 4 of the Act. For each vessel, plaintiff paid an amount equal to the statutory sales price and has treated this amount with adjustments required by law as the cost of the vessel for tax purposes. For the years 1947, 1948, and 1949, plaintiff has claimed, and the Commissioner of Internal Eevenue has allowed, depreciation deductions for the five vessels computed upon the basis shown in the schedule attached as Exhibit 1 to the stipulation filed by the parties, by reference made a part of these findings. Plaintiff does not consider it relevant to this proceeding that it purchased vessels from the Maritime Commission under Section 4 of the Merchant Ship Sales Act of 1946 after March 8,1946. 10. Section 9 of the Act authorizes adjustments for certain sales to citizens made prior to March 8, 1946. Thereafter, plaintiff filed with the Commission applications under Section 9 for an adjustment in the price of each of the seven vessels purchased in 1943 and 1944. The applications were approved and an agreement for adjustment was entered into by plaintiff and the Commission under date of December 14, 1949. A copy of the agreement is attached as Exhibit 2 to the stipulation filed by the parties, by reference made a part of these findings. 11. Under Section 3(d) of the Act, the statutory sales prices of the seven vessels purchased by plaintiff totaled $11,945,523.49. 12. If another taxpayer had purchased from the Commission on March 8, 1946, under Section 4 of the Act, seven vessels identical to those here in question except for improvements or additions made by plaintiff, that taxpayer would have had to pay the statutory sales price of $11,945,523.49 for the vessels. The cost of the vessels for tax purposes would have been $11,945,523.49. Plaintiff does not consider it relevant that another taxpayer would have had to pay the statutory sales price for vessels if it had purchased them from the Commission on March 8,1946. 13. Pursuant to the agreement of December 14, 1949, and Section 9(b) (3), plaintiff's mortgage indebtedness was reduced by $4,306,718.68 from-$12,133,727.29 to $7,827,008.61. After March 8, 1946, plaintiff made payments to the Commission totaling $7,827,008.61 which were used to satisfy plaintiff's reduced mortgage indebtedness. 14. Pursuant to the agreement of December 14,1949, plaintiff's trade-in allowance was reduced by $1,366,446 from $2,498,580 to $1,132,134. 15. Section 9(b) of the Act provides that plaintiff and the Commission be given certain credits. Section 9(b) (8) provides that if the credits in favor of the Commission exceed the credits in favor of the applicant, such excess shall be paid by the applicant to the Commission. In this case, there was an excess in favor of the Commission in the amount of $1,121,111.61. On January 30, 1950, plaintiff paid this amount without interest to the Commission. 16. The credits which gave rise to the payment of $1,121,111.61 were as follows: (a) Section 9(b) (1) provides that, for each vessel purchased the purchaser shall be given a credit for the excess of the cash payments made before March 8, 1946, over 25% of the statutory sales price. For five of the vessels purchased, plaintiff paid, before March 8, 1946, $2,947,966.69 in excess of 25% of the statutory sales prices and was therefore given credits totaling $2,947,966.69. (b) Section 9(b)(1) also provides that, where the cash payments made before March 8, 1946, do not equal 25% of the statutory sales price, the purchaser shall pay to the Commission the difference between the amount so paid and 25% of the statutory sales price. For two of the vessels, plaintiff's payments did not equal the 25% figure and plaintiff therefore owed tbe Commission for the two vessels the sum of $432,524.01. Instead of plaintiff's making a separate payment of this amount, the Commission was given credits equal to this amount. (c) Section 9(b) (5) provides that, for each vessel purchased, the purchaser shall be given a credit equal to interest at the rate of 3%% per annum on the original purchase price less any trade-in allowance from the date of delivery to March 8,1946. By virtue of this provision, plaintiff was allowed credits totaling $1,710,763.38. (d) Section 9(b) (6) provides that, for each vessel purchased, the Commission shall be allowed a credit equal to the charter hire paid to the purchaser for use of the vessel prior to March 8, 1946. By virtue of this provision, the Commission was allowed credits totaling $7,137,426.31. (e) Section 9(b)(6) also provides that, for each vessel purchased, the purchaser shall be allowed a credit equal to the amount that would have been paid as charter hire for bareboat use of vessels traded in on the original purchase for the period from the date on which the vessels traded in were delivered to the Commission to March 8,1946. By virtue of this provision, plaintiff was allowed credits totaling $1,090,651.37 for this hypothetical charter hire. (f) Section 9 (b) (8) provides that a credit shall be allowable to the purchaser if an overpayment of taxes results from the application of Section 9 (c) (1) and a credit shall be allowable to the Commission if a deficiency results from the application of Section 9(c) (1). Section 9(c) (1) provides that the purchaser's Federal taxes shall be recomputed on the following assumptions: 1. Depreciation and amortization on the vessels up to March 8,1946, was not allowable; 2. Charter hire credited to the Commission under Section 9 (b) (6) was never received by the purchaser; 3. Amounts credited to the purchaser under Sections 9(b) (5) and 9(b) (6) were income for the taxable year in which falls March 8, 1946. Recomputation of plaintiff's taxes under these provisions resulted in a calculated overpayment of $699,457.27. Under section 9(b)(8), plaintiff was allowed credits totaling $699,457.27. (g) Recapitulating, the credits were as follows: In favor of the Commission (b) $432, 524.01 (d) 7,137,426.31 $7, 569, 950. 32 In favor of the plaintiff (a) $2,947,966.69 (c) 1,710,763.38 (e) 1,090,651.37 (f) 699, 457. 27 6, 448, 838. 71 Net credit in favor of the Commission $1,121, 111. 61 The net credit in favor of the Commission in the amount of $1,121,111.61 is set forth in the agreement of December 14, 1949 (see Finding 10). 17. Defendant contends that plaintiff paid to the Commission the statutory sales price of seven vessels as follows: Cash paid by plaintiff prior to March 8, 1946_$5, 501, 823. 56 Less credit to plaintiff under section 9(b)(1) for cash paid prior to 3-8-46 in excess of'25% of statutory sales price of five vessels_ 2, 947, 966. 69 $2, 553, 856. 87 Cash paid by plaintiff on Jan. 30, 1950 (Amount equal to excess of 25% of statutory sales price of two vessels over amounts paid therefor prior to 3-8-46 — included in payment of $1,121,111.61 made by plaintiff to the Commission on January 30, 1950.)_ 432, 524. 01 Other cash paid by plaintiff after March 8, 1946_ 7, 827, 008. 61 Trade-in allowance on ships exchanged by plaintiff_ 1,132,134. 00 $11,945, 523.49 Total 18. Plaintiff contends that the cost basis of the seven vessels is as follows: Original purcliase price_ $20,134,130. 86 Less: Reduction in trade-in al- lowance from_$2,498, 680. 00 to_ 1,132,134. 00 Net reduction_$1, 366, 446. 00 Reduction of mortgage indebted- ness _ 4, 306, 718. 68 6, 673,164. 68 $14,460, 966.17 Plus: Cash adjustment in favor of U.S. Maritime Commission» 1,121, 111. 61 Cost basis seven vessels_ $15, 582, 077. 78 Proof Cash paid prior to March 8, 1946_ $5, 501, 823. 56 Cash, adjustment in favor of U.S. Maritime Commission_ 1,121, 111. 61 Readjusted trade-in allowance_ 1,132,134. 00 Adjusted Mortgage indebtedness_ 7, 827, 008. 61 Cost basis seven vessels_ $15, 582, 077. 78 Cost basis allowed by Commissioner of Internal Revenue (Adjusted Statutory Sales Price under Merchant Ship Sales Act of 1946)_ 11, 945, 523.49 Amount of cost basis in controversy _ $3,636,554.29 19. In the computation of plaintiff's income tax for 1946, 1947, 1948, and 1949, the Commissioner of Internal Revenue allowed plaintiff deductions for depreciation on the seven vessels in question. The Commissioner used as a basis for depreciation the statutory sales price of the vessels (which totaled $11,945,523.49) adjusted on account of (1) unrecognized gain of $999,016.09 realized on the trade-in of four vessels, (2) certain payments made upon five of the seven vessels in question from funds deposited in a construction reserve fund, and (3) certain improvements and betterments made to the seven vessels in question. These adjustments are shown in the 3 schedules attached as Exhibits 3, 4, and 5 to the stipulation filed by the parties, by reference made a part of these findings. The plaintiff does not challenge the correctness of these adjustments but submits that the Commissioner erred in using the statutory sales prices as the cost of the vessels. 20. On October 28, 1953, plaintiff filed timely claims for refund for 1946,1947,1948, and 1949. Copies of the claims are attached as Exhibits 6, 7, 8, and 9 to the stipulation filed by the parties, by reference made a part of these findings. 21. Statutory notices of disallowance were mailed to plaintiff as follows: Claim, for Year Date of Notice 1946 June 23,1954 1947 October 19, 1954 1948 August 7,1956 1949 August 14,1956 22. Plaintiff and the Commissioner of Internal Revenue entered into an agreement to suspend the running of the statute of limitations applicable to the claim for refund for 1946. This agreement became effective on June 8, 1956. A similar agreement for 1947 became effective on September 12, 1956. Copies of these agreements are attached as Exhibits 10 and 11 to the stipulation filed by the parties, by reference made a part of these findings. They refer to Barber Oil Corp. v. Manning, 135 F. Supp. 451, which was settled by agreement of the parties and dismissed upon their stipulation approved by the court on December 4, 1957. A copy of the stipulation is attached as Exhibit 12 to the stipulation filed by the parties, by reference made a part of these findings. 23. Plaintiff and defendant agreed that the trial in this proceeding be limited to the issues of law and fact relating to the right of plaintiff to recover, reserving the determination of the amount of recovery and the amount of offsets, if any, for further proceedings under Rule 38(c). Nos. 187-59 and 188-59 1. Plaintiff Mississippi Shipping Company, Inc. is a corporation organized under the laws of Louisiana and having its principal office at Hibernia Bank Building, New Orleans 9, Louisiana. 2. (a) Plaintiff duly filed its Federal income tax return for the year 1946 with the Collector of Internal [Revenue, New Orleans, Louisiana (now District Director of Internal [Revenue), and on or before the date fixed by law for the payment of taxes in installments, paid income taxes for the year 1946 in the amount of $106,219.85. (b) Upon examination and audit of plaintiff's income tax return for 1946 the Commissioner of Internal Revenue determined an overassessment for the year 1946 in the amount of $5,753.73. This overassessment, together with interest thereon as provided by law, was paid to plaintiff on or about October 31,1952. 3. (a) Within the time required by law, plaintiff filed its Federal income tax return for the year 1947 with the Collector of Internal Revenue, New Orleans, Louisiana (now District Director of Internal Revenue), and on or before the dates fixed by law for the payment of taxes in installments, plaintiff paid income taxes in the amount of $626,588.76. (b) The Commissioner of Internal Revenue upon examination and audit of plaintiff's return determined a deficiency for the year 1947 in the amount of $79,331.06. This deficiency, together with interest thereon as provided by law, was paid by plaintiff on or about October 31, 1952. 4. In the years 1942, 1944, and 1945, plaintiff purchased from the United States Maritime Commission (hereinafter called the Commission) eight vessels pursuant to § 502 of the Merchant Marine Act, 1936, c. 858, 49 Stat. 1985, 46 U.S.C. (1952 ed.) § 1152. The total purchase price of the eight vessels was $18,406,794.28. A certain amount was paid in cash, and $790,962.00 was paid through an allowance for two vessels traded in to the Commission. The adjusted cost basis of the two vessels traded in was zero; on their trade in, no gain or loss was recognized by reason of § 510(e) of the Merchant Marine Act, 1936, 46 U.S.C. (1952 ed.) § 1160(e). The balance of the total price was represented by mortgages on the eight vessels. As of March 8, 1946, cash payments made by plaintiff totaled $5,094,870.28, and the balance of plaintiff's mortgage indebtedness was $12,520,962.00. 5. Certain of the vessels were chartered by the Government upon their delivery to plaintiff. At various times during the charters, the Government paid charter hire to plaintiff. On its Federal income tax returns for the years in which the charter hire was paid, plaintiff reported the charter hire as income and deducted depreciation for the vessels. 6. On March 8, 1946, Congress enacted the Merchant Ship Sales Act of 1946, c. 82, 60 Stat. 41,50 U.S.C. App. (1952 ed.) § 1735, et seq., hereinafter referred to as "the Act." Under § 4 of the Act, 50 U.S.C. App. (1952 ed.) § 1737, citizens of the United States were given the right to purchase from the Commission war-built vessels at the statutory sales price defined in § 3(d) of the Act, 50 U.S.C. App. (1952 ed.) § 1736(d). Such purchasers were required to pay, at the time of sale, at least 25% of the statutory sales prices, and the balance was payable in not more than 20 equal annual installments with interest at 3%% per annum. By January 15, 1951, 843 ships had been sold under § 4 of the Act. Plaintiff does not consider relevant to this proceeding the fact that citizens of the United States purchased ships from the Maritime Commission after March 8,1946, under the Act. 7. In 1947 plaintiff bought six vessels from the Commission under § 4 of the Act. For each vessel plaintiff paid an amount equal to the statutory sales price and has treated this amount as the cost of the vessels for tax purposes. Plaintiff does not consider it relevant to this proceeding that it purchased vessels from the Commission under §4 of the Act after March 8,1946. 8. Section 9 of the Act, 50 U.S.C. App. (1952 ed.) § 1742, authorizes adjustments for certain sales to citizens made prior to March 8, 1946. Thereafter plaintiff filed applications under § 9 of the Act for an adjustment in the price of each of the eight vessels purchased in 1942, 1944, and 1945. The applications were approved and an agreement for adjustment was entered into by plaintiff and the Commission under date of November 9, 1949. A copy of the agreement is attached as Exhibit 1 to the stipulation filed by the parties, and is by reference made a part of these findings. 9. Under § 3 (d) of the Act the statutory sales price of the eight vessels purchased by plaintiff totaled $13,693,262.00. 10. If another taxpayer had purchased from the Commission on March 8, 1946, under § 4 of the Act, eight vessels identical to those here in question, except for improvements or betterments made by plaintiff, that taxpayer would have had to pay the statutory sales price of $13,693,262.00 for the vessels. The cost of the vessels for tax purposes would have been $13,693,262.00. Plaintiff does not consider it relevant to this proceeding that another taxpayer would have had to pay the statutory sales price for vessels if it had purchased them from the Commission on March 8,1946. 11. Defendant contends that plaintiff paid to the Commission the statutory sales price of the eight vessels as follows: Cash paid prior to March 8, 1946_$5, 094, 870. 28 Less cash credited to plaintiff under See. 9(b)(1)_ 1,671,654.78 - $3, 423, 315. 50 Total credits under Sec. 9)b) (8) in favor of plaintiff - 651,196.78 Cash paid after March 8, 1946_ 9,107,178. 52 Trade-in allowance on ships exchanged_ 511, 571. 20 $13, 693,262. 00 12. Plaintiff contends that the cost basis of the eight vessels is as follows: 1. Original Purchase Price_$18,406, 794.28 2. Less: Price reduction if bought in 1946_ 4,713, 532.28 (B) 3. Statutory Sales Price at 3/8/46_ 13,693,262.00 4. Less: Other Adjustments (Date of Purchase to 3/8/46) : a. Charter-hire paid by U.S. to Company_ 2,558, 353. 85 b. Adjustment of Trade-in Value of Vessels Contractual Value_ 790, 962. 00 Adjusted Value_ 511,571.20 Net Trade-in Adjustment. (279,390/80) c. Interest on original price at 3%%- $607, 870. 41 <3. Tax Credit computed under Act_ 840, 560.15 e. Net Credits_ 1,169, 048. 76 f. Charter-Hire (Net after credits to Company. Items 4a minus 4e)_ 1,389, 305. 09 (A) 5. Depreciable Cost-Basis (Items 3 plus 4f)— 15,082,567.09 6. Eeconeiliation: a. Original Purchase Price- 18, 406, 794.28 b. Net of Adjustments under Section 9: Credit to Company (Item 2)_ 4,713,532.28 Credit to Govt. (Item 4f)_ 1,389,305.09 Net Credit to Company_ 3,324,227.19 Depreciable Cost-Basis (per Company)_$15,082,567.09 The difference in depreciable cost-bases under the two parties' contentions is: (A) Per Company's Contention (Item 5)-$15,082,567.09 (B) Per Treasury Department (Item 3)- 13,693,262.00 Difference in Allowable Depreciation- $1, 389, 305. 09 13. Pursuant to the agreement of November 9, 1949 (see Finding 8) and Section 9(b)(3), plaintiff's mortgage indebtedness was reduced by $2,762,586.72 from $12,520,962.00 to $9,758,375.28. After March 8, 1946, plaintiff made payments to the Commission totaling $9,107,178.52. These payments plus credits of $651,196.78 explained below in Finding 17 were used to satisfy plaintiff's reduced mortgage indebtedness. 14. Pursuant to the agreement of November 9,1949, plaintiff's trade-in allowance was reduced by $279,390.80 from $790,962.00 to $511,571.20. 15. Section 9(b) of the Act provides that plaintiff and the Commission be given certain credits. Section 9(b) (8) provides that if the credits in favor of the applicant exceed the credits in favor of the Commission, such, excess shall be paid by the Commission to the applicant. In this case there was an excess in favor of plaintiff in the amount of $561,640.49. 16. The credits which gave rise to the sum of $561,640.49 were as follows: (a) Section 9(b) (1) provides that, for each vessel purchased, the purchaser shall be given a credit for the excess of the cash payments made before March 8, 1946, over 25% of the statutory sales price. For the eight vessels purchased, plaintiff paid before March 8,1946, $1,671,554.78 in excess of 25% of the statutory sales prices and was, therefore, given credits totaling $1,671,554.78. (b) Section 9(b) (5) provides that, for each vessel purchased, the purchaser be given a credit equal to interest at the rate of 3%% per annum on the original purchase price less any trade-in allowance from the date of delivery to March 8, 1946. By virtue of this provision, plaintiff was allowed credits totaling $607,870.41. (c) Section 9(b) (6) provides that, for each vessel purchased, the Commission be allowed a credit equal to charter hire paid to the purchaser for the use of the vessel prior to March 8,1946. By virtue of this provision, the Commission was allowed credits totaling $2,649,803.30. (d) Section 9(b) (6) also provides that, for each vessel purchased, the purchaser shall be allowed a credit equal to the amount that would have been paid as charter hire for bareboat use of the vessel traded in for the period from the date the vessel traded in was delivered to the Commission to March 8,1946. By virtue of this provision, plaintiff was allowed credits totaling $91,449.45 for this hypothetical charter hire. (e) Section 9(c)(1) provides that the purchaser's Federal income taxes be recomputed on the following assumptions: 1. Depreciation and amortization on the vessels up to March 8,1946, was not allowable; 2. Charter hire credited to the Commission under § 9 (b) (6) was never received by the purchaser; 3. Amounts credited to tlie purchaser under § 9(b) (5) and 9(b)(6) were income for the taxable year in which falls March 8,1946. Eecomputation of plaintiff's taxes under this provision resulted in overpayments totaling $875,319.94 and deficiencies totaling $34,750.79. Under § 9(b) (8) plaintiff was allowed credits totaling $875,319.94 and the Commission was allowed credits totaling $34,750.79. (f) Kecapitulating, the credits were as follows: In favor of plaintiff (a)_$1,671,554.78 (b)_ 607,870.41 (d)_ 91,449.45 (e)_ 875, 319. 94 $3, 246,194. 58 In favor of the Commission (e)_$2, 649, 803. 30 (e)_ 34, 750. 79 2, 684, 554. 09 Net credit in favor of plaintiff_ $561, 640. 49 17. The net credit of $561,640.49 in favor of plaintiff consisted of credits in favor of plaintiff on seven of the vessels totaling $651,196.78, and a credit on the eighth vessel in favor of the Commission in the amount of $89,556.29. The Commission did not issue a check for $561,640.49 to plaintiff. Instead the $651,196.78 in credits in favor of plaintiff were applied to plaintiff's mortgage indebtedness on the seven vessels concerned as of March 8, 1946. This was done pursuant to the second paragraph of Article YIII of the agreement of November 9, 1949. The $89,556.29 credit in favor of the Commission was pursuant to the third paragraph of Article VIII satisfied out of payments made by plaintiff after March 8, 1946, in excess of the amount required to satisfy plaintiff's mortgage indebtedness on the eight vessels. 18. Six of the eight vessels in question were delivered to plaintiff prior to January 1,1947. In computing plaintiff's income tax for 1946, the Commissioner of Internal Eevenue allowed plaintiff a deduction for depreciation on the six vessels. The Commissioner used as the basis for depreciation the statutory sales prices of the six vessels (which totaled $7,810,056.00) reduced by unrecognized gain of $170,528.73 realized on the trade-in of two vessels and increased by capital additions of $17,930 made by plaintiff during 1946. The remaining two vessels, Del Sud and Del Mar, were delivered to plaintiff in 1947. In computing plaintiff's income tax for 1947, the Commissioner of Internal Eevenue allowed plaintiff a deduction for depreciation on the eight vessels in question. The Commissioner used as the basis for depreciation the statutory sales prices of the eight vessels (which totaled $13,693,262.00) reduced by unrecognized gain of $511,571.20' realized on the trade-in of two vessels and increased by capital additions of $363,836.74 made by plaintiff during 1946 and 1947. Plaintiff does not challenge the correctness of the adjustments for unrecognized gain and capital additions but submits that the Commissioner erred in using the statutory sales prices as the cost of the vessels. 19. On December 10,1953, plaintiff filed timely claims for refund for 1946 and 1947. Copies of the claims are attached as Exhibits 3 and 4 to the stipulation filed by the parties, and are by reference made a part of these findings. 20. The refund claims were rejected by the Commissioner of Internal Eevenue in a notice mailed to plaintiff by registered mail on December 12,1958. 21. Plaintiff and defendant agreed that the trial in this proceeding be limited to the issues of law and fact relating to the right of plaintiff to recover, reserving the determination of the amount of recovery and the amount of offsets, if any, for further proceedings under Eule 38 (c). CONCLUSION OE LAW Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiffs are entitled to recover and judgments will be entered to that effect. The amounts of recovery will be determined pursuant to Eule 38 (c). United States v. United Mine Workers, 330 U.S. 258, 281—282, is not to the contrary. That ease said only that the opinions of several Senators, some of whom had not been members of the Senate when the legislation in question had been considered, and none of whom had been members of the Committee which had reported the legislation and which opinions were expressed eleven years after the legislation had been passed, could not "serve to change the legislative intent of Congress expressed" when the legislation had been passed. Similarly, Rainwater v. United States, 356 U.S. 590, 593, indicates only that an interpretation by one Congress of a statute passed by another Congress more than a half century before has "very little, if any, significance." See also the concurring opinion of Judge Littleton in The Equitable Life Assurance Society v. United States, 149 Ct. Cl. 316, 322, cert. denied 364 U.S. 829, and A. P. Green Export Co. v. United States, 151 Ct. Cl. 628.

386 U.S. 940

C. A. 3d Cir. Certiorari granted.

546 U.S. 1059

Application for stay of execution of sentence of death, presented to The Chief Justice, and by him referred to the Court, denied.

419 U.S. 859

App. Div., Sup. Ct. N. Y., 2d Jud. Dept. Certiorari denied.

16 T.C. 189

OPINION. .Van Fossan, Judge: During the years involved herein petitioner •was engaged in the manufacture and experimental development of aircraft and aircraft parts either under prime contracts with the War and Navy Departments or under subcontracts with other prime contractors. It was relatively a new corporation having been in existence only since July 6,1939. Its capital was limited and in order to carry out its commitments additional funds were needed. Prior to the early part of 1943 the required funds were made available in the form of advance payments from the Government. At the suggestion of the Army Air Forces contracting officer assigned to petitioner's operations, negotiations were started which culminated in a financing arrangement known as a "V-Loan." This arrangement was in line with the Wap Department policies set forth in the Findings of Fact. This financing arrangement consisted of a "Bank Credit Agreement" and nine "Guarantee Agreements." These agreements were executed concurrently. The "Bank Credit Agreement" was made between petitioner and a group of nine lending banks. It recited that petitioner and the banks wished to create a $6,000,000 line of credit to enable the petitioner "to borrow money from time to time," and that the money was to be used solely to finance petitioner's performance under certain limited contracts and other contracts to be designated in subsequent supplemental agreements. The "Guarantee Agreements" were executed by each of the nine lending banks and the Federal Reserve Bank of St. Louis, acting as the fiscal agent of the War Department. They provided that upon 10 days' written demand the War Department would purchase 90 per cent of petitioner's outstanding indebtedness incurred pursuant to the "Bank Credit Agreement." They also provided for voluntary purchase of the unpaid principal by the War Department. Petitioner contends that the amounts received by it under this arrangement constitute borrowed invested capital within the meaning of section 719 of the Internal Revenue Code. Respondent's Regulations 112, section 35.719-1 provide, in part, that: In order for any indebtedness to be included in borrowed capital it must be bona fide. It must be one incurred for business reasons and not merely to increase the excess profits credit. If indebtedness of the taxpayer is assumed by another person it ceases to be borrowed capital of the taxpayer. For such purpose an assumption of indebtedness includes the receipt of property subject to indebtedness. It has been held that the borrowed funds must be used for essential purposes of the business and they will not constitute borrowed capital if they are used for activities entirely unrelated to the taxpayer's business. Mahoney Motor Co., 15 T. C. 118. They must be invested in the working capital of the taxpayer. They must be utilized for the earning of profits and must be subject to the risks of the business. Hart-Bartlett-Sturtevant Grain Co., 12 T. C. 760, affd. (CA-8, May 5, 1950), 182 Fed. (2d) 153. Every formal requirement of section 719 and the regulations thereunder would appear to be met by the so-called "V-Loans" made by petitioner. These loans were made directly to the petitioner. They were evidenced by its notes and they were made solely for business purposes. The funds so acquired were needed and used for working capital and were subject to the risks of the business. It is now well established, however, that strict formal compliance is not enough for an indebtedness to qualify as borrowed capital. There must be compliance in substance as well as in form. Player Realty Co., 9. T. C. 215; Brann & Stuart Co., 9 T. C. 614; Hart-Bartlett-Sturtevant Grain Co., supra. It is the respondent's position that these loans were made on the credit of the United States; that they were, in substance, an indirect method employed by the Government for making advance payments; that it was the Government upon which the banks actually placed their reliance and to which they looked as the real obligor, and that, therefore, such amounts do not qualify as borrowed capital under section 719. We are unable to agree. As a factual matter it is inaccurate to state categorically that the banks never took into consideration the credit of the petitioner. The "Bank Credit Agreement" executed between petitioner and the nine lending banks contains certain specific covenants by which petitioner bound itself not to purchase or retire its. own stock, create loans or other encumbrances, borrow money or dispose of any substantial portion of its assets. Affirmatively, petitioner agreed to maintain current assets, carry insurance, pay its taxes, fulfill its contracts and agreements and furnish the lenders with periodic statements of its financial condition. It was forbidden to pay dividends in excess of specified amounts. These strict covenants required by the lending banks are evidence that the petitioner's credit and assets were more than incidentally involved in the loans. Furthermore, we can not agree that the arrangement was, in substance, merely an indirect method employed by the Government to make advance payments. The amounts received by petitioner were lent.to it by third parties, the banks. The loans were evidenced by the notes of the taxpayer. The obligation to pay the principal and interest thereon rested primarily with petitioner. The fact that payments due petitioner under its war contracts were assigned to the lenders and payment was made directly to them, does not alter the character of the loans or constitute them advanced payments. Brann & Stuart Co., supra. Nor would the Government's assuming the role of guarantor of the loans change their status as borrowed capital. With the Government guarantee available to lending institutions, it was only natural that such institutions should desire it as an additional protection to them. The Government did not assume primary and direct liability for these loans made to petitioner. Until default by petitioner, the Government had no principal liability. Its liability was not only secondary to petitioner's personal liability but also to petitioner's assets pledged to secure the loan. It matters not whether, upon default, the lending institutions would look to the Government first as guarantor or to the petitioner. If the Government had been forced to fulfill its guarantee it would have been entitled to look to petitioner for reimbursement. Du Val's Estate v. Commissioner, 152 Fed. (2d) 103, certiorari denied, 328 U. S. 838. See In re: Jamison's Estate, (Mo., 1947) 202 S. W. (2d) 879. Accordingly, we hold that the funds borrowed by petitioner and 90 per cent guaranteed by the Government, both in form and substance, constituted borrowed invested capital within the purview of section 719, supra. The remaining issue involves the $5,000 payment made by petitioner to Washington University. Couched in the terms of pertinent statutes, the issue may be stated to be whether it is barred as a deduction under section 23 (a) (1)' (A), Internal Revenue Code, by section 23 (a) (1) (B) On or about February 21, 1944, petitioner paid $5,000 to Washington University pursuant to the resolution of its board of directors set out in our Findings of Fact. It is stipulated that Washington University is "a corporation organized and operated exclusively for educational and similar purposes within the meaning of section 28 (q) " and it is conceded in petitioner's brief that its directors expected the payment to be treated as a contribution or gift within the purview of that section. In its return for the year ended June 30, 1944, petitioner included the $5,000 within its total deduction for "contributions or gifts paid." As set up by petitioner, the- entire amount of the deduction claimed did not exceed the 5 per centum limitation set out in section 23 (q) supra. However, as a result of a net operating loss deduction carried back from a subsequent year and other adjustments, the respondent in his notice of deficiency reduced petitioner's net income for the fiscal year 1944 so that the total amount of the claimed deduction for contributions was no longer within the 5 per centum limitation. Accordingly, the respondent disallowed the deduction to the extent of $3,505.77. Petitioner claims that the $5,000 payment is nevertheless deductible under section 23 (a) (1) (A),supra. In support of this claim it relies on section 29.23 (a)-13 of Regulations 111 which provides, in part, that: The limitations provided in section 23 (a) (1) and this section apply only to payments which are in fact contributions or gifts to organizations described in section 23 (q). For example, payments by a street railway corporation to a local hospital (which is a charitable organization within the meaning of section 23 (q)) in consideration of a binding obligation on the part of the hos pital to provide hospital services and facilities for the corporation's employees are not contributions or gifts within the meaning of section 23 (q) and may be deductible under section 23 (a) if the requirements of that section are otherwise satisfied. Respondent contends tbat in order for tire payment to come squarely within the terms of these regulations, petitioner must now show that the $5,000 which was paid to Washington University, was not in fact a contribution or a gift, as claimed in its reuirn, but was paid in consideration of a binding obligation to set up an aeronautical engineering course within the latter's engineering school. He argues that the evidence fails to show that the University was, in fact, bound to do anything in exchange for the money paid to it. We agree with respondent. Until the argument that the $5,000 payment was deductible as a business expense was advanced here by petitioner, the payment had been considered by all to be a gift or contribution. Albeit there are some facts giving color to petitioner's present claim, we believe the weight of the evidence preponderates in favor of the respondent. The communications between the parties preceding the payment refer to it as a contribution. The resolution, pursuant to which the $5,000 was paid, required that the University obtain commitments for an engineering school budget and contemplated the establishment of a course of instruction in aeronautical engineering and refers to the payment as a contribution or donation. Petitioner's directors expected the payment to be treated as a contribution for the purposes of Federal taxation and so conditioned the payment. Petitioner deducted the payment as a contribution in its tax return. The correspondence between the officials of petitioner and the University indicates that there was a common goal in the minds of both — the establishment of the above mentioned courses. This fact, however, proves nothing conclusively. The University could proceed with the project equally as well whether the payment was, as to petitioner, a gift or a business expense. Many, if not most, contributions to colleges are limited to support of some particular phase of activity and many are in consideration of the gifts of others. But these facts do not automatically render such contributions deductible as business expenses of the donor. Looking at all the evidence, we have concluded, and accordingly hold, that petitioner is not entitled to deduct its $5,000 payment to Washington University as a business expense within the purview of section 23 (a) (1) (A), supra. Reviewed by the Court. Decision will be entered under Rule 50. SEC. 719. BORROWED INVESTED CAPITAL. (a) Borrowed Capital. — The borrowed capital for any day of any taxable year ghaU be determined as of the beginning of such day and shall be the sum of the following: (1) The amount of the outstanding indebtedness (not including interest) of the taxpayer which is evidenced by a bond, note, bill of exchange, debenture, certificate of indebtedness, mortgage, or deed of trust, • *•***«« (b) Borrowed Invested Capital. — The borrowed invested capital for any day of any taxable year shall be determined as of the beginning of such day and shall be an amount equal to 50 per centum of the borrowed capital for such day. SEC. 23. DEDUCTIONS FROM GROSS INCOME. In computing net income there shall be allowed as deductions: (a) Expenses.— (1) Trade or business expenses.— (A) In General. — All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, . (B) Corporate Charitable Contributions. — No deduction shall be allowable under sub-paragraph (A) to a corporation for any contribution or gift which would be allowable as a deduction under subsection (q) were it not for the 5 per centum limitation therein contained and for the requirement therein that payment must be made within the taxable year. SEC. 23. DEDUCTIONS FROM GROSS INCOME. Xn computing net income there shall be allowed as deductions: * (q) Charitable and Other Contributions by Corporations. In the case of a corporation. contributions or gifts payment of which is made within the taxable year to or for the use of: * (2) A corporation, trust, or community chest, fund, or foundation, created or organized in the United States or in any possession thereof or under the law of the United States, or of any State or Territory, or of the District of Columbia, or of any possession of the United States, organized and operated exclusively for religious, charitable, scientific, veteran rehabilitation service, literary, or educational purposes or for the prevention of cruelty to children (but in the case of contributions or gifts to a trust, chest, fund, or foundation, payment of which is made within a taxable year beginning after December 31, 1943 only if such contributions or gifts are to be used within the United States or any of its possessions exclusively for such purposes), no part of the net earnings of which inures to the benefit of any private shareholder or individual, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation. * to an amount which does not exceed 5 per centum of the taxpayer's net income as computed without the benefits of this subsection. Such contributions or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the Commissioner, with the approval of the Secretary. *

384 U.S. 971

C. A. 5th Cir. Certiorari denied.

396 U.S. 986

Sup. Ct. Ill. Certiorari denied.

