State: Alaska
Volume: 17
Term: 1957-1958
Jurisdiction(s): Alaska
Source: https://static.case.law/alaska/17.pdf

244 F.2d 930
John D. SHAW, Appellant, v. UNITED STATES of
America, Appellee.
No. 14568.

United States Court of Appeals, Ninth Circuit.
Feb. 14, 1957.

a

Harold J. Butcher, Anchorage, Alaska, for appellant.
William T. Plummer, U. S. Atty., and Lloyd L. Duggar,
Asst. U. S. Atty., Anchorage, Alaska, for appellee.

Before FEE and BARNES, Circuit Judges, and
MURRAY, District Judge.

JAMES ALGER FEE, Circuit Judge.

John D. Shaw was convicted by a jury of having been
employed in an agency of the United States and, within two
years after such employment or service had ceased, having
prosecuted or acted as counsel, attorney or agent for prose-
cuting a claim against the United States involving a subject

a 7

matter directly connected with which he was so employed
or performed duties.?

The jury recommended leniency, and he was sentenced
to pay a fine of $100 by the court. He appeals from this
judgment.

The facts shown by the evidence are almost uncontro-
verted.. The Alaska Railroad is owned by the United
States and operated as an agency of the United States.
Shaw was employed by the Alaska Railroad as an Assistant
Chief Dispatcher, usually during the hours from 5:00 p. m.
to midnight. During the day, Shaw was clerk in the law
office of Harold J. Butcher, attorney for appellant in this
case, Under the Alaska statute, Shaw had filed an applica-
tion to study law under Butcher, a practicing attorney, with
a view to taking the territorial bar examination. Shaw was
pursuing both employments at the time of the Rainbow
collision, which was the subject of the action, George
Dushon vs. The United States, Civil No. A-7605, in the
District Court of the Territory of Alaska, to which refer-
ence will subsequently be made.

According to the allegation of the information,

“oe 3 3 on March 24, 1950, the said John D.
Shaw was directly connected with and performed
duties relating to an accident which occurred at or
about 5:15 P.M. on said day when Extra Train
No. 562 South, of the Alaska Railroad came into

118 U.S.C.A. § 284, which provides: “Whoever, having been em-
ployed in any agency of the United States, including commissioned
officers assigned to duty in such agency, within two years after the
time when such employment or service has ceased, prosecutes or acts
as counsel, attorney, or agent for prosecuting, any claims against
the United States involving any subject matter directly connected
with which such person was so employed or performed duty, shall
be fined not more than $10,000 or imprisoned not more than one
year, or both.”

8 |

collision with a gas car and trailers attached,

operated by a government contractor, at or near

Rainbow at mile 91.7 on the Alaska Railroad.”
The evidence showed that Shaw was Assistant Chief Dis-
patcher of the Alaska Railroad on March 24, 1950, after
5:00 p. m. Although he was in complete charge of the
office in the absence of the Chief Dispatcher and operating
the north control board, Extra Train No, 562 South was
proceeding under orders dispatched from the south board
at the time of the collision. The latter board was then
operated by Kerwin Frank under the supervision of Shaw.
One of the train crew reported the collision to Kerwin by
telephone. The latter was so much affected by the mis-
chance that he asked Shaw to take over the south board
telephone and handle the matter. Shaw talked to the crew
and gave directions for the return of the train to Anchorage
with the dead and wounded. He also directed ambulances
to meet them there and arranged for doctors and hospitaliza-
tion. Upon completion of this emergency service, Shaw
made an official report of the incident on the regular train
dispatcher’s sheet. Shaw continued in his employment in
the dispatcher’s office until November 15, 1951. During
this time, for almost twenty months, he had access to all of
the records therein. Until some time in 1951, Shaw was
also employed in the office of Butcher as a law clerk.

Hl Shaw attacks the information on the ground that
it states only that “John D. Shaw was employed by the
Alaska Railroad, a government agency,” and not that he
had “been employed in any agency of the United States.”
Exception was also taken on the ground that the court
instructed the jury that the “government must prove beyond
a reasonable doubt * * * that the defendant was em-
ployed by a governmental agency, the Alaska Railroad.”
(Emphasis supplied.) These are most tenuous objections.

| 9

The Alaska Railroad is owned by the United States and is
operated as an agency of the United States.”

Counsel for defense was asked to stipulate “that the
Alaska Railroad is a Governmental agency” and answered:

“Mr. Davis: I would suggest that the Alaska
Railroad is owned and operated by the Govern-
ment. I do not know whether it can be considered
a Governmental agency, that may be a technical
term.”

The court was then asked to take judicial notice that,
under 48 U.S.C.A.,? “The Alaska Railroad is established as
a Governmental agency” but it directed proof be taken on
the matter. John E. Manley, the witness on the stand, tes-
tified he had been Assistant General Manager of the Alaska
Railroad since 1949, and also testified to the following facts
to which counsel for defense stipulated: that the Secretary
of the Interior “is the head of the Department of the In-
terior,” that the Alaska Railroad receives “all of its in-
structions” “from the office of the Territorial Government,
Department of the Interior,” which is under “The Office of
the Secretary of the Interior.” This was certainly sufficient
basis for giving the instruction above noted. ,

HI The court also read the statute to the jury down to
the penalty clause, including the words, “whoever, having

2See Ballaine y. Alaska Northern Railway Co., 9 Cir, 259 F.
183, 185, 8 A.L.R. 990, which held that a tort claim could be brought
against the railway, since “the United States, in acquiring these
stocks and bonds and property of the Alaska Northern Railway Com-
pany, acted in its sovereign capacity, and in exercising entire control,
possession, ownership, and management, has merely employed the
corporate organization as an agency through which to execute the
purposes of the statute.”

348 U.S.O.A. § 301 et seq., popularly known as the “Alaska Rail-
road Act.”

10 —

been employed in any agency of the United States,” and told
the jury thereafter:
“You are instructed as a matter of law that the
Alaska Railroad is a governmental agency within
the meaning of the above quoted statute. You are
further instructed as a matter of law that a claim
against the United States as used in said statute,
means a demand against the Government for
money or property.”

HM The present objection that the statutory words,
“agency of the United States,” were not used and the
colloquial phrase “governmental agency” was substituted is
captious. Obviously, in Alaska “government” means United
States in colloquial parlance. In the civil action above re-
ferred to, there was an attempt to recover from the United
States because of claimed negligence of employees of the
Alaska Railroad as an agency of the United States, as the
record of the instant case proves. There was no other gov-
ernment involved in the prior civil case or this criminal case
except the government of the United States. A glance at
the present record shows that all attorneys, the witnesses and
the presiding judge used the word “government” not only
as synonymous with “United States” but almost exclusively
as shorthand to designate “the government of the United
States.” The evidence in this case makes it perfectly clear
and without contradiction that Shaw was an employee of
the Alaska Railroad and that this entity was an agency of
the United States. This could have been decided as a ques-
tion of law. There was no error in failure to instruct the
jury as to the meaning of “agency” or failing to define
“government” as “United States.”

Defendant urges that the information does not use the
statutory words “prosecutes” or “for prosecuting.” As has
been noted above, the court read the statute in part to the

— il

jury, as well as the text of the information, and read the
words from the statute “prosecutes or acts as counsel, attor-
ney, or agent for prosecuting.” The court told the jury that
the government must prove each of the following elements,
among others, beyond a reasonable doubt, to-wit:

“That the defendant prosecuted or acted as
counsel, attorney, or agent for prosecuting a claim
against the United States;

“That the claim which defendant prosecuted or
for which he acted as counsel, attorney, or agent in
prosecuting, involved subject matter directly con-
nected with defendant’s former employment or
service with the Alaska Railroad ;

“That the defendant prosecuted or acted as
counsel, attorney or agent for prosecuting such
claim within two years after his employment with
the Alaska Railroad had ceased.”

HEM The technical answer to this point is short. De-
fendant did not except to the failure of the court to define
these words and did not present any requested instruction.
defining either. But the real answer is practical. If the jury
found that the defendant did the acts described in the in-
formation, as a matter of law, he was either prosecuting
the action or acting as an attorney, counsel or agent for
prosecuting the claim against the government. There can
be no doubt that a person who allows his name to be placed
on a complaint as attorney for plaintiff in an action is prose-
cuting the underlying claim as a matter of law. Since this
fact is admitted, the finding was correct and the conclusion
was inevitable. It made no difference whether defendant
did more or not. But the record shows he did a great deal
more in investigating and interviewing witnesses and serving
subpoenas. It is implicit in the record that he persisted
therein up to the time there was a suggestion from others

12 |

that he was acting illegally. Only a short time before trial,
he signed a document on August 27, 1952, associating
George B. Grigsby, Esq., as an additional attorney in the
cause. His former employer said that, in the event of re-
covery, he had intended to pay Shaw a part of the fee and
to be very liberal in the division, He cannot avoid the fact
that Shaw was prosectiting the action now on appeal on the
basis that so far there is no recovery and therefore no fee to
him.

The information proceeds :
“That between the dates of March 24, 1950,
and March 22, 1952, said period being within two
years of the date when the said John D, Shaw left
the employ of the Alaska Railroad, the said John
Shaw acted as counsel and agent for plaintiffs in
the preparation of a suit against the United States
on behalf of persons injured in the aforemen-
tioned accident.
“That from March 22, 1952 until January 20,
1953, said period being within two years of the
date when the said John D. Shaw left the employ
of the Alaska Railroad, the said John D. Shaw
acted at attorney and agent for plaintiffs in the
case of George Dushon et al. v. United States,
Civil No. A-7605, a suit against the United States
brought by the said John D. Shaw and others on
behalf of various persons who sustained injuries
in the aforementioned accident on March 24,
1950.”
The objections to this portion of the information are numer-
ous, as follows: (a) The basic statute* does not cover
claims in tort; (b) the “claim” in the Dushon case did not

418 U.S.C.A. § 284,

Ee 13

involve “any subject matter directly connected with which”
Shaw “was so employed or performed duty.” ®

The first contention is that the statute does not cover a
tort claim against the United States, which the claim of
Dushon was. In United States v. Bergson, D.C., 119 F.
Supp. 459, a former employee of the Department of Justice,
within the time limited, appeared as counsel for private
clients and attempted to obtain letters of clearance for them
from the Anti-Trust Division of that Department. A ver-
dict was directed for defendant on the ground that the
statute above cited was intended to embrace claims against
the government for money or property. Without deciding
the soundness of the Bergson case, we find it has no applica-
tion to the case at bar, because the Dushon claim was for
money. The theory of defendant that 5 U.S.C.A. (1940
Ed.) § 100 and 41 U.S.C.A. (1940 Ed.) § 119 were revised
and codified without substantive change as 18 U.S.C.A. §
284 and did not include such claims as that of Dushon be-
cause the Tort Claims Act, 28 U.S.C.A. § 2674, had not
been passed at the time of the enactment of the codified sec-
tions is without merit. The present criminal statute includes
all claims against the United States for money, in any event.
It is true that, prior to the passage of the Tort Claims Act,
most claims of that nature were presented to Congress for
relief by special act. These were nonetheless claims against
the United States. The process became so burdensome that
general legislation was enacted whereby such claims were
presented to the District Courts rather than to Congress.

HE The Tort Claims Act recognizes that there are
“claims” as distinguished from “actions”, for this legisla-
tion confers ‘on specified courts “exclusive jurisdiction of

518 US.C.A. § 284,

14 EE

civil actions on claims against the United States for money
damages.” ®

Another point upon which great emphasis is laid has no
basis whatsoever. It has been noted above that the court
instructed the jury that the government must prove beyond
a reasonable doubt that the claim that Shaw acted as coun-
sel, attorney or agent in prosecuting “involved subject
matter directly connected with defendant’s former employ-
ment or service with the Alaska Railroad.” The informa-
tion alleges, as above noted, “that John D, Shaw was directly
connected with and performed duties relating to an acci-
dent” therein described, and subsequently “acted as attorney
and agent for plaintiffs” in a suit against the United States
on behalf of various persons who sustained injuries in the
aforementioned accident. On this subject, both the in-
formation and the instruction are perfectly plain. It was
a question of fact left to the jury by the trial judge. The
language of the information and that of the instruction are
unambiguous. Defendant did not ask that any of these
terms be defined. The point that was urged was that there
was a failure of proof. It is contended that Shaw was not
“directly” connected with the accident and that the accident
could not be the subject matter involved in the claim upon
which suit was predicated.

HI The undisputed facts show that Shaw, as Assistant
Chief Dispatcher, was the supervisor of the operation of
both the north and the south boards at the time of the
collision, that he took direct charge thereafter, arranged for
the hospitalization of the injured, rendered a report to the
government agency, upon which an investigation was
founded, and had access then and for a long time thereafter
to all of the sources of information and records available to

6 28 U.S.C.A. § 1346(b).

Le 15

the agency itself. To say, either as a matter of fact or law,
that the collision or accident was not the subject matter of
the claim upon which the suit against the United States is
founded is to deny meaning to words. The contention that
the claim was based upon negligence and that Shaw was
not directly connected with the negligence is mere quibbling.
Besides, there were in evidence the files of the Dushon case,
which can be interpreted as claiming negligence in connec-
tion with the office of the dispatcher. One of the allegations
of that complaint which bore the name of Shaw was that
“the defendant, United States of America and its officers,
agents and employees at the time of said collision were
negligent in enforcing its own rules and regulations with
regard to the movement of trains on the lines of the Alaska
Railroad and in using an inadequate, loose and slipshod.
system and method of informing its employees * * *.”7
Butcher, who tried that case, testified in effect that all the
employees of Alaska Railroad were treated as employees
for whose defaults the government would be liable. From
his explanation at the Shaw trial, it is obvious that the sub-
ject matter of the Dushon case was directly connected with
Shaw’s employment and service as Acting Chief Dispatcher
for the Alaska Railroad.®

7 Transeript of Record, page 127.

8 This view is affirmed by the following excerpt from plaintiff's ex-
hibit number 3, the amended complaint in the Dushon action:

“That the injuries suffered by the plaintiff as aforesaid, were
caused by the gross negligence and carelessness of the defendant,
its officers, agents and employees, acting within the scope of their
employment, and by the gross negligence and carelessness of the said
corporations heretofore named, their officers, agents and employees,
in the following pariteulars:
eH #

“4, That the defendant, United States of America, and its offi-
cers, agents and employees, at the time of said collision, were negli-
gent in enforcing its own rules and regulations with regard to the
movement of trains on the lines of the Alaska Railroad, and in us-

16 Ss

“T never intended and had no thought that there
was any fault in the Dispatcher’s-office or I would
have said so. I did know that when the dispatcher
sent his line-up out he usually sent it to the tele-
graph operators, The telegraph operators then
would convey it to the section foreman. I know
that on numerous occasions section foremen write
the line-up down and pass it to gas car operators.
Now, assume that in the very dangerous and in-
herently dangerous aspect of the moving of trains,
direct information is the only information that
ought to be relied upon, and knowing that a good
deal of the information passed on to gas car opera-
tors was indirect to the remotest degree, maybe
third and fourth hand, I—knowing that this acci-
dent had happened as a result of somebody not re-
ceiving information as to the movement of that
train or the movement of that gas car, I assumed
that somebody down the line, some section fore-
man or the wife of some section foreman or some
section-hand, had made a mistake in writing the
line-up and that was what I had reference to and
that is what we proved or attempted to prove in
the case.” Transcript of Record, page 184.

ing an inadequate, loose and slip-shod system and method of in-
forming its employees, including the said Harold D. Greene, who were
entitled and required to receive such information, of the daily move-
ment of trains on the lines of the said Alaska Railroad.

“5, ‘That said collision resulted by reason of the negligence of the
defendant in failing to employ and use an adequate and efficient
method and system of informing its employees of the movements of
trains on the Alaska Railroad, in consequence whereof the said Har-
old D. Greene was not informed of the approach of the train which
collided with the gas car and attached trailers operated by him, as
hereinbefore alleged, * * *”

De 17

The orders and the line-up came from the office of the
dispatcher, and one of the charges of negligence was the
failure to get this information correctly to Greene, an em-
ployee of a contractor, who was driving the gas car moving
in the opposite direction toward the point of collision.

HN The defense proposed four instructions, each of
which the court refused, This action is assigned as error.
The first request reads:
“You are instructed that the subject matter of
the claim in the Duschon case is the claim of right
of the injured persons to be compensated for in-
juries received by them through the alleged negli-
gence of the Alaska Railroad. In order to find
the defendant guilty as charged in the informa-
tion, you must find that his employment or duty
was directly connected with the alleged negligence
which resulted in the injuries complained of.”
While the record contains evidence that Shaw, as Assistant
Chief Dispatcher, was directly connected with the orders
and train lists, the transmission of which Dushon claimed
was negligent and therefore the giving of this instruction
would not have deflected the jury from the verdict of
guilty, still, as has been pointed out above, “subject matter,”
as used in the statute, cannot be thus narrowly construed.
The “subject matter” which was involved in the “claim
against the United States” was the collision. There was no
error in the refusal.

The second request reads:

“In law, the word ‘directly’, as used in these in-
structions, means ‘without anything intervening’,
not by secondary but by direct means. Therefore,
you are instructed that in order to find that the de-
fendant’s employment or duties were directly con-
a

18 |

nected with the subject matter of the Duschon
claim, you must find that the defendant’s relation-
ship to the negligence alleged in that claim was
direct, without anything intervening, and that his
connection was primary and not secondary.”
This is an attempt to have the word “directly” connected
with “negligence,” a word which the statute does not em-
ploy. The claims of negligence could not be stated without
“involving” the “subject matter directly connected with
which” Shaw “was so employed or performed duty.”

HM The third request reads:
“You are instructed that nothing subsequent to

the instant of the wreck or accident with which

the Duschon claim was concerned can have any

bearing on the defendant’s guilt or innocence in

the present case. You are therefore instructed not

to consider any acts of the defendant in backing up

the train to Anchorage from the scene of the acci-

dent and the duties he performed in connection

therewith.”
This proposal is clearly erroneous. The acts of defendant
subsequent to the collision were vital to the case of the
government. He sent these men to the hospital, where the
lawyer by whom he was employed interviewed them. He
made out the report of the collision. He had access to the
records of the Alaska Railroad. Where better could Butcher
have found whether the train lists and the orders were cor-
rectly transmitted to Greene, the driver of the gas car in
the collision?

HN The fourth request reads:
“You are instructed that in this case, as in all
criminal cases, the statute involved must be strictly
construed in favor of the defendant and against

EE 19

the Government. If, under the application of the
rule of strict construction, you find that the de-
fendant is not guilty as charged in the information
or if you have any reasonable doubt as to his guilt
under the information, then your verdict must be
not guilty.”
The strict construction of a statute is not a proper matter
upon which to charge a jury as an abstraction.

Even an apprentice lawyer should have known enough
about the ethics of our profession to have resigned his
clerkship when his lawyer employer took into the office
a series of investigations as to the injuries of persons in-
curred in a collision in which he, the apprentice, had played
a prominent part. Such dual allegiances are not permissible
in the profession. Certainly Shaw was in a dubious posi-
tion. His loyalty to the public service in which he was
employed should have never been questioned.

Of course, this conduct was not the subject of the in-
formation, The comment is made because of suggestion
that Shaw did not know of the existence of the statute. This
previous line of conduct explains and throws light upon his
action in preparation of the suit after he left the employ
of the Alaska Railroad and culminated in the prosecution of
the Dushon suit against the United States with his name on
the complaint. His intent is shown by his previous conduct
and by his active participation in the action up to the time
that there were rumors of his prosecution on account there-
of.

All of the claims of error by Shaw are thus disposed of
with one exception. However, exception was taken to the
giving of instruction number 5. This instruction we hold
to be erroneous. It reads:

“The law presumes every person charged with
crime to be innocent and, hence, the defendant is

20 Le

entitled to the benefit of this presumption until it

has been overcome by evidence beyond a reason-

able doubt. This rule as to the presumption of in-

nocence is a humane provision of the law intended

to guard against the conviction of innocent per-

sons, but it is not intended to prevent the convic-

tion of any person who is in fact guilty or to aid

the guilty to escape punishment.”
This Court has heretofore disapproved the last clause of
this identical instruction here attacked.® There is no retreat
from that position, We now reaffirm our previous stand.
In the Reynolds case the instruction might have meant the
difference between conviction and acquittal on a charge of
murder, where there was a claim by defendant that deceased
was a suicide and a plea of self defense. There was un-
doubtedly sufficient evidence to sustain a conviction, but
there was no eyewitness to the tragedy and the evidence was
almost entirely circumstantial. There this instruction was
not only erroneous, but highly prejudicial. In Kotteakos
v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed.
1557, the court reversed a criminal conviction where the in-
dictment charged a single conspiracy because the facts
seemed to give ground for a finding of several conspiracies
with a single individual forming the connecting link. In
doing so, a test was laid down for reversal or affirmance
where there is plain error in the record.

“In the final analysis judgment in each case
must be influenced by conviction resulting from
examination of the proceedings in their entirety,
tempered but not governed in any rigid sense of
stare decisis by what has been done in similar situa-
tions. [Citing case.] Necessarily the character
of the proceeding, what is at stake upon its out-

9 Reynolds v. United States, 9 Cir., 288 F.2d 460.

Le 21

come, and the relation of the error asserted to
casting the balance for decision on the case as a
whole, are material factors in judgment. * * *

“Tf, when all is said and done, the conviction is
sure that the error did not influence the jury, or
had but very slight effect, the verdict and the judg-
ment should stand, except perhaps where where
the departure is from a constitutional norm or a
specific command of Congress.” Kotteakos v.
United States, 328 U.S. 750, 762, 764-765, 66
S.Ct. 1239, 1246.

HH [E this test be applied in the case at bar, the judg-
ment must stand. Here there was practically no dispute of
“fact. If the case had been tried by a court, there must have
been a judgment of conviction. The questions of law
raised must all have been determined against defendant, as
has been above noted. The instructions are not a magical
formula, any deviation from which is necessarily fatal on
appeal. The trial may be held to be unfair to a defendant
when formalism is rigidly observed. But nothing requires
this Court to release a defendant obviously guilty because
there has been a deviation from a standard of absolute per-
fection, but where we can affirmatively say the defendant has
suffered no harm thereby. The fact that the jury did not
exercise the power of pardon, which is within their preroga-
tive in the face of overwhelming factual evidence of guilt
under the statute, is not reason for saying that the con-
demned clause could have had influence on the result.

Ht is for this reason that this Court has meticu-
lously reviewed the trial to show the unsubstantiality of the
alleged errors of law and the conclusive evidence of guilt.
Although the trial judge did not comment on the facts to
the jury and specifically warned them that they should dis-
regard his attitude in the case, it must nevertheless be re-

22 a

membered that a federal trial judge has a right to sum up
and comment on the evidence. This factor must always be
considered in viewing instructions given by a judge in this
system, In the state courts, where the rule is to the con-
trary, much more attention must be paid to technical exact-
ness of language.

The accused instruction is still valid in many jurisdictions.
It has been used considerably in the last many years and
a great many men are suffering or have suffered punish-
ment after a trial in which this instruction was given. As
counsel for defendant remarked in taking exception, the
judge in the case at bar customarily had given the same
instruction for a long period of time. It is one of those
instructions which gets into the file of a trial judge and is
treated as stock. Most of the cases where an instruction
of this type has been criticized have not disapproved its con-
tent.”

Our acute awareness of the rights of a defendant has dis-
covered that such an instruction might mislead a jury in a
case where the facts are in doubt, as was the situation in
Reynolds v. United States." But we are not bound to re-
verse in every case where the instruction may have been
given, notwithstanding the obvious guilt of the defendant
and the overwhelming weight of facts which are not even
contested. Our disapproval of the instruction stands. This

10 See, for example, cases cited in Reynolds v. United States, su-
pra Note 9; United States v. Farina, 2 Cir., 184 F.2d 18, certiorari
denied 340 U.S. 875, 71 S.Ct. 121, 95 L.Ed. 636; Moffit v. United
States, 10 Cir, 154 F.2d 402, certiorari denied 328 U.S. 853, 66 S.Ct.
1848, 90 L.Hd. 1625; People v. Henderson, 878 Ill. 436, 88 N.E.2d 727;
State v. Medley, 54 Kan. 627, 89 P. 227; State y. Hanlon, 38 Mont.
557, 100 P. 1035. Of. Gomila v. United States, 5 Cir. 146 F.2d 372,
where a similar instruction was given and the decision was reversed
on account of a “cumulation” of error.

UW Supra Note 9.

ee = 23

Court should never be required to pass again on a case where
such an instruction or a substantially similar one has been
given.

HH It is obvious, neither the trial judge nor the jury
was prejudiced against defendant. The jury recommended
leniency. The trial judge fined the defendant $100.00 as
a total penalty. There was no error prejudicial to defend-
ant.

The conviction is affirmed.

242 F.2d 276

CITY OF ANCHORAGE, a Corporation, Appellant, v. RICH-
ARDSON VISTA CORPORATION and Panoramic View
Corporation, Appellees.

No. 15082,

United States Court of Appeals, Ninth Circuit.
Feb, 21, 1957,

=

NX

No}
N
eee

——+—_.

John L. Rader, Lynn W. Kirkland, City Atty. of Anchor-
age, Anchorage, Alaska, for appellant.

Hellenthal, Hellenthal & Cottis, and Albert Maffei,
Anchorage, Alaska, and Reischling & Chan, Seattle, Wash.,
for appellees.

Before POPE and FEE, Circuit Judges, and ROSS, Dis-
trict Judge.

ROSS, District Judge.

This case comes to us on appeal from Alaska,.and con-
cerns the proper application by the City of Anchorage of its
electric power rate schedules to certain apartment houses
owned and operated by the plaintiffs in the City of Anchor-
age. The District Court upheld the contentions of plain-
tiffs that the City had erroneously applied its schedule of
rates. From this judgment the City appeals.

Richardson Vista Corporation and Panoramic View Cor-
poration, hereinafter referred to as “Vista” and “Pan-
oramic” are two housing corporations owning and operating
multiple apartment buildings in Anchorage, Alaska, Vista
owned nineteen separate apartment buildings with twenty-
two units in each, for a total of four hundred eighteen sepa-
rate apartments, the project being situate on a twenty-three
acre tract of land. Panoramic owned and operated fourteen
separate apartment buildings over a seventeen acre tract,
with twenty-two, sixteen and twelve units per building, with
a total of two hundred sixty-four apartments. Electric

LA

energy was furnished to these apartment house buildings
by the City of Anchorage, a municipal corporation, engaged
in the proprietary business of operating an electrical power
generating and distribution plant.

The meter panel in each separate apartment building
contained a meter for each individual apartment in the
building, plus a so-called “house” meter. We are not con-
cerned with the “apartment” or “tenant” meters and no
further reference will be made to them. The “hotise” meter
reflected power consumption of the common facilities main-
tained by plaintiffs in each building for the common use of
the tenants such as hallways, basement, operation of heating
system, etc., the cost of which was borne by the plaintiffs.
Consequently there were nineteen separate “house” meters
used in connection with the nineteen buildings operated by
Vista and fourteen in the fourteen buildings operated by
Panoramic.

The plaintiffs were charged and billed under the City’s
“Schedule (C) Commercial” of its published rates in the
same manner as though there had been a separate ownership
of each of the total thirty-three apartment houses. It is
obvious that under this method and practice of “separate”
billing the plaintiffs did not enjoy the benefits that would
have accrued had Vista’s nineteen “house” bills, and Pan-
oramic’s fourteen “house” bills been totalled, and the de-
creasing sliding scale charge for KWH consumption con-
tained in Schedule C been applied. The plaintiffs contend
that the action of the City in billing them as single customers
as to each 1-point connection in each building, and refusing
them the benefits of “combined” billing to which they insist
they are entitled, constitutes, as to them, an erroneous ap-
plication of Schedule C. In their complaint against the City
it is alleged:

28 —

“(Par. XII) That by virtue of defendant’s er-
roneous and incorrect application of its commercial
rate to plaintiffs’ consumption of electrical energy,
each of plaintiffs have paid for electrical energy
in an amount grossly in excess of what plaintiffs
should rightfully pay had defendant’s commercial
rates been properly applied to plaintiffs’ consump-
tion, * * * that defendant in the application of
its electrical rate to plaintiffs, has acted arbitrarily,
unjustly, unequally, unreasonably, discriminato-
rily, non-uniformly, and confiscatorily to its unjust
enrichment and will continue said practice unless
restrained.”

In the following paragraph XIII it is alleged “that other
electrical consumers * * * similarly situated * * *
are given the benefit of but one application of Schedule C
* %* *” However the record fails to support this allega-
tion. There are no like groups of apartment houses re-
ceiving different billing treatment than plaintiffs.

The prayer of the complaint is that (A) the City “be en-
joined from charging each of plaintiffs defendant’s com-
mercial electrical rate or tariff in the manner aforede-
scribed,” that is with a single separate billing for each sepa-
rate apartment house, “and ordered to apply the commercial
rate of each of plaintiffs’ total consumption,” namely, that
it be required to total or “combine” all of the separate
billings for each plaintiffs’ total number of apartment houses
into one “combined” bill, “and be ordered to desist from
charging each of plaintiffs’ buildings as if they were separate
consumers of defendant.” (B) “That the City * * *
be ordered and directed to repay plaintiff Richardson Vista
Corporation the sum of $2,530.97,” later increased to $20,-
590.66 plus $400.00 per month subsequent to December,
1954, in a supplemental complaint, “with interest at the rate

LL)

of six per cent per annum from date of each respective
protest until so repaid, and similarly the amount of $1,-
408.77 to plaintiff Panoramic View Corporation.” This
amount was also increased in a supplemental complaint to
$14,436.27 plus $200.00 per month subsequent to December,
1954. All power bills were paid by the respective plaintiffs
under protest.

In its answer the City denies all allegations of the com-
plaint relating to discrimination and wrongdoing, admits
the practice of “single” billing, a separate bill for each
separate building, asserts that Schedule C was properly ap-
plied; and that such method of rate application and billing
was entirely proper.

Plaintiffs do not here challenge the legality of the rates,
rules and regulations set forth in Schedule C. There is
no question raised that the rates are excessive, or that the
rules are in themselves discriminatory. It is merely said,
paragraph XII of the complaint, that the defendant, in the
application of its electrical rate to plaintiffs, “has acted
arbitrarily, unjustly, unequally, unreasonably, discrimina-
torily, non-uniformly and confiscatorily,” and that this came
about through an “erroneous and improper application of its
commercial rate,” Schedule C, “to plaintiffs.” (Italics
ours. )

It is obvious, too, that the record does not support the
complaint insofar as a cause of action is set out in paragraph
XIII on discrimination. No discrimination is shown either
against plaintiffs individually, or as members of a class dis-
criminated against.

.The case was heard before Judge Folta who filed his opin-
ion but came to his death before entering findings of fact
and conclusions of law, and judgment. Judge McCarrey
entered judgment for plaintiffs. F.R.Civ.P. Rule 63, 28 U.
S.C.A. He took the position that the opinion was sufficient-

30 |

ly comprehensive to take the place of the customary findings
of fact and conclusions of law. F.R.Civ.P. Rule 52,

We think it proper to comment on the matters set-out in
the opinion and to that end quote such parts thereof as we
deem pertinent, and necessary, to make our remarks under-
standable.

“The City contends that the installation and
maintenance of a separate service drop and meter
at each building warrant the classification made
and points to the fact that all identical housing
projects, as well as more than 200 multimeter con-
sumers within its corporate limits, are similarly
dealt with.

“% * %* but as I view the case, out of the
welter of contentions only two questions emerge,
(1) whether a housing project consisting of sev-
eral buildings erected on one tract of land and
owned by one ‘person’ is an ‘establishment’ within
the meaning of Schedule C of the City’s rate tar-
iffs, and (2) if so, whether the practice of the City
in refusing to combine meter readings is in conflict
with the schedule. (Italics ours.)

“It appears that before these housing projects
had been completed in 1951, the plaintiffs discuss-
ed the matter of rates with some of the officials of
the City with the view of obtaining the benefit of
conjunctive (combined) billing.

“Apparently all the parties thought Ordinance
No. 55 (original rate structure, rules and regula-
tions adopted by the City in 1925 and repealed
by implication by the adoption of Ordinance 283
in 1949) was still in effect. It provided that in no
event would separate premises even though owned
by the same consumer, be supplied with electricity

| 3)

through the same meter or meters, and expressly
prohibited combined meter readings.

“The sections containing these provisions had,
however been repealed on August 24, 1949, by Or-
dinance No. 282, without a reinactment of these
provisions. Section 602.1 of that ordinance em-
powers the City Manager to make and publish
rates and charges for electrical energy and service,
and Sec. 608.1 provides that

“The City Manager, with the approval of the
City Council, may adopt and promulgate such
rules and regulations as may be necessary pertain-
ing to the supplying and discontinuance of electric
service to all customers, including but not being
limited to rates, charges for connecting and dis-
connecting service, separate meters for separate
premises * * *7°”

“Schedule (C) Commercial Rate

“This service applicable to single phase service
for lighting, cooking, small appliances and inci-
dental single phase motors not in excess of five
(5) horsepower, in professional, mercantile, in-
dustrial and other establishments but not classed
as single family residences.” (Then follows rates
dropping from 10¢ for the first 25 KWH to 4¢ for
in excess of 2125 KWH. Italics ours.)

“Tt is in this setting that the plaintiffs presented
their demand for conjunctive (combined) billing
to the City Council.”

Continuing, it is said in the opinion, that even though the
provisions of Ordinance No. 55, insofar as they concern
us here, were inadvertently repealed, and that the city of-
ficials appeared to be ignorant of that fact, the reason stated
in the minutes of the City Council meeting of November 9,

32 a

1951, at which time the plaintiffs’ demand for “combined”
bill was refused, was that to grant the request “zwould alter
the established policy of billing for each individual and
would also affect many others who own more than one
building and are billed on a separate unit basis.” It is con-
ceded that whereas the old ordinance No. 55 contained an
express prohibition against “combined” billing, with the
adoption of Ordinance No. 283 (repealing Ordinance No.
55 by implication) no rule or regulation was adopted actual-
ly prohibiting combined billing. The opinion continues :
(Italics ours.)
“# 3 plaintiffs argue that in the absence

of stich a rule or regulation the practice referred to

(single billing) was unauthorized because of Sec.

49-1-3 of the code [A.C.L.A.1949] governing

public utilities generally. I am of the opinion,

however, that the language of that section clearly

shows that it was not intended to apply to munici-

palities.” (Bracket words inserted.)

The concluding paragraph of the opinion states:
“Since it can hardly be disputed that the plain-

tiffs housing projects are ‘establishments’ within

the meaning of Schedule C, the crucial questions

are (1) whether the refusal of the City Council to

grant the request for combined meter readings is

equivalent to an authorization or ratification of the

practice referred to, and, (2) if so, whether the

practice conflicts with Schedule C. Since the lan-

guage of Sec. 602.1 of Ordinance 283 is merely

permissive and the Court has already held that

Sec. 49-1-3 of the Code does not apply, it follows

that the City was not required to make such a prac-

tice the subject of a rule or regulation.” (Ltalics

inserted.)

a

“However, Schedule C necessarily implies that
an ‘establishment’ is entitled to the benefits of the
sliding benefits of the sliding scale of rates, where-
as the construction placed upon this schedule by
the City is that such an ‘establishment’ is entitled
to this benefit only if the service is of the 1-point
variety. While this classification could hardly be
said to be unreasonable, and therefor invalid, yet,
since it effectually excluded any establishment con-
sisting of more than one building from the benefits
of lower rates for increased consumption, I am
of the opinion that it was in conflict with Schedule
C except where multiple meters were installed at
‘the request of the consumer.” (Ttalics ours.)

The judgment entered by Judge McCarrey contained the
following orders:

«x % «Panoramic View Corporation, do
have and recover judgment against the defendant
City for the difference between the amount which
it has paid to the defendant for electric power and
the amount which should have been paid to the de-
fendant, had defendant’s promulgated and pub-
lished rate schedule been properly applied * *
that defendant pay interest at the legal rate * *
that defendant * * * is restrained and en-
joined from applying any rate schedule to plaintiff
Panoramic View’s establishment not based upon
a proper, reasonable classification and in accord-
ance with a promulgated and published schedule of
rates * * *”

We find that the opinion, so far as it may do service as
and in lieu of findings of fact, is supported by the record.
Tn its role of conclusions of law, should we hold that if the
statement, “since it can hardly be disputed that the plaintiffs’

be

34 Le

housing projects are ‘establishments’ within the meaning of
Schedule C”, may be taken as a proper conclusion of law
it is erroneous, and the conclusion should have been to the
contrary.

Even if we were to concede that the opinion filed in this
case could be treated as substituting for the conventional
findings and conclusions we are of the opinion that it would
not sustain the judgment entered, for it appears to us that
neither the facts nor the law support the opinion. Let us
scrutinize the facts as they appear in the record.

From 1925 until the date of the trial in 1955 it had been
indisputably the policy, practice and procedure of the City
to refuse “combined” billing. Indeed the original rate
schedules, rules and regulations as incorporated in the orig-
inal Ordinance No. 55 expressly prohibited the “combined”
billing practice, except where the single metering was done
by the City for its own convenience,

Ordinance No. 55 continued in effect until 1949 when re-
pealed by implication by Ordinance 283. The opinion stated
that it appeared that the City officials were unaware of the
repealing effect of Ordinance No. 283, but be that as it may,
the City continued its policy, practice and procedure of re-
fusing “combined” billing. To overcome this established
policy there should be some definite proof of the City’s in~
tention to depart therefrom.

HI Plaintiffs take the position that by adopting Ordi-
nance No. 283 in 1949, of which Schedule C was a part, this
in itself amounted to an abandonment of the “single” billing
practice for the reason that this ordinance did not by rule
or regulation prohibit the practice which had theretofore
been followed by the City for the past thirty years and
which had been expressly authorized by Ordinance No.
55.

| 3

However, a review of the cases leads us to the conclusion
that the majority of courts in passing upon this issue, of
single versus combined billing practice by utilities, have
held that where a schedule is silent on the subject the
“combined” billing practice is as much proscribed as though
the schedule, rules, or regulation had expressly prohibited
it. To put the matter in a more simple way the majority
of the courts hold that unless “combined” billing is expressly
authorized it will not be permitted. We recognize that
the cases are in some confusion in this area of public utility
law, and a careful study of the cases, where “combined”, or
“conjunctive”, billing was permitted, indicates that such
practice was expressly authorized, or that the courts may
have been influenced by the unusual fact situations involved
rather than by a desire to depart from the generally accepted
legal proposition that “combined” billing is not to be allowed
unless expressly authorized.

Some of the authorities commenting on this problem,
“single” versus “combined” billing by public utilities, are
set out. The court in Land Title Bank & Trust Company
v. Pennsylvania Public Utility Commission, 138 Pa.Super.
544, 10 A.2d 843, 846, was dealing with a somewhat similar
problem as ours, the application of tariffs, metering, and
manner of billing to a housing project consisting of some
sixty-six separate buildings with a total of over two hundred
and fifty apartments. In that case the plaintiff took the
position that all of the meter readings should be combined,
thereby permitting it the advantage of the wholesale rate.
The Commission had a rule to the effect that “ ‘unless other-
wise stipulated therein, the rates named in the Tariff for
each class of service are based upon the supply of the
service to one entire premise through a single delivery and
metering point. Separate supply for the same customer at
other points of consumption shall be separately metered and

36 |

billed.’ ” It is to be noted that the City of Anchorage though
not having an express rule since the adoption of its Ordi-
nance No. 293 in 1949, but following its policy and practice
in vogue since 1925, billed plaintiffs for service to each in-
dividual apartment house as a single establishment, based
on a single delivery and metering point, that is it billed for
each separate “house” meter in each of the separate apart-
ment buildings.
We cite a further pertinent portion of the court’s opinion
in the Land Title Bank and Trust Company case:
“To sustain this complaint would be to sanction
the organization of whole blocks of individual
owners into associations like these for the sole pur-
pose of affording themselves the benefits of a
classification to which, as individuals, they would
not be entitled. These associations could re-
distribute the energy to the owners and occupants
of the various premises. This device would not
necessarily confine itself to electric companies but
could be employed by individual owners to afford
themselves the benefits of more favorable classi-
fications of other utility companies. The effect of
such an arrangement would be to result in up-
setting the whole rate structure under which the
service of the Philadelphia Electric Company and
other utilities is furnished, to the detriment and
discrimination of thousands of other individual
consumers * * *’,
“To permit separate customer units to combine
for single point service would be to violate the
fundamental theory upon which the pricing of in-
tervenor’s tariff schedules are based.”
On the point that “single ownership” of like premises
does not, of itself authorize “combined” billing see City of

Se | 37

Raceland v. Colvin, 265 Ky. 12, 95 S.W.2d 1113. In
United States v. American Water Works Company, C.C.,
37 F. 747, 749, a situation which was concerned with the
application of meter readings to a group of buildings situate
on government reservation known as Fort Omaha, in con-
cluding that the government was not entitled to a “com-
bined” billing, the court said:
“3 Suppose some one in the city own-

ing a block of ground should put up 20 or 30

residences to rent; it would be a clear violation

of the spirit of this ordinance to permit him to

supply all these houses as though they constituted

one property. Indeed, as nothing is said about

contiguity, if ownership was the test, a man having

buildings, residences, stores, and factories scat-

tered in different parts of the city might insist up-

on a supply to all at the lowest rate; or, as neither

ownership nor contiguity is spoken of, why might

he not contract for all the water from defendant,

and subcontract it to various consumers in the

city? I think there can be little doubt on this. The

practice which has obtained ever since defendant’s

waterworks were established correctly interprets

the ordinance, and expresses its true spirit and

meaning; and that gives defendant the right to

treat each building as a separate consumer, and

charge either for the building or at meter rates

accordingly.”

The New York Public Service Commission, in Realty
Supervision Company v. Edison Electric Iluminating Com-
pany of Brooklyn, Public Utility Reports 1917B, p. 962,
commented as follows:

“T believe it (conjunctive billing) to be highly
discriminatory * * * both against the larger

38 Led

consumer who takes the same amount of current
with very much less service, and the small con-
sumer who cannot join with his neighbors to get
a lower rate * * * It is plain that the person
who owns numerous buildings, each with its serv-
ice connection and its one or more meters, gets a
great deal by way of service and facilities that
another customer, consuming a like amount of cur-
rent, but all in one building and with one service,
does not get. Moreover, this conjunctional service
contract is discriminatory against the owner or
lessee of a small building which cannot be jointed
under such a provision. He is forced to compete
with his neighbor in the same type and size of a
building and is penalized in his electric light or
power bill because he or his landlord does not
own any other buildings in the same block and
within 100 feet. If there were some appreciable
difference in the cost of the service to the fortunate
owner or lessee the service to such owner or lessee
could be rendered with appreciable economy to the
companies, it would perhaps be proper that the
owner of the single building should be charged
more than the owner of three or four; but where
the owner of several buildings receives for each
building the same service as the owner of a single
building, it is certainly discriminatory to allow
the consumption in such buildings to be joined and
the price of current reduced thereby.”

In another ruling of the New York Public Service Com-
mission, Re The New York Edison Co., et al., Public Utility
Reports, N.S.1935, it was said:

“The principal provision of the present rate
schedules as to conjunctional billing is that build-

| 3)

ings within 100 feet under common ownership or .
leasehold of record for at least five years, which

may be supplied from one service, may be taken
collectively as a basis of determining the amount to

be paid for electric service.

“The companies’ proposal retains these condi-
tions but provides in addition that the buildings
may not be separated by a city street or public high-
way unless used by the customer as a unitary enter-
prise. This restricts somewhat the extent to which
the rider may be applied.

“(7) Some form of conjunctional billing has
been in operation for twenty-five or thirty years
and this is apparently the first effort to restrict a
service which is preferential and discriminatory.
It is obvious that if a customer may combine
several buildings which are not intercommuni-
cating and which are served separately by the
electric company, each having its own service and
meter with all of the costs which such separate
service implies, particularly as to meter readings,
accounts and billings, and thus obtain a rate which
is considerably lower than could be obtained if the
separate properties were not so conjunctively
billed, there must needs be some justification out- /
side of the cost of the service. * * *”

Numerous other authorities could be cited but the fore-
going are sufficient to indicate the general trend of thinking,
and with which we agree.
The opinion upon which the judgment in this case is
predicated assumes as its major premise that “combined” |
billing is permitted by “Schedule C Commercial.” The con-
cluding paragraph of the opinion states:

40 a

“Since it can hardly be disputed that the defend-
ants’ housing projects are ‘establishments’ within
the meaning of Schedule C, the crucial questions
are (1) whether the refusal of the city council to
grant the request for combined meter readings is
equivalent to an authorization or ratification of the
practice referred to, and, (2) if so, whether the
practice conflicts with Schedule C.” (Italics in-
serted.)

It appears that this premise is false.

The applicable portion of Schedule C reads:

“This service applicable to single phase service
for lighting, cooking, small appliances and inci-
dental single phase motors not in excess of five (5)
horsepower, in professional, mercantile, industrial
and other establishments but not classed as single
family residences.” (Then follows the sliding or
diminishing scale based on increasing consumption.
Italics ours.)

If the statement in the opinion to the effect that the
groups of apartment houses owned and operated by each
plaintiff are “establishments” is to be sustained then that
meaning must be determined from the foregoing quoted
provision of Schedule C.

The conclusion set out in the opinion that plaintiffs were
each entitled to a “combined” billing is premised on the
proposition that each of the two groups of apartment houses
is an “establishment” within the meaning of the schedule.
That each of two groups, nineteen separate apartment
houses in one and fourteen in the other, constitute but two
establishments within the meaning of Schedule C we think
is an unwarranted assumption and inasmuch as the judg-
ment must stand or fall on this assumption the proposition
is worthy of some discussion,

Le

We agree that the word “establishment” may, and does,
have several shades of meaning, depending upon the context
in which the word is used, and the particular purpose sought
to be accomplished. What we strive for here is the meaning
intended as the word was used in Schedule C. Nothing
appearing to the contrary one must take it that the word
“establishment” was intended to be, and is, used in its ordi-
nary sense, that is the sense that the lay person would
ordinarily use it.

Webster’s Unabridged Dictionary gives what we take to
be the ordinary every day definition as the place where one
is permanently fixed for residence or business; residence,
including grounds, furniture, etc., with which one is fitted
out; also, any office or place of business, with its fixtures.
Here the identity and operation of each plaintiffs’ apartment
house is separate and distinct from the others. The context
indicates that it was intended that the word be used in the
sense of a single establishment, rather than to include
multiple like establishments. In Fleming v. American
Stores Co., D.C., 42 F.Supp. 511, at page 521, the court in
disposing of the contention that the word covered more
than one unit said:

“T cannot subscribe to the defendant’s view. To
do so would be to do indescribable violence to the
word ‘establishment’ in section 13(a) (2) [29 U.S.
CA. § 213(a) (2)]. It does not follow that be-
cause a unit of an enterprise is a component or
necessary part of that enterprise, that it is to be so
regarded as part and parcel of the whole enter-
prise as to lose its individual and separate identity
as an establishment.”

Construing the word “establishment” as used in Schedule
C as meaning one unit, and not all the units in an enterprise,
we are irresistibly led to the final conclusion, which is just

2 a

the opposite one reached in the opinion, namely, that the City
properly and correctly applied the Schedule C rates to each
single apartment house.

There is, however, a more compelling and impressive
argument for sustaining the interpretation given to Schedule
C by the City and its Manager, and the practice followed
in connection with it.

Section 602.1 of Ordinance No. 282, expressly em-
powered the City Manager to make and publish rates and
charges for electrical energy and service, and Section 608.1
provides that the City Manager, with the approval of the
City Council, may adopt and promulgate such rules and
regulations as may be necessary pertaining to the supplying
and discontinuance of electric service to all customers.
Schedule C—Commercia] Rate—promulgated under the au-
thority conferred by the ordinance relates to “single phase
service for lighting, cooking, * * * in professional, mer-
cantile, industrial and other establishments but not classed
as single family residences.”

HEME While a municipality cannot delegate any part of
its governmental power it may, of course, delegate minis-
terial or administrative functions to its officials or em-
ployees. It may delegate the power and duty of carrying
into effect valid ordinances adopted by it, thus the munici-
pality may vest in its officers broad discretion in such matters
as the application and enforcement of health laws, building
regulatioris, and the administration of public utilities oper-
ated by it or by others. With the exception of vesting arbi-
trary power or authority in an officer or employee, grants
of discretionary power to administrative officers is generally
permissible, and, in fact, is the general practice. Without
the power to delegate duty and discretion the affairs of the
City could not be carried on.

a  )

HBB Lt must be kept in mind that the courts cannot set
aside city ordinances unless they are unconstitutional or ultra
vires, or in some special connection or effect, unreasonable.
On the contrary, unless the ordinance is unnecessarily op-
pressive or unreasonable it is the duty of the court to uphold
it. Itis a well settled rule that where an ordinance is passed
relating to a matter within the legislative power of the
municipality all presumptions are in favor of its constitu-
tionality, and reasonableness, in short the presumption of
reasonableness follows the ordinance,

HE The question of policy must be determined by the
municipal legislative authority, and the fact that courts may
not agree with the announced policy is immaterial. If the
municipality has power to enact an ordinance, it may not
be set aside by the courts merely on the ground of hardship,
harshness, injustice, unfairness or because of commercial
advantages or disadvantages resulting from the enactment.

It is said that ordinances must be read and construed as a
whole in the light of circumstances existing at the time of
their adoption, with the proper regard for the consequences
that would result from giving them a particular meaning,
and the courts must keep in mind the object or purpose of
the enactment. While it has been held that there can be
no intent in an ordinance not expressed in words, it has been.
also held that that which is implied is as much a part of the
ordinance as though the same were therein spelled out.

HE In construing an ordinance words employed will be
taken in their ordinary and proper signification, unless it
shall be plainly necessary to enlarge or modify the significa-
tion in order to effectuate the plain intent of the body en-
acting the ordinance.

HH In like manner the presumption of reasonableness
follows the interpretation and construction given to an or-

mn a

dinance by the creating authority, and it will be presumed,
the ordinance permitting, that all rules, regulations and
practices adopted or invoked under its provisions are rea-
sonable and consistent with the expressed purpose, at least
until such time as the proof makes a showing to the con-
trary.

HB] It is obvious that there was here delegated to the
City Manager, with the approval of the Council, (1) the
power and authority to make and publish rates and charges
for power and service, and (2) to adopt and promulgate
such rules and regulations as may be necessary. It is
elementary that a municipal legislative body, here the City
Council, can properly delegate to its officer the power and
duty of carrying its ordinances into effect. Hitchcock v.
Galveston, 96 U.S. 341, 348, 24 L.Ed. 659, It is said that
the modern tendency is to be liberal in upholding ordinances
granting discretion to municipal administrative officers by
reason of the increasing complexity of municipal adminis-
tration.

True, neither the City Council, or the City Manager
printed or published, any rules, regulations, nor practices
relating to Schedule C other than those which appear in
the schedule itself. But that does not prevent the adoption
of rules, regulations, and practices supplementing and im-
plementing the printed Schedule C. The practice with which
we are here concerned is the separate billing of single estab-
lishments, and construing establishments to mean all users
under one roof and within one structure or building, ex-
cluding from this classification groups of buildings.

This interpretation followed the practice of many years,
was ratified by the City Council, and in fact was the inter-
pretation of the Council speaking through its agent, the
City Manager. There is no question but that the City had
the right, and as a fact was compelled, to construe its own

ordinance. Whether it did this in council meeting or by
acquiescence in the interpretation of the City Manager is
immaterial. The interpretation comports with the City’s
long established practice, maintains the policy determined to
be in the public interest, is not inconsistent with the text
of Schedule C, and gives the ordinary meaning to the words
used, including the word “establishments.”

We hold that the City had the power to construe and in-
terpret, itself or through the delegated power of the mana-
ger, its own statutes, including the word “establishment” as
used therein. Schedule C having been interpreted and con-
strued, and a practice having been adopted and followed in
relation to its application, there is little ground here for the
intercession of the court.

For all practical purposes what the plaintiffs seek is to
have the court reinterpret Schedule C, including the word
“establishments”, and then determine whether or not
“single” billing falls within a “practice” consistent with
such interpretation, However, we can be of no comfort to
plaintiffs on this score for we are compelled to accept the
interpretation of the City and its Manager as to Schedule
C, and the rules, regulations and practices in connection with
the schedule. The practical construction adopted by the
City and its officers is entitled to great weight and this court
will accord it such. City of Sedalia ex rel. and to Use of
Ferguson v. Shell Petroleum Corp., 8 Cir. 81 F.2d 193,
197, 106 A.L.R. 1327, There is no showing in the record
before us that the City and its officers in interpreting and
construing Schedule C, and in invoking the present’ practice
of “single” billing followed in connection therewith, acted
other than reasonably. There is no proof that the schedule
under that interpretation and practice was or is arbitrary
or discriminatory as to plaintiffs. For that reason we can-

46 EE

not now disturb, in review, the position taken by the City
and its Manager.

In our opinion the City and its Manager properly con-
strued and interpreted Schedule C, including the meaning of
the word “establishments”, and we are also of the opinion
that the practice of “single” billing as used by the City
is consistent with intent and purpose of Schedule C.

In view of our conclusions the several other ominous
points lurking in the background of this case need not now
be passed upon.

The judgment is reversed and the cause remanded with
directions to enter judgment in favor of the City of An-
chorage, defendant below. :

245 F.2d 21

UNITED PRESS ASSOCIATIONS, a Corporation, Appellant, v.
Sidney Dean CHARLES, Paul S. Charles and Patricia
Charles and the Pioneer Printing Company, a Corporation,
Appellees,

No, 14863,

United States Court of Appeals, Ninth Cireuit.
Mareh 1, 1957.

|
be .
a

iimttt

John H. Dimond, Juneau, Alaska, and Baker, Hostetler,
Patterson & Wick, Cleveland, Ohio, for appellant.

Faulkner, Banfield & Boochever, Juneau, Alaska, and
Herbert C. Faulkner, San Francisco, Cal., for appellee.

Before HEALY, POPE and FEE, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

This case balances upon the single question of whether
a civil case involving over twenty dollars, which has been
fairly and impartially tried by the court sitting with a jury,
should be reversed because of a procedural technicality
claimed to vitiate the order of-the court calling a jury.

United Press? brought action for damages, setting up
alleged breach of contract and loss of profit over the
time the contract, according to its terms, had yet to run.

1United Press” is used in this opinion to designate the plaintiff-
appellant.
a

50 |

Charles * answered alleging cancellation for breach by Unit-
ed Press. A counterclaim was also set up in the answer.
The reply admitted this amount was due to Charles.

The jury trial was held under the circumstances herein-
below outlined. Neither Charles nor United Press asked
for a jury within ten days after the issues were made up.*
Thereafter, Charles filed a motion for jury trial. The court
denied this motion on September 24, 1954. On April 12,
1955, the court entered an order directing a jury trial sua
sponte. United Press objected, but went to trial. The
jury found a verdict for United Press with damages at
$368.70 and a verdict for Charles on the admitted counter-
claim for $368.70. Judgment was entered on these general
verdicts.

It is now and has always been agreed by all members of
this panel that this judgment must be affirmed if there were
no defect in placing the cause on trial by a jury.

Appellant takes the position that the case must be revers-
ed because there was a jury trial, instead of a trial by the
judge alone.

There is no express prohibition of jury trial in the Con-
stitution, treaties or laws of the United States. There is no
express denial of the right of a trial judge to call a jury
in any civil trial in the Federal Rules of Civil Procedure.
The emphasis in Rules 38 and 39 is upon procedure where-
by a “party” may be deprived of his right to jury trial
guaranteed by the Seventh Amendment to the Constitution.
At common law, prior to the adoption of the Federal Con-
stitution, trial by jury in a case for breach of contract

2“Charles” is used to include all defendants and appellees.

3 Failure so to demand is described as a waiver of that right by
each of the parties. Rule 38(d), Federal Rules of Civil Procedure,
28 US.CA.

DD

would have been the usual and normal, if not the inevitable,
course.

Appellant now insists that these Rules gave him an ab-
solute right to trial by the judge sitting without a jury.
Trial by jury therefore was irremedial error. Therefore,
the case must be reversed on this ground alone. So the
argument runs. Appellant arrives at this result by a highly
technical construction of the text of the pertinent Rules.
But it would seem that this is rationalization flatly contra-
dicted by the positive declaration of intent contained in the
first of these Rules that the “right of trial by jury as de-
clared by the Seventh Amendment to the Constitution * *
shall be preserved to the parties inviolate.” Had the Rules
contained any express prohibition of jury trial under any
set of circumstances, it is probable that the Supreme Court
of the United States would not have adopted such provi-
sions, and it is equally probable that Congress would not
have approved them.*

4The tendency of commentators to limit the use of trial by jury
was noted when the preliminary draft of the Federal Rules was put
out, but the matter was not drawn to the attention of Congress. See
comment, 16 Ore.L.Rev. 103, 115, where it is said:

“Pinally, although the rules as proposed in words protect the right
of jury trial, it is clear that when no theory lies at the basis of a
pleading that ‘right’ is lost. This also is by design and not by inad-
vertence, The committee cite and give their approval to an article
by James Fleming Jr., entitled Trial by Jury and the New Federat
Rules of Procedure, There the underlying attitude is set forth as
follows:

“‘The right of jury trial should not be expanded. This method
of settling disputes is expensive and dilatory—perhaps anachronistic.
Indeed the number of jury trials should be cut down if this can be
done so as not to jeopardize the attainment of the other objectives
+». Some of these objectives have been widely accomplished
under various systems uniting law and equity. Almost everywhere,
for instance, a plaintiff may claim both legal and equitable relief
arising from a single cause of action . . . One of the greatest
difficulties seems to be associated with what may be termed a “the-
ory of the pleadings” doctrine,”

52 —

The position of appellant in this case is untenable. The
gist of its theory is that by a technical slip Charles, as a par-
ty, had waived a valuable constitutional right. This right
was not revived when Charles, as a party, filed a motion for
jury trial in accordance with the Rules, because the court
denied it. Thereafter, it is said not even the court could
restore to Charles his right to jury trial, even though the
motion by Charles was never withdrawn.®

If waiver is thus so potent, it may be applied also to
United Press. United Press chose to do business in Alaska.

“It may be objected that it is unfair to accuse the author of at-
tempting to abolish jury trial, since the article purports to have
‘strict regard for the constitutional limitation’; but the passage does
reflect the underlying distrust of theorists for jury trial and indi-
cates the desire to render the constitutional right as narrow as pos-
sible. It also shows the close connection between the elimination
from the rules of the phrase ‘cause of action’, with the included idea
of a basic theory of relief, and the objective of limiting the right of
jury trial. The ‘waiver clause’ of the rules is of vast assistance
also under such circumstances.”

5In 3A, Ohlinger’s Fed.Prac. (1948 Ed.) page 25, the view is taken
that the court has a right to grant jury trial notwithstanding waiver
by the parties. It is said, “* * * but it may well be questioned
that such a limitation is intended or, if intended, that such a limita-
tion would be valid.” In the pocket part to the 1956 edition, this view
is repeated, citing Pallant v. Sinatra, D.C., 7 F.R.D. 293, which is ex-
plained infra Note 11.

6In Hargrove v. American Cent. Ins. Co., 10 Cir., 125 F.2d 225, the
cause was actually decided upon the clear consent, acquiescence and
waiver of the parties, which is the ground here. The able writer of
the opinion, Circuit Judge Murrah, simply used the language of the
Rules to fortify his conclusion that the party had, by going to trial,
given up any right to insist that the trial judge could not make find-
ings on the evidence which he had heard. This right has always
existed where an advisory jury is called, whether at Jaw or in equity.
The case is not applicable here. First, because the trial judge in the
Hargrove case did not attempt to call a regular jury either on his
own motion or on motion of a party. Second, Judge Folta did not
attempt to call’an advisory jury, but insisted that he empaneled a
regular jury as at common law.

53

When it filed complaint in the local federal court as plain-
tiff,” it contemplated the acceptance of the judgment of the
local community as expressed by a jury drawn from the
vicinage. By a procedural situation, it was tentatively re-
lieved of that necessity, But the trial judge entered an or-
der for jury trial. Appellant objected. The point that was
really made in the objection by United Press was not that
it resisted jury trial, but that witnesses should have been
called in that instance instead of depositions of certain wit-
nesses which it presented. However, it was at the same
time opposing delay because it had brought two witnesses
from outside. The gravamen of its complaint was that the
order was changed on the eve of trial. However, it. made
no showing as to hardship by affidavit or sworn testimony
before the court. The judge might have postponed the
case, transferred it to another court or taken some other
action if this had been done. Indeed, it is possible he might
have called another judge to take his place. However, we
see nothing in the circumstances which suggests any pos-
sible disqualification. And it must be remembered that a
substitute judge might, as a very practical matter, be diffi-
cult to obtain in Alaska. But it is apparent United Press
did not desire delay either. In any event, appellant went
to trial before a jury and did not stand on the objections.

HI United Press was plaintiff. It was under duty to
refuse to go to trial before a jury, if it intended to rely upon
this procedural objection. If then the judge had dismissed
its action for failure to prosecute, the existence of a per-
sonal right not to go to trial before a jury could have been
tested. United Press has now gambled on a jury trial and

7The action was commenced in Juneau, but later transferred for
trial to Ketchikan.

8See Rule 41(b), Federal Rules of Civil Procedure. Such a dis-
missal is appealable. Boling v. United States, 9 Cir., 231 F.2d 926.

5d a

lost. By its conduct, any right it had was waived. By its
conduct and acquiescence, United Press also brought to
bear the one constitutional clause which has any direct bear-
ing on this situation. In actions at law involving more than
twenty dollars, the Federal Constitution provides:

“No fact tried by jury shall be otherwise re-
examined in any court of the United States, than
according to the rules of the common law.” Sev-
enth Amendment.

We think this mandate binding upon us. The case was
tried before a jury. The verdicts and the judgment found-
ed thereon are finalities,

Mit the personal right to trial by judge alone, claim-
ed here, was procedural, United Press could waive it. As
we have seen, United Press did waive it. Appellant, as it
needs must, then argues that it could not waive the point,
because the trial judge had no power to grant trial by jury.
This proposition is amusing and certainly paradoxical.
The drafters of the Rules announce that the right of a party
to jury trial shall be preserved inviolate. But the Rules
provide he can waive such right. United Press claims that

’ these provisions have metamorphosed the right of a party
to have a trial by jury, which can be waived, into a right
of the opposite party to trial by the judge alone, which can-
not be waived. Such abracadabra is not only impotent, but
utterly unconvincing.

MM The only explanation for such a result would be
that the judge had no jurisdiction to order jury trial. The
complete refutation of this sophistry is that there is no pro-
vision anywhere expressly forbidding the judge to call a
jury, according to common law usage, as we have seen.
Specifically, the entire emphasis of the Federal Rules of
Civil Procedure is upon nonaction by the parties.

5

In any event, by definition of the Rule, the judge had
power to grant trial by jury when Charles made a motion
therefor. It can hardly be contended the judge lost juris-
diction when the motion by Charles for jury trial was de-
nied. Although the latter was not insisting upon jury trial,
he never withdrew the motion. The denial did not change
the record, The denial was not unchangeable as a decree
of Rhadamanthus. The judge could have set aside the de-
nial and granted a jury on the eve of trial. But, it is ob-
jected, he did not so set aside the denial, but granted jury
trial sua sponte. If the judge had jurisdiction to set aside
the order, he had jurisdiction to grant trial by jury.

It is necessarily now claimed that a procedural trap had
been perfected, from which the judge could not escape even
in the interests of justice unless he followed a magical
formula without verbal or clerical deviation. Ali Baba, in
the case of the Forty Thieves, escaped like frustration by
remembering, even in his haste, to repeat the exact incanta-
tion of “Open Sesame.” But he would have been caught
in a similar procedural device if he had exclaimed “Open
Rice” or “Open Barley.” It is difficult to believe that the
advocates of the liberal procedure, which was supposed to
free courts and litigants from antique shackles of for-
malism, could agree to a reversal for such a procedural
deviation. This action, before the beginning of the trial,
had less effect on the merits than the framing of issue based
upon a casual clause of the surrebutter. Medieval scholasti-
cism could furnish no more pedantic example of the disre-
gard of actuality in pursuit of logic.

The setting aside of this verdict for purely pro-
cedural defect would be an archaism as flagrant as that of
Baron Surrebutter. The very purpose of the Federal Rules
of Civil Procedure was to eliminate complaints as to “the

56 De

technicalities of the law, the subtleties of practice and the
involvements of procedure.”

“The entire purpose of the rules was to strike
from judges and litigants useless shackles of pro-
cedure to the end that a fair trial of the essential
questions could be had. The trial court is vested
with broad discretionary powers so long as its ac-
tion is not inconsistent with substantial justice.”
Glaspell v. Davis, D.C., 2 F.R.D. 301, 304,

“Tt is quite noticeable in the new rules that
there has been a distinct effort to enlarge the dis-
cretionary power of district judges.” 45 W.Va.

Q. 5.
In any event, even if the District Judge were in error, or
even flagrant error, still this Court must apply the statutory
tule:

“Harmless Error. On the hearing of any ap-
peal * * * in any case, the court shall give
judgment after an examination of the record
without regard to errors or defects which do not
affect the substantial rights of the parties.” 28
ULS.C.A. § 2111. See also Rules of Federal Pro-
cedure, Rule 61.

Only if the judge lacked jurisdiction, so that his action
became void, would this statute be inapplicable. There-
fore, appellant must revert to the contention that the judge
had no jurisdiction to grant jury trial of his own motion.
Only thus would the waiver of United Press be ineffective.
Only thus could the procedural defect be deemed to affect
the substantial rights of the parties in the mode of trial.

But it was not the purpose of the Supreme Court
of the United States, in adopting the Federal Rules of Civil
Procedure, to establish jurisdictional limitations on the

a LL

power of the District Courts. In the statute relating to
adoption of civil rules, it is expressly provided that:

“Such rules shall not abridge, enlarge or mod-
ify any substantive right and shall preserve the
right of trial by jury as at common law and as
declared by the Seventh Amendment to the Con-
stitution.” 28 U.S.C.A. § 2072,

It is further said in an opinion:

“There are other limitations upon the authority
to prescribe rules which might have been, but
were not mentioned in the Act; for instance, the
inability of the ‘court by rule to extend or restrict
the jurisdiction conferred by a statute.” Sibbach
vy. Wilson and Co., Inc., 312 U.S. 1, 10, 61 S.Ct.
422, 425, 85 L.Ed. 479.9

The question of the constitutionality of an absolute bar
by rule to jurisdiction of the District Court in its discretion
to grant a jury trial in the designated cases, despite a tech-
nical waiver by either or both parties, need not be debated
here. Notwithstanding some sporadic expressions of com-
mentators,” the unquestioned custom of the trial courts has
been to grant a regular trial where the situation has de-
manded it, even where there has been a waiver by the par-

9See also the limitation of the powers to make rules contained in
the Act of June 19, 1984, ch. 651, § 2, 48 Stat. 1064, which should not
be done away with by rationalized construction.

10 No consideration is given by such commentators or courts which
have dicta upon the matter to the express declaration that the right
to jury trial shall be preserved inviolate, which should at least be
given the authority of a declaration of intent in the preamble of a
statute. No notice is taken of the fact that the limitation in both
Rules applies expressly to parties only. If the party waive, the case
shall be tried to the court in normal course. But, if the judge find
conditions imperative, he may order trial by jury. No commentator
mentions that there is no express limitation upon the power of the
court. None should be implied.

58 |

ties." In criminal cases, the necessity of allowing a de-
fendant a jury even after a plea of guilty or agreement to
submit to trial by judge alone is so obvious that further
comment is unnecessary. The identical public policy often
compels the granting of a jury trial in a law case in the
face of waiver by the particular parties. There are certain
controversies which split a local community to the center.
In such a case, the judgment of no court or series of courts
will allay the passions or give semblance of impartiality or
be accepted as a possible solution, unless founded upon a
verdict of a jury of the vicinage.” In civil actions between

WA trial judge may adroitly protect himself from a technical con-
struction of the rule as to parties by suggesting or requiring a motion
for jury trial to be filed, as was done by Judge Rodney in Container
Go. v. Carpenter Container Corp., D.C. 9 F.R.D. 89. Judge Folta
probably could have protected himself from this technical claim if he
had taken similar action here. Similarly, an excellent trial judge,
after suggesting the factors which made jury trial almost imperative
in the case, directed plaintiffs to file motions therefor, Pallant v.
Sinatra, D.G., 7 F.RD. 298, Judge Leibell. The lip service to the
technical wording of the rule as to parties was not allowed in either
case to prevent a jury trial where the situation demanded it. We
hold the trial judge had the power on his own initiative.

12 “"The service of juries is specially emphasized, because for three
or four decades advocates of the abolition of the trial jury have ap-
peared in the schools and the Press insisting that the institution is
‘outmoded’ and causes a ‘lag’ in the administration of justice, to bor-
row the words of those jargonists. But it is now clear that the jury
never met the needs of the social order better than it can meet them
today. The jury is still ‘the country’, the field of last resort. * * *
This right to put the decision to the country, to the Ultimate Power,
the people, must never be parted with.” Norton, Undermining the
Constitution (1950), page 87.

“The jury system tends to make the law intelligible. It tends to
keep it in touch with the common facts of life. * * *

“The litigant gets a body of persons who bring to bear upon the
facts of his case average common sense. * * *

“Their findings create no precedent. They can decide hard cases
equitably without making bad law. Litigants are contented with the
quality of justice dispensed by the courts; and this is no small gain

ee = 5!)

labor groups in many jurisdictions, it may be imperative
to call a regular or advisory jury as a matter of public
policy, even though neither of the parties desires the ac-
tion. Many similar situations might be suggested.

Such a situation was apparent here. We have no reason
to question the wisdom of Judge Folta or to attempt to de-
fend his action. It must be noted that Judge Folta did not
say he was prejudiced or indicate he thought he was dis-
qualified. If that had been true, he must have recused
himself. Rather, he simply recited that circumstances had
arisen of such nature that, in the public interest, the facts
should be settled by a jury. In our opinion, sound public
relations often call for the arbitrament of a private dispute
by a community through its representatives sitting as a
jury.

to a legal system.” Holdsworth, History of English Law (1908 Ed.),
page 167.

13 It is said this country should follow the English example and
practically eliminate jury trials. It is our thesis that the jury is an
instrument of democratic government and must be maintained at all
costs. Here the ordinary person has a right to vote for President.
He should be allowed and required to express community feeling by
deciding disputes between private litigants. The English have abol-
ished the grand jury, which we consider one of the pillars of our sys-
tem. See Costello v. United States, 350 U.S. 359, 362, 76 S.Ct. 406,
100 L.Hd. 397. Judges in America may amuse themselves with the
idea that they are sacrosanct, but they need only to read the recent
article by Alexander Holtzoff (A Visit to the London Courts: The
Administration of Justice in England, 42 A.B.A. Journal 29) to dis-
abuse themselves of the idea. The English and American Systems,
although each has the same foundation, have under varying condi-
tions of fact and temper of the people grown into entirely different
structures, The American depends for its existence on the jury sys-
tem. Abuses should cause rectification, but abolition amounts to de-
struction of freedom of the individual.

14 “Judges must explain the law to the jury. They must separate
the rule of law from the question of fact. This produces both pre-
cision in the statement of the rule and a clear outside judgment on

60 Le

{6,7] It must be remembered that the trial judge could
not foresee the result when he granted jury trial. Certain-
ly, Charles could not foresee that the verdict would be in
his favor, since he was apparently lukewarm on the subject.
And, save for claiming that witnesses would be better than
their depositions, United Press at no time urged that trial
by jury would be prejudicial to its interest until the verdicts
had been rendered. United Press should have refused to go
to trial. But it took a chance, as we have seen. In any
event, the matter of jury trial must be considered as of the
opening of the trial and not in the light of the outcome.

Charles entered into a written contract with United
Press, whereby the latter was to furnish a regular news re-
port for use in the newspaper which Charles was publishing
at Ketchikan, Alaska. The contract was in effect until Feb-
ruary 14, 1954, when, after many complaints regarding
neglect or refusal of United Press and a claim that Charles
was at considerable additional expense in order to compete
with a rival newspaper because of lack of news, which

the facts. * * * The jury is to'the inside technical world of our
common law system a representative of that outside sense.

“Among the results of the jury system, which we may class as po-
litical, we must place its results on the judge and on the jury itself.

“Je were the most unhappy case,’ says Hale,* ‘that could be to the
judge if he at bis peril must take upon him the guilt or innocence of
the prisoner,” As the director and advisor of the jury he can take
a more truly judicial attitude. If he preserves this attitude no odium
attached to him, whatever be the verdict. * * *

“The jury itself is educated by the part which it is required to take
in the administration of justice. This De Tocqueville regarded as
the chief value of the jury. It teaches a judicial attitude. It in-
spires respect for law and order. It makes persons feel that they
have duties to society and a share in the government.” 1 Holdsworth,
History of English Law (1908 Ed.), pages 168-169.

“#2 B.C, 818 So Stephen H.G.L, i. 578, ‘It saves judges from the
responsibility—which to many men would appear intolerably heavy
and painful—of deciding simply on their own opinions upon the guilt
or innocence of the prisoner.”

DTD

Charles claimed United Press was bound to furnish under
the contract, Charles refused to pay for further service.
Charles contends that he was compelled to accept a service
from the Associated Press in order to stay in business.
There are three other assignments of error noted.

HEM First, consideration should be given to rulings of
law excepted to at the trial. Objection was taken to two
instructions given by the court. The first is complained of
because the duration of the contract was limited to Septem-
ber 27, 1957, instead of extending to September 27, 1962,
as claimed by United Press. After carefully considering
the modification of the contract, we are of opinion that the
trial court was correct in the limitation placed upon the
term of the contract. Second, the trial court charged that
the jury could take into consideration the probability or im-
probability that Charles might remain in business. While
this phrase was not accurate, the record shows clearly that
no exception was taken to this portion of the instruction.
Neither of such matters could, in any event, have influenced
the verdict. Third, it is said there is no basis in the record
for the verdicts.

HEB This last assignment is based upon the fact
that the jury returned a verdict for United Press in the sum
of $368.70 and for Charles in the sum of $368.70. This
probably resulted from the fact that the judge charged the
jury that, since the amount due Charles on the counterclaim
was admitted, they should deduct the latter sum from any
amount which they should find in favor of United Press.
This we conceive was highly favorable to appellant, since
the instruction inadvertently directed the jury to find some
amount for United Press. But, even if we believed, as is
contended, that this was only the jury’s approximation of
rough justice between the parties, there was no legal error.

62 be

There is no ground for setting aside the verdicts for any-
thing which happened at the trial,

A careful examination of the record shows there is no
basis for the claim of United Press that the evidence does
not support the verdicts. There is testimony which would
justify a verdict for defendant on the claim of United
Press. There is a long and complicated argument by Unit-
ed Press, computing the amount of damages to which it
was entitled as matter of right. According to this theory,
no trial was necessary on the point, but only an adding
machine or comptometer. The evidence of United Press is
curiously divided into two lines. First, it attempted to
prove that it could not give Charles a lower rate because its
gross revenue from his business exceeded present cost of
transacting it. Thus, there was no profit on the operation.
Second, it was claiming damages for loss of profits for al-
leged breach amounting to over $20,000.00.

HEB The recovery of damages consisting of lost
profits is extremely difficult under any circumstances. The
future is nebulous. Losses in the past may be fairly as-
sessed. Profits to be made in the future are really the sub-
ject only of prophecy even by a jury. Where such a posi-
tive finding is made, it may often be affirmed. But, where
a jury finds no damage or nominal damages only for ex-
pected profits and there are elements, as here, which leave
the matter in doubt, affirmance should follow. The ques-
tion was one of fact, which is the province of the jury.

We regard these assignments as untenable. If the ques-
tion of the jury trial were not involved, we would hardly
believe the appeal in good faith. Since a jury trial was
proper, the appeal is dismissed.

Dismissed.

a }

POPE, Circuit Judge (dissenting).

I find myself in agreement with much that is said in the
majority opinion. Plainly both parties were anxious to go
to trial, and did proceed at the time set. I certainly agree
with the opinion’s encomiums for the jury system as such.
Of course all experienced lawyers agree in their admiration
for our system of trial by jury. But I fail to see what any
of this has to do with the facts or the law of this case.

My first point of disagreement concerns the statement
that by not refusing to go to trial United Press waived its
objection to the court’s order for trial by jury. Under our
system of trials the lawyer is permitted to record his ob-
jections, but when the ruling goes against him he is expected
to conform. The court may deny his motion to dismiss,
but he must answer over. It may refuse his offers of evi-
dence, but he must try the case on what he gets in. It may
reject his requested instructions, but he must argue on the
basis of those given. Even in the case where what tran-
spires warrants his motion for a mistrial, the court’s denial
of the motion does not occasion his refusal to proceed. He
knows his remedy lies in his right to appeal. The sugges-
tion in the court’s opinion that after the court below order-
ed a jury trial plaintiff’s counsel should have picked up his
papers and walked out of the courtroom, and that because
he did not do so he waived his objection, is surely untenable.
Courts are not run in that disorderly manner. The law
does not impose upon a party the dilemma of either refus-
ing to proceed and thus invite a dismissal, or else going
ahead at the risk of waiver.

The crucial question in this case does not concern the
time when the trial started. It concerns the time when the
trial ended, and a decision was called for. It was then that
the court failed in its duty to resolve the case.

64 |

My objection to the result here reached is based primarily
upon the fact that the only judicial officer qualified or au-
thorized to determine the issues of fact presented in this
case has never done so. If this were a case properly triable
to a jury whose verdict would have the same effect as if
trial by jury were a matter of right, I would have no diffi-
culty in concluding that the judgment here must be affirm-
ed.* But the Federal Rules of Civil Procedure which settle
the question whether this case was one for determination
by the court, or by a jury, are too clear for argument or
doubt, and when the trial ended the duty to decide rested
squarely on the court.

The parties, by failure to make demand within the time
fixed by Rule 38, waived trial by jury. Subsequently appel-
lees moved for a jury trial notwithstanding their failure to
make the demand. Such a motion was authorized by Rule
39(b). The court denied it, Nearly seven months later,
and on the afternoon before the trial was to begin, the
court, acting solely upon its own initiative, ordered a jury

1It is impossible to tell from the verdict just what the jury de-
cided. It is quite ambiguous. Literally, the verdict decided that the
plaintiff was entitled to win, (and rejected the defense of breach of
performance by plaintiff), and fixed plaintiffs damages at the very
sum, to the penny, which it was admitted was due defendant on a
counterclaim. Viewed in this light, the amount of the verdict, as I
read the evidence, is wholly inadequate, but on the assumption here
made, this would be a matter about which we could do nothing un-
der the rule of Fairmount Glass Works v. Cub Fork Coal Co., 287
U.S. 474, 58 S.Ct. 252, 77 L.Ed. 489. It is possible, however, that the
jury, in deciding to permit no recovery to either party, found the is-
sue as to liability against the plaintiff and disregarded the charge
that it must allow the counterclaim. So interpreted, the verdict when
returned failed to conform to the court’s instructions. Then, before
the jury was discharged, the parties might have requested that the
jury be required again to retire and correct or supplement their ver-
dict. In Bradley Min. Oo. v. Boice, 9 Cir., 194 F.2d 80, 82, we sug-
gested the propriety of the rule, approved in California, that a party
complaining of such a verdict, must make that request.

a

trial. The motion for jury, denied some months earlier, had
not been renewed. Appellant objected to the order for jury
trial, on the ground that its evidence, some of it taken by
deposition, had been prepared on the assumption the case
would be tried to the court. Stating, “it is a matter of in-
difference to me”, counsel for appellees disclaimed any in-
tention to make or renew any motion on his part. The
court had no motion before it; the prior motion was long
since disposed of,—it was functus officio; it had not been
renewed, and the court so considered the situation for its
order recited: “Ordered, sua sponte, under Rule 39, F.R.
C.P., that the case be tried by a jury.” (Italics supplied).

The jury trial which the court may order under Rule 39
(b),5 may only be ordered “upon motion”. This is made
doubly plain by the provision in Rule 39(c) that the ad-
visory jury there provided for may be ordered “upon mo-
tion or of tts own initiative’. (Emphasis added.) In my
view, therefore, the judge could not summon a jury for
trial of the issues in the manner of a common law jury.*

2“ made no motion to the court for a jury trial at this time. I
certainly wouldn’t have done that without giving Mr. Dimond notice,
and I assumed that there wouldn’t be any jury.”

3"(b) By the Court. Issues not demanded for trial by jury as
provided in Rule 38 shall be tried by the court; but, notwithstand-
ing the failure of a party to demand a jury in an action in which
such a demand might have been made of right, the court in its dis-
cretion upon motion may order a trial by a jury of any or all issues.

4This view of the effect of Rule 39(b) is stated in a dictum in Har-
grove v. American Cent, Ins, Co. 10 Cir., 125 F.2d 225, at page 228:
“Tf the issues tendered by the pleadings are purely legal, the parties
are entitled to a jury as of right, rule, 38(a), when demanded as pro-
vided in rule 88(b) (c). If no demand is made as provided for in sub-
divisions (b) and (c), the parties are deemed to have waived the right
of trial by jury, but the court may in its discretion, upon motion of
either party, order a jury trial of any or all issues, notwithstanding
waiver under 38(b) (¢), but may not order trial by jury on its own
initiative. 3 Moore Federal Practice, 3030, § 39.03.”

WAR—5

66 a

It does not aid the appellees to argue, as they do, that the
court had the right of its own motion to call an advisory
jury,® for there was no compliance with the mandatory re-
quirements of Rule 52(a) that in such a case “the court
shall find the facts specially.” °

The suggestion in the majority opinion, that the Rules
of Civil Procedure cannot restrict the power of the court to
grant a jury trial at any time, be there prior waiver or not,
seems to me to be wholly without reason or support. As-
suming that a court, under the common law practice, or
that prevailing before the rules, could order a jury trial
notwithstanding a prior waiver thereof, yet this power can-
not properly be treated as a part of the court’s “jurisdic-
tion” which cannot be limited by a rule. Rule 82 provides:
“These rules shall not be construed to extend or limit the
jurisdiction of the United States district courts or the venue
of actions therein.” But the limitation in Rule 39(b),
which restricts an order for jury trial after prior waiver

Moore, Federal Practice, 2nd ed. Vol. 5, p. 713, footnote 7, explains
why the history of the drafting of the rule shows that the failure
to provide for such an order on the court’s own initiative was an in-
tentional omission. Such construction of the Committee “is of
weight”. Mississippi Pub. Corp. v. Murphree, 326 U.S. 488, 444, 66
S.Ct. 242, 246, 90 L.Ed. 185.

In Sofarelli Bros, v. Elgin, 4 Cir., 129 F.2d 785, 787, the court
indicated that the “authorities are not altogether agreed” on this
point, but sustained the order for a jury trial in that case on the
ground that there had been a sufficient demand for jury trial by one
of the parties. No case cited by that court expresses any view con-
trary to that expressed in, the Hargrove dictum,

5 There appears to be a difference of opinion as to whether an ad-
visory jury can ever be called in a law action. See Hargrove v.
American Cent. Ins. Co., supra, holding it may not, and (American)
Lumbermen’s Mutual Casualty Go. of Ilinois v. Timms & Howard,
Inc,, 2 Cir, 108 F.2d 497, contra.

6 The court, when requested to make its own findings, expressed the
view that “there is no authority whatever for empaneling an advisory
jury except in an equity action.”

7

to cases where the court acts “upon motion” and not upon
its own initiative is a purely procedural means for arriving
at the mode of trial. It in no manner affects the jurisdic-
tion of the court as fixed by the statute. In Mississippi
Pub. Corp. v. Murphree, (supra, footnote 4) the Supreme
Court pointed out, 326 U.S. at page 445, 66 S.Ct. at page
246, that the “jurisdiction” referred to in Rule 82 meant
only “jurisdiction of the subject matter”. The position of
the majority cannot be squared with that. It would be as
reasonable to argue that Rule 38(b) could not require de-
mand for jury to be not later than 10 days after issue, as
such a limitation, not known at common law, would be a
limitation upon the court’s jurisdiction!

The net result of all this is that appellant has been denied
the findings, on the disputed questions of fact involved, to
which the rules entitled it. The judge himself was the only
judicial officer empowered to make these findings. In this,
as in any other case properly triable to the court, “Rule
52(a) of the Federal Rules of Civil Procedure * * * re-
quires the court to ‘find the facts specially’”. Kelley v.
Everglades Drainage District, 319 U.S. 415, 418, 63 S.Ct.
1141, 1143, 87 L.Ed. 1485. This requirement is manda-
tory, and where it is disregarded the appellate court must
vacate the judgment and remand for appropriate findings.”

The jury’s verdict cannot be sustained on any conceivable
theory of the evidence. If plaintiff was entitled to any
damages, it should have a sum far in excess of the amount
inserted in the verdict which was obviously merely an
amount copied from the amount of the conceded counter-
claim. If plaintiff was entitled to nothing, then defendant’s
counterclaim should have been allowed, and so the result
cannot be explained on that ground. The court’s error con-

7The cases so holding are collected in Steccone v. Morse-Starrett
Products Co., 9 Cir., 191 F.2d 197, 200, in footnote 10.

68 a

sists in its refusal to afford to appellant the determination
of the facts which appellant was entitled to call for. Appel-
lant has been prejudiced here, and justly complains, not on
any mere technicality, but upon a most fundamental ground,
namely, that it is the right of a litigant to call upon a judge
to do the judging which the rules require him to perform.

It would be difficult to find a case presenting a more strik-
ing denial of fair consideration of the merits of a litigant’s
case, As appears from the order where the judge “sua
sponte” directed a jury trial, this was prompted by his sug-
gestion of some sort of partial disqualification. Apparently
he thought he ought not find the facts, but that it would be
all right to determine the law. In its labored effort to ra-
tionalize the jury’s verdict, the majority opinion recites cir-
cumstances which bear no resemblance to the evidence of
what the damages really were. It cannot conceal the fact
that the verdict was obviously an effort of the jury to pro-
duce their idea of a rough justice that would give neither
party anything, regardless of the law and the instructions.
No litigant should be required to stand for that, where, as
here, it was not only within the court’s power, but its posi-
tive duty, to find the facts from the evidence. What hap-
pened to the appellant has no resemblance to a fair trial.

Finally, there is another respect in which there is error in
the decision. The court told the jury the contract ran to
September 27, 1957. Appellant says this date should have
been September 27, 1962. In this it is right.

The contract provided for automatic renewal for periods
of five years each in the absence of notice of termination.
Through such renewals the contract was extended from
October 3, 1948 to October 3, 1953. No notice of termina-
tion prior to this last date was given, and the contract was
hence then renewed to October 3, 1958. In the meantime
on February 21, 1950, a modification agreement was made,

— 69

suspending the original rates, and reducing them. It pro-
vided: “The term of the agreement between the parties
shall be extended by the length of time during which the
above suspension is in effect.” That modification agree-
ment was subject to termination on 30 days notice, but re-
mained in effect nearly four years and until defendants re-
pudiated the agreement. The court held that the four years
operated to make the whole contract terminate a few days
prior to October 3, 1957, The appellant’s position here is
correct that when the suspension period ended the contract
had already been extended to 1958, as I have said. The
four years would therefore be added to that period.

243 F.2d 299

Mike ERCEG, Appellant, v. FAIRBANKS SCHOOL DIS-
TRICT, Sylvia Ringstad, D. H. Doxey, George Edmond-
son, and E. M. Hofford, Appellees.
No, 15212.

United States Court of Appeals, Ninth Cireuit.
March 27, 1957.

Taylor & Taylor, Fairbanks, Alaska, for appellant.

Maurice T. Johnson, Harry O. Arend, Ralph J. Rivers,
Fairbanks, Alaska, for appellees.

Before HEALY, BONE and CHAMBERS, Circuit
Judges.

HEALY, Circuit Judge.

Appellant brought suit against appellee Fairbanks School
District and several individual defendants asking that he be
restored to the possession and enjoyment of certain mining
claims of which he was the owner, and that he have a money
judgment of some $1,070. The School District moved the
court for a dismissal upon the ground that the complaint
failed to state a claim upon which relief could be granted.
‘The motion was granted, and the action ordered dismissed.
Appellant did not seek leave to amend his pleading in any
particular, This appeal is from the judgment of dismissal.

The complaint is poorly drafted and difficult to follow or
understand. In summary it appears to boil down to the fol-
lowing: Appellant is the owner of certain “undeveloped”
patented placer mining claims located within the School
District. During each of the years 1949-1953 the District
assessed these claims at $100 per acre and levied a one per
cent tax thereon. This valuation, it is alleged, was fictitious
and in excess of the maximum valuation of $500 per twen-
ty-acre claim or fraction thereof permitted by law. Certain
of the claims were sold by the District at public sale to one
or another of the individual appellees for nonpayment of

72 |

the taxes imposed, The pleading asserts that the assessment
of the claims was made arbitrarily and capriciously, but it
does not state what their true value was. There is no alle-
gation in the pleading that the valuations placed on the
property were discriminatory or that they differed from the
valuations applied to like mining claims of others located
in the District. Nor is there any allegation that the tax
sales held by the School District were not conducted in
accordance with the law.

The complaint prayed that the assessment of and levy
on appellant’s property be declared illegal and void; that
the tax sales be set aside; that appellant be restored to full
possession and enjoyment of all his claims; and that in
addition he have a money judgment against the School Dis-
trict for the amount of $1,074.49. (This latter would ap-
pear to represent a sum allegedly paid the District by appel-
lant under protest in June of 1953.)

In this court appellant’s argument is limited to the propo-
sition that § 9 of the Organic Act for Alaska, as amended
48 ULS.C.A. § 78, and § 3 of the Alaska Property Tax Act,
Alaska Session Laws 1949, Chapter 10, placed a ceiling on
the District’s permissible valuation of placer claims such as
his of $500 for each twenty acres or fraction thereof.
From this he concludes that the District’s valuation of the
claims at $100 per acre for taxation purposes was illegal.
If this argument fails, appellant’s case necessarily falls
with it.

Section 9 of the Alaska Organic Act, supra, provides in
pertinent part:

“All taxes shall be uniform upon the same class
of subjects and shall be levied and collected under
general laws, and the assessments shall be accord-
ing to the true and full value thereof, except that
unpatented mining claims and non-producing pat-

ee 73

ented mining claims, which are also unimproved,
may be valued at the price paid the United States
therefor, or at a flat rate fixed by the legislature,
* * x” [Emphasis supplied.]
In pertinent part, § 3 of the Alaska Property Tax Act,
supra, reads as follows:

“Levy of Tax. * * * For the purposes of
this section the assessed value of unimproved, un-
patented mining claims which are not producing,
and non-producing patented mining claims upon
which the improvements originally required for
patent have become useless through deterioration,
removal or otherwise, is hereby fixed at $500.00
per each 20 acres or fraction of each such claim
* * %*” [Emphasis supplied.]

HE We are unable to see how these statutory provisions
afford appellant any comfort. His complaint alleged only
that his claims “are undeveloped patented placer claims.”
It did not allege that they are “non-producing.” Nor is it
alleged, as specified in § 9 of the Organic Act, supra, that
they are “also unimproved.” Nor is it asserted, as specified
in § 3 of the Alaska Property Tax Act, supra, that “the
improvements originally required for patent have become
useless through deterioration, removal or otherwise.” In
a word, the specific and essential requirements of the two
statutes relied upon as placing a ceiling on the District’s
permissible valuation of appellant’s patented placer claims
are not met here. We may add that in the context of these
two statutes, one would normally think of the patented
claims described in them as of the sort whose productivity
has been exhausted; whereas he would think of an “un-
developed” claim as one which has not yet been exploited.

These conclusions render unnecessary the consideration
of the District’s argument predicated on certain other terri-

74 as

torial statutes, mainly § 16-1-131 A.C.L.A.1949, which
Jatter we quote on the margin.*

HE We are troubled by appellant’s allegation, hereto-
fore mentioned, to the effect that in June of 1953 he paid
the School District a sum of approximately $1,070 under
protest, presumably on account of taxes on his placer claims
for the years in issue. It would seem that he may be entitled
to the return of this money, in whole or in part, unless de-
mand and refusal is requisite before the complaint could
state a valid claim.

This aspect of the case is remanded with directions to
the trial court to hear and ascertain the facts and to make
such order as law and justice may require.

Otherwise the judgment below is affirmed.

1“Action or proceeding to recover lands sold for taxes: Tender or
payment into court of taxes, penalty, interest and costs. In any ac-
tion, suit, or proceeding for the recovery of lands sold for taxes under
the provisions of this act, except the taxes have been paid or the
lands redeemed as herein provided, the party claiming to be the own-
er against the holder of.the tax title must with his complaint or an-
swer tender and pay into the court the amount of taxes for the pay-
ment of which the lands were sold, and penalty and interest and
costs of sale, and interest from the date of sale at the rate of fifteen
per cent per annum to the date of the tax deed or certificate and also
any taxes the grantee in said tax deed or certificate, or the pur-
chaser, may have paid on said lands, with interest thereon at the
rate of twelve per cent per annum from the date of such payment
to the date of the filing of his complaint or answer, the said sum
to be for the benefit of the holder of the tax title in case the same
should fail in such suit, action or proceeding and the court shall not
consider any complaint, answer or other pleading until such tender or
payment shall have been made.” [Emphasis supplied.]

Le vb)

20 F.R.D, 407

Lauren M. LUCAS, Plaintiff, v. CITY OF JUNEAU, a municipal
corporation; and Sears, Roebuck and Company, a foreign
corporation, Defendants.

No, A-7174.

District Court, Alaska, First Division, Juneau.
April 3, 1957.

Mildred R. Hermann, Juneau, Alaska, for plaintiff.

H. D. Stabler, Juneau, Alaska, for defendant City of
Juneau.

R. E. Robertson (of Robertson, Monagle & Eastaugh),
Alaska, for defendant Sears, Roebuck & Co.

KELLY, District Judge.
This case is before the court on a motion by the plaintiff
filed January 30, 1957, wherein he seeks reinstatement of

De 17

a sttit dismissed by Judge Hodge on October 22, 1955, for
lack of prosectition. The merits of the action are immate-
tial in this proceeding, and therefore only the circumstances
surrounding and following the dismissal need be consid-
ered.

The essential facts may be stated as follows:

(1) At the time this case was set for trial plaintiff was
under the care of doctors at the Veterans’ Administration
Hospital at Fort Miley, San Francisco, California, and his
affidavit to this effect dated October 12, 1955, was filed in
this court on October 15, 1955.

(2) Plaintiff’s counsel had moved from Juneau and
when informed that the court had set the matter for trial,
moved for a continuance and the court notified counsel that
if verified proof of plaintiff’s hospitalization was presented
before October 17, the continuance requested would be
granted. The affidavit referred to in (1) did not satisfy
the court as it was not stipported by affidavit of plaintiff’s
physician. Nowhere does it appear that such an affidavit
was made a condition precedent to granting a continuance.
Thereupon the Clerk of Court advised counsel that the
continuance had been denied and the case would go to trial
on October 21. Counsel for plaintiff attempted to have the
case dismissed without prejudice and sent the necessary
request and order to the court; however, the same did not
arrive until after the judge had dismissed the case when
neither plaintiff nor counsel appeared on Saturday, Octo-
ber 22.

(3) On February 24, 1956, plaintiff wrote a letter to
Judge Hodge and the following reply was sent to him by the
Clerk of the District Court February 28, 1956:

“Your letter of February 24, 1956, addressed to
the Hon. Walter H. Hodge, District Judge, re-
garding the above-captioned case has been brought

78 |

to my attention inasmuch as Judge Hodge has left
Juneau and returned to his own court at Nome.
“At this writing, it is doubtful that Judge Hodge
is to return to this division to hold court; there-
fore I feel that it would not be proper to submit
your letter to him for decision, inasmuch as coun-
sel on the opposite side have every right to be pres-
ent when such a matter is submitted for decision.
“Therefore by virtue of Chap. 5, Title 28, Sec.
143, U.S.C.A., about all that can be done in the
premise is to continue the matter over until such
time (as) a district judge is appointed, or some
one is designated to hold court here. This Section
reads:
“Vacant judgeship as affecting proceedings
“When the office of a district judge becomes va-
cant, all pending process, pleadings and proceed-
ings shall, when necessary, be continued by the
clerk until a judge is appointed or designated to
hold such court. June 25, 1948, c. 646, 62 Stat,
898,’

“Sincerely yours,

J. W. Leivers

Clerk of District Court”

(4) On August 2, 1956, a further letter was sent to
Mr. Lucas by the Clerk of Court, as follows:
“I£ you have a copy of your letter of February
24, 1956, particularly with reference to the last
paragraph thereof, and, inasmuch as you have on
occasions, discussed with me the matter of the dis-
missal of your case, the following occurs to me.
“Inasmuch as we now have a U. S, District Judge
for this court, the Honorable Raymond J. Kelly,

— 79

it may be that the said last paragraph of your
letter could be considered as a motion to reinstate
your case, providing that you make the showing
required by Judge Hodge, namely, that at the
time you were required to appear to prosecute
your case, you were under medical treatment and
as a result you could not appear.
“Your affidavit to this effect is on file, but the
showing you will be required to make will have to
be in the form of a certificate from the physician
who was attending you, that you were under his
care and required to be present for treatment at
the time your case was set for trial.”
Upon learning these facts this Court set this matter for
hearing on its own motion and counsel for plaintiff was in-
structed by the Court to file a formal motion to replace the
last paragraph of plaintiff’s letter of February 24, 1956.

FI The defendant Sears, Roebuck and Company
raises the defense that the motion of January 30, 1957,
was deficient in that it did not conform with certain Uni-
form Rules of the District Court. However, those defects
were remedied by plaintiff’s “Brief Supporting Argument
for Reinstatement of Case,” which was filed February 25,
1957, and following which both defendants were given an
opportunity to reply. Therefore the Court finds that in
this case the rules of procedure were essentially complied
with.

The plaintiff relies on Rule 60(b), F.R.Civ.P., 28 U.S.
C.A. and more particularly on subsection (6). Rule 60(b)
provides:

“(b) Mistakes;  Inadvertence; |  Excusable
Neglect; Newly Discovered Evidence; Fraud,
etc. On motion and upon such terms as are just,

80

the court may relieve a party or his legal repre-
sentative from a final judgment, order, or pro-
ceeding for the following reasons: (1) mistake,
inadvertence, surprise, or excusable neglect; (2)
newly discovered evidence which by due diligence
could not have been discovered in time to move for
a new trial under Rule 59(b); (3) fraud (wheth-
er heretofore denominated intrinsic or extrinsic),
misrepresentation, or other misconduct of an ad-
verse party; (4) the judgment is void; (5) the
judgment has been satisfied, released, or dis-
charged, or a prior judgment upon which it is
based has been reversed or otherwise vacated,
or it is no longer equitable that the judgment
should have prospective application; or (6) any
other reason justifying relief from the operation
of the judgment. The motion shall be made with-
in a reasonable time, and for reasons (1), (2), and
(3) not more than one year after the judgment,
order, or proceeding was entered or taken. A mo-
tion under this subdivision (b) does not affect the
finality of a judgment or suspend its operation.
This rule does not limit the power of a court to
entertain an independent action to relieve a party
from a judgment, order, or proceeding, or to grant
relief to a defendant not actually personally noti-
fied as provided in Title 28, U.S.C. § 1655, or to
set aside a judgment for fraud upon the court.
Writs of coram nobis, coram vobis, audita querela,
and bills of review and bills in the nature of a bill
of review, are abolished, and the procedure for ob-
taining any relief from a judgment shall be by
motion as prescribed in these rules or by an inde-
pendent action.”

Lh 81

HB Defendant City of Juneau points out that sub-
section (6) provides for relief only from “judgments,” and
claims that (6) should therefore have a narrower applica-
tion than the first three subsections, which, under the
construction proposed, are presumably applicable to “a
final judgment, order or proceeding.” The rule does not
seem to me to warrant such a strict construction, but in
any case, the facts shown here clearly indicate that the
order of dismissal operates as a final judgment within the
most stringent meaning of the rule. Rule 41(b), F.R.
C.P., under which the order of dismissal was entered, pro-
vides :

“Unless the court in its order for dismissal oth-
erwise specifies, a dismissal under this subdivision
and any dismissal not provided for in this rule,
other than a dismissal for lack of jurisdiction or
for improper vente, operates as an adjudication
upon the merits.” (Emphasis supplied.)

In Klapprott v. United States, 1948, 335 U.S.
601, 69 S.Ct. 384, 93 L.Ed. 266, the Supreme Court laid
down the rules of construction to be applied to 60(b). It
was held that subsections (1) and (6) were mutually ex-
clusive—that is, if the circumstances alleged in a motion
constituted excusable neglect as set forth in subsection (1),
the motion was restricted to that subsection, and relief
could not be granted under subsection (6). Therefore, if
the plaintiff can show no more than excusable neglect, the
one-year time limitation will preclude the reinstatement of
his action, but if the circtmstances constitute more than
excusable neglect, relief from the dismissal may be grant-
ed provided the motion was made within a “reasonable
time.” .
An examination of the Klapprott case shows that plain-
tiff, a German-born, naturalized citizen, was served with
a :

82 Le

notice of de-naturalization proceedings on May 15, 1942, to
which he was required to answer within 60 days. The
notice did not specify the charges, but stated that since
1935 he had displayed his loyalty to Germany and dis-
loyalty to this country; that he was leader and member of
the German-American Bund and other organizations inimi-
cal to the Constitution; and that these organizations were
propagated and encouraged by enemies of the United
States, :

Seven days before the expiration of the time for reply
in the de-naturalization proceedings, plaintiff was arrested
by Federal agents on a charge of conspiracy to violate the
Selective Service Act. He was convicted on this charge,
but the conviction was subsequently reversed in 1945. On
July 17, 1942, during the time of his incarceration, his
citizenship was cancelled by default, and approximately 4
years later a motion was filed under Rule 60(b) to set aside
the order of de-naturalization. Prior to the time of his
arrest and thereafter, petitioner was ill and unable to work,
and not represented by counsel. Altogether he was held in
jail four and a half years on charges which the government
was not able to sustain.

The court held that 60(b) (6) was available to plaintiff
because he showed circumstances which could not logically
be classified as “neglect.” In the words of the court [335
U.S. 601, 69 S.Ct. 390],

“The basis of his petition was not that he had
neglected to act in his own defense, but that in jail
as he was, weakened from illness, without a law-
yer in the denaturalization proceedings or funds to
hire one, disturbed and fully occupied in efforts
to protect himself against the gravest criminal
charges, he was no more able to defend himself in
the New Jersey court than he would have been
had he never received notice of the charges.”

| 88

The plaintiff in the present case labored under handicaps
at the time his suit was dismissed which were similar to
those found in the Klapprott case. He was required to
remain in California for treatment of the injury, making
the court equally inaccessible to him; he was represented
by an attorney only in the formal sense of having an attor-
ney of record; and as far as is revealed by the record, he
never received notice of the dismissal until after the time
for appeal had run.

His attorney or attorneys had left Juneau; they did not
appear in the matter on the date set for trial; they did
send in a request and proposed order to have the case dis-
missed without prejudice, but it did not arrive until after
the order for dismissal had been entered by the Judge. The
very fact that the attorneys sent in the proposal to have
the case dismissed without prejudice indicates that they
were abandoning the matter and took this action without
consultation with their client or without advising him there-
of.

| The action of an attorney in abandoning the case
of a client still under the care of the doctors in the Veterans’
Administration Hospital in California, where he had just
previously been a patient, without notice to the client, and
in permitting the order dismissing the case to be entered as
it was without his knowledge or consent, constitutes an
exception to the rule that the conduct of the attorney is
imputable to the client justifying the vacation of the order
of dismissal and placing the cause on the calendar for trial.
Grayson v. Stith, 181 Okl. 131, 72 P.2d 820, 114 ALR.
276.

[i The client here acted in good faith and had a right
to rely on his attorneys to do all things required of him for
the purpose of obtaining a hearing on the merits. It can-
not be said that the client was negligent, as he had no rea-

84 as

son to anticipate the failure of his attorneys to attend to the
matter. The conduct of the attorney was not such negli-
gence as could be imputed to the client, but on the contrary
was an abandonment of the client, who was in no position,
even had he known, to act for himself. Clarke v. Smith,
1923, 195 Iowa 1299, 192 N.W. 136.

In view of all the circumstances, the motion to vacate
the judgment was not delayed for an unreasonably long
period of time. The Court is convinced that the law au-
thorizes, and justice demands that the order of dismissal
be set aside and this case set for hearing on its merits.

Order in accordance with this opinion may be presented.

149 F.Supp. 932

Alfred F. BURGO, Plaintiff, v. Carrie N, BURGO, Defendant.
No. 6895-A.

District Court, Alaska, First Division, Juneau.
April 4, 1957,

wo
a

Mildred R. Hermann, Juneau, Alaska, for plaintiff.
M. E. Monagle (of Robertson, Monagle & Eastaugh),
Juneau, Alaska for defendant.

KELLY, District Judge.

This is an action for divorce brought by the husband
wherein he charges desertion on the part of the defendant
and asks for the dissolution of their marriage, a decree of
absolute divorce, and such orders as the Court may see fit in
regard to the support and custody of the adopted son, Al-
fred Burgo, Jr.

Defendant’s answer, which is not under oath, denies the
desertion and alleges that both parties were extremely anx-
ious to adopt the minor child in question but could not get
permission to do so unless they agreed to raise the child in
some other town than Juneau, where the child’s natural
mother resided with several other of her children.

The facts show that the parties were married in Juneau,
Alaska, on January 26, 1950, and legally adopted a child,
Alfred F, Burgo, Jr., in Juneau. The child, who was born
on April 12, 1950, was given to the parties hereto about’a’

be 87

month after birth by its natural mother who signed consent
(plaintiff’s exhibit No. 6) to adoption by the parties hereto
on July 11, 1950. Her husband, who was not the child’s
father, also signed such consent on July 31, 1950. A wel-
fare report dated June 30, 1951, and signed by Mrs. Sadie
F. Billis, District Representative, was filed with the U. S.
Commissioner, which stated in pertinent parts as follows:

“Mr. and Mrs. Burgo were married in Juneau
on January 25, 1950. At the present time Mrs.
Burgo and Patrick are residing at 1512 East
Coastal Highway, Wilmington, California. A re-
port from the Department of Social Welfare of
California states that the home is located in a
semi-industrial area and is very modest. It fronts
on the boulevard, which is a busy highway. At
the rear, however, there is a large yard which is
enclosed. The Burgos are buying this home, and
since it is a frame bungalow with a small living
room and bedroom, they are planning on making
additions.”

“The Worker had no doubt that Mrs. Burgo is
devoted to the child and he seems to be happy with
her and responsive.”

“Mr. Burgo is willing that the Welfare Agency
in California continue to supervise his home for a
longer period of time after he returns to live with
his wife.”

“Mr. and Mrs. Burgo prefer to have the adop-
tion completed in Juneau in view of the fact that
they have already paid the lawyer’s fee and that
you are familiar with the situation.”

Judgment and decree of adoption was entered by U. S.
Commissioner Gordon Gray July 13, 1951 (plaintiff’s ex-

88 a

hibit No. 5). The court file on the adoption proceedings
was incorporated in the record by reference.

The facts further reveal that the defendant apparently
sold some property in Ketchikan and with the minor child
went to California early in 1951, where defendant pur-
chased a home for the parties, near Wilmington, California,
on March 9, 1951; that the home was purchased in the
names of Alfred Burgo and Carrie Burgo, husband and
wife, as evidenced by the deed, which was introduced in
evidence as defendant’s exhibit A. Plaintiff sent defendant
an average of $80 per month during the first year she lived
in California and has sent various other sums at different
times thereafter (see plaintiff’s exhibits Nos. 1, 2, and 3).

The parties owned a home in Juneau and the testimony
reveals that there was some difficulty regarding the sale of
this home to the Plywood Company, whose property ad-
joined, for the reason that the defendant demanded an exor-
bitant amount as her share, but after considerable bickering
it was finally agreed to sell the home for $4,500 and divide
the money equally between the parties. This occurred in
the fall of 1952, In December of 1952, the plaintiff visited
the defendant in California and it is his testimony that he
lived with her and the child and that he worked for two
months in San Pedro, California, and then for some reason
not apparent from the evidence, he desired the family to
return to Alaska, and when defendant refused, according
to his testimony, he left and in three weeks in San Francisco
spent his share of the money received from the sale of the
Juneau home, $2,250 plus what he had earned in the two
months working in San Pedro. It is his claim that defend-
ant, in refusing to return to Alaska, was guilty of desertion.
He also testified that after his return he quit writing her
letters and refused to open and read letters she sent him.
His testimony does not reveal that he ever provided her

| 89

with funds with which to return to Juneau and in September
of 1953 he began this action.

HH (On the witness stand the plaintiff stated that he
desired very much to have the custody of the child; that he
could care for the child and when the child was not in school
and he was busy at his work as a longshoreman he would
hire some one to care for him. The natural mother of this
adopted child was called as a witness and she testified that
she had agreed to the adoption because she knew the plain-
tiff. She has been married twice and has had eight children,
four of whom have been adopted out, and her testimony
was to the effect that she was told by the Welfare Depart-
ment officials in Juneau that the Burgos promised to keep
the child in Juneau so that she, the natural mother, could
visit the child when she desired. The former United States

_Commissioner who handled this adoption testified as to the

circumstances surrounding it to the best of his memory
but he did state positively that it was the usual policy of the
authorities having to do with adoptions to require that the
child being adopted live in a different community from that
of the natural mother. This, of course, is the recognized
general practice and it is common knowledge that in most
agencies handling adoptions the natural mother does not
even know who adopts the child or where the child is.

A certified copy of the consent of the natural mother was
introduced in evidence (plaintiff’s exhibit No. 6) and her
testimony and this consent which she signed reveals that
although she was at the time married, the child was not
a result of that union.

When the plaintiff went to California in December of
1952 he apparently intended to stay, as he obtained work in
San Pedro, but later changed his mind and wanted the whole
family to return to Juneau.

90 Le

There is no evidence that he ever provided a home here or
made provisions to bring his wife and child here and it is
evident the Welfare officials in both California and Junéau
felt that the child was receiving excellent care in California
and it is undoubtedly better for the child to be raised away
from Juneau, which is the home of his natural mother.
Pictures of the boy (defendant’s exhibit B) taken in June
of 1953 when he was a little over three years old show an
apparently well-cared for child in a very happy mood.

The defendant in her answer prays only for a divorce
from bed and board and that she be declared to be the sole
and only owner of the property in the joint names of the
parties in California; she asks likewise for the sole and
exclusive care, custody and control of the minor child and
that plaintiff be required to pay the sum of $100 per month
for support and education of said child, and for her costs
and attorney fees.

Plaintiff’s 1955 and 1956 income tax returns (plaintiff’s
exhibit No. 4) show gross earnings of $3,718.83 for 1955
and $3,144.30 for 1956. He has no other assets or income
except a 10% veterans disability compensation allowance
amounting to about $17 a month.

The defendant’s answer charges facts which, had they
been substantiated by testimony at the hearing, might have
entitled her to a decree. The testimony at the hearing indi-
cated that the charges made were possibly true, but in the
absence of defendant’s testimony this Court does not feel
justified in awarding a decree to the defendant.

TH It seems pretty clear to this Court from the facts
known and reasonable inferences to be drawn therefrom,
that the parties intended, upon the adoption of this child,
to leave Juneau. The defendant sold property she owned
in Ketchikan and purchased property in the name of both

a 91

parties in California. Thereafter the plaintiff entered into
negotiations and finally sold the property the parties owned
in Juneau and divided the proceeds with the defendant.
The plaintiff later went to California and obtained employ-
ment there and then something happened. After a few
months he decided to take the family back to Juneau and
according to his testimony, the defendant refused to come,
and it is this refusal which he charges amounts to desertion.
His conduct immediately following this alleged desertion
was not very exemplary. By his own admissions on the wit-
ness stand he proceeded to go on a three-week spree in San
Francisco where he spent not only his earnings for the two
months he worked in San Pedro but also the residue of his
share of the receipts from the sale of the Juneau property.
By this conduct he reveals an instability and unsteadiness
which precludes this Court from entertaining any prayer
that he be awarded custody of the child.

HE Counsel for plaintiff at the trial of the case and in
plaintiff’s brief raised the claim of lack of jurisdiction of
this court in three particulars :

(1) Although the defendant herein had filed an answer
and had asked for a decree of divorce from bed and board,
that she had not filed a cross-complaint and had not sub-
mitted any testimony or appeared in court personally, and
therefore the court could grant no relief asked by the de-
fendant.

The document entitled “Defendant’s Answer” closed that
pleading with a prayer that the divorce filed by plaintiff
be dismissed; that she be granted a divorce from bed and
board; that she be decreed to be the sole and only owner
of the real property standing in the joint names of plaintiff
and defendant in California; that she be granted the sole
and exclusive custody of the minor child; that plaintiff be
required to pay defendant the sum of $100 each month for

92 a

the support of the child, together with costs and attorney
fees of defendant in the action.

This Court feels that by the filing of this Answer and the
appearance of her counsel throughout the trial, cross-ex-
amining witnesses, arguing points of law, that the defend-
ant has submitted herself to the jurisdiction of this court
for all purposes and that the plaintiff cannot complain that
this court of equity having once acquired jurisdiction of the
parties and of the subject matter of the suit, should not re-
tain and exercise that jurisdiction until the equities of all
the parties are determined.

The case of Sterl v. Sterl, 2 IlLApp. 223; 89 A.L.R.
1205 seems to have disposed of this question as follows:

“Tn this case the jurisdiction of the court is in-
voked by the appellee, he having, as he had a legal
tight to do, filed his bill against appellant, praying
relief and summoning the appellant into the court.
When she is thus brought in, and, having respond-
ed to the claims of the appellee by answering his
bill of complaint, being as it were, then forced into
the court, submits herself to its jurisdiction, and
asks the court to grant to her certain equitable
tights, to which she claims to be entitled, then it is
that the appellee challenges the jurisdiction of the
court to grant to her any equitable rights, but con-
tinues to clamor for his. This position is uncon-
scionable and indefensible upon the principles of
equity, * * *” (Emphasis supplied.)

Plaintiff brought this suit against the defendant and thus
brought her into court. She came into court by filing her
Answer and is thereby subject to the jurisdiction of this
court in all respects. Davis v. Davis, 1938, 305 U.S. 32, 59
S.Ct. 3, 83 L.Ed. 26,

be 93

HE (2) Plaintiff’s second contention is that the court
is without power to grant defendant’s prayer for the cus-
tody of the child, contending, since the child is domiciled
with the mother in California, that this domicile being out-
side of the jurisdiction of this court, no order can be entered
herein as to the custody.

This Court feels that this contention is without merit;
the court having proper jurisdiction over the parties hereto,
the custody of the child is a proper matter for this court’s
consideration herein. Anderson v. Anderson, 74 W.Va.
124, 81 S.E. 706. Stephens v. Stephens, 53 Idaho 427, 24
P.2d 52.

HM (3) The third question raised by counsel for plain-
tiff is that this court has no jurisdiction over the disposal
of real property located in another state.

With this contention of plaintiff, in its general applica-
tion, we are inclined to agree; however, in the brief which
is filed by plaintiff’s counsel it is pointed out that plaintiff
is willing to deed his share of the California property to the
wife but has been advised against this action by counsel
“unless and until some consideration is given him for de-
fendant’s attorney fees and costs.”

HI it is hardly proper for the Court to consider bar-
gaining rights in this connection. The equities of the sit-
uation are the concern of the Court and this Court finds that
plaintiff, having no money invested in the California prop-
erty whatsoever, has no equitable interest therein and that
he should, prior to the entry of the decree herein arid prior
to the dismissal of the accompanying Reciprocal Support
action pending in this court, execute a quitclaim deed to
this property to the defendant herein.

I | find that while the defendant, in carrying out the
desires of the Welfare Department in Juneau, acted prop-

94 |

erly in taking the child to California and establishing a home
there, when the plaintiff demanded that she return with him
to Alaska her refusal to do so technically may be deemed
desertion and therefore decree of divorce will be granted to
the plaintiff,

No alimony for the defendant’s support and maintenance
will be awarded.

The child, being of tender years and being well cared for
where now situated, will be awarded to the defendant here-
in, with rights of visitation in the plaintiff; and the plain-
tiff may have the custody of said child for one month during
the summer vacations providing he in advance furnishes
the cost of round trip transportation. The plaintiff will pay
the stm of $65 per month to the Clerk of the Court for the
support of Alfred Burgo, Jr., the adopted child of the par-
ties hereto.

Defendant will be awarded $325 attorney fees but will be
allowed no other costs. Plaintiff will not recover costs.

Decree in accordance with this opinion may be presented.

150 F.Supp. 519

Clifford E. HOHN, d/b/a Hohn Mechanical Contractors, and Un-
derwriters at Lloyd’s London, Plaintiffs, v. ALASKA IN-
DUSTRIAL BOARD, consisting of Henry A. Benson, Chair-
man, J. Gerald Williams, Member, and Ross P. Duncan,
Member and Nobel Jess Swepston, Defendants.

No. A-7418,

District Court, Alaska, First Division, Juneau,
April 5, 1957.

wo
oS
ee

—-_—_

Robert Boochever, of Faulkner, Banfield & Boochever,
Juneau, Alaska, for plaintiffs.

Harold J. Butcher, Anchorage, Alaska, for defendant
Nobel Jess Swepston.

KELLY, District Judge.

The facts reveal that defendant Swepston, hereinafter
called employee, was employed by plaintiff Hohn, herein-
after called employer, as a steamfitter commencing Novem-
ber 4, 1952; that on December 8, 1952, the employee suf-
fered an accidental injury arising out of and in the course
of his employment, resulting in a fracture of the heel bone
of his left foot; he was paid temporary disability compen-
sation based on the rate of pay he was receiving in Anchor-
age, Alaska, for the period from the date of injury through
April 2, 1953, in the total sum of $1,670.86; in addition,
medical expenses were paid totaling $1,037.72; that the em-
ployee returned to work on March 20, 1953, at a salary
equal to the salary he had received from the employer at the
time of the injury; the employment, however, was not as a
steamfitter but was a desk job in the performance of which
he sat at a desk and performed clerical work which required
knowledge of pipe fittings and plumbing supplies. He con-
tinued to work until his job terminated on July 23, 1953.
Employee had previously been a resident of Kansas prior to
coming to Alaska. After the termination of his job as

a

98 De

aforesaid he returned to Kansas, where he remained at
least until after March 15, 1954.

A report from a Dr. George Hale of Anchorage dated
March 20, 1953, had been submitted to the insurance carrier
for the employer stating that the employee would be able to
return to his regular work on March 20, 1953. This report
had been prepared by the doctor’s secretary, who signed his
name.thereto. It was brought out later that Dr. Hale did
not feel that the employee would be able to return to his nor-
mal work at that time and would not have signed the report.
He made a further report on July 23, 1953, in which he
stated:

“Examination at this time is completely nega-
tive except for the slight limitation of motion in
the subtalar joint. X-rays reveal very complete
healing in such perfect position that I would be
unable to tell he had ever had a fracture.

“The patient is not interested in a triple ar-
throdesis at this time and wants to avoid it as long
as possible so I am writing you this letter to give
you a picture of his status, and to see whether or
not you feel that continued compensation is in
order.”

After his return to Kansas the employee was treated by
a Dr. Jarrott, who submitted reports on September 3 and
October 24, 1953, in which he indicated among other things
that the maximum improvement had not yet been achieved.
These were followed by a report dated December 14, 1953,
in. which Dr. Jarrott stated that the employee was fit to re-
sume his usual work as of December 7, 1953, although the
injury had caused a 25% permanent partial disability.

The records show that on March 15, 1954, the employee
entered into a compromise and release with the employer
whereby he was paid an additional $675, being compensa-

nn

tion for a 25% permanent partial disability of use of the
foot. The employee was represented by counsel at the time
this compromise and release was entered into and this was
approved by the Alaska Industrial Board, and payment was
made in accordance therewith.

The employee on March 30, 1955, filed an application for
adjustment of claim with the Industrial Board, claiming
additional temporary compensation from July 23, 1953, to
December 5, 1953, the employee contending that the com-
promise and release above referred to was entered into in
reliance on the unauthorized report from Dr. Hale’s office.
The compromise settlement was then set aside by the ma-
jority of the Board although no tender of the amount paid
thereunder had been made to the employer or its insurer.
An award of $2,242.64 was entered, representing 65% of
the employee’s prevailing rate of pay in Alaska for the pe-
riod of July 23, 1953, to and including December 6, 1953.
This amount was to be in addition to the previous compen-
sation.

HBL This court is limited by Sec. 43-3-22, A.CL.A.
1949 to reviewing questions of law in this proceeding and
this opiniorr will be confined thereto. The Board’s findings
of fact may not be disturbed unless they are wholly unsup-
ported by the evidence, in which case they constitute error
as a matter of law.

BE Dealing first with the questions of law which
have been raised, the appellant contends that the Board was
powerless to set aside the compromise, and that if the em-
ployee was entitled to that relief, it would have to be ob-
tained by an independent action in a court of equity. There
is a division of authority among the state decisions on this
point, but it will be unnecessary to examine the several
views inasmuch as the problem can be resolved by referring

100 |

to the provisions of the Alaska Act. Sec. 43-3-6, A.C.L.A,
1949, pertaining to the right of the parties to enter into a
compromise, provides: :

“x % Tf approved by the Board, such
agreement shall be enforceable the same as any or-
der or award of the Board, and subject only to
modification in accordance with the provision of
Sec. 4 hereof.”

Sec. 4 in turn provides that:

“If an injured employee (is) entitled to com-
pensation under any subdivision or part of this
schedule, and it shall afterwards develop that he
or she is or was entitled to a higher rate of com-
pensation under same or some other part of subdi-
vision of this schedule, then and in that event he or
she shall receive such higher rate, after first de-
ducting the amount that has already been paid.-him
or her. To that end the Industrial Board is here-
by given and granted continuing jurisdiction of
every claim, and said Board may, at any time and
upon its own motion or on application, review any
agreement, award, decision or order, and,.on such
review, may make an order or award ending,
diminishing or increasing the compensation previ-
ously awarded, ordered, or agreed to, subject to
the maximum or minimum provided in this Act.
No such review shall affect such award, order or
settlement as regards any moneys already paid,
except that an award or order increasing the com-
pensation rate may be made effective from date of
injury, and except that if any part of the compen-
sation due or to become due is unpaid an award or
order decreasing the compensation rate may be
made effective from the date of injury, and any

BO

ee 101

payments made prior thereto in excess of such de-

creased rate shall be deducted from any unpaid

compensation, in such manner and by such meth-

ods as may be determined by the Industrial Board;

provided, however, that no compensation under

such increased rate shall be paid unless the dis-

ability entitling the employee thereto shall develop

and claim be presented within three (3) years

after the injury.” (Emphasis supplied.)
The necessary conclusion is that the Board may set aside a
compromise found to be based upon fraud or mistake. This
grant of authority in no way detracts from the jurisdiction
of the District Court, but within the confines of the Work-
men’s Compensation Act, A.C.L.A.1949, § 43-3-1 et seq.,
the Court and Board are vested with concurrent jurisdiction
on questions concerning the validity of a compromise.

HE The appellant also raises a question regarding the
interpretation of the word “rate” in Sec. 43-34. It is
argued that by using that particular word, the legislature
limited the Board to increasing the proportion of the com-
pensation, and did not authorize it to award additional
compensation. For example, if a settlement were based
upon a 50% disability, and the injury were later shown to
involve a 75% disability, the settlement could be increased
proportionately; or if it were based upon the assumption
that the employee’s average daily wages were $5 and it later
could be established that the average daily wages during
the period of disability would have been $10, the approved
settlement could be modified accordingly. However, if this
construction were applied, it would follow that in the case
of an injured workman receiving benefits for temporary
disability, after certification by the doctor that the employee
had recovered, and the issuance of an order terminating the
compensation, the Board would be powerless to award addi-

102 ae

tional compensation if the doctor’s analysis proved to be
wrong and the employee suffered a recurrence of the con-
dition immediately after the order. I feel such construc-
tion would not be in accord with the purpose of the Act.
As counsel for the employee has pointed out, citing 58
Am.Jur. 595:
“Although it has been held that the provisions
of workmen’s compensation acts are to be strictly
construed, inasmuch as the provisions thereof are
in derogation of the common law, the rule of lib-
eral construction has been very generally applied
upon the ground that such legislation is remedial
in character.”
The following statement was made in 15 N.A.C.C.A. Law
Journal, 156, at p. 157, in a comment on Colbert v. Consoli-
dated Laundry, 1954, 31 N.J.Super. 588, 107 A.2d 521:
“The spirit of the opinion is commendable. As
it says, ‘Why construe narrowly a statute which
courts construe liberally? A less liberal rule ap-
plied to claims arising under our Workmen’s
Compensation Act would do violence to the benef-
icent purpose intended to be effectuated by the act.
Liberality of construction of the Workmen's
Compensation Act has been firmly established and.
runs consistently through our cases on the subject.’
In spite of this universally admitted and continu-
ally repeated proposition, narrow constructions
are continually urged and taken through to the
highest courts. The infinite variety of conditions
of injury in employment in industry today do not
admit of the meticulous precision of a common
law conveyance.”

HM A further consideration is whether a tender of the
money paid in settlement was a prerequisite to re-opening

| 103

the case. Generally a tender is necessary, the foundation
for the rule being the injustice of allowing the claimant to
seek additional compensation without risking the loss of
that which he already has. However, in a letter dated Jan-
uary 12, 1955, from Morrell P. Totten & Co., Inc., the
employer’s insurer, to Mr. Butcher, counsel for the em-
ployee, it was stated:
“We likewise advise our settlement was affected

(sic) through Mr. Swepston’s then counsel, and

‘we are suggesting to our principals that they stand

upon the settlement as made, and defend in any

action which Swepston desires to commence at

this time.”
In view of this correspondence, any tender by the employee
obviously would have been refused, and the law will not
require the doing of a futile act. Smith v. Atchison, T. &
S. F. Ry., Tex.Com.App.1921, 232 S.W. 290; St. Louis
& S. F.R. Co. v. McCrory, 1911, 2 Ala App. 531, 56 So.
822; Woods v. Wikstrom, 1913, 67 Or. 581, 135 P. 192.

; | Passing on to the Board’s findings of fact, the
appellant questions the validity of findings (1) and (4):

(1) “That the claimant Jess Noble Swepston,
by reason of a medical report purportedly signed
by Dr. Hale of Anchorage, Alaska, was denied
compensation in accordance with Territorial law
from July 23, 1953 to and including December 6,
1953.”

(4) “That the daily rate of pay of the claimant
Jess Noble Swepston, at the time of the injury,
was $25.37 and that the claimant is entitled to
65% of said daily pay, or the sum of $16.49,
computed from the 23rd day of July, 1953, to and
including the 6th day of December, 1953, in ad-
dition to all other compensation previously paid.”

104 FS

. The Court concludes that the first finding of fact is sup-

ported by some credible evidence, and therefore it must be
upheld. The appellant’s contention that the findings of the
Board were inadequate undoubtedly has reference to the
absence of a specific finding of reliance by the employee on
the erroneous medical report from Dr. Hale’s office, but
the first finding necessarily implies such reliance. Appel-
lant presents a forceful argument that the employee would
not have relied on the unauthorized report in view of all
the circumstances, but I cannot find that the Board acted
arbitrarily in ruling that he did so rely.

HE] The employer further contends with regard to the
Board’s fourth finding of fact, that if any additional com-
pensation is allowable herein it should be based on the em-
ployee’s loss of earnings in Kansas during the period. He
argues that there is a strong presumption that although the
employee could have performed some work he probably
did not because of the compensation claim, inferring he
would receive more in compensation based on Alaska earn-
ings than he could earn in Kansas wages.

The provision for temporary disability found in 43-3-1
A.C.L.A.1949, in effect at the time of the injury, provides
in part:

“The average daily wage earning capacity of an
injured employee in case of temporary disability
shall be determined by his actual earnings if such
actual earnings fairly and reasonably represent his
daily wage earning capacity. If such earnings do
not fairly and reasonably represent his daily wage
earning capacity, the Industrial Board shall fix
such daily wage earning capacity as shall be rea-
sonable and have a due regard for the nature of
his injury, the degree of temporary impairment,
his usual employment and any other factor or cir-

— 105

ctmstance in the case which may affect his ca-
pacity to earn wages in his temporary disabled
condition.”
It seems to me that the amount of the award should be
based on the rate of wages claimant could have earned in
the State of Kansas.

Hl It is common knowledge that many employees come
to Alaska, either being recruited by contractors to work on
a certain job, or on their own volition to find employment
at the high wages of the construction industry in Alaska,
and upon the termination of their particular job or the com-
pletion of the project, return to their home states. This
Court therefore feels that when those circumstances exist
and the claimant, after his return, is found to be entitled
to workmen’s compensation based upon injury received, the
rate should be based upon the amount of pay he would have
received at the same type of employment in the state of his
residence.

In the case of Vanney v. Alaska Packers Ass’n, 12 Alas-
ka 284, on p. 290, Judge Dimond cited the provisions of
Sec. 1 of the Act, 43-3-1 A.C.L.A.1949, covering tempo-
rary disability, supra, and stated as follows:

“Under the law as written it appears to be the
duty of the Board, in every such case, to determine
the amount of wages or compensation the injured
employee is capable of earning and of which he is
or may be precluded from earning and receiving
by reason of his injuries, and base the award on
that result.”

and also:

“* 3 > but the ultimate test is, what has
the employee lost in wages or compensation by
reason of his injuries? That seems to be the
standard which the law prescribes, * * *,”

106 De

Another case which construes the Alaska Act and which
was taken to the 9th Circuit Court of Appeals, is the case
of Brown y. Alaska Industrial Board, 224 F.2d 680, 681.
Judge Denman, Chief Judge, wrote the opinion and cited
the above quoted part of Sec. 43-3-1, supra, emphasizing
the last sentence thereof. In this case, Brown, a foreman
in a surface mining operation in Alaska, suffered a knee
injury September 15, 1952, and was paid the wages of such
foreman until he ceased his employment in Alaska to go
to the State of Washington, where his temporary injury
ended on the following February 15th. Judge Denman
pointed out that in this situation it was necessary that the
Board make findings of fact on:

“x * * The wages Brown would have
earned in the State of Washington for the period
from the end of the employer’s activity to Febru-
ary 15, 1953, when his temporary injury ceased.”

and found the Board acted arbitrarily in failing to follow
the mandate of the statute.

In the case of Giske v. Alaska Industrial Board, 224 F.2d
853, in another opinion of the 9th Circuit Court of Appeals
written by Judge Denman, the court sustained the ward of
the Board, holding that where workmen’s compensation
claimant has failed to maintain the burden of proving his
employment would have continued but for injury, substan-
tial evidence sustains Industrial Board’s award based on
average daily earning capacity of $3.88 although claimant
had been earning 17.63 daily while engaged in the occupa-
tion resulting in injury.