174 U.S. App. D.C. 204

LEVENTHAL, Circuit Judge: These petitions to review Federal Power Commission certificate orders amount, on analysis, to a challenge to the FPC's ruling that the underlying contractual arrangements entitled United Gas Pipeline Co. to 120,000 Mcf/d from Humble Oil & Refining Co.'s natural gas production in the Garden City Field, and that this entitlement would be respected even though United later bettered its position in that field, especially in relation to Columbia Gas Transmission Corp. In our view the FPC acted within the permissible range of an administrative agency in both its construction of the contracts, and its certificate order. Taking into account this record, and the way the parties shaped their position before the agency, we cannot condemn the FPC on the ground that the broader non-contractual elements of public interest required a different result. We affirm. In its order, issued on October 16, 1974, in its Docket C172-674, Texas Gas Exploration Corp., et al., the FPC— a. Issued certificates authorizing Texas Gas Exploration (Texas Gas), et al. to sell certain of their gas to United; b. Held that the contractual and statutory obligations of Humble and Cullen to deliver 120,000 Mcf of gas per day to United from the Garden City Field were not reduced by the volumes sold to United by Texas Gas, et al. under the certificates issued in that order; and c. Held that Texas Gas et al. could collect only the area rate for "old gas" for the volumes sold under those certificates. The facts are available from the opinion of Administrative Law Judge Kanell, adopted by the FPC, and will not therefore be restated at any length. It suffices to say that on June 15, 1958, Humble and Cullen entered into a contract with United giving United the right to purchase all of their Garden City Field gas. In 1963, Humble and Cullen desired to sell some of their Garden City gas to Columbia Gas, and amended their contract with United on June 18, 1963. The 1963 amendment, sometimes referred to by the parties as a "carveout agreement," provided insofar as pertinent: 1. Humble and Cullen were obligated to deliver to United a maximum of 120,000 Mcf of gas per day, (this freed any excess to be sold to Columbia.) 2. The maximum daily delivery obligation of 120,000 Mcf would be reduced by any volumes received by United under "contracts as now in effect with Buyer's [United's] other suppliers" in the Garden City Field. 3. Humble and Cullen could meet their daily delivery obligation to United by delivering their own gas or other gas from the Garden City Field which either Humble or Cullen "shall from time to time have the right to market or dispose of for others". On June 28, 1963, Humble and Columbia executed an agreement which provided that Humble would warrant delivery of 6.1 trillion cubic feet (Tcf) of gas to Columbia from a number of fields. Humble further agreed that a portion of its Garden City Field gas, over and above the volumes required to fulfill its obligations to United, would be delivered toward the 6.1 Tcf. On the same day Cullen also entered into a contract to sell Columbia a portion of its excess gas, i. e., Garden City Field gas in excess of that required to meet its obligation to United. Between 1963 and 1971, Cullen had the right to market Garden City Field gas for Texas Gas and others, and delivered their gas to satisfy part of its obligation to United under the 1963 amendatory contract. These authorizations were revocable. Humble never had the right to market the gas of Texas Gas. On May 2, 1971, Cullen obtained small producer certificates, and notified Texas Gas et al. as of May 2, 1971, it would no longer market their gas. Texas Gas et al. thereupon entered into negotiations with United that culminated in 1972 contracts to sell to United 8,400 Mcf/d out of the Garden City Field gas formerly marketed for them by Cullen. When the amounts of those deliveries were deducted by Humble from the amount it delivered to United, United complained to the FPC and sought a declaratory ruling as to the meaning of the contract. The proceeding before the Federal Power Commission required the Commission to determine the validity of United's complaint that it was entitled to 120,000 Mcf/d from Cullen and Humble under the 1963 agreement. Humble took the position that the contract, properly interpreted, permitted it to deduct from the 120,000 Mcf/d obligation such additional amounts as United might obtain from other suppliers in the Garden City Field who had formerly supplied gas to Cullen as their marketing agent for sale to United instead of contracting directly with United. The Administrative Law Judge construed the contract to agree with the interpretation advanced by United, and also accepted by Cullen, that the clause providing for deduction of volumes received by United under "contracts as now in effect with Buyer's other suppliers" referred to amounts obtained by United from British Petroleum and Gulf, the suppliers in the Garden City Field with which it had contracts in effect on June 18, 1963 (see note 3). Humble did not petition for review of the adverse ruling. Columbia's petition to the FPC for review took the position previously advanced by Humble. The FPC adopted the construction of the contract set forth by the Administrative Law Judge. We affirm. The FPC's interpretation of the contract is in accordance with its literal terms, and is supported by a plausible explanation of the intendment of the parties. We would likely have reached the same interpretation ourselves, but should in addition note that there is room, in review of administrative agencies, for some deference to their views even on matters of law like the meaning of contracts, as on the meaning of statutes, where the understanding of the documents involved is enhanced by technical knowledge of industry conditions and practices. See Gulf States Utilities Co. v. Federal Power Commission, 171 U.S.App.D.C. 57, 518 F.2d 450, 457 (1975). Columbia advances the separate contention that the FPC's ruling amounts to permitting United to take the 120,000 Mcf/d from Humble plus up to 8,400 Mcf/d from Texas Gas et a 1. — and thus to take more from the field than was previously the situation. This, says, Columbia, can only be done in a proceeding under § 7(b) of the Natural Gas Act, in which Texas Gas seeks abandonment as to supply to Columbia, as well as the certification under 7(c) of its supply to United. And this can only be done in a comparative proceeding which takes into account the large elements of public interest inherent in shifting entitlements to gas supply. Where there is an abandonment or curtailment of service, the Commission has an obligation to consider not only the contract situation but larger elements of public interest, including the entire situation of the pipelines competing for purchase. Transcontinental Gas Pipe Line Corp. v. FPC, 160 U.S.App. D.C. 1, 488 F.2d 1325 (1973), cert, denied sub nom. Natural Gas Pipeline Co. v. Transcontinental Pipe Line Corp., 417 U.S. 921, 94 S.Ct. 2629, 41 L.Ed.2d 226 (1974); Michigan Consolidated Gas Co. v. FPC, 108 U.S.App.D.C. 409, 283 F.2d 204, cert. denied, 364 U.S. 913, 81 S.Ct. 276, 5 L.Ed.2d 227 (1960), cited in Transcontinental Gas, 160 U.S.App.D.C. at 5, 488 F.2d 1325. But the present case and record was not presented in these terms, as a comparative case or a broad public interest question. The proceeding was shaped as one involving a contract interpretation. In the proceeding before the FPC, Columbia tendered no evidence bearing on broad public interest questions, such as the comparative position of the United and Columbia pipelines, or even on whether its overall gas entitlement would fall in fact. The case was one involving an extremely modest amount, in comparison with supplies going to Columbia from Humble and to United. Columbia's counsel says the party proposing the application has the burden of proof. But the FPC can give some presumptive weight to contract arrangements, as Transco recognizes (see 160 U.S.App.D.C. at 5, 488 F.2d at 1329). Columbia should have offered some reasoning as to why the contracts should be rejected. Putting formality aside, and looking to broader issues, there is merit in principle that the overall "public interest," and not mere contract arrangement, should govern whenever there is a considered challenge to what is in fact a transfer of supply from one pipeline to another. That public interest background can be assured in the 7(c) proceeding to certificate the new purchaser. Again, since the volume of gas involved is relatively small and the parties did not present the broader public interest question to the Commission, we do not on this record fault the Commission for taking and deciding the case as the parties laid it before them. See FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 96 S.Ct. 579, 46 L.Ed.2d 533 (1976). Columbia accused the FPC of inconsistency, in that it recognized that Texas Gas et al. must be treated as producers already engaged in the pertinent supply arrangement, for it held Texas Gas to a flowing gas rate, and did not permit it to charge the rate set for new gas. But the ruling that Texas Gas had dedicated its gas to interstate commerce, for rate purposes, does not mean the gas had been contractually dedicated to United. Taking the case as it was shaped by the parties, we cannot say that the FPC was faithless to its obligation to consider the public interest. Affirmed. . Texas Gas et al. includes Texas Gas, Gulf Oil Corporation (Gulf) and Southern Natural Gas Company (Southern). . "Humble" is retained throughout although Humble Oil & Refining Co. was succeeded by Exxon Corp. . As of this June 18, 1963, amendment, United was also purchasing Garden City gas from British American and Gulf under outstanding contracts. . The contract was with Columbia's predecessor, namely United Fuel Gas Company. . Pursuant to FPC Order 428, 18 C.F.R. 157.40. . United thus contended that the volumes of gas furnished to it by Texas, Gulf and Southern should be excluded from the calculation of its 120,000 Mcf daily entitlement from Cullen and Humble. Any Garden City gas obtained under its contracts with British Petroleum and Gulf, however, would be included in the 120,-000 Mcf calculation. . We do not question the standing of Columbia to raise the question, nor did the FPC, for the more gas United has a right to get from Humble-Cullen under its 1963 contract, the less gas Columbia has a right to demand under its 1963 contractual right to take what is left after the sellers satisfy the contractual commitments to United.

469 U.S. 878

Appeal from Ct. App. N. M. Probable jurisdiction noted.

273 U.S. 719

Petition for a writ of certiorari to the Circuit Court of Appeals for the Second Circuit denied.

397 U.S. 952

Ct. Sp. App. Md. Certiorari denied.

445 U.S. 930

C. A. 6th Cir. Certiorari denied.

347 U.S. 992

Supreme Court of California. Certiorari denied.

518 U.S. 1007

C. A. 7th Cir. Cer-tiorari denied.

511 U.S. 1006

Ct. App. Cal., 2d App. Dist. Certiorari denied.

248 U.S. 584

Petition for a writ of certiorari to the Circuit Court of Appeals for the Second Circuit denied.

275 U.S. 496

Per Curiam. The petition for certiorari is denied for the reason that the petitioner has failed to comply with section 2 "of Rule 35 of the Supreme Court, which provides that the " petition shall contain only a summary and short statement of the matter involved and the reasons relied on for the issuance of' the writ," and that the supporting brief must be direct and concise. The petition for certiorari filed in this case is fifty-one pages long and contains no concise statement of the facts. The brief in support of the petition is seventy-two pages long and is presented separately. Both the petition and the brief have the same appendix, which is ninety pages long, and contains many references to Florida statutes.

532 U.S. 995

C. A. 4th Cir. Certiorari denied.

12 Cust. Ct. 334

Opinion by Keefe, J. At the trial samples of the earthenware containers were marked exhibits 1 to 10 inclusive, and the case was then suspended under suit 4342 (United States v. Mulligan, 29 C. C. P. A. 117, C. A. D. 179). It was held therein that Congress never intended to give unusual containers of such merchandise a rate status different from that given unusual containers of other kinds of merchandise. When again called for trial the manager of the plaintiff concern testified as to the earthenware containers only, and admitted that the miniature containers of the liqueurs were not purchased for the contents but for collection purposes, and that the one-tenth of a pint miniature is merely a fancy jar or container and that it enhances the value of the merchandise therein. There was some evidence that the miniatures are reproductions of the regular containers of cordials, which usually are attractive in appearance, but there was nothing in the record to establish that these miniature bottles or jugs are the usual containers for this' class of merchandise. An examination of the exhibits was found convincing that the jars are unusual in form and designed for use other than as containers of the cordials or liqueurs. In accordance therewith judgment was entered in favor of the Government.

79 Ct. Cl. 417

Whaley, Judge, delivered the opinion of the court: The Commissioner of Internal Revenue refunded to plaintiff in 1924 the income taxes paid by her for 1919 after cer tain deficiencies for the years 1917 and 1918 were deducted, and this suit is brought to recover interest on the amount so refunded, alleging an informal claim for refund was made by the plaintiff through certain correspondence filed with the Commissioner in the years 1921 and 1923. The refund having been made before the passage of the Revenue Act of 1924 and that act not being retroactive, United States v. Magnolia Petroleum Company, 276 U.S. 160, section 1324 (a) of the Revenue Act of 1921 is the applicable statute. This statute provides: " That upon the allowance of a claim for the refund of or credit for internal-revenue taxes paid, interest shall be allowed and paid upon the total amount of such refund or credit at the rate of one-half of 1 per centum per month to the date of such allowance, as follows: (1) If such amount was paid under a specific protest setting forth in detail the basis of and reasons for such protest, from the time when such tax was paid, or (2) if such amount was not paid under protest but pursuant to an additional assessment, from the time such additional assessment was paid, or (3) if no protest was made and the tax was not paid pursuant to an additional assessment, from six months after the date of filing of such claim for refund or credit. The term additional assessment ' as used in this section means a further assessment for a tax of the same character previously paid in part." The plaintiff had a gift made to her in 1917 of 325 shares of Ford Motor Company stock. In 1919 she sold this stock for $12,500 a share. In making her 1919 income-tax return she valued the stock at the time of - the gift at $12,500 a share; this being the same amount as that received by her when it was sold, there was neither gain nor loss to be taken on her return of income. When this item of value of the stock for 1917 came to the attention of the Commissioner, he wrote to plaintiff on January 31, 1921, requesting data to support the value of the stock in 1917 when it was received by her as a gift. Not receiving a substantive reply to this inquiry, the Commissioner again wrote to plaintiff on April 19, 1921, requesting prompt attention to his previous letter. In reply to this letter, on April 27, 1921, plaintiff stated to the Commissioner that she had in her possession affidavits fixing the value of this stock at $12,500, $14,420, and $14,000 per share. There is no claim in this letter of any refund which the plaintiff expected, but simply an affirmation of the value, at least of the amount, placed by her on this stock for the year 1917. It appears that in 1919 a decree of court was made requiring the payment of dividends by the Ford Motor Company which resulted in the plaintiff receiving during 1919 on her 325 shares of stock, $313,225.02. Instead of including this amount in her taxable income for the year 1919, the plaintiff amended her 1917 return and included this amount in that year's income. On May 27, 1921, the Commissioner wrote to the plaintiff stating this amount, having been received in 1919, was taxable in that year and not in 1917. In this letter the Commissioner sets out an audit of her taxes for 1919 which resulted in a proposed additional assessment for the year 1919 of $192,276.48. Upon the receipt of this audit made by the Commissioner showing a proposed deficiency of $192,276.48, the plaintiff replied affirming her position that the dividend was correctly placed in the year 1917 because of the adjudication of the case in the court of the State of Michigan and expressing the desire to have the Income Tax Unit give further consideration as to the year in which the additional dividend should be taken for tax purposes. There is no semblance of a claim for refund in this letter but simply a desire to have a final decision by the Tax Unit of the Bureau as to the year in which the dividend should be taken. In August 1921 the plaintiff again wrote to the Commissioner requesting a conference before any supplemental assessment was made by the Commissioner, and in this letter raised not only the question of the year in which the dividend should be included, but requested that the issue originally raised by the Commissioner as to the value of the Ford Motor Company stock in 1917 be given consideration, and asserted: "Very conclusive evidence can be presented that the value was very much in excess of that shown by your examining officer." This is the first intimation on the part of the plaintiff that the value of this stock, as fixed by her in her 1919 return, was more than the amount taken by her. On December 19,-1922, the Commissioner furnished the plaintiff an audit of her income-tax returns for the years 1917, 1918, and 1919, which showed an overassessment for 1917 of $54,624.63 and additional assessments for 1918 and 1919, respectively, of $149.14 and $192,309.88, that is, a proposed net additional tax of $137,834.39. Upon receipt of this notice of additional assessment, the plaintiff on January 10, 1923, wrote to the Commissioner, in seeking a delay of payment, stating: " Permit me, however, to kindly call your attention to the fact that in my own particular case (unlike that of other stockholders) there is another issue involved affecting the amount of this 1919 tax which is not touched upon in your letter and to which I wish to draw your attention. " It is the question of the loss sustained by me in the sale of this stock in July 1919, as compared with its fair market value when acquired by me, by gift, in January 1917." The plaintiff requested that the 1919 income tax be audited for the purpose of having the value of the Ford stock in 1917 ascertained and furnished the Commissioner information as to its value which showed it exceeded the amount fixed by her in the 1919 return. She again asserts: " I ask your kind consideration in regard to this item because, whereas I am taxed, as income, the amount of dividend received by me as the result of the Court decision in the Dodge-Ford suit, this has not been offset in any way by the great shrinkage in value in 1919, which was the direct result of this suit." The Commissioner, upon an audit of the plaintiff's return, decided that the loss sustained by the plaintiff on the value of the stock when sold, more than overcame the proposed additional tax and also resulted in the plaintiff not being liable for any tax in 1919. The amount paid by her for that year was accordingly returned to her as an overpayment after certain adjustments for previous years were made. This refund of the entire tax paid by the plaintiff in 1919 was due to the loss sustained by her on the sale of the stock. The Commissioner duly paid the plaintiff the sum of $64,352.27. On April 25, 1928, a formal claim for interest on the amount refunded was filed by the plaintiff in the sum of $9,421.85. This claim was rejected by the Commis sioner because no claim for refund for any part of the tax for 1919 had been filed prior to the allowance of the overpayment. The plaintiff contends that the letter of January 10, 1928, sworn to by the plaintiff, was sufficient compliance with the requirements of the statute to constitute an informal claim for refund to which the formal claim could be attached as an amendment. Under the applicable provisions of section 1824 (a) of the Revenue Act of 1921, a claim for refund must be filed before interest can be allowed. The first intimation that the value of the stock received by the plaintiff as a gift in 1917 was in question was raised by the Internal Revenue Bureau in a letter to the plaintiff. The entire correspondence with the Commissioner showed an endeavor on plaintiff's part to avoid the payment of the proposed additional assessment caused by the additional dividend received by the plaintiff being placed in the year 1919, the year in which it was received, and not in the year 1917 as insisted upon by her and in which year she had placed it in her supplemental return for that year. The plaintiff's whole object and aim were to avoid the payment of the additional tax caused by the receipt of this extra dividend. After exhausting all of the remedies provided by the Bureau without success, and after the Commissioner had notified her of the additional tax for the year 1919, plaintiff then resorted to and claimed a loss on the sale of the stock and offered this alleged shrinkage in value as an offset or the equivalent of the amount of additional taxes which the Commissioner asserted was due. The evidence fails to show that at any time did the plaintiff expect to get a refund of taxes for 1919, but, on the contrary, it shows an effort on her part for a.reduction or counterbalance of the proposed additional tax. There was never any assertion of a claim for refund or an intimation that, if the difference in values of the stock in 1917 and 1919 were taken into consideration, a shrinkage or loss would result in a refund to the plaintiff. This issue as to the value in 1917 was revived by plaintiff when all other efforts had failed to avoid the payment of the additional tax caused by the inclusion of the additional dividend in the 1919 return. There is nothing in any of plaintiff's letters which shows any basis on which she expected the return of any portion of .the taxes paid by her on her original return for 1919. In order to constitute a claim for refund there must be brought to the attention of the Commissioner facts sufficient in themselves which, when followed by the Commissioner, would result in an excess payment by the taxpayer of taxes for the year in question. In other words, the taxpayer must take the initiative and supply facts to the Commissioner with the claim that, if these facts are taken into consideration, it will be found that the taxpayer has overpaid the amount of taxes properly due the Government for the year in question. This court in the case of Lasher v. United States, 65 C.Cls. 295, upheld the plaintiff's contention of an informal claim for refund but, in that case, the letter on which the claim was founded set out the facts to the Commissioner on which he acted and claimed that if the facts were taken into consideration there would be an excess payment and therefore a refund due to the plaintiff. This was also true in the case of McKenny et al. v. United States, 72 C.Cls. 195. In that case the plaintiff made an application for special assessment and stated in the application that, if it were granted, it would result in showing that the plaintiff had overpaid its tax. The instant case is more analogous to the case of Philipsborn v. United States, 72 C.Cls. 545. In the latter case, as in this case, the plaintiff has attempted to amend by a formal claim for refund an alleged informal claim for refund. Without an informal claim, the formal claim is barred by the statute of limitations. We can find nothing in the record, either by inference or implication, which shows an assertion of a claim for refund of any part of plaintiff's taxes for the year 1919 to which the formal claim for refund can attach. The petition is dismissed. It is so ordered. Williams, Judge; Littleton, Judge; Green, Judge; and Booth, Chief Justice, concur.

405 U.S. 1049

ante, p. 191. Petition for rehearing denied. Mr. Justice Powell and Mr. Justice Rehnquist took no part in the consideration or decision of this petition.

4 Cust. Ct. 489

C. D. 64 reversed. C. A. D. 117.

568 U.S. 949

C. A. 5th Cir. Certiorari denied.

474 U.S. 947

Dist. Ct. App. Fla., 4th Dist. Certiorari denied.

176 L. Ed. 2d 1261

Petition for writ of certio-rari to the United States Court of Appeals for the Ninth Circuit denied. Same case below, 363 Fed. Appx. 500.

327 U.S. 802

Petition for writ of certiorari to the Supreme Court of Utah denied.