In the Giske case, supra, the total yearly earnings of the
claimant, who was a net boss in a cannery, amounted to
$2,540 from the cannery. His daily wage earning capacity
was computed in the findings of the Chairman of the Board
by dividing the sum of $2,540 by 360, and in pointing out

EE 107

the difference between this case and the case of Brown v.
Alaska Industrial Board, supra, the court found that the
Chairman did make his findings on those matters which the
statute directs him to consider and that there was substan-
tial evidence to support the Board’s award. :

While most employees desire early recovery and return
to work, no employee should be encouraged, in the event of
injury, to return to the states where both wages and living
costs are lower and where it would be as profitable to draw
compensation as it would be to go to work. The incentive
to early recovery could be lost.

I find, therefore, as a matter of law that the Board
erred in basing the award on the Alaska rate of pay and
that the award should have been based upon Kansas wages.
This matter is therefore remanded to the Board to make
findings of fact on the wages employee would have earned
in the State of Kansas from July 23, 1953 to December 6,
1953, and to correct the award accordingly.

261 F.2d 357

Sally CHRISTY, also known as Marion Robertson, Appellant, v.
UNITED STATES of America, Appellee.
No. 15970.

United States Court of Appeals Ninth Cireuit,
Nov. 18, 1958.

Oo - 7

>
a]

Jerry Giesler, Robert A. Neeb, Jr., Beverly Hills, Cal.,
for appellant.

George M. Yeager, U. S. Atty., George Allen McGrath,
Asst. U. S. Atty., Fairbanks, Alaska, for appellee.

Before DENMAN, Senior Circuit Judge, POPE, Circuit
Judge, and GOODMAN, District Judge.

DENMAN, Senior Circuit Judge.

Sally Christy, hereafter appellant, was tried by jury in
the District Court for the Territory of Alaska and found
guilty of a single count in violation of § 65-9-10, Alaska
Laws Annotated 1949% (hereafter A.C.L.A.). She was
sentenced to 18 months’ imprisonment. She urges on this
appeal that the lower court erred in admitting certain evi-
dence and in instructing and failing to instruct the jury on
certain matters.

The following facts were uncontradicted. At 2:00 A.M.
on the night of April 2, 1957, appellant was sitting in a taxi-
cab in front of the Silver Dollar Bar in Fairbanks, Alaska.
Three soldiers, Robinson, Akervik and McCraw, left the

1(Of “annatural carnal copulation by means of the mouth.”)

EE 11

Silver Dollar Bar and engaged the cab occupied by appellant
to take them back to their Army post. Robinson got in the
back seat with appellant and Akervik and McCraw sat in
front and the cab started toward camp.

Robinson testified that he had participated in the charged
crime as the cab proceeded. Being in accomplice the Alaska
Law required corroboration.

Section 66-13-59 of A.C.L.A.,1949, is as follows:

“Corroboration of testimony of accomplice.
That a conviction cannot be had upon the testi-
mony of an accomplice unless he be corroborated
by such other evidence as tends to connect the de-
fendant with the commission of the crime, and the
corroboration is not sufficient if it merely show
the commission of the crime or the circumstances
of the commission.”

HAs stated by the District Court of Alaska in 1948,
in United States v. Farwell, 76 F.Supp. 35 at page 39:
“The Civil and Criminal Codes of Alaska, as
well as the Codes of Civil and Criminal Procedure
are founded largely upon those of the State of
Oregon. Hence the decisions of the Supreme
Court of that state construing the laws of Oregon
which were adopted verbatim for Alaska are de-
serving of great respect, and, as regards those de-
cisions given before enactment of our codes, of
controlling authority.”
In 1890 the Oregon statute on corroboration of the testi-
mony of an accomplice was identical with that of Alaska as
it is now.

In 1890, in State v. Townsend, 19 Or. 213, at page
217, 23 P. 968, at page 969 the Oregon Supreme Court held
that the corroboration is sufficient if the facts “tend in some

112 a

degree to connect the defendant with the commission of the
crime.” (Emphasis added.)

EBM More recently in State v. Brazell, 126 Or. 579,
at page 581, 269 P. 884, the Supreme Court stated that the
corroborating evidence “need not be direct and positive, but
may be circumstantial in character. Such crimes are ordi-
narily not committed * * * to draw reasonable infer-
ences from facts proven. The weight of the corroborating
evidence is, of course, for the jury. It is only when there is
no evidence tending to connect the defendant with the com-
mission of the crime that a question of law arises upon mo-
tion for directed verdict of acquittal.”

In People v. Goldstein, 146 Cal. App.2d 268, at page 272,
303 P.2d 892, at page 895, the Court stated that:

“«*% % %* the corroborating evidence need
not establish the actual commission of the offense,
the corpus delicti. People v. Yeager, 194 Cal.
452, 473, 229 P. 40; People v. McNamara, 103
Cal.App.2d 729, 740, 230 P.2d 411. It is suffi-
cient that it tends to connect the defendant with
the commission of the crime in such a way as may
reasonably satisfy the jury that the witness, who
must be corroborated, is telling the truth. People
v. MacEwing, supra, 45 Cal.2d [218], at page
224, 288 P.2d [257] at page 260.)”

Unbeknownst to the people in the cab, a car bearing
Deputy Marshal McRoberts and Special Agent Hopkins
was following them at distances ranging from 10 to 100
feet. The officers tailed the cab unobtrusively for about
four miles, staying close enough to observe, through the
rear window of the cab, so much of the torsos of appellant
and Robinson as protruded above the seatback. After about
three miles of “love-making” they saw Robinson’s hand
placed behind appellant’s head, after which appellant’s

— 113

“head went down in a downward motion”. When Robin-
son left the taxicab and was arrested his trousers were open.

HMI Instead of claiming that she had normal sexual
intercourse with Robinson, on the contrary, she claimed she
was merely masturbating him. The movements of appel-
lant’s and Robinson’s bodies as described by appellant and
by the witnesses in the following car are thus entirely in-
consistent with their having normal sexual intercourse.
Appellant’s bent-over head with Robinson’s hand over it,
with normal sexual intercourse excluded, was consistent
with the action of the crime charged. It is further inferable
that she asked for and received ten dollars from Robinson
prior to the journey as testified to by one McCraw, an occu-
pant of the front seat of the taxicab and who was not an
accomplice, as her price for committing the act charged.
There was ample corroboration of Robinson’s testimony.

The lower court admitted into evidence the record of ap-
pellant’s prior conviction for the same felony, as an im-
peachment by the prosecution of appellant’s veracity.

The Alaska Compiled Laws Annotated, § 584-61 pro-
vides:

“Impeachment by adverse party: Evidence per-
missible. A witness may be impeached by the
party against whom he was called by a contra-
dictory evidence, or by evidence that his general
reputation for truth is bad, or that his moral char-
acter is such as to render him unworthy of belief,
but not by evidence of particular wrongful acts;
except that it may be shown by the examination
of the witness or the record of the judgment that
he has been convicted of a crime.”

Appellant contends that the prosecution was deprived of
its right to introduce the record because when she took the

a

114 De

stand she stated on her own behalf that she has been con-
victed of the mere misdemeanor of prostitution? It was an
impeachment of her testimony to show by the record of the
felony that she was lying when she described it as a misde-
meanor since she well knew that the prior conviction was
of the same felony for which she was then being tried.

Appellant contends that the judgment of the prior con-
viction is inadmissible because in it the Court said, “* *
that such sentence of imprisonment imposed herein is here-
by suspended until the further order of this Court, pursuant
to the laws of Alaska, it being the opinion of this Court that
the minimum penalty prescribed by the laws of the Territory
of Alaska, in the case of a person charged with Attempting
to Commit a Crime, to-wit, Unnatural Carnal Copulation of
this nature, is manifestly too severe in this case.”

HEE [tis true that it is error for the Court conducting
the trial to discuss the extent of the penalty of the crime
being prosecuted. Here, however, the appellant by her lying
description of the prior conviction herself invoked the in-
troduction of this impeaching evidence and hence cannot
complain. However, the Court sought to minimize the ef-
fect of the showing of the prior conviction by its Instruction
19 that:

“In arriving at a verdict in this case the subject
of penalty or punishment is not to be discussed or
considered by you, as that matter is one that lies
solely with the court and must not in any way
affect your decision as to the innocence or guilt
of the defendant.”

HH 0» appeal, counsel for appellant does not contend
that the instructions given by the lower court misstated the
applicable law. She merely argues that the lower court

2 Alaska Criminal Code § 65-9-12a and 12e,

De 115

committed prejudicial error by failing, on its own motion,
to inform the jury that Robinson was an accomplice.

It is apparent the Court could not have given such an
instruction since it would mean that the crime was com-
mitted and, in effect, so advised the jury. Instead the court
properly instructed the jury:

“If, therefore, you find that the witness, Ralph
V. Robinson, as disclosed by the evidence in this
trial, in any manner participated in, united in, or
aided, abetted or encouraged the commission of
the crime of unnatural carnal copulation to which
he testified against the defendant, then he is an ac-
complice within the meaning of the law.”

Cf£. People v. Ferlin, 203 Cal. 587, 601, 265 P. 230.

The appellant further contends the Court erred in its
failure to instruct the jury that the other occupants of the
cab might be accomplices though no such instruction was
requested and no objection made that it was not given.

| Rule 30 of the Federal Rules of Criminal Proce-
dure, 18 U.S.C.A. is here applicable. That rule states, in
relevant part: ‘“‘No party may assign as error any portion
of the charge or commission therefrom unless he objects
thereto before the jury retires to consider its verdict
* * %*” “The federal appellate courts, * * * sel-
dom reverse for failure to give instructions in the absence
of a seasonable request, and will do so only if the omission
appears to have been so seriously prejudicial as to lead the
court to believe that the accused was not given a fair trial.”
Nordgren v. United States, 9 Cir., 1950, 181 F.2d 718, 722.

HM] In that case, involving an instruction on accom-
plice testimony, the court found that there was no serious
prejudice because “it would not be difficult to find in this
record substantial corroboration of his testimony.” Since

116 |

in the present case there was ample corroborating testimony,
the Court’s omission did not prejudice the appellant.

HE Appellant finally contends that the Court erred in
advising the jury when it stated to the Court it had not ar-
rived at a verdict that, “This is an important case. In all
probability it cannot be tried better or more exhaustively
than it has been on either side. It -is desirable that you
agree upon a verdict or verdicts. The Court does not want
any juror to surrender his or her conscientious conviction”,
etc., substantially as in our decision in Hutson v. United
States, 9 Cir., 238 F.2d 167, 173. Both parties were read
the instruction before it was given and each stated there was
no objection to it, We see no reason to overrule the Hut-
son case.

The judgment is affirmed.

243 F.2d 482

Burton E. CARR and Marie A. Carr, Appellants, v. CITY OF
ANCHORAGE, a corporation, Appellee.
No. 15236,

United States Court of Appeals, Ninth Cireuit.
April 22, 1957.

LS
at
eee

118

Bell, Sanders & Tallman, Anchorage, Alaska, for appel-
Jants.

James M. Fitzgerald, City Atty., L. Eugene Williams,
Anchorage, Alaska, for appellee.

Before HEALY, POPE, and HAMLEY, Circuit Judg-
S.

2

HAMLEY, Circuit Judge.

This action was brought to recover the agreed considera-
tion under an oral contract between plaintiffs and the city
of Anchorage, Alaska. Plaintiffs alleged that the contract
had been fully executed on their part, and that defendant
had benefited therefrom.

a 119

Defendant moved for a summary judgment. It did so
on the ground that there was a failure to comply with cer-
tain necessary formalities governing the formation of mu-
nicipal contracts. The motion was granted, and such a
judgment was entered. Plaintiffs appeal.

The only question presented on this appeal is whether
defendant was entitled to judgment as a matter of law,
under the facts established by the pleadings and affidavits.

HE While the pleadings and affidavits raise certain dis-
puted questions of fact, they must all be resolved in favor
of appellants for the purpose of considering the motion for
summary judgment and the appeal therefrom. This is true
because a motion for summary judgment is improper where
there is left unresolved a genuine issue as to any material
fact. Rule 56(c), Federal Rules of Civil Procedure, 28
US.C.A,

The facts as so established may be briefly stated. In
May, 1950, appellants were constructing a building on their
property in Anchorage, and had completed the foundations.
Part of these foundations were located on land which the
city desired to acquire from appellants for street-widening
purposes. The matter of minimizing the expense to the
city of acquiring this land by relocating the building then
under construction was discussed at a regular council meet~
ing held that month. The mayor and city clerk, as well as
appellants’ attorney, were also present at that meeting.

At this meeting, and after a full discussion, the city coun-
cil and appellants entered into an oral agreement. Appel-
lants agreed to cut off the front part of the basement of the
building under construction, and to extend the building back
farther than originally planned. The city council agreed
that the city would reimburse appellants for the expense
incurred in relocating the foundations. This agreement
was not reduced to writing. There is no record in the

120 Ee

minutes of the city council meetings concerning this agree-
ment or the vote taken thereon,

Acting in reliance upon the oral agreement referred to
above, appellants altered the location of such foundations.
They thereby incurred necessary expenses in the sum of
$4,051.48. Appellee refuses to reimburse appellants for
these expenses.

In contending that this oral agreement, fully executed
by appellants, is void and unenforceable because of the fail-
ure to observe certain formalities, appellee relies upon three
city ordinances and a territorial statute.

| | One of these city ordinances is § 105.1 of Article
II, Anchorage General Code of Ordinances, printed in the
margin.* It seems to be appellee’s contention that all con-
tracts of the city must be executed in the manner specified
in § 105.1. This ordinance provides how “all legal docu-
ments” shall be executed. It does not, however, require
that all municipal contracts be evidenced by a “legal docu-
ment.” This ordinance, therefore, does not forbid oral
contracts.

The territorial statute relied upon is § 16-140,
Alaska Compiled Laws.? The facts before us do not estab-

LAnchorage General Code of Ordinances, Art. II:

“Section 105. Execution of Legal Documents.

“105.1. All legal documents requiring the assent of the City shall
be (1) approved by the City Council, (2) signed by the Mayor or City
Manager on behalf of the City, (8) attested to thereon by the City
Clerk, (4) approved thereon as to substance by the City Manager,
and (5) approved thereon as to form by the City Attorney, unless
otherwise provided by Territorial law, or a City ordinance.”

2 Alaska Compiled Laws:

“§ 16-1-40. Manner of Voting: Recording Votes.

“All votes in the council on ordinances, resolutions and authoriza-
tions for the payment of money shall be by ayes and nays and the
vote of each member shall be permanently recorded in the proceed-
ings of the council.”

EE 121

lish whether the vote on the proposed agreement with ap-
pellants was taken by “ayes and nays.” It does establish,
however, that no vote by ayes and nays was recorded in the
minutes of the city council. To this extent, at least, there
was a failure to comply with § 16-140.

Appellee contends that this is a mandatory requirement.
It argues that where there is noncompliance with a manda-
tory requirement, there can be no recovery, even though the
contract be fully performed by the other party.*

Without undertaking to determine whether the statutory
provision under discussion is directory or mandatory, we
have no hesitancy in saying that it is not the kind of a pro-
vision which calls for application of the strict rule to which
appellee calls attention,

The cases and authorities cited by appellee deal with re-
quirements which provide protection for the public, and
which go to the very substance of the contract. In the
Layne-Western Co. case, the statute involved required that
county contracts for public improvements be let only after
competitive bidding. In Edison Electric Co. v. City of
Pasadena, a statute prohibited the letting of power and light
contracts for periods longer than one year. The protection
afforded by statutes of this nature is the assurance of fair
dealing in the making of public contracts, and the elimina-
tion of collusion, fraud, and deceit. These statutes, in
effect, constitute a limitation on the power of the munici-
pality to act. The dictum in the Vito case, upon which ap-
pellee relies, is also based upon statutes of this nature.

Section 16-140 bears no resemblance to these statutes.
While it is true that the recording of the ayes and nays

3 In support of its position, appellee cites Layne-Western Co. v. Bu-
chanan County, 8 Cir., 85 F.2d 343; Edison Electric Co. y. City of
Pasadena, 9 Cir., 178 F. 425; Vito v. Town of Simsbury, 87 Conn. 261,
87 A, 722; 10 McQuillin, Municipal Corporations (8d ed. 1950), §
29.26.

122 De

serves a useful purpose, the requirement of the recording
is no more designed to protect the public than to protect the
party dealing with the public. It has no effect on the sub-
stance of the contract. We hold that, in the absence of fac-
tors such as were present in the Layne-Western Co. or the
Pasadena cases, and in the absence of any question of ultra
vires, a municipality is as subject to liability where it has
benefited from a fully performed oral contract as would be
a natural person. Independent Paving Co. v. City of Bay
St. Louis, 5 Cir. 74 F.2d 961, 964; 10 McQuillin, Munic-
ipal Corporations (3d ed. 1950), § 29.103.

We therefore conclude that the city cannot at this time
escape liability because of its own failure to keep proper
records of its business transactions.

HJ (One further contention remains to be dealt with.
Appellee urges for the first time in this court that the con-
tract is unenforceable, since it was not let on competitive
bidding in the manner provided by §§ 111 and 112 of Ar-
ticle II of the Anchorage General Code of Ordinances.
Since this contention was not urged in the trial court, we
need not consider it here. Hebets v. Scott, 9 Cir., 152 F.2d
739.

Nevertheless, we have done so, because of the like-
lihood that the point would otherwise be raised at the trial.
In our view, the ordinances relating to competitive bidding
are inapplicable here. The promised performance by appel-
lants consisted of halting and altering construction work on
their own property. The benefit to the city was the reduc-
tion in value of the ten-foot strip which it hoped to acquire
in later condemnation proceedings. Under these special
circumstances, the subject matter of the undertaking was
not amenable to the competitive bidding procedures specified
in the ordinances,

ee 123

Since the contract, if made and performed under the cir-
cumstances asstimed by the motion for summary judgment,
would not be unenforceable as a matter of law, summary
judgment for appellee should not have been entered. The
judgment is therefore reversed, and the cause is remanded.

OITY OF KODIAK, Alaska, A Municipal Corporation, Appellee,
vy. Tony VALTMAN and Paul H. Stover, Appellants.
Cr. Nos. 3395, 3400.

District Court, Alaska. Third Division, Anchorage.
April 25, 1957,

125

John E. Manders, Anchorage, Alaska, for appellants.
Charles W. Hughes, Kodiak, Alaska, for appellee.

McCARREY, District Judge.

This is an appeal from a decision in the City Mag-
istrate’s Court for the City of Kodiak, and, under the laws
of the Territory of Alaska, is heard by this court as a trial
de novo. 16-1-70, A.C.L.A.1949. See United States v.
Meyers, D.C.Alaska 1st Div. 1903, 2 Alaska 158; Jorge,
Application of, D.C.Alaska 3d Div. 1945, 10 Alaska 633,
639; and Notes of Decision, p. 2496, A.C.L.A.1949,

(126 |

On July 12, 1948, the City of Kodiak enacted Ordinance
No. 131, amending Ordinance No, 122, which, among

other things, provides as follows:

“Section 1. That all owners of Motor Vehi-
cles, who operate or drive any Motor Vehicle upon
the public streets of the City of Kodiak, Alaska,
are required to register and obtain a license for
the privilege of using said streets regardless of
whether the user is a resident of the City of
Kodiak or a resident of adjacent territory. (Em-
phasis supplied.)

“Section 2, The registration and license shall
be applicable to all Motor Vehicles using the
streets of the City of Kodiak, the owners of which
vehicle reside within the territorial confines of the
City of Kodiak, Alaska, and all Motor Vehicles
using the streets of the City of Kodiak, Alaska,
the owners of which vehicles reside within two
miles of any boundary line of the said city
* %* %* ” (Emphasis supplied.)

“Section 3. That this license shall replace per-
sonal property taxes upon Motor Vehicles, the
owners of which Motor Vehicles reside within the
territorial confines of the City of Kodiak, Alaska.
(Emphasis supplied.)

“Section 4. The fee for each City Vehicle li-
cense shall be:

“(a) For all automobiles and trucks of 34 ton
capacity or less, $10.00 per vehicle.

“(b) For all commercial vehicles and trucks of
more than % ton capacity, $15.00 per vehicle.

“(c) For all commercial Motor Vehicles re-
gardless of tonage or capacity which are used on

| 127

the streets of the City of Kodiak, for peddling,
catering or in any other door to door soliciting or
selling, $15.00 per vehicle * * *.”
“. .  ./s/ Lee C, Bettinger
Mayor

“Attest:
/s/ Myrna Perkins

Clerk
“Passed and approved under suspension of the
rules on July 12, 1948.”

All military vehicles are excluded from this ordinance,
and those military vehicles which do use the streets of the
City of Kodiak are issued the license, upon application,
without charge.

On March 5, 1956, Rose Valtman, wife of the defendant
Tony Valtman, was arrested and issued a ticket while driv-
ing on the streets inside the corporate limits of the City of
Kodiak, for failure to register and obtain a city license in
conformance with Ordinance No. 131. On March 9, 1956,
Paul Stover was arrested for the same offense.

A stipulaiton as to the essential facts has been made by
the parties; I consider recitation of certain parts of the
evidence essential to the determination of this matter. The
defendant Tony Valtman is married, has four children,
and lives one mile outside of the corporate limits of the
City of Kodiak, He is a civilian employee at the Kodiak
Naval Air Station and uses the streets of Kodiak daily in
going to and from his work. He and his family also use
the streets for shopping, going to and returning from school
with their children, obtaining medical and professional ad-
vice, and, occasionally, when attending social gatherings or
utilizing entertainment facilities.

The defendant Paul H. Stover is single, lives 100 feet
beyond the corporate limits of the City of Kodiak, and is

128 |

employed by the Bureau of Public Roads. Because of the
physical location of his home, and since there are no other
roads, it is ordinarily necessary that he, like the defendant
Valtman, use city streets in going to and from his work, as
well as for a number of the reasons set forth in the case of
the defendant Valtman.

In 1955 the City of Kodiak collected $51,000 from 1308
cars licensed under this ordinance. In 1956 the city col-
lected $62,000 for 1650 cars licensed. All monies thus col-
lected are expended for the repair and maintenance of the
city streets.

The City Manager, Chester Ricker, testified that all
monies collected under this ordinance are placed in a sepa-
rate fund and are used solely for the repair and mainte-
nance of the streets; that none of the money is placed in
the general fund.

The City Manager further testified that he thought the
sticker which is placed upon the windshield of a motor vehi-
cle under this ordinance would cost about 5¢, but that the
total cost of the certificate to the City of Kodiak, together
with its administration, would be approximately $1.00.
This sum, however, he felt would not necessarily include
the cost to the City of Kodiak for the time the Police De-
partment used in policing the vehicles under this ordinance.

Only two legal questions need be answered by the court.
First, is Ordinance No. 131 a regulatory or a revenue-
producing measure? Second, if it is revenue producing,
may the City of Kodiak, under the laws of the Territory of
Alaska, impose such a tax on those individuals owning and
operating vehicles and using the streets of the city? For
practical reasons, these questions will be answered in in-
verse order.

Counsel for the City of Kodiak relies principally upon the
case of Hoff v. City of Ketchikan, D.C.Alaska Ist Div.

EE 129

1942, 10 Alaska 220. The facts in that case, however, are
different from those in the present case in that apparently
no evidence was introduced as to the reasonableness of the
fee imposed or its relation to the cost of regulation, Id., 10
Alaska at page 226, where the court said:
“* 3 3 no evidence was offered as to its un-
reasonableness.”

In the Hoff case, the plaintiff operated a motor vehicle
within the City of Ketchikan. The city required, by ordi-
nance, that the operator pay a license fee of $8 on each
car. Hoff lived outside the city but worked within the
corporate confines and parked his vehicle within the city
limits while at work. Judge Alexander found for the city,
decreeing that the licensing ordinance was merely a regula-
tion within the city’s power to impose under its police
power.

This Ketchikan case is readily distinguishable from that
of the case at bar for the reason that evidence of the cost
of the Kodiak ordinance has been adduced.

HEME It is universally agreed that a city may only im-
pose those taxes which are authorized by the legislature.
Town of Fairbanks v. Independent Meat Market, D.C.
Alaska 4th Div.1910, 4 Alaska 147; Foster’s, Inc., v. Boise
City, 1941, 63 Idaho 201, 118 P.2d 721; 5A Am.Jur. 306;
Eugene Theatre Co. v. City of Eugene, 1952, 194 Or. 603,
243 P.2d 1060; United States v. City of Kodiak, D.C.
Alaska 3rd Div.1955, 132 F.Supp. 574, 15 Alaska 566. In
the case of Eugene Theatre Co. v. City of Eugene, the
court said:

“(243 P.2d at page 1067] It is an established
rule of law that the power to tax is not inherent
in a municipal corporation. The authority to tax
is not only a delegated authority conferred by the
state, but it is assumed that the state has given all

130 |

it intended should be exercised, and the grant, like

that of all special and limited grants, is to be

strictly construed. Where municipal authority to

tax is doubtful, the doubt is to be resolved against

the tax and in favor of the taxpayer.” (Em-

phasis supplied.)
As the Oregon court states above, any doubts as to the
validity of the tax will be indulged in favor of the tax-
payer. Town of Fairbanks, supra, 4 Alaska at page 149.

TBH] | Hlowever, if the ordinance is construed to be a
regulation, the presumption is the reverse. The city may
use all reasonable means to regulate its streets. Hoff,
supra, 10 Alaska at page 226. The fact that the regulation,
in fact, raises some revenue above the cost of administra-
tion will not necessarily invalidate the regulation. Id, SA
Am.Jur. 294; 53 C.J.S. Licenses § 19, p. 519; Foster’s,
supra, 118 P.2d at page 728, where the Idaho court states:

“The fact, that the fees charged produce more
than the actual cost and expense of the enforce-
ment and supervision, is not an adequate objection
to the exaction of the fees.”

HEME it is with interest we note that while a city may
enforce a regulatory ordinance, the fact that such an ordi-
nance produces revenue does not necessarily invalidate it.
At what point then does an ordinance cease to be regula-
tory and become a revenue-producing measure? This poses
a most difficult solution. As far as I am able to determine,
the best test is set up in the Eugene Theatre Co. case, supra,
where the Oregon court says:

“[243 P.2d at page 1065] It is well establish-
ed that a license imposed for regulatory purposes
should not materially exceed the expense of issu-

a 131

ing the license, and of necessary inspection and
regulation of the business licensed.”
Or, as stated at 53 C.J.S. Licenses § 19, p. 517:

“If the fee or tax is imposed in the exercise of
the police power for purposes of regulation, as
a general principle the amount which may be ex-
acted may include, and must be limited and rea-
sonably measured by, the necessary or probable
expenses of issuing the license, and of such in-
spection, regulation, and supervision as may be
lawful and necessary.”

As the Idaho court said in Foster’s, supra:

“The charge made * * * must bear a rea-
sonable relation to the thing to be accomplished.
[Citations.] The spread between actual cost of
administration and the amount of fees collected
must not be so great as to evidence on its face a
revenue measure rather than a license tax meas-
ure.”

A. second point is also determinative of the nature of
the ordinance, and that is the ordinance itself. As the
Oregon court said in Eugene Theatre Co.:

“The testimony of witnesses as to the motives,
intents, or purposes of the common council in the
adoption of this legislation is wholly immaterial.
The intent and purpose of the ordinance itself is
material.” (Emphasis supplied.)

Ordinance No. 131 of the City of Kodiak, which is in
question, states in Section 3:

“That this license shall replace personal proper-
ty taxes upon Motor Vehicles * * *.”

| I think these considerations are the vital ones.
With the exception of the last, they are more or less sum-

132 Ft

med up in Judge Folta’s decision in City of Anchorage v.
Brady’s Floor Covering, D.C.Alaska 3d Div.1952, 105 F.
Supp. 717, 718, 13 Alaska 741, where he found a tax im-
posed by the city invalid:

“A municipal corporation exercises only dele-
gated powers, and has no inherent power to levy a
tax by way of license or otherwise, or to exact a li-
cense fee. * * * [t]he City’s authority must
be found in some act of the Legislature which ex-
pressly or by necessary implication vests such
power in the City. If there is any fair or reason-
able doubt as to the extent of power so delegated,
the doubt must be resolved against the municipali-
ty, *

“As a regulatory license, authority for which
is implied under the police power, it is necessary
to find that * * * there isareasonable relation
between the license fee and the cost of regulation
by the City.’ (Emphasis supplied.)

HH The relation between the cost of administration
and the cost of the license is the area between regulation
and revenue which must be largely determined by the facts.
In the case at bar, this question of fact appears to be simple
and definite since the city’s own officer admitted it probably
would not exceed 10%. Thus, I can only conclude that the
remaining %o of the revenue derived from this ordinance is
for the purpose of raising revenue.

It is perhaps inequitable that people who use the city’s
streets and facilities but reside outside of the corporate
limits do not contribute to the cost of maintenance, but the
Legislature of the Territory of Alaska has failed to make
provision for such inequities and the court is limited by
their implementation.

ee 33

For the reasons stated, I find that the ordinance is in-
valid as applied to these defendants and hereby direct that
judgment be entered accordingly. Counsel for the defend-
ants is hereby ordered to prepare and submit such a judg-

ment forthwith,

Henry J. ERNST, Appellant, v. SECRETARY OF THE
INTERIOR, Solicitor, Department of the Interior, and
Roy N. Mikel, Appellees,

No, 15431,

244 F.2d 344

United States Court of Appeals, Ninth Circuit,
April 29, 1957.

134 | .

——+—

Maurice T. Johnson, Fairbanks, Alaska, for appellant.

George M. Yeager, U.S. Atty., Eugene V. Miller, Fair-
banks, Alaska, Perry W. Morton, Asst. Atty. Gen., for ap-
pellees.

Before HEALY, LEMMON, and FEE, Circuit Judges.

PER CURIAM.

This action was brought by appellant against the Secre-
tary of the Interior, the Solicitor of the Department of the
Interior, and one Roy N. Mikel, seeking review of a de-

LY

cision of the Solicitor cancelling a homestead entry which
had been allowed to appellant in 1951. The complaint al-
leged that the decision permitted the re-entry by Mikel, who
was the contestant.

|| Service of process on the Secretary and the Solicitor
was attempted by mailing copies of the complaint to them
and to the Attorney General of the United States in Wash-
ington, D. C., and by leaving a copy of the summons and
complaint with the United States Attorney at Fairbanks,
Alaska. The latter moved the court that an order be entered
quashing the return of service and dismissing the complaint
as against the Secretary and Solicitor on the ground that
they are residents of the District of Columbia and actions
can be brought against them only in that place. The motion
was granted and an order to quash and dismiss was entered
accordingly. The plaintiff appealed, stating as the point on
which he intended to rely that the court erred in granting
the motion.

Appellees Secretary and Solicitor, by their attorneys, have
appeared specially and moved this court to affirm the judg-
ment below and to remand the cause for further proceedings,
serving appellant with a copy of the moving papers. Ap-
pellant has appeared and filed with us a memorandum op-
posing the motion.

| | The order to quash and dismiss the case as against
the Secretary and the Solicitor was clearly correct inasmuch
as the court lacked jurisdiction of those officers. Their
official residence is in Washington, D. C. The governing
statute (28 U.S.C.A. § 1391(b) provides that “a civil action
wherein jurisdiction is not founded solely on diversity of
citizenship may be brought only in the judicial district where
all defendants reside, except as otherwise provided by law.”
There is no statutory authority for instituting suit against
these officials elsewhere than in their place of residence.

136 a

An affirmance of the order below will operate to avoid fruit-
less delays and costs and will in no wise prejudice appellant’s
right to bring an action in the proper jurisdiction, Appellate
courts have, and frequently exercise, authority to dispose
summarily of matters which are patently without merit.
See for example, the action of this court in United States v.
Berger, 150 F.2d 56, which reversed on motion a judgment
of dismissal granted by the district court. Accordingly the
order below dismissing the action as against the Secretary
and the Solicitor is affirmed.

Hi As earlier stated, the motion asks also that the cause
be remanded for further proceedings, presumably as against
the defendant Mikel. Mikel had answered appellant’s com-
plaint, denying all allegations thereof save that a decision in
his favor had been rendered in the contest proceeding.
Mikel was and is mere nominal party in any event. How-
ever the case, if any, as against Mikel is remanded for the
further consideration of the district court.

Affirmed in part and remanded in part.

ee 137

245 F.2d 951

NEW and USED AUTO SALES, Inc., a Corporation, Appellant,
v. Bernard L. HANSEN, also known as Barney Hansen,
and Suzanne Hansen, Appellees.
No, 15117.

United States Court of Appeals, Ninth Circuit.
April 30, 1957.

138

Bell, Sanders & Tallman, Anchorage, Alaska, for appel-
lant.

Burton Biss, Davis, Renfrew & Hughes, Anchorage,
Alaska, for appellees.

Before BONE, FEE and BARNES, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

In an action for replevin of a car, where the complaint
was the sole pleading, the court granting judgment for
$607.35 against plaintiff and in favor of defendant on a
motion for summary judgment. Possession of the automo-
bile was directed to be turned over to defendants, and by
subsequent order plaintiff was directed to pay defendants
$50.00, as attorney fees. Plaintiff Sales, Inc., appeals upon

ee 139

the ground that such an issue had never been developed and
that the record showed there were material questions of fact
in dispute.

The record is very much confused. Sales, Inc., on De-
cember 9, 1955, filed a complaint to replevy a Pontiac auto-
mobile in the possession of the Hansens. The Marshal took
possession of the car upon the filing of the statutory affidavit.
On December 20, 1955, no answer or other paper having
been filed by them, the Hansens filed a motion for summary
judgment, moving “the Court to enter Judgment for the de-
fendant [Hansens] against the plaintiff [Sales, Inc.] in the
amount of Six Hundred Seven and 35/100 Dollars ($607.-
35), plus interest and attorney’s fees, and Order the auto-
mobile returned to the defendant.” . |

Time was set for hearing of this motion thereby on De-
cember 23, 1955. Affidavits by both parties were filed, and
the cause was argued on December 23 and 24, 1955. On
January 6, 1956, the court entered a minute order granting
motion for summary judgment. This minute order directed
counsel “to appear at a later date for testimony as to the
accuracy of the statement of plaintiff.” Findings of fact,
conclusions of law and proposed judgment were prepared.
These were signed and entered January 26, 1956. Sales,
Inc., filed objections thereto with an affidavit of its attorney.
Argument was held on January 31, 1956. The court over-
ruled the objections. Sales, Inc., then filed a “Motion for
New Trial and to set aside Judgment and to Strike.” This
motion was denied on February 3, 1956, and the court
further ordered “that the plaintiff pay to the defendants the
sum of Fifty Dollars ($50.00) for attorney’s fees here-
in.”

HI The trial court here attempted to use summary
judgment procedure to supply the place of pleadings and
of trial. The efficiency of this device to eliminate from con-

140 |

gested trial dockets cases in which there is no substantial
dispute of fact is not denied, nor could it be. But this cir-
cumstance cannot be used as an excuse to hear and determine
causes which are not before the court by pleading or other-
wise.

The statute under which this judgment purports to be
granted gives an independent cause of action for damages
to the buyer who is injured by specific acts of the seller.*
If the seller had not already brought the replevin action, the
buyer would have been required to file a complaint setting up
his claim for damages. Since the seller had already filed a
complaint, it might have been possible, if the facts were
entirely uncontroverted, to have had the court enter a judg-
ment dismissing the complaint and for return of the car.
The merits of this disposition will be discussed later. But
the only manner in which the defendant could have affirma-
tive relief would have been to have filed his claim therefor
in the then pending action as a counterclaim.

There was no method whereby he could obtain affirmative
relief otherwise. The attempt to grant relief which was
not warranted by the allegations of the sole pleading on file
was abortive. The language of Rule 56, Federal Rules of
Civil Procedure, 28 U.S.C.A., makes it plain that this con-
clusion is correct:

“Summary Judgment
ES * * * * %* * *

“(b) For Defending Party. A party against
whom a claim, counterclaim, or cross-claim is as-

1 “Recovery of damages by buyer after retaking goods. If the sell-
er fails to comply with the provisions of Sections 18, 19, 20, 21 and
23 (§§ 29-2-18—-29-2-21, 29-2-28 herein) after retaking the goods, the
puyer may recover from the seller his actual damages, if any, and in
no event less than one-fourth of the sum of all payments which have
been made under the contract, with interest.” A.C.L.A. § 29-2-25.

Dn ED

serted * * * may, at any time,move * * *
for a summary judgment in his favor as to all or
any part thereof.” (Emphasis supplied.)

Clearly, the defending party here, the Hansens, could only
move for summary judgment as to all or any part of the
claim contained in the complaint on file in the court. On the
other hand, if Hansen wished to seek summary judgment
for affirmative relief, he must necessarily have filed a plead-
ing stating a claim either in an independent action or in the
action commenced by the complaint of Sales, Inc. For the
Rule in this regard provides:
“Rule 56. Summary Judgment
“(a) For Claimant. A party seeking to recover
upon a claim, counterclaim, or cross-claim * * *
may * * * move * * * for a summary
judgment in his favor upon all or any part there-
of.” (Emphasis supplied.)

Here defendant moved for summary judgment upon what
could only have been a counterclaim without even filing a
pleading setting up that counterclaim as required by Rule
13(a). The summary judgment on the unfiled counterclaim
was void.

Furthermore, Rule 56(c) provides in part:

“The motion shall be served at least 10 days be-
fore the time fixed for the hearing.”

The irregularity of setting the motion for hearing only three-
days after its service is an aggravating factor to the failure
to serve a counterclaim, but this circumstance might not
alone be decisive. It emphasizes the fact that no regard was
paid by the litigants to the very simple procedure prescribed
by the Rules. Judgments should not be avoided on techni-
calities, but here Sales, Inc., was denied the right to trial
by jury upon the complaint and the unfiled counterclaim.

142 a

In the summary judgment, the court does not re-
cite that “there is no genuine issue as to any material fact,”
as the Rule requires, but instead recites that “there are no
facts the determination of which turns on credibility.” This
recital alone is sufficient to vitiate the judgment.

HE Even on the counterclaim, there were genuine issues
as to material facts. According to the argument here, which
is borne out by the record in the court below, there was a
dispute as to how much the defendants had paid on the car.
A check which had been turned over as a payment had been
refused by the bank upon which it was drawn. Subse-
quently, an action was brought on this check, which had not
yet been determined at the date of the summary judgment.
Although no issue is here suggested which turns on credi-
bility, it seems clear there are issues which could only be re-
solved by an accounting.

As to the unpleaded counterclaim, there are two issues of
law upon which it appears the trial court would be required
to pass. First, it must be determined whether the statute
relied upon” applies where the taking was by an officer of a”
court, or only where the taking was by the conditional vendee
himself. Second, it must be determined whether the state-
ment of the balance due was a sufficient compliance with the
statute? This Court has no means of finding whether the
trial court considered such questions of law. In view of
the fact that this Court holds under the Rule that there was

2AC.LA, § 29-2-25,

3“ * * Upon written demand delivered personally or by reg-
istered mail by the buyer, the seller shall furnish to the buyer a writ-
ten statement of the sum due under the contract and the expense of
retaking, keeping and storage. For failure to furnish such state-
ment within a reasonable time after demand, the seller shall for-
feit to the buyer ten dollars ($10) and also be liable to him for all
damages suffered because of such failure * * *” A.O.L.A, § 29-
2-18.

ee 148

no basis for the summary judgment as to the supposed in-
dependent liability, no consideration will be here given to
these questions of law except to say we believe them under
appropriate facts determinative.

HI Since the complaint was in replevin, the only issues
judiciable by summary judgment were three. These were
(1) the existence of a valid conditional sales contract, by
the terms of which, upon default of vendee, Sales, Inc., had
the right to possession of the vehicle, (2) a default by Han-
sens, the vendee, which brought this right into existence, and
(3) the damage suffered by Sales, Inc., by detention of the
car by Hansens.

Hansens do not contest the truth of the complaint. Sales,
Inc., did not ask summary judgment in its favor. Instead,
Hansens rely upon collateral events claimed to have occurred
subsequent to the filing of the complaint and to the posses-
sion of the automobile by the Marshal in the instant action
pursuant to process therein. Hansens filed no answer or
counterclaim to the complaint. If such a pleading had been
filed, a motion for summary judgment might have been
filed with that claim as a basis under the rules. If the claim
of defendant was uncontested, then summary judgment
could have been granted thereon, But the supposed failure
of Sales, Inc., after seizure of the automobile by the Mar-
shal in the action, to provide a statement in conformity with
A.C.L.A. § 29-2-18, at best would give Hansens a right of
action against Sales, Inc., entirely independent of the re-
plevin action. Thus, such a claim would properly be intro-
duced in this action by counterclaim. But no such pleading
was filed.

The summary judgment is a very efficient device, and a
great many unfounded cases may be disposed of by its use.
The system of pleading envisioned by the federal rules is
liberal in the extreme. But abuses of these liberal and

144 a

efficient devices should not be tolerated. Here judgment
was entered without benefit of trial. There is no precedent
for the action taken in the instant case. If there were
precedent, it would be disapproved.

The summary judgment is set aside and the cause reversed
and remanded.

Reversed.

150 F.Supp. 555

Application of George James SPRACHER For a Writ of
Habeas Corpus.
No. A-13269,

District Court, Alaska. Third Division, Anchorage.
April 30, 1957.

William T. Plummer, U. S. Atty., Anchorage, Alaska,
for respondent.
James K. Tallman, Anchorage, Alaska, for petitioner.

McCARREY, District Judge.

The applicant filed a petition for a writ of habeas corpus,
which was allowed, and a hearing was held at considerable
expense to the Government in that it was necessary for them
to pay the transportation and per diem expenses of three
witnesses from the City of Kodiak to Anchorage to testify
at the hearing.

The court found the contentions of the petitioner, as set
forth in his petition for a writ of habeas corpus, to be
entirely without merit.

This matter comes before the court upon an oral motion
made by the United States Attorney for costs and attorneys
fees.

Hit is apparently well settled that a habeas corpus
proceeding is civil in nature. 25 AmJur. 151; Fisher v.
Baker, 1906, 203 U.S. 174, 27 S.Ct. 135, 51.L.Ed. 142;
Ludwick v. Webb, 1945, 23 Wash.2d 115, 160 P.2d 504,

a

146 a

Under 55-11-51 et seq,, A.C.L.A.1949, attorneys fees
“* %*« %& are allowed, of course, to the plaintiff upon a
judgment in the district court in his favor in the following
cases: * * *.” Tn the enumeration of the specific cases
where costs are allowed as a matter of course, none relates
to habeas corpus proceedings (55-11-52, A.C.L.A.1949),
nor are there any provisions relating to the taxation of costs
in the sections relating directly to habeas corpus proceedings.
66-26-1, et seq., A.C.L.A.1949.

General law indicates that such costs are taxable. 25 Am.
Jur. 254; Beasley v. Cahoon, 1933, 109 Fla. 106, 147 So.
288; Ex parte Lewis, 1953, 335 Mich. 640, 56 N.W.2d 211;
Giles v. State, 1950, 191 Tenn. 538, 235 S.W.2d 24; Anno-
tation, 81 A.L.R. 151. The annotation carries this state-
ment:

“Costs of habeas corpus proceeding may be
taxed against the applicant where he is unsuccess-
ful.” at page 154.

Other cases have held that the taxation of costs and attor-
neys fees can only be had where specific statutory authoriza-
tion exists. U. S. ex rel Brink v. Claudy, D.C.W.D.Pa.
1951, 96 F.Supp. 220. I am not persuaded by such au-
thority, in light of our general costs statutes here in Alaska,
and, therefore, feel it would be unwise to base a determina-
tion upon such a ground.

Where a habeas corpus proceeding is found to be without
merit, the courts have taxed costs, apparently on the basis
of the necessity and merit of the proceedings. State ex rel.
Shannon v. Reynolds, 1893, 13 Mont. 423, 34 P. 613; In
re Moy Chee Kee, C.C.N.D.Cal.1887, 33 F. 377.

While it is certainly the policy of this court to encourage
habeas corpus proceedings which are prosecuted in good
faith and merit, it should equally be my responsibility to
discourage actions which tend to misuse the time and energy

a 47

of the court and the opposing party without legitimate pur-
pose.

Hl Having heard the petition and determined that the
allegations of the petitioner were wholly without merit,
since the general costs laws of the Territory of Alaska would
seem to allow the same and attorney fees, supra, I, there-
fore, find that the United States Government is entitled to
attorney fees in the sum of $100, and costs in such an
amount as a total tabulation of the expense vouchers will
disclose.

Judgment is hereby directed to be prepared and submitted
accordingly,
244 F.2d 6
James A, WILLIAMS, Appellant, v. ©. P. COUGHLAN, Ted
McRoberts, Otheal Waitland, Ladessa Nordale, T. N. Gore,

and R. J. McNealy, Appellees,
No. 15405

United States Court of Appeals, Ninth Circuit.
April 30, 1957.

149

James A. Williams, in pro. per.
R. J. McNealy, Fairbanks, Alaska, for appellees.

Before DENMAN, Chief Judge, and STEPHENS and
POPE, Circuit Judges.

DENMAN, Chief Judge.

Williams appeals from an order of the United States Dis-
trict Court of Alaska, Fourth Division, dismissing his ac-
tion against the above-named defendants, without preju-
dice, on the ground that since Williams is a felon confined
in the Federal Penitentiary at McNeil Island, Steilacoom,
Washington, he has no capacity to sue under Section 65—2~
9, A.C.L.A.1949, which provides in pertinent part as fol-
lows:

“Effect of judgment of imprisonment in peni-
tentiary. That a judgment of imprisonment in
the penitentiary for any term less than for life
suspends all civil rights of the person so sentenc-
ed, and forfeits all public offices and all private

150 a

trusts, authority, or power during the term or
duration of such imprisonment.”

Nothing in the record before us indicates that any of the
above named defendants, except McNealy, were served
with process in the case or subjected themselves to the ju-
tisdiction of the court below by participating in the pro-
ceedings there. McNealy, the sole defendant over whom
this court has jurisdiction, moved the court below to dis-
miss the action on the ground that it was barred by the
statute of limitations when appellant filed his complaint on
October 15, 1956. Hence it is necessary to decide what is
the exact nature of the claim or claims which appellant’s
complaint seeks to assert against McNealy in order to deter-
mine what period of limitation, if any, applies.

The portion of the complaint dealing with McNealy reads
as follows:

“ok * %* on or about the 21st day of August,
Ladessa Nordale, T. N. Gore and R. J. McNealy,
Defendants, unlawfully compelled the Plaintiff to
stand trial upon a charge of selling liquor without
a license, without due process of law and without
any of the defense witnesses whom the Plaintiff
had requested be subpoenaed being present and
without the compulsory process of compelling the
requested witnesses to be present at the trial; also
with R. J. McNealy unlawfully acting as defense
attorney with the intent of having the Plaintiff
unlawfully confined and committed to jail.

“(E) That Defendants Ladessa Nordale, T. N.
Gore and R. J. McNealy, in their respective offices
of U. S, Commissioner, Assistant U. S. Attorney
and U. S. Attorney of the Fourth Division, Terri-
tory of Alaska, then and there being, then and
there willfully, unlawfully aided and abetted De-

a 151
fendants C. P. Coughlan and Otheal Waitland in
causing the unlawful arrest and detention of the
Plaintiff by accepting the criminal complaints
against the Plaintiff as is referred to above, and
thereafter issuing warrants for the arrest of the
Plaintiff without any probable cause or investiga-
tion as required by Article IV of the Bill of
Rights of the Constitution of the United States of
America.”

HM Appellant first alleges that McNealy together
with Nordale and Gore “unlawfully compelled” appellant
to stand trial on a charge of selling liquor without a license
“without due process of law” and in the absence of wit-
nesses whom appellant had sought to have subpoenaed.
Disregarding the words “unlawfully” and “without due
process of law” as mere conclusions of law by which appel-
lant seeks to characterize the acts of appellee, we find that
appellant asserts that by compelling appellant to go to trial
without the aid of his witnesses appellee exposed himself to
civil liability in damages for injuries inflicted on appellant
as a result of that trial. The claim thus asserted clearly
sounds in tort only; no element of contractual liability ap-
pears.

Appellant next alleges that appellee at that trial acted
“anlawfully” as defense attorney with the intent of having
appellant “unlawfully” committed to jail. Construing this
allegation liberally in favor of appellant, we find no indica-
tion that he intends to assert by this language anything
other than a tort claim against appellee for depriving appel-
lant unjustly of his liberty.

HI Finally appellant alleges that, together with the
other named defendants, appellee in his capacity as United
States Attorney caused appellant to be arrested on criminal
complaints sworn out by named defendants Coughlan and

152 a

Waitland “without probable cause or investigation” re-
quired by the Constitution. This allegation, like those pre-
viously discussed, purports to state a claim in tort against
appellee. All these claims therefore appear to be subject to
a two year period of limitation under § 55-2-7, A.C.L.A.
1949, which reads in pertinent part as follows:

“Within two years—

“First. An action for libel, slander, assault,
battery, seduction, false imprisonment or for any
injury to the person or rights of another not aris-
ing on contract and not herein especially enumer-
ated * * ¥.”

| | Since these claims accrued on or about August 21,
1953, according to the complaint, they were therefore bar-
red by the statute of limitations on or about August 21,
1955, unless the statute of limitations was tolled by § 55-
2-15, A.C.L.A.1949, which reads in pertinent part as fol-
lows:

“Tf any person entitled to bring an action men-
tioned in this article * * * be at the time the
cause of action accrued * * *

* * * * * * * *

“Third. Imprisoned on a criminal charge, or
in execution under sentence of a court for a term
less than his natural life,

“The time of such disability shall not be a part
of the time limited for the commencement of the
action, but the period within which the action
shall be brought shall not be extended in any case
longer than two years after such disability ceas-
es.” (Emphasis supplied.)

Since there is no showing in the record before us whether
or not appellant was imprisoned on August 21, 1953, when

P| 153

the acts complained of allegedly occurred, it would appear
from the record that, as above stated, appellant’s claims
were barred on or about August 21, 1955.

However, both appellant and appellee state in their briefs
that at the time appellant’s cause of action accrued he was
confined in the Federal Jail at Fairbanks, Alaska, apparent-
ly on the criminal charge of selling liquor without a license,
his confinement terminating on December 5, 1953. Assum-
ing this to have been the case, it appears that under § 55~-
2-15 the statute of limitations would not have run during
this period, but would have commenced to run upon appel-
lant’s release on December 5, 1953, and, unless the statute
were thereafter tolled for some reason, appellant’s claims
would be barred on December 5, 1955.

HI Nothing appears in the record or elsewhere to in-
dicate how long appellant was at liberty after his release
on December 5, 1953, before his present period of imprison-
ment commenced. Our study of Section 55-2-15 con-
vinces us that the statute of limitations on the present
claims was not tolled under that section during this latter
period of imprisonment because that section tolls the statute
only during the continuance of the disability which existed
at the time the cause of action arose. This appears from
the language of Section 55-2~15 which provides that the
statute is tolled during the period of “such disability”;
“such” clearly refers to the disability existing “at the time
the cause of action accrued.” Since appellant’s present
period of imprisonment was not in effect at the time the
claims here asserted accrued, it follows that the statute of
limitations was not tolled by Section 55-2-15 after Decem-
ber 5, 1953. Therefore appellant’s claims against McNealy
were barred on December 5, 1955 and the action should
have been dismissed on that ground, instead of “without
prejudice”,

HI In this situation we do not reach the question of
the constitutionality of applying Section 65-2-9, which sus-
pends the civil rights of a felon during his imprisonment,
to bar him from bringing a civil action where the statute
of limitations is not tolled under Section 55-2-15 because
the statute had run when this action was brought, and was
properly pleaded in defense.t

The decision is reversed and the action is ordered dis-

tmissed.

243 F.2d 589

J. GC, REYNOLDS and Agnes M. Reynolds, husband and wife, of
Homer, Alaska, Appellants, v. Raymond V. LENTZ and
Shirley Lentz, husband and wife, of Homer, Alaska; Bank
of Homer, a banking corporation, of Homer, Alaska; Wil-
liam L, Mathews, of Homer, Alaska; and Henry Anderson

and Eni Anderson, Appellees.
No, 15409,

United States Court of Appeals, Ninth Circuit,
April 4, 1957.
Rehearing Denied May 7, 1957.

1 Where it appears from the face of the complaint that the claim
may be barred by the statute of limitations, this defense may be
raised by motion. Sherwin y. Oil City National Bank, D.C.W.D.Pa,
1955, 18 F.R.D. 188, affirmed 3 Cir., 1956, 229 F.2d 835,

155

Bailey E. Bell, Bell, Sanders & Tallman, Anchorage,
Alaska, for appellants.

Edward V. Davis, Ralph E. Moody, J. Earl Cooper,
Moody & Talbot, Anchorage, Alaska, for appellees.

Before POPE, BARNES and HAMLEY, Circuit
Judges.

156 be

PER CURIAM.

This action was brought by the plaintiffs-appellants for
the purpose of establishing and enforcing as against the
defendants-appellees the rights of the plaintiffs to the per-
formance of a contract for the sale of real property between.
the plaintiffs as vendees and the defendants Lentz as ven-
dors. The court below found that the plaintiffs were in
default under the contract; that the vendors had properly
terminated it because of such default; that plaintiffs had
lost all rights under the contract; and that the defendants
were entitled to possession of the property and to recover
from the plaintiffs the sums which the latter had collected in
the way of rentals. Judgment was entered accordingly.

Upon this appeal appellants assert: (1), that the judg-
ment was void because the judge before whom the case was
tried had no jurisdiction to sit as a trial judge in the Terri-
tory of Alaska and had no jurisdiction in the case; and (2),
that the findings that the plaintifis were in default under
the contract were clearly erroneous.

HI The record shows that the case was tried before the
Honorable Edward P. Murphy, a District Judge of the
Northern District of California, who had been assigned and
designated to sit and hold court in the District of Alaska by
the Chief Judge of the Ninth Circuit pursuant to the pro-
visions of Title 28 U.S.C.A. § 292(b).1 The appellants
after trying the case before the designated Judge and finding
themselves unsuccessful, contended upon motion for new
trial that the trial judge had no jurisdiction and that his
action was wholly void because it was not within the power
of the Chief Judge of the Circuit to make such an assign-
ment. The contention is that the provisions of § 292(b),

1§ 292(b): “The chief judge of a circuit may, in the public interest,
designate and assign temporarily any district judge of the circuit to
hold a district court in any district within the circuit.”

Le 157

supra, can have no application to the district court for the
District of Alaska since the latter court is neither a “district
court” nor a “district court of the United States” within the
meaning of that section because § 451 of Title 28 U.S.C.A.
provides that as used in that Title: “The terms ‘district
court’ and ‘district court of the United States’ mean the
courts constituted by Chapter 5 of this Title.” The court
below is not one of the courts listed in Chapter 5.

We have no occasion to express any view as to this
contention of the appellants for it is well settled that they
have no standing to question the validity of the designation
of Judge Murphy or his right to sit as a Judge in the court
below. McDowell v. United States, 159 U.S. 596, 16 S.Ct.
111, 40 L.Ed. 271; Ball v. United States, 140 U.S. 118, 11
S.Ct. 761, 35 L.Ed. 377; Ex parte Ward, 173 U.S. 452,
19 S.Ct. 459, 43 L.Ed. 765.

Hl While appellants also contend that the court’s find-
ings were erroneous, we note that we are not obliged to
consider that contention because appellants’ brief has failed
to contain the specification of errors required by the pro-
visions of our Rule 18, 28 U.S.C.A. Notwithstanding this
failure, we have nevertheless considered appellants’ argu-
ment that the court erred in finding plaintiffs in default un-
der their contract.

| | The court is of the opinion that there is no error in
this respect. The contract provided that time was of essence
here and that the sellers, defendants here, should be released
from all obligations to convey the property in case of the
failure of the buyers to make any of the payments when due
or to perform any of the covenants contained in the con-
tract. The record shows and the court found that although
the contract was made on the 8th day of April, 1954, and
required the purchasers to keep the buildings on the property
described in the contract insured in standard insurance com-

158 —

panies to be approved by the sellers, in an amount not less
than $6500, with loss payable to the sellers, and to deliver the
insurance policies to the escrow holder, yet no policies were
procured tntil October 10, 1954, and then only in the
amount of $5500, and these were never deposited with the
escrow holder. The sellers elected to terminate the contract
on October 11, 1954.

We find no error in the judgment of the court below and
accordingly it is affirmed.

150 F.Supp. 735

KETCHIKAN PACKING COMPANY, Plaintiff v. CITY OF
KETCHIKAN, Defendant.

WARDS COVE PACKING COMPANY, Plaintiff v. KETCHI-
KAN INDEPENDENT SCHOOL DISTRICT, FIRST DIVI-
SION, TERRITORY OF ALASKA, Defendant.

Nos. 3801, 3802.

District Court, Alaska, First Division,
May 14, 1957.

P. J. Gilmore, Jr., Ketchikan, Alaska, and Edward A.
Rauscher, of Weter, Roberts & Shefelman, Seattle, Wash.,
for plaintiffs.

Victor P. Guns, Ketchikan, Alaska, for defendant City of
Ketchikan. .

C. L. Cloudy, of Ziegler, Ziegler & Cloudy, Ketchikan,
Alaska, for defendant Ketchikan Independent School Dis-
trict.

KELLY, District Judge.
These cases come before the court upon motions to dis-
miss filed by the defendant City of Ketchikan and the de-

160 a

fendant Ketchikan Independent School District, for the fol-
lowing reasons:

(1) that the court does not have jurisdiction of this mat-
ter and the plaintiffs are not entitled to commence or main-
tain these suits, and

(2) the complaints do not state a cause of action.

Able briefs were filed in support of the motions to dismiss
and in opposition thereto.

HI Plaintiffs seek, by their complaints filed in these
actions, to recover from the defendants taxes paid under
protest, alleging that the taxes were illegally assessed. It is
alleged that failure to pay the taxes on September 30, 1956,
would have resulted in the following penalties:

(1) 12% interest plus a 10% penalty on the tax;

(2) exercise of remedy of distraint and sale by the de-
fendant as to the personal property;

(3) exercise of the remedy of sale as to the real prop-
erty;

(4) fine of $300.00 plus 30 days’ jail sentence.

In these actions, the plaintiffs base their right to a refund
upon the common law rule that illegal taxes which are paid
involuntarily may be recovered. To sustain their conten-
tions they must show that the penalties which would result
from non-payment constituted duress.

The defendants point out, however, that the penalties
listed as numbers (2) and (3) will not render a payment
of taxes involuntary unless those penalties are imminent, and
in this case the taxing authority may not invoke such reme-
dies until thirty days after the tax becomes delinquent. They
further contend that the fine and jail sentence which are
claimed as the fourth element of duress would apply only
to the failure to file a statement disclosing the property

Le

owned by the taxpayer, and would not apply to the non-pay-
ment of taxes.

Hi Assuming that these contentions are true, the Court
nevertheless feels that the more logical rule is that the
existence of an automatic penalty upon delinquent taxes, in
addition to interest, may render a payment involuntary.
The defendants admit that this is stated by such authorities
as Corpus Juris Secundum, American Jurisprudence and
American Law Reports to be the general rule, but they show
that many cases cited in support thereof involve other non-
pecuniary penalties as well. Whether the results in those
cases would have varied, had the compulsion been limited
to penalties and interest, is debatable, but in any event there
is ample authority that such penalties standing alone may
render a payment of taxes involuntary.

In the case of Herold v. Kahn, 3 Cir., 159 F. 608, 612,
the court stated :

“In the case at bar, however, there was more
than the simple payment of the tax under protest
as to its illegality, as it was paid upon the demand
of the collector, coupled with a threat that unless
promptly paid, the same would be collected with a
penalty and interest at 1 per centum per month.
Payment upon such a demand from a government
official, acting within the general scope of his au-
thority, constituted such a duress as clearly made
such payment involuntary.”

Likewise, the case of Underwood Typewriter Co. v. Cham-
berlain, 92 Conn. 199, 102 A. 600, although it involved a
lien upon the real estate of the company, as well as a 5 per
cent penalty and 9 per cent interest, clearly indicated that the
interest and penalty by themselves were sufficient duress to
render a tax payment involuntary.

162 |

TI A taxpayer is entitled to test the validity of any tax
assessed against him, and the adoption of an absolute rule
that pecuniary penalties will never alter the voluntary nature
of a tax payment could give rise to situations in which the
exercise of that right would be so fraught with risk that for
practical purposes it could not be said to exist. I believe that
such a rule would be contrary to the decision in the case of
Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714.

[In the present cases I find that the penalty and inter-
est were burdensome to the extent of rendering the payments
involuntary. The fact that they were made before the taxes
became delinquent did not make them any less involuntary,
for it was only in this way that the penalty and interest could
be avoided.

The motions to dismiss are denied.

151 F.Supp. 132

Petition of Emil McCORD for a Writ of Habeas Corpus,
Petition of Andrew NICKANORKA for a Writ of Habeas Corpus.
Nos. A-13363, A~13364.

District Court, Alaska. Third Division, Anchorage.
May 15, 1957.

Russell E. Arnett, Jack F. Scavenius, Stanley J. Mc-
Cutcheon, Buell A. Nesbett, Arthur D. Talbot, Clifford J.
Groh, Wendell P. Kay, Roger Cremo, T. Stanton Wilson,
Peter J. Kalamarides, Anchorage, Alaska, for petitioners.

Kaye Richey, Asst. U. S. Atty., Anchorage, Alaska, for
respondent.

McCARREY, Jr., District Judge.
This matter comes before the court upon a petition for a
writ of habeas corpus.

164 Le

Emil McCord is being held to answer for statutory rape.
It is charged that he being a male person 23 years of age,
did carnally know and abuse a female person under the age
of 16 years, to wit, 14 years of age. Andrew Nickanorka
is held to answer on the same charge. It is alleged that he,
being a male person 29 years of age, did carnally know and

‘abuse another female person under the age of 16 years, to
wit, 14 years of age.

While being held in custody by the United States Marshal
to answer to the Grand Jury, the petitioners filed habeas
corpus proceedings before this court to obtain their release
from the United States Marshal, upon the grounds that
it is contrary to the law to hold them upon the territorial
crime of statutory rape, in that title 18 U.S.C. § 1153, makes
such a crime inapplicable to the act charged. The petitioners
allege that they and the female victims are full-blooded
Indians and that they all reside at Tyonek, Alaska, which
is within the limits of an area set aside for their use by
Executive Order No. 2141, issued in 1915.

There is no dispute as to the fact that the petitioners and
the victims are full-blooded Indians and that they and their
ancestors, for a long period of time, have resided in this area
set aside by the order supra, which is administered by the
Alaska Native Service, an administrative unit of the Bureau
of Indian Affairs. Further, that the tribe is governed by a
council elected at general meetings of the tribe.

One of the petitioners testified at the hearing that the chief
of the tribe, one Simeon Chickalusion, died on Easter Sun-
day and as of this date the tribe has not called a meeting to
elect a new chief, He further testified that there are six
members of the council and that these members are chosen
by a vote of the members at a general meeting called for
that purpose. Some testimony was adduced from this wit-
ness to the effect that the chief and the council take action

Ee 165

to correct any infractions of the law set up by the council.
The witness referred specifically to the violation of fish loca-
tion jumping, fishing being the principal source of livelihood
and income of this Indian tribe, since fur trapping has vir-
tually become extinct, due to the depletion of fur-bearing
animals.

All of the inhabitants in that area, excepting one white
school teacher who resides there a portion of the year, and
a Hawaiian who is married to a member of the tribe, are
all native Indians and members of the tribe.

The petitioners contend that the crimes alleged to have
taken place were committed, if at all, within “Indian coun-
try” which is within the definition of 18 U.S.C. § 1151 et
seq., and as a result thereof, they are outside the jurisdic-
tion of the Territory of Alaska and its penal laws. Their
additional argument is that the crime of statutory rape is
not within any of the crimes set forth in 18 U.S.C. § 1153,
which is more commonly referred to as the “Ten Major
Crimes” statute, applicable to Indian offenses within Indian
country.

The Government, on the other hand, takes the position
that Tyonek is not within “Indian country”, as defined in
18 U.S.C. § 1151, and that Alaska natives are in a different
position as concerns the jurisdiction of criminal offenses
than the Indians in the United States proper. The Govern-
ment further contends that, in any event, the crime of statu-
tory rape is within the provisions of 18 U.S.C. § 1153,

The administration of criminal law in areas occupied by
members of Indian tribal bodies has been the subject of pro-
longed legislative activity, extensively recited in the case of
United States v. Jacobs, D.C.E.D.Wis.1953, 113 F.Supp.
203. Congress, for a considerable length of time, has re-
moved the trial and punishment of criminal offenses from
the courts of the states and territories of the United States

166 be

within which the Indians are located and substituted federal
jurisdiction over the major crimes and left the minor crimes
to the tribal organization. United States v. Chavez, 1933,
290 U.S. 357, 54 S.Ct. 217, 78 L.Ed. 360. A number of
reasons have been forwarded for this, two of which are
covered in Ex parte Crow Dog, 1883, 109 U.S. 556, 3 S.Ct.
396, 27 L.Ed. 1030, perhaps the leading case on this subject.
The Supreme Court there ruled that the courts of the Terri-
tory of Dakota had no jurisdiction over members of the
Sioux tribe within Indian country, reasoning that their
independent status, established by treaty, evidences a Con-
gressional intent to relieve them of the rule of the Territory,
and, second, that the tribes must be protected from the re-
straints of a society they do not understand and into which
they have not yet become assimilated. A third reason is sug-
gested in United States v. Chavez, 290 U.S. 357, at page
361, 54 S.Ct. 217, 78 L.Ed, 360, that the federal court
system may afford the Indian protected from a frequently
unfriendly and occasionally hostile community until the time
arrives when he is more adequate to defend himself. Per-
haps a fourth reason has been the reluctance of the state
authorities to assume the government of a large and tax-
free population within its borders. Whatever may be the
determinative reason behind this policy, Congress has evi-
denced an intent to continue the existing system by revising
the legislation pertaining to this subject in 1948. 62 Stat.
757; 63 Stat. 94. At the same time, however, recent
enactments of Congress removing certain areas in certain
states from the exclusive jurisdiction of the United States
Courts (67 Stat. 588, 18 U.S.C. § 1162) indicate an intent
to place Indian peoples within the same society as their
white neighbors just as rapidly as they are able to adapt
themselves to that society. It is certainly to be desired that
a time will come when there is no need for this type of legis-

De 167

lation, but that time must be determined by Congress, not
by this court.

HJ The principle issue presented at the hearing on the
writ was whether the Tyonek area fits within the meaning
of “Indian country” in 18 U.S.C. § 1153. The Act defines
the term as:

“(a) all land within the limits of any Indian
Reservation under the jurisdiction of the United
States government * * * (b) all dependent
Indian communities within the borders of the
United States whether within the original or sub-
sequently acquired territory thereof, and whether
within or without the limits of a state, and (c) all
Indian allotments, the Indian titles to which have
not been extinguished * * *.” 18 U.S.C. §
1151.

The Government’s suggestion that the meaning of the
terms is confined to lands reserved to the Indians by treaty
is not compatible with this definition and their contention
that the definition is as to areas within the several states
seems also to be incorrect. The Supreme Court in the
Chavez case, 290 U.S. 357, 54 S.Ct. 217, 220, defined the
term “Indian country” as:

“* %* %* any unceded lands owned or occupied
by an Indian nation or tribe of Indians * * *.”

I feel that this interpretation is broad enough to include an
area, such as the Tyonek area, which is set aside and treated
as Indian land, even though the executive order separating
the land from the public domain fails to indicate its exact
purpose. The Court of Appeals for this circuit has indicated
that the recent amendments of the provisions applicable to
these situations have served to enlarge the meaning of the
term, rather than to diminish it. Williams v. U. S., 9 Cir.,
1954, 215 F.2d 1; Guith v. U.S., 9 Cir., 1956, 230 F.2d 481.

168 |

In this light, I think I am warranted in concluding that the
Tyonek area is “Indian country”.

HE The prosecution’s argument that Alaska natives
have a different status than Indians of the States is a rather
novel concept which I regard as inaccurate. The district
court in United States v. Kie, D.C.Alaska 1885, Fed.Cas.
15,528a, indicated that the Territory of Alaska as a whole
was not Indian country and that the natives of this area had
not achieved independent status by treaty. With these ob-
servations I can concur, but I do not feel that this acts to
remove them from the definitions of Congress otherwise
applicable to them and not limited by the legislative pro-
nouncement. See In re Sah Quah, D.C.Alaska 1886, 31 F.
327 in this regard. In view of the opinions expressed by
these courts and the definition of Congress, however, any
extension of the definition beyond those areas set apart from
the public domain and dedicated to the use of the Indian
people, and within which is found an operational tribal or-
ganization, would be unwarranted,

HME The next question is whether the crime of statutory
rape is one of those crimes within the terms of 18 U.S.C.
§ 1153 of which the federal courts will take jurisdiction.
The provision states:

“Any Indian who commits against the person
* * * of another Indian * * * any of the
following offenses, namely * * * rape * * *
shall be subject to the same laws and penalties as
all other persons committing any of the above
offenses, within the exclusive jurisdiction of the
United States. As used in this section, the offense
of rape shall be defined in accordance with the laws
of the State in which the offense was committed
ORK?

Ee 169

In United States v. Jacobs, D.C., 113 F.Supp. 203, the
court concluded, after an extensive discussion of the Con-
gressional activities concerning the provision cited, that it
was not the intent of Congress to include the offense of
statutory rape or carnal knowledge of a female under a
certain age in those crimes enumerated in the Act. The
same conclusion has been reached by the Supreme Court
of Wisconsin in State vy. Rufus, 1931, 205 Wis. 317, 237
N.W. 67. The reasoning adopted in these cases is quite con-
vincing and the deletion of a proposed amendment to the
Act which would have provided for this offense would cer-
tainly indicate that Congress preferred to leave this matter
to the tribal courts. At any rate, as the Jacobs case states,
any doubt in this direction must be resolved in favor of the
accused :

“Tt is axiomatic that statutes creating and de-
fining crimes cannot be extended by intendment,
and that no act, however wrongful, can be pun-
ished under such a statute, unless clearly within its
terms, There can be no constructive offenses, and
before a man can be punished, his case must be
plainly and unmistakably within the statute. [Cita-
tions.]” [113 F.Supp. 207]

We have no indication that the particular acts in question
will subject the petitioners to punishment by the tribe. It
is with interest that one observes the Indian race in the
United States is fast advancing in the adoption of the white
man’s society. This is commendable and the realization of
a goal sought. A large part of our Indian population is
at last shedding the distrusts and fear of our society which
they have evidenced in the past. Many are entering com-
mercial activities with their Caucasian neighbors. A small
but encouraging number have entered the professions and
our institutions of education are beginning to feel the influx

170 be

of Indian students, which has been so long desired, but until
recently, little realized. The records of the past series of
armed conflicts in which the United States has engaged
illustrates a most commendable achievement by members of
the Indian elements of our population. In the interest of
further acquainting the members of the tribe with the society
with which they must soon become members, it would cer-
tainly be injudicious to allow the petitioners to escape with-
out any sanctions applied to them. However, the sanctions
to be applied by the chief and the council must be left to the
tribe, in the absence of Congressional action. United States
v. Quiver, 1916, 241 U.S. 602, 36 S.Ct. 699, 60 L.Ed.
1196.

Since it follows as a corollary that if the Indian people
want to take advantage of the opportunities afforded them
under our democracy, there must, of necessity, and corollary
to these opportunities, follow the paralleling responsibility
of abiding by the laws and precepts of government that have
been adopted by the white race and which have made our
democracy great. However, I cannot avoid agreeing with
Judge Tehan in the Jacobs case, 113 F.Supp. 203, when he
says:

“Tt may well be that the description of the
Indian people set out in Ex parte Crow Dog [109
US, 556, 3 S.Ct. 396, 27 L.Ed. 1030] is no longer
warranted, and that the time has come to make In-
dians subject to more of the laws governing other
citizens or residents of the United States. But
this is a matter for the legislature and not the
courts. It is for Congress to change a policy that
has been long established and has been repeatedly
recognized by the courts.”

This decision should not be interpreted by members of the
native groups, be they Indian or Eskimo, as a general re-

| VW

moval of the territorial penal authority over them, for the
wreason that this court will take judicial notice that there are
few tribal organizations in Alaska that are functioning
strictly within Indian country as defined in 18 U.S.C. § 1151
et seq. As I have said, only when the offense fits distinctly
within the provisions of the applicable federal law will
territorial jurisdiction be ousted. Testimony indicates that
the Tyonek area, unlike most areas inhabited by Alaska
natives, has been set aside for the use of and is governed
by an operational tribal unit. Under these conditions, I can
see no alternative but to order the release of the petitioners.

245 F.2d 61

Charles TUENGEL, Appellant, v. The CITY OF SITKA,
ALASKA, an incorporated Alaska municipality, Board of
National Missions of the Presbyterian Church in the United
States of America, a corporation, and Sitka Community
Hospital, Appellees.

No. 15200.

United States Court of Appeals, Ninth Circuit.
April 10, 1957.

Rehearing Denied May 20, 1957.

See also 118 F.Supp. 399, 14 Alaska 546.

Robertson, Monagle & Eastaugh, Juneau, Alaska, Charles
Tuengel, Sitka, Alaska, for appellant.

Faulkner, Banfield & Boochever, Harold L. Faulkner,
Juneau, Alaska, for appellee.

Before FEE, CHAMBERS and HAMLEY, Circuit
Judges.

PER CURIAM.

This action for damages for alleged personal injuries was
tried before a jury, who found for defendants and against
plaintiff Tuengel. Plaintiff then appealed. :

The record shows these facts. On November 17, 1951,
Tuengel, who is a barber, called at the Sitka Community
Hospital at the request of one Cresa. The latter desired
Tuengel to cut his hair. A nurse on duty told Tuengel that
Cresa’s room was the third on the left, which direction, re-
peated by Tuengel, was correct.

P| 173

Instead of knocking at the door indicated, Tuengel opened
another door marked “Basement” and fell down a well
lighted stairway.

The case was fairly and impartially tried. The verdict
was in accordance with the evidence. There is no indica-
tion that the jury ignored material evidence. The in-
structions were full and correct and none was in error. Un-
der the statutes of Alaska, record of conviction of Tuengel
for criminal contempt for jury tampering was admissible for
what effect it might be given in affecting the credibility of
plaintiff. Section 58-461, A.C.L.A.1949; In re Ashland,
4 Alaska 486 (Cushman, J., 1912). No other alleged error
appears to be of substance.

Affirmed,
245 F.2d 691
Paul MITCHELL, Appellant, v. ©. Ll. SNIPES, Appellee.
No, 15295.

United States Court of Appeals, Ninth Cireuit.
May 27, 1957.

Bell, Sanders & Tallman, Anchorage, Alaska, for appel-

[| 1%

McLaughlin & Atkinson, Anchorage, Alaska, for ap-
pellee,

Before MATHEWS, CHAMBERS and BARNES, Cir-
cuit Judges.

BARNES, Circuit Judge.

HE Appellant was sued in the Justice’s Court, Territory
of Alaska, Anchorage Precinct, for the reasonable value of
carpentry work done for him by appellee at Chugiak, Alaska.
A judgment was awarded against him for $142.88, plus in-
terest and costs.

The judgment in the Justice Court recites that plaintiff-
respondent appeared with counsel, and testified. Defend-
ant-appellant appeared without counsel, and offered no evi-
dence.

Appellant sought to appeal this judgment to the District
Court for the Territory of Alaska. There the plaintiff
moved to dismiss the appeal. The appeal was dismissed and
judgment entered against appellant.

Thereafter appellant’s counsel moved to set aside the
District Court’s judgment, and filed memoranda of law and
affidavit in support thereof. A second affidavit, prepared by
appellant, was thereafter filed, as well as an affidavit made by
the Deputy United States Commissioner and Ex Officio
Justice of the Peace, who ordered the original judgment
in the Justice Court. The motion to set aside the District
Court’s judgment was thereafter denied, and the matter ap-
pealed to this Court.* On the hearing of a motion for the
setting of a supersedeas bond, a further affidavit was filed,
and appears in the record before us, although its purpose and
relevancy seem unclear.

128 U.S.C.A. § 1291; Rule 73, Federal Rules of Civil Procedure, 28
U.S.0.A,

176 a

The points raised on appeal are:

1. The District Court erred in failing to make
findings of fact and conclusions of law upon which
to base its judgment.

2. The District Court erred in dismissing the
appeal, as a matter of law.

3. The District Court erred in summarily dis-
missing the appeal, “since said dismissal required
the disposition of a genuine and material issue of
fact.”

4. In his brief, though not in his Designation
of Points on Appeal, appellant also asserted a lack
of jurisdiction in the judge sitting in Alaska, regu-
larly a judge from the Southern District of
Texas.

Hi It should first be noted that appellant cannot rely
on his fourth point. We have heretofore ruled that an ap-
pellant, who on appeal, questions for the first time the desig-
nation of a District Judge from the United States, or his
right to sit as a judge in the Alaska District Courts, has no
standing to raise the issue in this Court. Reynolds v.
Lentz, 9 Cir., 243 F.2d 589; McDowell v. United States,
159 U.S. 596, 16 S.Ct. 111, 40 L.Ed. 271; Ball v. United
States, 140 U.S, 118, 11 S.Ct. 761, 35 L.Ed. 377; Ex Parte
Ward, 173 U.S. 452, 19 S.Ct. 459, 43 L.Ed. 765.

We can discuss the first three points together. Appellee’s
motion to dismiss was based only on the record, and the law
applicable to the motion. None of the affidavits in the
record presented to this Court on appeal were before the trial
judge when he heard this motion. The affidavits, presenting
factual issues, were raised only in support of appellant’s mo-
tion to set aside the previous judgment for costs required by
the granting of the motion to dismiss. This appeal is only

De 177

from the judgment granting the motion to dismiss, and not
from the denial of the second motion to set aside the judg-
ment. [Tr. 23]

In determining the original motion to dismiss, the Dis-
trict Court was required to consider the law of Alaska au-
thorizing appeals from a Justice Court.

This reads:

Chapter 9, Section 68-9-1, A.C.L.A.1949.
“Either party may appeal from a judgment given
in a Justice’s Court, in a civil action when the sum
in controversy is (over) * * * fifty dollars
* * *, except when the sum is given by confes-
sion, or for want of an answer, as prescribed in
this chapter, and not otherwise.” [Emphasis
added.]

The motion to dismiss recites it was “based upon the
records and file herein.” This, so far as the record on ap-
peal herein discloses, consisted of but two documents, plain-
tiff’s complaint, and the Justice Court judgment. It is to
be observed (1) that there was no answer presented by the
defendant below, either oral® or written, as was required by
statute.* (2) The Judgment recites:

“* %* > the plaintiff having offered evidence
in support of his complaint, and the defendant
having offered no evidence.” [Tr. 4, 5]

We must assume, as the District Court was required to as-
sume, that the record before him correctly delineated the
proceedings occurring below. If anything were missing, or
lacking, appellant had his remedy in the District Court, pro-
posing an amendment,

2Cf.: § 67-1-5, subd. 2, A.C.L.A.1949,

3 § 68-3-1, A.O.L.A.1949.
be

178 Le

“* & %* to supply any defect, deficiency, or
omission therein, by filing formal pleadings
* * * on either side.” *

This he did not choose to do, either before the motion
was decided, nor when it was heard, nor thereafter.

It can only be concluded from the record before the
District Court, therefore, as appellee maintains, that ap-
pellant had “filed no written answer, offered no evidence,
and made no oral answer in the Justice’s Court.”

The appellant, thus standing mute in the Justice Court,
did, “by confession or for want of an answer,” require the
Justice of the Peace to award judgment to the plaintiff if
any cause of action had been established by plaintiff's testi-
mony. No other course of conduct was open to the Justice
of the Peace. On such a record, the District Court was
scrutinizing a record disclosing a non-appealable judgment
under Alaska law.2 The District Court was required to
grant the motion to dismiss, and thereafter to enter a judg-
ment for costs on appeal.®

The case of Johnson v. Johnston-Coutant Co., 4 Alaska
456, relied on by appellant, is inapposite, for in it there
existed no “reasonable conclusion that the defendant had
abandoned his cause before the Justice.” It is true that
there the record, at the time the motion to dismiss was made,
showed that defendant had asked for a continuance. The
record here, on the motion before the District Court, showed

4 Chapter 9, § 68-9~14, A.O.L.A.1949.
5 Chapter 9, § 68-9~1, supra.

6 Chapter 9, § 68-9-12, A.C.L.A.1949: “When an appeal is dismissed
the district court must give judgment as it was given in the court
below, and against appellant, for the costs and disbursements of the
appeal.”

See also: Whipple v. Southern Pac. Co., 84 Or. 370, 55 P. 975, inter-
preting the law from which Alaska took its Justice Court procedure,
and Everton y, Smith, 1 Alaska 422,

— 179

no such motion for continuance had been made. That in-
formation was before the District Court only on the motion
to set aside the judgment.

HM This was not a case requiring Findings of Fact and
Conclusions of Law. It was decided purely on, and as, a
matter of law.

In our opinion it was correctly decided, and the judgment
of the District Court based on the order dismissing the ap-
peal from the Justice Court is affirmed.

246 F.2d 194.

Phillip DANIELS, Appellant, v. UNITED STATES of America,
Appellee,
No. 15410

United States Court of Appeals, Ninth Cireuit,
May 28, 1957,

Phillip Daniels, Steilacoom, Wash., for appellant.
William T. Plummer, U. S. Atty., Lloyd L. Duggar,
Asst. U. S. Atty., Anchorage, Alaska, for appellee.

Before MATHEWS, CHAMBERS and BARNES, Cirr
cuit Judges.

MATHEWS, Circuit Judge.

This appeal is from an order of the District Court for the
Territory of Alaska, Third Division, denying a motion of
appellant, Phillip Daniels, filed in the District Court on
September 29, 1956. The motion was purportedly based
‘on 28 U.S.C.A. § 2255, the pertinent provisions of which
‘are as follows:

“A prisoner in custody under sentence of a
court established by Act of Congress claiming the

. 1¥ormerly called the District Court for the District of Alaska.
“See the Act of June 6, 1900, c, 786, 31 Stat. 321, and 48 U.S.C.A. §
401. But see also 28 U.S.C.A. §§ 878, 460, 610, 758(a), 1291, 1292(1),
1294(2), 1846(b), 2072 and 2410(a); 29 U.S.C.A, § 217; and 48 U.S.C.A.
§ 108a.

— 181

right to be released upon the ground that the sen-

tence was imposed in violation of the Constitution

or laws of the United States, or that the court

was without jurisdiction to impose such sentence,

or that the sentence was in excess of the maximum

authorized by law, or is otherwise subject to collat-

eral attack, may move the court which imposed

the sentence to vacate, set aside or correct the

sentence. * * *

“Unless the motion and the files and records

of the case conclusively show that the prisoner is

entitled to no relief, the court shall cause notice

thereof to be served upon the United States attor-

ney, grant a prompt hearing thereon, determine

the issues and make findings of fact and conclu-

sions of law with respect thereto. * * *”
As indicated above, § 2255 applies only to a prisoner in
custody under a sentence of a court established by Act of
Congress and claiming the right to be released upon one or
more of the grounds mentioned in § 2255. It appeared
from the motion that appellant was a prisoner in custody
under a sentence of a court established by Act of Congress,
namely, a sentence of the District Court ® that appellant be
imprisoned for life—a sentence imposed on December 3,
1952. However, appellant did not claim the right to be
released upon any of the grounds mentioned in § 2255 or
upon any other ground. Instead, appellant, in and by the
motion, sought to have the District Court vacate and set
aside his life sentence and to impose, in lieu thereof, a sen-
tence to imprisonment for 10 years only.* The files and
records of the case showed the following facts:

2 The District Court was established by the Act of June 6, 1900, ¢
786, 31 Stat. 321.

3 Obviously, a 10-year sentence, imposed on or-as of December 3,
1952, would still have several years to run, .

182 |

On October 22, 1952, appellant was indicted in the District
Court for first degree murder committed in the Third Di-
vision of Alaska on or about March 11, 1952. Appellant
was arraigned on November 20, 1952, and pleaded guilty on
December 1, 1952. Thereupon, on December 3, 1952, the
District Court sentenced appellant to be imprisoned for life.
The District Court was not empowered to impose any lesser
sentence.*

Thus the motion and the files and records conclusively
showed that appellant was entitled to no relief. Therefore,
on November 23, 1956, the District Court entered its order
denying the motion without causing notice thereof to be
served or granting a hearing thereon or making findings of
fact or conclusions of law. In this, there was no error.®

Order affirmed.

4In Alaska, the only penalties for first degree murder are those
prescribed in §§ 65-4-1 and 65-4-2 of Alaska Compiled Laws An-
notated, 1949. Section 65-4-1 provides: “That whoever, being of
sound memory and discretion, purposely, and either of deliberate and
premeditated malice or by means of poison, or in perpetrating or in
attempting to perpetrate, any rape, arson, robbery, or burglary, kills
another, is guilty of murder in the first degree, and shall suffer
death.” Section 65-4-2 provides: “That in all cases where the ac-
cused is found guilty of the crime of murder under this and the next
preceding section, the jury may qualify their verdict by adding there-
to ‘without capital punishment ;’ and whenever the jury shall return
a verdict qualified as aforesaid the person convicted shall be sen-
tenced to imprisonment at hard labor for life.” Appellant, having
pleaded guilty, did not have a jury trial. Consequently, there was no
verdict in his case—qualified or otherwise. Nevertheless, as indicat-
ed above, the District Court, instead of sentencing appellant to death,
sentenced him to life imprisonment. Whether the District Court
erred in not sentencing appellant to death we need not and do not
now decide,

5Garcia v. United States, 9 Cir., 197 F.2d 687. See also Birtch v.
United States, 4 Cir., 173 F.2d 316; United States v. Fleenor, 7 Cir.
177 F.2d 482; Morales v. United States, 1 Cir., 187 F.2d 518; God-
win y. United States, 8 Cir, 191 F.2d 932; Klein v. United States, 7
Cir, 204 F.2d.518; Meredith y. United States, 4 Cir, 208 F.2d 680;

ES

245 F.2d 855

ALASKA INDUSTRIAL BOARD, and Carl E, Jenkins, Appel-
lJants, v. CHUGACH ELECTRIC ASSOCIATION, Inc, a
corporation and General Accident, Fire and Life Assurance
Corporation, Ltd., a corporation, Appellees,

No. 14616.

United States Court of Appeals, Ninth Cirenit.
April 29, 1957.
Rehearing Denied June 7, 1957.

Hornbrook v. United States, 5 Cir., 216 F.2d 112; United States v.
Lawrence, 7 Cir., 216 F.2d 570; Marshall v. United, States, 6 Cir.,
217 F.2d 467; Adams y. United States, 95 U.S.App.D.O, 354, 222 F.2d
45; Schumpert v. United States, 6 Cir., 226 F.2d 578; Barber v. Unit-
ed States, 10 Cix., 227 F.2d 431; Simmons v. United States, 10 Cir.
230 F.2d 73; Johnson y. United States, 4 Oir., 234 F.2d 813.

ee
ces)

Ss 187

J. Gerald Williams, Atty. Gen. of Alaska, John H. Di-
mond, Juneau, Alaska, for appellants.

Robertson, Monagle & Eastaugh, Juneau, Alaska, for ap-
pellees.

Before DENMAN, Chief Judge, and STEPHENS,
HEALY, POPE, LEMMON, FEE, CHAMBERS,
BARNES, and HAMLEY, Circuit Judges,

HAMLEY, Circuit Judge.

In this case, which arises under the Workmen’s Compen-
sation Act of Alaska, two questions are presented on appeal.
The first of these is whether, under the circumstances of this
case, the Alaska Industrial Board had jurisdiction to reopen
a previously-rejected claim for a temporary total disability
award. The second is whether, if the board had such juris-
diction, it correctly granted such an award for injuries aris-
ing from the same accident in which a lump-sum award for
permanent total disability had previously been granted.

The following facts, essential to a consideration of these
questions, are not in dispute. On September 21, 1950, Carl
E. Jenkins received serious injuries when he came into con-
tact with a high voltage electric line while in the course of
his employment. His employer was Chugach Electric As-
sociation which had insured its liability under the act with
General Accident Fire & Life Assurance Corporation.

As a result of the accident, it was necessary to amputate
Jenkins’ left arm near the shoulder, his right leg below the
knee, and four toes of his left foot. These amputations were
made in a series of three surgical operations, the last of
which was performed on October 28, 1950. The left foot

188 Ee

failed to heal and was still under treatment at the time of his
doctor’s last report, on December 17, 1953.

Following this injury, his employer and the insurance
company began paying Jenkins compensation for temporary
total disability, under the “Temporary Disability” provision
of Alaska Comp.Laws Ann., § 43-3-1 (1949). This com-
pensation was paid at the rate of $95.34 per week, for ap-
proximately thirty-eight weeks.

On July 25, 1951, the employer and the insurance com-
pany reversed their position. They decided that Jenkins
had been permanently and totally disabled since October 28,
1950, when the last amputation (the right leg) occurred.
Accordingly, they granted him a lump sum of $8,100, as a
permanent total disability award, but deducted from it the
$3,645 which had been paid to Jenkins as temporary total
disability. A check in the sum of $4,455 was sent to Jenkins
on July 25, 1951, for the purpose of closing the claim.

On August 14, 1951, Jenkins filed with the board, on its
printed form, an application for adjustment of claim. The
evident purpose of this application was to claim continuing
benefits for temporary disability, despite the allowance of a
lump-sum award for permanent total disability.1 It was so
treated by the employer and insurance company, which filed
a joint answer denying that temporary disability continued.

It was also so treated by the chairman of the board, who,
on November 12, 1952, filed a decision granting the applica-
tion. It was held in this decision that temporary disability
had continued since October 28, 1950, Jenkins was award-
ed the $3,645 which had been deducted from his Iump-sum
payment, and continuing temporary disability payments
“until a medical end result is reached.”

1An amended application was filed on December 10, 1951, correct-
ing the figures originally given for total compensation received.

ES)

On February 6, 1953, after review by the full membership
of the board, the two members other than the chairman filed
a decision vacating the chairman’s decision and award of
November 12, 1952. It was held that, Jenkins’ condition
having been rated as a total permanent disability on October
28, 1950, “no compensation for total temporary disability is
thereafter payable.” He was, however, granted a tempo-
rary total disability award of $476.70, representing compen-
sation for a period of thirty-five days prior to the operation
on October 28, 1950. Jenkins did not seek a district court ©
review of this award, as he might have done under Alaska
Comp.Laws Ann., § 43-3-22 (1949).

On May 14, 1953, Jenkins wrote to the chairman of the
board, requesting a copy of the decision of February 6,
1953. On November 10, 1953, Jenkins’ attorney wrote to
the board, requesting that the claim be reopened. On No-
vember 21, 1953, Jenkins filed an application for adjustment
of claim. He there stated that he was entitled to temporary
disability until there was an end to disability through med-
ical means. The employer and the insurance company an-
swered contending that the decision of February 6, 1953,
was res judicata, and that the board was without jurisdic-
tion to reopen the claim.

The board, on January 8, 1954, filed a decision reversing
its action of February 6, 1953, holding that a condition of
temporary total disability existed on and after October 29,
1950, “no end medical result having been reached.” The
employer and the insurance company thereupon instituted
this action to set aside the board’s decision.

In granting judgment for plaintiffs, the district court held
that the board was without jurisdiction to reopen the claim
following its decision of February 6, 1953, from which no
appeal was taken. Alternatively, it was held that an award
for temporary total disability may not be granted for physi-

190 be

cal disability arising from the same accident in which an
award for total permanent disability has been granted.

We will first consider the jurisdictional question which is
presented.

The power and duty of the board with respect to the mod-
ification of compensation awards is governed by Alaska
Comp.Laws Ann., § 43-3-4 (1949), quoted in the margin.”

Appellees contend that Jenkins did not file a claim, within
the meaning of the proviso at the end of § 43-34, prior to
the expiration of the three-year period specified in that pro-
viso. In this connection, it is pointed out that certain medi-
cal reports relied upon by appellants as constituting such a
claim were dated prior to the hearing resulting in the deci-

2 Alaska Comp.Laws Ann. § 43-3-4 (1949):

“Modification of compensation: Continuing jurisdiction: Effect of
review upon moneys already paid: Limitation of time. If an injured
employee [is] entitled to compensation under any subdivision or part
of this schedule, and it shall afterwards develop that he or she is
or was entitled to a higher rate of compensation under same or some
other part of subdivision of this schedule, then and in that event
he or she shall receive such higher rate, after first deducting the
amount that has already been paid him or her, To that end the In-
dustrial Board is hereby given and granted continuing jurisdiction of
every claim, and said Board may, at any time and upon its own mo-
tion or on application, review any agreement, award, decision or
order, and, on such review, may make an order or award ending,
diminishing or increasing the compensation previously awarded, or-
dered, or agreed to, subject to the maximum or minimum provided
in this Act. No such review shall affect such award, order or settle-
ment as regards any moneys already paid, except that an award or
order increasing the compensation rate may be made effective from
date of injury, and except that if any part of the compensation due
or to become due is unpaid an award or order decreasing the compen-
sation rate may be made effective from the date of injury, and any
payments made prior thereto in excess of such decreased rate shall
be deducted from any unpaid compensation, in such manner and by
such methods as may be determined by the Industrial Board; pro-
vided, however, that no compensation under such increased rate shall
be paid unless the disability entitling the employee thereto shall de-
velop and claim be presented within three (8) years after the injury.”

Le

sion and award of February 6, 1953. It is further argued
that Jenkins’ letter of May 14, 1953, does not constitute a
claim or seek a rehearing. The letter of November 10,
1953, which his counsel filed with the board, and Jenkins’
application for adjustment of claim, filed November 21,
1953, were not filed within three years of the injury, which
occurred on September 21, 1950.

Appellees’ argument is apparently based upon the premise
that, in order to constitute a “claim” within the meaning of
the proviso to § 43-34, the document must be filed subse-
quent to the decision establishing the lower rate of compen-
sation. If this premise is correct, we would agree with ap-
pellees, that such a claim has not been filed within the statu-
tory three-year period. The letter of May 14, 1953, consti-
tuting the only document filed subsequent to the decision and
prior to the expiration of the three-year period, was a mere
inquiry, and not a claim.

But we find nothing in the statutory language warranting
the view that, to constitute a “claim” under this proviso, the
document must be filed subsequent to the decision establish-
ing the lower rate of compensation. The “claim” referred
to in the proviso is not intended to serve the purpose of an
application for rehearing. Under § 43-3-4, no such appli-
cation need be filed, since the board is expressly authorized
to review a prior decision “upon its own motion.”

HE All that the “claim” need contain is a request for an
increased rate of compensation over that presently in effect.
Jenkins’ application of August 14, 1951, amended on De-
cember 10, 1951, contained such a request. It was so treated
by the employer and insurer in their answer, by the chairman
in his decision of November 12, 1952, and by the board in
its decision of February 6, 1953. Both the original and
amended applications were filed within three years after the

injury.

192 a

HI It is of no consequence that the board may actually
have reopened the matter in response to Jenkins’ insufficient
letter of May 14, 1953, or his tardy claims of November 10
and 21, 1953. Since the board had power to reopen the
matter on its own motion, and since it did desire to reopen,
the action taken is to be deemed a reopening on the board’s
own motion.

HL We hold that Jenkins filed a timely claim for in-
creased compensation, within the meaning of the proviso of
§ 43-34.

Appellees further contend that the board’s reviewing pow-
er under § 43-34 is limited solely to the adjustment of the
rate of compensation where there is a change in the physical
condition of the claimant within three years of the original
injury. Appellees argue, and we agree, that the temporary
total disability award here in question is not for a changed
physical condition, but for a physical condition which has
existed since the accident.

Appellees’ contention that there must have been a change
in the physical condition of the claimant since the prior
award is supported by a decision of the same trial judge, in
Suryan v. Alaska Industrial Board, 12 Alaska 571.

HL We agree that § 43-34 provides a method whereby
the board may reconsider a previous decision, for the pur-
pose of awarding increased compensation to cover adverse
changes in physical condition subsequent to a prior award.*
We find nothing in § 43-34, or elsewhere in the act, how-
ever, which limits the power to reopen to cases involving
changed physical condition. The words “and it shall after-
wards develop” are broad enough to include not only chang-

3 We so held in Hilty v. Fairbanks Exploration Oo., 9 Cir., 82 F.2d
77, and Keehn y. Alaska Industrial Board, 9 Cir., 230 F.2d 712.

a

es in physical condition, but the disclosure of errors of law
in connection with the award.*

HI The immediately-following words, “that he or she
is or was entitled to a higher rate [emphasis added],” add
substance to this construction. The word “was” indicates
that the period during which a claimant may be entitled to
increased compensation includes the time between the injury
and the earlier award. This negatives the idea that in-
creased compensation must relate to changed physical con-
dition since the prior award.

It is true that, in § 43-3-1 and in the proviso at the end of
§ 43-344, the word “develop” is used to indicate progression
of physical disability. But this is because the word is there
used in juxtaposition with the words “injury” or “disabil-
ity.” These word combinations do not appear in the body of
§ 43-34, the language being “and it shall afterwards de-
velop.”

Appellees next argue that the board’s decision of Feb-
ruary 6, 1953, is conclusive and binding because no court
proceedings to contest the decision were instituted within
thirty days, as provided by § 43-3-22.

HB Under § 43-3-22, the award is conclusive and bind-
ing “as to all questions of fact,” unless tested in a court pro-
ceeding commenced within thirty days. The award for tem-
porary total disability here in question involves no recon-
sideration of factual questions. It was known at the time of
the prior award that Jenkins’ physical condition had not
been stabilized. The granting, on reconsideration, of his

4These words may also be broad enough to include the disclosure
of errors of fact. However, in view of § 43-3-22, making a prior
award conclusive and binding “as to all questions of fact,” unless
court proceedings are instituted within thirty days, it is uncertain
(and we do not decide) whether the board may reopen a claim for
the purpose of reconsidering questions of fact.
WAR—13

194 Le

claim for temporary total disability was not based upon a
redetermination of facts, but upon a different view of the
meaning of the statute. We need not now decide whether,
despite § 43-322, the board is authorized, under § 43-3-4,
to redetermine questions of fact.

HE Appellees’ final argument on the question of juris-
diction is that § 43-3-29, requiring claims to be filed within
two years after the injury, barred the reopening of the claim.
But, as before shown, the claim for increased compensation
was filed on August 14, 1951, and amended on December 10,
1951, which dates are well within the two-year period.
Hence, we need not decide whether the two-year period spec-
ified in § 43-3-29 governs in the case of reconsiderations,
in view of the three-year limitation specified in the proviso
to § 43-3-4.5

We conclude that the board acted within its jurisdiction
and power in reopening this claim for the purpose of fur-
ther considering Jenkins’ request for an award covering tem-
porary total disability.

This brings us to the second principal question presented
on this appeal. Where injuries, sufficient in themselves to
constitute total and permanent disability, are the basis of the
maximum award for such disability, may an allowance nev-
ertheless be thereafter made for temporary disability based
on the failure to heal of an additional injury concurrently
sustained ?

5 An additional jurisdictional question has suggested itself to us.
Under § 48-34, the board is given authority to reopen claims for
the purpose of increasing or decreasing the “rate of compensation.”
It may be that, in a strict sense, the granting of a temporary total
disability award to one who has already received a permanent total
disability award, is not an increasing of the “rate of compensation”
of the original award. This question, however, was not discussed
in the briefs or oral argument, and the answer is not so plain as to
warrant us in dealing with its sua sponte.

De  )

The pertinent statutory provisions to be examined are the
two paragraphs of Alaska Comp.Laws Ann., § 43-3-1
(1949), quoted in the margin.®

Appellants’ contention that a workman may receive bene-
fit payments for “temporary” disability after he has been
awarded a lump-sum payment for total and “permanent”
disability resulting from injuries received in the same acci-
dent seems to involve a contradiction in terms. Appellants
seek to avoid this apparent contradiction by segregating the
injuries arising from a single accident. Thus, if, after find-
ing some injuries sufficient to meet the statutory definition
of “total and permanent disability,” there are enough left
over, when separately considered, to meet the statutory defi-
nition of “temporary disability,” appellants believe the
workman is entitled to both awards.

Hl This reasoning might be permissible if we were con-
cerned with permanent and temporary “injuries,” as that
word is used in the statute, rather than “disabilities,” as that
word is used in the statute. One may have a permanently

6The paragraphs of § 43-3-1 in question read:

“[Qemporary disability.) For all injuries causing temporary dis-
ability, the employer shall pay to the employee, during the period of
such disability, sixty-five per centum (65%) of his daily average
wages. And in all cases where the injury develops or proves to be
such as to entitle the employee to compensation under some provi-
sion in this schedule, relating to cases other than temporary disabili-
ty, the amount so paid or due him shall be in addition to the amount
to which he shall be entitled under such provision in this schedule.

“Payment for such temporary disability shall be made at the time
compensation is customarily paid for labor performed or services ren-
dered at the plant or establishment of the employer liable therefor
and not less than once a month in any event.”

“[Loss of members as total permanent disability.] The loss of both
hands, or both arms, or both feet, or both legs, or both eyes, or any
two thereof, or hearing in both ears, shall constitute total and per-
manent disability and be compensated according to the provisions of
this Act with reference to total and permanent disability.”

196 De

injured arm and a temporarily injured leg. But if, by rea-
son of certain injuries, a workman is, under the statute,
totally and permanently disabled from doing any work, it
follows that there is, in legislative contemplation, no remain-
ing ability to work which can be affected, either permanently
or temporarily, by other injuries received in the same acci-
dent.

Appellants argue that the statutory schedule of payments
for “total and permanent disability” represents mere arbi-
trary indemnities, not necessarily associated with loss of
earning power. They contend that temporary disability
compensation, on the other hand, is directly and solely relat-
ed to loss of earning power, and thus is compensation for
loss of wages during the healing period. Hence, appellants
assert, there is no inconsistency in allowing payments for
temporary disability after an award has been made for total
and permanent disability.

The basic principle of all workmen’s compensation
laws is that benefits relate to loss of earning capacity and
not to physical injury as such. In the case of the loss of
certain members, total and permanent loss of earning pow-
er is conclusively presumed for the purpose of awarding
compensation under the act.’ The individual receiving such
an award may actually be able to continue some work, and
hence be, in fact, not totally and permanently disabled. But
the fact that some ability to work remains is not to be taken
into account in determining whether such an individual is
entitled to the lump-sum award.

We think it must logically follow that this conclusive pre-
sumption cuts both ways. In fixing the compensation for
certain injuries, defined in the act as constituting total and
permanent disability, sustained in an accident, actual re-

%1See 2 Larson, Workmen's Compensation (1952 ed.) § 58.10.

Ss | 17

maining ability to work is to be disregarded for all purposes
—those which are favorable to the workman as well as those
which are unfavorable. Under the presumption, whatever
the facts may be, there is no remaining ability to work, and
therefore no foundation for temporary disability benefits.
There is likewise no foundation for an additional partial
disability award which, under appellant’s theory, would oth-
erwise be available if it became necessary to amputate Jenk-
ins’ left foot. The award for total permanent disability re-
sulting from loss of members is thus intended as a maximum
award for disability resulting from injuries received in an
accident,

Appellants call attention to the second sentence of the
quoted paragraph relating to temporary disability. It is
there provided that, in all cases “where the injury develops
or proves to be such” as to entitle the employee to compensa-
tion under some provision of the schedule “relating to cases
other than temporary disability,” the amount so paid or due
him under the temporary disability schedule shall be in addi-
tion to the amount to which the employee shall be entitled
under such other or permanent disability schedule. Cases
of permanent injury are “cases other than temporary dis-
ability,” within the meaning of this statute. Libby, McNeill
& Libby v. Alaska Industrial Board and Lathourakis, 9 Cir.,
191 F.2d 262, certiorari denied 1952, 342 U.S. 913, 72 S.Ct.
359, 96 L.Ed. 683.8

HHI As applied to the facts of this case, the sentence
just noted does not authorize the payment of benefits for
temporary disability after the workman has been found to

8 Lathourakis was allowed and paid $2,005 for temporary disability
suffered prior to his condition becoming fixed into permanent dis-
ability. He then received a lump-sum award of $3,600 for fifty per
cent permanent disability, and payments for temporary disability
thereupon ceased.

198 Le

have a permanent total disability. It means only that a
lump-sum award for permanent total disability shall be in
addition to any benefits theretofore paid or due for tempo-
rary disability. If an injury which causes “temporary” dis-
ability thereafter develops or proves to be a “total” dis-
ability, it is no longer a “temporary” disability.®

HES The district court was therefore correct in holding
that, after the disability was determined to be total and per-
manent, Jenkins was no longer entitled to monthly benefits
for temporary disability.

In view of the ruling just stated, we feel constrained to
discuss one more aspect of this case. The determination
that Jenkins’ disability was total and permanent was made
by the board in July, 1951. The board, however, attempted
to relate back this determination of his status to October 28,
1950, when the second member was amputated. The board
took this action under the mistaken view that any payment
for temporary disability was improper. The result was that
there was deducted from Jenkins’ $8,100 award for perma-
nent total disability the thirty-eight weekly payments he had
received as temporary disability payments since the October
date. As before indicated, the total sum so deducted was
$3,645, leaving Jenkins but $4,455 of his lump-sum award.
This action was confirmed by the board’s decision of Feb-
ruary 6, 1953, except that an award of $476.70 was made
for temporary disability benefits due prior to October 28,
1950.

In our view, the temporary disability payments should
not have been deducted from the lump sum to which Jenkins
became entitled by virtue of being permanently and totally
disabled. We say this notwithstanding the established fact
that the loss of members warranting a classification of total

9 Keehn y, Alaska Industrial Board, note 3, supra.

1)

and permanent disability unquestionably occurred on Octo-
ber 28, 1950.

Our opinion on this point is governed by the paragraph of
§ 43-3-1 which relates to temporary disability. It is there
provided that when the injury develops or proves to be such
as to entitle the employee to compensation under some other
provision of the schedule (in this case, the provision relating
to total and permanent disability), the amount so paid or due
him under the temporary disability schedule shall be in addi-
tion to the amount to which he shall be entitled under such
other or permanent disability schedule.

We have heretofore interpreted the words “and it shall
afterwards develop”, as used in § 433-4, to include not on-
ly changes in physical condition, but also the disclosure of
errors of law in interpreting the statute. Section 43-3-1,
now under consideration, uses these same quoted words plus
the words “or proves.” The added words do not, in our
view, affect the meaning to be attributed to this provision.
We therefore construe this provision of § 43-3-1 in the
same way the similar provision in § 43-34 has been con-
strued.

HE (Until July 25, 1951, when the employer and the
insurance company reclassified appellant as totally and
permamently disabled, he was entitled to receive the ‘tem-
porary benefits which were being paid to him, because he
was then classified as temporarily disabled. It follows that,
under the paragraph of § 43-3-1 to which reference has
been made, the lump-sum payment awarded on July 25,
1951, should not have been reduced by the sum Jenkins had
received, or there was then due him, as a temporary disabil-
ity award.”

410 Libby, McNeill & Libby v. Alaska Industrial Board and Lath-

ourakis, supra. It was there pointed out that the prior 1929 act did
require the amount paid for temporary disability to be deducted from

200 a

There is good reason for this statutory requirement.
Benefits for temporary disability are determined as a per-
centage of average daily wages, and are paid at the time
compensation is customarily paid for labor performed at the
employer’s plant. See § 43-3-1. Such benefits, therefore,
are considered as income, and are normally treated and ex-
pended as such by workmen covered by the act. Lump-sum
payments for permanent total disability, on the other hand,
are intended to represent capitalization of future earnings.

Hence, if a workman should rely upon the classification
of a disability as temporary and treat payments so received
as income, the deduction of those payments from his award
for permanent disability would leave the injured workman
with a sum much less than what the legislature intended as a
capitalization of his future earnings.

We accordingly hold that the lump-sum payment of $8,-
100 should be in addition to the $3,645 paid for temporary
disability on and after October 28, 1950, and in addition te
the $476.70 award overdue for temporary disability prior
to October 28, 1950.

This deduction question was not presented in the trial
court and was not argued in the briefs. It was dealt with
to some extent during oral argument. Normally, we would
not consider and determine a question not presented in the
trial court and in briefs. This case, however, has been pend-
ing for more than five years, thus rendering a remand un-
desirable. The point under discussion is a matter of public

the award under other provisions of the act. This was changed when
the present language was enacted in 1946.

The provisions of § 43-3-4 providing for the deduction of amounts
already paid, and providing that a new award may be made effective
from date of injury, relate to cases wherein a “higher rate of com-
pensation” is awarded. When the employer and the insurance com-
pany decided to reclassify appellant as totally and permanently dis-
abled, they were not awarding him a higher rate of compensation.

2)

interest in connection with the administration of an import-
ant act having wide application. We have therefore con-
sidered it appropriate to depart from our usual practice,
noted above, so that the case can finally be disposed of on the
basis of this opinion.

The judgment is modified in accordance with the views
expressed in this opinion, and in all other respects is affirm-
ed.

DENMAN, Chief Judge (dissenting).

I dissent from the majority opinion’s harsh and unjust
conclusion resulting from its failure to apply to the relation-
ship between the statutory provisions for total permanent
and total temporary disability, the same liberal rule of inter-
pretation of the Supreme Court and this court,’ that the
majority opinion does in considering the statute’s time limi-
tations.

It is obvious and admitted by the majority opinion that an
employee’s loss of two limbs, here a hand and a foot, does
not create his total disability to work. There are many em-
ployments for a person with one good hand who can walk
with an artificial leg or for one who has two good hands and
a wheel chair.

Hence the statement of the statute that such loss “shall
constitute total and permanent disability and be compen-
sated according to the provisions of this act with reference
to total and permanent disability” can well be construed lib-
erally as providing no more than that one having such an
injury shall receive a certain amount of money in any event.
Since such a liberal construction would leave to the injured
man after the amputation the right to claim compensation

1Voris v. Hikel, 1953, 346 U.S. 828, 383, 74 S.Ct. 88, 98 L.Ed. 5;
Baltimore & Philadelphia Steamboat Co. v. Norton, 1982, 284 U.S.

408, 414, 52 8.Ct. 187, 76 L.Ed. 866; Libby, McNeill & Libby v. Alaska
Industrial Board, 9 Cir., 1951, 191 F.2d 262, 264,

202 |

for the actual continuing temporary disability from the in-
fections in his left foot, we are required to make it.

The statute provides for payment from the employer for
“all injuries causing temporary disability”.® .

If this provision covers all temporary disabilities from a
single industrial accident, the narrow and strict construction
of the majority which reads “all” to mean all injuries except
those accompanied by a loss of two limbs, etc., distorts the
statutory language by depriving the word “all” of its plain
meaning in violation of long established principles of statu-
tory construction.*

The court’s narrow construction leads to a most anomal-
ous result. Under the opinion’s rationale, a man like Jenk-
ins who loses two limbs in or shortly after an accident is en-
titled to total permanent compensation immediately ($8,-
100),* but receives nothing thereafter during a long period

2The pertinent portion of Section 43-8-1 reads as follows:

“(Lemporary disability.) For all injuries causing temporary dis-
ability, the employer shall pay to the employee, during the period of
such disability, sixty-five per centum (65%) of his daily average
wages, And in all cases where the injury develops or proves to be
such as to entitle the employee to compensation under some provi-
sion in this schedule, relating to cases other than temporary disabili-
ty, the amount so paid or due him shall be in addition to the amount
to which he shall be entitled under such provision in this schedule.”
{Emphasis added.]

3 Rice v. Minnesota & N. W. R. Co., 1861, 1 Black. 358, 379, 66 U.S.
358, 879, 17 L.Ed, 147 (* * * * it is not competent for this
court to reject or disregard a material part of an act of Congress,
unless it be so clearly repugnant to the residue of the act that the
whole cannot stand together.”); United States v. Raynor, 1938, 302
U.S. 540, 547, 58 S.Ct. 353, 356, 82 L.Ed. 413 (“A construction that
creates an inconsistency should be avoided when a reasonable inter-
pretation can be adopted which will not do violence to the plain words
of the act, and will carry out the intention of Congress.”)}; 2 Suther-
land, Statutory Construction § 4705.

4The provision of the Alaska statute for a lump sum award for
total permanent disability which is fixed in amount regardless of the

23.

of hospitalization which may last for several years. On the
other hand, a worker who has both legs crushed in an acci-
dent (his injury being less serious initially), and is hospital-
ized for several years while physicians fight to save his legs,
gets temporary disability as long as he is in the hospital until
a medical end result is reached, This may amount to many
thousands of dollars (65% of his weekly pay). If at the
end of that time amputation is found necessary, he then re-
ceives the total permanent disability lump sum payment in
addition. Thus although the end result in each case is the
same, the man whose injury was apparently less severe in-
itially gets more compensation. And if the man whose legs
were merely crushed did not have to have them eventually
amputated, he still could receive more compensation than
one in Jenkins’ position if his period of temporary disability
was long enough.®

Nothing in the statute compels this result. In fact the
second sentence of the provision of Section 43-3-1 defining
temporary disability suggests that permanent and temporary
disability payments may both be payable at the same time
injured man’s previous wage rate is unique. All other workmen's
compensation statutes in this country provide for periodie payments
which in all jurisdictions except three vary in amount according to
the workman’s pay rate prior to his injury. See 2 Larson, Work-
men’s Compensation Law, App.B, Table 8, pp. 524-6 (1952), consisting
of a comparison of the total permanent disability provisions of the
workmen’s compensation laws of 58 jurisdictiows, Liberal interpre-
tation of this unique statute requires that we not construe it to de-
prive the injured man of the temporary compensation which is based
on his wage loss and limit him to a mere fixed sum unrelated to his

loss of wages in the absence of a clear statutory mandate to that ef-
fect.

5 At the rate of total temporary compensation to which Jenkins was
entitled ($95.34 per week) the temporary compensation would exceed
the total permanent lump sum payment ($8,100) after only 20 months
of total temporary disability. According to the determination of the
Board, Jenkins’ total temporary disability continued more than three
years after his injury.

204 EE

for one injury, and nothing therein restricts this result to
cases where the workman becomes entitled first to tempo-
rary disability and thereafter to permanent disability.6 In my
view the argument of the opinion based on the distinction be-
tween “injuries” and “disabilities” ignores the realities of
the situation and relies on semantics, Such semantical re-
finements are not sufficient to support the harsh and unrea-
sonable construction of the statute which leads to the con-
clusion that one who is less severely injured (and suffers less
disability) may receive more compensation than one who is
more seriously disabled. The words of the Supreme Court
in Baltimore & Philadelphia Steamboat Co. v. Norton, 1932,
284 U.S. 408, 413, 52 S.Ct. 187, 188, 76 L.Ed. 366, appear
pertinent:

“It may not reasonably be assumed that Con-
gress intended to require payment of more com-
pensation for a lesser disability than for a greater
one including the lesser. Nothing less than com-
pelling language would justify such a construction
of the act.”

The temporary disability provisions of the Alaska statute
are typical of those of most other jurisdictions in this coun-
try. In the absence of a clear statutory mandate to the con-
trary, the Alaska statute should be construed, as have those
of other jurisdictions, as providing temporary disability
compensation during the healing period until a medical end
result is reached.”

6 That sentence reads: “And in all cases where the injury devel-
ops or proves to be such as to entitle the employee to compensation
under some provision in this schedule, relating to cases other than
temporary disability, the amount so paid or due him shall be in ad-
dition to the amount to which he shall be entitled under such pro-
vision in this schedule.” :

7See, e. g, McCall v. Potlatch Forests, 1949, 69 Idaho 410, 208 P.
2d 799, 801; Shell Oil Co. v. Industrial Commission, 1954, 2 IL2d

2)

There is nothing contrary to this in this court’s opinion in
Keehn v. Alaska Industrial Board, 9 Cir., 1956, 230 F.2d
712. There the physicians had determined that a medical
end result had been reached, a 40% permanent disability
award had been made and “A compromise and release was
signed by the parties.” 230 F.2d at page 713. Here no such
result had been reached and no compromise settlement made,
and we are concerned with the initial healing period prior to
the occurrence of a medical end result.

It appears to me that the statement of the majority opin-
ion that “in the case of the loss of certain members, total and
permanent loss of earning power is conclusively presumed
for the purpose of awarding compensation under the act” ®
which, the opinion asserts, is supported by Larson, has no
such support as applied to the issue presented in this case.
This conclusive presumption is applied, as Larson’s text
shows, to prevent the deduction of any wages acttally earn-
ed by a worker who is totally and permanently disabled with-
in the meaning of a workmen’s compensation statute from
his total permanent disability award.® Nothing in the text

590, 119 N.H.2d 224, 280; Gorman v. Atlantic Gulf & Pacific Co., 1940,
178 Md. 71, 12 A.2d 525; Laurel Daily Leader v. James, Miss.1955,
80 So0.2d 770, 778; Fallis v. Vogel, 1940, 187 Neb. 598, 290 N:W. 461;
Petersen v. Foundation Co., 1942, 128 N.J.L. 284, 25 A.2d 1; Peerless
Sales Co. v. Industrial Commission, Utah 1944, 154 P.2d 644; John-
son y. Cox, Ala.App.1955, 82 So.2d 562,

8 Majority opinion, 245 F.2d 861.

92 Larson, Workmen’s Compensation Law § 58.10, p. 42 (1952). See
e. g, Great American Indemnity Co. v. Segal, 5 Cir, 1956, 229 F.2d
845, where the court, in affirming a total disability award and dis-
allowing a deduction for wages earned by the disabled worker, quot-
ed a Texas decision, Davies v. Texas Employers’ Ass’n, Tex.Com.
App., 29 8. W.2d 987, as follows:

“{TJotal incapacity’ does not mean utter inability to do any work
at all, but that a man’s disability is total, within [the meaning of the
statute], when he can no longer ‘secure and hold employment for
physical labor’ such as he had to do to make a living prior to his in-
jury.” 929 F.2d at page 846,

206 |

supports the majority’s statement that “this conclusive pre-
sumption cuts both ways” and therefore that it must be ap-
plied to reduce the injured workman’s compensation.” So
applied, the presumption defeats the purpose which it was
created to serve (i. e., to maximize the recovery of the in-
jured man), and as applied to the present facts, results in a
construction of the statute which violates the principle of
the Norton case, supra.

It is significant that under other workmen’s compensation
statutes which closely resemble the Alaska statute in their
provisions for the determination of permanent and tempo-
rary disability, a large number of cases have held that where
“the effects of the loss of a member extend to other parts of
the body * * * the schedule allowance for the lost
member is not exclusive.”"* These cases are but another il-
lustration of the liberal rule of construction in workmen’s
compensation cases.” Since temporary disability compensa-
tion covers the healing period,” it appears to me that a for-
tiori the same rule of construction requires us to hold that
where the failure of an amputation to heal has inflicted upon
the workman a temporary disability in fact far greater than
the loss of the limb itself he is entitled to total temporary
disability compensation until the healing of the amputation
is completed.

10 Majority opinion, 245 F.2d 861.
12 Larson, op. cit. supra note 9, § 58.20, p. 44, casxs cited note 38.

12 Larson, op. cit. supra note 11, p. 45. The text writer suggests
that “destruction of the most favorable remedy should not be read
into the act by implication.” Ibid. In contrast to other workmen's
compensation statutes, the provision of the Alaska Act for tempo-
rary disability compensation is more adequate than its permanent
disability compensation provisions (note 4 supra). Hence the above
quoted principle here strongly supports affirmance of the Board’s
decision,

13 Note 7, supra.

=?)

Instead of the liberal treatment to which this unfortunate
man and his family are entitled the majority is leaving him
unpaid for the long period of actual total disability admit-
tedly arising from the electric burning in his employer’s
service, and a most harmful rule of construction is establish-
ed for this circuit.

POPE, Circuit Judge (dissenting).

What Judge Denman has pointed out in his footnote, 4,
namely, that the lump-sum payment under the Alaska statute
is in no way related to the wage scale of the injured work-
man, has convinced me that it is not proper to apply here
what the majority opinion calls a “basic principle of all
workmen’s compensation”, that is, that “benefits relate to
loss of earning capacity and not to physical injury as such.”
My difficulty is in seeing how we can read a “basic principle”
into a statute like this one which bears evidence of having
been drawn on a very different theory.

The majority opinion says: “One may have a permanent-
ly injured arm and a temporarily injured leg.” Just as self-
evident is the proposition that one may have a permanently
injured arm and leg and a temporarily injured leg, or he may
lose an arm and a leg and have a temporarily injured leg.
That is this case.

The opinion further says: “The individual receiving such
an award [i. e., for loss of an arm and a leg] may actually
be able to continue some work.” I have not been able to find
in the statute anything which says that if that ability to
continue to do some work is temporarily impaired by injury
of the remaining leg, he shall receive no compensation for
that distinct temporary disability.

* The majority opinion appears to get away from that by
asserting the existence of a conclusive presumption that
“cuts both ways”. According to the opinion it “cuts both

208 a

ways” so that although the person receiving the lump sum
award may “actually be able to continue some work” yet he
is conclusively presumed not to be able to do what he is “‘ac-
tually” able to do. The opinion arrives at this conclusive
presumption that “cuts both ways” by extending the pre-
sumption discussed by Larson (see footnote 7) in a manner
for which the cases cited by Larson furnish no authority.
Those cases indulge the conclusive presumption for the pro-
tection of the workman and to prevent him from losing his
total permanent disability award. I think the Alaska statute
does not warrant creating a presumption that cuts the other
way and minimizes the compensation which the workman
might otherwise claim.

It is a universally accepted rule relating to workmen’s
compensation laws that they should be liberally construed in
favor of the injured workman. When I know it is a fact,
as the majority opinion concedes, that a workman who has
lost an arm and a leg may actually be able to continue some
work and that such work may for the time being be prevent-
ed by what the opinion calls a “temporarily injured leg”, I
cannot be persuaded that I should create a new double-
edged presumption that what I thus know to be possible is a
matter of law impossible,

I am persuaded that if we would not import into this
unique statute any “basic principle” or “conclusive presump-
tion” not actually found in the act itself, and would just
take this statute by its four corners and apply the usual lib-
eral construction in favor of the injured workman, we would
have to find that it provides that the fixed award for certain
specified injuries was not intended to bar further compensa-
tion for the temporary loss of such earning power as re-
mained after the injury.

With Judge Denman I think the judgment should be re-
versed.

‘

es

247 F.2d 8
EMPIRE PRINTING COMPANY, a Corporation, Appellant, v.
Henry RODEN, Ernest Gruening and Frank A, Metcalf,
Appellees.
No. 15052.

United States Court of Appeals, Ninth Cirenit.
Tune 10, 1957,

x] |
|

| enn iri oo OEOAOEOeVOoov7V7™errereeee

H. L, Faulkner, San Francisco, Cal., for appellant.
Buell A: Nesbett, Anchorage, Alaska, for appellees.

Before DENMAN, Chief Judge, POPE, Circuit Judge,
and MURRAY, District Judge.

POPE, Circuit Judge. :

The appellees, as plaintiffs below, each filed a separate ac-
tion against Empire Printing Company, appellant, for def-
amation as a result of a publication which appeared in the
Daily Alaska Empire, a newspaper published by appellant
at Juneau, Alaska. The cases were consolidated for trial
and tried to a jury which returned verdicts awarding each
appellee $1.00 compensatory damages, and $5,000 punitive
damages, and appellant appeals.

At the time of the publication involved, appellee Gruening
was Governor of Alaska, appellee Roden was Territorial
Treasurer, and appellee Metcalf was Territorial Highway

Le =—_2 13

Engineer, and the three together constituted the Territorial
Board of Road Commissioners.

Prior to May, 1951, there had been operated under private
ownership a ferry, the “Chilkoot”, between Haines and
Juneau, Alaska, which closed a gap in the highway between
these two points. In May, 1951, the private owners of this
ferry announced to Territorial officials that because of in-
creased operating costs they did not intend to operate the
ferry during the season of 1951. Faced with the abandon-
ment of the ferry which closed the 65 mile water gap be-
tween Juneau and the highways of Alaska and the United
States, the appellees, acting as the Territorial Board of Road
Commissioners, purchased the ferry Chilkoot to operate it as
part of the Territorial Road system. During the 1951 sea-
son, the operating expenses of the ferry were paid by vouch-
er approved by the Territorial Auditor out of the Territorial
treasury from the funds earmarked for roads, harbors, etc.
Receipts from the operation of the ferry went to the Treas-
urer and into the general fund of the Territory.

This method of operation, which was followed during the
1951 season, proved unsatisfactory in several respects. In
the first place, the processing of Territorial vouchers, issued
in payment of operating expenses of the ferry, took con-
siderable time, and many of the expenses were payable im-
mediately; and secondly, because while the expenses of the
ferry were paid out of the road and harbor appropriations,
the income from the ferry went into the general fund of the
Territory, which resulted in a depletion of the road and har-
bor fund in an amount disproportionate to the net cost of
operating the ferry.

Because of these difficulties, appellees, acting as the Terri-
torial Board of Road Commissioners, met with the Attorney
General of the Territory in June, 1952, before the com-
mencement of the 1952 ferry season, and devised a plan for

214 De

the operation of the ferry by which revenue from it could be
used to defray operating expenses. Under this plan receipts
from the ferry operation were deposited in a bank account
known as the “Chilkoot Ferry” account, and the only per-
son authorized to draw funds from said account was the
purser of the ferry, one Robert E. Coughlin. Funds were
withdrawn by said Coughlin in payment of expenses of op-
erating the ferry. This method was followed in the 1952
operations of the Chilkoot ferry.

The publication in question appeared in the appellant’s
newspaper “Daily Alaska Empire” of September 25, 1952,
and gave the above mentioned details of the ferry operation
by appellees. Almost the entire front page of that issue was
devoted to the so-called “special ferry fund”, and is too vol-
uminous to be included in its entirety in this opinion. How-
ever, the headline, in black type an inch and a quarter high,
and extending across the entire eight columns of the front
page, read “Bare ‘Special’ Ferry Fund’. Beneath that head-
line was another smaller headline in 5% inch high black type
five columns wide reading “Reeve Raps Graft, Corruption”.
This latter heading dealt with a one column story at the ex-
treme left of the page regarding a speech made by a political
candidate named Robert Reeve, and, so far as its text is con-
cerned, it had nothing to do with the ferry fund or appellees.
Immediately next to the one column story and directly under
the headline “Reeve Raps Graft, Corruption” was a photo-
graph of a check drawn on the “special” ferry fund. Be-
neath the photograph of the check was a two column editori-
al entitled “Start Talking Boys” which dealt with the special
ferry fund. To the right of the page and as a subheadline to
the main headline three lines deep and in type one-half inch
high, was a statement “Gruening, Metcalf, Roden Divert
‘Chilkoot’ Cash to Private Bank Account”. In the story
which appeared under this headline was the statement, “The
case closely parallels that of Oscar Olson, former Terri-

A)

torial Treasurer who is now serving a prison term at Mc-
Neil Island Penitentiary for violating the law in the receipt
and disbursement of public funds.” In the editorial head-
ed “Start Talking Boys”, there was this additional refer-
ence to Oscar Olson: “Oscar Olson sits today in his prison
cell, dreaming of the days when he thought Territorial laws
were only for the underlings.”

It was the above quoted headlines and portions of the
publication which appellees alleged constitute the libel. Ap-
pellant pleaded as affirmative defenses truth, fair comment
and privileged criticism.

In this court the appellant states its position upon the
principal issue between the parties as follows: “Appellees
claim that the articles could be interpreted as meaning that
the appellant was charging the appellee with stealing public
funds or converting them to their own use, whereas there is
nothing of that nature contained in the publication.”

At the time here in question, § 65-5-63, A.C.L.A.1949,
provided as follows with respect to the offense of embezzle-
ment of public money:

“Embezzlement of public money. That if any
person shall receive any money whatever for said
Territory or for any county, town, or other muni-
cipal or public corporation therein, or shall have in
his possession any money whatever belonging to
such Territory, county, town, or corporation, or in
which said Territory, county, town, or corporation
has an interest, and shall in any way convert to his
own use any portion thereof or shall loan, with or
without interest, any portion thereof, or shall neg-
lect or refuse to pay over any portion thereof as by
law directed and required, or when lawfully de-
manded so to do, such person shall be deemed
guilty of embezzlement, and upon conviction

216 |

thereof shall be punished by imprisonment in the
penitentiary not less than one nor more than fif-
teen years, and by fine equal to twice the amount so
converted, loaned, or neglected or refused to be
paid, as the case may be.”

§ 7-1-9 of the same Code defined embezzlement when
committed by the Treasurer of the Territory of Alaska in
substantially the same terms as those used in the section just
quoted, and concluded by providing that upon his convic-
tion of such offense the Treasurer should be subject to the
same punishment as otherwise provided in the laws of Alas-
ka for the crime of embezzlement. Both of the sections just
referred to deal with embezzlement of public funds. Other
sections of the Alaska Code define and provide for the pun-
ishment of embezzlement by various other classes of per-
sons.” Embezzlement, as defined in these latter sections, is

1“$ 7-1-9. Embezzlement: Penalty. If the Treasurer of the Ter-
ritory of Alaska, or any person exercising the duties of that office,
shall fail, neglect or refuse, to account for or pay over, all moneys in
his hands as said Treasurer in accordance with law, or shall unlaw-
fully convert to his own use in any manner whatever, or to the use
of another not lawfully entitled thereto, or use by way of investment
in any kind of property, or loan without authority of law, any por-
tion of the public money intrusted to him for safe keeping, transfer
or disbursement, or unlawfully convert to his own use, or to the use
of another not entitled thereto, money or other property which may
come into his hands by virtue of his office he shall be deemed guilty
of the embezzlement of so much of the money or property as is
thus taken, converted, invested, used, loaned, or unaccounted for, and
upon conviction thereof he shall be subject to the same punishment
as is otherwise provided in the laws of Alaska for the crime of em-
bezzlement.”

2“§ 65-5-61, Embezzlement by employee or servant. That if any
officer, agent * * * shall embezzle or fraudulently convert to his
own use, or shall take or secrete with intent to embezzle or fraudu-
lently convert to hisownuse * * *,

“§ 65-5~62. Embezzlement by bailee: Indictment, That if any
bailee, with or without hire, shall embezzle, or wrongfully convert

Le 7

the crime as that term is more commonly understood, In the
case of embezzlement under those sections there must be a
“wrongful conversion”, a “fraudulent conversion”, or “con-
version with intent to defraud.”

§ 12-2-1, A.C.L.A.1949, also provides with respect to
public officials receiving public money as follows:

“Every office, board, commission or bureau au-
thorized to collect or receive any fees, licenses,
taxes or other money, and every office, commission
or bureau of the United States or other authorized
agency, authorized to collect any fees, licenses,
taxes or other money, belonging to this Territory,
shall account for and pay such fees, licenses, tax-
es or other money, less any fees he may be entitled
to under existing law, to the Territorial Treasurer
at lease once each month and the same (shall) be
covered into the general fund.”