546 U.S. 971

C. A. 5th Cir. Certiorari denied.

188 U.S. 108

Mb. Justice Habían, after making the foregoing statement of facts, delivered the opinion of the court. 1. Before considering the merits of the case it is proper to remark that although the railroad company holds the patent of the United States for the land in controversy, the defendant, according to the laws of the State, was entitled to judgment, if.it appeared that he was equitably entitled to possession as against the plaintiff. 2 Hills' Codes, § 530 et seq.; Burmeister v. Howard, 1 Wash. Ty. 207. 2. Wé have seen that the Northern Pacific Bailroad Company was created by the act of Congress of July 2, 1864, c. 217, making a grant of lands in aid of the construction of the road from Lake Superior to Puget Sound. When that grant was made substantially the entire country between those points was untraveled as well as uninhabited except by Indians, very few of whom, at that time, were friendly to' the United States. The principal object of the grant, as will appear from its language, was to secure the safe and speedy transportation of thet mails, troops, munitions of war and public stores, by means of a railroad and telegraph, and to that end and in order to bring the public lands into market it was deemed important to encourage the settlement of the country along the proposed route. The public lands in that vast region were unsurveyed, and it was not known when they would be surveyed. Congress, of course, knew that if immigrants accepted the invitation of the Government to establish homes upon the unsurveyed public lands, they would do so in the belief that the lands would be surveyed, that their occupancy would be respected, and that they would be given an opportunity to perfect their titles in accordance with the homestead laws. Such was the situation when the act of July 2, 1864, was passed. Necessarily the act must be interpreted in the light of that situation. It shoidd not be so interpreted as to justify the charge that the Government laid a trap for honest immigrants who risked the dangers of a wild, unexplored country, in order that they might establish homes for themselves and their families. And it should not be supposed that Congress had in view only the interests of the company, which, with the aid of a munificent grant of lands, was empowered to connect Lake Superior and Puget Sound with a railroad and telegraph line. Let us now see what is the fair import of the act of 1864, under which both parties claim possession. By the third section of that act it was, among other things, provided as follows, to wit: " That there be, and hereby is, granted to the ' Northern Pacific Railroad Company,' its successors and assigns, for the purpose of aiding in the construction of said railroad and telegraph line to the Pacific coast, and to secure the safe and speedy transportation of the mails, troops, munitions of war, and public stores, over the route of said line of railway, every alternate section of public land, not mineral, designated by odd numbers, to the amount of twenty alternate sections per mile, on each side of said railroad line, as said company may adopt,0 through the Territories of the United States, and ten alternate sections of land per mile on each side of said railroad whenever it passes through any State, and whenever on the line thereof the United States .have full title, nqt reserved, sold, granted, or otherwise' appropriated, and free from' preemption or other claims or rights, at the time the line of. said road is definitely0fixed, and a plat thereof filed in the office of the Commissioner, of the General Land Office; and whenever, prior to said time, [of definite location,] any'of said sections or parts of sections shall have been granted, sold, reserved, occupied hy homestead settlers, or preempted, or otherwise disposed of, other lands shall be selected by said company in lieu thereof, under the direction of the Secretary of the Interior, in alternate sections, and designated by odd numbers, not moré than te§ miles beyond the limits of said alternate sections. ." By the sixth section of the act it was, among other things, provided as -follows: " § 6. And he it further enacted, That the President of the United States shall cause the lands to be surveyed for forty miles in width on both sides of the entire line of said road, after the general route shall be fixed, and as fast as may be required by the construction of said railroad; and the odd sections of land hereby granted shall not be liable to sale, or entry, or preemption before or after they are survéyed, except by said company, as provided in this act." The stipulation of facts omits the latter part of section 6 ; but of the words omitted this court will take judicial notice. They are as follows: " But the provisions of the act of September, eighteen hundred and forty-one, granting preemption rights, and the acts amendatory thereof, and of the act entitled ' An act to secure homesteads to actual settlers on the public domain,' approved May twenty, eighteen hundred and sixty-two, shall be, and the same are hereby, extended to all other lands on the line of said road, when surveyed, excepting those hereby granted to said company. And the reserved alternate sections shall not be sold by the Government at a price less than two dollars and fifty cents per acre, when offered for sale." The railroad company insists that after the order of withdrawal from " sale or entry " made in 1873 by the Commissioner of the Land Office, and based upon its map of general route, no right could be acquired by a settler upon any odd-numbered alternate section of land within the forty-mile limit indicated., by the map of general route. As the lands in question were-not surveyed Until 1893, the company's contention means that during the twenty years succeeding the withdrawal in 1873 all the sections covered by the map of general route which would, upon a survey appear to be odd-nuinbered alternate sections, were absolutely excluded from occupancy by any settler having in view the homestead laws. The defendant insists that the act of 1864 recognized the right of an immigrant to occupy any section of the public lands on the general route up to the time of the definite location of the road, provided it was done in good faith with the intention to perfect his title under the homestead laws whenever it became possible to do so, and that if at the time of definite location it appeared that he was in the occupancy of an odd-numbered alternate section the railroad company could not disturb him; By the sixth section-of the act of July 2,1864, it was declared that the odd sections " hereby granted," that is, by that act granted, should not be liable to sale, entry or preemption before or after they were surveyed, except by the company, as provided in the act. But we have also seen, looking at the third section, which was the granting section of the act, that Congress did not grant every odd-numbered alternate section within the general limits specified, but only the odd-numbered alternate sections to which the United States had full «title, and whiqh. had not been previously reserved, sold, granted or otherwisé appropriated, and which were free from preemption or " other claims or rights " at the time the line of the road was definitely fixed — giving to.the railroad.company the right, to select lands, within certain limits, in place or such as were found, at the date of definite location, to have been disposed of or to be " occupied by homestead settlers." The first inquiry is whether the railroad company acquired any vested interest in the land in dispute by reason merely of the acceptance by the Land Department of its map of general route or by reason merely of the withdrawal order of 1873. In other words, did the land, after the •general route was established, become segregated from the public domain and cease to be a part of the public lands, so as not to be subject to occupancy, in good faith, by homestead settlers, prior to definite location ? These questions have a direct bearing on the present issues; for, if Congress did not intend — as, we think, it did not —that the railroad company should acquire any vested interest in these lands, prior to definite location, we can understand why it excluded from its grant any lands " occupied by homestead settlers " at the time of the definite location of the road. The above questions are, we think, distinctly answered in the negative by recent decisions of this court. Let us see if "such be not the case, In St. Paul & Pacific v. Northern Pacific, 139 U. S. 1, 5, it was held that after a map of a general route was filed and up to .definite location; the grant to the railroad company was in the nature of a "float," and land which previously to definite location had been' reserved, sold, granted or otherwise appropriated, or upon which there was a preemption " or other claim or right " did not pass by the grant of Congress. In United States v. Northern Pacific Railroad Company, 152 U. S. 284, 296, 298, the court said : " The act of 1864 granted to the Northern Pacific Railroad Company only public land, . . . free from preemption or other claims or rights at the time its line of road was definitely fixed, and a plat thereof filed in the office of the Commissioner of the General Land Office." In Northern Pacific Railroad Company v. Sanders, 166 U. S. 620, 634, 636, it was adjudged that the railroad company " acquired, by fixing its general route, only an inchoate right to the odd-numbered sections granted by Congress, and no right attached to any specific section until , the road was definitely located and the map thereof filed and accepted. Until such definite location it was competent for Congress to dispose of the public lands on the general route of the road as it saw proper." In the same case the court, after observing that as the lands there in dispute were not free from claims at the date of definite location, it was of no consequence what was done with them after that date, proceeded : " The only ground upon which a contrary view can be rested is the provision in the sixth section of the act of 1864, that ' the odd sections of land hereby granted shall not be liable to sale or entry or preemption before or after they are surveyed, except by said company, as provided by this act.' But this section is not to be construed without reference to other sections of the act. It must be taken in connection with section three, which manifestly contemplated that rights of preemption or other claims and rights might accrue or hecoms attached to the lands granted after the general route of the road was fixed and before the line of definite location was established. Literally interpreted, the. words above quoted from section six would tie the hands of the Government so that even it could not sell any of the odd-numbered sections of the lands after the general route was fixed— an interpretation wholly inadmissible in view of the provisions in the third section. The third and sixth sections must be taken together, and so taken it must be adjudged that nothing in the sixth section prevented the Government from disposing of any of the lands prior to the fixing of the line of definite location, or, for the reasons stated, from receiving, under the existing statutes, applications to purchase such lands as mineral lands." The principles announced in the Sanders case were reaffirmed in Menotti v. Dillon, 167 U. S. 703, 720, the court adding: " It is true, as said in many cases, that the object of an executive order withdrawing from preemption, private entry and sale, lands within the general route of a railroad is to preserve the lands, unencumbered, until the completion and acceptance of the road. But where the grant was, as here, of odd-numbered sections, within certain exterior lines, £not sold, reserved or otherwise disposed of by the United States, and to which a preemption or homestead claim may not have attached, at the time the line of said road is definitely fixed,' the filing of a map of general route and the issuing of a withdrawal order did not prevent the United States, by legislation, at any time prior to the definite location of the road, from selling, reserving or otherwise disposing of any of the lands which, but for such legislation, would have become, in' virtue of such definite location, the property of the railroad company." In United States v. Oregon &c. Railroad, 176 U. S. 28, 43, which involved the conflicting claims of two railroad companies to certain lands and required the court to determine the effect of a map of general route filed by the Northern Pacific Railroad Company, as well as the extent of the grant made to it, the court said : " If therefore the Perham map of 1865 were conceded for the purposes of the present discussion to have been sufficient as a map of ' general route ' — and nothing more can possibly be claimed for it — these lands could not be regarded as having been brought by that map (even if it had been accepted) within the grant to the Northern Pacific Railroad Company, and thereby have become so segregated from the public domain as to preclude the possibility of their being earned by other railroad companies under statutes enacted b}r Congress after the filing of that map and before any definite location by the company of its line." In the same case: " In opposition to the views we have expressed it may be said that the clause in the act of July 25,1866, providing for the selection under the direction of the Secretary of the Interior of lands for the Oregon Company in lieu of any that should 1 be found to have been granted, sold, reserved, occupied by homestead set- tiers, preempted or otherwise disposed of,' shows that Congress did not intend to include in but intended to exclude from the grant to that company any lands that could have been earned by the Northern Pacific Railroad Company by definitely fixing its route and filing its map of definite location. Undoubtedly those lands would be regarded as having been appropriated when the route of the Oregon road was definitely located, if prior to that date the route of the Northern Pacific Railroad had been definitely fixed, and if such lands were within the exterior lines of that route. But, as we have said, these lands were within the limits of the grant of July 25, 1866, and had not, at that time, or when the route of the Oregan road was definitely located, been appropriated for the benefit of the Northern Pacific Railroad Company, for the reason that the latter company had not then filed any map of definite location. The Northern Pacific Railroad Company could tahe no lands except such as were unappropriated at the time its line was definitely fixed. It accepted the grant of 1864 subject to the possibility that Congress might, before its line was definitely fixed, authorize other railroad corporations to appropriate lands within its general route, allowing it to select other lands in lieu of any so appropriated. ' The lands here in dispute were consequently subject to be disposed of by Congress when the act of 1866 was passed ; and (the line of the Northern Pacific Railroad not having been definitely located prior to the passage of the forfeiture act of 1890) the Oregon Company became entitled to take the lands and to receive patents therefor in virtue of its accepted map of definite location." See also Wilcox v. Eastern Oregon Land Co., 176 U. S. 51, and Messinger v. Same, 176 U. S. 58. The cases above cited definitely determine that the railroad company acquired no vested interest in any particular section of land until after a definite location as shown by an accepted map of its line; and that until definite location the land covered by the map of general route was a "float," that is, at large. In support of the proposition that the 'railroad company acquired an interest in the lands in dispute, upon its general route being established, reference has been made to some expressions in the opinion of Mr. Justice Field in Buttz v. Northern Pacific Railroad, 119 U. S. 55, 71 and 72, to the effect that when the general route of that road was made known by a map duly filed and accepted, " the law withdraws from sale or preemption the odd sections to the extent of forty miles on each side. The object of the law in this particular is plain ; it is to preserve the land for the company to which, in aid of the construction of the road, it is granted." But it is evident, in view of both prior and subsequent decisions, that this language is not to be taken literally or apart from the other portions of the opinions of the eminent jurist who delivered the judgment of the court. If, upon the filing and acceptance of the map of general route, the law withdrew the odd-numbered sections, then the previous holding in many cases that until definite location the grant was a float, with no interest in specific sections being acquired by the railroad company, would be meaningless; and there would be some difficulty in Congress appropriating such lands prior to definite location. Indeed, it is manifest that the court did not •mean to announce any new doctrine in the Buttz case; for Mr. Justice Field, when delivering judgment in that case, said that the charter of the Northern Pacific Railroad Company contemplated " the filing by the company, in the office of the Commissioner of the General Land Office, of a map showing the definite location of the line of its road, and limits the grant to such alternate odd sections as have not at that time, been reserved, sold, granted, or otherwise appropriated, and free from preemption, grant, or other claims or rights/ . . . Nor is there anything inconsistent with this view of the sixth section as to the general route, in the clause in the third section making the grant operative only upon such odd sections as have not been reserved, sold, granted, or otherwise appropriated, and to which preemption and other rights and claims have not attached, when a map of the definite location has leen filed." Further, we had occasion in Northern Pacific Railroad v. Sanders and United States v. Oregon &c. Railroad Company, above cited, to limit the broad language in the Buttz case which implied that after the general route was fixed the land was withdrawn by the law for the railroad company. We said in the last named case: " This language was too broad if it is construed to express the thought that public lands, when within the exterior lines of a ' general route,' are ' appropriated ' from the time the map of such route is filed, so as to prevent them from being granted by Congress to and from being earned by another railroad corporation prior to the filing of a map of definite location by the company designating such general route." It results that the railroad company did not acquire any vested interest in the land here in dispute in virtue of its map of general route or the withdrawal order based on such map; and if such land was not " free from preemption or other claims or rights," or was " occupied by homestead settlers " at the date of the definite location on December 8, 1884, it did not pass by the grant of 1864. Now, prior to that date, that is, in 1881, Nelson, who is conceded to have been qualified to enter public lands under the homestead act of May 20, 1862, went upon and occupied this land and has continuously resided thereon. The land was.not surveyed until 1893, but as soon as it was surveyed he attempted to enter it under the homestead laws of the United States, but his application was rejected, solely because, in'the judgment of the local land officers, it conflicted with the grant to the Northern Pacific Kailroad Company. He was not a mere trespasser, but went upon the land in good faith, and, as his conduct plainly showed, with a view to residence thereon, not for'the purposes of speculation, and with the intention of taking the benefit of the homestead law by perfecting his title under that law, whenever the land was surveyed. And for fourteen years before the railroad company by an ex jparte proceeding, and without notice to him, so far as the record shows, obtained from the Land Office a recognition of its claim, and for sixteen years before this action was brought, he maintained an actual residencie on this land. It is so stipulated in this case. As the railroad had not acquired any vested interest in the land when Nelson went upon it, his continuous occupancy of it, with a view, in good faith, to acquire it under the homestead laws as soon as it was surveyed, constituted, in our opinion, a claim upon the land within the meaning of the Northern Pacific act of 1864; and as that claim existed when the railroad company definitely located its line, the land was, by the express words of that act, excluded from the grant. This view protects the hona fide settler in his home, established upon the invitation of the Government under great difficulties, and does no injustice to the railroad company; for, after restricting- the grant to such odd-numbered sections of lands, within specified lateral limits, as were free from preemption or " other claims or rights " at the time the line of the road was definitely fixed, Congress, in the act of 1864, as we have seen, proceeded: " And whenever, prior to said time [of definite location] any of said sections or parts of sections shall have been granted, sold, reserved, occupied hy homestead settlers, . or preempted, or otherwise disposed of, other lands shall he selected hy said company in lieu thereoff etc. The words "occupied by homestead settlers " show that Congress intended by the charter of the Northern Pacific Railroad Company — whatever it may have intended as to other companies receiving grants of public lands — that occupancy by a homestead settler, with the intention to take the benefit of the homestead laws, constituted a claim which, existing at the date of definite location, would exclude from the grant land that might otherwise be covered by it. If Congress did not intend thus to protect the occupancy of homestead settlers, the reference to lands being " occupied by homestead settlers," at date of definite location, was meaningless, and it was useless to reserve to the company the privilege of selecting lands in lieu of those lost by such occupancy. Congress knew, when passing the act of 1864, that one going west to establish his home could not know whether the unsurveyed land occupied by him would be an even-numbered or odd-numbered section. Hence, the provision in section 3 in relation to odd-numbered sections " occupied by homestead settlers." The efficacy of such a provision could not be destroyed except by further legislation. It is as if Congress had in words declared that among the " other claims or rights " of Avhich the land must be free at the time of definite location in order that the railroad company might take, were claims aris ing out of occupancy by homestead settlers. Such settlers Congress, in effect, declared should be protected' in their rights, and the railroad company should be reimbursed by lieu lands near by. Nelson's occupancy, we have seen, commenced in 1881, while the definite location of the road occurred in 1884. That he occupied and continuously resided upon the land in dispute as a homestead settler after 1881 is admitted. • If it be said that Nelson's claim was that of mere occupancy, unattended by formal entry or application for the land, the answer is that that was a condition of things for which he was not in anywise responsible, and his rights, in law, were not lessened by reason of that fact. The land was not surveyed until twelve years after he took up his residence on it, and under the homestead law he could not initiate his right by formal entry of record until such survey. He acted with as much promptness as was possible under the circumstances. In Ard v. Brandon, 156 U. S. 537, 543, this court said: " The law deals tenderly with one who, in good faith, goes upon the public lands, with a view of making a home thereon. If he does all that the statute prescribes as the condition of acquiring rights, the law protects him in those rights, and does not make their continued existence depend alone upon the question whether ór no he takes an appeal from an adverse decision of the officers charged with the duty of acting upon his application." In the same case the court, quoted with approval these words from Clements v. Warner, 24 How. 394, 397: " The policy of the Federal Government in favor of settlers upon public lands has been liberal. It recognizes their superior equity to become the purchasers of a limited extent of land, comprehending their improvements, over that of any other person." In the recent case of Tarpey v. Madsen, 178 U. S. 215, 219 —which was a contest between the Central Pacific Railroad Company and a preemptor who sought to avail himself of the act of September, 1841 — it was found as a fact that the land in dispute had on it, at the date of definite location, (which was on October 20, 1868,) the improvements of a bona fide settler; and one of the questions in the case was how far the rights of the settler, based upon a bona fide occupancy, were affected by the absence of a local land office in which could be made some record of his application or. entry. This court said: " It is true that there was then no local land office in which those seeking to make preemption or homestead entries could file their declaratory statements or make entries, and the want of such an office is made by the Supreme Court of the State one of the main grounds for holding that the land did not pass to the railroad company. We agree with that court fully in its discussion of the general principles involved in the failure of the Government to provide a local land office. The right of one who has actually occupied, with intent to malte a homestead or preemption entry, cannot be defeated by the mere lacle of aplace in which to make a record of his intent. . If Olney was in possession of this tract before October 20, 1868, [date of definite location] with a vievj of entering it as a homestead or preemption claim, and was simply deprived of his ability to make his entry or declaratory statement by the lack of a local land office, he could undoubtedly, when such office was established, have made his entry or declaratory statement in such way as to protect his rights." In the present case, the settler waited from 1881 to 1893 for the land to be surveyed, and as soon as that was done he attempted to enter it under the homestead law in the proper office, but his claim was overruled upon the theory, unfounded in law, that the land was covered by the railroad grant. So far we have proceeded on the ground that as the act of 1864 granted to the railroad company the alternate sections to which at the time of definite location the United States had full title, not reserved, sold, granted or appropriated, and which wer a free from preemption or other claims or rights at date of definite location, and authorized the company to select other lands in lieu'of those' then found to be " occupied by homestead settlers," Congress excluded .from the grant any land so occupied with the intention to perfect the title under the homestead laws whenever the way to that end was opened by a survey. 3. But the case of the appellant does not depend entirely upon this view of the act of 1864. It is placed on impregnable ground by the act of May 14, 1SS0, c. 89, entitled An act for the relief of settlers on public lands," and which was in force when, in 1881, Nelson settled upon the land in dispute. The act is as follows: " 1. That when a preemption, homestead or timber-culture claimant shall file a written relinquishment of his claim in the local land office the land covered by such claim shall be held as- open to settlement and entry without further action on the part of the Commissioner of the General Land Office. § 2. In all cases where any person has contested, paid the land office fees, and procured the cancellation of any preemption, homestead, or timber-culture entry, he shall be notified by the register of the land office of the district in which such land is situated of such cancellation, and shall be allowed thirty days from date of such notice to enter said lands : Provided, That said register shall be entitled to a fee of one dollar for the giving of such notice, to be paid by the contestant, and not .to be reported. § 3. That any settler who has settled, or who shall hereafter settle, on any of the public lands of the United States, whether surveyed or unsurveyed, with the intention of claiming the same under the homestead laws, shall be allowed the same time to file his home- stead application and perfect his original entry in the United States Land Office as is now allowed to settlers under the preemption laws to put their claims on record, and his right shall relate back to the date of settlement, the same as if he settled under the preemption laws." 21 Stat. 140. The third section of this statute is a distinct confirmation of the rights of a qualified person who had theretofore settled or should thereafter settle " on any of the public lands of the United States, -whether surveyed or unsurveyed, with the intention of claiming th<3 same under the homestead laws;" though, of course, no lands could be deemed of that character which had prior to such settlement become vested in a railroad company in virtue of an accepted map of definite location. It is, as we have seen, a fixed principle in the law relating to the administration of the public lands that a railroad grant is a mere float until definite location, and that prior to that date all lands, within the exterior limits of a general route, are entirely at the disposal of the Government, to be appropriated .as it desires. The railroad company, -as already shown, acquired,.by its accepted map of general route, no interest in any specific lands, but only a right to take those to which, at the date of definite location, the United States had full title, and upon which there was no claim, and which were not " occupied by homestead settlers." It was, therefore, competent for the United States by the act of 1880 — which was four years prior to the definite location of the Northern Pacific Railroad — to give additional rights to those who had then settled, or might thereafter in good faith settle upon any of the public lands. 'Some who have made comments on this act seem to overlook the broad language of section three, and to forget that that section embraces not only those who had theretofore, but those who might thereafter, settle on the public lands, whether surveyed or imsurveyed. Nelson settled on unsurveyed public land, in which the railroad company had no vested or specific interest and the third section of the act of 1880 was purposeless if it did not allow him to perfect his title under the homestead laws, as soon as the la/nd was surveyed. The meaning we have given to the words "occupied by homestead settlers" in the act of 1864, and what has been said about the act of 1880, finds support in decisions of the Land Department. It will be well in view of the far-reachiing consequences of the decision in the present case to refer to some of those decisions. In Southern Pacific Railroad (Branch) v. Lopez, 3 L. D. 130, 131 (1884), Secretary Teller said that the act of July 27, 1866, 14 Stat. 292, relating to the Southern Pacific Railroad Company, " granted only such lands as were ' not reserved, sold, granted, or otherwise appropriated, and free from preemption or other claims or rights ' at date of definite location ; and provided that ' whenever prior to said time any of said sections or parts of sections shall have been occupied by homestead settlers,. preempted,' etc., lieu lands might be taken." It will be observed that this was the language of the Northern Pacific Act of 1864. The Secretary proceeded: "Now a homestead entry, which must be made on surveyed lands, would-be within-the descriptive terms 'other claims'' without doubt; but the question material to the case before me, wherein the land' was not surveyed, is whether a homestead settlement on unsurveyed land, with a view to entering it when surveyed, is within said terms.- 1 think it is. Construing together the granting words and those respecting the lieu land selection, it is evident that one of the ' other claims or rights ' excepting land from the operation of the grant was ' occupation [occupied] by homestead settlers.' The word 'occupied' and the idea conveyed by it were foreign to the homestead law at date of this act, as. an essential element in the reservation of land. I need not recite the numerous decisions of the courts and of the Land Department, which settle the principle that under the homestead law it is the ' entry ' which reserves land (except for the short period during which it is reserved by settlement under the act of May 14, 1880,) and not any occupation by the claimant before or after it. The language of the granting act is therefore peculiar in this respect, and we are to suppose that it was used deliberately, with knowledge of then-existing law, and for a special and important purpose. We must interpret it in accordance with this evident purpose. Congress was aware that by this act it was making grants- of land's far beyond the line of the government surveys, in regions occupied and to be occupied largely .by settlers awaiting the advent of the surveyor to prefer their claims. By section 6 the homestead law was extended to the even sections after survey, and expressly withheld from the odd sections before and after survey, and yet in section 3 land ' occupied by homestead settlers ' was excepted from the grant. Congress knew that unsurveyed land could not be ' entered ' as homestead ; it had in terms prohibited homestead ' entry ' on. these lands / it was aware that only by such ' entry ' could a claim be appropriated and reserved from the grant, without express exception; and therefore in the use of the words ' occupied by homestead settlers ' it intended to make such express exception, and to indicate a different kind of appropriation by a class of settlers not within the letter of the homestead law, though clearly within its spirit, namely, those who had made a home on the public domain in advance of the surveys, with the intention of subsequently claiming it under said law. If this was not the purpose, then the employment of the peculiar language referred to was a vain and useless thing; and such a thing we are not to suppose Congress had done. 92 U. S. 733. It therefore follows that the land claimed by Lopez, whose proofs are not questioned in any particular, and who preferred his claim promptly upon survey, was ' occupied by a homestead settler ' when the grant to this company tooh effect, and hence excepted from the operation of the grant." In Northern Pacific Railroad Company v. Anrys, 10 L. D. 258-9 (1890), which was a contest between the Northern Pacific Railroad Company and a homesteader who had settled on unsurveyed public lands, Secretary Noble said : " It is urged that the land was not subject to the operation of the homestead law at the date of Newland's settlement, because unsurveyed, and that the homestead claim could have attached only by entry. But it must be remembered that the rights of the parties here must be determined by a proper Construction of the railroad grant rather than of the general homestead' law. It must be admitted that the ruling in the case at bar is in line with those of the Department for many years. In the case of Southern Pacific Railroad Company v. Lopez, 3 L. D. 130, the question here presented was fully discussed in connection with a grant framed in words identical with those used in the grant for-the Northern Pacific Company, and it was held that a homestead settlement on unsurveyed land with a view to entering it when surveyed is within the term 'other claims,' and that 'it is evident that one of the " other claims or rights " excepting land from the operation of the grant was " occupation by homestead settlers." ' In support thereof it was urged that Congress was aware that by the act in aid of a road extending across the western half of the continent, it was making a grant far beyond the line of government surveys, in regions occupied and to be occupied largely by settlers awaiting the advent of the surveyor to prefer their claims. In this view I concur. It seems beyond question that it was to protect such settlers as described above that Congress excepted from the operation of the grant tracts ' occupied by homestead settlers.' Had Congress intended to extend its protection only to those who had made entry, it would have said so, in other and appropriate words. The ordinary exception of ' lands to which a homestead right has attached ' would have fully protected that class of settlers. But Congress went further and made occupation the test, instead of entry. I do not deem it necessary to cite cases to show that the views of the Department on this point have not changed." In Spicer v. Northern Pacific R. R. Co., 10 L. D. 440, 443, the rights of an Indian were disputed by the Northern Pacific Railroad Company under the act of March 3, 1875, 18 Stat. 402, 420, c. 131, extending the benefit of the homestead laws of the United States, with certain restrictions'upon the title when obtained, to Indians twenty-one years of age, or the head of a family having abandoned the tribal relations. Secretary Noble said: " The pr'oyisions of this act were in force at the date when the company's rights attached on definite location of its road, and, if the matters alleged relative to the claim of the Indian, Enoch, be true, he was at that date, and had been for many years prior thereto fi/oing upon the lemd in question, as his home, with the intention to acquire title thereto as a homestead; he had valuable and permanent improvements thereon, and had exdtir vated the same for many years, during all of which time he claimed it as his home. Such a claim, it seems to me, is clearly covered by the excepting clause of the grant to the company, and, if proven, would be sufficient, in my judgment, to defeat the claim of the company to the land. True, the Indian had put no claim of record for the land, but it is well settled by departmental rulings that while such omission might defeat the claim as against a subsequent settler who duly places his claim of record, it will not defeat such claim as against the United States, and the land covered thereby will be excepted from.the operation of any grant for the benefit of a railroad company attaching subsequently to the inception of the settlement right. Northern Pacific Railroad Company v. Evans, 7 L. D. 131, and authorities there cited. It is also well settled that a claim resting on settlement, residence a/nd improvements, acquired prior right to the date when the company's rights attached under its grant, is sufficient .to except the land covered thereby from the operation of such grant." In Northern Pacific Railroad Company v. McCrimmon, 12 L. D. 554, it was said : " In support of this appeal, counsel for the railroad company contend that Thomas did not claim the land as government land, but as railroad land, and that, although the land was excepted from the withdrawal on general route, yet Thomas did not insist upon the right to take it as government land, but was satisfied to claim it under the railroad company. Under the ruling of the Department, as announced in the cases of Northern Pacific Railroad Company v. Bowman, 7 L. D. 238, and Northern Pacific Railroad Company v. Potter, 11 L. D. 531, the only question to be determined is, whether there was a settlement on the land at date of definite location by one having the qualification to enter the land under the settlement laws, and, if these facts are shown, the land would he excepted from the operation of the grcrnt, although such settler might, not have known of his right, but held the land under the belief that it was railroad land." In Northern Pacific Railroad Company v. Plumb, 16 L. D. 80, it appeared that the land in dispute was within the primary limits of the company's grant as shown by map of definite location filed July 6, 1882, and was also within the limits of the withdrawal on map of general route filed February 21, 1872. Secretary Noble said: " The only question raised by the appeal is as to whether the occupanóy shown by Plum was sufficient to defeat the grant. It appears that in 1881 Plumb took possession of the tract in question, together With an adjoining forty-acre tract, upon which he resided. In the spring of 1882 he broke the entire tract in question and enclosed it with a fence, and has since had possession of and improved the land. He had never exercised the preemption right, and was therefore duly qualified to claim the land under his settlement right. In 1886 he contracted to purchase the adjoining forty acres, upon which he had resided, from the company, and at the hearing it was sought to show that he also claimed the land in question under the grant at the date of the definite location of the road, but the testimony will not warrant such a finding. ' Being in possession of the land in question at the date of the definite location of the road with valuable improvements thereon, and duly qualified to assert a right thereto under the settlement laws, he had such a right to the land as serced to defeat the grant, and the fact that the claim subsequently asserted by him was under a different law from those providing for settlement can in nowise affect his rights in the premises. Being excepted from the grant by reason of his settlement, Plumb was at liberty to seek title from the Government under any law under which such lands might be taken." In Northern Pacific Railroad Company v. Benz, 19 L. D. 229, the land in dispute was within the limits of the' grant to the company, as shown by map of definite location filed July 6, 1882, and was covered by the withdrawal upon general route of February 21, 1872. Secretary Smith said: " The present contest is between the railroad company on one part, and Hoy and Benz on the' other. If it can be made to appear affirmatively, by good and sufficient testimony, that either of these parties, Hoy or Benz, was in possession of said land July 6, 1882, when the line of the road opposite thereto was definitely fixed, and, at the same time, had the right to perfect title to the same under the preemption or homestead laws, such possession excepted the land from the grant to therailroad company and reduced the contest to one between Hoy and Benz; or, rather, to one between Hoy and the legal representatives of Benz, he having died since entering his appeal." It was found that on July 6, 1882, Hoyt was a competent entryman under the homestead laws. What has been said as to the meaning and scope of the acts of 1864 and 1880 is not inconsistent with anything decided in Maddox v. Burnham, 156 U. S. 544, and Wood v. Beach, 156 U. S. 548. In Maddox v. Burnham the question was as to the rights of a homestead occupant as against a certain railway company. Beferring to the third section of the act of 1880, the court said: " By this section for the first time the right of a party entering land under the homestead law was made to relate back to the time of his settlement. But this act was passed' long after the' ricjhts of the railway company had accrued cmd the legal title had passed to it. It is not operative, therefore, to divest such legal title, or enlarge as against such title any equitable rights which the defendant theretofore had." 'This was a case therefore in which the claim based upon occupancy accrued after the legal title had become vested in the railroad company, not a case in which the grant was, as here, a float with no right attached to any specific section. In Wood v. Beach — which was a contest between a homestead settler and a railway company — it appeared that the map of the line of definite location was filed December 6, 1866, and a withdrawal followed in 1867, while the occupation arid settlement of the homesteader did not commence until June 8, 1870. Of course, the legal title to the sections granted vested in the railway company upon the filing and acceptance of the map of definite location. Besides the withdrawal in 1867 was pursuant to the express command of the act of Congress of July 26, 1866, 14 Stat. 290, § 4, which provided that as soon as the railway company should " file with the Secretary of the Interior maps of its line, designating the route thereof, it shall be the duty of said Secretary to withdraw from the market the lands granted by this act in such manner as may be best calculated to effect the purpose of this act and subserve tljte public interest." It might well be, therefore, that one whose right, resting upon occupancy, had accrued, as in Maddox v. Burnham, after the legal title passed to the railroad company, or one who, as in Wood v. Beach, did not settle upon the public lands until after the railroad company had definitely located its road, and after the lands had been withdrawn from market pursuant to the directions of an express act of Congress, could not, as against the. railroad company, acquire an interest in them in virtue of the act of 1880. Nor is there any conflict between the decision now rendered and Northern Pacific Railroad v. Colburn, 164 U. S. 383; for, as appears from the opinion and record in that case, the land there claimerl to have been occupied by a homestead settler, at the date of definite location, wras surveyed public land, and the good faith of the occupation was not manifested by an entry, or an attempt at entry, at any time in the local land office. It was held that the inchoate right of the homesteader must be initiated by a filing in the land office. In the present case, as we have seen, the land occupied was unsurveyed, and at the time of such occupancy, the'land being unsurveyed, there could not then have been any filing or entry in the land office. The case before us is altogether different. Nelson's occupancy occurred after the passage of the act of 188Q. While that act did not apply to a railroad company which had acquired the legal title, by a definite location of its road, it distinctly recognized the right prior to such time to settle upon the public lands, whether surveyed or unsurveyed, with the intention of claiming the same under the homestead laws. In occupying the land here in dispute Nelson did not infringe upon any vested right of the railroad company; for there had not been at the date of such occupancy in 1881 any definite location of the line of the railroad, and the land, so occupied, with other lands embraced by the map of general route, constituted only a " float," the company having, at most, only an inchoate interest in them, a right to acquire them, if, at the time of definite location, it was not "occupied by homestead settlers" nor incumbered with " other claims or rights." The withdrawal merely from " sale or entry " in 1873, based only on a map of the general route of the road, did not identify any specific sections, was not expressly directed or required by the act of 1864, was made only out of abundant caution and in accordance with a practice in the Land Department, and did not and could not" affect any rights given to homestead occupants by Congress in the acts of 1864 and 1S80. Besides, the order made in 1873 to withhold from sale or entry all the odd-numbered sections falling within the limits of the general route was without practical value so far as the land in dispute was concerned ; for such land had not been surveyed, and there could not have been any sale or entry of unsurveyed lands. At any-rate, the order of withdrawal directing the local land office to withhold from " sale or entry " the odd-numbered sections within the limits of the general route could not prevent the occupancy of one of those sections prior to definite location by one who in good faith intended to claim the benefit of the homestead law; this, because such right of occupancy was distinctly recognized by the act of 1864. But if this were not so, the act of 1880, in its application to public lands, which have not become already vested in some company or person, must be held to have so modified the order of withdrawal based merely on general route, that such 07'der would not affect any occupancy or settlement made in good faith, as in the case of Nelson, after the passage of that act, and prior to definite location. This conclusion cannot be doubted, because the act of 1880 made no exception of public lands covered by orders of withdrawal from sale or entry based merely on general route, and because also public lands, which had not become vested in the railroad company, by the definite location of its line, were subject to the power of Congress. It results that the Supreme Court of the State of Washington erred in not affirming the judgment of the court of original jurisdiction in favor of the defendants. The judgment must be reversed, and the cause remanded for such further proceedings as may not be inconsistent with this opiiiion.

488 U.S. 944

Ct. App'. Tex., 11th Dist. Certiorari denied.

139 U.S. 642

Mr. Justice Field, after stating the case, delivered the Opinion of the court. By the Code of Oregon the findings of the court in an . equity case of this kind are as conclusive as similar findings would be in an action at law. Hill's Annotated Laws of Oregon, sec. 397. They must therefore be taken as correct in the disposition of the question before us, they not having been set aside or qualified by any subsequent action of the court below. And upon them it is contended that the amendment to the declaratory statement of the defendant made-in 1884, by'which he was enabled to include within it the land in controversy, never occupied or improved by him, but at the time in the possession of the plaintiff, was in effect a second declaration of a. preemptive right to a different tract from the one originally claimed by him, and was allowed in disregard of the express prohibition of the statute, Bev. Stat. § 2261, or upon a plain misconstruction' of its provisions, and gave no jurisdiction to the land department to treat the land thus in eluded as part of his preemption claim, and that but for the amendment the land would have been awarded to the plaintiff. It is objected to this contention that the question as to the defendant's right as a preemption claimant to the land in controversy was a matter to be determined by the land department, where it was considered. It is true the determination of that department in matters cognizable by it, in the alienation of lands under the laws of the United States, cannot be collaterally impeached, where its enforcement, is sought. In ejectment the question always is. who has the legal title for the demanded premises, not who ought to have it. In such cases the patent of the government issued upon the direction of the land department is unassailable. But whilst the patentee holds the legal title his equitable relations to other parties are not thereby affected. That title, with.important qualifications hereafter mentioned, is as much subject to control as the title to land held by him derived from private sources. If one takes a title in his own name, whilst acting as agent, trustee or guardian, or in any other fiduciary capacity, a court of equity will, upon a showing of the fact in an appropriate proceeding, subject the lands to proper trusts in his hands or compel him to transfer the title to the party equitably entitled to it. Nor does it matter whether the party takes the title in his own name in good faith, under the belief that he can thereby better manage the property to the advantage of those for whom he is acting, or in compliance with their wishes, or whether* from an intention to defraud them of their rights therein. In either case a court of equity will control the legal title so as to protect the just rights of the true owner. Townsend v. Greeley, 5 Wall. 326, 335; Estrada v. Murphy, 19 California, 248. All this is but common knowledge, and the doctrine is constantly invoked for'the protection of the rights of parties against the mistake, accident or fraud of agents or parties acting in a fiduciary capacity, and little difficulty is experienced in enforcing it, where the property held is not claimed under the adjudication of a court or other tribunal affirming the title of the holder; as, for instance, upon the determination of a department like that established to supervise proceedings for the alienation of the public lands. In these latter cases the action of a court of equity is limited so as not to interfere with the rightful exercise of the powers intrusted to the department. The conclusions of the department are not even then open to review for alleged errors in passing upon the weight of evidence presented, for that would be to make a court of equity a court of appeal from its decisions, which was never contemplated. But where the matters determined are not properly before the department, or its conclusions have been reached from a misconstruction, by its officers, of the law applicable to the cases before it, and it has thus denied to parties rights which, upon a correct construction, would have been conceded to them, or where misrepresentations and fraud have been practised, necessarily affecting its judgment, then-the courts can, in a proper proceeding, interfere and control its determination so as to sbcure the just rights of parties injuriously affected. Quinby v. Conlan, 104 U. S. 420, 426; Baldwin v. Stark, 107 U. S. 463, 465. In such cases a court of equity only exercises its ordinary jurisdiction to prevent injustice from a misconstruction of the law or the machinations of fraud. The misconstruction referred to must be, as stated, of the law applicable to the case as established. Of this misconstruction we have an instance in Silver v. Ladd, 7 Wall. 219, where it was held by the Commissioner of the General Land Office and the Secretary of the Interior that the donation act of Oregon did not allow an unmarried woman to take as a settler, on the ground that she was not the head of a family. But this court decided that in this determination the officers misconstrued the law, and upon á bill in equity, filed by her son against subsequent patentees of the United States of the lands, held that relief should be afforded by directing a transfer of the title to him from such patentees. And the misrepresentations and fraud mentioned necessarily affecting the judgment of the department, must be such as have prevented the unsuccessful party, from fully presenting his case, or the officers of the government from fully considering it; such as have imposed upon its jurisdiction or turned. its attention from the real controversy. It must also appear that but for such imposition and fraud the determination •would have' been in favor of the plaintiff, and have entitled him to the patent for the land in dispute. Lee v. Johnson, 116 U. S. 49, 50: Sparks v. Pierce, 115 U. S. 408, 413; Vance v. Burbank, 101 U. S. 514, 519. ' The case at bar, upon the facts found, is brought fully within the law as thus declared. The defendant in his original declaratory statement did not include the premises in controversy as part of his preemption claim. It covered only adjoining land. Under the statute he could not make a second declaration for different property. Section 2261 of the Be vised Statutes provides that "no person shall be entitled to more than one preemption right by virtue of the provisions of section 2259 ; nor where a party has filed his declaration of intention to claim the benefit of such provisions for one tract of. land, shall he file, at any future time, a second declaration for another tráct."' Section 2259 referred to designates who may be entitled to preemption. The inhibition of section 2261 is positive and unconditional. The tract applied for in the second declaration need not be an entirely separate and distinct parcel to call into effect the prohibition ; it is enough if there be such addition to the original land applied for as to justify the designation of it, with the addition, as a different tract. With the filing of the first declaration the applicant is limited to the land designated, whether less or different from what he supposed he could claim, or what he may subsequently desire to acquire. The prohibition of the statute is without qualification or exception, and the rights of the preemptor must be measured by it. Baldwin v. Stark, 107 U. S. 463, 466. Such has been the uniform ruling of -the land department, except where a .prior claim has prevented the completion of the original entry, or a mistake in the first declaration has occurred without the knowledge or any fault 'of the claimant. In the Case of J. B. Raymond,, 2 Land Dec. 854, the claimant filed a declaratory statement in February, 1880, for a quarter section of land in Kansas, .and in April, 1883, he applied to the local land office for permission to make a second filing for the same land, alleging as a reason therefor that he had made valuable improvements on his claim, but, having failed to raise any crops on account of the drought, was unable to pay for the land w ithin the time prescribed by law. He, therefore, desired to file a second declaratory statement for the same land, for the better protection of his rights in the premises. The local land office rejected the application, and the Commissioner approved of the decision. Subsequently, the claimant asked permission to file- another declaration for the same or other land, but it met with a similar rejection, and the case on both applications was brought before the Interior Department, where the decision of the Commissioner in both instances was affirmed. Mr. Teller, then Secretary, held that the claimant's application to file a new declaration for other land was properly denied upon the second clause of the statute, and that his application to file for the same land was properly denied upon the first clause, he having attempted to exercise the one preemptive right which was alone permissible. In Allen v. Baird, 6 Land Dec. 298, it appeared that Allen had made a declaratory statement for a tract of land as a preemptor, in March, 1883, although he had made such declaration for another tract in August, 1880. It was sought to avoid the former filing upon the ground that at the date thereof he was not twenty-one years of age, and hence the filing was a nullity and no bar to a second one. The Commissioner held that the second filing was illegal, and upon appeal to the Interior Department his decision was affirmed. In disposing of the case, Mr. Lamar, then Secretary, after observing that Allen had stated in his first filing that he was over twenty-one years of age, when he knew the statement was untrue, and that, the land being subject to settlement and entry, he could not be heard to allege that the first filing was illegal, said : " The question of, second filing was carefully considered by my predecessor, Secretary Teller, in the Case of J. B., Raymond, 2 Land Dec. 854, wherein it was held, that under the provision of section 2261, Devised Statutes, a preemptor may file but one declaratory statement for land free to settle ment and entry. This ruling has been- uniformly followed, and the only exception is where the preemptor is unable tc perfect his entry on account of some prior claim, and there is no fault on his part." Reference is then made to other decisions of the department, and to the case of Baldwin v. Stark, cited above, where the positive and unconditional character of the inhibition of the statute is recognized by this court. In allowing the defendant in this case to amend his declaratory statement, the commissioner of the General Land Office assumed a power which was not vested in him. No circumstances existed which prevented the first declaration from bringing into operation the express prohibition of the statute against a second one. The claimant knew perfectly the character and extent of the land originally claimed by him. He was at the time under no misapprehension on that subject. The commissioner, in allowing the amendment to cover a much larger tract than at first claimed, authorized a second declaration for a different tract, which was not permissible. If that officer was of the opinion that the statute did not apply to an amendment, thus enlarging the original declaration, he misconstrued its provisions. Without such enlargement, the premises in controversy would not have been brought before the land department as a part of the claim of the defendant, and no obstacle would have been presented to the award of a patent to the plaintiff for the land. By the amendment, therefore, the department acquired no more jurisdiction to award to the defendant the tract not embraced by his original declaration than it had to award to him any other tract never entered by him as a preemptioner in the local land office. Its subsequent action upon the additional tract could not defeat the rights of the plaintiff to the premises. Besides the want of authority in the commissioner to allow under the form of an amendment an enlargement of the preemption claim, the manner in which that officer was imposed upon taints the transaction as one of fraud and misrepresentation on the part of the claimant, by which material facts were concealed from the department. A court of equity has jurisdiction in such a case to compel the transfer to the plaintiff of property which, but for.such fraud and- misrepresentation, would have been awarded to him, and of which he was thereby wrongfully deprived. jDecree affirmed.