Appellant calls attention to those portions of § 65~5-63,
quoted above, which provided that the offense of embezzle-
ment of public money may be committed not only when the
official shall “convert to his own use any portion thereof”,
but also when he “shall loan * * * any portion there-
of”, or when “he shall neglect * * * to pay over any
portion thereof as by law directed and required.” Its posi-
tion is that the appellees did in fact fail to pay over the re-

to his own use, or shall secrete with intent to convert to his own use
ee ap

“3 65-5-65. Embezzlement by trustee. That if any person, being
the trustee of any property for the benefit of another, or for any pub-
lic or charitable use, shall, with intent to defraud, by any means con-
vert the same or any portion thereof to his own use or benefit
aoe oD

“g 65-5-66. Embezzlement by banker, broker, ete. That if any
person, being a banker, broker, merchant, attorney, or agent, and be-
ing intrusted with the property of another, shall, by any means, with
intent to defraud, convert the same, * * *,”

218 |

ceipts from the ferry operation to the Territorial Treasurer
as required by § 12-2-1; that this amounted to a neglect or
refusal to pay over such funds as by law directed within the
meaning of § 65-5-63 quoted above. It contends that the
published article stated no more than that, namely, that the
appellees had entered into an arrangement whereby money
belonging to the Territory was put into a special fund and
not paid over to the Treasurer; that since this is all that
the newspaper article said, the publication was not actionable
primarily because it was true.?

The appellees’ actions proceeded upon their theory that
the published articles went far beyond the mere statement
that appellees had set up a special fund which was not paid
over to the Territorial Treasurer ;—that its actual sense and
meaning to the reading public was that they, the appellees,
had been guilty of the crime of embezzlement as that crime
is commonly understood in that they had been guilty of
wrongful conversion of public funds to their own use. Ap-
pellees say that the reading public must have understood the
articles when taken together and read as a whole as charg-
ing the crime of embezzlement involving private profit and
moral turpitude, primarily because of the statement that this
case paralleled that of Oscar Olson who was again referred
to in the editorial, which described Olson, as sitting “in his
prison cell.”

Hi Olson, as the published article indicated, was a
former Territorial treasurer who was convicted of embez-
zlement upon an indictment under § 7-1-9 above referred
to. Judgment had been entered upon his plea of guilty and

3 It is also argued that viewed in this light the articles could not
be regarded as libelous per se, since language cannot be so construed
unless it “falsely impute the commission of a crime”. ‘The argument is
that the articles as printed were not false because they merely related
civeumstances that actually occurred with respect to the creation of
the special fund and the failure to pay it into the treasury.

Le = 19

he had been sentenced to a term at McNeil’s Island Peni-
tentiary. His case, it may be assumed, was one well known
in the Territory. The public funds had been converted to
his own use. The record here shows that he embezzled some
thousands of dollars which he put into his own pocket and
spent. Appellees say that these articles in substance were
calculated to convey to the reader, and did create in the
mind of the reader, the thought that these appellees had been
guilty of a like or similar offense. This principal issue was
submitted to the jury by an instruction which stated as fol-
lows:

“The Court does not here declare or intend to
indicate to you whether or not the crime charged,
imputed to the plaintiffs, or intended to impute to
the plaintiffs, the wrongful theft or misappropria-
tion of public funds. The plaintiffs alleged that
such words, together with other references to the
Oscar Olson case, and imputations of graft and
corruption, impute to them the crime of embezzle-
ment as that crime is commonly understood, that
is, the wrongful conversion of public funds en-
trusted to plaintiffs to their own use, which acctsa-
tion is admittedly untrue. The defendant denies
that there was any accusation of theft of public
funds, or any such imputation intended, and con-
tends that the violation of law charged referred
only to unlawful receipt and disbursement of pub-
lic funds, which it alleges to be true. This is a
question of fact for the jury to determine, from a
consideration of all of the evidence in the case,
and from a careful consideration of the publica-
tions in their entirety, including headlines, and any
reasonable imputations or deductions arising
therefrom.”

220 a

We think that this instruction of the court and the sub-
mission of this question to the jury was proper. In Wash-
ington Post Co. v. Chaloner, 250 U.S. 290, 293, 39 S.Ct.
448, 63 L.Ed, 987, it was stated: “A publication claimed to:
be defamatory must be read and construed in the sense in
which the readers to whom it is addressed would ordinarily
understand it. So the whole item, including display lines,
should be read and construed together, and its meaning and
signification thus determined. When thus read, if its mean-
ing is so unambiguous as to reasonably bear but one inter-
pretation, it is for the judge to say whether that signification
is defamatory or not. If, upon the other hand, it is capable
of two meanings, one of which would be libelous and ac-
tionable and the other not, it is for the jury to say, under all
the circumstances surrounding its publication, including ex-
traneous facts admissible in evidence, which of the two
meanings would be attributed to it by those to whom it is
addressed or by whom it may be read.”

HM Here was a case in which the plaintiffs asserted
that what was said, in the light of the way it was said, and
the surrounding circumstances, was that plaintiffs had been
guilty of the crime of embezzlement involving private profit
and moral turpitude; that is to say, as that crime is com-
monly understood. The first question was for the judge:
whether the publication proven was capable of that mean-
ing. If it was, then it was for the jury to determine wheth-
er the publication was in fact so understood.* And if it was

4Restatement of Torts, § 614: “(1) The court determines whether
a communication is capable of a defamatory meaning. (2) The jury
determines whether a communication, capable of a defamatory mean-
ing, was so understood by its recipient.”

And see Prosser on Torts, 24 Ed,, § 92, p. 581: “It is for the court
in the first instance to determine whether the words are reasonably
capable of a particular interpretation; it is then for the jury to say
whether they were in fact so understood.”

22

so understood, no proof of the truth of a lesser, more in-
nocuous meaning, could make out a defense.

And so it was proper for the court to tell the jury, as it
did, that if they should find that the charge in the publication
was the serious one, which the appellees claimed it was, then
“the defendant must show, to justify the truth of such
publication, not only that plaintiffs took the funds accruing
from the operation of the ferry, deposited them in a sepa-
rate account, and paid operating expenses out of such ac-
count without vouchers approved by the Auditor, but de-
fendant must also show by a preponderance of the evidence
that plaintiffs handled the money wrongfully and fraudu-
Jently and with a criminal intent to convert such to their
own use.” The jury found for the plaintiffs, appellees here,
upon these issues.

Hin our view the record warrants the jury’s finding
that the publication was calculated to charge the more seri-~
ous and more degrading type of offense, and that the at-
tempted justification of truth was not sustained.

Plainly here there was plenty of room for a finding that
the publication charged, and that it was well calculated to
charge, embezzlement involving theft and conversion to ap-
pellees’ own use. Defamation can be accomplished in a mul-
titude of ways, and the manner in which the front page of
defendant’s newspaper was made up on the occasion here in
question, could well be regarded by the jury as a deliberate
defamation by indirection, insinuations and associations,
even if a direct and categorical charge were lacking. The
jury could well infer that the readers of that newspaper
were given to understand by what they read that these ap-
pellees had been guilty not merely of a violation of statute
but of embezzlement under circumstances of extreme in-
famy and depravity. “A charge need not be made directly;
indeed, the venom and sting of an accusation is usually more

222 Lt

effective when made by insinuations. The floating calumny
which each reader may affix to any and every official act
which his aroused suspicion may lay hold of is capable of
inflicting graver injury and injustice than a direct, specific
charge, which may be squarely met and refuted, if untrue.”
Sherin v. Eastwood, 46 S.D, 24, 190 N.W. 320, 323.

HE What a newspaper article actually says or carries
to its readers must be judged by the publication as a whole.
The headlines alone may be enough to make libelous per se
an otherwise innocuous article. Gustin v. Evening Press
Co., 172 Mich. 311, 137 N.W. 674.

An article may become libelous by juxtaposition with
other articles or photographs. Zbyszko v. New York
American, 228 App.Div. 277, 239 N.Y.S. 411. The jury
had the right to read this publication with an eye upon the
question of what ideas it was calculated to bring to the
average reader, and it could well believe that the publica-
tion charged these plaintiffs with guilt of the most repre-
hensible kind and with personal dishonesty, corruption and
moral turpitude.

Immediately under the page-wide scare headline
“Bare ‘Special’ Ferry Fund” appear two sets of sub-head-
lines in heavy black type three-fourths of an inch in height.
On the lefthand side, and five columns wide, is the heading
“Reeve Raps Graft, Corruption”. Immediately under this
line and dovetailing with it is a photostat copy of one of the
Chilkoot ferry checks. The fact that the text of the article
under the heading relating to graft and corruption refers to
a wholly different matter is a circumstance which the jury
had a right to consider, but it did not compel them to ignore
the very possible purpose sought in weaving all these head-
lines together, especially in view of the substantial evidence
of actual malice on the part of the publishers. The jury
could conclude that the headline was placed where it was

es _

for its effect upon the reader in connection with the other
headlines. It was immediately opposite the headline, in
comparable type reading “Gruening, Metcalf, Roden Divert
‘Chilkoot’ Cash to Private Bank Account.” The two
column wide editorial on this same page immediately below
the reproduction of the check, is headed, “Start Talking,
Boys”. Not only is that heading of the editorial an appar-
ent simulation of the way a detective would address a crook
in a cops and robbers movie, but it has sarcastic comments
upon other “deals” with which Gruening had been connect-
ed, and whose defense of a named former proceeding is re-
ferred to as one which “still rings stridently in the ears of all
honest Alaskans.” Defamation may be by irony or ridicule.
See Prosser, § 92, pp. 576, 580.

The reference in the right hand headline to the diverting
of funds to a “private” bank account fits into what the jury
could find to be a calculated creation of inferences of graft
and corruption. The casual reader of this page might thus
be given the impression that the diversion is to “private
uses,”

Most important in this connection is the reference to Os-
car Olson. A direct reference to the Olson case is made in
the news account and again in the sarcastic reference in the
editorial. It seems a fair interpretation of the publication
that in charging that this case “parallels” that of a dishonest
territorial treasurer who was caught and sentenced to serve
time in McNeil Island Penitentiary for converting terri-
torial funds to his own use, the newspaper was charging ap-
pellees with that kind of an offense.

HI Since the jury could rightly find that such was the
meaning of the newspaper publication, it follows that it

5“Qscar Olson sits today in his prison cell dreaming of the days
when he thought that Territorial laws were only for the underlings.”

224 |

could also find, under the court’s instruction quoted above,
that the defense of truth was not made out. “The truth,
when relied on in justification of a libel, must, to constitute
a complete defense, be as broad as the defamatory accusa-
tion; and so the proof of truth of a part only of a charge
will not amount to a complete defense.” Register News-
paper Co. v. Stone, 102 S.W. 800, 801, 31 Ky.Law Rep. 458,
11 LRA.N.S., 240. “The truth which is admitted as a
defense in such an action as this is the truth of the alleged
words in substance and in fact, in the sense in which they
were used and intended to be understood, or were reason-
ably understood in accordance with the usual construction
and common acceptation of the meaning of the words as
used, in the light of all the surrounding circumstances.”
White v. White, 129 Va. 621, 106 S.E. 350, 352. There is
no claim whatever that any of the appellees in what they did
with respect to the special fund were guilty of any personal
dishonesty or made any individual profit, or received any-
thing to their own use, That is conceded.

This brings us to a consideration of various specifications
of error dealing with sundry rulings of the trial court which
appellant asserts were erroneous and prejudicial, A  sub-
stantial number of these specifications failed to conform
with the requirements of Rule 18(2) (d) of this court, 28
U.S.C.A. which provides that: “When the error alleged is
to the charge of the court, the specification shall set out the
part referred to totidem verbis, whether it be in instructions
given or in instructions refused, together with the grounds
of the objections urged at the trial.” In general this court
has not been inclined to be strict in the enforcement of that
rule, particularly when the briefs sufficiently disclose the
point which the appellant is endeavoring to make. Here it
must be said that appellant’s disregard of this rule has made
it exceedingly difficult to ascertain what appellant is trying

DD

to say. Nevertheless we propose to deal with each specifica-
tion or attempted specification as stated.

HEME Appellant complains that the trial court held and
ruled that there was no criminal penalty for such acts as ap-
pellees performed in respect to'the setting up of the special
ferry fund. Since the jury by their verdict have approved
appellees’ version of the meaning of the newspaper publica-
tion and have in effect found that it charged appellees with
embezzling funds to their own use, as did Oscar Olson, the
question as to whether setting up the Chilkoot ferry fund
was also subject to criminal punishment would appear to be
unimportant. But in any event, appellant is mistaken as to
the trial court’s ruling upon this point. What the court said
as to this matter was contained in instruction No. 5 which
fully explained the provisions of § 65-5-63 and § 7-1-9,
above referred to and then left it to the jury to determine
whether the actions of the plaintiffs relating to the ferry
fund were or were not illegal.® We find no occasion to
consider whether the court should have determined this
question itself rather than leaving it to the jury, for no ex-
ception was taken to the action of the court in this regard.
Rule 51 Fed.Rules Civ.Proc., 28 U.S.C.A.

Two of the specifications relate to the cancelled checks
drawn on the special ferry fund and to the use of those funds
in the operation of the ferry. At the trial appellant intro-
duced in evidence the certificates of the Territorial Treasur-
er, the Territorial Secretary, and the Director of Finance,
stating that they had each searched the records of their of-
fice and did not find in such offices any of the ferry fund

6The court charged: “By this the Court does not intend to com-
ment in any way as to whether or not the actions of the plaintiffs re-
lating to the ‘Chilkoot’ ferry fund were or were not illegal, which is
a matter for the jury; but it is the intention of this instruction only
to declare to you the remedy in case there may exist any such il-
legality.”
fe

226 |

checks. These certificates were dated in October and No-
vember, 1955, shortly before the trial of the action began.
Appellant requested an instruction to the jury that the ap-
pellees had not produced the records of the ferry fund or its
checks at the trial and reciting that it was the duty of the
plaintiffs, these appellees, to have seen that these papers
were filed in the proper office, and that the destruction of
such papers would constitute a crime.

Hl It is plain that such an instruction would be wholly
improper; the certificates that the checks were not then in
the several offices mentioned were dated long after the ap-
pellees had left office, the terms of two of them having ex-
pired some two and one-half years previously. The sugges-
tion attempted in the proposed instruction that appellees
were responsible for the absence of the checks is wholly un-
warranted by the facts. But more significantly, the disposi-
tion of the checks or the funds had no relation whatever to
the alleged libel. Nothing in the publication concerned dis-
position or loss of the checks or their destruction and to in-
vite the jury to speculate as to whether some one had de-
stroyed the checks would be a most improper invitation to
consider collateral and irrelevant matter.

The appellants offered to prove that there was a shortage
in the funds used to operate the ferry and they object to
the trial court’s exclusion of this evidence. The appellants
would infer from the shortage an act of criminal misconduct
by the appellees and thus establish the truth of the charge
that they were guilty of the crime of embezzlement as that
crime is commonly understood.

While the inference of misconduct might be permissible
from mere proof of a shortage, there is nothing in the offer
of proof which would connect the misconduct with the ap-
pellees, and it is clear from the evidence that they never
actually handled any of the money. Therefore, as the at-

27

torney for the appellants recognized, for this evidence to be
relevant the appellees would have to be vicariously liable
criminally for the misconduct of their agents who actually
ran the ferry.

HEEB But under the facts here present appellees could
not be vicariously guilty of the crime of embezzlement in
the common sense. Generally speaking the doctrine of re-
spondeat superior has no application in criminal law; State
v. Moss, 95 Or. 616, 182 P. 149, 188 P. 702, 705; United
States v. Food and Grocery Bureau of Southern California,
D.C., 43 F.Supp. 966, 971; Sayre, Criminal Responsibility
for Acts of Another, 43 Harv.L.Rev. 689, 702. The reason
for this is that except in rare instances the element of intent
is a requisite portion of the proof of a criminal charge and
cannot be inferred from the mere fact of the agency. Cer-
tainly embezzlement as that crime is commonly understood
is a crime of that character, and in which proof of specific
intent is required. As the Supreme Court said in Morissette
v. United States, 342 U.S. 246, 260, 72 S.Ct. 240, 248, 96
L.Ed. 288:

“Stealing, larceny, and its variants and equiva-
lents, were among the earliest offenses known to
the law that existed before legislation; they are in-
vasions of rights of property which stir a sense of
insecurity in the whole community and arouse pub-
lic demand for retribution, the penalty is high and,
when a sufficient amount is involved, the infamy
is that of a felony, which, says Maitland, is ‘* *
as bad as a word as you can give to man or thing.’
State courts of last resort, on whom fall the heav-
iest burden of interpreting criminal law in this
country, have consistently retained the require-
ment of intent in larceny-type offenses.”

228 a

HE Accordingly, we think the trial court was correct
in excluding the proffered proof of loss of funds in the
operation of the ferry. There was no offer or attempt to
show that the plaintiffs personally knew about or au-
thorized the alleged misappropriation. Hence the offered
evidence was wholly irrelevant to prove the truth of the
accusation that the plaintiffs embezzled funds in the manner
in which the jury has found the publication charged.

Another specification of error relates to the language
of § 65-5-63, quoted above, which provides that a person
in the possession of public money violates that section if
he “shall loan, with or without interest, any portion thereof.”
Appellant attempts, again without complying with this
court’s rules, to specify error of the court in instructing that
the deposit of funds in a bank subject to be withdrawn by
check does not constitute in law a loan of such funds. Ap-
parently the argument is that since the legal relationship
between a bank and its depositor is that of debtor and credi-
tor, the mere deposit of the ferry funds in a bank would be
a loan in violation of the statute.

Hs Even if appellant were right in this assertion, and
if that instruction ought not to have been given, it is plain
that it could not be prejudicial for here it is conceded by all
parties that these ferry funds were not paid to the Territorial
Treasurer as they should have been. Whether there was
a technical loan to the bank where they were deposited would
therefore be of no important significance. However, it is
our opinion that the court’s instruction was a correct one:
It is clear that when the Territorial legislation prohibited
the making of loans it did not intend that mere deposits in a
bank should be included within that classification.

The court admitted in evidence over the objection
of the appellant a portion of a letter which had been written

2)

to the editor by one of its writers and published by the news-
paper. It referred to the publications here asserted to be
libelous and stated that when the writer read them he was
caused to think that the Governor [Gruening] was a “dis-
honest, misappropriating, unworthy man.” We think it
doubtful if this should have been received notwithstanding
the appellant’s publication of the letter would be tantamount
to admission that such a communication had resulted from
the original articles. If the testimony of witnesses may be
received for the purpose of disclosing how the reading pub-
lic actually understood a newspaper story, we think it would
be the better rule to require such reader witnesses to be pro-
duced to testify, thus subjecting them to cross-examination.
However, the receipt of this single item of evidence cannot
be said to be so prejudicial as to call for a new trial.

Ina so-called specification which assigns error in refusing
to give 22 different instructions requested by the appellant,
-the appellant refers to the proposed instructions only by
number, and en masse, not otherwise describing or iden-
tifying them. This is a gross disregard of the requirements
of our rule and we are not required to consider such request-
ed instructions or the refusal to give them; nevertheless, we
have examined them and we find no merit in the complaints
respecting any of them, Some of the instructions listed are
peremptory in character and are the equivalent of a com-
mand for a directed verdict. Others merely express a view
of the law diametrically opposed to that contained in the
proper instructions of the court which we have previously
quoted. Some of them bearing upon the defense of fair
comment and privilege are no different than the instructions
given upon those questions by the court itself. We find it
sufficient to say that the court’s charge to the jury, taken in
its entirety, fairly presented to the jury the issues to be deter-
mined by it.

230 — |

HN The verdicts of the jury awarded punitive damages
in substantial amounts, but the record contains a mass of
evidence disclosing express malice on the part of the ap-
pellant, which, if believed by the jury, well warranted the
verdicts returned. We note no substantial error in the
record and accordingly the judgment in the consolidated
cases in favor of each of the appellees and against the appel-

lant is affirmed.
24 F.2d 556

S. BIRCH & SONS, a corporation, C. F. Lytle, a corporation, and
Green Construction Company, a corporation, partners doing
business as Birch Lytle & Green, Appellants, v. Robert
L, MARTIN, Appellee.

8. BIRCH & SONS, a corporation, 0. F. Lytle, a corporation, and
Green Construction Company, a corporation, partners doing
business as Birch Lytle & Green, Appellants, v. L. A.
MARTIN, Appellee.

L, A. MARTIN, Appellant, v. 8, BIRCH & SONS, a corporation,
C. F. Lytle, a corporation, and Green Construction Company,
a corporation, partners doing business as Birch Lytle &
Green, Appellees,

Nos, 15107, 15108,

United States Court of Appeals, Ninth Cireuit,
May 15, 1957.

Rehearing Denied June 17, 1957.

rt

23.

233

—_+_—_

" Davis, Renfrew & Hughes, Anchorage, Alaska, for ap-
pellants.

Bell, Sanders & Tallman, Anchorage, Alaska, for appel-
lee,

Before BONE, FEE and BARNES, Circuit Judges,

234 De

BARNES, Circuit Judge.

On August 14, 1952, along a narrow strip of highway
approximately six miles south of Anchorage, Alaska, L. A.
Martin (hereinafter, Martin Sr.) and his son, Robert Martin
Jr., were beaten and bloodied by a group of road construc-
tion workers, buoyed by alcoholic beverages and the happy
knowledge of a job completed.

Subsequently, the father and son filed these actions
against S. Birch & Sons, a corporation, C. F. Lytle, a corpo-
ration, and Green Construction Company, a corporation,
(partners doing business as Birch Lytle & Green) and five
individual defendants, Ross McDonald, Cecil “Joe” Sipes,
John P. Bell, Duane J. “Bud” Weber, and Raymond E.
Wise, all employees of the aforementioned partnership. The
actions were consolidated for trial, The cases were tried by
a jury, which returned a verdict in favor of Martin Sr.
against the three corporate partners, and Bell and Weber,
individually, for $7,000 compensatory and $2,000 punitive
damages. The trial judge later directed and Martin Sr. con-
sented to remittitur of $2,500 of the compensatory award.
The jury also returned a verdict in favor of Martin Jr.
against the three corporate partners, and Weber, individual-
ly, for $7,500 compensatory and $2,500 punitive damages.
McDonald and Wise were exonerated in each action. Sipes
was not served with summons and did not participate in the
trial. The defendant partnership alone prosecutes these
appeals. Martin Sr. has cross-appealed, challenging the
propriety of the remittitur.

The incident took place alongside and on a twenty-foot
wide stretch of highway. The defendant partnership had
just completed work on approximately one thousand feet
of new paving on the west half of said highway. The
narrow width of the highway necessitated vehicular traffic
control by flagmen employed by the partnership. These

De 235:

men were stationed at barricades at each end of the con-
struction zone. They permitted north and southbound traffic
to travel alternately along the eastern ten feet width of the
highway.

Sometime after 6:00 p. m. and before 7:00 p. m., the
plaintiffs, driving their automobile south through the gath-
ering twilight at the head of a procession of southbound
traffic, were flagged onto the eastern one-half of the high-
way. After traveling approximately one-half the distance
through the traffic control, the plaintiffs’ vehicle found its
forward progress blocked by a northbound car, driven by
Sipes, in which Weber was a passenger. The impasse oc-
curred immediately opposite the gravel pit and asphalt plant,
which, together with the partnership office and a scale house,
were located off the highway to the west. There was no
traffic behind the northbound car; there was an undeter-
mined amount of traffic behind the southbound car.

Each driver insisted that the other give him the right of
way. An altercation ensued. At this point, the testimony
differs. According to the conflicting evidence, Martin Jr.,
the driver of the southbound car, was grabbed by Weber
who stood, “half-soused,” with beer can in hand outside the
Martins’ car window and when Martin Jr. tried to disengage
himself, Weber pulled him out of the car, or, he (Martin Jr.)
jumped out of his car without provocation to do battle with
Weber, who was empty-handed and merely feeling “happy”.
Martin Jr. was knocked down by one and attacked by four
or five men (including Sipes) and kicked in the mouth, or, he
knocked down Weber three times, and as one witness posi-
tively stated—was never struck himself. The stories of
Martin Sr.’s activities are just as disparate. He was struck
in the face and knocked unconscious by Bell, either while
reaching for a lug wrench in the car trunk, which he sought
in order to aid his son, or, after he had obtained the wrench
and was rushing into the melee to even it up.

236 Le

When Martin Jr. saw his father lying on the ground he
hurried to his side to protect him from further blows. None
were forthcoming. Martin Jr. then lifted his father back
into the car and prepared to depart. However, the milling
group of men surrounding the car, estimated at ten to fifteen
in number, refused to permit them to leave the area. One
of the men—supposedly McDonald—told the Martins that
“We have taken off you S.B.’s for the last four or five years;
now, you're going to listen to us; you’re not going any-
where.” Martin Jr. obeyed instructions and remained at
the scene. His auto, a former taxicab, had a two-way radio
in it, and he called the police. After a few minutes wait the
Highway Patrol arrived on the scene and plaintiffs were
allowed to leave. The entire incident did not consume more
than forty minutes.

. There is no doubt that the plaintiffs were beaten by
someone during the fray. Martin Sr, sustained bloody and
cut lips, loss of his set of artificial dentures, a large knot-like
lump—“as big as an egg””—on the back of his head, a con-
cussion, and sundry other more minor injuries. Martin Jr.
suffered a concussion, a badly cut eye, a bruised knee, had
two teeth knocked out and several others loosened.

HE At the trial the defenses of mutual combat and self-
defense were presented by counsel for the defendants, but
the jury obviously rejected both of them. It apparently
accepted plaintiffs’ version of the fracas as related above.
We cannot disturb its resolution of conflicts in the evidence
as to who among the individuals sued bore the responsibility
for the assault. Parker v. Title & Trust Co., 9 Cir., 233
F.2d 505; Capital Transit Co. v. Bingham, 94 U.S.App.
D.C. 75, 212 F.2d 241.

The evidence raises certain questions of law. “Two
distinct theories upon which liability of the defendant part-
nership could be predicated were submitted to the jury.

Lr 237

Plaintiffs sought to impose both vicarious and direct liability
on the partnership. Vicarious liability rested squarely on
the doctrine of respondeat superior. Direct liability was
founded on alleged negligence in failing to use reasonable
care to protect highway users during their passage through
the controlled area from the unlawful acts of employees.

HBB To hold the partnership responsible under the
doctrine of respondeat superior, plaintiffs were required to
prove that the attack upon them by the employees occurred
during the course and’ in the scope of their employment.*
The pummeling administered plaintiffs by Weber, Bell, and
Sipes constituted no less than an aggravated assault and
battery.” Their actions were willful, wanton and intention-
al. Indeed, plaintiffs contend their conduct was criminal
in character.’ The fact that the unlawful activity was in-
tentional and even criminal does not per se take it out of

1N. L. R. B. v. International Longshoremen’s & Warehousemen’s
Union, 9 Cir., 210 F.2d 581.

2 Plaintiffs alleged in their separate complaints that several uni-
dentified “John Does”, also employees of defendant partnership, par-
ticipated in the fight. But they were unable to identify these un-
known persons or their employer at the trial. Since persons other
than employees of defendant partnership were present at the con-
struction site, it seems highly dubious that the partnership could be
held Mable for the acts of the unidentified “John Does.” In any
event, the same considerations that control the question of scope of
employment of the identified aggressors would also apply to the un-
identified persons.

3 Both parties have devoted much effort to a discussion of liability
based on “mob violence.” Such conduct is deemed criminal under
the law of the Territory of Alaska. A.C.L.A.1949, § 65-10-1._How-
ever, it is the general rule, and no Alaska legislative history or ju-
dicial decision is cited to the contrary, that such legislation does not
create a new basis of statutory liability. independent of common law
liability. The civil action remains one for trespass or assault com-
mitted pursuant to the mob enterprise. 46 AmerJur. 185. Accord-
ingly, the text discussion of the partnership's liability for its em-
ployees’ assaults comprehends'this theory,

238 a

the scope of employment. “It is accepted law that the master
may be liable for the willful and malicious acts of a servant
* * *” Novick v. Gouldsberry, 9 Cir., 173 F.2d 496, 500.
But such fact is an important consideration in ascertaining
if the specific acts charged occurred while the servant was
acting within the scope of his employment. Its precise effect
in a given case will vary with the particular factual context
involved.

Here the acts complained of constituted battery.
“To create liability for a battery by a servant upon a third
person, the employment must be one which is likely to bring
the servant into conflict with others.” Restatement of
Agency, § 245, Comment a. What is needed is a functional
relationship between the employment and the wrongful act
or acts. It must be shown that “the particular tortious act
was [not] clearly unrelated to the accomplishment of any
of the objects of the employment.” Novick v. Gouldsberry,
supra, at page 501. Where the connection is too remote
and attenuated, the master is not liable. Under such con-
ditions the only reasonable inference to be drawn from the
servant’s conduct is that he is giving vent to personal feelings
and is seeking solely to further his personal interest. “When
this is the case, the mere fact that the act which caused
the harm was done while the servant was acting in the em-
ployment and on the employer’s premises would not result in
liability. 35 Amer.Jur., Master and Servant, Sec. 55; Re-
statement, 1 Agency, Sec. 245, Comment (d), p. 550.”
Novick v. Gouldsberry, supra, at page 501. It must appear
that the employee is acting in part at least in the interests
of his employer; mixed motives will suffice. But where
the employee acts only to further his own interests, the em-
ployer is not liable. Nelson v. American-West African
Line, 2 Cir., 86 F.2d 730, The question is essentially one
of degree. An assault by a hockey player on a spectator

ee 239

may justify vicarious liability, M. J. Uline Co., Inc. v. Cash-
dan, 84 U.S.App.D.C. 58, 171 F.2d 132, where as an assault
by one construction worker upon another may not. Park
Transfer Co. v. Lumbermen’s Mut. Cas. Co., 79 U.S.App.
D.C. 48, 142 F.2d 100. Each case must be decided in its
own unique factual setting.

HEME Applying these general principles to the case at
bar, we find that both Weber and Sipes were truck drivers,
and Bell was a paving operator. None had any duties which
necessitated or were likely to call for the use of force.
None even had any duties which were likely to bring any of
them into direct contact with passing motorists. None
was charged with controlling the flow of traffic in the
restricted area or with clearing road jams. Moreover, none
of the identified trio were on duty when the incident oc-
curred. All had checked out for the day and were on their
way home. The time cards show that Bell signed out at
5:30 p. m. and Weber at 6:00 p. m., while Sipes completed
his shift at 5:30 p. m. also. Their continued presence at
the work site was due to their desire to participate in the
job completion celebration. They had no duties while
on work which would warrant the conclusion that their
wrongful acts were committed while they were acting within
the scope of their employment; a fortiori when they were
off work. The proximity to their employment was geo-
graphical not functional. Such proximity is not enough to
establish liability.

It is, of course, quite possible that during the course of
their labors on this particular project the men became irri-
tated with highway users who interrupted or impeded their
work. In their uninhibited state they may well have pic-
tured plaintiffs as the personifications of the Despised
Motorist. Nonetheless, as a distinguished commentator has
pointed out, “The servant’s act in punishing persons who

240 Lt

annoy him in the performance of the service * * * can
very seldom be regarded as within the (scope) of the em-
ployment.” 2 Mechem, Agency, 2 Ed. 1914, § 1978, This
is not one of those rare situations.

It might be argued that while the aggravated assaults
would not under ordinary circumstances come within the
scope of the employment of the known assailants, they
would in this particular instance because a managerial
official of the defendant partnership either authorized or
ratified them. McDonald was the general superintendent on
the construction project. There is no evidence in the record
that he authorized or approved in advance, or even ac-
quiesced in the attacks upon the Martins. His presence on
the scene begins just as the actual brawling was ending.
He reached plaintiffs car at the same time Martin Sr. was
knocked to the ground. No further physical injuries were
inflicted on plaintiffs thereafter. McDonald is charged with
detaining plaintiffs and he admits that he ordered them off
the road to alleviate the traffic clog. In respect to the re-
marks he purportedly made to plaintiffs, heretofore quoted
in full, which were tinged with antagonism and indicated
satisfaction with plaintiffs’ plight, there is no credible basis
in the record establishing McDonald as their source. Both
Martins said they saw McDonald and heard him speak but
neither was able to identify him at the trial; in fact Martin
Sr. mistakenly identified another man as McDonald. Martin
Jr. did not testify that he heard the profane taunt, although
he was in full possession of his faculties when it was sup-
posedly uttered. Martin Sr. claimed that he heard the re-
marks while regaining consciousness and while he was still
“coming and going” and that an anonymous onlooker iden-
tified McDonald as the speaker. This is hardly adequate
evidence to bind the partnership, on a theory of ratification,
to vicarious liability.

Dh 241

Our holding in the instant cause does not conflict with
the decisions of this Court in the Novick v. Gouldsberry, su-
pra, and Pacific Tel. & Tel. v. White, 9 Cir., 104 F.2d 923,
cases. In Novick we upheld a judgment against a saloon-
keeper for an assault made by a bartender while on duty, on
the ex-husband of the bartender’s wife. The rationale of the
decision was that the bartender, by the very nature of his
employment, “was authorized to maintain order in the
saloon, and the assault was committed in the course of his
keeping order.” 173 F.2d 496, 501. In White the em-
ployer was held liable for an assault committed upon a sus-
pected robber by its chief special agent while attempting to
procure a confession. The agent had general authority to
make a full investigation of the robbery and consequently
the assault committed pursuant to his investigation did not
fall outside the scope of his employment. The bartender in
Novick and the special agent in White both had jobs which
were likely to bring them “into conflict with others.” Re-
statement of Agency, § 245, Comment (a). In each of
those instances it could be said that the employee was acting
to some degree in his employer’s interest. That vital link—
there present—is here absent. The respondeat superior
doctrine cannot apply.

The fact that vicarious liability cannot be sustained does
not necessarily absolve the partnership from any and all
liability.

HI The relationship of employer and employee creates
under certain circumstances a duty on the employer to use
reasonable care to control the activities of the employee on
the work premises so as to prevent harm to persons coming
onto the premises, despite the fact that such activities are
not within the scope of employment and are done solely to

242 Ee

advance the personal interest of the servant.* Prerequisite
to liability is a showing that the employer knew or should
have known of the necessity and opportunity for exercising
such control.

The jury was properly instructed as to the nature and
scope of this duty. And a plausible basis for its application
to the instant case might be constructed, if it were not for
one overriding and insurmountable difficulty.

HM The scope of the duty in a highway construction
zone realistically extends over the entire area where con-
trol by the employer is effective. The imposition of the
duty is especially appropriate in the immediate vicinity of
the highway. It existed at the site of this melee. There
was sufficient evidence of appellant’s breach of its duty to
present this issue to the jury. The evidence shows that
McDonald authorized the purchase of whiskey and beer in
plentiful quantities for the men. Sipes and Weber, fearful
such supply would be insufficient, procured more for their
private supply and use. McDonald and Wise, also a Super-
intendent, were both aware that this was a job completion
celebration. It is common knowledge that such occasions
furnish the opportunity for, in the vernacular, “letting off
steam.” They saw the men consume the liquor and then
obtain more beer. Surely they perceived the gay frame of
mind of the men. They also saw the men coiigregate and
remain in the construction zone area. However, -despite
having provided the alcoholic beverages to the men, they
took no precautions to insure safe passage for motorists
through the area. They had the ability to do so. This was
incontrovertibly established by the undisputed evidence that

4Mletcher y. Baltimore & Potomac Ry. Co., 168 U.S. 185, 18 §.Ct.
35, 42 L.Ed. 411; In re Sabbatino & Co., 2 Cir, 150 F.2d 101; Re-
statement of Torts, § 317; Restatement of Agency, § 213; Harper

& Kline, “The Duty to Control the Conduct of Another,” 43 Yale LJ.
886, 896 (1934).

Ee 243

when McDonald ordered Weber to desist from further
brawling and to leave the area, he (Weber) obeyed. Under
such circumstances the question of their negligence, if any,
was for the jury to determine. Thus, it would appear that
a valid theory of liability exists to support the jury verdict
were it not for one crucial fact. It is, of course, true that
the particular theory upon which the jury did base its ver-
dicts is unknown, We already have held that one of the two
alternatives—respondeat superior—was unsustainable. We
now must hold that the second theory—negligent control—
cannot be supported.

The. fatal flaw in this latter theory is that the
defendant partnership would be liable under the facts of this
case only if its supervisorial employees, McDonald and
Wise, had been derelict in the performance of their duties.
The record does not disclose any independent negligent
conduct on the part of the partnership itself. There is no
evidence that the partners from the facts known or which
should have been known to them, knew or should have
known of the necessity of taking additional steps to protect
the personal safety of passing motorists.® If they had any
duty to act, it was by and through their superintendents on
duty. The record reveals that McDonald and Wise were the
only superintendents on duty and at the scene of the fight.
They provided the liquor and they were responsible for
policing the premises and controlling the men. Yet the ques-
tion of their negligence in respect to the control of the re-
stricted area was submitted to the jury in the same in-
struction as was the question of negligence of the defendant
partnership. The jury absolved both McDonald and Wise
from individual responsibility. We can only conclude there-
from that it found neither was negligent. The master’s

5See Hedrick v. Fraternal Order of Fishermen of Alaska, D.C.,
103 F.Supp. 582.

244, Es

liability being wholly derivative, the release of the servants
bars any recovery against the master, 57 C.J.S. Master &
Servant § 619(b), pp. 421-422.

There being no valid basis for the compensatory damages
awards, it follows that the awards of punitive damages—
resting on the same ground as the compensatory verdicts—
cannot stand,

In view of our determination of the instant case we do
not reach the merits of other points raised by appellant.

| The cross-appeal of L, A. Martin remains to be
considered. By it, he attempts to contest the validity of the
remittitur to which he consented. He was not compelled to
do this. He could have had a new trial, but he preferred to
choose the reduced amount. He cannot now question the
propriety of the judgment to which he gave consent. Lewis
vy. Wilson, 151 U.S. 551, 14 S.Ct. 419, 38 L.Ed. 267.

The judgments in these consolidated cases are hereby
Reversed as to the defendant partners only.

354 U.S. 925, 77 S.Ct. 1378

UNITED PRESS ASSOCIATIONS, a Corporation, petitioner, v.
Sidney Dean CHARLES, Paul S. Charles, Patricia Charles
et al, No. 948,

Supreme Court of the United States.
June 17, 1957,
SCs
John Dimond, for petitioner.
Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit.
“Denied. ‘

243 F.2d 451
George DUSHON, Harold Rathgeb, Hilton Duke, Peter J. Vallen-
tine, Nels Pilskog, Joe Miszencin, and Thomas J. Golden,
Appellants, v. UNITED STATES of America, Appellee.
No, 14922,

United States Court of Appeals, Ninth Cirouit,
April 23, 1957.
Rehearing Denied June 18, 1957.

246

Harold J. Butcher and Geo. Grigsby, Anchorage, Alaska,
for appellants.

William T. Plummer, U. S. Atty., Anchorage, Alaska,
and Donald A. Burr, Asst. U. S. Atty., for appellee.

Before HEALY, POPE, and HAMLEY, Circuit Judges.

HEALY, Circuit Judge.

HE Appellants brought this suit under the Federal Tort
Claims Act to recover damages for injuries caused by the

| 247

negligence of one Harold D. Greene, assertedly an employee
of the United States. The trial court found that Greene
was an employee of an independent contractor and not of the
United States, and accordingly denied recovery. The sole
question presented on appeal is whether or not this holding
iserror. Weare satisfied that it is not.

Briefly summarized, the background facts are these:
The Alaska Railroad, which is a single track road traversing
the area between Seward and Fairbanks, Alaska, is an
agency of the United States. In 1949 it entered into a con-
tract with three heavy construction contractors,” one of
which was the Morrisson-Knudsen Company, Inc., for the
rehabilitation of a portion of its railroad tracks south of
Anchorage, between the two stations known as Potter and
Indian. The terrain necessitated that men, equipment and

1The Federal Tort Claims Act, 28 U.8.C.A. § 1346(b), in material
part reads:

“(b) Subject to the provisions of chapter 171 of this title, the dis-
trict courts * * * shall have exclusive jurisdiction of civil ac-
tions on claims against the United States, for money damages
* * * for injury or loss of property, or personal injury or death
caused by the negligent or wrongful act or omission of any employee
of the Government while acting within the scope of his office or em-
ployment, under circumstances where the United States, if a private
person, would be liable to the claimant in accordance with the law
of the place where the act or omission occurred.”

Chapter 171, § 2671. Definitions, provides in material part that the
‘term “ ‘Federal agency’ includes the executive departments and in-
dependent establishment of the United States, and corporations pri-
marily acting as, instrumentalities or agencies of the United States
but does not include any contractor with the United States.” The
term “Employee of the government” is defined as including “offi-
cers or employees of any federal agency, * * * and persons act-
ing on behalf of a federal agency in an official capacity, temporarily
or permanently in the service of the United States, whether with or
without compensation.”

2The contract was joint, and the three construction concerns are
generally referred to in the briefs and in this opinion as “the con-
tractor.”

248 |

materials be moved over the Alaska Railroad tracks to the
place of work. The right of access to the job was derived
from the contract, but in order to obtain such access the
contractor had to provide rail motor cars and unpowered
track cars, or “man-haul” cars, for utilization of the tracks.
Some of these cars were purchased by the joint contractors
and some were rented from Morrison-Knudsen Company,
which in turn had a previous rental agreement for them with
the Alaska Railroad. This latter rental agreement did not
pertain to the construction project.

The appellants, who were employees of the contractor,
were injured while being transported in man-haul cars pro-
pelled by a rail motor car operated by Harold D. Greene,
who was also an employee of the contractor. In rounding
a curve, where the view was obstructed, the cars collided
with a train of the Alaska Railroad. Concededly the colli-
sion and resultant injuries were due solely to Greene’s neg-
ligence.

In permitting the contractor to operate on its tracks, the
Alaska Railroad never hired nor sent any motor car opera-
tors anywhere for the contractor. However, the latter’s
employees who were to operate rail motor cars were required
by the Railroad to conform to certain of its operating proce-
dures, and the Railroad retained the right to approve any
motor car operator selected by the contractor. In order
to determine whether the contractor’s employees whom the
contractor had designated to operate the rail motor cars were
qualified to do so, the Railroad required such operators to
take an examination as to the operating rules of the Rail-
road. Upon approval being given, a certificate of examina-
tion was delivered to that person. Such a certificate did
not constitute a permit or license for that person to operate
on the Railroad’s tracks but was merely a means of identi-
fying that such person appeared qualified to operate a rail

Le 249

motor car. In this instance Greene had been issued the
requisite certificate after his examination.

Greene had been employed for something like a year by
the Morrison-Knudsen Company, and he continued with
that concern until taken over by the contractor to operate
rail motor cars on the joint project. His salary was paid by
the contractor. He was selected for the job by the project
manager for the contractor, and all the directions and orders
to perform work given to Greene were given by the con-
tractor. There were no orders or other restrictions given to
or placed upon Greene by the Alaska Railroad in the use
of its track.

The various rules and regulations adopted by the Rail-

" road, above noted, were enforced for the purpose of safe-
guarding and protecting the Railroad’s property and passen-
gers. In the event of an infraction of these rules, Greene
was not subject to being penalized or discharged by the
Alaska Railroad but was subject only to disqualification as
a rail motor car operator for the contractor,

Part of the Railroad’s operating procedure was to issue
and transmit twice a day to its personnel involved informa-
tion of contemplated movements taking place upon its tracks,
which information was called a “line-up.” As a rail motor
car operator, Greene, in order to conform to the Railroad’s
rules and regulations, had to obtain such a “line-up.” Safety
precautions of the Railroad required that in rounding a
curve (such as the one on which the collision occurred)
where the view was obstructed, a flagman was required to be
sent out to protect against any approaching train and it was
the responsibility of the rail motor car operator to see that
the track was clear.

The contractor’s campsite was at a place called Rainbow,
located in the work area south of Potter and some four or
five miles north of Indian. On March 24, 1950, Greene

250 Le

was under orders of the contractor to proceed south from
Rainbow to Indian and pick up a work crew at the end of
the day’s shift at approximately five o’clock p. m, and return
them to camp. Greene had received the “line-up” for the
day. After a train of the Alaska Railroad, designated as
No. 4, which was going north, left Rainbow between three
and four p. m, of that day, Greene started south toward In-
dian with his rail motor car pulling four empty man-haul
cars. In the course of returning from Indian, after picking
up members of the contractor’s crew, including the plaintiffs,
Greene’s rai] motor and man-haul cars while traveling in a
northerly direction on a blind curve collided with “Alaska
Passenger Extra 562 South” traveling toward Indian, This
was the collision which caused the injuries above mentioned.
Its occurrence was traceable directly to Greene’s failure to
determine whether or not the track was clear.

As already indicated, appellants have formally abandoned
all arguments advanced below save the single contention
that their injuries were caused by the negligence of an em-
ployee of the United States, namely, Greene. The uncon-
troverted facts recited above, plus the provisions of the Tort
Claims Act itself, would appear to render that contention un-
tenable. However, several arguments are advanced in at-
tempted support of it, and these we will notice briefly.

It is said that Greene was an “employee” of the Alaska
Railroad because while operating on its tracks he was un-
der the “control” of the Railroad. The facts showing such
“control” are said to be that Greene was approved as a motor
car operator by the Railroad, and while operating on its
tracks was supposed to obey certain safety regulations pre-
scribed for the protection of passengers and freight of the
Railroad. However, Greene was not hired by the Railroad,
nor was he paid wages by it. The sole purpose of his going
on the tracks was to render service to the contractor who

Le 251

had hired him and who paid his wages. Subject only to the
fact that he was not to make trips which would interfere
with the Railroad’s service, the latter could not determine
the nature of his work or his job assignment, nor direct
when or where he should make his trips.

The test of “control” is only one of the factors to be
weighed in determining whether an agency or employment
relationship is present. The showing of “control” here was
entirely inadequate to support a holding that such a rela-
tionship existed.

HM Assuming that their showing of control was in-
sufficient to establish an agency or employee relationship,
appellants argue in the alternative that the case presents an
exception to the rule that such a relationship need be present
in order to render the government liable. One such argu-
ment advanced is that inasmuch as the Railroad permitted
the contractor to use its tracks, it must be held to have
assumed liability for the latter’s negligence.

The authorities cited for this proposition are cases in-
volving leases by private railroad companies to subsidiaries.
Such authorities, and others of like nature, afford no analogy
here, The Alaska Railroad is not a privately owned concern
but a Federal Agency. There are no statutes or regulations
defining its powers or obligations except the Act of Congress
under which it was acquired and which gave the President
complete discretion in its construction and operation. Con-
sult Enabling Act, 48 U.S.C.A. §§ 301-308. Under that
statute the government was obviously free to delegate to an
independent contractor, as here, the proprietary function of
rehabilitation or repair involved.

HI Finally, it is contended that a railroad is a danger-
ous agency, and that the government can not shield itself
from liability, based on imputed negligence, by employment

252 a

of an independent contractor. Authorities called to our at-

tention afford no basis for believing that as of the present

time a railway is to be considered a dangerous instru-
-cmentality.

Altogether apart from what has been said, there remains
the overriding principle that the United States has not
consented to be sued under the Tort Claims Act on any
ground other than that of a wrongful or negligent act or
omission on the part of an employee of the government.
Dalehite v. United States, 346 U.S. 15, 44, 73 S.Ct. 956, 97
L.Ed. 1427. Appellant argues that Dalehite has been over-
ruled by Rayonier v. United States, 352 U.S. 315, 77 S.Ct.’
374, 1 L.Ed.2d 354. However, Rayonier overruled Dale-
hite only to the extent of holding that the government can
not escape liability on the ground that a municipal corpora-
tion might not be liable for similar negligence of ‘its em-
_ployees while performing a sovereign governmental func-
tion. The principle that the United States may be held liable
only for the negligent acts or omissions of an employee of
the government is in nowise affected,

Affirmed.

a 253

Lillian SCHLOTHAN, Plaintiff, v. Sigmund BINSTOSS, and
The Territory of Alaska, Defendants.
No, A. 3412.

District Court, Alaska, First Division, Ketchikan.
Tune 21, 1957.

Ye}
N

— 255

—+—.

Lester O. Gore, of Gore & Jernberg, Ketchikan, Alaska,
and Phillip Barnett, of Barnett & Robertson, San Fran-
cisco, Cal., for plaintiff.

J. Gerald Williams, Atty. Gen., Territory of Alaska, by
David J. Pree, Asst. Atty. Gen., for defendant Territory of
Alaska.

KELLY, District Judge.

This is an action brought by the plaintiff to foreclose a
purchase money mortgage given by the defendant Sigmund
Einstoss to secure the payment of some $11,000 with inter-
est, the unpaid remainder of a $25,000 note which was
given in payment for certain tideland property in Ketchi-
kan, Alaska. The defendant Territory of Alaska was join-
ed in the complaint because of its claimed interest in the
property by virtue of a Territorial tax lien, notice of which
was recorded November 2, 1953, for taxes accruing in the
years 1950 and 1951 in the total sum of $59,582.93 plus
penalties and interest. The Territory filed a cross-claim
against the defendant Einstoss for this sum and prayed for
enforcement of its lien. On motion of the plaintiff, judg-
ment was entered for foreclosure of the mortgage upon the
pleadings. The order and judgment heretofore entered
provided for a summary judgment on behalf of the de-
fendant Territory of Alaska pursuant to Rule 56, Fed.
Rules Civ.Proc., 28 U.S.C.A., against the defendant Sig-
mund Einstoss in the amount of $83,402.47, together with

256 De

6% interest on the sum of $59,582.93 from and after May
1, 1954. The judgment also provided that the Territory
of Alaska have a lien upon all the property of Sigmund
Einstoss wherever located. The judgment on the pleadings
further provided as follows:
“%* * %* That the Territory of Alaska has
appeared in this action and claims a lien upon all
of said described property and alleges its lien to be
superior to plaintiff’s lien; that this judgment
does not attempt to decide whether the plaintiff’s
lien or the lien of the Territory is superior. That
question is left for further action by this Court.”
It is upon this question, left unsettled in the judgments and
decrees heretofore entered, that this matter is now before
this Court.

An order was entered on December 21, 1956, staying the
enforcement of the judgment and decree until this question
is disposed of, and providing, if a sale of the property by
agreement between the parties was had, the proceeds there-
from would be deposited in the registry of the court.

On January 25, 1957, a stipulation of facts was filed and
on January 29, 1957, an order was entered requiring the
present occupants and users of the premises to pay the rent
therefor to the Clerk of the District Court.

The Court requested briefs from the Attorney General,
representing the Territory of Alaska, and granted permis-
sion to counsel for the plaintiff to file briefs upon this ques-
tion,

The stipulation of facts reveals that prior to June 19,
1951, plaintiff was the owner of the tideland property and
the improvements thereon, the subject matter of this litiga-
tion, and that at that time the property was owned by the
plaintiff free and clear of any and all liens, mortgages, or
deeds of trust. Prior to the date of sale of this property

a 257

it was used for the manufacture of wire netting by the
Alaska Steel and Wire Company, which company was a
corporation operated by plaintiff’s husband, William Schlot-
han, for some 20 years. On or about January 27, 1951, the
corporation was dissolved, the Alaska Steel and Wire Com-
pany having ceased operation of its wire netting manufac-
turing, and from the time of said dissolution until the sale
of the property by the plaintiff it was used for storage and
warehouse purposes only.

Early in 1951 the defendant, Sigmund Einstoss, ap-
proached the plaintiff and her attorney, Phillip Barnett,
with the idea of purchasing the property and the improve-
ments thereon for use as a storage and warehouse building.
At that time defendant Einstoss was engaged in the fishing
and canning business throughout Alaska, including the op-
eration of a salmon cannery at the north end of the
City of Ketchikan. This operation was conducted on prop-
erty known as the Bertosen property and was known locally
as the “Einstoss Cannery.” Einstoss needed additional
space for storage and warehouse purposes. - As a result of
long negotiations, on June 19, 1951, plaintiff executed a
quitclaim deed to the property, taking back a purchase
money mortgage as security for the payment of the balance
due under the terms and conditions of sale. Plaintiff was
aware of the cannery operation of Einstoss. At no time
prior to the sale of the property in 1951 to Sigmund Eins-
toss did the defendant or anyone else use the property as a
cannery.

Shortly after the acquisition of the Schlothan property
by Einstoss he secured salmon cannery equipment and con-
verted the use of the buildings thereon for cannery purposes
and in fact canned salmon on the property during 1951 as
well as using the property for storage and warehouse pur-
poses.

a

258 |

Defendant Einstoss defaulted in the terms of his mort~-
gage and on March 29, 1954, proceedings were instituted to
foreclose the mortgage. Einstoss died and Mildred Hulce
was appointed administratrix of his estate.

On November 2, 1953, the defendant Territory of Alaska
filed a notice of tax lien in the Office of the Recorder for
the Precinct of Ketchikan where this property is located.
This notice of tax lien was against defendant Einstoss.
At no time prior to November 2, 1953, was any actual no-
tice of any kind or character ever given to the plaintiff of
the existence of any lien or of any taxes due the Territory
from Einstoss. The Territorial lien is based on the pro-
visions of the commercial fisheries license tax provided for
in Ch. 82, S.L.A.1949 as amended by Ch. 113, S.L.A.1951.

The stipulation of facts sets forth that the taxes owed
by Einstoss were for operations in various parts of Alaska
as follows:

Petersburg, Alaska, 1950 tax claimed $ 3,018.40
Ketchikan, Alaska, 1950 (not on prop-
erty herein described but other

parts of Ketchikan) 10,833.13
Other locations in Alaska, 1950 8,110.92
Petersburg, Alaska, 1951 20,802.41
Other parts of Alaska, including

Ketchikan, 1951 16,818.07

What portion of the $16,818.07 is the result of the opera-
tion of the defendant Einstoss on the mortgaged property
herein described is not revealed; nor was it shown what
part, if any, of the above taxes for 1951 accrued after the
Schlothan property was transferred on June 19, 1951, to
the tax debtor, Einstoss. This, likewise, could be deter-
mined by the Territory from its records.

a 259

The general question here involved is the extent to which
commercial fishery license taxes owing to the Territory by
virtue of the statute can be given priority over a purchase
money mortgage on property acquired by the tax debtor.
The issues are threefold, based upon the different origins
of the taxes involved:

(1) Can the license taxes accruing from the
canning operations at the property here involved
be given priority over the purchase money mort-
gage?

(2) Can the license taxes accruing after the ac-
quisition of the property here involved from other
different and separate canning operations be given
priority over the purchase money mortgage?

(3) Can license taxes accruing from other sep-
arate operations before the acquisition of the
property here involved be given priority over the
ptrchase money mortgage?

The Territory contends that each of these questions must
be answered in the affirmative, based upon Sec. 4(h) of the
Act:

“(h) Liens. All taxes levied or provided or
accruing under the provisions of this Act, and the
penalties and interest thereon, are hereby declared
to be a lien prior, paramount and superior to all
other liens, mortgages, hypothecations, convey-
ances and assignments, upon all the real and per-
sonal property of the person, firm or corporation
liable therefor, and also upon all the real and per-
sonal property used with the permission of the
owner thereof in prosecuting the business; * *”

In support of their contentions, the defendant Territory
of Alaska cites United States v. Snyder, 1893, 149 U.S.
210, 13 S.Ct. 846, 37 L.Ed. 705, and Territory of Alaska

260 De

v. The Artic Maid, D.C.Alaska 1956, 140 F.Supp. 190,
the so-called “‘freezer-ship cases” decided by Judge Hodge,
of this court, on March 14, 1956. However, the applica-
tion of Sec. 4(h) in the “freezer-ship cases” was entirely
different than in the present case. Judge Hodge determined
that a fisheries license tax against the owner of a vessel be-
came a first lien upon his property, and followed the vessel
into the hands of a purchaser who had no actual knowledge
of the encumbrance. In the present case, the tax is charged
to the purchaser and not the seller. The Territory seeks to
subordinate the seller’s equity to the tax lien.

The Supreme Court held in the case of United States v.
Snyder, supra, that a tax imposed by Congress is not sub-
ject to the recording laws of Louisiana.

As can readily be seen, these cases do not answer the
troublesome problem here facing the Court.

With regard to the taxes accruing in 1950 and 1951,
prior to the purchase of the Schlothan property by defend-
ant Einstoss, the Territory contends that the lien upon “all
the real and personal property of the person * * * liable
therefor” would include this property and be a superior
lien to the Schlothan mortgage. Obviously the taxes which
accrued prior to the purchase of the property here involved
were not a lien on Schlothan’s property when they accrued,
for Einstoss had not yet purchased the property. Could
property purchased thereafter be made subject to the tax
lien beyond the buyer’s interest therein and superior to the
purchase money mortgage? In the absence of specific
wording in the act extending the lien to after-acquired prop-
erty, it clearly could not.

Cooley, in his treatise, The Law of Taxation, Vol. 3, Sec.
1230 (4th ed. 1924), states the rule as follows:

“Tf, therefore, the statute in terms makes the
tax a lien on one species of property, it will not by

a 261

intendment be extended to any other species,
And if in terms it makes the tax a lien on all prop-
erty and rights of property of the person taxed,
the lien will be limited to property and rights own-
ed when the tax accrued.” (Emphasis supplied.)

Other authorities in accord with this statement are:

Libby, McNeill & Libby v. City of Yakutat, Alaska, 9
Cir., 1953, 206 F.2d 612; Yarbrough Bros., Hardware Co.
v. Phillips, 1923, 209 Ala. 341, 96 So. 414; Board of
Com’rs of Natrona County v. Shaffner, 1903, 12 Wyo.
177, 74 Pac. 88; Farm & Cattle Loan Co. v. Faulkner,
1926, 34 Wyo. 199, 242 P. 415; State v. Swensk, 1939,
161 Or. 281, 89 P.2d 587; 33 Am.Jur., Liens, Sec. 13, p.
425.

HM In the present case the lien is given priority over
all other encumbrances upon all the real and personal prop-
erty of the person, but there is no specific provision for a
prior lien on after-acquired property. Accordingly, the
Territory’s lien for taxes accruing prior to the acquisition
of the property from Schlothan is subject to the purchase
money mortgage.

There is no doubt that the taxes which are allocable to
the canning operations on the property in question may be
made a first lien upon that property. The reason for such
a rule was aptly stated in Thomas v. Jones, 1897, 94 Va. .
756, 27 S.E. 813, 814:

“That taxes are prior in dignity to all other
liens must be so from the very necessity of the
case; otherwise the state would be powerless to
collect her revenue. The liens upon land would,
as in the case at bar, often be greater than the
value of the land, and, the tax lien being inferior,
the land would escape all taxation.”

262 |

Likewise, the authorities agree that taxes may be declar-
ed a lien against all the owner’s real and personal property,
without giving priority, however, over encumbrances on the
property other than that against which the tax is assessed.
The rule is summarized in 3 Cooley, The Law of Taxation,
Sec. 1236 (4th ed. 1924) :

“The rule in most of the states is that the lien
on each tract of land is for the taxes against such
tract only, but in some states the statute is found
to go even further than this, and to give a lien on
the land for taxes assessed against its owner in re-
spect to any of his property, real or personal, The
constitutionality of this legislation is unquestion-
able.”

Cooley refers, of course, to a property tax, whereas in
this instance, a license tax is involved. But the portion of
the total license tax which is chargeable against each can-
nery is certain and ascertainable, and in that respect it is
analogous to a property tax upon the individual properties
themselves.

HA more difficult problem is presented, however,
when taxes allocable to one cannery are sought to be im-
pressed as a prior lien on a different cannery which is sub-
ject to a pre-existing encumbrance. To do this would ren-
der it possible for a lien upon one piece of property to be
extinguished by taxes arising from the activities carried on
at an entirely different location, regardless of the vigilance
of the lien-holder. This Court is not unmindful of the pre-
sumption that a person contracts “with reference to the lia-
bility imposed by the law, and is presumed to have knowl-
edge of it and to govern himself accordingly in such con-
tracts as he may choose to make.” Donaldson v. Henning,
1913, 4 Alaska 642. In fact, reasonable arguments could
be advanced that in this case it is not inequitable to impose

Ee 263

the Territory’s lien upon the property superior to Schlo-
than’s purchase money mortgage. Being charged with no-
tice of the existence of the statute, and having actual knowl-
edge that Einstoss was engaged in the canning business, the
use of the property for canning purposes and the resulting
accrual of taxes were not remote possibilities.

In a different situation, however, the sale could have been
made to a person who had not previously engaged in any
of the activities subject to the license tax, but who there-
after entered the canning business, or resold the property to
a third person who was in the canning business. The harsh-
ness of this law is apparent. Anyone who takes a lien upon
real or personal property in the Territory would do so with
the understanding that his lien could be entirely wiped out
by subsequent events which he would have no way of con-
trolling. Moreover, assuming, but without deciding, that
the legislature intended this lien to extend not only to all
the real and personal property of the person liable therefor
which was used in the business, but also to include all his
other property of whatever nature, the scope of this law
would be greatly expanded. Every credit sale of furniture
or an automobile would be consummated under the spectre
of the fisheries license tax. A citizen could even sell his
home to a neighbor who had never engaged in the cannery
business whatsoever and as part of the purchase price take
back a mortgage, which would certainly then be a first lien
upon the property. That person might thereafter engage
in the cannery business and incur a tax indebtedness to the
Territory, and the mortgage interest of the original owner
of the property could be wiped out; or, that neighbor could
transfer that home by deed to another who incurred can-
nery taxes, and again have the mortgage of the original
owner, which is a valuable property interest, entirely wiped
out. Would legislation giving a prior lien on encumbered

264 be

property other than that from which the tax arose consti-
tute the taking of one man’s property to pay the debt of an-
other, and thus deprive him of property without due process
of law? It has been suggested in several cases, notably
Scottish American Mortgage Co.-v. Minidoka County,
1928, 47 Idaho 33, 272 P. 498, 65 A.L.R. 663, and Advance
Thresher Co. v. Beck, 1910, 21 N.Dak. 55, 128 N.W. 315,
that a statute creating such a lien would be of doubtful con-
stitutionality. In each of these instances, however, the
courts refused to impute to the legislature the intention of
creating a prior lien on property other than that taxed, and
therefore the constitutional issue was not decided.

However, the dicta in the Scottish American Mortgage
Co. and the Advance Thresher Co. cases was impliedly re-
jected by the Supreme Court in the case of International
Harvester Credit Corporation v. Goodrich, 1956, 350 U.S.
537, 76 S.Ct. 621, 627, 100 L.Ed. 681, involving the New
York Highway Use Tax Act, Tax Law, McKinney’s
Consol.N.Y.Laws, c. 60, § 501 et seq., which taxed carriers
for their use of New York highways based upon the weight
of the vehicle and the distance traveled over such highways.
Sec. 506 of the New York Code provided:

“§ 506. Payment of tax * * * The fees,
taxes, penalties and interest accruing under this
article shall constitute a lien upon all motor vehi-
cles and vehicular units of such carrier. The lien
shall attach at the time of operation of any motor
vehicle or vehicular unit of such carrier within
this state and shall remain effective until the fees,
taxes, penalties and interest are paid, or the motor
vehicle or vehicular unit is sold for the payment
thereof. Such liens shall be paramount to all
prior liens or encumbrances of any character and
to the rights of any holder of the legal title in or
to any such motor vehicle or vehicular unit.”

Ee 265

In 1953, Eastern Cartage and Leasing Company, Inc., a
carrier subject to the tax, purchased two trucks from In-
ternational Harvester Co. and one truck from Brockway
Motor Company, Inc. Each of the purchases was by a con-
ditional sales contract, and those pertaining to the two sales
by International Harvester Co. were duly assigned to plain-
tiff, International Harvester Credit Corp. Upon default by
Eastern, the three trucks were repossessed. Thereafter, on
April 21, 1954, the State asserted a lien for unpaid High-
way Use taxes which had accrued against Eastern from
January 1, 1952, through February, 1954.

In ruling that the prior lien, as measured by taxes on the
carrier’s operation of trucks other than the three in ques-
tion, as well as taxes arising before the purchase of the
trucks, was constitutional, the Supreme Court treated the
lien provision as an amendment to the New York Uniform
Conditional Sales Act, and compared it with a landlord’s
lien for unpaid rent, which is “enforceable against personal
property found on the premises in the possession of the
tenant, even though the legal title to such personal property
may be in a third party who has allowed the tenant to have
possession and beneficial use of it.”

Quoting Justice Cardozo in Burnet v. Wells, 289 U.S.
670, 677-678, 53 S.Ct. 761, 77 L.Ed. 1439, the Supreme
Court suggested that the test of due process was whether
the statute was “one that an enlightened legislator might
act upon without affront to justice.”

As applied to the particular facts of the case it was deter-
mined that:

(1) the lien is reasonable because both the car-
riers and the truck manufacturers benefit from the
construction and maintenance of the New York
highways, to which the proceeds of the tax are de-
voted;

266 |

(2) the burden placed upon the highways by an
enctumbered truck is just as great as that by an un-
encumbered truck;

(3) there is need for an effective lien to en-
force a tax which cannot be computed or readily
collected in advance.

In the present case the Territory’s limited sources of
revenue might well justify giving it a high degree of security
for the collection of taxes, but in other respects, I believe
that the reasons for the existence of the lien are less com-
pelling than in the Goodrich case. For example, the benefit
to the subordinated lien-holder under the commercial fisher-
ies license tax is only that benefit which all citizens derive
from an increase in the general tax fund. On the other
hand, the revenue from the New York Highway Use Tax
is devoted to the building and maintaining of highways—a
distinct benefit to the manufacturers of trucks. Further-
more, a truck manufacturer is fully cognizant of the use to
which his products will be put, while the vendor of property
in Alaska would ordinarily be much less able to foresee the
use of that property in an activity subject to the commercial
fisheries tax. However, it does not appear that these dis-
tinctions are of such significance that, in the light of the
Goodrich decision, the statute in question can be said to
constitute an “affront to justice.”