440 U.S. 970

Appeal from App. Ct. Ill., 2d Dist. Motion of appellant for leave to proceed in forma pauperis granted. Probable jurisdiction noted.

9 B.T.A. 1133

OPINION. Trammell : The only issue in this proceeding is whether a liquidating dividend received in 1922 under the circumstances sot out in the findings of fact is a capital gain under the provisions of section 206 of the Eevenue Act of 1921 and taxable as such under the provisions of that section or whether it is a dividend within the meaning of section 201 and subject to the surtax imposed by section 211 of the Act. The pertinent provisions of section 201 are: (a) That the term "dividend" when used in this title means any distribution made by a corporation to its shareholders or members, whether in cash or in other property, out of its earnings or profits accumulated since February 28, 3013, (b) For the purpose of this Act every distribution is made out of earnings or profits, and from the most recently accumulated earnings or profits, to the extent of such earnings or profits accumulated since February 28, 1913; (c) Any distribution (whether in cash or other property) made by a corporation to its shareholders or members otherwise than out of (1) earnings or profits accumulated since February 28, 1913, or (2) earnings or profits accumulated or increase in value of property accrued prior to March 3, 1913, shall be applied against and reduce the basis provided in section 202 for the purpose of ascertaining the gain derived or the loss sustained from the sale or other disposition of the stock or shares by distributee. Section 206 provides in part as follows: (а) That for the purpose of this title: (1) The term "capital gain" means taxable gain from the sale or exchange of capital assets consummated after December 31, 1921; (2) The term " capital loss " means deductible loss resulting from the sale or exchange of capital assets consummated after December 31, 1921; (3) The term " capital deductions " means such deductions as are allowed under this title for the purpose of computing net income and are properly allocable to or chargeable against items of capital gain as defined in this section; (4) The term "capital net gain" means the excess of the total amount of capital gain over the sum of the capital deductions and capital losses; (5) The term " ordinary net income " means the net income, computed in accordance with the provisions of this title, after excluding all items of capital gain, capital loss, and capital deductions; and (б) The term "capital assets" as used in this section means property acquired and held by the taxpayer for profit or investment for more than two years (whether or not conneeted with his trade or business), but does not include property held for the personal use or consumption of the taxpayer or his family, or stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year. In Frank D. Barrow, 8 B. T. A. 276, we considered the question of whether income derived from a distribution in liquidation is taxable as a dividend within the meaning of section 201 of the Act of 1921, or is a gain or profit from the sale or other disposition of personal property. After reviewing the various income-tax acts passed subsequent to the adoption of the Sixteenth Amendment and prior to the Act of 1921 insofar as they related to the definition and taxation of dividends, and coming to a consideration of section 201 of the Revenue Act of 1921, we said: Congress dropped the distinction between liquidating dividends and dividends as defined in section 201 (a) which it has recognized in the 1918 Act, and declared anew its intent to tax as dividends all distributions of earnings accumulated since February 28,1913, whether the same be made in liquidation or otherwise, as was the case under the 1916 and 1917 Acts. This clearly appears from the provision of the new subdivision (c) that "any distribution made othenoise than out of (1) earnings or profits accumulated since February 28, 1913 shall be applied against and reduce the basis provided in section 202 " for determining gain or loss on the sale or other disposition of property. Earnings or profits accumulated since February 28, 1913, distributed in liquidation are to be excluded from the computation of gain derived or loss sustained from such distribution, and are to be taxed as other dividends, regardless of whether there is a gain derived or loss sustained from such distribution. The intent of Congress to remove the distinction between liquidating dividends and other dividends, and to make its definition of the term in section 201 (a) comprehensive and all-inclusive, so far as earnings or profits accumulated since February 28, 1913, are concerned, appears even more clearly from the history of the 1921 Act in process of enactment. The House Bill provided, in section 201 (c), for the treatment of liquidating dividends in the identical language of the 1918 Act. The Senate amendment eliminated the provision entirely and substituted as subdivision (c) the provision as to stock dividends appearing as subdivision (d) in the Act as passed. The House accepted the amendment with an amendment which appears as subdivision (e) in the Act as finally passed. The statement of the House Managers from the Committee on Conference relative to this provision, is: " The House bill provided that amounts distributed in liquidation of a corporation shall be treated as in part or in full payment in exchange for stock or shares, and any gain or profit realized thereby shall be taxed to the distributee as other gains or profits. The Senate amendment strikes out this provision. The House recedes with an amendment, [Referred to above.]" There would seem to be no doubt that Congress intended its definition of " dividends " to include liquidating dividends to the extent of earnings accumulated since February 28, 1913. The Revenue Act of 1918, section 201 (c) provides in part as follows: Amounts distributed in the liquidation of a corporation shall be treated as payments in exchange for stock or shares, and any gain or profit realized thereby shall be taxed to the distributee as other gains or profits. This provision is omitted in the Revenue Act of 1921. A capital gain is a gain from the sale or exchange of capital assets. If under the 1921 statute a liquidation dividend is not to be treated as a gain or profit on the sale or exchange of assets, it follows that such a dividend does not come within the scope of section 206 (a) (1), that is, a taxable gain from the sale or exchange of capital assets. Under section 201 of the 1921 Act the distribution in this case is to be taxed as other dividends. Frank D. Darrow, supra. It being so taxed, there is no provision of the statute which would permit the petitioner to elect to have the distribution taxed under section 206 (a) (1). The action of the respondent is approved. Reviewed by the Board. Judgment will he entered for the respondent.

368 U.S. 836

C. A. 2d Cir. Certiorari denied. Mr. Justice Douglas is of the opinion certiorari should be granted.

540 U.S. 1138

C. A. 11th Cir. Certiorari denied.

291 F.2d 252

BARNES, Circuit Judge. This action is for a tort occurring upon the navigable waters of the United States. Thus the Admiralty jurisdiction of the United States courts is invoked. 28 U.S.C. § 1333. A final decree having been rendered below, this court has jurisdiction over the appeal. 28 U.S.C. § 1291. On December 3, 1956, Frank Sannella, an employee of appellant Yerba Buena Corporation, was injured while on board the S.S. Fairland docked at Stockton, California. Sannella's employer was, at the time, stevedoring the vessel. Within a year after the injury, Sannella filed suit in the United States District Court, Northern District of California, against Waterman Steamship Company and several Does. Waterman Steamship Company filed an answer denying ownership of the vessel. The action against the Does was later dismissed. Fireman's Fund Insurance Company, compensation underwriters for the stevedore, Yerba Buena Corporation, filed a motion to intervene in order to recoup compensation and medical expenses paid in behalf of Sannella out of any judgment in favor of Sannella. This motion to intervene was granted. On or about January 30, 1959, Sannella's attorneys learned that the S.S. Fairland's owner was Pan-Atlantic Steamship Corporation and not the then defendant, Waterman S.S. Company. Pan-Atlantic determined to settle with Sannella for the sum of $7,000, and so advised appellants' attorneys. Because the latter declined to waive any portion of the lien of the compensation carrier, amounting to $3,584.93, counsel for appellee tendered the defense of the action to appellants. Thereafter, the compensation carrier agreed to cut its demand to about $2,000, and Pan-Atlantic went ahead with the settlement. They asked the stevedoring companies to approve of the reasonableness of the settlement, but received no response to this request for comment. At that time the stevedoring companies could have obtained any information they thought necessary with respect to liability. Pan-Atlantic then concluded the settlement, advising counsel for appellants. After concluding the settlement with Sannella, Pan-Atlantic sued Yerba Buena Corporation and California Stevedore & Ballast Co. California Stevedore & Ballast Co. was joined because Yerba Buena had performed the stevedoring services involved under a contract with California Stevedore. Judgment for $7,000 was entered in favor of Pan-Atlantic. This appeal followed. I. Appellants argue first that appellee was a volunteer in settling with Sannella. They point out that Sannella had never filed suit against Pan-Atlantic and had not even moved to set aside the order dismissing the fictitious defendants in the action against Waterman S.S. Company. And an independent action against Pan-Atlantic, appellants contend, would probably have been barred by laches. California Code of Civil Procedure, § 340, providing a one year statute of limitations in tort actions, would, appellants assert, be a fair measure of the promptness with which Sannella was required to act. Appellee admits that Sannella would be confronted by obstacles in any attempt to reinstate the fictitious defendants in the original action (Molnar v. National Broadcasting Co., 9 Cir., 1956, 231 F.2d 684). But the rules regarding Doe practice in federal court are not crystal clear (Scurlock v. American President Lines, D.C.N.D.Cal.1958, 162 F.Supp. 78), and it is not certain that Sannella would have been unsuccessful in a motion to set aside the order dismissing the Does, since he could have made such motion within the one year limit established by the Federal Rules of Civil Procedure, Rule 60(b) (1), (2) and (3), 28 U.S.C.A. Appellee agrees with appellants that in applying laches, an Admiralty court will be guided by the analogous state statute of limitations. But appellee correctly notes that the statute of limitations is not an iron rule; the question presented by a defense of laches is addressed to the discretion of the trial court which may consider "the peculiar equitable circumstances" of the case (Czaplicki v. The Hoegh Silvercloud, 1956, 351 U.S. 525, 533, 76 S.Ct. 946, 951, 100 L.Ed. 387). Thus, while appellee had defenses to any action which Sannella might bring, it is by no means clear that such defenses would have been successful. Thus there were disputed legal positions in existence, and appellee did not act as a volunteer in settling with Sannella. II. Appellants next urge that appellee failed to establish its own liability to Sannella and that consequently it cannot seek recovery on its contract of indemnity. The assertion that appellee was not liable because of Sannella's laches has already been disposed of. Additionally, appellants assert in almost the same breath, two diametrically opposed positions. The evidence establishes, they contend, that appellee's vessel was not unseaworthy, and therefore appellee could not have been legally liable for Sannella's injury. After attacking as inadmissible hearsay some of the evidence upon which a finding of unseaworthiness could be based, appellants assert that "any alleged failure which may have caused the accident to Sannella was caused by the defective equipment of appellee's vessel Such cause, appellants point out, does not come within the indemnity contract, which provides indemnification only when the stevedore is itself negligent. Appellants' inconsistent positions tend to establish the elements necessary to support appellee's recovery. In order to recover, appellee must first show that it had some sort of liability to Sannella. Appellants, relying upon the unofficially reported case of McAndrews v. United States Lines Company, 1959, A.M.C. 1575, contend that appellee's liability must be an actual one; the ship owner must establish its own negligence or the unseaworthiness of its vessel. Another view, propounded by appellee and supported by recent and strong authority, is that the indemnitee need show only a potential liability; the indemnitee need not resist settlement to the point of a jury verdict, the amount of which might greatly exceed a reasonable settlement. (Lilleberg v. Pacific Far East Line, Inc., D.C.N.D.Cal.1958, 167 F.Supp. 3, relying upon Chicago Rock Island & Pacific Railway Co. v. United States, 7 Cir., 1955, 220 F.2d 939.) Such potential liability certainly existed in the instant case, where a longshoreman was injured by a roller beam which might have fallen because of improper maintenance. That such improper maintenance may have existed was implicit in the testimony contained in the assertedly inadmissible statement of Fate Thompson. We do not think that the admission of the signed statement, on the issue of potential liability, was reversible error in this judge tried case. The deposition was not necessary to sustain a finding of "potential liability." It is thus established that the injury to Sannella may have been caused in part, as appellants themselves contend it was, by the unseaworthiness of appellee's ship. Appellee has shown its potential liability. Having established such potential liability, appellee need establish further only that Yerba Buena Corporation's negligent conduct contributed to Sannella's injury. The very depositions relied upon by appellants to establish the seaworthiness of the vessel contain evidence that Yerba Buena Corporation's employees negligently moved the starboard end of the rolling beam so far ahead of the port end that the starboard end untracked. See Libellant's Exhibit 16, Deposition of Second Mate Donald C. Uht, of S. S. Fairland, p. 6, 1. 12 to p. 7, 1. 6; and Exhibit 15, Deposition of Jackson Perry Everett, Chief Officer of S. S. Fair-land, p. 36, 1. 21 to p. 37, 1. 19. Such evidence, of course, supports the trial court's finding (XIII, R. 42) that Yerba Buena Corporation's negligence contributed to the accident. And it exists in the case irrespective of the assertedly hearsay statement of Fate Thompson. Further, the stevedoring companies introduced no evidence to establish their lack of negligence, although they had the opportunity to do so in the indemnity action. Thus, appellee, in settling with Sannella was not a volunteer; furthermore, it has established positively that it had a potential liability to Sannella and that appellants were liable over under the ex press terms of their contract of indemnity. III. Appellants next claim that the $7,000 settlement was not shown to be reasonable. This assertion is without merit. Sannella suffered a permanent disability, described as a permanent fifteen per cent loss of use of the right leg. In addition Sannella could probably have shown loss of earnings in excess of $5,500 through 1958. See Record, pp. 32-33. IV. In view of the foregoing the last point of controversy should not alter the result. The court held that Yerba Buena is es-topped from claiming that any part of the $7,000 settlement was a voluntary payment by Pan-Atlantic. Such estoppel is based upon the fact that appellants' underwriters, Fireman's Fund, participated in the suit and the settlement in order to recover a portion of the medical expenses paid in Sannella's behalf. Appellants point out, however, that they and their subrogee, Fireman's Fund, had no claim against appellee, and hence no direct interest in any settlement with appellee. Their only claim for reimbursement of medical expenses was against their employee, Sannella. Appellee does not dispute this proposition, as a general rule, but contends that the situation is altered because Sannella had agreed with appellee to accept $5,000 net in settlement. Thus, appellee suggests, "liens" asserted by appellants' underwriters represented additional amounts to be paid by appellee in settlement of Sannella's claim. But this is beside the point, if, legally, Fireman's Fund had a right to recover and did recover only from Sannella and not from appellee. The basis for an estoppel against appellants has not, then, been clearly established. While this was principally relied upon by the trial court in its Memorandum and Decision, the Findings and Conclusions thereafter made are what this court must look to and rely upon. Ohlinger v. United States, 9 Cir., 1955, 219 F.2d 310. Any error which the trial court may have made with respect to the estoppel issue does not alter the result. Appellee made a reasonable settlement of a definite potential liability, and the findings upon which appellants' liability under their indemnity contract is predicated are not clearly erroneous. We affirm the decision below.

324 U.S. 847

Petition for writ of certiorari to the United States Emergency Court of Appeals denied.

400 U.S. 885

Appeal from C. A. 8th Cir. dismissed for want of jurisdiction. Motion of appellant to strike scandalous matter denied. Treating the papers whereon the appeal was taken as a petition for writ of .certiorari, certiorari denied. Mr. Justice Blackmun took no part in the consideration or decision of this motion and appeal.

456 U.S. 925

Sup. Ct. Fla. Certiorari denied.

439 U.S. 1116

Ct. App. Cal., 2d App. Dist. Certiorari denied.

532 U.S. 911

C. A. Fed. Cir. Certiorari denied.

2 Cust. Ct. 534

Opinion by Sullivan, J. It was stipulated that the merchandise consists of rubber mice similar to those the subject of Abstract 31963 with the exception that they are in part of bamboo. The claim at 45 percent under paragraph 409 was therefore sustained.

533 U.S. 405

Justice Kennedy delivered the opinion of the Court. Four Terms ago, in Glickman v. Wileman Brothers & Elliott, Inc., 521 U. S. 457 (1997), the Court rejected a First Amendment challenge to the constitutionality of a series of agricultural marketing orders that, as part of a larger regulatory marketing scheme, required producers of certain California tree fruit to pay assessments for product advertising. In this case a federal statute mandates assessments on handlers of fresh mushrooms to fund advertising for the product. The Court of Appeals for the Sixth Circuit determined the mandated payments were not part of a more comprehensive statutory program for agricultural marketing, thus dictating a different result than in Glickman. It held the assessment requirement unconstitutional, and we granted certiorari. 531 U. S. 1009 (2000). The statute in question, enacted by Congress in 1990, is the Mushroom Promotion, Research, and Consumer Information Act, 104 Stat. 3854, 7 U. S. C. § 6101 et seq. The Act authorizes the Secretary of Agriculture to establish a Mushroom Council to pursue the statute's goals. Mushroom producers and importers, as defined by the statute, submit nominations from among their group to the Secretary, who then designates the Council membership. 7 U. S. C. § 6104(b) (1)(B), 6102(6), 6102(11). To fund its programs, the Act allows the Council to impose mandatory assessments upon handlers of fresh mushrooms in an amount not to exceed one cent per pound of mushrooms produced or imported. § 6104(g)(2). The assessments can be used for "projects of mushroom promotion, research, consumer information, and industry information." § 6104(c)(4). It is undisputed, though, that most moneys raised by the assessments are spent for generic advertising to promote mushroom sales. Respondent United Foods, Inc., is a large agricultural enterprise based in Tennessee. It grows and distributes many crops and products, including fresh mushrooms. In 1996 respondent refused to pay its mandatory assessments under the Act. The forced subsidy for generic advertising, it contended, is a violation of the First Amendment. Respondent challenged the assessments in a petition filed with the Secretary. The United States filed an action in the United States District Court for the Western District of Tennessee, seeking an order compelling respondent to pay. Both matters were stayed pending this Court's decision in Glickman. After Glickman was decided, the Administrative Law Judge dismissed respondent's petition, and the Judicial Officer of the Department of Agriculture affirmed. Respondent sought review in District Court, and its suit was consolidated with the Government's enforcement action. The District Court, holding Glickman dispositive of the First Amendment challenge, granted the Government's motion for summary judgment. App. to Pet. for Cert. 18a. The Court of Appeals for the Sixth Circuit held this case is not controlled by Glickman and reversed the District Court. 197 F. 3d 221 (1999). We agree with the Court of Appeals and now affirm. A quarter of a century ago, the Court held that commercial speech, usually defined as speech that does no more than propose a commercial transaction, is protected by the First Amendment. Virginia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U. S. 748, 762 (1976). "The commercial marketplace, like other spheres of our social and cultural life, provides a forum where ideas and information flourish." Edenfield v. Fane, 507 U. S. 761, 767 (1993). We have used standards for determining the validity of speech regulations which accord less protection to commercial speech than to other expression. See, e. g., ibid.; Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N. Y, 447 U. S. 557 (1980). That approach, in turn, has been subject to some criticism. See, e. g., Glickman, supra, at 504 (Thomas, J., dissenting); UU Liquormart, Inc. v. Rhode Island, 517 U. S. 484, 518 (1996) (THOMAS, J., concurring in part and concurring in judgment); Rubin v. Coors Brewing Co., 514 U. S. 476, 493 (1995) (Stevens, J., concurring in judgment). We need not enter into the controversy, for even viewing commercial speech as entitled to lesser protection, we find no basis under either Glickman or our other precedents to sustain the compelled assessments sought in this case. It should be noted, moreover, that the Government itself does not rely upon Central Hudson to challenge the Court of Appeals' decision, Reply Brief for Petitioners 9, n. 7, and we therefore do not consider whether the Government's interest could be considered substantial for purposes of the Central Hudson test. The question is whether the government may underwrite and sponsor speech with a certain viewpoint using special subsidies exacted from a designated class of persons, some of whom object to the idea being advanced. Just as the First Amendment may prevent the government from prohibiting speech, the Amendment may prevent the government from compelling individuals to express certain views, see Wooley v. Maynard, 430 U. S. 705, 714 (1977); West Virginia Bd. of Ed. v. Barnette, 319 U. S. 624 (1943), or from compelling certain individuals to pay subsidies for speech to which they object. See Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977); Keller v. State Bar of Cal, 496 U. S. 1 (1990); see also Glickman, supra, at 469, n. 13. Our precedents concerning compelled contributions to speech provide the beginning point for our analysis. The fact that the speech is in aid of a commercial purpose does not deprive respondent of all First Amendment protection, as held in the cases already cited. The subject matter of the speech may be of interest to but a small segment of the population; yet those whose business and livelihood depend in some way upon the product involved no doubt deem First Amendment protection to be just as important for them as it is for other discrete, little noticed groups in a society which values the freedom resulting from speech in all its diverse parts. First Amendment concerns apply here because of the requirement that producers subsidize speech with which they disagree. "[T]he general rule is that the speaker and the audience, not the government, assess the value of the information presented." Edenfield, supra, at 767. There are some instances in which compelled subsidies for speech contradict that constitutional principle. Here the disagreement could be seen as minor: Respondent wants to convey the message that its brand of mushrooms is superior to those grown by other producers. It objects to being charged for a message which seems to be favored by a majority of producers. The message is that mushrooms are worth consuming whether or not they are branded. First Amendment values are at serious risk if the government can compel a particular citizen, or a discrete group of citizens, to pay special subsidies for speech on the side that it favors; and there is no apparent principle which distinguishes out of hand minor debates about whether a branded mushroom is better than just any mushroom. As a consequence, the compelled funding for the advertising must pass First Amendment scrutiny. In the Government's view the assessment in this case is permitted by Glickman because it is similar in important respects. It imposes no restraint on the freedom of an objecting party to communicate its own message; the program does not compel an objecting party (here a corporate entity) itself to express views it disfavors; and the mandated scheme does not compel the expression of political or ideological views. See Glickman, 521 U. S., at 469-470. These points were noted in Glickman in the context of a different type of regulatory scheme and' are not controlling of the outcome. The program sustained in Glickman differs from the one under review in a most fundamental respect. In Glickman the mandated assessments for speech were ancillary to a more comprehensive program restricting marketing autonomy. Here, for all practical purposes, the advertising itself, far from being ancillary, is the principal object of the regulatory scheme. In Glickman we stressed from the very outset that the entire regulatory program must be considered in resolving the case. In deciding that case wé emphasized "the importance of the statutory context in which it arises." Id., at 469. The California tree fruits were marketed "pursuant to detailed marketing orders that ha[d] displaced many aspects of independent business activity." Id., at 469. Indeed, the marketing orders "displaced competition" to such an extent that they were "expressly exempted from the antitrust laws." Id., at 461. The market for the tree fruit regulated by the program was characterized by "[collective action, rather than the aggregate consequences of independent competitive choices." Ibid. The producers of tree fruit who were compelled to contribute funds for use in cooperative advertising "d[id] so as a part of a broader collective enterprise in which their freedom to act independently [wa]s already constrained by the regulatory scheme." Id., at 469. The opinion and the analysis of the Court proceeded upon the premise that the producers were bound together and required by the statute to market their products according to cooperative rules. To that extent, their mandated participation in an advertising program -with a particular message was the logical concomitant of a valid scheme of economic regulation. The features of the marketing scheme found important in Glickman are not present in the case now before us. As respondent notes, and as the Government does not contest, cf. Brief for Petitioners 25, almost all of the funds collected under the mandatory assessments are for one purpose: generic advertising. Beyond the collection and disbursement of advertising funds, there are no marketing orders that regulate how mushrooms may be produced and sold, no exemption from the antitrust laws, and nothing preventing individual producers from making their own marketing decisions. As the Court of Appeals recognized, there is no "heavy regulation through marketing orders" in the mushroom market. 197 F. 3d, at 225. Mushroom producers are not forced to associate as a group which makes cooperative decisions. "[T]he mushroom growing business . is unregulated, except for the enforcement of a regional mushroom advertising program," and "the mushroom market has not been collectivized, exempted from antitrust laws, subjected to a uniform price, or otherwise subsidized through price supports or restrictions on supply." Id., at 222, 223. It is true that the party who protests the assessment here is required simply to support speech by others, not to utter the speech itself. We conclude, however, that the mandated support is contrary to the First Amendment principles set forth in cases involving expression by groups which include persons who object to the speech, but who, nevertheless, must remain members of the group by law or necessity. See, e. g., Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977); Keller v. State Bar of Cal., 496 U. S. 1 (1990). The Government claims that, despite the lack of cooperative marketing, the Abood rule protecting against compelled assessments for some speech is inapplicable. We did say in Glickman that Abood "recognized a First Amendment interest in not being compelled to contribute to an organization whose expressive activities conflict with one's 'freedom of belief.' " 521 U. S., at 471 (quoting Abood, 431 U. S., at 235). We take further instruction, however, from Abood,'s statement that speech need not be characterized as political before it receives First Amendment protection. Id., at 232. A proper application of the rule in Abood requires us to invalidate the instant statutory scheme. Before addressing whether a conflict with freedom of belief exists, a threshold inquiry must be whether there is some state imposed obligation which makes group membership less than voluntary; for it is only the overriding associational purpose which allows any compelled subsidy for speech in the first place. In Abood, the infringement upon First Amendment associational rights worked by a union shop arrangement was "constitutionally justified by the legislative assessment of the important contribution of the union shop to the system of labor relations established by Congress.". Id., at 222. To attain the desired benefit of collective bargaining, union members and nonmembers were required to associate with one another, and the legitimate purposes of the group were furthered by the mandated association. A similar situation obtained in Keller v. State Bar of Cal., supra. A state-mandated, integrated bar sought to ensure that "all of the lawyers who derive benefit from the unique status of being among those admitted to practice before the courts [were] called upon to pay a fair share of the cost." Id., at 12. Lawyers could be required to pay moneys in support of activities that were germane to the reason justifying the compelled association in the first place, for example, expenditures (including expenditures for speech) that related to "activities connected with disciplining members of the Bar or proposing ethical codes for the profession." Id., at 16. Those who were required to pay a subsidy for the speech of the association already were required to associate for other purposes, making the compelled contribution of moneys to pay for expressive activities a necessary incident of a larger expenditure for an otherwise proper goal requiring the cooperative activity. The central holding in Keller, moreover, was that the objecting members were not required to give speech subsidies for matters not germane to the larger regulatory purpose which justified the required association. The situation was much the same in Glickman. As noted above, the market for tree fruit was cooperative. To proceed, the statutory scheme used marketing orders that to a large extent deprived producers of their ability to compete and replaced competition with a regime of cooperation. The mandated cooperation was judged by Congress to be necessary to maintain a stable market. Given that producers were bound together in the common venture, the imposition upon their First Amendment rights caused by using compelled contributions for germane advertising was, as in Abood and Keller, in furtherance of an otherwise legitimate program. Though four Justices who join this opinion disagreed, the majority of the Court in Glickman found the compelled contributions were nothing more than additional, economic regulation, which did not raise First Amendment concerns. Glickman, 521 U. S., at 474; see id., at 477 (Souter, J., dissenting). The statutory mechanism as it relates to handlers of mushrooms is concededly different from the scheme in Glickman; here the statute does not require group action, save to generate the very speech to which some handlers object. In contrast to the program upheld in Glickman, where the Government argued the compelled contributions for advertising were "part of a far broader regulatory system that does not principally concern speech," Reply Brief for Petitioner, O. T. 1996, No. 95-1184, p. 4, there is no broader regulatory system in place here. We have not upheld compelled subsidies for speech in the context of a program where the principal object is speech itself. Although greater regulation of the mushroom market might have been implemented under the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U. S. C. § 601 et seq., the compelled contributions for advertising are not part of some broader regulatory scheme. The only program the Government contends the compelled contributions serve is the very advertising scheme in question. Were it sufficient to say speech is germane to itself, the limits observed in Abood and Keller would be empty of meaning and significance. The cooperative marketing structure relied upon by a majority of the Court in Glickman to sustain an ancillary assessment finds no corollary here; the expression respondent is required to support is not germane to a purpose related to an association independent from the speech itself; and the rationale of Abood extends to the party who objects to the compelled support for this speech. For these and other reasons we have set forth, the assessments are not permitted under the First Amendment. Our conclusions are not inconsistent with the Court's decision in Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U. S. 626 (1985), a case involving attempts by a State to prohibit certain voluntary advertising by licensed attorneys. The Court invalidated the restrictions in substantial part but did permit a rule requiring that attorneys who advertised by their own choice and who referred to contingent fees should disclose that clients might be liable for costs. Noting that substantial numbers of potential clients might be misled by omission of the explanation, the Court sustained the requirement as consistent with the State's interest in "preventing deception of consumers." Id., at 651. There is no suggestion in the case now before us that the mandatory assessments imposed to require one group of private persons to pay for speech by others are somehow necessary to make voluntary advertisements non-misleading for consumers. The Government argues the advertising here is government speech, and so immune from the scrutiny we would otherwise apply. As the Government admits in a forthright manner, however, this argument was "not raised or addressed" in the Court of Appeals. Brief for Petitioners 32, n. 19. The Government, citing Lebron v. National Railroad Passenger Corporation, 513 U. S. 374 (1995), suggests that the question is embraced within the question set forth in the petition for certiorari. In Lebron, the theory presented by the petitioner in the brief on the merits was addressed by the court whose judgment was being reviewed. Id., at 379. Here, by contrast, it is undisputed that the Court of Appeals did not mention the government speech theory now put forward for our consideration. The Government's failure to raise its argument in the Court of Appeals deprived respondent of the ability to ad dress significant matters that might have been difficult points for the Government. For example, although the Government asserts that advertising is subject to approval by the Secretary of Agriculture, respondent claims the approval is pro forma. This and other difficult issues would have to be addressed were the program to be labeled, and sustained, as government speech. We need not address the question, however. Although in some instances we have allowed a respondent to defend a judgment on grounds other than those pressed or passed upon below, see, e. g., United States v. Estate of Romani, 523 U. S. 517, 526, n. 11 (1998), it is quite a different matter to allow a petitioner to assert new substantive arguments attacking, rather than defending, the judgment when those arguments were not pressed in the court whose opinion we are reviewing, or at least passed upon by it. Just this Term we declined an invitation by an amicus to entertain new arguments to overturn a judgment, see Lopez v. Davis, 531 U. S. 230, 244, n. 6 (2001), and we consider it the better course to decline a party's suggestion for doing so in this case. For the reasons we have discussed, the judgment of the Court of Appeals is Affirmed.

435 U.S. 912

C. A. 4th Cir. Motion of petitioner for leave to proceed in forma pauperis and certiorari granted. Judgment vacated and case remanded for further consideration in light of Simpson v. United States, ante, p. 6.

16 T.C. 1026

OPINION. Arundell, Judge: The respondent has determined that securities disposed of by Lilley & Co. during the years in question were not capital assets within the definition of section 117 (a) (1) of the Internal Revenue Code and, therefore, the gain upon their sale or exchange is taxable as ordinary income pursuant to section 22 of the Code. The relevant portion of section 117 (a) (1) defines "capital assets" as "property held by the taxpayer (whether or not connected with his trade or business), but does not include property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business In support of his determination, the respondent argues that Lilley & Co. was a "dealer" holding the securities primarily for sale to customers in the ordinary course of business. Whether or not securities are held primarily, for sale to customers in the ordianry course of business is a quetsion of fact, Stern Brothers & Co., 16 T. C. 295, in which the crucial phrase is "to customers." This phrase and the word "ordinary" were added to the definition of capital assets by Senate Amendment No. 66 in the Revenue Act of 1934 so that a speculator trading on his own account could not claim the securities he sold were other than capital assets. The theory of the amendment was that those who sell securities on an exchange have no "customers" and for that reason the property held by such taxpayers is not within the above quoted exclusionary clause. O. L. Burnett, 40 B. T. A. 605, 118 F. 2d 659; Thomas E. Wood, 16 T. C. 213. In determining whether a seller of securities sells to "customers," the merchant analogy has been employed. Schafer v. Helvering, 299 U. S. 171; Van Suetendael v. Commissioner, 152 F. 2d 654, affirming a Memorandum Opinion of this Court (Sept. 25, 1944); Leach Corp. v. Blacklidge, 23 F. Supp. 622; Warren Co. v. United States, 53 F. Supp. 578; Regulations 111, sec. 29.22 (c)-5. Those who sell "to customers" are comparable to a merchant in that they purchase their stock in trade, in this case securities, with the expectation of reselling at a profit, not because of a rise in value during the interval of time between purchase and resale, but merely because they have or hope to find a market of buyers who will purchase from them at a price in excess of their cost. This excess or mark-up represents remuneration for their labors as a middle man bringing together buyer and seller, and performing the usual services of retailer or wholesaler of goods. Cf. Schafer v. Helvering, supra; Securities-Allied Corp. v. Commissioner, 95 F. 2d 384, certiorari denied, 305 U. S. 617, affirming 36 B. T. A. 168; Commissioner v. Charavay, 79 F. 2d 406, affirming 29 B. T. A. 1255. Such, sellers are known as "dealers." Contrasted to "dealers" are those sellers of securities who perform no such merchandising functions and whose status as to the source of supply is not significantly different from that of those to whom they sell. That is, the securities are as easily accessible to one as the other and the seller performs no services that need be compensated for by a mark-up of the price of the securities he sells. The sellers depend upon such circumstances as a rise in value or an advantageous purchase to enable them to sell at a price in excess of cost. Such sellers are known as "traders." The securities sold by Lilley & Co. were held for widely varying lengths of time. Some were sold on the day of purchase; others were held for periods in excess of 3 years. We need not determine whether those held for not more than 6 months were capital assets. It may well be that as to them, the firm's status was that of a dealer holding securities primarily for sale to customers, but since the gains on their sale were reported in full and the losses were not in excess of these gains, the correctness of the asserted deficiency in nowise depends upon whether or not the securities were capital assets. Furthermore, the fact that the firm's status as to these securities was that of either a dealer or trader does not require a determination that the firm occupied the same status as to the remaining securities. Carl Marks & Co., 12 T. C. 1196. See I. T. 3891, 1948-1 C. B. 69. But whatever the firm's status may be as to the securities held for not more than 6 months, the evidence taken as a whole clearly establishes that as to the remaining securities the firm was a trader holding them primarily for speculation or investment. Specific evidence has been submitted to show that a considerable number of the securities held for more than 6 months were accumulated as part of a program to force a reorganization and gain control of the issuing corporation, or for the realization of a gain when the issuing company redeemed them or issued liquidating dividends. Furthermore, as to these securities, it was the firm's practice to buy in small lots and dispose of them in large blocks. It did not acquire them "to create a stock of securities to take care of future buying orders in excess of selling orders," Schafer v. Helvering, supra, or always sell to a class of persons different than those from whom it bought. Cf. Van Suetendael v. Commissioner, supra. It frequently refused to sell these securities which it was accumulating despite the fact that the bid price would have resulted in a profit. The activity of Lilley & Co. with regard to the securities in question conformed to the customary activity of a trader in securities rather than that of a dealer holding securities primarily for sale to customers. Respondent has stressed other phases of the firm's activity in support of his argument that the firm is a dealer in securities. He points out that the firm has two regular places of business, is licensed by the State of Pennsylvania as a "dealer," advertises itself as a "dealer," transacts a large volume of business, and subscribes to certain services commonly used by brokers and dealers. These are all significant facts which weigh against petitioners' contention that the firm was a trader. But they are no more conclusive than are other facts which weigh just as heavily in favor of petitioners' contention, such as the fact that the firm had no salesmen, no "customers' men," no customers' accounts, no board room, and has never advertised itself or held itself out to the public as having on hand securities for sale. After weighing all such factors and analyzing the activity previously referred to, we are of the opinion that Lilley & Co.'s status as to those securities held for more than 6 months was that of a trader holding them for speculation or investment. Therefore, those securities are capital assets and the gain upon their sale or exchange is taxable at capital gains rates. Respondent relies on such cases as Edmund S. Twining, 32 B. T. A. 600, affd. on other points, 83 F. 2d 954, certiorari denied, 299 U. S. 578; Stokes v. Rothensies, 61 F. Supp. 444, affd., 154 F. 2d 1022, and Helvering v. Fried, 299 U. S. 175. These cases, as well as United States v. Chinook Investment Co., 136 F. 2d 984, held that the taxpayer in question was a dealer in securities. But since they resolved merely a question of fact, and contained significant evidence that is not present in the instant case, they do not support the conclusion respondent seeks here. On brief the petitioners argued that no income was realized either by Lilley & Co. or the individual partners upon the disposition of securities to the partners in the years 1942 and 1943. The partnership disposed of these securities pro rata to the partners at market price. This issue was not raised by the pleadings, nor suggested by anything contained therein or in the opening statement of counsel. Under these circumstances, the issue is not before us and may not be considered. Jamieson Associates, Inc., 37 B. T. A. 92. In the partnership income tax return for 1944, Lilley & Co. erroneously included the long term capital gain of $2,585.39 on the sale of 470%0<)ths voting trust certificates of Crestshire Corporation as a short term capital gain. The parties may make proper adjustment of this error in the computation under Rule 50. Decisions will be entered under Rule 50.

463 U.S. 1223

C. A. 6th Cir. Certiorari granted, judgment vacated, and case remanded for further consideration in light of Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, ante, p. 1073.

430 U.S. 930

Sup. Ct. Va. Certiorari denied.

204 U.S. 599

Mr. Justice Day delivered the opinion of the court. This case is here upon certificate from the Circuit Court of Appeals for the Third Circuit. From the facts stated it appears that William J. Doyle'and James G. Doak were, adjudged guilty of conteinpt of court in the Circuit Court'of the United States for the Eastern District of Pennsylvania. After the bringing of the action, upon the petition of the London Guarantee and Accident Company, Limited, the plaintiff below, the court made the following order: "And now, June 25th, 1904, the court orders the defendants to produce, within twenty days, in the office of the clerk of said court, their pay sheets, time books, cash books and all other books of original entry which contain information as to the amount of compensation paid to' employees of themselves or of their subcontractors or of any other persons contemplated in the contracts upon which suit is brought in this case during the period of 'said contracts as set forth in the petition filed." After that order was made the certificate recites: "Thereafter the plaintiff presented to the court-a petition. alleging disobedience by the defendants of the above order and praying that an attachment issue against them for contempt of court. Thereupon the court granted a rule upon the defendants to show cause why an attachment should not issue against them for contempt of court by reason of their violation' and disobedience of said order. To this rule the defendants filed an answer under oath, denying intentional non-compliance with said order and stating that they were not able to produce all the books and papers called for, because upon a thorough search the absent ones could not be found and averring their belief that they were accidentally lost or by mistake were destroyed at a time when alterations' were made in their office and a removal of its contents to another place occurred. ' Subsequently, to wit, on January 3d, 1905, upon the hearing of the rule, the court gave and entered judgment that the 'defendants are guilty of contempt in disobeying the order referred to,' and further adjudged as follows: "If the defendants produce in the office of the clerk of the Circuit Court on or before January 15th, 1905, the ledger of 1902-4, the pay rolls or time sheets from March to May 28, 1903, and the cash book from May 28 to December 1, 1902, or if they produce 'the cash book alone, they are ordered to pay no more than the costs accruing upon this motion, including the stenographer's charges, on or before January 20, or in default of such payment to suffer imprisonment in the jail of this county for the period of sixty days. If the foregoing books and papers are not produced on or before January 15, the defendants are ordered to pay a fine of two hundred and fifty dollars, and also the cost accruing upon this motion, including the stenographer's charges, on or before January 20, or in default of such payment to suffer imprisonment in the jail of this county for the period of sixty days." A writ of error was allowed to the Circuit Court of Appeals. Upon the facts stated the following question was certified to this (fourt: "Has the Circuit Court of Appeals jurisdiction upon the writ of error sued out by the defendants to review the above recited judgment of January- 5th, 1905, adjudging that the defendants are guilty of contempt of court in disobeying the above recited order of court of June 25th, 1904, and imposing upon the defendants a- fine of $250.00 on the specified, conditions and terms?" Cases involving the right to review orders of the Federal courts in matters of contempt have been so recently before this court that an extended discussion of the principles involved is unnecessary. Bessette v. W. B. Conkey Company, 194 U. S. 324; Matter of Christensen Eng. Co., 194 U. S. 458; Alexander v. United States, 201 U. S. 117. In Bessette v. W. B. Conkey Co., supra, a question was certified here from the Circuit Court of Appeals of the Seventh Circuit, involving the jurisdiction of that court to review an order in a contempt proceeding finding the petitioner guilty of contempt for violation of an orderof the Circuit Court, and imposing a fine. In that case the subject underwent a full examination and the previous eases in this court were cited and reviewed. As a result of those decisions we deem it settled that an order .punishing for contempt made in the progress of the case, when not in the nature of an order in a criminal proceeding, is regarded as interlocutory and to be reviewed only upon appeal from a final decree in the case. Matter of Christensen Eng. Co., 194 U. S. 458. In Bessette v. Conkey Co., supra, it was pointed out that this court had no jurisdiction to review judgments in contempt proceedings criminal in their nature under the power to punish for contempt defined by Congress, 1 Stat. 83, and limited by the act of March 2, 1831. 4 Stat. 497, Rev. Stat. sec. 725. The right to review a judgment in a contempt proceeding in the Circuit Court of Appeals was derived from the Circuit Court of Appeals act, section 6, of which Mr. Justice Brewer, speaking for the court in the Bessette case, said: "So when, by section 6 of the Court of Appeals act, the Circuit Courts of Appeals are given jurisdiction to review the 'final decisions in the District Court and the existing Circuit Courts in all cases other than those provided for in the preceding section of this act, unless otherwise provided by law,' and the preceding section gives to this court jurisdiction to review convictions in only capital or otherwise infamous crimes, and no other provision is found in the statutes for a review of the final order in contempt cases, upon what satisfactory ground can it be held that the final decisions in contempt cases in the Circuit or District Courts are not subject to review by the Circuit Courts of Appeals? Considering only such cases of contempt as the, present — that is, cases in which the proceedings are against one not a party to the suit, and cannot be regarded as interlocutory — we are of the opinion that there is a right of review in the Circuit Court of Appeals." And again, in the same case, it is said: "As, therefore, the ground upon which a review by this court of a final decision in contempt cases was denied no longer exists, the decisions themselves ceased to have controlling authority, and whether the Circuit Courts of Appeals have authority to review proceedings in contempt in the District and Circuit Courts depends upon the question whether such proceedings are criminal cases." It therefore appears that the only right of review given to the Circuit Court of Appeals in contempt proceedings is derived from the act giving that court such right in criminal cases. In the course of the discussion in the Bessette case it is said that proceedings for contempt may be divided into those which have for their purpose the vindication of the authority and dignity of the court, and those seeking to punish parties guilty of a disregard of such orders as are remedial in their character, and intended to enforce the rights of private parties, to compel obedience to orders and decrees made to enforce their rights and to give them a remedy to which the court deems them entitled. And it is said that the one class is criminal and punitive in its nature, in which the Government and the public are interested, and the other civil, remedial and coercive in its character, in which those chiefly concerned are individuals whose private rights and remedies are undertaken to be protected and enforced. From the discussion in that case it clearly appears that proceedings which are criminal in their nature and intended for the vindication of public justice, rather than the coercion of the opposite party to do some act for the benefit of another party to the action, are the only ones reviewable in the Circuit Court of Appeals under its power to take jurisdiction of and determine criminal cases. In that case, and in the cases generally, where the right of review has been recognized, the party prosecuted has been other than one directly interested in the suit and brought into it for the purpose of punishing a known violation of an order in defiance of the authority and power of the court. In such case the proceeding is entirely independent and its prosecution does not delay the conduct of the action between the parties to final decree. True it is that in some cases, as in the Christensen case, 194 U. S. 458, the punishment for contempt which has been held reviewable is for a past act of a party in violation of an order made for the benefit of the other party. In that case one-half of the fine imposed went to the United States, and was not intended for the enforcement of an order in favor of a party,- but rather for the vindication of the authority of the court, and punishment for an act done in violation of the court's order, and it was held that such judgment was in a criminal proceeding and reviewable in the Circuit Court of Appeals. In the present case, while it is true that the fine imposed is not made payable to the opposite party, .compliance with the order relieves from payment, and, in that event, there is no final judgment'of either fine or imprisonment. "It may not be always easy," said the learned justice, speaking for the court in the Conkey case, "to classify a particular act as belonging to either one of these two classes [speaking of vindicatory and remedial proceedings]; it may partake of the character of both. A significant and general determinative feature is that the act is by one party, to the suit, in disregard of a specific order made in behalf of the other; yet sometimes disobedience may be of such a character and in such a manner as to indicate a contempt of the court other than a disregard of the rights of the adverse party." In view of the principles which we deem settled by the adjudications referred to, the question decisive of the present case, therefore, is: Was the judgment rendered in the contempt proceeding criminal in its nature, and' having for its object the vindication of the authority of the court, or was it one in the nature of a proceeding to enforce an order seeking the protection of. the rights of the party to the suit for whose benefit it was made? The certificate does not fully indicate the character of the action in which the order was made; yet sufficient appears from which it is to be inferred that the action before the court was one in which it was necessary for the protection of the plaintiff that an inspection of the books and papers of the defendant be had. The defendants were required to produce in the office of the clerk the time books, cash books, etc., containing information as to the amount of compensation paid to the' employés of' themselves or subcontractors, or to any other persons contemplated in the contracts upon which suit was brought. The court deemed it proper, in view of certain contracts between the parties,' that these books and papers be opened for inspection for the benefit of the plaintiff. And, after hearing the parties, it was adjudged that if 'they produce the books they should be hable only for the costs of the proceedings or in- default of payment suffer imprisonment for a period of sixty days. And if the books and papers were not produced on or before January 15 a fine of $250 and costs was imposed or in default of payment thereof imprisonment in the county jail for the period of sixty days. We think it is. apparent from a perusal of this order, in the fight of the state ment of facts under which it was made, that its object and purpose was to obtain information for the benefit of the plaintiff in the suit to which the court found it entitled, and that the punishment of fine and imprisonment, which was in the alternative, was imposed,, not for the vindication of the dignity or authority, of the court, in the interests of the public, but in order to secure, for the benefit of the plaintiff, a compliance with the order of the court as to the production of the books. The case clearly falls within the class of contempt proceedings which p,re not criminal' in their nature, and are not reviewable before final decree. The proceeding is against a party, the compliance .with the order avoids the punishment, and there is nothing in the nature of a criminal suit or judgment imposed for. public purposes upon a defendant in a criminal proceeding. It may be true, as said in argument, that unless the party complies with the order he may be subjected to fine or imprisonment, and if the order cannot be reviewed until after final decree it may comé too late to be of any benefit to the party aggrieved.1 But the power to punish for contempt is inherent in the authority of courts, and is necessary to the administration of' justice and part of the inconvenience to which a citizen is subject in a community governed by law regulated by orderly judicial -procedure. As has been said, while the party may suffer imprisonment, "he carries the keys of the prison in his own .pocket," In re Nevitt, 117 Fed. Rep. 448, and by compliance'with the order of the court may deliver himself from punishment. But whatever the hardship, the question now before the court is as to the authority .of the Circuit Court of Appeals to review judgments in contempt proceedings. In the. Circuit Court of Appeals act, as construed by this court, the jurisdiction of the Circuit Court of Appeals is extended to the right to review judgments entered before final decree in the action out of which the contempt proceedings arose where the order is final and in a proceeding of a-criminal nature. Beyond this, the jurisdiction- of the court has not been carried, and, in our opinion, no right of review exists in such a case as is showh'.'in"4he certificate before us, in advance-of a final decree in the case in which the order was made. It is urged by counsel for plaintiff in error that the only authority of- the Circuit Court to make an order for the production of books and papers in a common law action is under section 724 of the Revised Statutes of the United States, providing for the production of papers after' issue -joined. But the question certified is not as to the lack of authority of the Circuit Court to make the order for want of jurisdiction, a question which might arise upon a habeas corpus proceeding, but concerns the right of the Circuit Court of Appeals to review an order made in the Circuit Court, undertaking to punish for contempt for violation of an order made in other than a proceeding of a -criminal character. The Circuit Court of Appeals Act of 1891 gives no right to review other than final judgments in-,the District and Circuit Courts, except in injunction orders, as provided in § 7 of the act. McLish v. Roff, 141 U. S. 661, 668. Eor the rcasoris stated we think the Circuit Court of Appeals has no jurisdiction to review the judgment set forth in the certificate, and the question certified will be answered in the negative. Mr. Justice Peckham took no part in the decision of this case.

544 U.S. 1065

C. A. 9th Cir. Certiorari denied.

374 U.S. 843

Court of Appeals of New York. Certiorari denied.

360 U.S. 343

Mr. Justice Frankfurter delivéred the opinion of the Court. • Petitioner was convicted of knowingly and willfully evading the payment of income taxes for the years 1950,' 1951 and 1952. A substantial part of the alleged evasion was failure to report income from dividends. Among the Government's exhibits at trial was a record, presum-' ably contemporaneous and in the petitioner's handwriting, of dividends received during 1951 and 1952. This record reflected an amount of dividend income for 1951 substantially larger than that reported on the 1951 return. Petitioner contended that this record had-been turned over to the accounting firm which regularly prepared his return, Arthur R. Sanfilippo & Co., in early 1952 for use in preparing his 1951 return, but that the figures had not been accurately entered on the return by the accountants. The Government's contention was that the record had not been given to the accounting firm until, early 1953, subsequent to the initiation of the investigation of petitioner's tax affairs and long after the filing of the 1951 return. The time at which the record had been given to the accountants thus became directly relevant to the issue of. criminal intent in the charge against the petitioner. Arthur R. Sanfilippo, an important government witness and the principal partner in the accounting firm, testified that his firm had not received the handwritten record of dividend income until early 1953. Prior to the trial, on July 16, 1956, during the course of an interrogation by agents of the Internal Revenue Service, Sanfilippo had been unable to recall when the dividend record had been received. More than a month later, August 23, 1956, Sanfilippo had met with revenue agents to verify and sign the transcript of his earlier testimony. At this meeting he executed a supplementary affidavit reciting that he wished to clarify his original answers and that he remembered that his firm had not received the dividend record until after revenue agents had begun their investigation of petitioner's tax returns. A memorandum of the conference at which this affidavit was executed was made by one of the agents present. On cross-examination of Sanfilippo the defense demanded and received various documents including the transcript of the July 16 interrogation and the August 23 affidavit. The defense also requested .production of any memoranda, or of any part thereof summarizing what Sanfilippo had said, which had been made of the August 23 conference. The trial judge denied this request on the ground that the Act of September 2, 1957, 71 Stat. 595, 18 U. S. C. § 3500 — the so-called "Jencks" Act — governing the' production of statements made to government agents-by government witnesses, precluded production of the requested memorandum since it was not within the definition of "statement" in (e) of the Act. The Court of Appeals for the Second Circuit affirmed. 258 F. 2d 397. Together with several other cases raising Jencks Act problems, we granted certiorari, 358 U. S. 905, to determine the scope and meaning of this new statute. Accurate analysis of these problems as a basis of their appropriate solution requires due appreciation of the background against which the statutory terms must be projected. Exercising our power, in the absence of statutory provision!, to prescribe procedures for the administration of justice in the federal courts, this Court, on June 3, 1957, in Jencks v. United States, 353 U. S. 657, decided that the defense in a federal criminal prosecution was entitled, under certain circumstances, to obtain, for impeachment purposes, statements which had been made to government agents by government witnesses. . These statements were therefore to be turned over to the defense at the time of cross-examinátion if their contents related to the subject -matter of the witness' direct testimony, and if a demand had been made for specific statements which had been written by the witness or, if orally made, as recorded by agents of the Government. We also held that the trial judge was not to examine the statéments. to determine if they contained material inconsistent with the testimony of the witness before deciding whether he woiild turn them over to the defense. Once the statements had been shown to contain related material only the defense was adequately equipped to decide whether they had. value for impeachment.. This decision only concerned production and therefore did not, purport to modify the laws of evidence governing the admissibility of prior statements of a witness. The decision promptly gave rise to sharp controversy and concern. The day following our opinion the House of Representatives was told that the decision in Jencks posed a serious problem of national security and that legislation would be introduced: 103 Cong. Rec. 8290. The same day H. R. 7915, the first of eleven House bills dealing with what became the Jencks problem, was introduced in the House. Defendants' counsel began to invoke the Jencks decision to justify demands for production far more sweeping than that involved in Jencks, And under circumstances' far removed from those of that case, and some federal trial judges acceded to those excessive demands. The Department of Justice, concerned over these rapid intrusions of Jencks into often totally unrelated areas, drafted legislation to clarify and delimit the reach of Jencks. See 103 Cong. Rec. 15781. On June 24, 1957, this legislation was introduced into the Senate by Senator O'Mahoney acting for himself and several othér Senators. 103. Cong. Rec. 10057. After study by a subcommittee of the Judiciary Committee the bill was reported out, Í03 Cong. Rec. 10601, then withdrawn and a .completely new measure substituted. 103 Cong. Rec. 14913. When the bill reached the floor for debate Senator O'Mahoney proposed an amendment in the nature of a substitute which was adopted,. 103 Cong. Rec. 15938, and the bill passed the Senate on August 26. Ibid. In the House the original H. R. 7915, after, being amended in Committee, see 103 Cong. Rec. 10925, was passed on August 27, 103 Cong. Rec. 16130, and then substituted for. the text of the Senate bill. 103 Cong. Rec. 16131. The two versions went to Conference. The Conference Report was agreed to by the Senate, on . August 29/103 Cong. Rec. 16490, and by the House, the next day. 103 Cong. Rec. 16742. The Act was approved on September 2/ and became law as §3500 of the Criminal Code, 18 U. S. C. Congress had determined to exercise its power to define the rules that should govern in this particular area in the'trial of criminal cases instead of leaving the matter to the lawmaking of the courts. In almost every enactment there are gaps to be filled and ambiguities to be resolved by judicial construction. This statute is not "free from them. Here, however, the detailed particularity with which Congress has spoken has narrowed the scope for needful judicial interpretation to an unusual'degree. The statute clearly defines procedures and plainly indicates the circumstances for their application. Since thisCase is the first calling for authoritative exposition of an Act that frequently conies into use in federal criminal prosecutions we deem it appropriate to explicate the construction of the statute required by the circumstances of this case. 1. Subsection (a) requires that no statement of a government witness made to an agent of the Government'and in the Government's possession shall be turned over to the defense until the witness has testified on direct examination. This section manifests the general statutory aim to restrict the use of such statements to impeachment. Subsections (b), (c) and (d) provide procedures for the production of "statements," and for the consequences to the, Govérnment of failure to produce. Subsection (e) restrictively defines with particularity. the term "statement" as used in the three preceding sections. The suggestion that the' detailed statutory procedures restrict only the production of the type of statement described in subsection- (e), leaving all other statements, e. g., non-verbatim, non-contemporaneoqs records of oral statements, to be produced under pre-existing rules of procedure as if the statute had not been passed at all, flouts the whole history and purpose of the enactment. It would-mock Congress to attribute to it an intention to surround the production of the carefully restricted and most trustworthy class of statements with detailed procedural safeguards, while allowing more dubious' and less reliable documents a more favored legal status, free from safeguards in the tournament of trials. To state such a construction demonstrates its irrationality;.the authoritative legislative history precludes its acceptance. To be sure, the statute does not, in so many words, state that it is the exclusive, limiting means of compelling for cross-examination purposes the production of statements of a government witness to an agent of the Government. But some things too clearly evince a legislative enactment to call for a redundancy of utterance. One of the most important motive forces behind the enactment of this legislation was the fear that an expansive reading of Jencks would compel the undiscriminating production of agent's summaries of interviews regardless of their character or completeness. Not only was it strongly feared that disclosure of memoranda containing the investigative agent's interpretations, and impressions might reveal the inner workings of the investigative process and thereby injure the national interest, but it was felt to be grossly unfair to allow the defense to use statements to impeach a witness which could not fairly be said to be the witness' own rather than the product of the investigátor's selections, interpretations and interpolations. The committee reports of both Houses and the floor debates clearly manifest the intention to avoid these, dangers by restricting production to those statements •specifically defined in the bill. Indeed both the House and Senate bills as they went to Conference explicitly so stated. See 103 Cong. Rec. 16130; 103 Cong. Rec. 16125. Nothing in the Conference Reports or the limited debate following Conference intimated the slightest intention to change the exclusive nature of the measure. Indeed the reports and debate proceeded on the explicit assumption that the bill retained as a major purpose the barring of all statements not specifically defined. The purpose of the Act, its fair reading and its overwhelming legislative history compel us to hold that statements of a government witness made to an agent' of. the Government which cannot be produced under the terms of 18 U. S. C. § 3500 cannot be produced at all. 2. Since the statutory, procedures are exclusive they constitute the rule of law governing the production of the statement at issue in this case and it becomes necessary to determine the scope and meaning of the statutory definition of "statement" contained in (e). Clause (1) of (e) permits the production of "a written statement made by said witness and signed or otherwise adopted or approved by him . . . ." Although some situations may arise, creating peripheral problems of construction, its import is clear. Clause (2) widens the definition of "statement" to include "a stenographic, mechanical, electrical, or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement made by said witness to an agent of the Government and recorded contemporaneously with the making of such oral statement." Clearly this provision allows the production of mechanical or stenographic recordings of oral state ments, even' though later transcribed. A preliminary-problem for determining that the statement now before us may be produced is whether the statutory phrase "other recording" allows an even wider scope for production. We find the legislative history persuasive that the statute .was meant to encompass more than mere automatic reproductions of oral statements. However, such a finding is only the beginning of the task of construction. It is clear that Congress was con- • cerned that only those statements which could properly be called the witness' own words should be made available to the defense for purposes of impeachment. It was important that the statement could fairly be deemed to reflect fully and without distortion what had been said to the government agent. Distortion can be a product of selectivity as well as' the conscious or inadvertent infusion of the. recorder's opinions or impressions. It is' clear from the continuous congressional emphasis on "substan-' tially verbatim recital," arid "continuous, narrative statements made by the witness recorded verbatim, or nearly so . . . ," see Appendix B, post, p. 358, that the legislation, was designed to eliminate the danger of distortion and misrepresentation inherent in a report which merely selects portions, albeit accurately, from a, lengthy oral recital. Quoting out of context is one of the most frequent and powerful-modes of misquotation. We think it consistent with this legislative history, and with the generally restrictive terms of the statutory provision, to require that summaries of an oral statement which evidence substan tial selection of material, or which were prepared after the interview without the aid of complete notes, and hence rest on the memory of the agent, are not to be produced. Neither, of course, are statements which contain the agent's interpretations or impressions. . In expounding this standard we do not wish to create the impression of a "delusive exactness^" The possible permutations of fact and circumstance are myriad.' Trial courts will be guided by the indicated standard, informed by fidelity to the congressional purposes we have' outlined.There iá nothing impalpable about these provisions. Sihce vie feel the statutory standard has' guiding definiteness, it would be idle to attempt a minute enumeration of particular situations to which it is to be applied. Such a vain attempt at forecasting myriad diversities with, minor variance is as futile and uncalled for in this as in so many other areas of the law. That is what the judicial, process is for — to follow a generally clear direction in dealing with a new diversity as it may occasionally arise. Final decision as to production must rest, as it does so. very often in procedural and evidentiary matters, within the good sense and experience of the district judge- guided by the standards we have outlined, and subject to the appropriately limited review of appellate courts. 3. The statute itself provides no procedure ior making a determination whether a particular statement comes within the terms of (e) and thus may be produced if related to the Subject matter of the witness' testimony. Ordinarily . the defense demand will be only for those statements which satisfy the statutory limitations. Thus the Government will not produce documents clearly beyond the reach of the statute for to do so would not be responsive to the order of the court. However, when it is doubtful whether the production of a particular statement is compelled by the statute, we approve the practice of having the Government submit the statement to the trial judge for an in camera determination. Indeed, any other procedure would be destructive of the statutory purpose. The statute governs the production of documents; it does not purport to affect or modify the rules of evidencé regarding admissibility and uSe of statements once produced. The Act's major concern is with limiting and regulating defense access to government papers, and it is-designed to deny such access to those statements which do not satisfy the requirements of (e), or do not relate to the subject matter of the witness' testimony. It would indeed defeat this design to hold that the defense may see statements in order to argue whether it should be allowed to see them. It is also the function of the trial judge to decide, in light of the circumstances of each case,, what, if any, evi dence extrinsic to the statement itself may or must be offered to prove the nature of the statement. In most cases the answer will be plain from the statement itself. In others further information might be déemed relevant to assist the court's determination. This is a problem of the sound and fair administration of a criminal prosecution and its solution must be guided by thé need, reflected in so much of our law of evidence, to avoid needless trial of collateral and confusing issues while assuring the utmost fairness to a criminal defendant. See, e. g., Nardone v. United States, 308 U. S. 338, 342. In light of these principles the case before us is clear. Both the District Court and the Court of Appeals correctly held that the sole standard - governing production of the agent's memorandum of his conference with Sanfilippo was 18 U. S. C. § 3500. The district judge and a unanimous Court of Appeals held that the statement was not within the definition of statement in (ej as properly understood by them. We have examined the statement and the record and find that the determination of the two courts below was justified and therefore must be sustained. It would bespeak a serious reflection on the conscience and capacity of the federal judiciary if both a trial judge and a Court of Appeals were found to have disregarded the command of Congress, duly interpreted, for making available a prior statement of -a government witness in a case. Against - such a contingency there is always the safeguard of this Court's reviewing power. Affirmed. [For opinion of Mr. Justice Brennan, joined by The Chief - Justice, Mr. Justice Black and Mr. Justice Douglas, see post, p. 360.] APPENDIX A TO OPINIÓN OF THE COURT. SUMMARY OF LEGISLATIVE HISTORY DEMONSTRATING THE INTENT OF THE CONFERENCE MEASURE TO RETAIN AS A PRIMARY PURPOSE OF THE ACT A PROHIBITION OF PRODUCTION OF ALL STATEMENTS NOT DESCRIBED IN SUBSECTION (E). (SEE PP. 350-351, ANTE.) The bills as they went to Congress contained explicit provisions making them exclusive. For example, the Senate. bill provided in subsection (a): v.- "In any criminal prosecution brought by the United States, no statement or report of a Government witness or prospective Government witness (other than the defendant) made to an agent of the Government which is in the possession of the United States shall be the subject of subpena,- or inspection, except, if provided in the Federal Rules of Criminal Procedure, or as provided in paragraph (b) of this section (Emphasis added.) 103 Cong. Rec. 16130. The House bill contained a similar provision. Although the last phrase of this section was dropped out when the section was rewritten to eliminate reference to the Federal Rules of Criminal Procedure, see 103 Cong. Rec. 16488; H. R. Rep. No. 1271, 85th Cong., 1st Sess., there is no indication that its omission was intended to work a silent and radical change in the entire concept and purpose of the Act. Both the Conference Report of the House Managers and the floor remarks of the Senate Conferees enumerate the particular changes which had been made to meet earlier specific differences and objections. No mention is made, nor can an intimation be found, of any intention to change the exclusive nature of the measure. The House Conference Report enumerates the specific changes and then states that "To remove any doubt as to the kinds of statements affected by the bill as agreed to by the conferees, a new paragraph V •was added . . . expressly defining the' term 'statement.' " H. R. Rep. No. 1271, 85th Cong., 1st Sess. 3. In the Senate, Senator O'Mahoney, in response to a question, gave the specific changes which had been made in the bill by the Conference, and he did not give the slightest indication that it had lost its exclusive nature. 103 Cong. Rec. 16487. What small debate there was following the Conference Report supports the conclusion that no change in the exclusiveness of the bill was intended. For example, Senator O'Mahoney, introducing the conference measure, stated that, "[t]here was some fear upon the part of the Department of Justice that the. Senate bill would create a greater latitude for the examination of irrelevant reports of agents. The language which was devised by the conferees has cleared up the doubts . . . ." 103 Cong. Rec. 16487. See also 103 Cong. Rec. 16488-16489. In the House, Representative Keating, one of the Conferees, explained that "The conferees provided that the only statements a defendant could see, and then only in the courtroom were those actually signed or formally approved by the witness or a stenographic verbatim recital of a statement made by a witness which is recorded contemporaneously with the making of such oral statement. In othfei words, only those statements need be produced in court by the Government, which could be shown in ccrart. to. impeach the credibility of the witness." 103 Cong. Rec. 16739. See also 103 Cong. Rec. 16742. APPENDIX BvTO OPINION OF THE COURT. PARTIAL SUMMARY.OF LEGISLATIVE HISTORY BEARING "ON THE PROPER CONSTRUCTION OF ^SUBSECTION .(E). (SEE PP. 351 AND 352, ANTE.) The original Senate bill,' as passed by' the. Senate, allowed the production of "any transcriptions or records of oral statements made by the witness to an agent of the Government . . . ." See 103 Cong. Rec. 16130. During the course of the Senate debate an amendment had "been offered to limit this provision to mechanical transcriptions or recordings. See 103 Cong. Rec. 15930-15931. This amendment was. rejected after Senator O'Mahoney, sponsor of the legislation, had argued that it would leave the bill too "limited." "All we are asking," he stated, "is that the records which are . relevant and competent,"-' which deal with.the oral statements made by Government witnesses whom the Government puts on the stand, with respect to the matters concerning which., they testify, be made available." 103 Cong. Rec. 15932. Thus thé bill as it. left the Senate was clearly not confined to, automatic reproductions of oral statements/although its . further reach was not explicitly demarcated. The House bill, as passed, allowed only the production of written statements signed by the witness or otherwise adopted ' or approved. 103 Cong. Rec. 16125. The present language ¿merged from the Conference. Senator O'Mahoney, sponsor of the original Senate bill and one of the Senate Conferees; in submitting the conference bill,'made it clear that (e) "would include a memo randum made by an agent of the Government of an oral statement made to him by a Government witness . . . .'' 103 Cong. Rec. 16488. Senator Javits then asked: ". . . what has been done with the so-called records provision is to tie it down, to those cases in which the agent actually purports to .make a substantially verbatim recital of an oral statement that the witness has made to him — not the agent's own comments or a recording of his own ideas, but a substantially verbatim recital ,of an oral statement; which the witness has made to him, and as transcribed by him; is that correct?" Ibid. Senator O'Mahoney replied, "Precisely." Thus although the Senate history indicates that the bill was restricted to. a "substantially verbatim recital," it is apparent that the Act was not designed to be restricted to mere mechanical transcription The proceedings in the House are less clear. It is true that Representative Keating, one of the House Conferees, did say that only stenographic verbatim recitals need be produced. 103 Cong. Rec. 16739. But this was said in reply to Representative Celler's statement that the conference measure was as liberal as the original Senate bill. Representative Geller was also a House Conferee. The. report of the:House Managers, signed by all the House Conferees, after pointing out that the term "statement" had been defined in the bill,'stated: "It is believed that the provisions of the bill as agreed to by the conferees are in line with the standard enunciated by Judge George H. Moore of the. eastern district of Missouri in . . . U. S. v. Anderson . . . which is set forth at page 14552 [sic] of the daily Congressional Record of August 26, 1957." H. R. Rep. No. 1271, 85th Cong., 1st Sess. 3. In the opinion referred to, Judge' Moore had explicitly-limited the type of oral statement which could be produced under the Jencks. decision to ". . . only continuous, narrative statements made by the witness recorded verbatim, or nearly so, and does not include notes made'during the course of an investigation (or reports compiled therefrom) which contain the subjective impressions, opinions/ or conclusions of the person or persons making such notes." 103 Cong. Rec. 15940. This standard, explicitly incorporated into the House Report, has a dual significance. It not only goes beyond mechanical or stenographic statements, in defining the statements which must be made available to the defense, but indicates that once beyond that point a very restrictive standard is to be applied. We reject the Government's contention that, at trial, petitioner asserted only that the statute did not cover his. request for production, and failed to assert that, if the statute was applicable, the memorandum could be produced under its terms. We find that objection to the interpretation of the statute was adequately made. 103 Cong. Rec. 8327. The other House bills were H. R. 8225, 103 Cong. Rec. 9572; H. R. 8243, 103 Cong. Rec. 9746; H. R. 8335, 103 Cong. Rec. 10181; H. R. No. 8341, 103 Cong. Rec. 10181; H. R. 8388, 103 Cong. Rec. 10403; H. R. 8393, 103 Cong. Rec. 10403; H. R. 8414, 103 Cong. Rec. 10547; H. R. 8416, 103 Cong. Rec. 10547; H. R. 8423, 103 Cong. Rec. 10547; H. R. 8438, 103 Cong. Rec. 10589. Many of the cases in .the lower federal courts after Jencks and prior to the enactment of. the statute are collected in the statement of the Attorney General contained in H. R. Rep. No. 700, 85th Cong., 1st Sess., and in S. Rep. No. 569, 85th Cong., 1st Sess. See also S. Rep. No. 981, 85th Cong.; 1st Sess.; 103 Cong. Rec. 15939-15941. The statute provides: "(a) In any criminal prosecution brought, by the United States, no statement or report in the possession of the United States which wás made by a Government witness or prospective Government witness (other than the defendant) to an agent of the Government' shall be the subject of subpena, discovery, ór inspection until said witness has testified on direct examination in the trial of the case. "(b) After á witness called by the Ui " ed States has testified on direct examination, the court shall, on motion of the defendant, order the United States to produce any statement (as hereinafter defined) of the witness in the possession of the United • States which relates to- the subject matter as to which the witness has testified. If the entire' contents of any such statement relate to- the subject matter of the testimony of the witness, the court shall Order it to be delivered directly to the defendant for his examination and use. "(c) If the United States claims that any statement ordered to be produced under this section contains matter which does not relate to the subject matter of the testimony of the witness, the court shall order the United States to deliver such statement for the inspection of the court in camera. Upon such delivery the court shall excise the portions of such statement which do not relate to the subject matter of the testimony of the witness. With such material excised, the court shall then direct delivery of such statement to the defendant for his use. If, pursuant to such procedure, any portion of such statement is withheld from- the defendant and the defendant objects to such withholding, and the trial is continued'to an adjudication •of the guilt of the defendant, the entire text of such statement shall be preserved by the United States and, in. the event the defendant appeals, shall be made available to the appellate court for the purpose of determining-the correctness of the ruling of the trial judge. Whenever any statement is delivered to a defendant pursuant to this' section, the court in its discretion, upon application of said defendant, may recess proceedings in the trial for such time as it may determine to be reasonably required for the examination of such statement by said defendant and his preparation for its use in the trial.. "(d) If the United States elects not to comply with an order of the court under paragraph (b) or (c) hereof to deliver .to the defendant any such statement, or such portion thereof as the court may direct, the court shall strike from the record the testimony of the witness, and the trial shall proceed unless the court in its discretion shall determine that the interests of justice require that a mistrial be declared. "(e) The term 'statement,' as used in subsections (b), (c), and (d) of this section in relation to.any witness called by the United States, means— "(1) a written statement made by said witness and signed or otherwise adopted .or approved by him; or "(2) a stenographic, mechanical, electrical, or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement made by said witness to an agent of the Government and recorded contemporaneously with the making of such oral statement." See, e. g., H. R. Rep. No. 700, 85th Cong., 1st Sess.; S. Rep. No. 569, 85th Cong., 1st Sess.; S. Rep. No. 981, 85th Cong., 1st Sess. The statements in the reports are frequent and clear. There are many like expressions on the floor of both chambers. For example, there was a lengthy debate in the Senate over an amendment which would have restricted the type of statement which could be produced beyond the limitations already incorporated in the Senate bill. The entire debate proceeded on the explicit assumption that only those statements which were enumerated in the bill could be produced at all. 103 Cong. Rec. 15930-15935. See also 103 Cong. Rec. 16116. There are many similar expressions during the debates. See legislative history summarized in Appendix A, post, p. 356: See legislative history summarized in Appendix B, post, p. 358. See, e. g., 103 Cong. Rec. 16739. See also many statements to the same effect in the House and Senate Reports. See legislative material' cited and quoted in Appendix B, post, p. 358. Of course the statute does not provide that inconsistency between the statement and the witness' testimony is to be'a relevant consideration. Neither is it significant whether or not the statement is admissible as evidence. The statute as interpreted does not reach any constitutional barrier. Congress has the power to prescribe rules of procedure for the federal courts, and has from the earliest days exercised that power. See 37 Harv. L. Rev., at 1086 and 1093-1094, for a collection of such' legislation. The power of this Court to prescribe rules of procedure and evidence for the federal courts exists only in the absence of a relevant Act of Congress. See Funk v. United States, 290 U. S. 371, 382; Gordon v. United States; 344 U. S. 414, 418. Much of the law of evidence and of discovery is concerned with limitations on a party's right to have access to', and to admit in evidence, material which has probative force. It is obviously a reasonable exercise of-power over the rules of procedure and evidence for Congress to determine that only statements of the sort described in (e)- are sufficiently reliable or important for purposes.of impeachment to justify a requirement that the Government; turn .them over to the defense. The statement- consists of a brief agent's summary, of approximately 600 words, of a conference lasting 3% hours. It was made up after the conference and consists of several brief statements of information given by Sanfilippo in response to questions of the agent. The typed agent's memorandum is clearly not a' virtually verbatim narrative of' the conference but represents the agent's selection of those items of information deemed appropriate for inclusion in the-memorandum. Thus by applying the governing standard set forth at pp. 352 and 353, supra, it is clear that the lower courts did not err in refusing to hand the statement over to the defense.