Other authorities lend support to the conclusion that this
lien provision is within the scope of legislative power. In 84
C.J.S. Taxation § 600, p. 1210, it is stated:

«“* & * where the statutes put all tax liens
on the same plane, making no distinction between
the lien which exists on land for the tax on person-
alty and the lien which exists for the tax on the
land itself, making both paramount to other liens,
or where a statute provides that the tax on personal

| 267

property shall be a lien on the owner’s real prop-
erty not to be removed until the tax is paid or
the property sold for the tax, a personal prop-
erty tax is a lien on the real estate of the person
assessed superior to the lien of a prior mortgage;
and, likewise, this is true where a statute expressly
provides that the tax for personal property charged
on real property shall have priority over any other
lien.”
In 51 Am.Jur., Taxation, Sec. 1016, p. 887, it is stated:
“Tt is doubtless competent for the legislature not
only to make taxes a lien upon all the property of
the owner of the property taxed, but to make such
liens a first lien upon the property of the taxpayer,
giving them priority over a mortgage or any other
lien existing against the property, whether created
before or after the assessment of the tax;” \

See also Getchell v. Walker, 1929, 129 Or. 602, 278 P.
93 and Home Owners’ Loan Corporation v. City of Phoe-
nix, 1938, 51 Ariz. 455, 77 P.2d 818.

The plaintiff raises the further issue that the statute
violates the due process clause because it failed to provide
her with notice. She relies upon the case of Anderson v.
Great Northern Ry. Co., 1914, 25 Ida. 433, 138 P. 127, 131,
which passed upon the lien created in Sec, 1 of Ch. 226 of
the Session Laws of Idaho for 1911. The Supreme Court
of Idaho held the law to be invalid and void, and stated in its
decision as follows:

“No process is ‘due process’ which does not
give notice, either actual or constructive; and no
‘taking of property’ for debt is lawful, unless the
debt has been created with the knowledge and con-
sent of the debtor. This knowledge and consent
may be constructive so far as it is necessary to

268 EE

create a charge against property, but the statute
which furnishes the constructive notice must pro-
vide process by which the claims may be measured °
and established, so the property owner may have
a ready and certain method of knowing or ascer-
taining his liability. No such method is furnished
by the statute under discussion * * *,”

HE However, as Judge Hodge pointed out in the
“freezer-ship cases” supra [140 F.Supp. 200] :

“It is not necessary that notice of lien be re-
corded, docketed or filed in the absence of statute
requiring such. 53 CJ.S. Liens § 6, p. 850;
United States v. Curry, D.C., 201 F. 371.”

Ht is well established that the statute itself is con-
structive notice of the rights and obligations which it con-
fers.

In Anderson National Bank v. Luckett, 1944, 321 U.S.
233, 243, 64 S.Ct. 599, 605, 88 L.Ed. 692, the court held:

“All persons having property located within a
state and subject to its dominion must take note
of its statutes affecting the control or disposition
of such property and of the procedure which they
set up for those purposes. Reetz v. People of State
of Michigan, 188 U.S. 505, 509, 23 S.Ct. 390, 392,
47 L.Ed. 563; North Laramie Land Co. v. Hoff-
man, 268 U.S. 276, 283, 45 S.Ct. 491, 494, 69
L.Ed. 953. Proceedings for the assessment of
taxes, the condemnation of land, the establishment
of highways and public improvements affecting
land owners, are familiar examples. Huling v.
Kaw Valley Ry. & Imp. Co. 130 U.S. 559,
563-564, 9 S.Ct. 603, 605-606, 32 L.Ed. 1045;

— 269

Ballard v. Hunter, 204 U.S. 241, 254-257, 262, 27
S.Ct. 261, 264-267, 269, 51 L.Ed. 461.”

The requirement of the Idaho court that the property
owner have a ready and certain method of knowing or as-
certaining his liability appears to be at variance with the
conclusion of the Supreme Court in Hodge v. Muscatine
County, Iowa, 1905, 196 U.S. 276, 281, 25 S.Ct. 237, 49
L.Ed. 477 and International Harvester Credit Corp. v.
Goodrich, supra. In the latter case, not only did the vendors
of motor vehicles lack a source for determining what taxes
were charged against the vendees, but a statute made it
a misdemeanor for state employees to disclose information
concerning tax delinquencies, and yet the due process clause
was not found to have been violated.

HBB The Court can come to no other conclusion than
that the legislature has the power to declare taxes allocable
to one piece of property, a prior lien on other property of
the taxpayer, and that it has validly exercised such power in
this instance. The words of Chief Justice Marshall in
McCulloch v. State of Maryland, 1819, 17 U.S. 316, 427,
4 Wheat. 316, 427, 4 L.Ed. 579 are appropriate:

“That the power of taxing * * * by the
states may be exercised so as to destroy * * *
is too obvious to be denied * * *.”

“ce %* * the power of taxing the people and
their property, is essential to the very existence of
government, and may be legitimately exercised on
the objects to which it is applicable, to the utmost
extent to which the government may choose to
carry it. The only security against the abuse of
this power, is found in the structure of the govern-
ment itself. In imposing a tax, the legislature acts
upon its constituents. This is, in general, a suffi-

270 a

cient security against erroneous and oppressive
taxation.

“The people of a state, therefore, give to their
government a right of taxing themselves and their
property, and as the exigencies of government
cannot be limited, they prescribe no limits to the
exercise of this right, resting confidently on the
interest of the legislator, and on the influence of
the constituent over their representative, to guard
them against its abuse.”

HH [n the present case it is the tax lien, an integral part
of the taxing power, which has aggrieved the plaintiff. As
was pointed out in the Goodrich case, supra, the power to
impose a tax lien is subject to the test of “reasonableness,”
and is not unlimited, but within the broad scope of “reason-
ableness,” the taxpayer is equally dependent upon the legis-
lature with regard to liens as he is with regard to the tax it-
self.

Hl [ agree with the Supreme Court of South Dakota,
which stated in the case of Minneapolis Threshing Mach.
Co. v. Roberts County, 1914, 34 S.D. 498, 149 N.W. 163,
165, L.R.A.1915D, 886:

“The results complained of are presumed to
have been in the contemplation of the parties when
the contract was made. If the statute is obnoxious
because it acts as a restraint upon the free ex-
change or alienation of personal property, or ren-
ders it unsafe to deal in such property, then it
should be repealed or amended, but this relief must
be sought from the legislature and not from the
court.”
The power to tax is exclusively a legislative function and
has not been extended in any manner to the judiciary. If

EE 271

the tax is bad, burdensome, vicious, or destructive, the only
remedy, if any exists, is by appeal to the legislature and not
to the courts.

This division of authority between the legislature and
the judiciary was illustrated in the State of Arizona. In the
case of Maricopa County v. Equitable Life Assur. Soc.,
1934, 42 Ariz. 569, 28 P.2d 821, a statute similar to Sec.
4(h) of the fisheries license tax act was given full effect by
the court. Home Owners’ Loan Corporation v. City of
Phoenix, supra, a subsequent case also involving a conflict
between a prior mortgage lien and a tax lien, pointed out
that the legislature had amended the lien provision after
the Maricopa County decision, and as a result, tax liens were
made subject to pre-existing encumbrances on all property
except that against which the tax was assessed.

“As long as the legislature, in imposing a tax,
does not violate applicable constitutional limita-
tions or restrictions, the courts have no concern
with the wisdom or policy of the exaction imposed,
the political or other collateral motives behind it,
the amount to be raised, or the persons, property or
privileges to be taxed, such matters being exclu-
sively for the lawmaking body, whose action will
not be reviewed by the judiciary. A court may ap-
propriately determine whether the property taxed
was or was not within the taxing power, but if
within the taxing power, the court may not deter-
mine that the power has or has not been discreetly
exercised.

“In the matter of raising revenue for the gov-
ernment, it has been said, the courts cannot set up
their judgment against the legislative judgment in
determining who shall be required to contribute.

The remedy for oppressive taxation does not lie

272 Le

with the judicial branch of the government, and
the judicial power may not be invoked to correct
oppressive taxation. Where, however, the legis-
lature transcends its functions and violates one or
more of the restrictions or limitations placed upon
the taxing power by the Constitution, the judiciary
has the right and duty to interpose and declare the
attempted imposition invalid.” 51 Am.Jur., Taxa-
tion, Sec. 47, p. 77-78.

HE Inorder to hold an act of the legislature in violation
of the guarantees of the Constitution a court must find an
abuse of power so unreasonable that the individual is de-
prived of rights no government may deny.

“When a legislative body having power to tax a
certain subject matter actually imposes such a
burdensome tax as effectually to destroy the right
to perform the act or to use the property subject
to the tax, the validity of the enactment depends
upon the nature and character of the right de-
stroyed. If so great an abuse is manifested as to
destroy natural and fundamental rights which no
free government could consistently violate, it is the
duty of the judiciary to hold such an act unconsti-
tutional. In any other case, however, since the
taxing power conferred by the Constitution knows
no limits except those expressly stated in that in-
strument, it must follow that if a tax is within the
lawful power, the exertion of that power may not
be judicially restrained because of the results to
arise from its exercise.” 51 Am.Jur., Taxation,
Sec. 49, p. 80-81.

This Court finds that it was not the intention of the legis-
lature to impose a lien upon after-acquired property beyond
the interest of the taxpayer therein; that the lien for taxes

Le 273

accruing prior to the date the taxpayer acquired this prop-
erty and executed the mortgage on June 19, 1951, does
not create a lien superior to the mortgage involved in
this litigation.

TMs find that the cannery taxes accruing from the
use of the property here involved as a cannery after the
acquisition of said property by the defendant Einstoss
create a lien superior to that of the mortgage; and, like-
wise, that other cannery taxes accruing after the acquisition
of said property on June 19, 1951, and arising from the
use of property elsewhere in the Territory, for which
the defendant Einstoss became liable, are also a lien upon
the property superior to the mortgage.

Therefore, the priorities would be

First: Fisheries license taxes, including penal-
ties and interest, owing to the Territory from the
operation of any of defendant Einstoss’ canneries
since June 19, 1951; and

Second: Balance of the note held by the plain-
tiff,

The foregoing shall constitute findings of fact and
conclusions of law unless either party desires additional
findings, in which event the same may be presented on
motion, Judgment and decree may be entered in accordance
with this opinion.

|

274 Le

354 U.S. 939, 77 S.Ct. 1402

J. OC. REYNOLDS and Agnes M. Reynolds, Husband and Wife,
petitioners, v. Raymond V. LENTZ and Shirley Lentz,
Husband and Wife, et al. No. 1066.

Supreme Court of the United States,
June 24, 1957.

Bailey E. Bell, for petitioners.

Edward V. Davis, for respondents Lentz.

Ralph E. Moody, for respondents Bank of Homer and
others.

J. Earl Cooper, for respondents Anderson and others.

Petition for writ of certiorari to the United States Court
of Appeals of the Ninth Circuit.

Denied.
249 F.2d 410
Tillman Foster ETHERTON, Appellant, v. UNITED STATES

of America, Appellee,
No, 15190.

United States Court of Appeals, Ninth Circuit.
Tune 25, 1957.

Ww
6S
nN

276 Le

Tillman Foster Etherton, in pro. per.

William T. Plummer, U. S. Atty., Lloyd L. Duggar,
Asst. U.S. Atty., Anchorage, Alaska, for appellee.

Before STEPHENS, FEE and BARNES, Circuit
Judges.

PER CURIAM.

Etherton was convicted after trial before a jury in the
Alaska District Court. One indictment was in four counts,
each charging a felony, and a second contained two sepa-

| 277

rate felony counts. The charges dealt with contributing
to the delinquency of two different minors and sodomy.
The trial was on the two indictments consolidated. The
verdict was guilty on each of the counts. He was sen-
tenced oti March 20, 1951, to twenty years imprisonment.
No appeal was taken. A year after sentence, appellant
filed a motion to vacate and set aside judgment, which was
denied by the District Court. A vast number of motions
of all types were filed in the District Court between that time
and the present. All have been denied there.

On March 29, 1956, Etherton filed in the District Court
an affidavit and motion to proceed in forma pauperis, a mo-
tion to vacate and set aside the judgment and sentence and
a motion for personal appearance. The District Court de-
nied all these motions.

TE The time for appeal from the original conviction
hhas long since passed, and Etherton cannot use these mo-
tions as a writ of error or appeal. Therefore, no considera-
tion is given to the allegations that two indictments were
tried without consolidation or the supposed harmful con-
sequences which followed such a trial. The record shows
that the indictments were consolidated. The allegation
that the same offense was charged in two separate counts
is not true and would not be ground for action here in any
event,

HM (One indictment charges in one count that Ether-
ton contributed to the delinquency of a minor, Larry Cox,
at Anchorage, Alaska, between September, 1949, and June,
1950, and another count charges appellant contributed to
the delinquency of the same minor during the same period
at Wasilla, Alaska. These two locations are seventy miles
apart by road. The statute, A.C.L.A. § 65-9-11, address-
es itself to prohibition of an “act or omission.” The
counts of the indictment are drawn to accord with this

278 De

purpose. The acts alleged to contribute to delinquency
are not only alleged to be performed at different places,
but obviously these must have been at different times. The
other indictment is similarly good against such allegations,
since it specifically charges in two counts the same offense
committed upon one Wiley at different places and within
stated separate times. The other two counts charge two
different crimes committed on one Shaw. The separate
sentences may therefore be properly cumulated. This
Court cannot go further and review the evidence.

HE Appellant claims that the territorial act under
which punishment was imposed was so vague and uncer-
tain as to be unconstitutional. The statute provides that
anyone who performs acts or omissions which contribute
to the delinquency of a minor shall be guilty of a felony.t

1There is no positive suggestion by the parties here that there is
vagueness in the statutory definition of the crime to “contribute to
the delinquency of any child” (A.C.L.A. § 65-9-11), although this may
be implied. Statutes, similarly worded, have been adopted in many
of the states of this Circuit. Since the statute law of Oregon has
been generally used as a basis for the Alaska enactments, the fol-
lowing quotation therefrom well illustrates the point:

“When a child is a delinquent child as defined by any statute of
this state, any person responsible for, or by any act encouraging,
causing or contributing to the delinquency of such child, or any per-
son who by threats, command or persuasion, endeavors to induce
any child to perform any act or follow any course of conduct which
would cause it to become a delinquent child, or any person who does
any act which manifestly tends to cause any child to become a delin-
quent child, * * * upon conyiction by a fine of not more than
$1,000, or by imprisonment in the county jail for a period not exceed-
ing one year, or both, or by imprisonment in the penitentiary for a
period not exceeding five years.” Oregon Revised Statutes, § 167.210,
defining a felony.

See also Arizona Revised Statutes, § 13-822; California Welfare
and Instiutions Code §§ 700, 702 (West's Ann.); Nevada Revised
Statutes, §§ 201.090-201.110, A like statute, Idaho Code, § 16-1710,
was recently repealed in favor of a comprehensive youth rehabilita-
tion code, § 16-1801 et seq. Such legislation has been upheld, and,

De 279

It thus follows a pattern familiar in the states of this coun-
try. The particular portion chosen for attack is the puni-
tive section, which reads in part:

“oe > shall be guilty of a felony and upon
conviction thereof shall be punished by imprison-
ment in the penitentiary for not more than two
years nor less than one year, or by imprisonment
in the federal jail for not more than one year nor
less than one month, or by fine of not more than
one thousand dollars nor less than one hundred
dollars, or by both such fine and imprisonment.”
A.C.L.A, § 65-9-11.

There seems to be no difficulty here. The crime is de-
fined as a felony. The judge is given a wide discretion as
to what punishment may be applicable. Indeed, as all must
recognize, the limits must be wide to accommodate the
various acts and omissions which may fall within its pur-
view. It obviously makes no difference that a crime pun-
ishable by imprisonment in the penitentiary is a felony
and that other crimes are misdemeanors, as provided by
A.C.L.A. § 65-2-2. That section governs provisions which
do not expressly describe the prohibited act as a felony or
a misdemeanor, but do provide minimum punishment. -Here
the statute declares this crime to be a felony. Appellant
was given a felony sentence. He cannot complain that some
other person may be given a lesser penalty.

Affirmed.

since the Alaska statute was adapted therefrom, unquestionably it
must be sustained against such an attack,

286 a

246 F.2d 493

TERRITORY OF ALASKA, Appellant, v. AMERICAN CAN
COMPANY, Fidalgo Island Packing Company, Libby, Mc-
Neill & Libby, Inc, Nakat Packing Company, New England
Fish 0o., P. E. Harris Company, Inc., Pacific & Arctic Rail-
way & Navigation Co., and Oceanic Fisheries Co., Appellees.
No. 15070.

United States Court of Appeals, Ninth Cireuit.
June 27, 1957.

—+—_

J. Gerald Williams, Atty. Gen., Territory of Alaska,
Henry J. Camarot, Juneau, Alaska, for appellant.

H. L. Faulkner, San Francisco, Cal., R. E. Robertson,
Juneau, Alaska, and W. C. Arnold, Seattle, Wash., for
appellees.

Before HEALY, LEMMON, and FEE, Circuit Judges.

LEMMON, Circuit Judge.

In the face of the Alaska Legislature’s mandate in 1953
that the Territory’s Property Tax Act of 1949 “is hereby
repealed,” with certain specific and limited exceptions em-
bodied in a special saving clause clearly not applicable here,
the appellant insists that it can still “collect accrued and
unpaid taxes for the years 1949, 1950, 1951 and 1952.”

It is urged that this saving clause merely bestowed an
“Smportant additional right in the form of a pecuniary ad-
vantage [to] municipalities, schools and public utilities
* * * but denied to the Territorial Government”; but
that this “alleged special savings [sic] clause” should not
protect the appellees from being held “personally liable
for the unpaid taxes” for the earlier years.

HH [n this connection, we may observe in passing that
Doth parties repeatedly refer in their briefs to “savings”
clauses—the appellant 44 times and the appellees 58 times.

282 |

This palpable error, in which the Court below joined, and
which, because of its frequency, can scarcely be regarded
as typographical, occasionally is encountered even in some
legal encyclopedias. For example, in 50 Am.Jur., Statutes,
§ 528, page 535, under the caption “Express Saving Pro-
visions in Repealing Statutes,” we find the form “savings”
and the form “saving” each used three times in the same
paragraph, each time followed by the word “clause.”

Since we are here dealing with statutory construction
and not with bank accounts, “saving” is, of course, the pre-
cise word, See State of South Carolina v. Gaillard, 1880,
101 U.S. 433, 438, 25 L.Ed. 937; Bridges v. United States,
1953, 346 U.S. 209, 227, note 25, 73 S.Ct. 1055, 97 L.Ed.
1557; Bouvier’s Law Dictionary, Rawle’s Third Revision,
1914, volume 2, page 3007; 82 C.J.S. Statutes § 440, pp.
1014-1018; Webster’s New International Dictionary, Sec-
ond Edition, Unabridged, 1955, page 2223, sub verbis “sav-
ing clause.”

In his argument supporting the fine-spun thesis that
the appellees owe these back taxes in the face of a plain
and—as to them—unqualified repeal, able counsel for the
appellant displays more agility than persuasiveness.

1. Statement of the Case

On February 21, 1949, the Territorial Legislature of
Alaska enacted the first general “Property Tax Act” of ©
the Territory, Chapter 10, Session Laws of Alaska, 1949,
hereinafter sometimes referred to as Chapter 10.

On March 12, 1953, the Property Tax Act was repealed
by Chapter 22, Session Laws of Alaska, 1953, pages 73-
74, which was passed over Governor Ernest Gruening’s
veto. Because of the crucial relevance of that repealing
statute to the present lawsuit, we copy it below in full:

“To repeal the Alaska Property Tax Act en-
acted by Chapter 10, Session Laws of Alaska,

Se 283;

1949, as amended by Chapter 88, Session Laws
of Alaska, 1949; excepting from repeal certain
taxes and tax exemptions; and declaring an emer-
gency.

“Be it enacted by the Legislature of the Terri-
tory of Alaska:

“Section 1. That Chapter 10, Session Laws
of Alaska, 1949, as amended by Chapter 88, Ses-
sion Laws of Alaska, 1949, be and it is hereby re-
pealed.

“Section 2, Section 1 of this Act shall not be
applicable to:

“(a) any taxes which have been levied and as-
sessed by any municipality, school or public utility
district under the provisions of Chapter 10, Ses-
sion Laws of Alaska 1949, as amended, or which
are levied and assessed during the current fiscal
year of such municipality, school or public utility
district; and

“(b) any exemptions from the taxes referred
to in subsection (a) of this section, which have
been granted under the provisions of Section 6(h)
of Chapter 10, Session Laws of Alaska 1949.

“Section 3. An emergency is hereby declared
to exist and this Act shall be in full force and ef-
fect for and after the date of its passage and ap-
proval.” [Emphasis supplied. ]

It may here be explained that Section 6(h) of Chapter
10, supra, refers to “incentive exemptions” that the Tax
Commissioner of Alaska was authorized to grant to “new
industries,” and is not relevant to the present controversy.

Between April and May of 1955, the appellant filed
eight separate complaints against the appellees seeking to
recover a total of more than $175,000 in taxes, interest

284 be

and penalties for various years between 1949 and 1952,
inclusive. The appellees point out that these suits “were
all personal actions against the several [appellees] seek-
ing to recover taxes on both real and personal property
combined without any attempt at segregation of one type
of property from the other.”

Each appellee filed a separate and identical motion to
dismiss, alleging that the complaint did not state a claim
upon which relief could be granted, and that the action
was not brought within the time required by law.

On May 5, 1955, the appellant filed a counter motion
te strike against four of the appellees, requesting the Court
below to strike the motion to dismiss. The Court denied
the motion to strike and granted the appellees’ motion to
dismiss the eight complaints, for the reasons stated in the
Court’s opinion, which was filed on January 4, 1956. D.C.,
137 F.Supp. 181.

On February 7, 1956, the appellant filed a notice of ap-
peal from the order of the Court below dismissing the
complaints. On November 14, 1956, we ordered that the
appeal “be dismissed for want of jurisdiction because of
the lack of final judgment,” and we remanded the cases
to the Court below.

On December 11, 1956, the District Court filed a final
judgment decreeing (1) that the complaints alleging a per-
sonal liability be dismissed; (2) that the complaints and
the “numbered causes be dismissed on the merits for the
reasons stated in the Court’s opinion of January 4, 1956,”
supra; and (3) that neither the taxes nor the remedy un-
der Chapter 10 “survived the repeal found in Chapter 22
SLA 1953,” etc.

On the same day, a second notice of appeal was filed in
this case. It is this second appeal that is now before us.

ee 285

Four questions are presented by the appellant:

(1) Whether the Property Tax Act is a tax on the ap-
pellees for which they are personally liable, or is merely a
tax upon their property;

(2) Whether the appellant is without a remedy to col-
lect and enforce taxes due under the Property Tax Act;

(3) Whether the language in Chapter 22, supra, repeal-
ing the Property Tax Act, is a “special saving clause” nul-
lifying the appellant’s right under the “Territorial General
Saving Clause,” infra, “to collect accrued and unpaid taxes
for” 1949-1952,

(4) Whether, in interpreting Chapter 22, supra, the
terms and expressions of which’are asserted to be ambigu-
ous, “the Court is limited in ascertaining the legislative
intent to only those statutory constructional aids of which
it may take ‘judicial notice’ or whether it may refer to ex-
trinsic aids, otherwise admissible under the laws of evi-
dence, which bear directly on such intent.”

In our view, Question No. 3 is determinative of the issue.

2. Alaska’s General Saving Statute

Section 19-1-1, Alaska Compiled Laws Annotated, 1949,
as amended by Chapter 4, Extraordinary Session Laws of
Alaska, 1955, reads as follows:

“Effect of repeals or amendments. The repeal
or amendment of any statute shall not affect any
offense committed or any act done or right accru-
ing or accrued or any action or proceeding had or
commenced prior to such repeal or amendment;
nor shall any penalty, forfeiture or liability incur-
red under such statute be released or extinguished,
but the same may be enforced, continued, sus-
tained, prosecuted and punished under the repeal-
ing or amendatory statute save as limited by the
ex post facto and other provisions of the Consti-

oY

286 a

tution, in which event the same may be enforced,
continued, sustained, prosecuted and punished un-
der the former law as if such repeal or amendment
had not been made. When any act repealing a
former act, section, or provision shall be itself
repealed, such repeal shall not be construed to re-
vive such former act, section, or provision, unless
it shall be expressly so provided.”

HB 3. The Saving Section of the Repealing Act Over-
rides the General Saving Statute.

Section 2 of the Act of 1953, hereinafter the repealing
act, must prevail over Section 19-1-1 of Alaska Compiled
Statutes Annotated, hereinafter the general saving stat-
ute.

At the outset, we note that the very title of the repeal-
ing act underlines one of its main purposes; namely, that
of “excepting from repeal certain taxes and tax exemp-
tions.”

In John J. Sesnon Co. v. United States, 9 Cir., 1910,
182 F. 573, 576, certiorari denied, 1911, 220 U.S. 609, 31
S.Ct. 714, 55 L.Ed. 608, a case that came to this Court
from Alaska, Judge Morrow observed :

“Where doubt exists as to the meaning of the
statute, the title may be looked to for aid in its con-
struction.”

In the repealing statute before us, the participial phrase,
“excepting from repeal” certain taxes, etc., without any
qualification to the word “excepting,” indicates that the
term is to be taken in its ordinary restrictive sense.

Considering the repealing act as a whole, we should bear
in mind that being a special or, in the words of the Supreme
Court, a “specific” enactment, it qualifies and furnishes
exceptions to the general repeal law of Alaska—Section

Ss | 287

19-1-1, dealing with the “Effect of repeals or amend-
ments,” supra.

More than threescore and ten years ago, this rule was
already “well settled” in Anglo-American law.

In Townsend v. Little, 1883, 109 U.S. 504, 512, 3 S.Ct.
357, 362, 27 L.Ed. 1012, the Court observed:

“According to the well-settled rule, that general
and specific provisions, in apparent contradiction,
whether in the same or different statutes, and with-
out regard to priority of enactment, may subsist
together, the specific qualifying and supplying ex-
ceptions to the general, this provision for the exe-
‘cution of a particular class of deeds is not control-
led by the law of the territory requiring deeds
generally to be executed with two witnesses.
[American and English‘authorities cited.]” [Em-
phasis supplied.]

The principle is merely a corollary of the familiar maxim,
Expressio unius est exclusio alterius, as was pointed out
in Rybolt v. Jarrett, 4 Cir., 1940, 112 F.2d 642, 645:

“There is some force here in the maxim Expres-
sio unius est exclusio alterius. When in a stat-
ute of such clean cut restrictive force, the legis-
lature undertook to make certain explicit excep-
tions, it seems a fair implication that the legislature
intended to exclude other exceptions, and thus to
make the statute say what it means and mean what
it says.”

Similarly, in Jones v. H. D. & J. K. Crosswell, 4 Cir.,
1932, 60 F.2d 827, 828, it was said:

“Being exceptions carved out of the general
tule, intangible property not specifically mentioned
as being tangible property must be excluded. The
maxim ‘expressio unius est exclusio alterius’

288 —

applies. It is a well-settled principle of statutory
construction that the expression of one thing ex-
cludes others not express. [Many cases cited.]”
[Emphasis supplied.]

The principle is well established in California. In Los
Angeles Brewing Co. v. City of Los Angeles, 1935, 8 Cal.
App.2d 391, 398, 48 P.2d 71, 74, cited in the Stanford
Law Review of January, 1949, Volume 1, Number 2, Page
371, Note 2, the Court remarked:

“As section 22 or article 20 [of the Constitu-
tion of California] was adopted last, as it is spe-
cial in dealing with this subject of the control,
licensing, and regulating of ‘the manufacture,-
sale, purchase, possession, transportation and dis-
position of intoxicating liquor within the State’
and as it shows an intention to remove the licens-
ing for revenue of those so dealing in intoxicating
liquors from the realm of a municipal affair to that
of a matter of general state-wide concern, its pro-
visions must be held to control over those of sec-
tion 6 of article 11 of the Constitution [authoriz-
ing cities and towns to legislate “in respect to
municipal affairs”] and vest in the state the ex-
clusive and sole right to license for the purpose of
revenue those engaged in the business of manufac-
turing, dealing in or handling intoxicating liq-
uors.” [Emphasis supplied.]

So far we have looked at the authorities dealing with
the general application of the principle of “The expression.
of one is the exclusion of others.” But there is a leading
and oft-quoted decision that applies the venerable maxim
to the precise question that we are here considering; name-
ly, the conflict between a general repeal provision and a
special repeal provision.

| 289

We refer to State v. Showers, 1885, 34 Kan. 269, 8 P.
474, 476-477, where the entire question was lucidly dis-
cussed :

“The offense of which the defendant was found
guilty was committed in violation of section 7 of
the prohibitory liquor law as enacted in 1881, and
the prosecution for such offense was commenced
and conducted to its final termination after said
section had been amended and the original section
repealed by an act taking effect March 10, 1885;
and the first question presented to this court,
* * * is whether the defendant could be pun-
ished for a violation of the old section when the
prosecution had not been commenced until after it
had been amended and repealed.” 8 P. at page
475.

The general saving statute of Kansas at that time read
in part as follows:

“The repeal of a statute does not revive a stat-
ute previously repealed, nor does such repeal
affect any right which accrued, any duty imposed,
any penalty incurred, nor any proceeding com-
menced, under or by virtue of the statute re-
pealed.” Compiled Laws, 1879, c. 104, § 1.

It will be observed that the above Kansas statute was
closely similar in effect to the General Saving Act of Alas-
ka, § 19-1-1, supra. On the other hand, § 19 of the re-
pealing act of 1885, supra, contained the following spe-
cial saving proviso:

“All prosecutions pending at the time of the
taking effect of this act shall be continued the
same as if this act had not been passed.”

a

290 Ld

With this legislative and factual situation before it, the
Supreme Court of Kansas said:

“The question as to what should be repealed
and what saved was before the legislature. They
had the entire subject-matter thereof under consid-
eration, and evidently intended to cover the entire
grounds; and evidently intended that nothing
should be repealed except what they expressly
repealed, and that nothing should be saved ex~
cept what they expressly stated should be saved.
They expressly saved some things; therefore it
must be inferred that they intended to save no
others. Expressio unius est exclusio alterius.
The legislature evidently intended that the spe-
cial saving clause which they enacted in section
19 of the act of 1885 should take the place of all
others, so far as prosecutions under original sec-
tion 7 were concerned; and that in cases where the
special saving clause could apply the general sav-
ing statute should have no operation. ‘It is a
well-settled rule of construction that specific pro-
visions relating to a particular subject must govern
in respect to that subject, as against general pro-
visions in other parts of the law which might
otherwise be broad enough to include it.’ Felt
v. Felt, 19 Wis. [193] 196. ‘It is familiar law
that a later statute will operate as a repeal of a for-
mer, though it contains no express repeal, and
even though its provisions are not absolutely re~
pugnant to those of the former, whenever it is ob-
vious that the one was intended as a substitute
for the other.’ [Cases cited.]

“Tf, however, the saving clause in section 19 of
the act of 1885 was not intended by the legislature
to cover the entire ground, and to be a substitute

2)

for the general saving statute so far as cases like
this are concerned, then the saving clause con-
tained in section 19 of the act of 1885 has no office
to perform, but is absolutely worthless, for the
general saving clause would save all that it saves
and very much more. Such an interpretation of
the law as this would violate all proper canons of
construction. It would in effect say that the leg-
islature had done the very foolish thing of enact-
ing a saving clause which can have no real opera-
tion at all, and can subserve no actual purpose
whatever. ‘It is a well-settled rule that when
any statute is revised, or one act framed from an-
other, some parts being omitted, the parts omitted
are not to be revived by construction, but are to be
considered as annulled. To hold otherwise would
be to impute to the legislature gross carelessness
or ignorance, which is altogether inadmissible.’
Ellis v. Paige, [1 Pick. 43] 18 Mass. [43] 45.”
[Emphasis supplied.]

Emphasizing that the general saving statute comes into
play only where the repealing act is “silent as to whether
the rights and remedies” under the old law are to be saved,
the Supreme Court of Kansas said in conclusion:

“The theory upon which it has been held by this
court that the general saving statute is applicable
in cases of repeals is that where the repealing stat-
ute is silent as to whether the rights and remedies
which had previously accrued under the repealed
statute should be saved or not, such silence indi-
cates an intention on the part of the legislature
that the general saving statute should be left to op-
erate upon the repeal, and to save all such rights
and remedies as come within the saving provisions
of the general saving statute. [Case cited] In

292 Le

the present case, however, the repealing statute
is not silent, for it itself contains a saving clause
which shows that it was not the intention of the
legislature to rely upon the general saving statute.

“For the reasons above stated we think the
present action cannot be maintained. The judg-
ment of the court below will therefore be reversed
and cause remanded for further proceedings.

“(All the justices concurring.)” 8 P. at pages
477-4784

Both on reason and authority, therefore, we hold that
§ 2 of Chapter 22 of 1953, the repealing statute, means
precisely what it says; namely, that Chapter 10 of the Ses-
sion Laws of Alaska, 1949, shall “be and it is hereby re-
pealed,” except “any taxes which have been levied and as-
sessed by any municipality, school or public utility district,”
etc., including such taxes levied and assessed for the “cur-
rent fiscal year”—taxes which are not in controversy here,
and which alone are saved from repeal.

With the above exclusive exception, Chapter 10, Session
Laws of Alaska, 1949, is no longer of any force or effect
—as to past, present, or future years.

4. The District Court Did Not Err in Excluding
from Evidence H.B.No. 3 and S.B.No. 5.

The appellant asserts that “Because of the ambiguity
of the statute and the direct bearing on the legislative intent,
the Court should have considered the bill originally intro-

1See also, on this question of the legislators’ intention “that noth-
ing should be saved except what they expressly stated should be
saved”, Wilmington Trust Co, v. United States, D.O.Del.1928, 28 F.
2d 205, 208; and on the general application of the “expressio unius”
maxim, see also Ainsworth v. Bryant, 1949, 84 Cal.2d 465, 472, 473,
211 P.2d 564, 568; 50 AmJur. § 528, page 585; 82 C.J.S. Statutes §
440(a), p. 1015.

ee | 2 !3

duced and the amendments thereto, which preceded the
final adoption of Chapter 22, SLA 1953”.

Specifically, the appellant urges as error the lower court’s
rejection of “both the original House Bill No. 3 and Senate
Bill No. 5, Twenty-first Session, Territory of Alaska Leg-
islature”.

The record shows that only House Bill No. 3 was offered
in evidence. The appellant counters with the statements
that Senate Bill No. 5 “was identical in all respects to House
Bill No. 3”; that an authenticated copy was formally filed
in the District Court with the Territory’s brief; and, “al-
ternatively”, that the Senate bill “could have been called to
the Court’s attention by citing page 32 of the 1949 Senate
Journal (which is conceded by the appellees to be subject
to judicial notice) wherein the word-for-word likeness of
the title of Senate Bill No. 5 and House Bill No. 3 clearly
indicates both bills to be indistinguishable in form, design
or purpose”.

We accept the appellant’s “alternative” point at its face
value, and hold that the title of the Senate bill and the
House bill indicate that they are “indistinguishable”. By
a parity of reasoning, however, we also hold that the title
of House Bill No. 3 as introduced and the title of the House
bill as enacted “clearly indicate” their differences.

As originally introduced, the bill, according to its title,
was offered for the purpose of abrogating and repealing
all accrued and unpaid taxes levied thereunder”; while the
Act as passed carried a title showing that the new statute
was “excepting from repeal certain taxes and tax exemp-
tions”. The extract from the Senate Journal printed in
the appendix to the appellant’s opening brief in this Court
also shows that a “new Section 2” dealing with taxes levied
“by any municipality, school or public utility district”, etc.,
supra, was added by the Senate, and was concurred in by
the House.

294 Le

These changes in the House bill before its final enact-
ment, however, are not relevant here.

In Trailmobile Co. v. Whirls, 1947, 331 U.S. 40, 60-
61, 67 S.Ct. 982, 992, 91 L.Ed. 1328, the Supreme Court
thus disposed of attempts to interpret statutes by minutely
tracing “legislative maneuvers” :

“These reasons, founded in the literal con-
struction of the statute and the policy clearly evi-
dent on its face, are sufficient for disposition of
the case. They are not weakened by the Govern-
ment’s strained and unconvincing citation of the
Act’s legislative history.

“That argument is grounded in conclusions
drawn from changes made without explanation
in committee [as in the statute before us] with
respect to various provisions finally taking form
in § 8, changes affecting bills which eventually
became the Selective Training and Service Act [50
U.S.C.A.Appendix, § 301 et seq.] and the Na- '
tional Guard Atct, 54 Stat. 858, 50 U.S.C.A.Ap- |
pendix, § 401 et seq. Apart from the inconclusive
character of the history, the Government’s conten-
tion assumes that the only alternatives presented
by the final form of the bill were indefinite dura-
tion for the incidents of the employment named
and none at all. This ignores the other possibil-
ities considered in this opinion, including duration
for a reasonable time. Moreover, as has been
noted, the most important committee changes re-
lied upon were made without explanation. The
interpretation of statutes cannot safely be made
to rest upon mute intermediate legislative maneu-
vers.” [Emphasis supplied.]

ee | 295

We hold that the trial court did not commit prejudicial
error in excluding evidence of the original House Bill No.
3 and the amendments thereto.

From the foregoing, it will be seen that, since the lim-
ited saving clause did not preserve enough of the repealed
tax statutes to be applicable against the taxpayers who are
the appellees here, they are not liable either in rem or in
personam. Any discussion, therefore, of the personal lia-
bility of the appellees as contradistinguished from the in
rem liability of their property, would be moot.

In our view, the appellants are not liable either in rem
or in personam, since the repealing act, as has been shown,
completely wiped out any tax liability except as to munic-
ipal, school, or public utility district taxes, which are con-
cededly not involved in the instant case.

5. Conclusion

Accordingly, it is the holding of this Court that the sav-
ing section of the repealing act relating to the Alaska Prop-
erty Tax Law overrides the general saving statute; and
thatthe Court below did not err in excluding from evidence
House Bill No. 3 and Senate Bill No. 5,

The judgment of the District Court is therefore

Affirmed.

HEALY, Circuit Judge (dissenting).

I disagree with the holding of the majority that section
2(a) of chapter 22, Alaska Session Laws of 1953, nulli-
fies the effect here of the Alaska General Savings Statute,
section 19-1-1, Alaska Compiled Laws 1949, The relevant
provisions of the latter are quoted below.t It is not at all

1“Effect of repeals or amendments. The repeal or amendment of
any statute shall not affect an offense committed or any act done or
right accruing or accrued or any action or proceeding had or com-
menced prior to such repeal or amendment; nor shall any penalty,

296 Le

clear that it was the legislative intent to wipe out the lia-
bility of those in the situation of appellees for unpaid taxes
levied for the years 1949 through 1952, but rather that
section 2(a) had another and different purpose.

Significantly, the history of the 1953 legislation shows
that section 2 of the original bill was deleted in the course
of the bill’s consideration. That section in unmistakable
terms had forgiven and abrogated all pre-1953 taxes. Con-
currently, the phrase “and abrogating and repealing all ac-
crued and unpaid taxes levied thereunder” was deleted from
the bill’s title. Thus the legislature had before it in the
original bill clear language which would have forgiven the
taxes here in question. It chose, instead, to reject the lan-
guage. .

In material part section 2(a) of the Act as finally passed
reads:

“Section 2. Section 1 of this Act shall not be
applicable to: (a) any taxes which have been
levied and assessed by any municipality, school
or public utility district under the provisions of
Chapter 10, Session Laws of Alaska 1949, as
amended, or which are levied and assessed during
the current fiscal year of such municipality, school
or public utility district; * * *,”

In light of what has been said above, the section is fairly
construable-as intending no more than a grant to the mu-
nicipalities and school and public utility districts—but not
to the Territory itself—of the right to levy and collect taxes

forfeiture or liability incurred under such statute be released or ex-
tinguished, but the same may be enforced, continued, sustained, pros-
ecuted and punished under the repealing or amendatory statute save
as limited by the ex post facto and other provisions of the Constitu-
tion, in which event the same may be enforced, continued, sustained,
prosecuted and punished under the former law as if such repeal or
amendment had not been made * * *,”

Se 27

for the then current year, namely 1953, both before and
after the repealing act had taken effect. There was a logi-
cal reason for granting this right to these local districts
in that the legislature may well have felt it undesirable to
interfere with their current fiscal programs, whether or
not the levies for that year had yet been made. As so con-
strued, section 2(a) is readable in pari materia with the
General Savings Statute, above quoted, as not interfering
with the collection of unpaid 1949-1952 taxes, either of the
Territory or of the taxing districts.

As was recognized by the trial judge but is not mentioned
in the majority opinion here, it is a fundamental rule of stat-
utory construction that general savings clauses or statutes
preserve rights and liabilities which have accrued under
an act repealed, and that they operate to make applicable
in designated situations the law as it existed before the re-
peal, unless such application is negatived by the express
terms or clear implication of a particular repealing act.

My brothers, as I understand them, do not contend that
such application is negatived by the express terms of the
1953 legislation, but rather is to be gathered by implica-
tion. To me, however, the legislation in the respects here
in question is fundamentally ambiguous, both in its mean-
ing and in the motives inspiring its enactment. Accord-
ingly I dissent from the majority holding.

298 |

244. F.2d 647

Edward 8. BURTON et al., Appellants, v. MATANUSKA
VALLEY LINES, Inc., a corporation in the Territory
of Alaska, Appellee.
No, 15030.

United States Court of Appeals, Ninth Cirenit.
April 8, 1957.
Rehearing Denied July 5, 1957.

ir)
S
aN

300 . Lt

Harold J. Butcher, Anchorage, Alaska, for appellants.
Edgar Patl Boyko, Anchorage, Alaska, for appellee.

Before DENMAN, Chief Judge, and POPE and
LEMMON, Circuit Judges.

POPE, Circuit Judge.

Appellee Matanuska Valley Lines, Inc., a common car-
rier of passengers by bus, had operated for some years an
integrated system of bus lines within the City of Anchor-
age, Alaska, within the nearby military bases known as
Elmendorf Air Force Base and Fort Richardson Military
Reservation, between those bases, and between the bases
and the City of Anchorage, and throughout the public high-
ways surrounding the City and the bases, and extending

ELT

over a large area in South Central Alaska. It held a fran-
chise from the City of Anchorage, a certificate of public
convenience and necessity from the Territory, and licenses
from the military authorities on the bases.

Appellant, Anchorage Bus Company (here called Anchor-
age Bus), through its officers, the individual appellants,
shortly before this action arose, procured from the Military
Commands contract permission to operate a bus business
for hire between and within those bases, in competition
with Matanuska Valley Lines (here called Matanuska).
Anchorage Bus then announced that it was prepared, and
was about to commence bus operation in direct competition
with Matanuska in all the areas in which the latter had
established lines, including those in the City, those between
the City and the bases, and in the areas outside the City
and the bases. Asserting that for these latter operations
Anchorage Bus had no lawful franchise, certificate or per-
mit to operate, and that the proposed competitive operation
would be ruinous to Matanuska, and cause it irreparable
injury and damage, the latter brought this action against
Anchorage Bus, and its officers, seeking among other things,
an injunction against its proposed operations outside the
military bases. After notice and hearing upon affidavits
and documentary evidence, the court granted Matanuska’s
motion for a preliminary injunction. This appeal is from
that interlocutory injunction. :

The first complaint shown in this record (an amended
complaint) was filed October 25, 1955. How long prior
thereto the actioh was commenced does not appear. But it
is apparent that shortly after the action was begun, An-
chorage Bus began to take steps designed to assure the
fulfillment of its intention to operate in competition with
Matanuska. On October 21, 1955, Anchorage Bus ob-
tained -from the Alaska Bus Ttransportation Commission
a certificate of public convenience and necessity to furnish

302 |

bus transportation between the City and the military bases.
Four days later that certificate was suspended “until a pub-
lic hearing could be held.” The order recited that suspen-
sion was granted upon Matanuska’s protest that the cer-
tificate had been issued without notice, and that the An-
chorage Bus operations would put Matanuska out of busi-
ness. It was ordered that hearing would be had on
December 6, 1955, as to whether the Anchorage Bus cer-
tificate should be reinstated and Matanuska’s certificate
modified “to allow concurrent operations by other author-
ized bus companies.”

On October 31, 1955, Matanuska made its motion for a
preliminary injunction. Hearing on the motion and the
affidavits filed in its support and in opposition thereto was
had on November 10, 1955. On November 14, 1955, the
court announced its decision to grant a preliminary injunc-
tion effective until December 6, 1955, the date set for
hearing by the Commission, and directed plaintiff to pre-
pare findings and a form of order.

When the Commission met, as contemplated, it made
no decision as to either question, that is whether Anchorage
Bus should have a certificate of public convenience and
necessity, or whether Matanuska’s certificate should be ruled
non-exclusive. The reason for this non-action was that
the Commission believed (erroneously, it developed) that
Anchorage Bus could travel between the City and the bases
without traversing any Territorial roads. Making show-
ing of this failure of the Commission to act, and that An-
chorage was about to commence the operations which had
been enjoined, Matanuska renewed its application for a
temporary injunction asking that such injunction be con-
tinued during the pendency of the suit.

At this stage of the proceedings, the commanding officer
of the Elmendorf Air Force Base moved into the arena on

Le ED)

the side of Anchorage Bus. According to an affidavit of
a local business man, the deputy base commander, who is-
sued the telegram shortly to be mentioned, stated that com-
mitments had been made to Anchorage Bus for an exclu-
sive contract to operate on the bases, and that to make that
operation successful, Anchorage Bus needed the revenue
from base to City operations, and the officer felt bound to
support the new company to the limit. On December 21,
1955, the Commission received from the Commander of
the Air Force Base a telegram stating that Matanuska’s
liability policy was insufficient coverage for operation on
the military reservation and that it was not adhering to
schedules; hence he was seeking authority from the Sec-
retary of the Air Force to cancel Matanuska’s license; that
if this occurred hardship would result unless operation be-
tween the City and the bases by another operator was au-
thorized; and that the insurance, equipment and on-base
service of Anchorage Bus was entirely adequate and satis-
factory. Upon receipt of this telegram, the Commission,
immediately, and without notice, issued a temporary cer-
tificate to Anchorage Bus.*

1 It is not entirely clear just when this temporary certificate would
g0 into effect. Section 9(4), Chap. 93, Session Laws of Alaska, 1949,
provides: “Except as otherwise provided in this Act, all orders of
the Commission, other than orders for the payment of money, shall
take effect within such reasonable time, not less than thirty days, as
the Commission may prescribe * * *”

The statute’s provision for temporary certificate, § 7a), provides:
“To enable the provision of service for which there is an immediate
and urgent need to a point or points having no carrier service capa-
ble of meeting such need, the Commission may, in its discretion and
without hearings or other proceedings, grant temporary authority
for such service by a common carrier by bus or a contract carrier by
bus, as the case may be. Such temporary authority shall be valid
for such time as the Commission shall specify, and shall create no
presumption that corresponding permanent authority will be granted
thereafter.”

304 be

Contrary to the hope implied in the Commander’s tele-
gtam, Matanuska’s service on the bases and between them
and the City was never suspended. This was the first time
in the more than three years it had held a license on the
base, that any suggestion of lack of adequate insurance
had been made, and at once Matanuska procured additional
coverage to meet the Commander’s complaint.* It is also
plain that the parties and the court considered that the
court’s ruling of November 14 preceding, that a prelim-
inary injunction should issue, was still in effect, for on
December 23 Anchorage Bus moved the court to dissolve
the temporary injunction, mainly on the ground of the ac-
tion of the military authorities and the issuance of the tem-
porary certificate, This was heard, on affidavits filed in
support and in opposition, and denied on December 27.
During a portion of the period since November 14, the court
had been considering proposed findings offered by Mata-
nuska, and exceptions of Anchorage Bus thereto, On Jan-
uary 16, 1956, the court made and filed its findings and
conclusions and issued the preliminary injunction from
which this appeal is taken, The injunction was conditioned
upon plaintiff giving a bond in the sum of $40,000 to cover
costs and damages. It enjoined operations between the
City and the bases, in the City, and in the Territory, but
expressly excepted and permitted operations within the
military bases.

On this appeal much of the argument by appellant re-
lates to the question as to whether Matanuska should pre-

20n December 22, 1955, the Commander wrote Matanuska sus-
pending its authority to operate on the base, and directing that it
cease operations on December 27. On December 23 Matanuska pro-
cured the additional coverage to meet the officer’s complaint. (The
letter had suggested that Matanuska might make “further demon-
stration to us of your financial responsibility and evidence that you
earry adequate liability insurance” and then the officer would consid-
er granting a new license to operate.)

35

vail upon the final trial of this action, Plaintiff cannot
win, it is said, for two reasons: (1) Anchorage Bus had
a certificate of convenience and necessity,—the one issued
December 21, 1955, described above; and (2), Matanuska’s
certificate from the Commission, and its franchise from
the City are neither of them “exclusive,” notwithstanding
they purport to be such.

HEBD Before we go into the questions which must be
answered in order to evaluate either of these two points,—
questions, which we shall note, are not easily answered, we
should first observe the limited scope of review which is
permitted us upon an appeal from a temporary injunction.
This limitation arises from the nature of an interlocutory
injunction, and from the purposes to be served thereby.
Such an injunction preserves the status quo and protects
plaintiff from irreparable injury during the pendency of
a suit until such time as the court may adjudge and
finally determine the rights of the parties. Necessarily
the court must presuppose that in the case at bar it may
turn out that plaintiff will ultimately lose. Thus the court
may finally find the facts against the plaintiff who procured
the temporary injunction. But this possibility does not
compel a denial of a temporary injunction if proper show-
ing be made therefor; otherwise a court, which neces-
sarily requires time to reach a final determination, would
have no way to protect a party who may suffer irreparable
loss if the status quo be not preserved. Without this power
to issue interlocutory injunctions, courts would be unable
to make their final judgments effective, for the very right
to be protected, or the subject of the action itself, might
be destroyed irreparably during the period required to ar-
rive at an ultimate determination of the action.

And just as a court must of necessity obtain time in

which to determine which party is right upon the facts,
a

306 Dn

so in a substantial number of cases time is necessarily re-
quired to resolve grave, difficult and complicated questions
of law. If, in such a case, it is ultimately decided that the
party who obtained the temporary injunction cannot win,
that in itself does not demonstrate that it was wrong to is-
sue the injunction. For a considerable latitude of judicial
discretion is allowed the trial court in its determination
whether the situation requires a preservation of existing
conditions through an injunction pendente lite, and our
more deliberate conclusion that the ultimate decision must
be against a permanent injunction does not in itself war-
rant a reversal of the interlocutory order.

We know of no better statement of this principle than
that found in Love v. Atchison T. & S. F. Ry. Co., 8 Cir.,
185 F. 321, 331, as follows: “But the granting or with-
holding of an interlocutory injunction rests in the sound
judicial discretion of the court of original jurisdiction, and
where, as in the case in hand, that court has not departed
from the equitable principles established for its guidance,
its orders may not be reversed by the appellate court, with-
out clear proof that it has abused its discretion. * * *
An appeal from an order granting or refusing an inter-
locutory injunction does not invoke the judicial discre-
tion of the appellate court. The question is not whether
or not that court in the exercise of its discretion would
make or would have made the order. It was to the dis-
cretion of the trial court, not to that of the appellate court,
that the law intrusted the granting or refusing of these in-
junctions, and the only question here is: Does the proof
clearly establish an abuse of that discretion?”

And in Ohio Oil Co. v. Conway, 279 U.S. 813, 815, 49
S.Ct. 256, 73 L.Ed. 972, the Supreme Court, expressly cit-
ing with approval the Love case, said: “Where the ques-
tions presented by an application for an interlocutory in-

37

junction are grave, and the injury to the moving party will
be certain and irreparable, if the application be denied and
the final decree be in his favor, while if the injunction be
granted the injury to the opposing party, even if the final
decree be in his favor, will be inconsiderable, or may be
adequately indemnified by a bond, the injunction usually
will be granted.”

HL When the tests thus stated are applied to the facts
of the present case, we are forced to conclude that the in-
terlocutory injunction here under review must be sustained.
The court below was presented with a number of ques-
tions which were both serious and difficult. One of these
was whether the certificate of convenience and necessity
authorizing Matanuska’s maintenance of transportation fa-
cilities between the military bases and the City was an ex-
clusive one?

Matanuska’s certificate, dated September 17, 1949, and
issued by the Transportation Commission, was expressly
stated to be an exclusive one. The Territorial Act of March
23, Chap. 93, Sess. Laws of Alaska, 1949, provided in §

3A related question of somewhat less significance here is whether
Matanuska had an exclusive franchise to operate its bus transporta-
tion system in the City. The franchise, granted by ordinance to
Matanuska, provided that the grantee “shall have the exclusive right
or franchise to operate a motor bus service, or trolley bus service as
a common carrier over the streets of the City of Anchorage, Terri-
tory of Alaska, and other points without the City of Anchorage to
points within the City of Anchorage. * * *” The ordinance
granting such franchise was enacted January 24, 1956. By Chap.
91, Sess.Laws of Alaska, 1949, the city councils of such cities as An-
chorage were authorized to grant franchises “including exclusive
franchise privileges” for bus transportation systems and the same
chapter provided that exclusive franchises theretofore approved were
ratified and given full force and effect under the Act. It is noted that
a portion of the operations of Anchorage Bus which were enjoined
by the court below were within the City and upon the City’s streets.
See also footnote 6 infra.

308 Le

2(e) that the Commission should have power to issue cer-
tificates of convenience and necessity, which authority “shall
include the discretion to issue exclusive certificates on such
rotites and upon such conditions as the Commission deems
necessary or advisable * * *.” It is contended that
this legislative provision is null and void because it violates
the provisions of the Act of Congress enacted in 1886, now
found in 48 U.S.C.A. § 1471, and providing in part as fol-
lows: “The legislatures of the Territories of the United
States now or hereafter to be organized shall not pass local
or special Jaws in any of the following enumerated cases,
that isto say: * * * Granting to any corporation, as-
sociation, or individual any special or exclusive privilege,
immunity, or franchise whatever. In all other cases where
a general law can be made applicable, no special law shall
be enacted in any of the Territories of the United States
by the Territorial legislatures thereof.” *

It is by no means clear that this language of the 1886
enactment was intended to prohibit this or other terri-
torial legislatures from recognizing that public utilities
are natural monopolies and providing for regulation of
such utilities by means comparable to that commonly pro-
vided by state legislatures, which often find that such pub-
lic utilities may best be regulated by making them monop-
olies. In Idaho Power & Light Co. v. Blomquist, 26 Ida-
ho 222, 141 P. 1083, 1088, the court said: “There is nothing
in the Constitution that prohibits the Legislature from
enacting laws prohibiting competition between public util-
ity corporations, and the Legislature of this state no doubt

4 Substantially the same language was incorporated in the Alaska
Organic Act of 1912, 37 Stat. 514, see Title 48 § 77, where in stating

certain restrictions imposed by the territorial legislature, it was said:
-“Nor shall the legislature grant to any corporation, association, or

individual any special or exclusive privilege, immunity, or franchise
without the affirmative approval of Congress.”

3)

concluded that a business like that of transmitting electricity
through the streets of the city and furnishing light and pow-
er to the people must be transacted by a regulated monop-
oly, and that free competition between as many companies
or as many persons as might desire to put up wires in the
streets is impracticable and not for the best interests of the
people.”

We know of nothing either in the legislative history of
this congressional provision or in the decided cases dealing
with it, which would suggest that it was intended to be a
limitation upon the Alaska legislature’s power to provide
a normal system for regulation of bus companies. Nixon
v. Reid, 8 S.D. 507, 67 N.W. 57, 32 L.R.A. 315; Hender-
son v. Ogden City Railway Co.;'7 Utah 199, 26 P. 286, are
cases dealing with the same Act of Congress, and both re-
ject the interpretation of the Act which appellants urge
upon us here. Certainly the assertion that the provisions
of the Alaska statutes authorizing the Commission and the
City Council to grant exclusive certificates and franchises,
are null and void, presented a grave problem to the trial
judge and one which, to say the least, required much time
for study and consideration, The position taken by the
appellant on this point is so doubtful that we think the
trial court could not properly accept its argument without
careful investigation and extended consideration.

There was also an important question as to whether
Matanuska was not entitled to an injunction even if its
certificate was not an exclusive one. That would be par-
ticularly true if Anchorage Bus was without a valid cer-
tificate of its own. See Frost v. Corporation Commis-
sion, 278 U.S. 515, 49 S.Ct. 235, 73 L.Ed. 483; Wichita
Transportation Co. v. People’s Taxicab Co., 140 Kan. 40,
34 P.2d 550, 94 A.L.R. 771; Puget Sound Traction, Light
& Power Co. v. Grassmeyer, 102 Wash, 482, 173 P. 504,

310 a

L.R.A.1918F, 469; Adam v. New York Trust Co., 5 Cir,
37 F.2d 826. Furthermore, there appears to be substai-
tial authority for the proposition that the holder of a non-
exclusive public utility franchise who is first in the field
may enjoin the second and later holder of a franchise who
threatens competition which seriously or unnecessarily in-
terferes with the first holder’s property or operations. See
the cases collected in the Note and Annotation, 119 A.L.R.
432,

As we have indicated in the statement of facts here, An-
chorage Bus received a temporary certificate from the
Commission on December 21, 1955. If the plaintiff’s cer-
tificate of convenience and necessity dated September 17,
1949, was an exclusive one, as it purported to be, the is-
suance of the temporary certificate would constitute no bar
to plaintiff’s injunction.®

But there is a further difficult question presented here,
and not an easy one, namely, whether the temporary cer-
tificate was valid.

The statute (see footnote 1, supra) contemplates the is-
suance of such a certificate only to provide for service be-
tween points “having no carrier service capable of meeting
such need.” As has been indicated, there was enough rea-
son to believe that the Commission issued the temporary
certificate under a misapprehension and a belief that an
emergency existed. The certificate so shows on its face.®
The communications of the commanding officer had led
the Commission to believe that Matanuska could not op-

5S Under the authorities listed in the note and annotation cited
above, even if plaintiff's certificate were non-exclusive, yet since it
was the first one, it might procure an injunction against the defend-
ant even though the latter had the temporary certificate.

©The certificate recites that Matanuska “has been denied access to
the said military installations.” .

ee = 311

erate. However, it actually never ceased operating, and
the court was justified in assuming that no emergency of
the kind contemplated by the statute had arisen ;—hence,
that the conditions upon which the Commission might is-
sue the certificate were non-existent.”

In suggesting as we have done here that the trial judge
was confronted with serious and thorny questions for de-
cision in this case, we are not undertaking to decide how
those questions should ultimately be resolved. As this
court had occasion to say in Trautwein v. Moreno Mut.
Irr. Co., 9 Cir., 22 F.2d 374, 376, a case quite similar to
the present one, “[B]ut those are all questions for con-
sideration when the case is heard on the merits. On the
present hearing, the courts are only concerned with the
single question: Did the plaintiffs make out a prima facie
case?”

Hl Further pursuing the inquiry suggested by the Su-
preme Court’s statement, supra, in Ohio Oil v. Conway,
it should be noted here that the injury to plaintiff would

7A further question as to the validity of the temporary certificate
is presented by the language of § 2(e), supra. There, the Commis-
sion’s power to issue certificates is set forth as follows: “(e) Issue
certificates of convenience and necessity, conformable to the provi-
sions of this Act as hereinafter set forth. This authority shall in-
clude the discretion to issue exclusive certificates on such routes and
upon such conditions as the Commission deems necessary or advisa-
ble in the public interest to secure continuous, efficient and dependa-
ble bus services in the affected areas, provided that in making such
determinations with respect to routes partly within and partly with-
out incorporated towns, an order for isswance of a certificate shall
not be final until concurred in by the city council or councils of the
affected town or towns by a majority vote of the members to which
such bodies are entitled.”

‘The portion we have emphasized is significant, for the City of An-
chorage was incorporated, it never approved any operation by An-
chorage Bus, and the certificate purported to authorize operation
within the City to the City bus terminal.

312 Lt

be certain and irreparable if the application for an injunc-
tion would be denied and the final decree be in its favor.
Matanuska was the owner of a long established business
thoroughly integrated and serving an immense area in that
portion of Alaska, an area with a population in excess of
100,000. We know judicially, as the district court knew,
that final determination of the issues presented in the case
would come only after long delay because of the condi-
tion of the court calendars in Alaska... Without an injunc-
tion Matanuska would have no adequate remedy against
Anchorage Bus which was a newcomer with a smaller and
very limited investment and nothing but an expectancy in
the way of a business. The injunction was issued upon
condition that the defendant be indemnified by a bond and
the amount of the bond required was in an amount sub-
stantially equal to the defendant’s total investment. The
injury to the latter from the injunction, even if the final
decree went in its favor, would obviously be inconsequen-
tial.

It is our opinion that in issuing the temporary injunc-
tion the court was following the rules applicable in such
cases as Ohio Oil v. Conway, supra; Deckert v. Independ-
ence Shares Corp., 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed.
189, and Prendergast v. N. Y. Tel. Co., 262 U.S. 43, 43
S.Ct. 466, 67 L.Ed. 83, Cf. High on Injunctions, 4th Ed.
§ 1510.

HEM Anchorage Bus has undertaken to urge in its
brief here a number of other points which we think have no
bearing upon the substantial issues in the case. Thus it
complains that the trial court failed to consider its conten-
tion that the Commission improperly suspended its cer-
tificate of October 21, 1955. It is our view that the sus-
pension was within the power of the Commission but that

31S

the right to present this contention was waived at the hear-
ing in the court below.*

’ It is also argued that the court was in error in granting
a temporary restraining order pending the hearing on the
temporary injunction. As we have held that the tempo-
rary injunction issued after hearing was properly granted,
it necessarily follows that the temporary restraining or-
der was an appropriate step preliminary to that injunc-
tion.

The temporary injunction order appealed from is af-
firmed.

LEMMON, Circuit Judge (dissenting).

. We have frequently adverted to the weight that courts
should accord to findings and decisions made by adminis-
trative boards in the exercise of what Mr. Justice Frank-
furter is fond of calling “expertise.” +

Once again we are faced with an attempt by a trial court
to interfere, this time by injunction, with the activities of
a public utility operating under a certificate lawfully granted
to it by a regulatory commission.

In its brief, the appellee ascribes to the appellants a
“monstrous contention that an existing public transporta-

8 When the legality of the suspension was under discussion the
following colloquy took place between the court and counsel for ap-
pellants: “The Court. In that respect, Mr. Butcher, I do not feel
it is controlling in an injunctive proceeding, and, therefore, that
would be a collateral matter to be tried before the court at this time,
which I do not feel would be proper. I think that the case itself
should stand or fall upon the merits of the cause of action which the
[appellee] has at this time.

“Mr, Butcher. That is exactly our position, Your Honor.”

. 1See Universal Camera Corp. v. National Labor Relations Board,
1951, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456; Far East Confer-
ence v. United States, 1952, 842 U.S. 570, 576, 72 S.Ct. 492, 96 L.Ed.
576. .

314 a

tion system, franchised and licensed in accordance with
law and serving a large and vital area under difficult con-
ditions, is defenseless in a court of equity against the dep-
redations of a group of adventurers out to make a quick
dollar by pirating a few lucrative routes,” etc.

I deplore the use of such immoderate language, for
which there is not a shred of support in the record.

The District Court issued a preliminary injunction re-
straining the appellants from interfering with the appel-
lee’s franchises, certificates of public convenience and ne-
cessity, etc., issued by the Territory of Alaska, etc.; and
from operating a bus transportation system over Terri-
torial streets in Anchorage, Alaska, and also over highways
connecting Elmendorf Air Force Base and Fort Richard-
son Military Reservation and the City of Anchorage.

From that preliminary injunction the present appeal has
been taken.

1. The Amended Complaint

On October 25, 1955, the appellee filed a complaint
against the appellants and others, containing, in summary,
the following allegations:

The appellee is engaged in operating as a common car-
rier a motor bus or trolley bus service within the city lim-
its of Anchorage, under the name of Anchorage City
Transit System, as grantee under an exclusive twenty-year
contract of franchise from the City of Anchorage, dated
January 24, 1946.

The appellee also operates a motor bus service between
its terminal in the City of Anchorage and Elmendorf Air
Force Base, hereinafter Elmendorf, pursuant to a “trans-
portation license” issued by the Department of the Air
Force on October 21, 1952, effective for five years, or un-
til October 12, 1957, and also pursuant to an “exclusive

Se =— 315

certificate of convenience and necessity’’-issued by the Alas-
ka Bus Transportation Commission, hereinafter the Com-
mission, on September 17, 1949, applicable to the connect-
ing routes between the appellee’s terminal in the City of
Anchorage and Elmendorf.

The appellee also operates a motor bus service between
its terminal in Anchorage and Fort Richardson Military
Reservation, hereinafter Richardson, “pursuant to oral
authorization by the appropriate authorities and for which
an application for a transportation license is now pend-
ing,” and pursuant further to an “exclusive certificate of
convenience and necessity” issued by the Commission on
September 17, 1949, applicable to the connecting routes
between the appellee’s terminal in Anchorage and Fort
Richardson. That certificate was still in effect when the
suit was filed.

The appellants and other defendants below who have
not appealed are interfering with the appellee’s rights, fran-
chises, etc., by seeking “to induce the breach, termination
and abrogation of the said contracts, and by spreading
malicious rumors concerning the validity and existence
thereof,” etc., thus causing irreparable damage to the ap-
pellee’s business, “all to the end that great and irreparable
damage to the public interest in continued adequate trans-
portation may result,” etc.

The Commission is alleged to have issued a certificate
of public convenience and necessity to the appellant An-
chorage Bus Company, Inc. hereinafter Anchorage Bus,
covering the connecting routes between Anchorage and
Elmendorf and between Anchorage and Richardson, in
violation of the appellee’s “aforesaid exclusive franchise
and certificate, without notice or opportunity to be heard
first given to [appellee] and contrary to the provisions
* * * of applicable Territorial law; issuance of the

316 a

said certificate to the appellant Anchorage Bus and opera-
tion thereunder by Anchorage Bus in competition with
the appellee threatens to cause irreparable damage to the
appellee by depriving it of the only revenue providing por-
tion of its integral public transportation system, contrary
to the public interests,” etc.