481 U.S. 1018

C. A. 7th Cir. Certiorari denied.

275 U.S. 548

Petition for a writ of certiorari to the Circuit Court of Appeals for the Ninth Circuit denied.

164 U.S. App. D.C. 104

PER CURIAM: The appellant Powell was tried and convicted on an indictment alleging that in violation of 18 U.S.C. § 751(a) he escaped from Saint Elizabeths Hospital where he had been lawfully committed to custody by order of court. The case was tried to the court without a jury on stipulated facts. The facts were: 1. In 1970 Powell was tried in the District Court on felony charges and found not guilty by reason of insanity. 2. Following his acquittal and after a hearing to determine his mental condition at that time he was committed to Saint Elizabeths, a hospital for the mentally ill, pursuant to 24 D.C.Code § 301(d). See Bolton v. Harris, 130 U.S.App.D.C. 1, 395 F.2d 642 (1968). 3. On November 21, 1972 he escaped from Saint Elizabeths. The District Court found Powell guilty and' sentenced him to imprisonment for a term of twenty months to five years. The only question presented by this appeal is whether an escape from Saint Elizabeths Hospital in the circumstances of this case constitutes an escape within the meaning of the Federal Escape Act, 18 U.S.C. § 751(a). The part of that section pertinent to the appellant's case provides: (a) Whoever escapes . . . from any custody under or by virtue of any process issued under the laws of the United States by any court, judge, or magistrate, or from the cus tody of an officer or employee of the United States pursuant to lawful arrest, shall, if the custody or confinement is by virtue of an arrest on a charge of felony, or conviction of any offense, be fined not more than $5,000 or imprisoned not more than five years, or both . The appellant contends that his escape did not violate the Act. We are constrained to agree. As we read the statute Powell could be convicted and sentenced for escape only if he was in custody "by virtue of an arrest on a charge of felony, or conviction of any offense". His acquittal by reason of insanity was not a "conviction". See Cameron v. Mullen, 128 U.S.App.D.C. 235, 387 F.2d 193 (1967). The government argues however that he was in custody by virtue of his original arrest on the felony charge. We are not persuaded by this argument. We think the arrest of the appellant on the felony charge was terminated and the arrest lost its legal vitality when he was acquitted by reason of insanity. Thereafter his custody was pursuant to the provisions of 24 D.C.Code § 301(d). This interpretation of the statute is confirmed by the legislative history of 18 U.S.C. § 751(a) and its predecessor, 18 U.S.C. § 753h as amended by Pub.L. No. 74-233, 74th Cong., 1st Sess., Aug. 3, 1935. The 1935 amendment broadened the statute to cover an escape from custody "by virtue of an arrest". The report of the House Committee on the Judiciary and subsequent discussion on the floor of the House make it clear that the purpose of this amendment was simply to make escape from custody before trial and conviction a criminal offense. See H.R.Rep.No.803, 74th Cong., 1st Sess., pp. 1-2 (1935); 79 Cong.Rec. 8573. There is no indication that Congress intended the phrase "by virtue of an arrest" to mean that a defendant would remain under arrest and subject to prosecution for escape after he was acquitted. If any doubt about this construction of the escape statute remains it is dispelled by 24 D.C.Code § 301(h) and (i). Section 24-301(i) provides: When a person has been ordered confined in a hospital for the mentally ill pursuant to this section and has escaped from such hospital, the court which ordered confinement shall, upon request of the Government, order the return of the escaped person to such hospital. Section 24-301 (h) provides: The provisions of this section shall supersede in the District of Columbia the provisions of any Federal statutes or parts thereof inconsistent with this section. Obviously Congress recognized that if a man is insane and by definition not responsible for his acts he should not be subject to criminal prosecution for leaving the mental hospital where he is confined. Thus, the escape statute applicable to Powell was 24 D.C.Code § 301(i)', and not 18 U.S.C. § 751(a). The judgment is reversed with directions to dismiss the indictment. It is so ordered.

419 U.S. 1009

C. A. 9th Cir. Certiorari denied. Mr. Justice Douglas would grant certiorari.

565 U.S. 1158

C. A. 9th Cir. Certiorari denied.

531 U.S. 969

C. A. 11th Cir. Certiorari denied.

460 U.S. 1036

C. A. 9th Cir. Motion of respondent for leave to proceed in forma pauperis and certiorari granted.

479 U.S. 843

C. A. 10th Cir. Certiorari denied.

522 U.S. 919

C. A. 7th Cir. Certiorari denied.

362 U.S. 949

Supreme Court of Ohio. Certiorari denied.

42 Cust. Ct. 351

Opinion by Donlon, J. In accordance with stipulation of counsel that the merchandise consists of mother-of-pearl disks similar in all material respects to those the subject of Paramount Import Export Co. et al. v. United States (45 C.C.P.A. 82, C.A.D. 677), the claim of the plaintiff was sustained.

178 L. Ed. 2d 370

Petition for writ of certiorari to the United States Court of Appeals for the Fourth Circuit denied. Same case below, 602 F.3d 597.

5 Cust. Ct. 580

Tilson, Judge: The question involved in the applications for review listed in schedule A, hereto attached and made a part hereof, is the proper dutiable foreign value of certain yarn-dyed and piece-dyed goods imported from Paris, France. In each of said appeals entry was made under duress to meet advances made by the appraiser in a similar case which was then pending on appeal to reappraisement. The test case was reappraisement No. 106712-A, which was the subject of decision by the trial court, as reported in Reap. Dec. 3437, which in turn was the subject of review by the Third Division of this court, Reap. Dec. 3601, and the decision was in turn the subject of review by the appellate court, 23 C. O. P. A. 336, In each of these decisions, which were participated in by nine judges, the importer's claimed values were found to be the proper dutiable foreign values. The appeals now before us are so-called duress entry cases, in which the importer made certain additions on entry to meet advances made by the appraiser in reappraisement 106712-A. At the trial of this case the importer offered and there was admitted evidence without objection the record in the original test case, sufra. No other evidence was offered by the importer. The Government offered and there were received in evidence a special agent's report, dated September 29, 1936, which was marked exhibit 1 for identification and later marked exhibit 1; a special agent's report dated January 27, 1937, which was marked exhibit 2 for identification and later marked exhibit 2, and a special agent's report dated January 23, 1937, which was marked exhibit 3 for identification and later marked exhibit 3. Exhibit 3 in and of itself is nothing more than a letter from the special agent to the Commissioner of Customs transmitting nine affidavits. These affidavits will be referred to and discussed later, but exhibit 3 in and of itself need be given no further consideration. This constitutes all the evidence before us. With reference to exhibit 1 the trial court found as follows: These two sales, as reported by the special agent, were undated and there is nothing in the various items of merchandise, in the absence of samples, from which to determine that the merchandise contained in these sales was similar to the merchandise involved in the appeals before us. In fact, even if the merchandise itself were similar, the superscription over the prices in these sales, namely "Joblot" or "Job" would clearly infer that the sales were not usual sales. On any and all counts the record of these sales cannot be accepted as controlling evidence in the cases at bar. It bas never been our understanding that undated sales could be considered as evidence of the value of any merchandise. Such sales, might-have been made on the date of exportation or they might have been made 10 years prior or 10 years subsequent to the date of exportation, and, not being able to determine from an undated sale-just when the same was made, the same would be too indefinite and uncertain to be given any consideration or weight as evidence. We find no error in the ruling of the trial court above set out, and its decision in that respect is affirmed. With reference to said exhibit 1 the trial court further found as follows: These sales are dated but the dates are, with a few exceptions, so much later than the latest shipment, May, 1935, involved in the case at bar as to be of no importance as evidence herein. The exceptions mentioned above relate to merchandise, such as "silk scarves" or "rayon" fabrics which is not involved in the appeals before us and, therefore, has no connection with the present case. We find no error with the above ruling of the trial court and its decision in this respect is affirmed. We also agree with the finding of the trial court that " Exhibit 2 for identification contains nothing of evidential value in itself " and that it "consists entirely of summaries by the special agent of the information, as he interprets it, of what is contained in the affidavits obtained by him from several French dealers." Referring to exhibit 3, which consists of affidavits obtained by the special agent from French dealers, the trial court found as follows: The larger number of these Trench dealers when shown the samples that the special agent had obtained from Rodier (presumably those in exhibit A) made affidavit that they did sell merchandise similar to that sold by Rodier and attached to their respective affidavits samples of such of their goods as they considered similar to those sold by Rodier. A careful comparison of each sample attached to the affidavits in exhibit 3 with each of the samples in exhibit 1-A reveals that only two or at most three samples could be considered similar in an.y way and that these, in the absence of analysis, cannot be considered comparable. The net- result of the Government's new evidence is, therefore, to leave unchanged the state of facts passed upon in the incorporated case and gives no reason for departing from the decision and judgment therein. In tbe old record, exbibit 7, Paul Rodier, tbe present exporter, made affidavit in .part as follows: That a wholesale quantity of woolen dress goods, according to the custom of the trade in the markets of Trance for almost half a century, is always more than a single piece of fabric of one pattern and color and is ordinarily about 100 meters of one pattern and color for yarn-dyed fabrics and about 300 meters of one pat tern in one or more colors, for piece-dyed fabrics; that a wholesale quantity and a usual wholesale quantity of woolen dress goods as thus explained are the quantities in which such dress goods are generally sold by the French woolen dress goods industry in the markets of France; and that the sales in such quantities far outnumber and greatly exceed in volume the business done in that trade in smaller quantities. Qualifying himself to make the above statement, the said Rodier stated as follows: That he is managing director of Rodier of No. 3 Rue des Moulins, Paris, France, in existence since 1853, and engaged in the manufacture and sale of dress goods made of wool, cotton, silk, rayon, or linen, and a few articles made of one or more of those materials; that he has been associated with that company for 48 years; and that he is familiar with its products, their prices, and the terms and conditions under which they have been sold for consumption in France and for exportation to other countries. Charles Fernand Rocoffort, manager of Rodier of Paris, testified that their sales are made at the wholesale quantity price, which is the general rule applying in France; that a wholesale quantity in the dress goods industry in France is from 100 to 300 meters, 100 meters for yarn-dyed goods and 300 meters for piece-dyed goods; that the usual quantities of woolen dress goods sold by the French woolen dress goods industry in France is 100 meters per color in one pattern of yarn-dyed goods and 300 meters per pattern, which may include more than one color, in piece-dyed goods. With reference to a usual wholesale quantity of this merchandise Eugene Altmeyer, in exhibit 6 of the old record, made affidavit as follows : That within his knowledge of buying such dress goods, and his knowledge of thev sale of similar merchandise of French manufacturers, including Rodier, the usual wholesale quantity is 100 meters per color for yarn-dyed fabrics or 300 meters by pattern for piece-dyed fabrics; that these are the usual minimum wholesale quantities offered for sale irrespective of the nature of the business of the purchaser; and that these are recognized and accepted as the usual wholesale quantities in the trade, and are never considered unusual. In exhibit 3 of the present record this same witness made affidavit in part as follows: That inasmuch as neither he nor R. H. Macy & Oie, manufacture or sell woolen dress goods or other merchandise in France, he has no knowledge of the usual wholesale quantity in which such merchandise was sold in France in the ordinary course of trade during the years 1932-33. That whatever statement was made by him relative to the usual wholesale quantity in which sales were made during 1932-33 in France was not based on his experience or personal knowledge but from information received from outside sources. In exhibit 5 of the old record Lucien Sehloss made affidavit as follows: That within his knowledge of buying such woolen dress goods, and his knowledge of the sale of similar merchandise of French manufacturers, including Rodier, the usual wholesale quantity is 100 meters per color for yarn-dyed fabrics, or 300 meters by pattern for piece-dyed fabrics; that these are the usual minimum wholesale quantities offered for sale, irrespective of the nature of the business of the purchaser; and that these are recognized and accepted as the usual wholesale quantities in the trade, and are never considered unusual. In exhibit 3 of the new record this same witness made affidavit as follows: That, inasmuch as neither Adolphe Schloss Fils & Cie., nor he, personally, oells such merchandise in France, he has no knowledge of the usual wholesale suantity in which woolen dress goods are so sold in France in the ordinary course qf trade. In exhibit 4 of the old record M. Dubrulle made affidavit as follows; that he has been associated with Mathan & Dubrulle for 26 years; that he is familiar with the woolen dress goods manufactured and sold by Rodier, 3 Rue des Moulins, Paris, France; and that Mathan & Dubrulle, with which he is connected is engaged in the manufacture and sale of similar woolen dress goods, That within his knowledge of manufacturing and selling such woolen dress goods, and his knowledge of the sale of similar merchandise of other manufacturers, including Rodier, the usual wholesale quantity is 100 meters per color for yarn-dyed fabrics, or 300 meters by pattern for piece-dyed fabrics; that these are the usual wholesale quantities offered for sale, irrespective of the nature of the business of the purchaser; and that these are recognized and accepted as the usual wholesale quantities in the trade, and are never considered unusual. In exhibit 3 of the new record this same witness made affidavit as follows: That his company, Mathan & Dubrulle, does not manufacture and sell woolen dress goods similar to that manufactured and sold by Rodier of Paris, France. That the merchandise manufactured and sold by Rodier is distinctive and high class, since it is manufactured on hand looms. The merchandise manufactured and sold by Mathan & Dubrulle is in a lower class, made on mechanical and automatic looms and is not comparable to that manufactured and sold by Rodier. That the usual wholesale quantity in which sales of such woolen dress goods were made to all purchasers in France in the ordinary course of trade, for the period from January 1932 to date, was five pieces per color for fancy merchandise and ten pieces for plain merchandise in the gray, and that he does not know from his experience anything about the usual wholesale quantity in which sales were made in France of merchandise similar to that manufactured and sold by Rodier of Paris, France. The quotation of these contradictory statements in these affidavits renders unnecessary any comment thereon by us. There are also other examples of contradictions in the record which we do not deem it necessary to here detail. We have carefully considered and weighed all the evidence before us, United States v. Rodier, 23 C. C. P. A. 336, United States v. Kleberg, 25 C. C. P. A. 142, and United States v. Kraft Phenix, 26 C. C. P. A. 224, and upon the weight thereof, we agree with the trial court that: The net result of the Government's new evidence is, therefore, to leave unchanged the state of facts passed upon in the incorporated case and gives no reason for departing from the decision and judgment therein. Upon the weight of all the evidence herein we find as facts: 1. That the merchandise in question consists of woolen dress goods imported from Paris, France. 2. That in entering the merchandise the importer made certain additions to meet advances made by the appraiser in reappraisement 106712-A, in which case the importer's claimed values were affirmed by the appellate court in United States v. Rodier, 23 C. C. P. A. 336, and that the importer so entered his merchandise in good faith. 3. That foreign value is the proper basis of appraisement of the merchandise in the cases before us. 4. That the usual wholesale quantity of the merchandise is 100 meters of one pattern and color for the yarn-dyed fabrics and 300 meters of one pattern, in one or more colors, for piece-dyed fabrics. 5. That the proper dutiable foreign values of the woolen cloth or dress goods are the entered values, less any additions made by the importer on entry to meet advances made by the appraiser in similar cases then pending on appeal. As'to any and all other merchandise the appraised values are affirmed. As matter of law, we therefore affirm the judgment of the trial court. Judgment will be rendered accordingly.

8 Cust. Ct. 489

Opinion by Cline, J. The exhibit in this case showed that the importer abandoned the decayed portion of the shipment and also that the examiner reported approximately 20 percent of the shipment was found decayed and worthless. The United States Department of Agriculture reported "Stock showing decay-ranges from 4% by count, in some samples to 36% in others and averages approximately 20%. Decay is chiefly Bacterial Soft Rot in various stages, mostly advanced stage." It also appears that the percentages were estimated from an examination of the tomatoes in the freight car in which the goods arrived. From the record it was found that the weight of evidence indicates that 20 percent of the shipment of tomatoes were decayed and entirely worthless at the time of examination by the appraiser. Following Huber v. United States (5 Cust. Ct. 59, C. D. 370) it was held that no duty should have been assessed on the worthless portion amounting to 20 percent of the shipment. The protest was sustained to that extent.

342 U.S. 894

Supreme Court of Illinois. Certiorari denied.

201 Ct. Cl. 888

Plaintiff, receiver of Holiday Nursing Homes, Inc., seeks judicial review of a determination of the Secretary of Health, Education and Welfare by his agent, Massachusetts Blue Cross, Inc., a fiscal intermediary for purposes of administration of the Medicare program, pursuant to an agreement with the Secretary under 42 U.S.C. § 1395 (h). The disputed determination involves whether certain items may be allowed as reimbursable costs for services rendered to Medicare -beneficiaries by said Holiday Nursing Homes. Plaintiff seeks to recover money allegedly due and owing to it from defendant for services furnished by plaintiff to individuals entitled to post-hospital extended care services under the said agreement with the Secretary. Additionally, plaintiff alleges that its property was taken without just compensation in violation of the Fifth Amendment to the Constitution and that it is not liable to defendant for any overpayment to it under the Health Insurance for the Aged and Disabled Act. On April 27, 1973, the court issued the following order: "This case comes before the court on defendant's motion, filed December 4, 1972, for summary judgment. Upon consideration thereof, together with the opposition thereto and the briefs and oral argument of counsel, the court concludes as follows: "1. With respect to the years 1968 and 1969 the defendant's motion is granted, and the petition is dismissed, for failure to exhaust the prescribed administrative remedy, i.e. failure of the provider to appeal to the Blue Cross Associa-. tion's Medicare Provider Appeals Committee. This form of remedy, which was made mandatory, was valid and authorized by 42 U.S.C. § 1395(h) and (u). The provider could not properly by-pass this administrative procedure. "2. As for the year 1967, the court holds that it is precluded by 42 U.S.C. § 1395 ff. and § 405 (h) from reviewing or overturning the determination of the Provider Appeals Committee except insofar as such determination (a) may have involved or rested upon procedures which were constitutionally invalid or violative of the governing statute, or (b) may have substantially violated the Due Process Clause of the Fifth Amendment or the provisions of the governing statute. See Schroeder Nursing Care, Inc. v. Mutual of Omaha Ins. Co., 311 F. Supp. 405 (E.D. Wisc., 1970); San Vincente Hospital v. Travellers Ins. Co., C.D. Calif., No. 71-2453-FW, August 10, 1972; Rothman v. Hospital Service of Southern California, C.D. Calif., No. 68-1325-JWC, April 19, 1972; Aquavella v. Richardson, 437 F.2d 397 (2d Cir. 1971); Coral Gables Convalescent Home, Inc. v. Richardson, 340 F. Supp. 646 (S.D. Fla., 1972); St. Jude Manor Nursing Home, Inc. v. Richardson, M.D. Fla., No. 72-681-Civ.-J-S, Oct. 3, 1972. With respect to these two types of claim, the court has jurisdiction under 28 U.S.O. § 1491 .and the finality provisions of the medicare legislation do not bar judicial review. "3. Plaintiff has raised the following claims of the types specified in paragraph 2, supra: " (i) Under the Medicare Provider Appeals Procedure (see the document headed "Functions of Provider Appeals Committee") staff members of the fiscal intermediary (which was a party to the dispute before the Provider Appeals Committee) could participate in deciding and drafting the Committee's determination, and may well have done so in this instance. Cf. Camero v. United States, 179 Ct. Cl. 520, 375 F. 2d 777 (1967). " (ii) The provider was informed during performance that certain types of costs were allowable and could be reimbursed but the Committee unfairly and invalidly denied reimbursement of those very costs. "(iii) Although the formal procedures accorded the right of cross-examination, this right was in fact denied or unfairly curtailed at the hearing. "The court deems these issues worthy of further exploration by the trial division, and accordingly, with respect to the year 1967, denies without prejudice the defendant's motion for summary judgment and remands the case to the trial division for trial (or other appropriate fact-finding-procedure) on these three questions. The court stresses that (a) the case is not being returned to the trial division for a full trial on all of plaintiff's costs but only for consideration and determination of the three issues listed supra, and (b) the court has taken no position, even tentatively, on the validity of any of these three claims. "it IS SO ORDERED." BY THE COURT (Sgd) WlLSON CoWEN Chief Judge Plaintiff's petition for certiorari was denied October 23, 1973.

454 U.S. 835

C. A. 5th Cir. Certiorari denied.

546 U.S. 921

C. A. 10th Cir. Certiorari denied.

538 U.S. 971

C. A. 7th Cir. Motion of AT&T Corp. for leave to file a brief as amicus curiae granted. Certiorari denied.

430 U.S. 929

C. A. 8th Cir. Certiorari denied.

40 Cust. Ct. 698

Johnson, Judge: These appeals for reappraisement have been submitted for decision upon the following stipulation of counsel for the parties hereto: IT IS HEREBY STIPULATED AND AGREED by and between the attorneys for the parties hereto that the market values or the prices of the merchandise manufactured by Schumann & Schreider on the invoices covered by the above enumerated appeals for reappraisement, at the time of exportation of such merchandise to the United States, at which such or similar merchandise was freely offered for sale and sold to all purchasers in the principal markets of Germany, the country from which exported, in the usual wholesale quantities and in the ordinary course of trade, for exportation to the United States, 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, were the appraised values less the amounts added under duress and that there were no higher foreign values. IT IS FURTHER STIPULATED AND AGREED that these appeals be submitted on this stipulation. On the agreed facts I find the export value, as that value is defined in section 402 (d) of the Tariff Act of 1930, to be the proper basis for the determination of the value of the merchandise manufactured by Schumann & Schreider, and that such values were the appraised values, less the amounts added under duress. Insofar as the appeals relate to all other merchandise, they are dismissed. Judgment will be entered accordingly.

20 Ct. Int'l Trade 345

Opinion Goldberg, Judge: This matter is before the Court following trial de novo. It involves the proper tariff classification of succinic acid anhy-dride, a chemical added to such products as processed food, medicine, wine, and animal feed to impart a tart flavor to improve the taste of the products or mask foul flavors. The plaintiffs product entered the United States in 1990. The United States Customs Service ("Customs") classified it as "anhydrides of succinnic acid" under subheading 2917.19.27 of the Harmonized Tariff Schedules of the United States (HTSUS), and imposed a tariff of 3.7 cents per kilogram plus 16.8% ad valorem. Plaintiff urges that the merchandise should be classified under subheading 2917.19.50, HTSUS, a residual classification which carries a tariff of 4%. The Court finds that Customs properly classified the product. The Court exercises its jurisdiction pursuant to 28 U.S.C. § 1581(a) (1988). I. Standard of Review Customs' tariff classification decisions are presumed to be correct; the importer bears the burden of proving otherwise. 28 U.S.C. § 2639(a)(1) (1988). To determine whether the importer has overcome this presumption, the Court must consider whether Customs' classification is correct, both independently and in comparison with the importer's proposed alternative. Jarvis Clark Co. v. United States, 2 Fed. Cir. (T) 70, 75, 733 F.2d 873, 878, reh'g denied, 2 Fed. Cir. (T) 97, 739 F.2d 628 (1984). II. Customs' Classification In considering Customs' classification, the Court begins with the plain language of the statute. Subheading 2917.19.27, HTSUS, describes a number of acids and anhydrides derived from different chemicals. The relevant portion of the subheading provides for "anhy- drides of succinnic acid derived in whole or in part from maleic anhydride or from cyclohexane." 2917.19.27, HTSUS. A. Meaning of the Term "Anhydrides of Succinnic Acid": Before comparing plaintiffs product to the description in subheading 2917.19.27, HTSUS, it is necessary to clarify the meaning of a few disputed terms. The Court first determines whether or not the term "anhydrides of succinnic acid," as used in subheading 2917.19.27, HTSUS, names plaintiffs product. According to plaintiffs expert witness, Mr. Philip S. Rhodes, Vice President of Anhydrides & Chemicals, Inc., the only two proper names for plaintiffs product are "succinic anhydride" and "suc-cinicacidanhydride."AccordingtoMr.Rhodes,"anhydridesofsuc-cinnic acid" is a description of the product, but it is not a proper name. Defendant's expert witness, Dr. James W Canary, Assistant Professor of Chemistry at New York University, similarly testified that "anhydrides of succinnic acid" is not the commonly accepted name for the product. However, Dr. Canary observed that the description brings only one thing to mind: plaintiffs product. Both experts agreed that an anhy-dride of a chemical indicates that a molecule of water has been removed from the original chemical. Both experts testified that the terms "suc-cinic anhydride" and "succinic acid anhydride" identify succinic acid from which a molecule of water has been removed. The Court's own review of the closeness of the three names, the identical chemical structure that they identify or describe, and the testimony of both Mr. Rhodes and Dr. Canary persuade the Court that the terms succinic anhydride, succinic acid anhydride, and anhydrides of succinnic acid are synonymous for purposes of interpreting the HTSUS. The Court finds, therefore, that the description provided in the HTSUS, "anhydrides of succinnic acid," is clear and unambiguous. The Court will therefore use these terms interchangeably. B. Meaning of the Term "Derived": The term "derived" as used in subheading 2917.19.27, HTSUS, can have one of two meanings. According to the dictionary, the term "derived" means "formed or developed out of something else. " Webster's Third New International Dictionary 608 (Unabridged, 1986). Similarly, the term "derivative" is defined as "a substance that is made from another substance." McGraw-Hill Dictionary of Scientific and Technical Terms 545 (5th ed. 1994). This first meaning of the term "derived" therefore implies that one substance is derived from another substance when it is made physically from the other. According to Dr. Canary, a second definition of the term "derived" is used in the academic world and among scientists. According to this usage, a substance is derived from another when both substances possess similar chemical formulas. See Webster's Third New International Dictionary 608 (Unabridged, 1986) (defining "derivative" as "a chemical substance that is so related structurally, to another substance as to be theoretically derivable from it even when not so obtainable in practice"). Scientists would then place additional conditions on a process to indicate that one substance is actually made from another. Dr. Canary also testified that he believes the scientific definition is not widely used outside a laboratory or classroom. In his opinion, a production manager, for instance, would be more likely to use the term "derived" to mean that one substance is made from another. In ascertaining the plain meaning of a particular statutory term, the Court presumes that Congress frames tariff acts using the language of commerce. Nylos Trading Co. v. United States, 37 CCPA 71, 73 (1949). The Court also presumes that the commercial meaning of a tariff term coincides with its common meaning, in the absence of evidence to the contrary. United States v. C.J. Tower & Sons, 48 CCPA 87, 89 (1961). The Court may rely upon its own understanding, and consult standard lexicographic and scientific authorities to determine the common meaning of a tariff term. Brookside Veneers, Ltd. v. United States, 6 Fed. Cir. (T) 121, 125, 847 F.2d 786, 789, cert. denied, 488 U.S. 943 (1988). For purposes of the present case, the Court interprets the term "derived" as used in subheading 2917.19.27, HTSUS, to mean to physically make one thing from another. This accords with the way the term is typically used in commerce. C. Plaintiff's Production Process: Both defendant's expert witness, Dr. Canary, and plaintiffs expert witness, Mr. Rhodes, gave substantially identical testimony as to the production process utilized to make plaintiffs product. According to both Dr. Canary and Mr. Rhodes, there are various ways to make succinic acid anhydride. Both agreed that the first step in plaintiff s production process is to mix maleic anhydride, hydrogen, and a catalyst in a reaction chamber. According to Mr. Rhodes, the mixture is then stirred and cooked to make the molecules recombine to produce a crude form of succinic acid anhydride. Typically, the mixture will contain some maleic anhydride that did not chemically react to form suc-cinic acid anhydride. If moisture is present in the reaction chamber, the mixture will also contain traces of succinic acid. Removing these impurities can be accomplished in various ways. Dr. Canary described a purification process by which the crude succinic acid anhydride is heated, thereby converting the liquid to a gas, then cooled so that the gas recondenses into a purified liquid. Mr. Rhodes testified that their product is purified by a vacuum distillation process. Mr. Rhodes also testified that plaintiff uses an alternative production process when the color of their product is important, such as when used in foodstuffs. In this alternative process, maleic anhydride is first dissolved in water and kept at room temperature. Succinic acid forms, which is then precipitated from the water using salt. The compound is then heated to steam out the water, thereby producing succinic acid anhydride. The color of the anhydride is lighte'r under this process because it avoids heating to temperatures that discolor the mixture. Both witnesses agreed that under both processes, maleic anhydride is the source material used to make plaintiffs product. In the first step of each production process, maleic anhydride is combined with either hydrogen, or when the second process is used, mixed with water. Using the words of subheading 2917.19.27, HTSUS, plaintiffs product is physically produced from, or derived from, maleic anhydride. The Court finds, therefore, that subheading 2917.19.27, HTSUS, describes plaintiffs product. D. Plaintiff's Challenge to Subheading 2917.19.27, HTSUS: Plaintiff challenges Customs' classification on the grounds that it does not describe plaintiffs product because it never went through the acid form during the production process. Plaintiff is effectively arguing that the Court should interpret the term "of" in "anhydrides of succinnic acid" to require that the product was actually produced from succinic acid. Plaintiff is presenting the Court with a tortured interpretation of subheading 2917.19.27, HTSUS. The HTSUS does not impose any requirement that the succinic acid anhydride must have been succinic acid at any time during the production process. As discussed above, to fall within the scope of this subheading, the only requirement is that the "anhydrides of succinnic acid" must be derived in whole or in part from maleic anhydride or from cyclohexane. The Court found such a condition because the term "derived" appears in subheading 2917.19.27, HTSUS. In contrast, the term "of" as in "anhydrides of succinnic acid" does not imply the condition that the anhydride must be made from succinic acid. The Court's statutory construction is consistent with the science of making succinic acid anhydride. The expert witnesses discussed two general methods of producing succinic acid anhydride: it can be created either by removing two hydrogen atoms and one oxygen atom from suc-cinic acid, or by adding hydrogen atoms to maleic anhydride. The chemical structure of succinic acid anhydride is the same regardless of which method is utilized. The HTSUS provides for succinic acid anhydride derived in whole or in part from maleic anhydride, which corresponds to the second method described by the expert witnesses. If the HTSUS required that the end product pass through succinic acid form, it would not have provided for the alternative process of deriving succinic acid anhydride directly from maleic anhydride. The Court will not impose plaintiffs additional requirement where it appears contrary to the explicit language of the HTSUS. III. Plaintiff's Proposed Classification The Court next considers plaintiffs proposed classification under subheading 2917.19.50, HTSUS, for "other" "polycarboxylic acids, their anhydrides, halides, peroxides and peroxyacids; their halogenated, sulfonated, nitrated or nitrosated derivatives." Plaintiff argues that this is the proper classification because plaintiff s product was classified previously under the Tariff Schedules of the United States (TSUS) as Tariff Item 426.04, at the rate of 4.2% ad valo-rem. The conversion reports indicate that Item 426.04 was to be converted to several HTSUS classifications. One of these classifications is the one proposed by plaintiff. Customs' selected classification, however, is not among the conversion options. See Conversion of the Tariff Schedules of the United States Annotated into the Nomenclature Structure of the Harmonized System, USITC Pub. No. 1400 (June 1983); Continuity of Import and Export Trade Statistics After Implementation of the Harmonized Commodity Description and Coding System, USITC Pub. No. 2051 (Jan. 1988). Thus, plaintiff argues it suffered a tariff increase simply because of conversion to a new tariff system, and that this contravened the instructions of the conversion report. Plaintiff supports its argument with legislative history showing that the conversion process was supposed to avoid, to the extent practicable, changes in the rates of duty on individual products. Guidelines for Converting the Tariff Schedules of the United States to the Harmonized System (Conversion Guidelines), 46 Fed. Reg. 47,897-98 (1981). The Court notes that the conversion reports upon which plaintiff relies serve only as a guide; they are not dispositive of tariff classification disputes. Thomas Equipment Ltd. v. Unites States, 19 CIT 316, 322, 881 F. Supp. 611, 617 (1995). Also, although the conversion guidelines instruct Customs to avoid rate changes to the "extent practicable," they also direct Customs to simplify tariff rate structures and suggest modifications which would alleviate administrative burdens on the government. Conversion Guidelines, 46 Fed. Reg. 47,897-98. Where an item is described by two headings, the Court is instructed to select the heading which provides the most specific description. See General Rules of Interpretation 3(a), HTSUS. Subheading 2917.19.27, HTSUS, which provides for succinic acid anhydride derived from maleic anhydride, more clearly describes plaintiffs product than does a subheading that provides for "other" polycarboxylic acids. Where the language of the statute is clear and unambiguous, as is the case here, the Court will not find for an alternative classification based upon general legislative history. To do so would ignore the clear language of the HTSUS. This Court holds, therefore, that Customs properly classified plaintiffs product as "anhydrides of succinic acid" under subheading 2917.19.27, HTSUS. Conclusion For the foregoing reasons, the Court rules in favor of the defendant. A separate judgment and order thereon will be entered accordingly. The HTSUS spells the terra "succinic" as "succinnic," differently than dictionaries and other sources the Court has consulted. This difference is immaterial to interpreting the HTSUS. The Court will spell the term as "succinic" except when quoting language from subheading 2917.19.27, HTSUS.

528 U.S. 982

C. A. 9th Cir. Certiorari denied.

178 L. Ed. 2d 440

Petition for writ of certiorari to the United States Court of Appeals for the Eighth Circuit denied. Same case below, 383 Fed. Appx. 579.

563 U.S. 982

C. A. 5th Cir. Certiorari denied.

346 U.S. 916

C. A. 9th Cir. Certiorari denied. The Chief Justice took no part in the consideration or decision of this application.

444 U.S. 899

C. A. 5th Cir. Certiorari denied.

14 How. 488

Mr. Justice CURTIS delivered the opinion of the court. Henry Webster, an alien, and subject of Great Britain, brought his writ of entry in the Circuit Court of the United States for the District of Maine, to recover possession of a parcel of land described in the count. He claims title under a will of Florentius Vassall. At the trial, the parties agreed on the following facts: " It is agreed, by the parties, that the following statement of facts is true, namely, that the demanded premises belonged to the proprietors of the Kennebec Purchase, and were by them duly granted and assigned to Florentius Vassall, one of the proprietors in fee, in the year 1756, being included in the grant recorded in the records of the proprietary. " That Florentius Vassall made his will September 20th, 1777, and died at London, 1778, seised of the lands in question, they then being unoccupied wild lands. The will was afterwards •duly proved in the Prerogative Court of Canterbury, September 14, 1778, a copy of which will, with its exemplifications, ' has been duly filed and'recorded in the Probate Office for the county :of Kennebec; which will was offered in evidence, as copied, and makes a part of this case. (C.) " Richard Vassall, named in the will, died about 1795, leaving only one .child, Elizabeth Vassall,1 who married Sir Godfrey Webster, deceased,' about the first day. of January, 1793, by whom she had issue, two sons, namely, Sir Godfrey Vassall Wtebster, who died ip the lifetime of said Elizabeth, without issue, and Henry Webster, the demandant. 1 Said Elizabeth, afterwards, namely, in January, 1796, waS legally divorced from her husband, the said Sir Godfrey Webster, and on the first day of July, 1797, she was legally joined in marriage with Richard Henry Fox, afterwards Lord Holland, by whom she had issue, one son, Henry Edward Fox, who is now living. All charges upon the land devised have been satisfied, and they are not now subject to apy life estate, estate for years, or outstanding terms, under the'will. Said Lord Holland died on the-1841; said Lady Holland died in' the fall, of the year 1845. The'persons named in said will as devisees in remainder, after the failure of -the issue of said Elizabeth, or their lineal descendants, are now living in England, as is the said. Henry Edward P'ox, son of said 'Elizabeth; That said. Florentius Vassall, was, at the time of said grant, a resident in Boston, State of Massachu setts; that he, on or before the year 1775, left his said residence, went to England, and never returned; and that neither he, nor any of the devisees named in said will, have ever resided within the limit's of the United States since that time. The premises demanded, being the matter in dispute, are of greater value than two thousand dollars. " The tenant, and those from whom he legally derives title xo said demanded premises, have been in the quiet, undisturbed, open, notorious, and • exclusive possession and occupation of said premises for and during the term of fifty years next preceding the. commencement of this action, he and they claiming to hold the same adversely to any claim of said demandant, 'or any other person, as his and' their own property in fee-simple." These facts, together with the will of Florentius-Vassal], made the case. By this will the testator devised three plantations in Jamaica, and all his lands in New England, (which included the demanded premises,) to Lord Falmouth, Lord Barr rington, and Mr. Charles Spooner, and their heirs, to the uses, upon the trusts, and for. the intents and purposes, and with and subject to the powers and provisos therein expressed. The will then proceeds to declare, in respect to all the lands in New England, as follows: To the use of my son, Richard Vassall, for and during his life, and from and after the determination of that estate by forfeiture, qr otherwise, during his life, to the use of the three trustees during the life of Richard Vassall, in trust to preserve the contingent uses and estates thereinafter mentioned, and for that purpose to make entries and bring actions as occasion shall require, but nevertheless to permit Richard Vassall to take the rents of the premises to his own use during his life. The testator then declares the remainder, after the death of Richard, to be to the use of the son and sons of Richard, to be equally divided between them, share and share alike, as tenants in common, and not as joint tenants, and to the several and respective heirs male of the bodies of such sons, with cross remainders among them; and in default of such issue male of Richard, subject to a term of years, which it is agreed is not outstanding, to the use of Elizabeth Vassall, the daughtér of Richard, for her life, with remainder as before stated to the trustees for the life of Elizabeth to preserve contingent remainders, in case of forfeiture of her life estate; and then-follows .the provision under which the demandant claims title, which is therefore given in tne words of the will. "And from and-immediately after the decease of the said Elizabeth Vassall, to the one or all and every the son and sons of-the said Elizabeth Vassall, to be.heaotter to be divided between or amongst' such sons, if more tiian one, share and, share alike, and they to take as tenants in common, and not as joint tenants, and thé severa and respective heirs male of the body and bodies of all anc every such son and sons issuing." Then follow remainders to the other daughters of Richard, as tenants in common in tail general, with cross remainders; remainder to the daughters of Elizabeth Vassall, as tenants in common in tail general, with cross remainders, —- with successive remainders to George and Richard, and William Barrington, testator's grandsons, for life; remainder to their sons, as tenants in common-in tail male; remainder to testdtor's granddaughter, Louisa Barrington, for life, and her sons in common in tail male ; remainder to her daughters, as tenants in common in tail general; remainder to testator's daughter, Elizabeth Barrington, for life ; remainder to -her other sons " in tail male successively;" remainder to her future daughters, as tenants in common in tail; remainder to testator's nephew May, for life ; remainder to his sons in common in tail male; remainder to his daughters in common in tail; remainder to the minister and wardens- of Westmoreland, &e. These are the most material provisions of the will of these lands, and are sufficient to show its- general structure, -in reference to the questions which have been made concerning its legal effect. The first of these question is, whether, by force of the will, the demandant took any, and if any, what legal estate in these lands on the decease of his mother, Elizabeth Vassall. It is'insisted, by the tenant's counsel, that the '.trustees took the legal estate in fee simple, and that the estates limited to Richard Vassall for life', and to the others, byway of remainder, were only equitable estates, and consequently the demandant cannot maintain this action. But whether we look to the evident intent of the testator, or to the settled technical meaning of the language he has employed, we think it clearly appears that the life estate of Richard Vassall and the contingent remainders limited thereon were legal estates, and that the trustees did not hold the fee-simple under this will. The instrument was drawn in England, evidently by a skilful draughtsman, and is in .strict conformity with well-known precedents'. It employs technical' language with accuracy, and all the various provisions of the will, though numerous and complicated, compared with the usually, simple testamentary dispositions of property in this country, .are capable of' being clearly understood and fully executed. The. substance of the devises of these lands, may be stated to be: to tbe trustees and their heirs to the use of Richard for life, remainder, for his life in case of forfeiture, to the trustees to preserve contingent' remainders ; remainder to the sons of Richard, if any, as tenants in common in tail, with cross remainders; remainder to Richard's daughter Elizabeth for life; remainder to trustees to preserve contingent remainders during her life; remainder to the sons of Elizabeth in tail, the demandant being the elder of her two sons. A devise to the trustees and their heirs to the uses mentioned, carries the legal estate to the cestuis que úse, unless the will has imposed on'the trustees-some duty, the performance of which requires the legal estate to be vested in them. And in that case they would take an estate exactly commensurate with the exigencies of their trust. Morrant in Gough, 7 B. & C. 206; Kenrick v. Lord Beauclerck, 3 B. & P. 178; 10 Bythewood on Con. 214; Jarm. on Wills, 198-9; Nielson v. Lagow, 12 How. 110, 111; 1 Greenl. Cruise, 346-7, note. The testator has not imposed on the trustees any duties, connected with these lands, which in any way interfere with the existence of legal estates in the different beneficiaries named in the will. On the "contrary, the sole duties to be performed by them, in reference to these lands, are to take the life' estates, in case of forfeiture, and hold them, so that the future remainder-men may not be -deprived of the legal estates limited fo them by way of contingent remainders, which require the preservation of the particular estates .to support them. Whether the trustees took and held any legal estate in either of the plantations in Jamaica, it is not necessary to determine. It was arguéd that .they did, because they have some duties to perform concerning two of them, and that the testator employs the same language in devising these two plantations to the trustees, as he does in devising the lands in New England. But it by no means follows that the same words devising to trustees two parcels of' land, must necessarily vest the legal estates in both parcels in the trustees, because they take a legal estate in one of those parcels. They may take a. legal estate in one, because subsequent parts of the will require them to do -acts in reference to it, which can be done only by the holder of the legal estate, and then the law assigns to them such an estate as the' due execution of their trust demands; while at the same time, by force of the statute of uses, or of wills, the other land, as to which no duties are required-'of the trustees* goes to the cestuis que use.. So far as this will operates on the lands in New England, there-is nothing, to prevent the usual and settled operation of ,a devise to uses, which is, to vest the legal estate in the cestuis que use;. and it is placed beyond all doubt that it was not intended the trustees should hold the fee, because there are express limitations of life estates to them to preserve contingent remainders, which would be wholly-inoperative if they took the fee, and is sufficient of itself to control any doubtful intent, according to Doe v. Hicks, 7 T. R. 433; Curtis v. Price, 12 Ves. 100. Oar conclusion is that the legal estates in the New England lands, were'to go to the beneficiaries named in the will. It is further urged by the tenant's counsel, that the legal effect of the devise to Elizabeth Vassall for life, remainder to her sons, as tenants in common, share and share alike, and-to the heirs, of their bodies, gave an estate tail to Elizabeth Vassall, under the rule in Shelly's case, whiih was in force in Massachusetts, within whose limits these lands lay at the time this will took effect. There is no doubt this rule made part of the law of Massachusetts until the 8th of March, 1792, when it was abolished by statute, so far as it respeets wills. Bowers v. Porter, 4 Pick. 198; Steel v. Cook, 1 Met. 282. But in our opinion, the rule in Shelly's case is not applicable to this devise. That rule is, that when the ancestor, by any gift or conveyance, takes an estate of freehold, and in the same gift or conveyance. an estate is limited, either immediately or mediately, to his heirs in fee or in tail, that the words heirs, &c., are words of-limitation, and not of purchase. Here the life estate is limited to Elizabeth Vassall, and the remainder to her sons as tenants in common, share and share alike, and the heirs of their bodies. The fee tail is not limited to the heirs in tail of the first taker. The heir in tail was this .demandant; and the remainder is not limited to him, but to him' and his brother, as tenants in common. It is not a question, therefore, whether the same persons shall .take by descent or purchase, which alone is the matter determined by the rule in Shelly's case; for the two sons could not take an estate tail from their mother as tenants in common. They must take as purchasers, or not take-at all; and there is no rule of law which forbids such a devise, nor can the rule in Shelly's case be applied to it. On the contrary, it is well settled that a limitation by way of remainder to the sons of the first taker, as tenants in common, manifests the intent of the testator that the ancestor should not take an estate in fee or in tail, and that, the sons may and do take as purchasers; Doe v. Burnsall, 6 T. R. 30; Burnsall v. Davy, 1 B. & P. 215; Gilman v. Elvy, 4 East, 313, Doe v. Collins, 4 T. R. 294; 4 Greenl. Cruise, 389. Our opinion is, that upon the decease of his mother, this demandant took, as a purchaser, an estate tail in one moiety of these lands, as a tenant in common with his brother. It was objected that the devise to him was upon the condition chaj; as soon as he should come into the actual possession of the lands devised, he should take and use the surname of Vas sail; but it is enough to.say that he'does not appear'to have yet come into such actual possession, and that if this condition subsequent were broken, only the person to whom the lands are devised over can by an entra take advantage of it.. Taylor v. Mason, 9 Wheat. 325; Finley v. King, 3 Pet. 347 Under the Revised Statutes of -Maine, c. 145, § 13, the demandant may recover according to his title, provided he has a right of entry; and this raises the only remaining question, whether he has such a right, or whether it is barred by an act of the Legislature of Maine, passed on the-eleventh day of August,-1848, which is as follows: .An act, in addition to the one hundred and forty-seventh chapter of the Revised Statutes. See. 1. No real or mixed action for the recovery oí any lands in this Tstate shall be commenced or maintained against any person in possession of such lands, where such person, or those under whom he claims, have been in actual possession for more than forty years; and 'claiming to hold the same in his or their own right, and which possession shall have been adverse, open, peaceable, notorious, ahd exclusive. Sec.. 2. This act shall take effect at the end of one day, from and after its approval by the governor. This action was commenced on the fourteenth of April,' 1846, and, consequently, had been pending' upwards of two years, when the above act was passed. The inquiry is, what is its effect upon this action, and- the title of the demandant ? That •it was intended to. be retrospective, and to- bar a recovery in actions then pending, upon proof of such, seisin by the tenant as the act describes, is plainly indicated. Under the constitution of the State of Maine, can it so operate ? To determine this question, it is necessary to take into view the legal rights of the demandant" and tenant, when this act was passed, and the change in those rights attempted by the act. The dernandant, on the decease of his mother, in 1845, became constructively seised of- an • estate tail, and had a right of entry into these lands. The actual seisin of the tenant and those under whom he claims, though adverse to all persons having estates in possession under the will of Florentius Vassall, for a period óf time sufficient to bar their right of entry, did not become adverse as against the demandant, until he acquired an estate-in possession, by the decease of his mother; and, consequently, when he brought this action, he was lawfully entitled to one- moiety of the land, as .tenant in tail, having an estate of inheritance which he could convey by deed, and upon which, being disseised, he could maintain a writ of entry. In other words, the land was his property, and, as such, he had a right to recover and hold it. Rev. Stat. c. 147, § 3. Thé effect of the act is, to make the seisin of the .tenant, and of those under whom he claims* adverse as against.thé demand-ant, during the time he had no right of possession, and thus to deprive him of his right of entry, and destroy his estate in the •land. The actual operation of this law upon the demandant's title, would have been expressed in words, if it had been said in the statute that, whereas, up to that time an actual wrongful, seisin had been by law adverse only against those having estates 'in possession, and so, those coming' in by way of remaindér, were.well entitled to theland, however long that actual 'wrongful seisin might have been continued; yet, thereafter, those who have come in by way .of remainder, shall, not be deemed entitled to the land, because such actual seisin shall be taken to be adverse as against them, and they, shall not be allowed to maintain an action for the recovery of the land to which they had lawful title when the action was brought. It is only by" giving this construction to the law, that it can.be made to operate at all, on the demandant's title.. It requires a possession for forty years, "adverse, open, peaceable, notorious, and exclusive." Adverse to whom ? Exclusive of whom ? If adverse to, and exclusive of, the demandant, who came into the title by way of remainder, less than three years before the act was passed, then, according to the' law of the State existing down to the passage .of the act, no aptual wrongful seisin could be adverse to him until he had an e,state in the land entitling him to its possession. But we cannot suppose this law meant to enact, merely, that forty years' exclusive and actual seisin should bar an action by one having title to the possession during the' whole of that period, because, by the Revised Statutes, (c. 147, § 1,) twenty years yvas^ sufficient; and, therefore, we are forced to conclude, that the intention of the legislature was, to make an actual seisin, for forty years, sufficient to destroy a title which had become vested, by way of remainder, before the act was passed, and which'was a valid'title by the .then existing law. Under the constitution of the State of Maine, as expounded by the - highest court of thar State, is it in the-power of the legislature to pass a retrospective law, thus operating to destroy ati.estaté in lands ? Wfe think this case not distinguishable from the case .of the Proprietors of the Kennebec Purchase, v. Laboree et al. 2 Greenl. Rep. 275. That was a writ of -entry to recover a tract of land. The. principal question was, whether an act of the legislature concerning disseisin, was valid in its retrospective operation. Prior to the passage of this act an entry under a deed, duly registered, which described a tract of land by rhetes and-bounds, and actual possession of a .part of that tract, operated, by the law of Maine, as a disseisin of the true owner of the whole tract described in the deed.. But- an entry, without such a deed, gave seisin, as again ét the owner, only of so much of the land as was actually occupied; and this occupation was required to be equivalent to what'is figuratively described in the common law as pedis possessio; that is, open, notorious, and exclusive, such as at once to give notice to all, of the nature and extent of the possession and claim," and show the exercise of the exclusive dominion over the land, and the appropriation of it to the use and benefit of the possessor. This being the state. of the law w.hen the action was brought, a law was passed, one section of which was in these words: " Be it further enacted; that, iu any writ or action which has" been, or may hereafter be brought, for the recovery of any lands, &c., it shall not be necessary for limiting the demandant and bar-' ring his right of. recovery, that the premises defended shall have-been surrounded by fences, or rendered inaccessible by other ob-. structions; but it shall be sufficient if the possession, occupancy, and improvement thereof, by the defendant, or those under whom he claims, shall have been open, notorious, and exclusive, comporting with the ordinary managements of similar estates in the possession and occupancy of those who have title thereunto, or satisfactorily indicative of such exercise of ownérship as is usual in the .imprcvement of a farm by its owner; and no part of the premises demanded and defended shall be excluded from the operation of the aforesaid limitation, because, such part may be woodland or without cultivation."- The Supreme Court of Maine held, chat so far as this, act attempted to change the law of disseisin in respect to titles ex-isting when.it was passed, the act was inoperative and void, because in conflict with the constitution of that State. The opinion of the court, delivered by Mellen, Chief Justice, contains an elaborate arid searching analysis of the subject, and it is evident, that learned court considered it with all the care, demanded by a question of so much delicacy and importance, and brought to its adjudication sound principles of constitutional jurisprudence The principles of this decision have been "recognized in subsequent cases, (Oriental Bank v. Freeze, 18 MainRep. 109; Austin v. Stevens, 24 Maine Rep. 520; Preston v. Drew, 5 Law Reporter, 189,) and we are not aware that it has ever been questioned, or denied to be a just exposition of the constitutional law of that State. The result of the decision is, that the constitution of "the State has secured to every citizen the right of " acquiring, possessing, and enjoying property j " and that, by "the true intent and meaning, of this section, property cannot, by a mere act of the legislature, be taken from, one man and vested in another directly; nor can it, by the retrospective Operation of law, be' indirectly transferred from one to another, or be subjected to the government of principles in a court of justice, which must necessarily produce that effect: According to this decision, .the act now in question is inoperative, as respects this action, and the demandant's title, on, which it is founded. For, unless by a retrospective operation it subjects his title to the government of a new law of disseisin, which, in effect, transfers his property to the tenant, it can have no operation; and whether such an effect can be produced, by an act of the Legislature of Maine, under the constitution of that State, was the precise question adjudicated by the Supreme Court in the case referred to, which adjudication we understand to contain amestablished principle in the fundamental law of that State. The thirty-fourth'section of the Judiciary Act, (1 Statute at Large, 92,) as well as the rule sf general jurisprudence, as to the operation of the lex loci upon titles to land, requires us to determine this case according to the law of the State of Maine. In ascertaining what that law is, this court looks to the decisions of- the -highest court of that State; and where the question turps upon the construction to be given to the constitution of the State, and we find a construction made by the highest State Court very soon after the constitution was formed, acquiesced- in by the people of the State for nearly thirty years, and xepeatedly confirmed by subsequent judicial decisions of that court, we cannot hesitate to adopt it, and apply it to this case, to which, in-our judgment, it is justly applicable. Such has been the uniform course of this court. McKeen v. Delancy's Lessee, 5 Cr. 22; Polk's Lessee v. Wendall, 9 Cr. 87; Gardner v. Collins, 2 Pet. 58; Shelly v. Guy, 11 Wheat. 351; Green v. Neal, 6 Pet. 291, are some of the cases in which this coúrse has been followed, and its reasons explained. The question has usually been concerning Jhe construction of a statute of a State.- But we think there is no sound distinction between the construction .of a law enacted by the legislature of a State, and the construction of the organic law, ordained by the people themselves. The exposition of both belongs to the judicial department- of the government of the State, and' its decision is final, and binding upon all other departments of that- government, and upon the people themselves, until they see fit to change1 their constitution; and this court receives such a settled construction as part of the fundamental law of the State. ' In conformity with these principles, we are constrained- to. hold the law now in question to be inoperative upon the demand-ant's title, and consequently, that he is not barred by it from maintaining this action. The judgment of the Circuit Court must be reversed, and a venire de novo awarded. Order. This cause came on to be heard on the transcript of the re» cord from the Circuit Court of the United States for the District of Maine,- and was argued by counsel. On consideration whereof, it is now here ordered and adjudged, by this court, that, the judgment of the said Circuit Court in this cause, be, and the same is hereby, reversed, with costs, and that this cause be, and the same is hereby, remanded to the said Circuit Court, with directions to award a venire facias de novo.