A second cause of action alleges publication in two An-
chorage daily newspapers of certain statements alleged
to have been defamatory. The present appeal is not con-
cerned with this second cause of action.

The complaint closes with a prayer that the appellants
be enjoined “during the pendency of this action, and per-
manently, from interfering” with the appellee’s contracts,
franchises, etc.; that the appellee have judgment against.
the appellants for $250,000; and that the defendant Com-
mission members be enjoined from seeking to abrogate
the appellee’s exclusive certificate of public convenience
and necessity “except after due notice and proper hear-
ing,” etc.; that the Commission be ordered to suspend,
during the pendency of this action and until final deter-
mination on the merits can be made, “any certificate of
public convenience and necessity” issued by it to Anchor-
age Bus, in violation of the appellee’s certificate and fran-
chise; and that the Commission be ordered to show cause
why they should not grant a public hearing to the appel-
lee and Anchorage Bus to determine whether public con-
venience and necessity require the cancellation of the said
certificate issued to Anchorage Bus.

2. Statement of Facts

The appellee held a certificate of public convenience and
necessity issued on September 17, 1949, by the Commission,
in which it was “exclusively authorized” to provide bus.
transportation service in and over highways within the
Territory from the two bases to the City and return.

De

Appellee also possessed an exclusive twenty-year fran-
chise, granted by the governing body of the City and ap-
proved by the electorate of the City, to operate a bus serv-
ice picking up and discharging passengers on the streets
of the City of Anchorage and adjacent areas, under the
name of Anchorage City Transit System. This franchise
was granted by an ordinance dated January 24, 1946.

Finally, the appellee on October 21, 1952, was granted
by the Department of the Air Force a license to operate
a motor transportation service on Elmendorf, from Octo-
ber 13, 1952, to October 12, 1957. This license was revo-
cable at will by the Secretary of the Air Force, and stipu-
lated that the privilege therein granted was not to be “con-
strued to prevent the furnishing of transportation service
by such other persons or companies as may be authorized
by the Secretary of the Air Force.”

On June 10, 1955, Anchorage Bus was awarded a con-
tract by the combined Army and Air Force Exchange to
operate a bus transportation service on Elmendorf and
Richardson, replacing the appellee, which for several years
had been furnishing this same service under a license. The
Court below found that the appellants “were prepared,
ready, and about to commence operation in direct compe-
tition with [appellee’s] said transportation system over
the public highways * * * ofthe Territory * * *
and Anchorage, between points on said Military Bases and
* %* * Anchorage.”

On October 21, 1955, the Commission issued to Anchor-
age Bus a certificate of public convenience and necessity
to furnish motor bus transportation between Elmendorf
and Fort Richardson, on the one hand, and the Bus Termi-
nal in the City of Anchorage, on the other.

On October 25, 1955—the same day on which the com-
plaint herein was filed, supra—the Commission suspended

318 be

the certificate issued to Anchorage Bus “on October 17,
1955.”* The reason given for the suspension was that
the appellee had protested that it had not been granted an
opportunity to appear at the hearing. The Commission’s
order also recited that “certain bus service” rendered by
the appellee would “be interfered with and possibly dis-
continued because of the alleged financial difficulties caused
by the granting of the said Certificate to [Anchorage Bus],
which if substantiated will be to the detriment of the pub-
lic interest.”

In the same order, the Commission decreed that a pub-
lic hearing be held on December 6, 1955, to inquire (1)
Why the certificate of “October 17,” 1955, issued to An-
chorage Bus should not be reinstated; (2) why the cer-
tificates [sic] issued to the appellee on September 17, 1949,
should not be modified (a) to limit the number of bus
routes and certificates issued therefor; and (b) to allow
“concurrent operations” by other authorized bus compa-
nies, etc.

On October 31, 1955, the court below issued a tempo-
rary restraining order prohibiting the appellants from in-
terfering, etc., with “the exclusive Territorial and munic-
ipal franchises” of the appellee, and from operating any
public bus service on the public highways and streets of
Anchorage or between Anchorage and Elmendorf or Rich-
ardson, etc. The appellee was required to give a $10,000
bond.

On December 14, 1955, the Commission announced that
it was convinced that it was “physically possible” for the
appellant Anchorage Bus “to travel and transport passen-
gers from Elmendorf * * * and Richardson non-stop

2 The copy of the certificate itself contained in the transcript in this
appeal gives the date of the certificate as October 21, 1955, as stated
herein, supra.

LD

to a bus terminal on private property in * * * An-
chorage * * * without traversing any Territorial
roads,” and that therefore the Commission was “of the
opinion that it is possible for * * * Anchorage Bus
* * -* to operate * * * without the necessity of
securing * * * a Certificate of Public Convenience
and Necessity.”

At a meeting of the Commission held on December 21,
1955, there was read a telegram from Colonel Louis E.
Coira, commander of the 5039th Air Base Wing, at Elmen-
dorf, stating that the appellee’s liability policy was consid-
ered “absolutely insufficient insurance coverage for opera-
tion within military reservation.” The telegram also refer-
red to “past deletion of routes on base without notice and
past and present lack of adherence of trip schedules,” which
it was charged impeded “arrival and departure of Air Force
personnel and civilian employees, seriously affecting opera-
tion and morale.”

“For these and other pertinent reasons,” the telegram
continued, “Air Force Secretary has been requested to give
permission to cancel license of that carrier [appellee] cov-
ering operations within military reservation. Upon re-
ceipt of permission, [appellee] will be notified that its li-
cense is cancelled, and authorization for operation by it of
any public transport within reservation will be terminated.

“This will create great hardship unless you authorize
operation between City of Anchorage and military bases
by another carrier. Present insurance, equipment and on-
base service by Anchorage Bus * * * considered en-
tirely adequate and satisfactory. Brief operation between
Elmendorf * * * and Anchorage by Anchorage Bus
* * * indicated service adequate to meet requirements
of the military.”

320 De

Accordingly, the Commission announced its formal de-
cision to the effect that at its hearing on December 15th
[sic]? it had refrained from hearing “the testimony of
Anchorage Bus * * * it did so with the thought that
the action and the decision made at that hearing would re-
lease * * * Anchorage Bus * * * from the re-
straining order [supra] which was then in effect”; that
“At least a majority of the Commission would not have
terminated the hearing without allowing * * * An-
chorage Bus * * * to complete its case if they did
not feel that this would be the result”; and that therefore,
the Commission, “after reconsidering the evidence pre-
sented at the hearing in Anchorage on the aforesaid date
grants * * ** Anchorage Bus * * * a tempora-
ry certificate * * * to cover the highways traversed
between the terminal in Anchorage on 5th Street to * *
Richardson and Elmendorf. * * *”

A temporary certificate of public convenience and ne-
cessity, bearing the same date as that of the meeting just
referred to,—December 21, 1955—was issued to Anchor-
age Bus. The certificate recited that the appellee had “been
denied access to the said military installations, all to the
detriment and inconvenience of those members of the pub-
lic who work, reside or are stationed at the said military
installations”; and that “the Elmendorf * * * Com-
manding Officer has specifically requested that the said
Anchorage Bus Company be preferred and authorized to
operate between * * * Anchorage and the said Air
Force Base for reasons of military operations and morale,
OR KN

3As already indicated herein, the transcript before this court
shows the date of the previous hearing to have been December 14,
1955.

LY

The routing indicated in the certificate was substantially
the same as that outlined in the decision, supra.

On the following day, a letter was sent by Colonel Coira
to Russell Swank, the appellee’s vice president and general
manager, stating that the appellee’s liability insurance, “cov-
ering injury to persons which arise [sic] in the operation
of your bus transportation service is inadequate. This
policy was not approved in this headquarters as required
by your license to operate on this installation.”

The letter also stated that the authority granted to the
appellee on October 15, 1952, to operate on Elmendorf (the
tecord before us shows that it was signed on October 21,
1952, supra) was suspended effective on the conclusion of
the appellee’s “presently scheduled runs of 27, December
1955”. Colonel Coira also stated that the extending of a
new license for motor transportation service on Elmendorf
would be considered “Upon future demonstration to us
of your financial responsibility and evidence that you carry
adequate liability insurance.”

The record shows that December 23, 1955, a general in-
surance agency informed the appellee that, effective De-
cember 27, 1955, the latter’s liability insurance had been
written “with limits as required by the Territory of Alaska
namely: “$50,000/200,000 Bodily injury, $5,000 Prop-
erty Damage plus $2,500 Property Damage from any cause
for passengers’ property”. ,

In this connection, it should be pointed out that on this
appeal the right of the appellee to operate within the bound-
aries of either Elmendorf or Richardson is not pertinent
to the issue, since the preliminary injunction specifically
provides that “nothing herein contained shall be construed
to prohibit the normal operations of the [appellant] with-
in [such] boundaries * * *”

fe

322 a

On January 16, 1956, the District Court issued the pre-
liminary injunction appealed from, embodying in general
the terms of the temporary restraining order, supra, but
fixing the appellee’s bond at $40,000.

3. The District Court’s Findings and Injunction.

The court found that the appellee was furnishing an in-
tegrated motor bus transportation system under the name
of Anchorage City Transit System, pursuant to a franchise
issued by the City of Anchorage, a certificate of public con-
venience and necessity issued by the Territory of Alaska,
and a license or licenses issued by the military authorities;
that this system was integrated with connecting carriers
likewise operated by the appellee and its affiliates ; that there-
by it serves the entire area of South Central Alaska in the
transportation of freight, mail, and passengers; that the ap-
pellants operate buses for hire, under contract with the Base
and Post Exchanges at Elmendorf and Richardson, and
between these two Bases, in competition with the appellee;
that the appellants are preparing to commence operation in
direct competition with appellee’s transportation system
over the highways, streets and alleys in the Territory and
the City, between said Bases and the City; that the ap-
pellants do not hold a franchise from the City and do not
have a permanent certificate of public convenience and ne-
cessity issued by the Territory, but only a temporary cer-
tificate; that the temporary certificate was issued. improvi-
dently and without a determination upon the merits; that
the appellee has filed an appeal with the District Court
from the issuance of the temporary certificate and that the
appeal is still pending; that the appellants do not have
any other franchise, license or permit for operation of a
bus transportation system between the Bases and the City
except the said contract with the Base and Post Exchange
and the said temporary certificate; that appellee derives

Ls = =— 323

in excess of 70% of its gross revenue from the routes be-
tween the City and the Bases, and that the loss of these
routes to the appellants would result in financial failure for
the rest of appellee’s bus transportation system and force
cessation of its operations, contrary to the best public in-
terest, convenience and necessity, and to the irreparable
damage and injury of the appellee; that as a result of the
appellants’ operations, the appellee bus company has lost
the services of a number of its employees and that other
employees probably will leave as a result of the appellants’
activities, unless restrained, and will seek to protect them-
selves against possible unemployment by accepting employ-
ment with the appellants, thus seriously disrupting the
operations of the appellee’s transit system; that the tempo-
rary injunction would not seriously damage the appellants ;
that the Commission, charged by law with the adminis-
tration of and having power to control common carrier
service by bus in Alaska, has held hearings to resolve the
entire controversy and to determine what course of action
would be most beneficial to the public interest, which hear-
ings have been recessed and not concluded and, according
to the Commission’s order, may be resumed only upon the
request of Anchorage Bus, in the event that the latter still
desires a certificate from the Territory; that a decision
by the Commission will be subject to review by the Dis-
trict Court under Territorial law; that the rights and
equities of the parties and the public interest must be
protected in continued uninterrupted bus transportation;
that continued, uninterrupted bus transportation will be
best protected by preserving the status quo, thereby pro-
tecting the integrity and financial stability and ability to
operate of the presently franchised and licensed carrier, the
appellee.

The appellants are enjoined, pending the District Court’s
determination upon the merits of the action, from interfer-

324 —

ing with, breaching or violating in any manner, either di-
rectly or indirectly, any of the existing franchises, certifi-
cates of public convenience and necessity, licenses or
transportation agreements of the appellee, issued by the
Territory, the City, or the Department of Defense; from
operating any bus or other motor vehicle as a public motor
vehicle carrier for hire over the highways, streets, and al-
leys of the City or Territory, within the City, or between
the Bases and the City; but, as we have seen, exempting
from the injunction the operations of Anchorage Bus with-
in the boundaries of the Bases. .

4, The Questions Presented

Nowhere in their brief do the appellants set out, eo
nonvine, the “specification of errors” required by our Rule
18, subd. 2(d), 28 U.S.C.A. They have, however, in-
cluded in the record a “Statement of Points on Which
Defendants Will Rely on Appeal”, and in their brief they
have listed exactly one-half of the “fourteen separate
points”. Of those seven selected “points”, we are informed
that three have been consolidated into one. While all this
does not amount to a technical compliance with our Rule,
I believe that it amounts to a substantial compliance, and
I would accept it as constituting the required “specifica-
tion of errors”. I do not, however, approve of such slip-
shod observance of our Rules.

The appellee, on the other hand, “contends that only the
following issues are presented on this appeal:

“1, Did the Judge below abuse his discretion in grant-
ing the temporary restraining order and preliminary in-
junction?

“2. Do the pleadings and affidavits show sufficient equity
in plaintiff's [appellee’s] bill to permit the trial court to
grant interlocutory relief for the preservation of the status
quo, pending determination of the case on the merits?”

325

I adopt as my own the appellee’s more concise statement
of the equitable issues presented on this appeal.

5. The Failure of the Commission to Give the Appel-
Jants Notice of the Suspension Was Not a Mate-
rial Error.

Before taking up these two main issues, there should be
considered a “collateral” problem that comes into the case
through the suspension of the appellants’ certificate of pub-
lic convenience and necessity. The appellants contend that
this suspension, regardless of a specific provision of the
certificate,* giving the Commission considerable leeway in
the matter of certificates, “was void and of no effect because
it was issued without notice to appellants, as provided in
subsection (c) of section 9 and it was made effective im-
mediately, contrary to the provisions of subsection (d) of
Section 9.” The “Section 9” referred to is part of Chap-
ter 93 of the 1949 Session Laws of Alaska, excerpts from
which are copied in the margin.®

4“This Certificate of Public Convenience and Necessity with its
conditions and limitations shall continue in full force and effect so
long as the Bus Transportation Commission determines that the An-
chorage Bus Company, Inc., is at all times fit, willing and able prop-
erly to perform the services above proposed and referred to, and to
conform to the provisions of the Act and the rules and regulations
promulgated thereunder, and to properly service the public conven-
ience and necessity at all times.” [Emphasis supplied.]

5 “Section 6. Certificates of Public Convenience and Necessity.

“(a) Except as allowed under Section 7, no common carrier by bus
shall engage in transportation subject to this Act unless it holds a
certificate of public convenience and necessity issued by the Com-
mission; provided, however, that if any such carrier or a predeces-
sor in interest was a bona fide operation as a common carrier by bus
on January 1, 1947, over the route or routes or between the ports
with respect to which application is made and has so operated since
that time (or, if engaged in furnishing seasonal service only, was in
bona fide operation during the seasonal period, prior to or including
such date, for operations of the character in question) except, in ei-
ther event, as to interruptions of service over which the applicant

326 Dn

Although we believe that Subsection (c) of § 9 of the
act of 1949, supra, gives the Commission considerable lee-
way to “suspend” its orders “upon such notice and in such
manner as it shall deem proper”, it seems to me that coun-

or its predecessor in interest had no control, the Commission shall
issue such certificate without requiring further proof that public con-
venience and necessity will be served by such operation, and without
further proceedings, if application for such certificate is made to the
Commission as provided in subsection (b) of this Section and prior
to the expiration of ninety days after this Section takes effect.
Pending the determination of any such application, the continuance
of such operation shall be lawful. If the application for such cer-
tificate is not made within ninety days after this Section takes effect,
it shall be decided in accordance with the standards and procedure
provided for in subsection (¢), and such certificate shall be issued or
denied accordingly. Any person, not included within the provisions
of the foregoing proviso, who is engaged in transportation as a com-
mon carrier by bus when this Section takes effect may continue such
operation for a period of ninety days thereafter without a certificate,
and, if application for such certificate is made to the Commission
within such period, the continuance of such operation shall be lawful
pending determination of such application.

“(b) Application for a certificate shall be made in writing to the
Commission, be verified under oath, and shall be in such form and
contain such information and be accompanied by proof of service
upon such interested parties as the Commission shall, by regulations,
require.

“(@) The Commission shall issue a certificate to any qualified ap-
plicant therefor, authorizing the whole or any part of the operations
covered by the application, if the Commission finds that the appli-
cant is fit, willing, and able properly to perform the service proposed
and to conform to the provisions of this Act and the requirements,
rules, and regulations of the Commission thereunder, and that the
proposed service, to the extent authorized by the certificate, is or will
be required by the present or future public convenience and neces-
sity; otherwise such application shall be denied.

“(@) Such certificate shall specify the route or routes over which,
or the points to and from which, such carrier is authorized to operate,
and, at the time of issuance and from time to time thereafter there
shall be attached, to the exercise of the privileges granted by such
certificate such reasonable terms, conditions, and limitations as the
public convenience and necessity may from time to time require, in-
cluding terms, conditions, and limitations as to the extension of the

a EL

sel for the appellants himself waived any irregularity, if
there was irregularity, in the Commission’s order of sus-
pension. The main opinion correctly adverts to this.

In any event, on December 21, 1955, the Commission,
az we have seen, issued to the appellant Anchorage Bus
a certificate of public convenience and necessity. As the
appellants themselves state in their brief, it was “armed”
with that certificate that the appellants moved the court to
dissolve the preliminary injunction,

I turn now to that ultimate question.

6. The Appellee’s Dilemma: Either Its Certificate Pur-
ported to Give an Exclusive Franchise, and Was
Therefore Invalid—

routs (route) or routes of the carrier, and such other terms, and con-
ditions, and limitations as are necessary to carry out, with respect to
the operations of the carrier, the requirements of this Act or those
established by the Commission pursuant thereto; provided, however,
that no terms, conditions, or limitations shall restrict the right of
the carrier to add to its equipment, facilities, or service within the
scope of such certificate, as the development of the business and the
demands of the public shall require, or the right of the carrier to
extend its services over uncompleted portions of highway projects
hereafter completed.

“(e) No certificate issued under this Act shall confer any proprie-
tary or exclusive right or rights in the use of public highways.”

Section 9 of that Act is entitled “Notices, Orders, and Service of
Process”, Subsection (c) of Section 9 reads as follows:

“(e) The Commission may suspend, modify, or set aside its orders
under this Act upon such notice and in such manner as it shall deem
proper.”

Subsection (d) of Section 9 follows:

“(d) Except as otherwise provided in this Act, all orders of the
Commission, other than orders for the payment of money, shall take
effect within such reasonable time, not less than thirty days, as the
Commission may prescribe and shail continue in force until its fur-
ther order, or for a specified period of time, according to provisions
of the order, unless the same shall be suspended, modified, or set
aside by the Commission, or be suspended or set aside by a court of
competent jurisdiction.”

328 Dn

The appellee concedes that “we have a complex fact situ-
ation”. Ordinarily, questions of fact, in a matter of this
kind, should be left to the “expertise” of the administrative
body skilled and experienced in that area.

It is earnestly pressed upon us, however, that “two Ter-
ritorial statutes, one * * * applicable to the Territorial
and the other to the Municipal franchise”, buttress the ap-
pellee’s “valuable property right”.

The first is § 2(e) of Chapter 93 of the Session Laws
of 1949, supra, which reads as follows:

[The Commission shall :] .
* * * * * * * %

“Issue certificates of convenience and necessity,
conformable to the provisions of this Act as here-
inafter set forth. This authority shall include
the discretion to issue exclusive certificates on
such routes and upon such conditions as the Com-
mission deems necessary or advisable in the pub-
lic interest to secure continuous, efficient and de-
pendable bus services in the affected areas, * *.”
[Emphasis supplied.]

The other statute is Chapter 91 of the 1949 Session Laws
of Alaska, which amended § 16-1-35 of the Alaska Com-
piled Statutes Annotated, Volume 1, to read as follows:

“The council shall have and exercise the fol-
lowing powers :]

“Section 1. * * * Sixteenth: Franchises.
To grant franchises, including exclusive franchise
privileges, for the construction, operation and
maintenance of * * * bus transportation sys-
tems * * * and to permit the use of streets
and other public places for a period of not to ex-
ceed twenty years, under such rules and regula-
tions as may be prescribed by ordinance. * * *

3!

“Section 2. Exclusive franchises heretofore ap-
proved by not less than fifty-five percentum of the
votes cast at any municipal election wherein the
people approved an exclusive franchise within said
municipality are hereby ratified and given full force
and effect under this Act provided the terms of
said franchise intend that the same shall not be in
force and effect.” [Emphasis supplied.]

Such enactments by the Territorial Legislature contra-
vene a specific Congressional mandate contained in 48 U.S.
CA. § 77:

“* 9% % nor shall the legislature [of Alas-
ka] grant to any corporation, association, or in-
dividual any special or exclusive privilege, immu-
nity, or franchise without the affirmative approval
of Congress; * * * and all laws passed, or
attempted to be passed, by such legislature in said
Territory inconsistent with the provisions of this
section * * * shall be null and void.”

Again, 48 U.S.C.A. § 1471 reads in part as follows:
“Local or special laws
“The legislatures of the Territories of the Unit-
ed States now or hereafter to be organized shall
not pass local or special laws in any of the follow-
ing enumerated cases, that is to say:
* * * * * * * *

“Granting to any corporation, association, or
individual any special or exclusive privilege, im-
munity, or franchise whatever.

“Tn all other cases where a general law can be
made applicable, no special law shall be enacted
in any of the Territories of the United States by
the Territorial legislatures thereof.”

330 a

See also In re O’Harra Bus Lines, Inc., 1948, 12 Alaska
129.

These two next preceding statutes make it abundantly
clear that a Territorial legislature in general, and the Alas-
ka legislature in particular, may not grant an exclusive
franchise to a bus company without the affirmative approv-
al of Congress—which approval is of course absent in the
instant case.

In striving to explain away the above two Congression-
al provisions, which on their face destroy the appellee’s case,
the appellee takes somewhat inconsistent positions. It first
concedes that “the quoted language * * * does limit
the power of the Territorial Legislature to grant exclu-
sive franchises, by making such exclusive grant subject
to the affirmative approval of Congress.” [Emphasis the
appellee’s] With this statement I unreservedly agree.

On the next page of its brief, however, the appellee
qualifies this concession to plain logic, by asserting:

“The only possible conclusion to be drawn from
a combined reading of these two provisions is that
Congress intended to prohibit the Territorial Leg-
islature from granting exclusive franchises of
Territory-wide application, except with the affirm-
ative approval of Congress. Nor can the Terri-
torial Legislature grant locally restricted but
extlusive franchises by the enactment of local
or special laws, but is confined to the promulga-
tion of general laws for this purpose,” etc., etc.

On the ensuing page, the brief further develops this
“Territory-wide” limitation idea:

“The logic of this interpretation is appealing
and is historically sound. Clearly the granting of
an exclusive Territory-wide franchise by the Leg-
islature is a matter of such wide import that the

ee || 331

Congress of the United States, in view of the lim-
itations placed upon Territorial governments, has
properly reserved to itself the right to take final ac-
tion in such matters. At the same time Congress
clearly did not desire to retain unto itself, nor did
it intend thereby to prohibit to the Territories, the
exercise of exclusive franchising powers on the
local scene, either directly by the Legislature or
through delegation, except insofar as it imposed
a general prohibition: against the enactment of
local or special legislation, which also applies to
a number of other cases.”

{Emphasis again the appellee’s]

I find the appellee’s argument confusing and incon-
sistent. First we are told that “the power of the Terri-
torial Legislature to grant exclusive franchises [is] * *
subject to the affirmative approval of Congress.

Next we are told that the prohibition applies only to
the Legislature’s grant of Territory-wide exclusive fran-
chises.

But it may not “grant locally restricted but exclusive
franchises by the enactment of local or special laws”, but
only by general laws.

Again, the argument is that Congress did not intend
“to prohibit to the Territories, the exercise of exclusive
franchising powers on the local scene, either directly by
the Legislature or through delegation * * *”

Finally comes the crowning inconsistency, in the same
sentence:

“«* %* & except insofar as it imposed a general pro-
hibition against the enactment of local or special legisla-
tion,” etc.

3320 CO Le

In other words, (1) the Legislature may not grant ex-
clusive franchises, in general, without the approval of
Congress, (2) It may not grant exclusive franchises of
“Territory-wide application only”. (3) It may not grant
exclusive franchises by enacting local or special laws but
may do so by “general” laws. (4) The Legislature may
“exercise * * * exclusive franchising powers on the
local scene, either directly * * * or through: dele-
gation.” (5) But it may not do so by the enactment of lo-
cal or special legislation”. (Query: How else can the
Legislature “exercise * * * exclusive franchising
powers on the local scene” except by “local or special leg-

* islation” ?)

I have thus expatiated upon this quintuple inconsistency
of the appellee because I believe that stich inconsistency
of itself betrays the weakness of the appellee’s frantic ef-
forts to escape the plain Congressional mandate:

The Legislature shall not, either directly or indirectly,
grant special or exclusive franchises, absent the affirma-
tive approval of Congress.

Nor do I agree with the appellee’s argument that, while
“the Territorial Legislature [cannot] grant locally re-
stricted but exclusive franchises by the enactment of local
or special laws”, it may promulgate “general laws for this
purpose * * * which grant the power to authorize
locally exclusive franchises to cities as well as to the Ter-
ritorial Bus Commission”. The appellee’s theory would
enable the Legislature to “delegate’—that is the word
used by the appellee elsewhere in this connection—power
that it did not itself possess. Under such a paradoxical
concept, the creature would have greater power than the
creator!

The mere statement of such a proposition demonstrates
its fallacy. It would enable the Territorial Legislature to

ee =— 333

do indirectly what it cannot do directly, thus disregarding
the salutary maxim, Qui facit per alium facit per se.
7. -—or the Appellee Did Not Have an Exclusive
Franchise, in Which Case the Appellants Could
Not Be Enjoined from Operating.

If the appellee has a certificate of public convenience and
necessity that is not exclusive, and the appellants now
possess a valid certificate, as I believe they do then the ap-
pellants have the same right to operate as the appellee
has.

In that event, the appellee is not entitled to an injunc-
tion, preliminary or permanent.

The above propositions are so self-evident that they
do not require to be buttressed by citation of authorities.

In its brief, however, the appellee digests a number of
cases in an attempt to support its contention that “even in
the absence of an exclusive franchise,” a public utility “has
a right * * * to be protected against interference
with its operations, property or plant by a competitor’.
But every one of the appellee’s own summaries show that
relief was granted in those cases because there was an “un-
lawful” operation of competing taxicabs or that there was
“the operation of a competing bus line which was not li-
censed”; or an “operation of jitney buses * * * in
violation of an ordinance”; or “the operation * * * of
jitney buses, without permit or license from the city or
town”; or that taxicabs “were being operated in viola-
tion of an ordinance”. :

I have no quarrel with these cases. They simply are
not in point. .

Similarly, the appellee cites 119 A.L.R. 432-456, which
likewise is not in point. This may be seen at once from
one of the opening sentences: :

334 |

“The present annotation, * * * is con-
cerned not with the consequential effects of mere
competition, but with direct interference with prop-
erty or the use thereof, Questions in reference to
the right of a public utility operating under a fran-
chise or other sufficient authority to protection
against unlawful competition by one having no
valid franchise or permit are not dealt with here-

in.”

It will thus be seen that the above annotation does not
deal with relief against even unlawful competition, which
I believe does not exist in the instant case. Nor is there
charged here that there was “direct interference with prop-
erty or the use thereof”. Neither is the preliminary in-
junction concerned with such interference.

The able District Judge evidently considered himself
the arbiter of the city’s transportation interests. This is
shown by the following language used by the Court:

“Well, the court must consider the entire trans-
portation system of the area, which means within
the City of Anchorage proper as well as that con-
tiguous to the City of Anchorage and not exclu-
sively the City-Military segment, and, based upon
the facts in evidence and arguments of counsel
that the court has before it at this time the motion
to dissolve the preliminary injunction is hereby
denied for the reason that the ground given by the
defendants is not sufficient in equity.”

I do not so regard the Court’s duty. The Court should
have limited itself to a consideration of the legal and equi-
table rights of the parties, not the public convenience and
necessity. The latter problems were entrusted to the dis-
cretion and “expertise” of an administrative body especially

335

created for that purpose—the Alaska Bus Transportation
Commission.

In Honolulu Rapid Transit & Land Company v. Ter-
ritory of Hawaii, 1908, 211 U.S. 282, 290-291, 29 S.Ct.
55, 57, 53 L.Ed. 186, the Court said:

“The business conducted by the transit compa-
ny is not purely private. It is of that class so af-
fected by a public interest that it is subject, within
constitutional limits, to the governmental power of
regulation. This power of regulation may be ex-
ercised to control, among other things, the time
of the running of cars. I¢ is a power legislative
in its character, and may be exercised directly by
the legislature itself. But the legislature may dele-
gate to an administrative body the execution in de-
tail of the legislative power of regulation.” [Em-
phasis supplied.]

The correct rule is thus stated in 28 Am.Jur., Injunc-
tions, § 162, page 352:

“Equity will not attempt by injunction to sub-
stitute its own discretion for that of [public]
officials in matters belonging to the proper juris-
diction of the latter.”

Again, in op. cit., § 168, page 358, we find the follow-
ing:

“Government Departments and Executive Offi-
cers.—The judiciary may not encroach upon other
departments of the government nor will it, as a
rule, interfere with performance by them of their
constitutional functions.”

T do not think that the appellants, as co-holders with the
appellee of non-exclusive public transportation privileges,
could be restrained by injunction from the enjoyment of
those privileges.

336 a

8. Conclusion

The horns of the appellee’s dilemma are as follows:

(1) Either its certificates of public convenience and ne-
cessity purported to give it the exclusive right to operate
buses between the City of Anchorage and the two military
reservations, and therefore were unlawful, as contraven-
ing a Federal statute; or

(2) The appellee’s certificates were not exclusive and
therefore did not entitle it to an injunction restraining the
appellants from operating buses along the same routes.

Whether the appellants were entitled to certificates of
convenience and necessity was a matter to be determined
by the Alaska Bus Transportation Commission, in the law-
ful exercise of its administrative “expertise”.

Accordingly, I think that the case should be remanded
to the District Court, with instructions to dissolve the pre-

liminary injunction.

KETCHIKAN SPRUCE MILLS, a corporation, Plaintiff, v. K.
F. DEWEY, Tax Commissioner of the Territory of Alaska,
Defendant,

No. 7548-A,

District Court, Alaska. First Division, Juneau.
Tualy 17, 1957.

oD
on

oD
)

340

John H. Dimond, of Faulkner, Banfield & Boochever,
Juneau, for plaintiff.

J. Gerald Williams, Atty. Gen., David J. Pree, Asst. Atty.
Gen., Territory of Alaska, for defendant.

KELLY, District Judge.

The plaintiff in this action, a corporation engaged in the
business of manufacturing and selling lumber products,
seeks to recover $10,158.96 as a partial refund of taxes paid
to the Territory for the years 1950 through 1954, under
the terms of the Alaska Business License Act, Ch. 43, SLA
1949, as amended. Prior to the proceedings in this court,
the plaintiff had made an unsuccessful application to the
Tax Commissioner for the payments which it contends
should be returned, and had then petitioned for a hearing,

3)

as provided in Section 6(b) of the Act. The hearing was
conducted, and a ruling adverse to the plaintiff was rendered
on September 7, 1956, by the Deputy Tax Commissioner,
R. D. Stevenson, upon which the plaintiff appealed to this
court in accordance with the provisions of Section 7 of the
Act.

A stipulation entered into between the parties indicates
that during the years in question the plaintiff made sales
of lumber to various purchasers, including wholesale deal-
ers; manufacturers of certain wood products; the United
States Army; and in one instance, to a Mr. Takahashi, a
Seattle exporter, who subsequently shipped the lumber to
Japan for “further remanufacture.”

Under the terms of the Act an initial fee of $25 is re-
quired of all licensees, and in addition, a sum equal to one-
half of one percent of the gross receipts in excess of $20,-
000 and not more than $100,000, and one-fourth of one
percent of the gross receipts in excess of $100,000. The
determination of this case rests upon the interpretation to
be given to Section 2(d), defining “gross receipts.” They
include generally all receipts from sources within the Terri-
tory, whether in the form of money, credits or other valua-
ble consideration, received from engaging in or conducting
a business, but are subject to the following exceptions:

“These general provisions for computing gross
receipts are hereby modified as follows: Resident
wholesale firms registered in Alaska as domestic
corporations or otherwise identifiable as whole-
salers who are residents, need not include the re-
ceipts from sales of finished products to dealers -
for resale to constimers upon which resale the tax
levied hereunder applies, nor need the receipts
from sales by manufacturers of their products
manufactured in Alaska, except where such prod-

342 Dn

ucts are sold direct to the consumer, be included,
nor need the receipts from any sale made to any
person in a foreign country for shipment out of
the United States be included unless exported in
bond for re-entry into the United States.”

Plaintiff contends that certain sales which it made be-
tween 1950 and 1954 were exempt from taxation by virtue
of the second and third exceptions to a licensee’s “gross
receipts,” as set forth above. The Territory claims that to
avail himself of the exception, a taxpayer must be a manu-
facturer and a wholesaler, and the sales to be excepted from
gross receipts must be sales of finished products. It further
contends that even if the statute is construed adversely to
its position, the plaintiff nevertheless cannot prevail be-
cause the taxes were paid voluntarily under a mistake of
law.

HH In support of the construction which is urged by
the Territory, it is pointed out that the clause relating to
manufacturers cannot stand alone as an independent sen-
tence. This clause reads:

“nor need the receipts from sales by manufac-
turers of their products manufactured in Alaska,
except where such products are sold direct to the ©
consumer, be included * * *”
Therefore, it is argued, this clause is dependent upon the
preceding clause, and is subject to all the limitations con-
tained in it, namely, that the manufacturer must also be
a resident wholesale firm registered in Alaska as a domestic
corporation or otherwise identifiable as a wholesaler who
is a resident, and who sells finished products to dealers for
resale to consumers, upon which resale the tax applies. I
am compelled to disagree with this interpretation. The
wording of the clause in question could readily be altered
to make it constitute a separate sentence, and the exception

| 343

which it specifies is no less complete and independent be-
cause of its grammatical dependence on the preceding part
of the sentence. This interpretation is supported by an
amendment to the Business License Tax, Ch. 172, SLA
1957, which reads in part:

“Sec. 3, Exemptions,

“(a) The following gross receipts shall be ex-
empt from tax hereunder:

* * * * * * * *

“(5) Gross receipts of resident wholesale firms
registered in Alaska as domestic corporations, or
otherwise identifiable as wholesalers who are resi-
dents, which are derived from sales of finished
products to dealers for resale to consumers upon
which resale the tax levied hereunder applies.

“(6) Gross receipts derived from any sale made
to any person in a foreign country for shipment
out of the United States, except where the goods
or products sold are exported in bond for re-entry
into the United States.

“(7) Gross receipts of manufacturers or proc-
essors derived from sales of their products manu-
factured or processed in Alaska, except where such
products are sold directly to the consumer.”

If there was any doubt that the exceptions listed originally
in Sec. 2(d) were intended by the legislature to be sepa-
rate and distinct, it has been removed by the amendment.

Heo The Territory further points out that products
sold to consumers are necessarily finished products. This
statement is possibly too broad, because the term “con-
sumer” is susceptible of more than one meaning, but, as
will be shown later, it is correct as far as this case is con-
cerned. Products sold to consumers being finished prod-

344 De

ucts, the defendant correctly observes that “such products”
in the clause “except where such products are sold direct
to the consumer” means finished products. Applying the
rule that qualifying or limiting words or clauses are to be
teferred to the immediately preceding antecedent, as found
in Dunn vy. Bryan, 1931, 77 Utah 604, 299 P, 253, the de-
fendant concludes that “their products manufactured in
Alaska” in the preceding clause is necessarily restricted
to finished products. This contention must also be rejected.
Any reference of “such products” to the foregoing words
“their products manufactured in Alaska” must be merely
for the purpose of identification. . Finished products are
but a part of “products manufactured in Alaska,” and it
is patently illogical to say that what is true with regard to
a part is necessarily true with regard to the whole.

Hl The Territory further relies upon the interpreta-
tion given to these exceptions by the Department of Taxa-
tion under its rule 2B(1) :

“(1) Resident wholesale firms, registered in
Alaska as Domestic Corporations or otherwise
identified as Wholesalers, who are residents and
manufacturers, may deduct from gross receipts
the receipts from sales of finished products to deal-
ers for resale to consumers upon which resale the
license levy hereunder applies 2

Administrative interpretations are accorded consideration
and given weight, but the final construction of a statute
rests with the courts. Armstrong Paint & Varnish Works
y. Nu-Enamel Corp., 1938, 305 U.S. 315, 330, 59 S.Ct.
191, 83 L.Ed. 195; Ada County v. Oregon Short Line R.
Co., 9 Cir., 1938, 97 F.2d 666; Folsum v. Pearsall, 9 Cir.,
1957, 245 F.2d 562.

HEMI = [n this instance, I am constrained to hold that
the three exceptions listed in 2(d) are separate and dis-

— 345

tinct, and that they do not limit or qualify each other in
any way. In that respect, the interpretation of the Depart-
ment of Taxation was erroneous.

The vital question with regard to most of the sales
claimed to be exempt by the plaintiff, is the meaning to
be given to the word “consumer.” Its use in some stat-
utes has been construed to mean the person who finally ex-
hausts the usefulness of goods. Boyer-Campbell Co. v.
Fry, 1935, 271 Mich. 282, 260 N.W. 165, 98 A.L.R. 827;
Reyzan v. Nudelman, 1938, 370 Ill. 180, 18 N.E.2d 219.
Under other statutes it has been applied to the manufac-
turers who process, shape, or in some way alter raw ma-
terial during the course of producing a finished product.
State v. J. Watts Kearny & Sons, 1934, 181 La. 554, 160
So. 77; Bedford v. Colorado Fuel & Iron Corporation,
1938, 102 Colo. 538, 81 P.2d 752; Craftsman Painters &
Decorators, Inc., v. Carpenter, 1942, 111 Colo. 1, 137 P.
2d 414; Volk v. Evatt, 1943, 142 Ohio St. 335, 52 N.E.
2d 338; Townsend Electric Co. v. Evans, 1952, 193 Tenn.
536, 246 S.W.2d 967; J. W. Meadors & Co. v. State, 1954,
89 Ga. App. 583, 80 S.E.2d 86.

In Volk v. Evatt, supra, for example, a person engaged
in manufacturing heating units was held to be a consumer
of the materials which went into each unit. In the first
instance, then, the final product and its constituents are
consumed but once, while under the latter interpretation,
the material may be “consumed” a number of times before
the final end is achieved. As applied to the Alaska Busi-
ness License Tax, one interpretation would require the in-
clusion as gross receipts of only the proceeds of the final
sale of a finished product, while the other would extend
the tax to proceeds of a sale from one manufacturer to
another of material which will become a part of the final
product. More concretely, the second interpretation would

346 |

require the plaintiff in this case to include as gross receipts
those sales of lumber to customers who “consume” it by
manufacturing doors, ladders, musical instruments, etc.

A consumer is defined by Webster’s New International
Dictionary as “one who uses (economic) goods and so
diminishes or destroys their utilities;—opposed to pro-
ducer.” Under this definition only the final purchaser of
the product could be considered a consumer. The 1957
Territorial Legislature adopted the substance of this defini-
tion in Ch. 172, SLA 1957, supra. Sec. 3(b) states that:

“The word ‘consumer’ as used in this Sec. 3
shall mean the person who, in the ordinary com-
mon meaning of the term, ultimately uses goods,
and so diminishes or destroys their utilities as
long as they last or until such person desires to do
away with them.”

The 1957 amendment is not controlling in the present case,
of course, and if “consumer” had a d‘fferent meaning pre-
viously, that meaning should be applied to the transactions
in question. However, the 1957 amendment is entirely
compatible with the sections which it amended. There is
no indication that the tax was meant to be given a broader
or a more limited application, or to be altered in any way.
Rather, the content of the amendment strongly suggests
that the purpose was simply to clarify the 1949 Act, and
to make it more accurately represent the intent of the leg-
islature. Viewing the amendment as merely a clarifica~
tion, it lends support to the interpretation of “consumer”
by the Alaska Development Board, an official Territorial
agency, at the time the act was passed. Plans were then
being formulated for the construction of the Ketchikan
Pulp Mill, and Mr. Lawson Turcotte, Executive Vice Presi-
dent of the Puget Sound Pulp & Timber Company in Bell-
ingham, Washington, corresponded with Mr. George Sund-

ee 347

borg, consultant of the Development Board, concerning
the scope of the new Business License Tax. One of the
principal purchasers of pulp from the proposed mill was
to be the American Viscose Corporation, a manufactur-
er of such products as rayon yarns. With specific refer-
ence to the manufacturers’ exception in Sec, 2(d), Mr.
Sundborg stated in a letter to Mr. Turcotte dated March
23, 1949:

“The exemption was embraced in an amendment
made in the Senate specifically to exempt our pro-
spective pulp and paper manufacturers. You
would report as gross receipts only such prod-
ucts as your corporation would sell in Alaska
direct to the consumer. I assume that there would
be no such products in connection with your
proposed operation. If there should be some
minor by-product which you would sell direct to
the consumer in Alaska, receipts from same would
have to be reported. Certainly your receipts
from sale of pulp to the American Viscose Cor-
poration would not have to be included.”

I find that the legislature intended the word “con-
sumer” to include only the final purchaser of the finished
product.

HEME The next question is whether the plaintiff may
recover the taxes which it paid in excess of the amount
legally due. The defendant states that “The general rule
appears to be that taxes voluntarily paid under a mistake
of law cannot be recovered,” citing a number of cases in
support thereof. That this is a correct statement of law
goes without saying, but it does not conclude the present
case. It is equally well settled that the legislature may en-
act additional remedies unknown at common law for the

348 be

recovery of illegal or excessive taxes, 51 Am.Jur. Taxa-
tion, Sec, 1179, p. 1012. 84 C.J.S. Taxation § 635, p.
1277. 3 Cooley, Law of Taxation, Sec. 1282, p. 2561.
Commercial Nat. Bank of Council Bluffs v. Board of Sup’rs
of Pottawattamie County, 1915, 168 Iowa 501, 150 N.W.
704; Lincoln Nat. Life Ins, Co. v. Fischer, 1945, 235 Iowa
506, 17 N.W.2d 273; F. M. Sibley Lumber Co. v. De-
partment of Revenue, 1945, 311 Mich. 654, 19 N.W.2d
132; B—C Remedy Co. v. Unemployment Compensation
Commission, 1946, 226 N.C. 52, 36 S.E.2d 733, 163 A.L.R.
773; District of Columbia v. McFall, 1951, 88 U.S.App.
D.C. 217, 188 F.2d 991.

In my opinion, Sec. 6(c) of the Business License Act
creates such an additional remedy. It provides:

“If the Tax Commissioner determines that a fee
in excess of the amount lawfully due has been
paid, he shall allow a refund or permit a credit
according to which of said two methods the tax-
payer requests. If refund is allowed, same shall be
made out of the General Fund pursuant to a vouch-
er approved by the Tax Commissioner.”

Thus a taxpayer is entitled to a refund upon the bare show-
ing that he paid an amount in excess of the tax which was
due. There is no requirement that the tax be paid under
protest, or that any showing of duress must be made.

Hl In the light of the statutory provision, proof that
the payment was made voluntarily or under a mistake of
law is no defense.

Having determined that a refund is authorized by Sec.
6(c) of the Act, it becomes unnecessary to consider the
application of Sec. 48-7-1(b), A.C.L.A.1949, a general tax
refund statute upon which plaintiff relies in the alterna-
tive.

Le

HI The Territory has not pleaded the statute of lim-
itations, but on page 7 of its brief it claims that “the appeal
was not timely.” It refers to Sec. 6(a), which provides
that:

“As soon as practicable after the final payment

of the tax is made, the Tax Commissioner shall

examine the return and determine the correct

amount of the totaltax * * *,”
It is suggested that when the Tax Commissioner exam-
ined and approved each of the returns “as soon as prac-
ticable” after they were filed, any right to a refund which
may have existed by virtue of Sec. 6(c) was terminated.
However, it does not appear that the refund provision was
intended to apply only until the return was approved by the
Commissioner, since Sec, 6(b) states that:

“At any time when it appears that agreement

cannot be reached with the taxpayer as to the cor-

rect amount of the license tax involved, the Tax

Commissioner may set a time and place of hear-

ing upon the question * * *.” (Emphasis

supplied.)
While it is doubtful that the above provision would ex-
tend any rights to the taxpayer beyond the time specified
in the applicable statute of limitations, it does seem to in-
dicate an intention to allow the taxpayer to raise the ques-
tion of an overpayment of taxes even after the return has
been approved by the Commissioner.

An examination of the stipulation of facts dis-
closes that the sales enumerated in sections (a) through
(j) of paragraph 3 need not have beeneincluded as gross
receipts for the reason that they were “sales by manu-
facturers of their products manufactured in Alaska,” and
they were not sales “direct to the consumer.” The sale
of lumber for shipment to Japan listed in section (h) was

350 a

excludable for the additional reason that it was a sale for
shipment to a foreign country, and not in bond for re-
entry into the United States. Likewise, the third excep-
tion of 2(d) applies to section (k), the sales of lumber to
the United States Engineers for shipment to Japan and
Korea. The facts recited in sections (m) through (p)
of the stipulation do not establish whether or not the pur-
chasers involved were “consumers” but the testimony of
E. W. Boogen, manager of the Ketchikan Spruce Mill’s
wholesale sales department, satisfies the Court that they
were not, and that therefore the receipts from these sales
are not includable as gross receipts. The total amount
of the sales which were excludable is $3,849,048.23, and
the plaintiff is entitled to a refund for the taxes which were
paid upon that sum.

HN The plaintiff contends that section (1), the sales

to the Army and Air Force for the construction of installa-
tions in Alaska, should be excluded from gross receipts
because: (1) they were sales at a “manufacturer’s price”
and cannot be considered sales at retail; and (2) their in-
clusion as gross receipts would violate the immunity of the
federal government from state taxation.
Assuming that the first argument is true, the purchasers
are nevertheless the final users and consumers of the lum-
ber. These sales may not be excluded from gross receipts
unless the plaintiff's second contention would compel that
conclusion.

On the question of the tax being a violation of sovereign
immunity, reliance is placed upon the case of Kern-Lim-
erick, Inc., v. Scurlock, 1954, 347 U.S. 110, 74 S.Ct. 403,
98 L.Ed. 546. In that case a joint venture, identified as
W H MS, contracted to build an ammunition depot for
the Navy. By the terms of the contract it was to act as
an agent for the Navy, the latter taking immediate title

| 351

to any goods purchased for the project. When Arkansas
sought to impose a 2% tax, under its Gross Receipts Tax
Law, upon the purchase of two tractors by W H M S, the
Supreme Court held the tax unconstitutional as applied to
those transactions. The plaintiff asks that a like conclu-
sion be drawn here. However, there are fundamental dif-
ferences between the Arkansas case and the present case.
The Supreme Court of Arkansas held in Cook v. Southeast
Arkansas Transportation Co., 211 Ark. 831, 202 S.W.2d
772, that the Gross Receipts Tax Law was a sales tax de-
spite the fact that it is not apparent from the title. In ad-
dition, the Arkansas Act itself provides that the seller shall
collect the tax from the purchaser, a provision not found
in the Business License Tax. The Supreme Court there-
fore found that in the Kern-Limerick case the legal inci-
dence of the tax was not upon the seller, but the buyer,
which by reason of the agency relationship was the United
States itself.

HER The plaintiff admits the differences between
the two statutes, but contends that the result is the same,
and that the burden of the Alaska statute would be equally
abhorrent to federal immunity. However, the economic
burden alone will not vitiate a tax as applied to the fed-
eral government. Form—not substance—is the control-
ling element under the “legal incidence” test established
in James v. Dravo Contracting Co., 1937, 302 U.S. 134,
58 S.Ct. 208, 82 L.Ed. 155 and State of Alabama v. King
& Boozer, 1941, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3. The
test was not altered in the Kern-Limerick case, although the
result differed because of the changed factual situation.
The legal incidence of the tax in the earlier cases was found
to be upon the independent contractors who were doing
work for the federal government, and although the eco-
nomic burden of the tax was eventually passed on to the

352 be

government, the tax was sustained in each case. In the
Kern-Limerick case, however, W H M S was not an in-
dependent contractor, but an agent for the government,
and thus the legal incidence of the tax was upon the United
States. The court stated in 347 U.S. at page 122, 74 S.Ct.
at page 410:
“We find that the purchaser tnder this con-

tract was the United States. Thus, King & Booz-

er is not controlling for, though the government

also bore the economic burden of the state tax in

that case, the legal incidence of that tax was held

to fall on the independent contractor and not upon

the United States.”

In the present case the legal incidence of the Business
License Tax is upon the Ketchikan Spruce Mill, and sales
to the United States are not excludable from gross receipts
because of federal immunity from state taxation. See:
Federal Reserve Bank of Chicago v. Department of Reve-
nue, 1954, 339 Mich. 587, 64 N.W.2d 639; Arizona State
Tax Commission v. Garrett Corporation, 1955, 79 Ariz.
389, 291 P.2d 208; Sales and Use Taxes as Affected by
Federal Government Immunity, 9 Vanderbilt L-Rev. 204
(1956).

HEE ©» the question of interest, equitable motives
have led the majority of courts to recognize tax refunds as
an exception to the general rule that interest does not run
against a sovereign in the absence of an express statute
creating such liability. The Ninth Circuit Court of Ap-
peals has aligned itself with these authorities in the case
of Mullaney v. Hess, 9 Cir., 1951, 13 Alaska 276, 189 F.
2d 417, suggesting that interest might be allowed in re-
sponse to “considerations of fairness.” I feel that inter-
est should be allowed; however, the Territory should not
be penalized by the lack of promptness on the part of the

Le 353

claimant in presenting the claim. Interest at the legal rate
will be allowed from the date the claim was presented.

HN The rule prevails, however, that costs may not be
assessed against a sovereign without statutory authority
therefor. 14 Am.Jur., Costs, Sec. 34, p. 22; Chastain’s,
Inc. v. State Tax Commission, 1952, 72 Idaho 344, 241
P.2d 167; State ex rel. Carroll vy. Gatter, 1953, 43 Wash.
2d 153, 260 P.2d 360; State ex rel. Ervin v, Colonial Ac-
ceptance, Inc., Fla.1955, 80 So.2d 681.

Accordingly, plaintiff's claim for costs is denied.

Findings of fact and conclusions of law in accordance
with this opinion may be submitted, either by stipulation
or upon notice for hearing. They should include the exact
amount of the refund to which the plaintiff is entitled.
Thereafter, judgment may be entered in accordance here-

with,

Richard HULSE, Petitioner, v. William POTTER and
Robert Sharp, Respondents.
No, 3784-A,

United States District Court, Alaska. First Division,
Ketchikan.

Tuly 18, 1957.

1D
8

be | 355

Floyd O. Davidson, Ketchikan, Alaska, for petitioner.
Victor P. Guns, Ketchikan, Alaska, for respondents.

KELLY, District Judge.

This matter comes before the court upon a petition for
a writ of habeas corpus which sets forth that Richard Hulse,
a minor of the age of 18 years, was unlawfully impris-
oned and detained by the respondents in the city jail of
Ketchikan, Alaska. The return of the respondents having
been properly filed herein, a hearing was granted by the
court wherein testimony of the petitioner and others was
heard.

The pertinent facts as disclosed by the record and file in
this court in this cause and the testimony of the witnesses
at the hearing reveal the following:

On September 10, 1956, the petitioner was convicted
in the municipal court of the City of Ketchikan before
Magistrate Charles W. Hughes, on the charge of driving
an automobile while under the influence of intoxicating
liquor and received as sentence a $100 fine, his driver’s li-
cense was suspended for a period of one year, and he was
sentenced to serve 30 days in the city jail at Ketchikan,
Alaska. The 30 day sentence was suspended, however,
“on condition of payment of fine and observe driving re-
strictions.”

On January 23, 1957, the petitioner was again arrested
by a member of the city police of the City of Ketchikan
upon three separate complaints, charging him first, with
speeding; second, failure to stop for a stop sign; and third,
‘driving without a driver’s license.

356 PC

Upon a hearing before Municipal Magistrate Ruth Si-
monsen on January 24, 1957, the petitioner pleaded guilty
to those three charges. The City Magistrate thereupon
sentenced the petitioner to serve the previously suspended
sentence of 30 days. .

Petitioner raises the following legal questions in connec-
tion with this hearing:
A. In the absence of express authority, does
a municipal magistrate have the inherent power,
by virtue of the office, to suspend the execution
of a sentence?

B. Assuming arguendo that the power ex-
isted to suspend the 30-day sentence, was the pe-
titioner given reasonable notice and the right to
be represented by counsel, as required by stat-
ute?

C. Was the sentence of September 10, 1956,
strictly binding upon the petitioner if the sentence
was vague or if the terms of the stispension were
never made clear to petitioner?

HM This Court asked for briefs upon the sole ques-
tion of whether or not there was authority in the munici-
pal magistrate to suspend the execution of a sentence.
However, in view of the questions raised in petitioner’s
brief, this Court will dispose of all these questions. “A”
and “B” above will be disposed of together later herein.
In “C” above, petitioner’s counsel assumes that the sen-
tence was vagtie and contends that the petitioner would
not be bound by it if the terms of the suspension were never
made clear to the petitioner. The sentence provided first,
for a $100 fine, which $100 fine the petitioner paid. His
driver’s license was suspended for one year, and it is pre-
sumed was taken up, and he was sentenced to 30 days in

[| 357

the city jail, which sentence was suspended. Now, cer=
tainly, he understood that he was fined $100 because he paid
it; he understood that his driver’s license was suspended
for a year because it was taken away from him; and he
must have understood that his sentence was suspended
because he did not serve the 30 days in the city jail. The
conditions of the suspension of the sentence were that he
pay his fine, which he did, and that he observe the driving
restriction. This plainly means the restrictions imposed
by the revocation of his license, which bars him from driv-
ing at all for one year. Certainly that is the only logical,
rational interpretation of the wording of the sentence.

HI The Magistrate’s Court is not a court of record.
The proceedings are more or’ less informal, especially
where pleas of guilty are entered, and so long as the stat-
utory provisions are substantially complied with and no
tights are denied to the accused these proceedings should
be upheld.

In Alaska the territorial legislature has provided no
executive authority for pardon or commutation of sentence
but has by statute given the power to the magistrate to
suspend sentences. Section 66-16-31, A.C.L.A. 1949, as
amended by Ch, 195, S.L.A. 1955, provides:

“Upon entering a judgment of conviction * *
any court having jurisdiction to try offenses
against the Territory of Alaska, when satisfied
that the ends of justice and the best interest of
the public as well as the defendant will be served
thereby, may suspend the imposition or execution
or balance of the sentence and place the defendant
on probation for such period and upon such terms
and conditions as the court deems best. * * *”

358 |

Section 66-16-33 A.C.L.A, 1949 provides:

“This Article shall apply to the District Courts
of the Territory of Alaska and the Courts of Unit-
ed States Commissioners acting as Justices of the
Peace, provided that all proceedings for the revo-
cation of suspension of sentences in Justice Court,
may be reviewed in the District Court, as in other
cases by law provided.”

Section 16-1-70 A.C.L.A, 1949, provides:

«x 3% & The rules of proceeding before a
municipal magistrate shall be as near as practicable
the same as before a justice of the peace, unless
otherwise prescribed by ordinance enacted by the
council, * * * A judgment in the court of a
Municipal Magistrate shall be enforced in the same
manner as provided by law for the enforcement
of judgments in the court of a Justice of the
Peace.”

The City of Ketchikan not only did not “provide other-
wise” as permitted by Sec. 16-1-70, supra, but on the con-
trary reaffirmed such procedure. Sec. 8 of Ordinance 439
of the City of Ketchikan, Alaska, passed and approved
September 21, 1949, provides:

“Section 8. Jurisdiction of the Magistrate and
procedure before his court: The Municipal Magis-
trate shall have jurisdiction of all actions for vio-
lation of the ordinances of the City of Ketchikan.
Appeals shall be from his judgments to the dis-
trict court in the same manner as appeals from a
Justice of Peace. The rules of procedure of (the
Justice of) the Peace as prescribed by the General
Laws of the Territory of Alaska except where oth-
erwise provided in this ordinance. (sic)

Le 359

“A judgment in the court of the Municipal
Magistrate shall be enforced in the same manner
as provided by law for enforcement of judgments
in the court of a Justice of Peace. Executions
shall be the same as in the Court of a Justice of
Peace.”

On the question of whether or not the petitioner was
given reasonable notice and the right to be represented
by counsel as required by statute, it is undisputed that the
petitioner was asked when arrested on the traffic offenses
if he wished to see an attorney. I find he was given an
opportunity to have counsel but apparently did not wish
to avail himself thereof.

HL Moving on to the question of notice, I feel that
when we discuss this question we should interpret it in a
reasonable manner, and what would ordinarily be intended
by the statutory provisions. It seems to me that the pro-
vision contemplates that if the petitioner were to be charged
only with a violation of his probation or the commission
of an act which would be a violation of the conditions un-
der which his sentence was suspended, he should then be
given notice of a hearing to be held to determine the truth
or falsity of the alleged violation of the conditions of his
suspended sentence and be given an opportunity to procure
counsel to there represent him. However, where, as here,
the defendant pleads guilty to an offense which, of itself,
violates the conditions under which his sentence was sus-
pended, and he was given an opportunity to have counsel, it

‘ would be absurd to hold that the petitioner was entitled to
have a formal notice served upon him in connection there-
with. On his plea of guilty for three traffic violations, he
could have been sentenced to the limit the ordinance permits
on each charge, to run consecutively, had the Magistrate so
desired, which could have confined petitioner in the city

360 be

jail for a period several times longer than what he would
have to serve here. Instead, the Magistrate chose to re-
voke the former suspended sentence and require petitioner
to serve the 30 days there imposed.

I find no substantial rights of petitioner were denied by
the procedure taken. The petition is denied, and petitioner
remanded to the Chief of Police of Ketchikan to carry out
the sentence.

The foregoing shall constitute findings of fact and con-
clusions of law unless either party desires additional find-
ings, in which event the same may be presented.

Judgment may be entered in accordance with this opin-

ton,

In the Matter of the Reinstatement of William Lewis PAUL,
No, 3918-A,

District Court, Alaska, First Division, Juneau.
Aug. 12, 1957.

i=]

362 |

Henry Roden, Juneau, Alaska, and Frederick Paul, Seat-
tle, Wash., for petitioner.

Roger G. Connor, U. S. Atty., Juneau, Alaska, for re-
spondent.

KELLY, District Judge.

This matter comes before this court upon the motion
filed by the United States Attorney, seeking dismissal of
the petition filed herein for the reinstatement of William
Lewis Paul to the practice of law.

The petition, filed June 13, 1957, sets forth that an or-
der was entered on July 31, 1937, which provided that the
said William L, Paul. be permanently disbarred and re-
moved from the practice of law in the courts of Alaska,
and that his name be stricken from the rolls of attorneys
of this court. This order further provided that he might
apply for reinstatement at any time within one year there-

be 363

after provided that during that period he had been guilty
of no other conduct inconsistent with the duties and obli-
gations of an attorney at law, and that he had strictly com-
plied with certain conditions, namely :

“1. That he deposit in the registry of this
court, for distribution to those lawfully entitled
thereto, all the money, property and things of val-
ue whatsoever received by him from, for or on
account of the persons, or any of them, named or
alluded to, or in connection with the matters set
forth in counts one to five, inclusive, of the infor-
mation, together with interest at the rate of six
per cent per annum; and that he otherwise make
full and complete restitution.

“2. That when he makes such restitution and
makes proper apology and amends to the court and
furnishes satisfactory evidence of his reforma-
tion, he may apply for reinstatement.”

HL Upon motion and proper hearing, an order was
later entered extending the time within which the defend-
ant might apply for reinstatement up to and including the
15th day of September, 1938. No application for rein-
statement was filed in accordance with the order, nor was
any action taken until the present petition for reinstate-
ment was filed in this proceeding; nor is there any evidence
or showing of compliance within the time specified with
the other requirements which the original order of disbar-
ment specified must be complied with before an application
for reinstatement could be filed in that proceeding, It
would appear from the original order and the supplemental
order extending the time to the 15th day of September,
1938, that it is now too late to apply in the original pro-
ceeding for reinstatement. Such a proceeding at this time
would be in effect a petition to set aside the original order

364 |

of disbarment, and in view of all the circumstances, as re-
vealed by the original file, this petition cannot be regarded
as one filed in compliance with the orders of this court for
reinstatement, but must be regarded as a new application
for admission to practice law. As such it has no place in
the original proceeding but must be filed in compliance
with the provisions of the Alaska Integrated Bar Act (Ch.
196, S.L.A.1955).

[2] It is well established that an application for rein-
statement of an attorney disbarred by a judgment of a court
of competent jurisdiction, as was the petitioner here, must
be treated as an application for admission to practice and
not as a petition to vacate the order of disbarment. As
such, therefore, under the statute it should be first directed
to the Board of Governors of the Alaska Bar and the re-
quirements of that statute followed.

The statute gives ample remedies and prescribes the
proper procedure should the applicant desire to have a
hearing before the court upon the recommendations of the
Bar.

Ch, 196, S.L.A.1955, which is hereafter referred to as
the Bar Act, provides for the creation of the “Alaska Bar
Association” and provides for its organization, government,
membership, and powers to regulate the practice of law
and to provide penalties for violations. Sec. 8 authorizes
the Board of Governors to adopt rules fixing the qualifica-
tions, requirements, and procedures for admission to prac-
tice law except as provided in the Act, and to establish
and enforce rules of professional conduct for all members
of the Alaska Bar patterned after, but not limited to, the
Code of Ethics of, the American Bar Association; to in-
vestigate, prosecute, hear, and nnally determine all causes
involving discipline, disbarment, suspension, or reinstate-
ment. -

Le 365

Sec. 14 pertains to disciplinary proceedings and review
and provides as follows:

“Upon finally determining any cause involving
the discipline, disbarment, suspension or reinstate-
ment of a member of the Alaska Bar, the Board
of Governors shall certify its findings and recom-
mendations thereon to the U. S. District Court
for the Judicial Division wherein the accused mem-
ber resides. Upon receiving the findings and
recommendations, the Court shall, within thirty
days thereafter, issue an order of disbarment,
stispension, reinstatement, dismissal, or otherwise,
in full accordance with the recommendations of
the Board of Governors, unless the accused mem-
ber shall sooner petition the Court for review of
the proceedings, findings and recommendations of
the Board. In the event such petition is made, the
Court shall proceed promptly with the review
in the manner it may choose, and after comple-
tion of the review shall issue such order in the
cause as the Court may, in its discretion, deter-
mine proper. Any hearings or other procedures
before the Court shall be for the sole purpose of
review of the determinations of the Board of Gov-
ernors and shall not constitute a trial de novo of
the cause. The procedure for review herein set
forth shall be the exclusive method of appeal
from the determinations of the Board of Gov-
ernors in any matter involving the discipline, dis-
barment, suspension or reinstatement of a member
of the Alaska Bar. A full stenographic record
of all hearings on matters involving discipline,
disbarment, suspension or reinstatement shall be
kept. The Board of Governors shall have power
to issue subpoenas and to invoke the aid of the

366 |

U.S, District Court, if necessary, to compel the
attendance of witnesses at hearings held pursuant
to the powers granted herein.”

HE The motion to dismiss was argued at some lensth
and petitioner submitted a brief attacking the Alaska Bar
Act as unconstitutional and contending further that since
the disbarment had occurred prior to the enactment of the
Integrated Bar Act of Alaska, the matter should be heard
before the court and no petition need be filed with the Board
of Governors of the Alaska Bar under the Act.

Petitioner claims that the Bar Act, supra, is invalid and
unconstitutional because the legislature has interfered with
the judicial prerogative by taking away from the court
the power to discipline attorneys appearing before it.

There is no question but that, since an attorney is an
officer of the court, whether he shall be admitted to prac-
tice before the court is a judicial and not a legislative ques-
tion. Regardless of the inherent power of the court, how-
ever, to admit petitioners for license to practice law, the
legislature may prescribe reasonable rules or regulations
for admission to the Bar which will be followed by the
court, the only limitation being the requirement that such
regulations be reasonable and do not deprive the court of
its power to prescribe additional conditions for the admis-
sion of applicants, nor take from the court the right and
duty of actually making orders admitting such petitioners.
The legislative regulations are, in reality, minimum stand-
ards required for admission and the courts may require
additional conditions unless satisfied that the qualifications
prescribed by the legislature are sufficient. The require-
ments of the legislature in this regard are restrictions on
the individual, and not limitations on the court. In re
Lavine, 1935, 2 Cal.2d 324, 41 P.2d 161, 42 P.2d 311.
The same rule applies to reinstatement as to admission.

[| 367

The Bar Act takes nothing away from the inherent pow-
er or authority of the court, but, on the contrary, adds
helpful machinery. Sec. 14 provides that when the Board
of Governors have finally determined any cause involving
disbarment or reinstatement that it certify the findings
and recommendations “to the U. S. District Court for the
Judicial Division wherein the accused member resides.
Upon receiving the findings and recommendations, the
Court shall, within thirty days thereafter, issue an order
of disbarment, suspension, reinstatement, dismissal or oth-
erwise,” in accordance with the recommendations “unless
the accused member shall sooner petition the Court for
review of the proceedings, findings and recommendations
of the Board.” If such petition is filed, the court shall
promptly review the same “in the manner it may choose,”
and after completion of such review “shall issue such order
in the cause as the Court may, in its discretion, determine
proper.”