482 U.S. 928

C. A. 1st Cir. Certiorari denied.

19 How. 162

Mr. Justice CURTIS delivered the opinion of the court. This is an appeal from a decree of the Circuit Court of the United States for the eastern district of Louisiana. The libél alleges that the appellants shipped on board the brig Ann Elizabeth, at Wilmington, in the State of Delaware, a large quantity of gunpowder, to be carried to New Orleans, in the State of Louisiana; and that, on the shipment thereof, bills of lading, in the usual form, were signed by the master of the brig; that, according to the invoices, of the merchandise specified in the bills of lading, its value was-$7)233.75; that, on the arrival of the brig at New Orleans, the libellants required the delivery of the merchandise thus shipped, but they received only a part thereof; and that the part not delivered consisted of 1,646 packages, which, according to the same invoice valuation, amounted to the sum of $>5,936.54. The libel further-alleges that no part of that sum has been paid to the libellants; and it prays process against the brig, and a,.decree for the damages thus demanded, and for such other relief as shall to law and justice appertain.' ' The master of the brig, intervening for his own interest and that of his part-owners, admits that the shipment of goods was made, as alleged in the libel; but propounds that, in the course of the voyage, it became necessary, for the safety of all concerned, through the perils and dangers of the seas, to make a jettison of that part of the libellant's goods which were shipped and not delivered. The first question is, whether the claimant has shown, in support of his defensive allegation, that the jettison was occasioned by a peril of the sea. If it was, then the carrier is exonerated from the delivery of the merchandise, and has only to respond for that part of its value which is his just contributory share towards indemnity for the common loss by the. jettison. A jettison, the necessity for which was occasioned solely by á peril of the sea, is a loss by a peril of the sea, and within the exception contained in the bill of lading; But, if the unseaworthiness of the vessel, at the time of sailing on the voyage, caused, or contributed to produce, the necessity for the jettison, the loss is not within the exception of perils of the .seas. That there was such a necessity for this jettison as justified the master in making it, we think, is proved. In the case of Lawrence v. Minturn, (17 How., 109,) this court had occasion to consider the extent of the authority of the master to make a jettison. We then held, that "if he was a competent master; if an .emergency actually existed, calling for a decision whether to make a jettison of a part of the cargo; if ho appears to have arrived at his decision, with due deliberation, by a fair exercise of his skill and discretion, with no unreasonable' timidity, and . with an honest intent to do his duty,, the jettison is lawful. It will be deemed to have been necessary for the common, safety, because the person to whom the law has intrusted authority to decide upon and make it, has duly exercised that authority." Ve find the case at har is within this rule. "We do not detail the evidence, because the authority of the master to make the jettison has not been seriously controvei'ted. - This part of the case turns upon the other inquiry, whether the vessel was unseaworthy for the voyage when it was begun. It is the hull of the vessel which"is alleged to have been unseaworthy.- To constitute seaworthiness of the hull of a vessel in respect to" cargo, the hull must he -so tight, stanch, and strong, as to. he competent to resist all. ordinary action of the sea,' and to prosecute and. complete the voyage without damage to the cargo under deck. . If a vessel, during the voyage, has leaked so much as to injure the cargó, or render a jettison of it necessary, one mode of testing seaworthiness is, to ascertain what defects, occasioning leakage, were found in the vessel at the end of the voyage; and then to inquire which of those defects are attributable to perils of the seas, encountered during the voyage, and which, if any, existed when it-was begun; and, if any of the latter be found, the remaining inquiry is, whether they were such as to render the vessel incompetent to resist the ordinary attacks of the sea, in the course of the particular voyage, without damage or loss of cargo. - This vessel, on her arrival at Hew Orleans, was taken into dock, and examined. She was found to be a new vessel, and thát she had been- strained. A but, about midships, at or near the third or fourth streak, was started. The hopd-epds forward were also strained, and, on trial, it was found they would take about a thread of oakum. , Two worm-holes were also found in her bow, about three-eighths of an inch in diameter — one about three streaks from the keel, the other a little higher up. As the vessel was new,. there seems to be no doubt these holes were in the plank when put on the vessel, but from some cause remained undiscovered. The véssel sailed from Wilmington on the afternoon of the 21st of December, 1852. The wind being northeast and strong, the vessel -came to anchor at Reedy Island, and on the 22d proceeded to sea. The master,-being a part-owner and claimant, has not been examined. The first officer appears to have died before the proofs were taken in the Circuit Court. Ho account is giviv of the second officer or the crew, except one seaman, who, together with two passengers, have been examined' on the part of the claimants, to prove the occurrences of the voyage. It would have been mpre satisfactory to have had the evidence of one or more officers of the vessel, and especially of the mate, with his log-book. Still, these'three witnesses do satisfactorily show, that on the night of the 23d of December, the brig encountered a strong gale- and heavy seas, causing her to labor and strain badly. This weather continued, and the sea became more heavy, up to the night of the 27th'. Until about 8 • o'clock that night, it was not known the vessel was leaking; but, on sounding the pumps at that time, it was found that the vessel had two feet of water in the hold. The pumps were manned and kept going, but the leak increased two feet in about two hours. The jettison was then made, and the vessel so far relieved that the pumps could control the leak, and the vessel, with the residue of the cargo, arrived at New Orleans. It is manifest that the vessel encountered extraordinary action of the sea; and, as the vessel appears to have been new, and generally stanch and well fastened, the defects found at New Orleans, except the worm-holes, are fairly attributable to this cause. The starting of a but, and the opening of the hood-ends of a new vessel of .ordinary strength, indicate a very uncommon degree of strain; and such defects would alone account for the amount of leakage of a vessel heavily laden, and exposed to such a sea as is described. "We do not think the existence of the worm-holes amount to unseaworthiness. Any lcak which might have been occasioned by them in any ordinary sea, does not appear to have been such as the pumps could not control, without damage to the cargo. All vessels have leaks; and, independent of the strains received from the violent action of the sea, we are not satisfied this vessel would have leaked so much that the pumps could not have controlled the water in her. hold, and prevented its doing damage to the cargo. 'We find, therefore, that the vessel is exonerated from the claim for the full value of the merchandise; and the remaining question is, whether the vessel is chargeable with any part of the value of the merchandise in this cause. When a lawful jettison of cargo is made, and the vessel and its remaining cargo are thereby relieved from the impending peril, and ultimately arrive in the port of destination, though, the shipper has not a lien on the vessel for the value of his merchandise jettisoned, he has a lien for that part of its value which the vessel and its freight are bound to contribute towards • his indemnity for the sacrifice which has been made for the common benefit. And this lien on the vessel is a maritime lien, operating by the maritime law as a hypóthecation of the vessel, and capable of being enforced by proceedings in rem. The right of the shipper to resort to the vessel for claims growing directly out of his contract of affreightment, has very long existed in the general maritime law. It is found asserted in a variety of forms in the Consulado, the most ancient and important of all the old codes of sea laws, (see chaps. 63, 106, 227, 254, 259;) and the maxim that the ship is bóund to the merchandise, and the merchandise to the ship, for the performance of the obligations created by the contract of affreightment, is a settled rule of our maritime law. (The Schooner Freeman, 18 How., 182; The Ship Packet, 3 Mason, 261; The Volunteer, 1 Sum., 550; The Reeside, 2 Sum., 467; The Rebecca, Ware's R., 188; The Phœbe, Ib., 263; The Waldo, Davies's R., 161; The Gold Hunter, 1 Blatch. and How., 305.) Pothier declares (Treatise of Charter-parties, preliminary chapter on Average) that the right to contribution in general average is dependent on the contract of affreightment,, which embraces in effect an undertaking, that if the goods of the shipper are damaged for the common benefit, he shall receive a due indemnity by contribution from the owners of the ship, and of other merchandise benefited by the sacrifice. The power and duty of the master to retain and cause a judicial sale of the merchandise saved, has also been long established. (Consulado del Mare, ch. 51, 52, 53, and note 1 in vol. 3, p. 103 of Pardessus's- Collection; Laws of Oleron, art. 9; Ord. de la Marine, Liv. 3, tit. 8, sec. 21, 25; Nesbit on Ins., 135; Strong v. New York Firemen's Insurance Company, 11 John. R., 323; Simonds v. White, 2 B. and C., 805; Loring v. The Neptune Insurance Company, 20 Pick., 411; 3 Kent. Com., 243, 244.) And this' right to enforce a judicial sale, through what we term a lien in ran, is not confined to the merchandise, hut extends to the vessel. Emerigon, (ch. 12, sec. 43,) speaking generally of an action of contribution, says it is in its nature a real action. Cassaregis, (dis. 45, N. 34,)est in rem scripta." It would he extraordinary if the right to a lien were not reciprocal; if it existed in favor of the vessel, when sacrifice was made of part or the whole of its value, for preservation of the cargo, and not against the vessel, when sacrifice was made of the cargo for preservation of the vessel. By the ancient admiralty law, the master could hind both the ship and cargo by an express hypothecation, to obtain a ransom on capture. So he could, and still may, when the whole enterprise has fallen into distress, which could not otherwise he relieved, hypothecate both the vessel arid cargo to obtain means of relief. These are cases of express hypothe-cation made by the master, under the authority conferred on him by the maritime law; hut he .can also sell a part of the cargo to enable him to prosecute his voyage, or deliver a part of it in payment of ransom of his vessel, and the residue of the cargo, on capture; and when he does so, the law of the sea creates a lien on the vessel, as security .for the reimbursement of the loss, of the shipper- whose goods have been sacrificed. (The Packet, 3 Mason, 255; Pope v. Nickerson, 3 Story's R., 492; The Gold Hunter, 1 Blatch. and How., 300; The Boston, Ib., 309; Consol. del Mare, ch. 105; Laws of Oleron, art. 25; Ord. of Antwerp, art. 19; Emerigon Con. a la Grosse, ch. 4, secs. 9, 11.) . The authority to make a jettison of cargo is derived from the same source; an instant necessity, incapable of being provided for save by a sacrifice of part of what is committed to the master's care, and the presumed consent of the owners of all the subjects at risk, that the loss shall become a charge upon what is benefited by the sacrifice. (The Gratitudine, 3 Rob., 210.) If the sacrifice be made to enable the vessel to perform the voyage, by paying what the owners are bound to pay to complete it, the charge is on the vessel and its owners. If it be made to ¡believe the adventure from a peril which has fallen on all the subjects engaged in it, the risk of which peril was not assumed by the carrier, the charge is to be borne pro-portionably by all the interests, and there is a lien on each to the extent of its just contributory obligation. This authority of the- master to make the sacrifice, and this consent of the owners of the subjects at risk to have it made, and their implied undertaking to contribute towards the loss, are viewed by the admiralty law; as sufficient to create an hypothecation of the subjects benefited, for the security of the payment of the several sums for which those subjects are respectively liable. In other words, as the master is authorized to relieve the adventurer from distress, by means of an express hypothecation, in case of capture or distress in port, or by means of a sale of part of the cargo, thereby creating á maritime lien on the property ultimately benefited, in favor of the owner of what is sold or hypothecated; so he may also, in a ease of necessity at sea, make a jettison of cargo, and thereby create a lien on the property thus saved from péril. Pothier (Con. Mar., n., 34, 72) and Emerigon (Con. a la Grosse, ch. 4, sec., 9) say that the sale of-part of the eargo in port, to supply the necessities of the ship, is a kind of forced loan. Though the sacrifice of part of the cargo at sea cannot be considered a loan, it is a forced appropriation of it to the general benefit of those engaged in a common adventure, under a contract of affreightment; and such use of the property of one, for the benefit of others, creates a charge Qn what was thus saved, for what may fairly, be termed the price of that safety. (Abbott on Shipping, part 4, ch. 10, s. 6.) Ia United States v. Wilder, (3 Sumner, 311,) which was a case of general average, Mr. Justice Story likens it to a case of salvage, where safety is obtained by sacrifices of labor and danger, made for the common benefit; and he says the general maritime law gives, a lien in rem for the contribution, not as the only remedy, but as in many cases the best remedy, and in some cases the only remedy. ; In the District and Circuit Courts of the United States, this jurisdiction has been exercised, and some cases of this kind are found in the books, though • most of their decisions are not in print. (The Mary, 5 Law Reporter, 75; 6 Ib., 73; The Cargo of the George, 8 Law Reporter, 361; Sparks v. Kittredge, 9 Law Reporter, 349; Dunlap's Ad. Pr., 57; 2 Browne's Civ. and Ad. Law, 122; The Packet; The Gold Hunter; The Boston, above cited.) The restricted admiralty jurisdiction in England seems insufficient to enforce this lien. (The Constantia, 2 W. Rob., 487.) Nor is there anything in the case of Rae v. Cutler, decided by this court in. 1849, and reported in 7 How., 729, which conflicts with the view, we have now taken. That was a libel by the owner of k vessel against the consignee of cargo, to recover the contributory share of the ave-' rage due from the goods which the master had voluntarily delivered to the respondent before the libel was filed. The court decided, that though the master, as the agent of the own? er of the vessel in that ease, had by the maritime law a lien upon the goods, as security for the payment of their just contribution, this lien was lost by their voluntary -delivery to the consignee; and that the implied promise to contribute could not be enforced by an action in personam against the consignee, . in the admiralty. .This admits the existence of a lien, arising out of the admiralty law, but puts it on the same footing as a maritime lien on cargo for the price of its transportation; which; as is well kfiown, is waived by an authorized delivery without insisting on payment. , On full consideration, we are of opinion that when cargo is lawfully jettisoned, its owner has, by the maritime law, a lien .on the vessel for its contributary share of the general average compensation; and that the owner of the cargo -may enforce payment thereof by a proper proceeding in rem. against the vessel, and against the residue of the cargo,, if it has not been delivered. The remaining question is, whether the pleadings in this case are in such form .as to present this claim for the consideration ' of this court, and entitle, the libellant to assert a lien on the' vessel for its contribution. The rules of pleading in the admiralty are exceedingly sim- pie and free from technical requirements. It is incumbent on the libellant to propound with distinctness the substantive facts on which he relies; to pray, either specially or generally, for the relief appropriate to them; and to ask for such process of the court as is suited to the action, whether in rem or in per-sonam. It is incumbent on the respondent to answer distinctly each substantive fact alleged in the libel, either admitting or denying,' or declaring his ignorance thereof, and to allege .such other facts as he relies upon as a defence, either in part or in whole, to the case made by the libel. The pr'pofs of each party must correspond substantially with his allegations, so as to prevent surprise. But there are no technical rules of variance, or departuré in pleading, like those in the common law, nor is the court precluded from granting the relief appropriate to the case appearing on the record, and prayed for by the libel, because" that entire case is not distinctly stated in the libel. Thus, in cases of collision, it frequently occurs that the libel alleges fault of the claimant's vessel; the answer denies it, and alleges fault of the libellant's .vessel. The court, finds, on the proofs, that both were in fault, and apportions the damages. Looking to this libel, we find it states that a contract of affreightment was made to transport these goods from Wilmington. to blew Orleans, on board this brig; that the goods were laden on board, and. the brig had arrived, but only a part of f the goods have been delivered. It states the value of the part not delivered, avers that thé libellants have not been paid any part of that sum, prays for process against the brig, and a decree for the value of the merchandise not delivered, and also for such other relief as to law and justice may appertain. The answer admits all the facts stated in the libel,- but sets up, by way of defensive allegation, a' necessary jettison of that part of the cargo not delivered. It is manifest, that though this answers, in part, the claim for damages made by the libel, it does not wholly answer it. It shows sufficient cause why the libellant should not assert a lien on the brig for the whole value of his merchandise, but at the same time shows that the libellant has a valid lien on the brig for that part of the value of the -merchandise which the vessel is bound to contribute. While it asserts that the performance of the contract of af-freightment . by transportation of the merchandise to Hew. Orleans was excused by a peril of the sea, it. admits that, an obligation arose, out of the relations of the parties created by that contract of affreightment, and out of the facts relied on as ah excuse for not transporting the merchandise; that this obligation was to pay to the shipper a part of the value of his goods; that it was the duty of the master, at the port of New irleans, to ascertain what part of that value the vessel was hound to contribute, and that there is a lien on the vessel to secure its payment. If the technical rules of common-law pleading existed in the admiralty, there might be difficulty in admitting a claim for general average, in an action founded on a contract of affreightment; because, though the claim for such average grows out of the contract of affreightment, the implied promise to pay it is technically different from the promise on the face of a bill of lading. In the case of Pope v. Nickerson, (3 Story, 465,) Mr. Justice Story went into a very extensive examination of such claims, under an agreed statement of .facts, in an action of assumpsit on bills of lading; and it does not seem to have occurred, either to him or the counsel, that it was inconsistent with any substantial rule of the common law so to do. But in the admiralty, as we have said, there are no technical rules of variance or departure. The court decrees- upon the whole matter before it, taking care to prevent surprise, by not allowing either party to offer proof touching any substantive fact not.alleged or denied by him. But where, as in this case, the defensive allegation of the' respondent makes a complete case for the libellant, so that no evidence in support of it is required, and where that case is within the form of action and the prayer of relief, and the process used by the libellant, we think it not a sufficient reason for refusing relief, that the precise case oh which the court think fit to grant it is not set out in the libel. We understand, that in the court below the libellants relied on the duty of the master to adjust and collect, and pay to them, the- general average contributions, as precluding- the defence of a, necessary jettison. Wé think this defence was properly overruled. The libellants did hot there insist on their lien on the vessel for its contribution. We do not consider then' failure to do so precludes them from calling on this court to make that decree, to which the record shows they áre entitled. In Finlay v. Lynn, (6 Cranch, 238,) this court was of opinion that the appellant, whose bill was dismissed by the Circuit Court, was entitled to an account, on a ground not assumed in the Cirepit Court. This court said: "The plaintiff probably did not apply for this account in the court below, and it does not appear to have been a principal object of his bill. This court therefore doubted whether it would be most' proper to affirm the decree dismissing the bill, with the addition that it should be without prejudice to any future claim for profits, and for the debt due from one store to the other, or to open the decree and direct the account. , The latter is deemed the more equitable course. The decree, therefore, is to be reversed, and the cause remanded, with directions to take an account of the profits of the jewelry store, if the same shall be demanded by the plaintiff." But, as the libellants failed to call the attention of the Circuit Court to this view of their rights, and-placed their claim there solely on the grounds that the jettison was unlawful, or, if lawful, could not be a de-'fence, because the master had failed to do the duty incumbent on him in a case of general average, we think the decree should be reversed, without costs. The cause must be remanded to the Circuit Court, with directions to ascertain the amount of the lien of the libellants on the Ann Elizabeth, for the share to be contributed by the vessel towards the loss sustained by the libellants, and. to enter a decree accordingly. Mr. Justice CATROÍT and Mr. Justice CAMPBELL dissented.

262 U.S. 743

Petition for a writ of certiorari to the Circuit Court of Appeals for the Ninth Circuit denied.

297 U.S. 613

Mr. Justice McReynolds delivered the opinion of the Court. The order granting this certiorari limited our consideration "to the question of jurisdiction and its appropriate exercise." The facts, not in serious dispute, were fully set out by the Circuit Court of Appeals. It will suffice now to restate those bearing particularly' on the. points- for decision. The Trust Department of The Bank of Pittsburgh National Association — The Bank — acquired real estate mortgages and held them- in a pool apart from other assets. It sold participation shares therein to sundry customers and issued appropriate certificates. Interest on the mortgages, when collected, was distributed to these, as agreed. Difficulties arose; many debtors de faulted; and, to meet the demands of. certificate holders, The Bank advanced $40,000. In September, 1931 The Bank failed; the Comptroller of the Currency appointed first Thomas, then Atwood, and finally respondent Bradford, as Receiver to wind up its affairs. Desiring to relinquish control of the mortgage pool, the Receiver consented to the appointment by the Orphans' Court of petitioner, Commonwealth Trust Co., as successor trustee for the pool assets, and delivered all of them to it. The face value of mortgages so delivered exceeded the total outstanding certificates by $291,000. The Orphans' Court authorized the trustee to distribute among certificate holders funds collected from mortgage debtors, but nothing went to the Receiver of The Bank, "the Court directing that payments to him be suspended pending a judicial determination of" his rights "to participate in such distribution." Thereupon, the Receiver instituted these equity proceedings in the United States District Court. The Commonwealth Trust Co., as trustee, and four certificate holders were made defendants. The prayer of the bill asked an adjudication of the Receiver's right to be paid the excess of the mortgage debts over outstanding certificates ($291,000) from assets of the pool; also his privilege to receive therefrom the amount advanced by The Bank ($40,000) on account of agreed interest upon the certificates; and for general relief. The District Court granted relief as prayed. The Circuit Court of Appeals held that the bill stated a cause in equity within the jurisdiction of the trial court and, with certain modifications, affirmed its decree. As so modified and finally approved, this provides:— That there is due and payable to the plaintiff, Avery J. Bradford, Receiver of The Bank of Pittsburgh National Association, out of interest moneys collected and to be collected by the Commonwealth Trust Company as Trustee of the mortgage pool formerly held by The Bank of Pittsburgh National Association from mortgages in .said mortgage pool, the sum of $40,213.68 advanced to the mortgage pool by The Bank of Pittsburgh National Association. That the plaintiff, Avery J.' Bradford, Receiver of The Bank of Pittsburgh National Association, is- a participant and cestui que trust to the amount of $291,-020.45 in the mortgage pool formerly administered by The Bank of Pittsburgh National Association and now being administered by the defendant, Commonwealth Trust Company as Trustee. That there is now due and payable from the defend- • ant, Commonwealth Trust Company, Trustee as aforesaid, to Avery J. Bradford, Receiver of The Bank of Pittsburgh National Association, the sum of $26,191.84, being the amount withheld from said Receiver under previous distribution's to participants other than said Receiver on account of principal, and the sum of $29,225.26, being the amount withheld from said Receiver under previous distributions to participants other than said Receiver on account of income and the sum of $1,254.84, being the interest earned and collected by the Commonwealth Trust Company, Trustee as aforesaid, on the amounts withheld from said Receiver. That this court retain jurisdiction of this cause for' the purpose of making such other orders' and decrees, if any, as-may become necessary. The claims established in paragraphs 1 and 3 shall have priority of payment over any future distribution of assets to participants in the pool. Petitioners do not deny that ordinarily District Courts of the United States haye original jurisdiction of suits by Receivers of National Banks; Title 28, U. S. C. 41 (1 and 16); Gibson v. Peters, 150 U. S. 342, 344; In re Chetwood, 165 U. S. 443, 458; United States v. Weitzel, 246 U. S. 533, 541; and that the parties were before the trial court. But they maintain the cause stated by the bill was not one cognizable in equity, since the subject matter was a fund held by a trustee under appointment of the state court against which no adjudication was possible in the absence of an accounting — the necessity of this was inherent in the cause as presented.' Also, that to enforce the remedy sought would necessarily interfere with possession and control of the res in the custody of the Orphans' Court. And further, that under the rule of comity approved in Pennsylvania v. Williams, 294 U. S. 176 and Penn General Casualty Co. v. Pennsylvania, 294 U. S. 189, the trial court should have dismissed the proceedings. The original bill revealed that the Receiver had been denied participation as a cestui que trust in the assets held by petitioner Trust Company, and asked an adjudication of his rights therein. He did not seek direct interference with possession or control of the assets; he prayed that his right to partake thereof be determined. The claim was an equitable one, within the ordinary jurisdiction of the chancellor. "In all cases in which an action of account would be the proper remedy at law, and in all cases where a trustee is a party, the jurisdiction of a court of equity is undoubted; it is the appropriate tribunal." Fowle v. Lawrason's Executor, 5 Peters 495, 503; Clews v. Jamieson, 182 U. S. 461, 479-480; Alexander v. Hillman, 296 U. S. 222. Jurisdiction having been properly invoked, it became the duty of the trial court to determine the issues, unless required by rules based on comity to relegate the complainant to the state court. This may not be done except in special and peculiar circumstances not revealed, we think, by the present record. McClellan v. Carland, 217 U. S. 268, 281, held— "It, therefore, appeared upon the record' presented to the Circuit Court of Appeals that the Circuit Court had practically abandoned its jurisdiction over a case of whicN it had cognizance, and turned the matter over for adjudi' cation to the state court. This, it has been steadily held, a federal court may not do. Chicot County v. Sherwood, 148 U. S. 529, 534." See also Kline v. Burke Construction Co., 260 U. S. 226, 234. . The trust here involved was created by The Bank's voluntary action, not by the Orphans' Court. Whatever control the latter possessed resulted solely from appointment of the successor trustee and, for present purposes, did not materially differ from that exercised by probate courts over such fiduciaries as guardians, administrators, executors, etc. The jurisdiction of federal courts to entertain suits against the latter is clear, when instituted in order to determine the validity of claims against the estate or claimants' interests therein. Such proceedings are not in rem; they seek only to establish rights; judgments therein'do not deal with the property and order distribution; they adjudicate questions which precede distribution. Byers v. McAuley, 149 U. S. 608, 620; Security Trust Co. v. Black River National Bank, 187 U. S. 211, 227; Waterman v. Canal-Louisiana Bank c§ Trust Co., 215 U. S. 33, 43; Riehle v. Margolies, 279 U. S. 218, 223; Harrison v. Moncravie, 264 Fed. 776, 779. Property in its (the trustee's) posession is not in custodia legis as in case of receivers. Hinkley v. Art Students' League, 37 F. (2d) 225, 226; Appeal of Hall, 112 Pa. 42, 54; 3 Atl. 783; Strouse v. Lawrence, 160 Pa. 421, 425; 28 Atl. 930; Goodwin v. Colwell, 213 Pa. 614, 616; 63 Atl. 363; Nevitt v. Woodburn, 190 Ill. 283, 289; 60 N. E. 500. The trial court properly exercised the jurisdiction which it acquired. The doctrine approved in Pennsylvania v. Williams, and Penn General Casualty Co. v. Pennsylvania, supra, is not applicable. In each of those cases we found conflict between the federal court and authorities of the State concerning liquidation of the business and assets of an insolvent local corporation. ' The question was whether, under the peculiar circumstances disclosed, the federal court should retain jurisdiction; .its power generally to render judgment in personam against fiduciaries appointed by state courts was expressly recognized. Here there are no extraordinary. circumstances. As contemplated by Congress the Receiver sought an adjudication of his rights. The final decree produced no interference with the trustee's possession, nor with the power of the Orphans' Court to order- distribution of assets. •' The Receiver's privilege to participate has been declared;' only a judgment in personam was rendered. Congress has empowered Receivers of National Banks to sue in federal courts; the obvious importance of permitting them freely to do so cannot be disregarded. All necessary parties were brought before the trial court. The claim to the contrary, is without merit. The challenged decree is Affirmed.

390 U.S. 1024

Ct. App. Cal., 1st App. Dist. Certiorari denied.

49 Cust. Ct. 14

Nao, Judge: Tbe two protests here involved, which, have been consolidated for purposes of trial, relate to certain publicity material, which was assessed with duty at the rate of 15 cents per pound, pursuant to the provisions of paragraph 1406 of the Tariif Act of 1930, as modified by the General Agreement on Tariffs and Trade, 82 Treas. Dec. 305, T.D. 51802, for articles lithographically printed or at the rate of 10 per centum ad valorem, pursuant to the provisions of paragraph 1410 of said act, as so modified, for printed pamphlets. That the instant merchandise, in fact, consists of lithographed or printed matter, within the intendment of said paragraphs 1406 and 1410, as modified, supra, is not disputed by the plaintiff. It is contended, however, that the material is properly entitled to free entry within the provisions of paragraph 1629(c) of said act, as added by Public Law 85-211, 92 Treas. Dec. 281, T.D. 54463, which reads as follows: Any catalog, price list, or trade notice relating to offers, by a person whose principal place of business or toona fide residence is in a foreign country, to sell or rent products of a foreign country or to furnish foreign or international transportation or commercial insurance services. It appears from the record that the plaintiff is an importer and distributor of automobiles and parts, manufactured by the A. B. Volvo Co. of Gothenburg, Sweden. In connection therewith, it also imports certain promotional material which it distributes to its dealers who are located in the 11 Western States, Alaska, and Hawaii, for the purpose of stimulating the dealers' sales to their customers. It is this promotional material which forms the subject of the instant controversy. As identified by plaintiff's traffic manager, the items consist of postcards, containing pictures of model PV 544 and model 122 S, plaintiff's collective exhibit 1; an illustrated brochure, describing model PV 544, its special features and specifications, plaintiff's exhibit 2; leaflets, showing photographs and specifications of model PV 544, plaintiff's collective exhibit 3; a folder, explaining the rust-protecting processes applied to the Volvo PV 544, plaintiff's exhibit 4; a brochure on model 122 S, complete with pictures and printed matter descriptive of its features and specifications, plaintiff's exhibit 5; individual sheets of a parts catalog, plaintiff's collective exhibit 6; and a parts catalog, plaintiff's exhibit 7. No prices are set forth in any of the exhibits. One of the witnesses for the plaintiff explained that prices are established by the factory in Sweden through its American representative and that they are uniform throughout the United States. It further appears that it is necessary for each dealer to have a parts catalog, so that he will know what parts must be ordered for specific repairs. Parts are stocked by the plaintiff in its warehouse and furnished to the dealers on order. In the event that certain parts are not on hand, they are ordered by plaintiff from the factory in Sweden and flown to the United States. While the record shows that the cars, parts, and accessories, as well as the promotional material, imported by plaintiff, are all of Swedish origin, it also establishes that the plaintiff is an independent corporation, not affiliated with the American factory representative nor any other American distributor of Volvo automobiles, parts, or accessories. It is further reasonably inferable that no privity exists between the Swedish factory and the plaintiff, although plaintiff's exact status with respect to the manufacturer is not defined. In any event, the proof tends to reveal that the involved promotional material is designed to stimulate sales of automobiles and parts owned by plaintiff, and distributed through its dealers. The question, therefore, arises whether such material relates to "offers, by a person whose principal place of business or bona fide residence is in a foreign country, to sell products of a foreign country within the contemplation of paragraph 1629(c). supra. Assuming, without deciding, that all of the publicity here involved relates to offers to sell products having their origin in a foreign country, is it so intimately connected with a person whose principal place of business or bona -fide residence is in a foreign country as to be embraced by the provisions of paragraph 1629(c), supra% Seemingly ignoring the residence requirement of the statute, counsel for plaintiff urges that "The catalogues, price lists and trade notices at bar, imported for the specific purpose of stimulating sales of Swedish Volvo Autos and parts and thus expanding international trade, fall squarely within the scope of par. 1629(c), supra, of the Tariff Act of 1930, added to the Tariff Act by Public Law 85-211." Counsel's argument derives from the fact that the language of the provision is ambiguous, and resort to aids to construction being, therefore, appropriate, the history of the provision demonstrates an intent on the part of Congress to allow free entry for 'advertising material imported in bulle for subsequent distribution to potential customers in the United States[Italics quoted.] Counsel for defendant stresses the foreign residence requirement as precluding free entry of the instant merchandise and further contends that the subject material does not relate to offers to sell foreign products. Insofar as the language of paragraph 1629 (c) is concerned, this is a case of first impression. Related portions of Public Law 85-211, by virtue of which said paragraph was added to the Tariff Act of 1930, but bearing upon the matter of the free admission of certain imported samples, were, however, the subject of consideration by this court in the recent cases of Carson M. Simon & Co. v. United States, 46 Cust. Ct. 118, C.D. 2243, and Italian Drugs Importing Co., Inc. v. United States, 46 Cust. Ct. 243, C.D. 2263. The Simon case, supra, involved an interpretation of that portion of Public Law 85-211 which added a new paragraph 1821(a) to the Tariff Act of 1930, providing in part for the free entry of "any sample to be used in the United States only for soliciting orders for products of foreign countries." The merchandise in controversy was wallpaper sample books, imported by an American wholesaler and distributed to its customers for the purpose of obtaining orders for the French and Italian wallpapers exhibited in the sample books. We there expressed the view that the language of said paragraph 1821(a) was sufficiently ambiguous to support an examination of extraneous data to assist in the ascertainment of legislative intent. Accordingly, we stated: Considering then, the legislative history oí Public Law 85-211, supra, which added paragraph 1821 to the Tariff Act of 1930, we find that the law was designed to implement the International Convention to Facilitate the Importation of Commercial Samples and Advertising Material, to which Convention the United States became a signatory on May 28, 1953. Upon advice and consent of the United States Senate, granted February 22, 1956, the Convention was ratified by the United States on September 16, 1957, and became effective with respect to this country on October 17,1957, 8 U.S.T. 1636. The stated objects of the Convention were "the adoption of uniform regulations regarding the importation of samples of goods of all kinds (whether natural products or manufactured articles) and of advertising matter" to "promote the expansion of international trade." After considering Articles II and III of the Convention covenant, and Senate Report No. 852 to accompany H.R. 5924, which became Public Law 85-211, we held that if the samples were to be used in this country for the solicitation of orders for products to be supplied from abroad, they were embraced by the statute, regardless of whether or not ownership of the samples had been acquired by domestic persons. This conclusion was supported in part by the fact that both the Convention and the statute made provision for foreign residence in the case of advertising material, whereas, in connection with samples, no similar limitation was imposed. The principle of the Simon decision was adopted in Italian Drugs Importing Co., Inc. v. United States, supra, to allow free entry of medicinal samples distributed in the United States for the purpose of soliciting orders for a medicinal manufactured in Italy and, hence, serving to promote international trade. Further reference to the International Convention to Facilitate the Importation of Commercial Samples and Advertising Material, supra, discloses that tbe contracting parties intended to use the term "persons" as embracing both natural individuals and legal entities, and that the subject of advertising materials was covered by Article IV thereof, which reads in part as follows: Duty-free admission of advertising material 1. JEJach Contracting Party shall exempt from import duties catalogues, price lists and trade notices relating to (a) goods offered for sale or hire, or (b) transport or commercial insurance services offered, by a person established in the territory of another Contracting Party, when such documents are imported from the territory of any Contracting Party, provided that * Senate Keport No. 852 to accompany Ii.E. 5924 contains the following comments about advertising matter: The United States customs treatment of imports of advertising matter and samples has not been an appreciable barrier to foreign concerns opening or maintaining sales operations in this country and the enactment of the bill will not involve important changes in the tariff treatment of the imports involved. Nevertheless, enactment of the bill is necessary to bring such tariff treatment precisely into accord with that contemplated by the Convention. United States exporting interests place considerable importance on certain foreign countries accepting the Convention since it is believed that its provisions will facilitate the entry of samples and advertising matter into these countries from the United States. [Italics supplied.] H.R. 5924 would provide duty-free entry for import of catalogs, price lists, and trade notices relating to the sale or rental of foreign goods or services to United States residents. At present imports of such advertising material if imported in bulk for subsequent distribution to potential customers are subject to duty as books, pamphlets, or other printed or lithographed paper articles. However, imported advertising material distributed directly through the mails to potential customers is usually not subject to duty. ^ ‡ sis JÍC * As we construe paragraph 1629(c) against the background of the International Treaty and the statement of congressional purpose, we are inclined to adhere to the dictum of the Simon case, supra, that the advertising material must stem from persons whose principal place of business or bona fide residence is in a foreign country. That is to say, to be entitled to free entry, such material must relate to offers made by foreign residents directly to their potential customers in the United States. Under the circumstance that the language of the provision specifies a foreign place of business or residence, it cannot have as broad a connotation as that portion of Public Law 95-211 relating to samples of negligible value. It is not enough that the ultimate effect of the promotional material is to stimulate international trade. The plain intendment of the specific phrase concerning foreign residence is that the advertising matter must pertain directly to transactions between the foreign seller and the American purchaser. When the chain of transactions is extended by the interposition of an American buyer, to whom the trade notices are distributed by an American seller, and who, therefore, is not induced to purchase from the foreign seller, the primary purpose of the material being to bolster sales by an American importer to Ms domestic customers, the objectives of the statute to broaden the American contacts of the foreign producer are not achieved. Any other interpretation, it seems to us, must read out of the provision the very explicit language which relates the offers of sale to persons "whose principal place of business or bona fide residence is in a foreign country." Yet, we are constrained to avoid such a result by the fundamental rule of construction which requires that all parts of a statute be given effect, if it is possible to do so, and by the further precept that we may not ascribe to the Congress the use of superfluous, unnecessary, or meaningless phraseology. Since the instant record tends to support a finding that plaintiff is neither a subsidiary nor an agent of the exporter and that the advertising circulars do not relate to offers of sale by the exporter, but, on the contrary, are designed to promote American dealers' sales, the merchandise at bar is not embraced within the scope of the provisions of paragraph 1629(c), supra. The claim for free entry thereof is, therefore, denied. Judgment will be entered accordingly.

541 U.S. 905

C. A. 6th Cir. Certiorari denied.