It can thus be seen that where the attorney involved dis-
putes or disagrees with the findings and recommendations
of the Board of Governors, he may have a review of the
entire proceedings before the Board of Governors and the
court may enter such order as it deems proper.

The courts, from time without memory, have referred:
to referees, masters, commissioners, and court-appointed
examiners, matters upon which testimony would be taken,
findings made, and recommendations submitted to the
court, and certainly in this instance the Bar Act of Alaska
does not interfere with any inherent power or authority
the court has, regardless of the Act, to exercise its preroga-
tive and make the final decision in the matter.

In this proceeding for disbarment, upon motion of the
defendant an order was entered February 27, 1937, enti-
tled “Order of Reference,” and a committee of three mem-

368 —

bers of the Territorial Bar was appointed to “hear the par-
ties and to take testimony with respect to the issues as
framed by the pleadings herein and to report its findings
of fact to this Court. * * *” Had the Integrated Bar
Act of Alaska not been adopted there certainly would be
no question but that this court would have authority to ap-
point a committee of attorneys to investigate the petition,
take testimony if necessary, and submit their report and
recommendations to the court. The Integrated Bar Act
places this responsibility directly upon the Board of Gov-
ernors.

The court which admitted an attorney to practice has al-
ways been the tribunal to discipline that attorney. Through-
out the years, however, the courts have always had the aid
and assistance of the Bar and its members, who are officers
of the court, in maintaining proper ethical standards which
all attorneys who want to continue to practice law must
observe.

For over 30 years there has been a constant growth in
the system of integrated bars throughout the nation; in
some states they have been created by statute, in some by
court rule, but in all, the Bar of the state or other juris-
diction, has taken a leading role in policing their member-
ship so that the standards of the lawyers would be kept at
a high level in order that in their dealings with the public
they would maintain proper comportment so as to protect
the public interest and safeguard the general welfare of
those with whom they dealt.

Any decisions which the Bar Act authorizes the Board
of Governors to make in the hearings which they hold are
merely recommendatory in character, and the only orders
which have the effect of working disbarment or reinstate-
ment of a person are the final orders of the Court. The
Board itself is not invested with judicial powers, and the

[| 369

review referred to in the Bar Act is not a limited review,
but affords re-examination of the entire record by the
Court. :

Petitioner’s contention that the legislature has sought,
in the Bar Act, to delegate to the Board of Governors a
judicial function is without merit. The court should not
declare an act of the legislature unconstitutional unless it
appears that there is a clear repugnancy between the terms
of the act and the constitution. Such does not exist here.
I find that the Bar Act here in question is valid and must
be complied with.

This petition should first have been presented to the
Board of Governors of the Alaska Integrated Bar in ac-
cordance with the provisions of the Alaska Integrated Bar
Act. The motion to dismiss is granted. An order may
be presented in accordance with this opinion.

153 F.Supp. 481

Fred McKAY, Libelant, v. The Motor Vessel SOKOL, Official
Number 215,124, her engines, tackle, apparel, furniture and
equipment, Respondent, and George Nix, Cross-Libelant.

No, 3687-KA,

District Court, Alaska. First Division, Ketchikan.
Aug. 16, 1957.

—
of

Le 371

W. C. Stump, of Stump & Bailey, Ketchikan, Alaska,
for libelant.

C. L. Cloudy, of Ziegler, Ziegler & Cloudy, Ketchikan,
Alaska, for respondent and cross-libelant.

KELLY, District Judge.

This action arose as a result of a collision between the
M/V Eureka (hereafter referred to as the Eureka), owned
by the libelant Fred McKay, and the M/V Sokol (hereaft-
er referred to as the Sokol), owned by the respondent and
cross-libelant, George Nix. The accident occurred about
150 yards off the entrance of Thomas Basin on September
23, 1955, at or about 2:15 p.m.

It was stipulated by the parties that the damages to the
Eureka totalled $2,853.57 and the damages to the Sokol to-
talled $1,125.91.

The evidence shows that the Eureka had left its berth
at Hansen’s Store dock and was proceeding in a south-
easterly direction towards the Union Oil Company station
in the southeastern portion of the harbor area of Ketchi-
kan; it maintained a course about 150 yards offshore and
was proceeding at a speed of about 5 knots when the Sokol,
in the act of entering Ketchikan Harbor from the Thomas
Basin moorage, maintained a straight course directly out
into the channel and collided with the Eureka and as a re-
sult of this collision both vessels were damaged in the
amounts as set forth above; that at the time of the colli-
sion the weather was clear and the visibility good; that
the Sokol was traveling at a speed of about 7 knots

There was independent testimony from disinterested
witnesses tending to establish that the owner and master
of the Sokol was in an intoxicated condition at the Pot-
latch Bar around noon or shortly thereafter, and another

372 a

witness, who observed him at or about three o’clock in the
afternoon, likewise verified his intoxicated condition.

I find, as a matter of fact, that a boat leaving Thomas
Basin moorage entering Ketchikan Harbor, as it passes
through the two dolphins marking the entrance of Thomas
Basin, has an unobstructed view both up and down Tongass
Narrows and especially of the Ketchikan Harbor in both
directions from said entrance.

I find, as a matter of fact, that the respondent, prob-
ably because of his condition, failed to turn either star~
board or port, failed to reduce speed or give any signal,
but continued on a collision course straight out into the
channel.

I find, as a matter of fact, that the libelant observed the
approach of the Sokol from the time it passed the entrance
of Thomas Basin and that libelant held course and speed
until he realized, when the Sokol was about 60 feet from
his vessel, that the respondent was not going to turn right
or left, when he thereupon took evasive action, put his en-
gine in full speed astern and his wheel hard right, turning,
and that the Eureka was struck by the Sokol just forward
of the pilothouse.

There is testimony to the effect that the ordinary fish~
ing boat, such as the Sokol, if the wheel is put either hard
tight or hard left, can, within a distance of 60 feet, swerve
in such a manner as to avoid striking an object directly
ahead.

HI The testimony in the case shows definitely the im-
proper handling of the Sokol and the definite negligence
of the' master and owner thereof in operating it in the
fashion he did and in causing it to collide with the Eureka.

Counsel for respondent contends, however, that because
of the-conduct of the Eureka, it was guilty of the viola~

[| 373.

tion of certain rules of navigation and guilty of negligence
to such a degree that even though the major fault was on
the Sokol, because of the conduct of the Eureka the dam-
ages should be divided in accordance with maritime rules.

Respondent claims this negligence consists of the fol-
lowing:

(1) Violation of the narrow channel rule in that the
Eureka was proceeding on her port side of the channel in
Tongass Narrows. :

(2) Failure to blow a one-blast whistle signal indicat-
ing the Eureka’s intention to hold course and speed,

(3) Failure to blow a danger signal.

(4) Failing to maintain a proper lookout.

(5) Passing too close to the entrance of Thomas Basin.

It has been stated that “narrow channels” are bodies of
water navigated up and down in opposite directions, and
that they do not include harbor waters, with piers on each
side, where the necessities of commerce require naviga-
tion in every conceivable direction. The Islander, 2 Cir.,
1907, 152 F. 385; The No. 4, 2 Cir. 1908, 161 F. 847;
The Klatawa, D.C.W.D.Wash., 1920, 226 F. 120.

The Court in the two earlier cases cited held that the
“narrow channel” rule did not apply to that part of the
Hudson River which served as a harbor for the City of
New York. While the present situation differs, inasmuch
as the commerce is comparatively light between Ketchi-
kan and Pennock Island, across the Tongass Narrows from
the city, whereas the New York Harbor has a great num-
ber of vessels crossing from one side to the other, still the
traffic between various points along.the Ketchikan Harbor
renders the application of the “narrow channel” rule im-
practical within the harbor. It would create considerable
hardship as well as new hazards to require that vessels

374 |

traveling between two points within the Ketchikan Harbor
must proceed to the far side of The Narrows, crossing the
north-bound lane of through traffic twice, to do so.

The two cases relied upon by the respondent to establish
the application of the “narrow channel” rule in this case
involved collisions which occurred in the Ketchikan area
and in which the Court found that the “narrow channel”
rule was applicable. In The Admiral Watson, D.C.W.D.
Wash., 1920, 266 F. 122, the vessel had just rounded the
north end of Pennock Island, preparatory to docking at
Ketchikan, when it collided with a fishing vessel, the Hel-
geland, which was proceeding from the harbor. Judge
Neterer, who decided the case, had previously defined a
“narrow channel” in The Klatawa, supra, as excluding
harbor waters, It is therefore apparent that the collision
occurred outside of what was then considered Ketchikan
Harbor.

In the other case cited by the respondent, Atlas Assur-
ance Co., Ltd., of London, England v. The Cupid, 1952,
D.C., 14 Alaska 108, 108 F.Supp. 590, the Court stated:

“The collision occurred about midnight of April
24, 1950, on a clear night with fair visibility, in
Tongass Narrows, a narrow channel, south of
and connecting with Ketchikan Harbor.” (Em-
phasis supplied.)

HE While it is recognized that Tongass Narrows is
a narrow channel, the “narrow channel” rule would not
apply to local traffic in that part of . .e waters comprising
the Ketchikan Harbor.

On the question of the Eureka’s failure to blow a one-
blast whistle signal to indicate its intention to hold course
and speed, there does not appear to be any basis for impos-
ing such a duty on the privileged vessel in a crossing situa-

[| 375

tion. Article 18, Rule I of the Inland Rules provides for
a one-blast whistle signal when one of two vessels ap-
proaching end on, or nearly so, proposes to pass port to
port, or a two-blast whistle signal to indicate a starboard
to starboard passing. However, as noted above, the pres-
ent case involved a crossing situation and not a meeting
end on. In the case of Compania De Navegacion Cebaco,
S. A. v. The Steel Flyer, 4 Cir., 1952, 200 F.2d 643, 645,
the Court observed :

“* % * but in this case the vessels were not
meeting head on or nearly so, but were on cross-
ing courses and therefore Articles 19 and 21
* > © were applicable. These rules make no
provision for the giving and acceptance of signals
since they clearly provide that the vessel which
has the other on her starboard side shall keep out
of the way of the other while the other shall keep
her course and speed. * *° *”

Ht is true that the Eureka was obligated to sound
a warning signal as soon as it became apparent that the
Sokol was not going to respect the privileged vessel’s right-
of-way, and her failure to do so constitutes a fault. Un-
der the major-minor fault rule established in the Pennsyl-
vania, 1874, 19 Wall. 125, 136, 86 U.S. 125, 136, 22 L.
Ed. 148, the Eureka, in order to escape liability for half
of the damages resulting from the collision, must prove
not only that the fault shown probably did not contrib-
ute to causing the collision, but also that it could not have
so contributed. I find from the evidence that the libelant
has sustained this burden, and that when he became aware
that the Sokol did not intend to change course, a warn-
ing would have been too late to have prevented the colli-
sion.

376 |

HE The alleged failure to maintain a proper lookout
must be rejected as a reason for holding the Eureka to be
at fault. It seems unlikely that on a boat the size of those
involved here it would be customary to have any one ex-
cept the pilot serving as a lookout, but even if such a prac-
tice were the usual rule, the testimony of those aboard the
Eureka was that they had seen the Sokol from the time she
first emerged from Thomas Basin. Thus the absence of
a lookout, if in fact the Eureka was obliged to have one,
could not have been a factor in causing the collision.

I find that the Eureka did not pass too close to the en-
trance of Thomas Basin, and that the Sokol had ample room
in which to maneuver.

The libelant is entitled to recover for all damages sus-
tained by the Eureka, and in addition, his costs and dis-
bursements.

The foregoing shall constitute Findings of Fact and
Conclusions of Law unless the parties desire additional
Findings or Conclusions.

Judgment may be entered in accordance herewith.

LE

253 F.2d 621

FIDALGO ISLAND PACKING COMPANY, a Corporation, and
Clara Wilson, Appellants, v. A.B, PHILLIPS, Executive
Director, Employment Security Commission of Alaska, Ap-
pellee.

No. 15510.

United States Court of Appeals, Ninth Circuit.
Aug. 19, 1957.

—+—_

Faulkner, Banfield & Boochever, H. L. Faulkner, Juneau,
Alaska, and John H. Dimond, Juneau, Alaska, for appellant.

J. Gerald Williams, Atty. Gen., Dickerson Regan, Juneau,
Alaska, for appellee.

Before HEALY, FEE and CHAMBERS, Circuit
Judges.

PER CURIAM.

Previously in this case the District Court granted a judg-
ment holding an administrative order null and void for lack
of jurisdiction on the part of the territorial employee who
purported to promulgate it, and issued an injunction against
enforcement thereof. Fidalgo Island Packing Company v.
Phillips, D.C., 120 F.Supp. 777, 15 Alaska 15. Fidalgo
Island was plaintiff in the cause and Clara Wilson an inter-
venor. A. B. Phillips, who formerly was Executive Direc-
tor of the Employment Security Commission of Alaska, was

defendant. Fidalgo Island and Wilson each prayed in the:

respective complaints for allowance of attorney fees. The
judgment entered did not allow attorney fees, probably for
the reason that the suit was actually against the Territory
of Alaska. The purpose of the proceeding was to conserve
governmental funds for the appropriate claimants, but was
not an action upon the particular claims themselves. Any

such allowance for attorney fees would be paid out of the’

Employment Security Fund or the administrative fund of

De EL

the Commission. Fidalgo Island had no claim upon either
of these funds, according to its allegations, but feared its
contributions would be larger than lawful and that the
money would be devoted to illegal purposes. Wilson did
not allege she had any presently existing claim against either
fund, but adopted the allegations of the complaint of Fidal-
go Island.

Neither plaintiff Fidalgo Island nor the intervenor pre-
sented any claim for interest in their respective complaints.

Phillips appealed from the judgment notwithstanding the
fact that the District Court did not award to plaintiff or in-
tervenor any costs, attorney fees or interest, and that neither
appealed or cross-appealed from the judgment.

This Court affirmed the judgment as entered, and it there-
by became a finality.t The mandate of this Court was en-
tered. Judgment based upon the mandate, in form approved
by Fidalgo Island and Wilson, was entered. However, cer-
tiorari was prayed by Phillips, or his successor, of the Unit-
ed States Supreme Court. It was denied.’

Fidalgo Island appeals from the failure of the trial court
to include attorney fees and interest in the judgment after
the denial of certiorari.

Hi As to attorney fees, we hold that, since such allow-
ance was prayed for in the complaints and no judgment was
entered therefor, although the other relief was granted, any
tight thereto was lost by failure to cross-appeal. This is
true even if the attorney fees are claimed as costs. If the
first judgment did not specifically make this allowance for
costs, it would be necessary to raise the point on the first
appeal. Otherwise, multiple appeals would result.

1Phillips v. Fidalgo Island Packing Co., 9 Cir, 230 F.2d 688, 16
Alaska 12, rehearing denied 9 Cir., 288 F.2d 234, 16 Alaska 338.

2Phillips v. Fidalgo Island Packing Co., 352 U.S, 944, 77 S.Ct. 262,
1 L.Bd.2d 237.

380 |

HI As to interest, like considerations prevail, How-
ever, in addition, we may inquire upon what amount interest
could be asked. In order to prevent payments on claims
now adjudged illegal, plaintiff has had the court impound a
‘fund of over Six Hundred Fifty Thousand Dollars for sev-
eral years. Neither plaintiff nor intervenor is a claimant
against the fund. If legitimate claimants are legally entitled
to interest because of the delay upon their respective claims,
this Court must assume interest will be awarded. But
neither plaintiff nor intervenor has any interest therein one
way or the other. Appellants have themselves caused delay
of many months by this appeal, which we hold baseless.

The matter was finally adjudicated upon the first appeal,
and the only item which may now be entered in addition to
the judgment consists of the costs in this Court on the first
appeal and upon the pending appeal.

The present appeal is dismissed with costs against the
present appellants.

Le 381

154 F.Supp. 944

George D. ¥. WOO, Plaintiff, and The Territory of Alaska, as rep-
resented by the Board of Liquor Control, Plaintiff in In-
tervention, v. CITY OF ANCHORAGE, a municipal
corporation, Anton Anderson, as Mayor thereof, I. M. 0.
Anderson, Brad Phillips, Roy Nigh, Frank M. Reed, Jack
Davis, and Hewitt Lounsbury, as members of and constitut-
ing the City Council thereof, George Shannon, as City
Manager thereof, and John C. Flanigan, as Chief of Police
thereof, Defendants.

Civ. A. No, A-13407,

District Court, Alaska, Third Division, Anchorage.
Aug. 30, 1957.

382 |

John E. Manders (of Manders, Butcher, Dunn & Connol-
ly), Anchorage, Alaska, for plaintiff.

J. Gerald Williams, Atty. Gen. of Alaska, and Robert J.
Annis, Asst. Atty. Gen., Juneau, Alaska, for intervenor,
Territory of Alaska.

James M. Fitzgerald, City Atty., and L. Eugene Williams,
Asst. City Atty., Anchorage, Alaska, for defendants.

TOLIN, District Judge.

Plaintiff George D. Y. Woo, who possesses an Alaskan
territorial license for the operation of a liquor dispensing
business, seeks in this action to enjoin as invalid the en-
forcement of an ordinance of the City of Anchorage which
would impose upon him the additional burden of securing a
municipal liquor license. The Territory of Alaska, as rep-
resented by the Board of Liquor Control, has intervened as
a plaintiff in order to urge that the municipal licensing ordi-
nance constitutes an illegal restriction upon the exclusive
licensing power of the territorial Board.

Woo is the owner and operator of a restaurant known as
the “Rice Bowl”, located at 232 Fifth Avenue in the City
of Anchorage. On or about January 9, 1957, he applied to
the Board of Liquor Control for the issuance to him of a
territorial beverage dispensing liquor license in accordance
with the laws of the Territory of Alaska. Approximately
twenty days later Woo applied to the Anchorage City Coun-
cil for approval of the territorial application and for the is-
suance to him of the additional municipal liquor license re-
quired by the City ordinance. On March 12, 1957, after a
hearing, the City Council refused to approve the applica-
tion. Thereafter, on March 16, 1957, Woo’s application to
the Board of Liquor Control was approved by that body and
a territorial license for carrying on a liquor dispensing busi-
ness at the “Rice Bowl” was issued to him. Woo has sub-
sequently been advised by the Anchorage City Attorney that,

ee 383

since the City Council has refused to issue a municipal li-
cense, any attempt by Woo to dispense intoxicating liquors
as authorized by his territorial license would result in prose-
cution under the Anchorage Code of Ordinances.

Ordinance 1031, amending Article 4, Chapter 4, Anchor-
age General Code, provides in pertinent part as follows:

“Sec. 4-3. No person shall operate an intox-
icating liquor establishment under a business name
or style or individual name without first obtaining
a license therefor from the city. * * *

“Sec. 4-6(b) (1). No application for an intox-
icating beverage dispensary license shall be ac-
cepted or approved for any location not licensed at
the time of application where the total of licensed
beverage dispensaries in the aggregate at any one
time would exceed two licenses for each fifteen
hundred of population in the city. * * *

“Sec. 4-6(b) (3). Notwithstanding the fore-
going provisions of this section, the council shall
refuse to issue any type of license to any applicant
if, in the opinion of the council, the number of li-
censes already granted for the particular block,
section or area are adequate for the reasonable
needs of the city. * * *”

‘The ordinance was enacted pursuant to, and derives its
authority from, an enactment of the legislature of Alaska,
35-4-18, A.C.L.A.1949, which provides as follows:

“§ 354-18. Municipal regulations. Incorpo-
rated municipalities, in the Territory of Alaska,
may, by ordinance duly enacted, provide such ad-
ditional rules and regulations governing the barter,
sale and possession of intoxicating liquor within
such municipalities as may be deemed necessary
to the orderly conduct of the business of selling

384 De

intoxicating liquor; provided, however, that such
ordinance or ordinances thus enacted shall not be
inconsistent with this Act, and.that no municipal-
ity shall impose any additional taxes.”

The stipulated facts disclose that, under the license—
population ratio formula contained in the ordinance, Woo is
not entitled to a municipal liquor license. If the territorial
legislature had the power to grant to municipalities con-
current licensing power, and if the ordinance is within that
authorization, the plaintiffs are entitled to no relief.

The power to “make all needful Rules and Regulations
respecting the Territory * * * belonging to the Unit-
ed States” has been lodged in Congress by the federal Con-
stitution, Article 4, Section 3. Congress could have legislat-
ed directly respecting the manufacture and sale of intoxicat-
ing liquors in Alaska," or it could delegate to the territorial
legislature power to enact laws regulating the liquor traffic.
But, of course, if Congress did delegate such authority to
the territorial legislature, that body must discharge its pow-
er strictly within the limits stated in Bordenelli v. United
States, 9 Cir., 1956, 233 F.2d 120 and Boggess v. Berry
Corp., 9 Cir., 1956, 233 F.2d 389. Congress gave to the
legislature of Alaska permission to regulate the liquor traffic
only in a specified manner. Unless, therefore, an express
and specific direction to the territorial legislature can be
pointed out whereby Congress permitted that body to sub-
delegate concurrent licensing authority to municipal corpo-
rations, the power did not exist, and any attempt to do so
would be void.

As was pointed out by Judge Fee in Bordenelli, Congress
enacted legislation in 1934 which marks the extent of the

1Nelson v. United States, 0.0.D.0r.1887, 30 F. 112, affirming D.O.
D.Alaska 1886, 29 F. 202. Cf. Bimns v. United States, 1904, 194 U.S.
486, 24 8.Ct. 816, 48 L.Ed. 1087.

| 385

power of the territorial legislature to regulate and control
liquor traffic as follows [233 F.2d 122]:

“No spirituous or intoxicating liquors shall be
manufactured or sold in the Territory of Alaska
except under such regulations and restrictions as
the Territorial Legislature shall prescribe, and the
Legislative power and authority conferred upon
the Legislative Assembly of the Territory of Alas-
ka”

by the acts organizing the territory and general legislation
relating to the structure and powers of, the government of
the area

“% 3% shall be, and is, extended to include
any legislation pertaining to the manufacture or
sale of spirituous or intoxicating liquor within the
said Territory, and any provision contained in the
said sections, in conflict herewith, is expressly re-
pealed: Provided, however, That the Legislature
of the Territory of Alaska shall have full power
and authority to delegate the powers conferred to
any board or commission designated or created by
the legislature for such purpose, which powers
shall include the power to make rules and regula-
tions governing the manufacture, barter, sale, or
possession of spirituous or intoxicating liquors in
the Territory of Alaska, to prescribe the qualifica-
tions of those who are to engage in the manufac-
ture, barter, sale, or possession of intoxicating
liquors in the said Territory, and to prescribe li-
cense fees and excise taxes therefor * * ¥*,”

- 48 ULS.C.A. § 292,
a

386 a

On the same day, Congress adopted another section, which
reads:

“The act of the Territorial Legislature of Alas-
ka entitled ‘An Act to create the board of liquor
control and prescribe its powers and duties’, ap-
proved May 4, 1933, contained in the Session
Laws of Alaska, 1933, being chapter 109 thereof,
at pages 193-194, be, and the same is, ratified and
approved, and the board thereby created shall have
the powers and the authority conferred upon it by
the said act. And any person, firm, or corporation, .
who shall violate any of the rules or regulations
prescribed by the said board governing the manu-
facture, sale, barter, and possession of intoxicating
liquors in the Territory of Alaska, or the qualifica-
tions of those engaging in the manufacture, sale,
barter, and possession of such liquors in the said
Territory, or the payment of license fees and ex-
cise taxes therefor, shall be deemed guilty of a mis-
demeanor, and upon conviction thereof shall be
punished as provided in section 2072 of the Com-
piled Laws of Alaska.” 48 U.S.C.A. § 293.

The congressional grant of specific authority to the legis-
lature of Alaska to designate or create a “board or commis-
sion” to regulate the liquor traffic “clearly foreshadowed
the erection of an independent body” ® which could pro-
mulgate uniform licensing rules throughout the Territory.
In 1937, however, the territorial body partially discarded
this basic plan of central regulation adopted by Congress
and enacted new legislation which allowed incorporated
municipalities, by ordinance, to provide additional rules and
regulations not inconsistent with the territorial Act. C. 78,

2 Bordenelli v. United States, 9 Cir., 1956, 233 F.2d 120, 128.

ee 387

Sessions Laws of Alaska 1937, now 35-4-18, A.C.L.A.1949
and 1957.3

The legislature of Alaska was specifically instructed by
Congress that the power “to prescribe the qualifications of
those who are to engage inthe * * * sale, or posses-
sion of intoxicating liquors” should be exercised either by
the legislature of Alaska or by a territorial “board or com-
mission” designated or created by it. No other mode of
regulation of the liquor traffic was authorized. Since the
numerous municipal corporations of Alaska in no. sense con-
stitute the “board or commission” contemplated by Con-
gress, the attempted subdelegation to them of concurrent
licensing power violates both the letter of the Alaskan Or-
ganic Act, 48 U.S.C.A. § 67 et seq., and the clear intent of
Congress. The legislature of Alaska was utterly without
power to authorize municipal restrictive licensing, and that
portion of the Anchorage General Code passed pursuant to
the purported grant of power by the territorial legislature
is void.

Plaintiffs are entitled to an injunction restraining the de-
fendants from attempting to enforce the invalid licensing
provisions of Ordinance 1031 against Woo. Counsel for
plaintiff Woo may submit Findings of Fact, Conclusions of
Law and Judgment against the defendants in conformity
with this Memorandum of Decision.

3Enactments of the legislature of Alaska in 1953 and 1957 first
abolished and then re-established the Board of Liquor Control. The
effect of this later legislation upon the validity of Woo’s territorial
license, which was issued during the interregnum, need not be con-
sidered in determining the enforceability of the City licensing ordi-
nance,

888 |

355 U.S. 837, 78 S.Ct. 62

Robert L. MARTIN and L. A. Martin, petitioners, v. 8S. BIRCH
& SONS, a Corporation, C. F. Lytle, a Corporation, and
Green Construction Company, a Corporation, Partners
Doing Business as Birch, Lytle & Green.

No. 359.

Supreme Court of the United States.
Oct. 14, 1957.

Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit.

Denied.

355 U.S. 810, 78 S.Ct. 50

ALASKA INDUSTRIAL BOARD and Carl E. Jenkins, petitioners,
vy. CHUGACH ELECTRIC ASSOCIATION, Inc. a Cor-
poration, and General Accident, Fire and Life Assurance
Corporation, Ltd,

No, 303.

Supreme Court of the United States.
Oct. 14, 1957.

Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit granted and case trans-
ferred to the summary calendar.

Granted.

38)

155 F.Supp. 411

Jay BICKEL, Trustee in Bankruptcy for the Estate of Stanley
‘W. Todd, Bankrupt, Plaintiff, v. POLARIS INVESTMENT
COMPANY, Inc., et al., Defendants.

No. 7958.

District Court, Alaska. Fourth Division, Nome.
Oct, 15, 1957.

390

R. J. McNealy, Fairbanks, Alaska, for plaintiff.
George B. McNabb, Jr., Fairbanks, Alaska, for defend-
ants.

ED

HODGE, District Judge.

Plaintiff in this action seeks to recover the value of
personal property alleged to have been transferred by Stan-
ley W. Todd, Bankrupt, to the defendant Polaris In-
vestment Company, within four months prior to the filing
of a petition in bankruptcy against him. At a pre-trial
conference it was admitted that the property in question,
consisting of office furniture and a stock of goods, was
seized by the defendant within four months of such bank-
ruptcy upon distraint for past due rent of premises leased
by the defendant to the bankrupt, which property and goods
were simply taken from the premises and held by defend-
ant without process for payment of the rent. The case
was then submitted to the Court for determination as a
matter of law upon these stipulated facts.

The sole question to be determined is whether or not
such distraint is void or voidable by the Trustee in bank-
ruptcy under the provisions of Sec. 67, sub. £ of the Bank-
ruptcy Act (Sec. 107, sub. a, Title 11 U.S.C.A.); or con-
stituted a voidable preference under the provisions of Sec.
60 of the Bankrupcy Act (Sec. 96, subs. a, b, Title 11 U.S.
C.A.).

HHI It is settled that a landlord’s lien obtained by dis-
traint prior to bankruptcy is not one “obtained through
legal proceedings” within the meaning of Sec. 67, sub. £
of the Bankruptcy Act, and consequently is not voided by
the bankruptcy of the tenant within four months of such
distress or levy. Henderson v. Mayer, 225 U.S. 631,
638-640, 32 S.Ct. 699, 56 L.Ed. 1233; Lewis v. Fidelity
& Deposit Co., 292 U.S. 559, 569, 54 S.Ct. 848, 78 L.Ed.
1245; City of Richmond v. Bird, 249 U.S. 174, 39 S.Ct.
186, 63 L.Ed, 543; In re West Side Paper Co., 3 Cir., 162
F. 110; In re Mount Holly Paper Co., 3 Cir, 110 F.2d
220; In re C. J. Rowe & Bros., D.C., 18 F.2d 658; In re

392 a

Zumberis, D.C., 24 F.Supp. 368; In re Edmonds, D.C., 27
F.Supp. 196; Id., D.C., 30 F.Supp. 934; In re Kentucky
Book Mfg. Co., D.C., 30 F.Supp. 400; In re Kocialek, D.
C., 32 F.Supp. 228; In re Koizim, D.C., 52 F.Supp. 357.

We have no statutory landlord’s lien in Alaska, nor any
specific provision by statute for distress warrant proceedings
by a landlord, as provided in some states. However, Sec.
2-1-2, A.C.L.A.1949, provides that so much of the com-
mon law as is applicable and not inconsistent with the Con-
stitution of the United States or with any law passed by
Congress or the Legislature of Alaska is adopted and de-
clared to be the law in the Territory. And Sec. 22-1-3,
A.C.L.A.1949, provides that in addition to the remedy pro-
vided to a landlord for recovery of rent accrued by action,
landlords shall not be deprived of any other legal remedy
for the recovery of their rents, “whether secured to them
by their leases or provided by law”.

HI Distress for rent in arrears is an ancient common
Jaw remedy which allows a landlord to go on the demised
premises and seize property of the tenant therein for rent
and hold it until the rent is paid. It is analogous to “dis-
traint”, which is a summary extra-judicial remedy having
its origin in the common law, consisting of seizure and
holding of personal property by independent action without
the intervention of legal process, for the purpose of com-
pelling payment of a debt. It involves the actual seizure
of the property of the debtor to enforce payment of the ob-
ligation, and becomes effective upon such seizure. It de-
pends upon the principle of possession and is distinguished
from a lien upon the property of the tenant as security for
rent; that is, it is in the nature of a lien, but confers no
lien until the right of distress has been exercised, as was
done in this case. 32 Am.Jur. 486, Sec. 613; Raffaele v.

LE)

Granger, 3 Cir., 196 F.2d 620; 32 Am.Jur. 461, Sec. 564,
565, 567.

The decisions above enumerated make no distinction be-
tween a statutory landlord’s lien and the right of distress
or distraint recognized at common law. In fact the com-
mon law remedy is specifically recognized in some of these
decisions. To quote from the West Side Paper Co. case,
supra [162 F, 111],

“Distress for rent in arrear, is one of the most
ancient, as well as ‘one of the most efficient of the
landiord’s remedies for the collection of rent.’ It
is in most of our states, as it was at common law,
a right sui generis, belonging to the landlord
whenever the relation of Jandlord and tenant ex-
isted. It appears to have been abolished in a few
of the states, and in most of them its exercise has
been regulated by statute. Its essential character-
istics are, however, for the most part the same as
existed at common law.”

This language is quoted and adopted in the case of In re
Edmonds, D.C., 30 F.Supp. 934, supra, and the case of
In te Zumberis, supra. The same principle is recognized
in the case of Lewis v. Fidelity & Deposit Co., supra [292
U.S. 559, 54 S.Ct. 852], wherein the Supreme Court said
in passing upon another lien,

“Tt resembles also those cases where, under the
common law of distress or under a statutory lien,
described by the courts as ‘inchoate’ or ‘dormant,’
a landlord, within four months of bankruptcy,
seizing or levying upon whatever property was on
the tenant’s premises, was held to have a valid
lien” (citing Henderson v. Mayer, supra; Rich-
mond v. Bird, supra).

394 |

In Henderson v. Mayer, supra [225 U.S. 631, 32 S.Ct.
701], the Supreme Court in passing upon a statutory land-
lord’s lien stated: “in this respect it is the full equivalent
of a common-law distress—the lien of which is held not to
be discharged by § 67£” (citing In re West Side Paper Co.,
supra).

Sec. 67, sub. £ of the Bankruptcy Act has been amended
since the decision in the West Side Paper Co. case, but the
language of the present section is substantially the same.
In this connection it should also be noted that under the
provisions of Sec. 67 as now constituted (Sec. 107, Subdi-
vision c, Title 11 U.S.C.A.), liens created or recognized by
the laws of any state on personal property not accompanied
by possession of, or by levy upon or by sequestration or
distraint of such property, shall not be valid against the
Trustee. In this case the lien was accompanied by both
possession and distraint of the property.

HE The right of distress by actual seiztre of posses-
sion of the tenant’s property upon demised premises must
therefore be recognized; and it must further be held that
such right is not void nor divested by Sec. 67, sub. f of the
Bankruptcy Act. .

HI lt has also been held that a landiord’s levy by dis-
traint does not operate as a preference, as the effect of such
distraint did not enable the landlord to obtain a greater per-
centage of his debt than some other creditor of the same
class, there being only one landlord creditor. In re Belknap,
D.C, 129 F. 646; Richmond Standard Steel, Spike & Iron
Co. v. Allen, 4 Cir., 148 F. 657; In re Kentucky Book
Mfg. Co., supra.

The matter of priority in payment of debts under Sec.
64 of the Bankruptcy Act (Sec. 104, Title 11 U.S.C.A.)
is not here involved, as the question of such priority of

De 395

payment is distinguished from a valid lien of distress. In
re Goldstein, D.C., 34 F.Supp. 876; In re Jay & Dee Store,
D.C., 39 F.Supp. 588; In re Edmonds, supra.

Plaintiff having failed to establish a legal claim against
the defendant for recovery of the property involved or the
value thereof, judgment may be entered in favor of the
defendant, dismissing this action with prejudice. Upon
agreement of counsel for the defendant, no costs or at-
torney fees will be taxed against the plaintiff.

Earl G. ARONSON, Administrator of the Estate of Flora Ritta Mae
Aronson, Deceased, etc. Appellant, v. George A.
McDONALD, Appellee,

No. 15881.

248 F.2d 507

United States Court of Appeals, Ninth Circuit,
Oct. 15, 1957.

Le 397

Maurice T. Johnson, Fairbanks, Alaska, for appellants.
Collins & Clasby, Charles J. Clasby, Fairbanks, Alaska,
for appellee.

Before LEMMON, FEE and BARNES, Circuit Judges.

LEMMON, Circuit Judge.

This is an appeal from a judgment in favor of ap-
pellee, defendant below, in an action brought under the
Alaska wrongful death statute * by appellant Earl G. Aron-
son, as administrator of the Estate of Flora Ritta Mae
Aronson, deceased, for the benefit of the surviving husband,
Earl G, Aronson, and children of the decedent: Earlene A.
Roberts, Betty C. Howard, and Earl G. Aronson, Jr. The
case was tried to the judge who found appellant’s intestate
guilty of contributory negligence and held that she had as-
sumed the risk of the defective automobile in which she was
riding at the time of the fatal accident. From the judg-
ment entered in favor of defendant, this appeal is prose-
cuted. Several points are urged for reversal. The only
one which deserves serious consideration is the attack upon
that part of the judgment which awards a personal judg-
ment against Earl G. Aronson, as an individual and not
in his capacity as administrator.

An extended statement of the facts is not needed. Suffice
it to recount that appellant’s intestate was riding as a pas-
senger, with other persons, in an automobile owned by
appellee, and driven by his wife, Naomi McDonald,. on
Richardson Highway in Alaska between Copper Center
and Valdez; that the hydraulic brake line was broken dur-
ing the trip and all the fluid was lost, leaving the automobile
without adequate foot brakes. All of the parties in
the automobile were acquainted with the faulty condition

1Sec. 61-7-8, A.C.L.A.1949, as amended by Chapter 89, 8.L.A.1949,
as amended by Chapter 158, $.L.4,1955. :

398 Le

of the brakes and were aware of the fact that fog rendered
visibility very low. The danger of proceeding was dis-
cussed by the parties in the automobile, two of the passen-
gers expressing the desire that the brakes be repaired before
proceeding. With knowledge of the condition they all
finally elected to continue on the journey to Valdez. In
order to do so it was necessary to cross Thompson Pass
and descend a long grade. Traversing the grade without
brakes, the car gained momentum which could not be stop-
ped by the driver. The car left the highway, turning over
several times, killing two of the passengers, including appel-
lant’s intestate, and injuring two of the others.

The court found Mrs. McDonald to have been negligent
in operating the vehicle without adequate brakes and that
her negligence was one of the proximate causes of the ac-
cident. The contributory negligence of appellant’s intestate
was found in her continuing to ride in the vehicle without
remonstrance or objection and with knowledge of the de-
fective brakes; she assumed the risk of proceeding in the
face of the danger and peril inherent in the operation of
the vehicle under the conditions existing and the negligence
on her part was one of the proximate causes of her fatal
injuries.

Hl Although appellant asserts otherwise, these findings
find ample support in the record. After discovering the
brake failure and before descending the grade, one of the
passengers asked that they stop and hold a prayer meeting.
This was done. Following the prayer meeting, and, appar-
ently all being satisfied that their prayers would be answered
and see them safely through the dangerous descent, they
proceeded without objection from anyone. As the car
gathered speed, the driver sought to slacken the speed by
using the hand brake. That brake soon began to smell and
the car gained momentum, the hand brake having become

| 399

completely ineffective through the burning of the brake
lining. The driver attempted to bring the car into a lower
gear. The automobile was equipped with a semi-automatic
transmission. In so attempting she put the transmission
into neutral.

Complaint is made that the court refused, at the time of
trial, appellant’s motion to increase the ad damnum clause
in his complaint. The above findings render this ruling
moot and the propriety of it need not detain us.

Additionally, by consent of counsel ruling upon the mo-
tion was by the court’s announcement continued until de-
termination of liability; the question of liability being, by
consent of all counsel, first tried, the court stating, “if lia-
bility is established, then of course the ruling (upon the re-
quest to increase the damages prayed for) would be very
germane”.

HI Prejudicial error is claimed as the result of the
court’s refusal to admit in evidence a topographic map of
the area where the accident occurred. The person who pre-
pared the map was not produced as a witness, but appellant
asserts that it was admissible upon proof that it correctly
represented the scene.

This is true as an abstract proposition. However, in
this instance, there were written on the map lines and figures
apparently indicating various degrees of grade of the high-
way which the evidence disclosed were placed thereon by a
party who was not produced as a witness. Appellee’s ob-
jection upon the ground of hearsay was properly sustained.

Hl Finally, we come to the one plausible contention ad~
vanced by appellant. It relates to the propriety of the per-
sonal judgment for costs and disbursements against the
administrator. Appellant brought the action in his rep-
resentative capacity as administrator. The children are

400 a

mentioned only as persons who were damaged as a result
of the alleged wrongful death and are not individually or
collectively parties to the suit, except as beneficiaries.

The pertinent statute provides, “The personal repre-
sentatives * * * may maintain an action * * * for
an injury done * * * and the amount recovered, if
any, shall be exclusively for the benefit of the decedent’s
husband or wife and children * * *”?

It is evident that the action authorized by the law and
here involved is for the benefit of the surviving hushand and
children. The administrator brought it under the authority
of the statute for the exclusive benefit of those persons.

Sec, 55-11-65, A.C.L.A.1949, provides as follows:

“Tn an action prosecuted or defended by an ex-

ecutor, administrator, trustee of an express trust,

or a person expressly authorized by statute to

prosecute or defend therein, costs shall be recov-

ered as in ordinary cases, but such costs shall only

be chargeable upon or collected off the estate,

fund, or party represented, unless the court or

judge thereof shall order the same to be recovered

off the plaintiff or defendant personally for mis-

management or bad faith in such action or the

defense thereto.”

The statute authorizes costs against all these parties, in-
cluding Earl G. Aronson as one of the parties represented.
This action is brought by an administrator, a person ex-
pressly authorized by statute to prosecute it. Costs are
chargeable to the estate or party represented (the surviv-
ing husband and children) unless the court orders the
costs charged against the administrator “for mismanage-
ment or bad faith in such action”, There is no finding of

2Ch. 89, 8.1.4-1949.

Le 401

mismanagement or bad faith; and, indeed, appellee ex-
pressly disclaimed any such contention.

The appellant objects that the wrongful death statute,
Sec. 61-7-3, A.C.L.A.1949, as amended, does not “dis-
close any right to assess costs against the personal repre-
sentative of the deceased.” But since no such assessment
was made in this case against the administrator qua admin-
istrator, the question is moot.

It follows that the judgment is likewise correct in so
far as taxation for costs against these parties is decreed.
The judgment is affirmed.

249 F.2d 73

‘Woodrow W. REYNOLDS, on Behalf of Himself and All Other
Taxpayers Similarly Situated, Appellant, v. Hugh WADE,
as Treasurer of the Territory of Alaska, John McKinney, as
Director of Finance of the Territory of Alaska, Don M.
Dafoe as Commissioner of Education of Alaska and A, H.
Ziegler, William Whitehead, Mrs. James March, Mrs. Myra
Rank and Robert F. Baldwin as Members of the Board of
Education of the Territory of Alaska, Appellees.

No. 15135.

United States Court of Appeals, Ninth Circuit.
Oct, 21, 1957.

402 be

—_+—_
Howard D. Stabler, Juneau, Alaska, Henry C. Clausen,
Richard G. Burns, San Francisco, Cal., for appellant.
J. Gerald Williams, Atty. Gen., Edward A. Merdes,
Henry J. Camarot, Deputy Attys. Gen., for appellees.
Before ORR, LEMMON and FEE, Circuit Judges.
ORR, Circuit Judge.

The District Court of Alaska dismissed an action brought
by appellant, a taxpayer, on behalf of himself and others

be 403

similarly situated, to restrain certain officials of the Terri-
tory of Alaska from making alleged unlawful expenditures
of territorial funds, and from administering a territorial
statute concerned with publicly furnished transportation to
non-public schools.

Tt seems to be agreed that in the event the appellant has
capacity to sue, under Alaska law, the allegations of his
complaint are sufficient to require that he be permitted to
proceed with his action.t

1The complaint alleges the following:

“1, This action is in equity to restrain an unlawful and unconsti-
tutional expenditure of public funds and arising also under the First,
Fifth, and Fourteenth Amendments to the United States Constitution
and Sections 1981, 1982, and 1988 of Title 42 of the United States
Code, to redress the deprivations under color of territorial law, of a
right secured by the Constitution of the United States and made ap-
plicable to the Territory of Alaska by Section 23 of Title 48 of the
United States Code, all of which more fully appears hereinafter.
‘The taxpayer plaintiff of the Territory of Alaska sues to restrain cer-
tain territorial officials from disposing of funds appropriated by the
Territorial Legislature for the transportation of children to pa-
vochial and church schools, * * *

“2, At all times mentioned herein, plaintiff has been and is the
owner of real and personal property located in the Juneau-Douglas
Independent School District and in the Territory of Alaska, and a
citizen and resident and taxpayer thereof; and assessed for and
liable to pay taxes to the Territory of Alaska as provided by law;
and within one year before the commencement of this action has
paid a Territorial Income Tax, a resident fisherman’s license tax,
and automobile license tax, a $7.50 school tax and a hunting license
tax to said territory.

“3, [The citizen, resident taxpayers of said Territory number
many thousands. Plaintiff and all of said persons are in the same
class and are affected by all the matters and@ things mentioned here-
inafter and are subject to like injury and damage as the injuries
complained of in plaintiff's complaint.] There are common questions
of law and of fact affecting their rights and a common relief is
sought. These persons united in interest with plaintiff are too nu-
merous to make it practical to bring them before the Court, and
plaintiff, therefore, brings this action on his own behalf as such
owner, resident, citizen and taxpayer, and also in behalf of each and

404 be

The right of a taxpayer to bring an action to enjoin offi-
cials from proceeding in an unlawful manner is recognized
in an overwhelming number of states and two territories.”
Appellees take the position that we are not at liberty, in this
circuit, to travel the road charted by the numerous state de-
cisions on the subject, because of a road block thrown up
in the case of Sheldon v. Griffin, 9 Cir., 1949, 174 F.2d 382,
383. This contention was sustained by the trial court. To
the contrary we conclude that Sheldon v. Griffin does not
present such an obstacle because of a different factual sit-
uation existing in the instant case.

In the Griffin case the plaintiff, alleging that he was a
citizen and taxpayer of Alaska, sought to have an amend-
ment to the Unemployment Compensation Code of Alaska
declared invalid for asserted irregularities in the course of
the measure’s passage. The amendment provided for a

all the said citizens and residents and taxpayers of said school dis-
trict and Territory.”

‘The statute challenged is entitled, “An Act to promote the public
health, safety, and welfare by providing transportation for children
attending schools in compliance with compulsory education laws”.
[Laws 1955, c. 39.] Briefly, the Act provided publicly furnished trans-
portation to non-public schools where the distance is comparable with
the distances over which children attending public schools are pub-
licly transported. The statute is to be financed by funds appropriat-
ed for that purpose by the Territorial Legislature.

The complaint further alleged that the Territorial Legislature,
Laws 1955, Ist Ex.Sess. page 59, at page 68, enacted a general ap-
propriation bill stipulating monies from the Territory’s general funds,
derived from Territory taxation, part of which was allocated for
transportation to non-public schools under the above described stat-
ute.

‘The complaint prayed that the transportation measure, as well as
the portion of the 1955 territorial appropriation for its administra-
tion, be declared null and void. Appropriate injunctive relief was
also requested,

2 See 52 Am.Jur., Taxpayers’ Actions, § 6 (1944); 11 Am.Jur., Const.
Law, § 116 (1987); 1929, 58 A.L.R. 588; and cases cited therein.

[| 405

merit system of credits upon employers’ contributions for
unemployment compensation, and also reduced the waiting
period for unemployment benefits. This court held that
the complaint presented no justiciable controversy, because:

“ok ok The amendment under attack adds

nothing to the burden of the taxpayers of Alaska.
The unemployment compensation fund adminis-
tered by the Commission is made up of contribu-
tions exacted from employers in accordance with
regulations prescribed by the Commission, plus
fines and penalties collected pursuant to the provi-
sions of the Act. Alaska Compiled Laws 1949,
§ 51-5-5. There is nothing in the pleading or
proof to indicate that the plaintiff has a particu-
lar right of his own to which injury is threatened,
or any interest distinguishable from that of the
general public in the administration of the law.
To entitle himself to be heard he is obliged to dem-
onstrate not only that the statute he attacks is void
but that he suffers or is in imminent danger of
sustaining some direct injury as the result of its
enforcement, and not merely that he suffers in
some remote or indefinite way in common with
the generality of people. Frothingham v. Mellon,
262 U.S. 447, 488, 43 S.Ct. 597, 67 L.Ed. 1078.
* * *” (Italics supplied.)

It will be noted that this court in reaching its decision re-
lied in part on the doctrine expounded in the case of Com-
monwealth of Massachusetts (Frothingham) v. Mellon,
1932, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078. We
think the reliance was proper, inasmuch as there was no
relation between the plaintiff as a taxpayer and the effect
of the amendment to the Unemployment Compensation
Code. There, the plaintiff failed to show special injury re-

406 De

sulting to him from the operation of the new measure. His
attempt to set out some indefinite relationship in common
with people generally was not enough.

Since the creation of a merit system for contributions to
the unemployment compensation fund, and the reduction of
the waiting period for unemployment benefits did not add
to the taxpayer’s burden, a mere citizenship and taxpaying
status, without more, did not justify a challenge by the
citizen taxpayer.

The instant case is readily distinguishable in that the
statute in question puts a burden upon the Territorial tax-
payer. The administration of the transportation to non-
public schools is financed through the General Fund, into
which the general tax revenues of Alaska citizens and resi-
dents flow. Here, the plaintiff and those similarly situated
as taxpayers do suffer injury when there is an unlawful
expenditure of public funds,

The question of whether an Alaskan taxpayer, suing in
his private capacity, has standing to challenge the validity
of a statute enacted by the Alaskan Territorial Legislature,
and enjoin funds appropriated for its administration, is
one of first impression in this circuit.

The great majority of states allow a taxpayer to sue to
enjoin state officials from alleged unlawful expenditure of
tax-derived state funds.* The principle that the taxpayers
are the equitable owners of public funds is often stated to
support the majority rule. Also, the decisions allowing
taxpayers’ suits against municipalities and counties are
often employed as authority to sustain taxpayers’ actions
against states,

The decisions denying this type of suit distinguished be-
tween a taxpayer’s suit against a municipality, where the

3 See note 2 supra.

Le 407

action is considered analogous to a stockholder’s action
against a private corporation, and a suit against a state,
where the sovereign of the state is in question.*

HI The law is settled that a Federal taxpayer cannot
sue to enjoin alleged unlawful expenditure of funds from
the Federal treasury in the absence of a showing of a direct
special injury. Commonwealth of Massachusetts (Froth-
ingham) v. Mellon, 1923, 262 U.S. 447, 43 S.Ct. 597, 67
L.Ed. 1078. There, an original action in the Supreme
Court by Massachusetts against the Secretary of the Treas-
ury, challenging the constitutionality of a Congressional
statute, was decided together with a similar action by a
Federal taxpayer. The Supreme Court restated its rule
allowing taxpayers’ suits against municipalities, approving
the reasoning employed, but held that the relation of a
taxpayer of the United States to the Federal Government
was so minute and indeterminable that no basis was af-
forded for equitable relief.

The Supreme Court announced the doctrine that “The
party who invokes the power must be able to show not only
that the statute is invalid, but that he has sustained or is
immediately in danger of sustaining some direct injury as
the result of its enforcement, and not merely that he suffers
in some indefinite way in common with people generally.”
262 U.S. at page 488, 43 S.Ct. at page 601.

The principle announced in Commonwealth of Massachu-
setts (Frothingham) v. Mellon has no application to the
instant case; here, a justiciable controversy is present. The
basis of the Mellon doctrine lies in the infinitesimal relation-
ship between the Federal taxpayer and the Federal treas-
ury. When we compare the interest of a Federal taxpayer,
who is one of over one hundred and sixty million, with the

4See Annotations of authorities listed in note 2 supra.

408 Es

interest of an Alaskan taxpayer with a population of less
than 130,000, the distinction, though one of degree, is ob-
vious. The rationale of the cases allowing taxpayers’ ac-
tions against municipalities is clearly applicable in the Alas-
kan situation.

In Buscaglia v. District Court of San Juan, 1 Cir., 1944,
145 F.2d 274, 284, the Court of Appeals allowed:a tax-
payer’s action against Puerto Rico officials administering
an alleged invalid law. There, the court distinguished
Mellon by comparing the infinitesimal relationship of the
Federal taxpayer with the Federal treasury, and the much
closer relationship of the Puerto Rican taxpayer with his
government. The court there stated:

“* %* & The language of the court in Com-
monwealth of Massachusetts v. Mellon was di-
tected to a case involving the relation of an indi-
vidual taxpayer to the Federal Government. The
interest of such an individual, as affected by an al-
leged illegal expenditure of federal funds, was
regarded as so minute, indeterminable, and re-
mote, as not to present any substantial case or con-
troversy in the constitutional sense between the
plaintiff and the Secretary of the Treasury. But
the relation of a taxpayer to the government of
Puerto Rico is, as a matter of degree, not so atten-
uated; and despite any purely logical arguments

- which might be made from some of the language
in Commonwealth of Massachusetts v. Mellon, we
have no doubt that it is within the competence of
the territorial government, either by legislative act
or judicial decision, to authorize a taxpayer’s bill
in equity in a case like the present without trench-
ing upon the doctrine of separation of powers im-
plicitly in the Organic Act. * * *”

De 409

HI The sparse Alaskan population indicates even a
much greater.pecuniary interest of the Alaskan taxpayer
than his Puerto Rican counterpart.

Employing much the same reasoning, the courts of
Hawaii have held that a taxpayer may sue to enjoin the
administration of an unconstitutional statute. Castle v.
Kapena, 1883, 5 Haw. 27; Lucas v. American Hawaiian
E. &C. Co., 1904, 16 Haw. 80; Castle v. (Atkinson) Secre-
tary of Hawaii, 1905, 16 Haw. 769.

In Valentine v. Robertson, 9 Cir., 1924, 300 F. 521,
this court held that an Alaskan taxpayer could invoke the
aid of a court of equity to restrain an unlawful expenditure
of the City of Juneau.

We conclude that an Alaskan taxpayer should be allowed
to challenge alleged misapplication of funds, either munici-
pal or Territorial, in order that the taxpaying public may
have recourse to a prompt remedy to prevent irremediable
public injury.

The judgment of the trial court dismissing the complaint
and awarding attorney’s fees to appellees (defendants) is
reversed.

410 Le

156 F.Supp. 111

Jack Paul BROWN, Libelant, v. Dean KAYLER, Chris Dahl
and John Doe, d/b/a Kayler-Dahl Fish Company,
Respondents,

No. 8778-KA.

District Court, Alaska, First Division, Ketchikan.
Nov. 6, 1957.

—._—_

A. H. Ziegler, of Ziegler, Ziegler & Cloudy, Ketchikan,
Alaska, for libelant.

R. E. Robertson, of Robertson, Monagle & Eastaugh, by
F, O. Eastaugh, Juneau, Alaska, for respondents.

KELLY, District Judge.

This matter came on before the court for argument upon.
exceptions to the amended libel filed herein, which excep-
tions allege as follows:

(1) That the libelant claimed injuries were suffered on
September 27, 1954, more than two years prior to the filing
on November 29, 1956, of the libel, and to the issuance on
November 29, 1956, of the monition herein which pleadings
disclose the staleness of libelant’s demand and his guilt of
laches for the reason that Sec. 55-2-7, A.C.L.A.1949, pro-
vides that an action for any injury to the person or to the
rights of another not arising from contract shall be brought
within two years from the date of suffering such injury.

(2) That the averred facts in the amended libel are in-

sufficient to constitute a catse of action and do not show
that libelant was either a seaman, a shipper, or a passenger

412 a

or that any action arises by the alleged unseaworthiness of
the barge Homer, or that libelant has any claim or right of
action because of such alleged unseaworthiness, or that a
good, safe and proper means of reaching the pilothouse of
said vessel was not furnished libelant, or that the means fur-
nished was not in accordance with the usual construction of
such vessels, or that libelam was not previously informed
and knew the construction of said vessel and the means by
which to reach the pilothouse thereof, or that any alleged
negligence of the respondents was the proximate cause of
libelant’s alleged injuries.

(3) That the facts averred in the amended libel do not
constitute a cause of action within the admiralty and mari-
time jurisdiction of this court.

(4) That the excuse of laches, as set forth in paragraphs
VII, VIU, IX, X, and XI, of the amended libel, does not
constitute a valid ground to excuse libelant’s failure to file
his libel within two years after the cause of action arose.

It appears from the pleadings and the undisputed state-
ments of counsel, that the sequence of events is substantially
as follows:

(1) That at about 8:00 p. m. on September 27, 1954, at
Excursion Inlet, Alaska, in the North Pacific Ocean, where
respondents maintained their vessel Homer, libelant landed
his vessel, the Rebecca, alongside the Homer, in navigable
waters, and that said libelant had aboard his vessel a catch of
salmon which he sold to the respondents and delivered
aboard the Homer and was then directed by respondents to
board the Homer in order to receive payment for the fish.

(2) That the libelant proceeded over the top deck of the
Homer from the bow to the pilothouse, at or near the stern
of the Homer, and that at a distance of about 8 feet from the
said pilothouse the deck became uneven and that upon reach-
ing this point of change in the level of the deck, libelant fell,

a 413

striking his head against the pilothouse or other structure,
sustaining injuries which resulted in his total disability.

It is admitted on the part of libelant that the libel was not
filed within two years from the date of said accident but
that same was filed on November 29, 1956, over two months
after the statute of limitations had expired on September 27,
1956, ,

Libelant contends that the delay in filing the action was
excusable for the following reasons:

(1) Asa result of said accident, libelant had not recover-
ed from the injury sustained before the expiration of the
two-year period fixed by the Alaska statute and has not now
recovered from the same.

(2) That libelant wished to delay commencement of the
suit as long as possible in order to determine as well as he
could the extent of his injuries.

(3) That libelant filed suit under the Alaska statute for
damages before the expiration of the two-year period but _
that suit was filed against Kayler-Dahl Fish Company, Inc.,
a corporation; that libelant believed and had reported to his
counsel that the barge Homer was operated by and under the
control of said corporation at the time he was injured there-
on.

(4) That libelant is an Indian and unfamiliar with legal
matters and had no knowledge of whether this was a trade
name, a company, or a corporation, but believed and report-
ed to his counsel that it was a corporation.

(5) That after suit was filed as aforesaid against Kayler-
Dahl Fish Company, a corporation, said action was dismiss-
ed for the reason that the Kayler-Dahl Fish Company cor-
poration had been dissolved prior to the time of the acci-
dent.

(6) That said motion to dismiss was not filed until the
two-year period had expired and libelant was precluded

414 a

from refiling his suit under the Alaska statute within the
two-year period.

(7) That the respondents are believed to be the owners
of all the assets of said dissolved corporation, which were
transferred to the respondents as individuals upon dissolu-
tion.

(8) That the respondents as individuals are not preju-
diced by the delay.

(9) That this is a suit in personam and the rights of lien
creditors and others cannot be prejudiced thereby.

(10) That if the doctrine of laches be applied herein,
libelant will be deprived of his day in court and will sustain
incalculable loss and damage.

Respondent points out that the common-law suit against
the nonexistent corporation was filed a mere nine days be-
fore the expiration of the two-year period for filing as per-
mitted by the statute.

Counsel for libelant and respondents both presented able
arguments in open court and carefully prepared briefs in
connection therewith, and it appears to this Court that the
issue is narrowed down herein to the following questions:

(1) Whether or not the allegations in the amended libel
as set forth in paragraphs III and IV thereof, are sufficient
to allege a cause of action based upon negligence and unsea-
worthiness of the vessel.

(2) Whether or not the delay in bringing this action over
two months after the expiration of the statute of limitations
bars the maintenance of said action.

(3) Whether or not the excuse and reasons for the de-
lay as set forth in the pleadings are sufficient, if sustained,
to excuse the laches and permit the bringing of a tardy ac-
tion,

Es 415

While it appears to this Court that there is considerable
merit to the respondents’ contention that

(1) the libel does not sufficiently allege facts showing the
alleged negligence relied upon, and

(2) the libel does not properly or sufficiently allege any
duty owed libelant, any failure to perform such duty, or any
injuries resulting therefrom.

Ido not feel a finding on these points is necessary in view
of the determination made hereinafter upon the question
presented alleging failure to bring the action herein timely,
that is, within the period after the cause of action arose,
as required by Sec. 55-2-7, A.C.L.A.1949.

T hold that this case is one barred by the statute and that
the excuses presented for the laches of libelant in failure to
bring the action within the 2-year period are insufficient
reasons in law or equity.

It is pointed out in libelant’s brief that the powers of a
court of admiralty are so broad and the considerations which
impel its actions so extensive that it has been called, as dis-
tinguished from a court of law or a court of equity, a court
of justice.

It should here be pointed out that Justice wields a two-
edged sword; the rights of both parties to an issue must
be examined. The basic reasons for a statute of limitation
are to encourage prompitness in the prosecution of remedies
and to discourage delay. It is just as necessary to protect
one against whom a claim might be asserted as it is to guard
the rights of a claimant, but the statute of limitation is aimed
to protect one against whom a claim might be asserted from
penalties resulting from the passage of time, when witnesses
had died, scattered, or disappeared, evidence has vanished or
been misplaced, lost, or destroyed, facts have been obscured.
by defect of memory and lapse of time, as well as from the
element of surprise.

416 —

Where statutes of limitation are passed they point out to
those who would use the court that the courts are open to
claimants for the period permitted under the statute and not
thereafter, and it is only in the case of the gravest injustice,
under most exceptional circumstances, where no fault inures
to the claimant, and then only in the exercise of sound judg-
ment where real equitable considerations exist, that the
court is permitted to exercise discretion in waiving the
laches complained of. Westfall Larson & Co. v. Allman-
Hubble Tugboat Co., 9 Cir., 73 F.2d 200,

None of the exctises or reasons for delay are sufficient to
overcome the presumption of prejudice to respondent.

None of these reasons present a condition which proper
diligence could not have avoided.

The common-law action is barred and it would be incon-
sistent to allow libelant to sue in admiralty with the same ef-
fect as at common law thereafter under these circumstances.
McGrath v. Panama R. Co., 5 Cir., 298 F. 303; Marshall
vy. International Mercantile Marine Co., 2 Cir., 39 F.2d 551.

The exceptions of respondents are allowed, and the libel-
ant is allowed thirty days from November 7th, 1957, in
which to file an Amended Libel, and upon his failure so to
do, the suit and complaint will be dismissed with prejudice.

Le 417

156 F.Supp. 107

UNITED STATES of America, Plaintiff, v. Thomas
FELLER, Defendant.

No, 1726-KB.

District Court, Alaska. First Division, Ketchikan.
Nov. 15, 1957.

Roger G. Connor, U. S. Atty., Juneau, Alaska, and
C. Donald O’Connor, Asst. U. S. Atty., Ketchikan, Alaska,
for plaintiff.

E. E. Bailey, of Stump & Bailey, Ketchikan, Alaska, for
defendant.

KELLY, District Judge.

This matter comes before this court on an appeal from
the United States Commissioner’s Court in Ketchikan from
the revocation of a portion of a sentence which had been
suspended by said Commissioner, who imposed certain con-
ditions to be observed by the probationer, which said Com-
missioner found to have been violated. The pertinent facts
leading up to this situation are substantially as follows:

On or about August 27, 1956, the defendant Thomas
Feller and his crew on the seine boat Evelyn Raye were
fishing commercially for salmon near Emerald Bay in Ern-
est Sound, Southeastern Alaska, in an area then closed to
commercial fishing. As a result of this violation, Feller
and his crew were apprehended and on October 3, 1956, Fel-
ler pleaded guilty and was fined $1,200, and a jail sentence
of four (4) months was imposed and suspended upon the

420 De

condition, among others, that he violate no Federal or Ter-
ritorial laws or any municipal ordinances. The severity
of the sentence was occasioned by the fact that Feller had
been convicted earlier in the same season for another fisher-
ies violation and had been three times convicted of fishing
violations in his lifetime.

On November 15, 1956, the defendant Feller was ar-
rested for hunting and killing deer with the aid of artificial
light. As a result of this charge, an attempt was made in
the month of December, 1956, to try the case at Wrangell.
However, weather conditions prevented the government at-
torney from arriving at Wrangell and accordingly the case
was postponed.

Due to the pressure of work in the United States Attor-
ney’s office, another trial date could not be arranged until
January 16, 1957, when there was a trial in Wrangell in
which the jury was unable to reach a verdict.

Procedural delays, the expense to the government of ad-
ditional trials at Wrangell, and the beliefs that suspended
sentences would become ineffectual unless acted upon
promptly and soon after the alleged violation, and that
justice would be best served thereby, led to a petition being
filed for the revocation of the sentence previously suspend-
ed by the United States Commissioner in Ketchikan in
October, 1956.

A hearing for revocation was held in Ketchikan on the
26th day of July, 1957, and the hearing resulted in a find-
ing by the Commissioner that Feller had violated the terms
of his probationary sentence. The Commissioner imposed
two months of the previously suspended sentence to be
served, and the defendant has appealed.

It should be noted that the original sentence was imposed
on October 3, 1956. On November 15, 1956, the defend-
ant was arrested and charged with hunting and killing deer

a 421

with the aid of artificial light. Trial was held on this charge
on January 16, 1957, and the jury disagreed. Other pro-
ceedings taken in the case, involving a number of matters
which are not pertinent here, caused further delay, and the
hearing for the revocation of the suspended sentence was
held before the Commissioner who had passed the sentence
on the 26th day of July 1957, and at that hearing the
Commissioner revoked two months of the suspended sen-
tence and ordered that they be served. Verbal notice of ap-
peal was given immediately on said 26th day of July, 1957,
and on the 22nd day of August, 1957, transcript of appeal
was filed in the District Court at Ketchikan. The fall
term of this court in Ketchikan began on October 14, 1957;
the one year from the time the original sentence was im-
posed by the United States Commissioner expired on Octo-
ber 3, 1957.

This Court heard testimony and every opportunity was
provided for the appellant to produce all evidence he de-
sired. The government witnesses testified fully regarding
the facts surrounding the alleged violation. This Court
held a trial “de novo” covering the matter appealed to this
court from the Commissioner’s decision.

HI This Court finds that the facts reveal that the de-
fendant Feller violated the terms of his probation by hunt-
ing deer in violation of the laws and regulations as charged
by the Federal officials.

Although the defendant Thomas Feller was not on trial
before the District Court on the charge of illegally shoot-
ing deer, testimony was introduced which amply indicated
to this Court that the said defendant was engaged in kill-
ing deer illegally as charged. While a jury might reach a
different verdict in case of trial, nonetheless the Court which
originally imposed the sentence at the revocation hearing,
was amply justified in finding that conditions of probation

422 be

had been violated and this Court on the appeal trial de
novo, also determines from the evidence introduced that
ample grounds exist to find that the defendant Thomas
Feller violated the law.

HI Determination having been made that the condi-
tions of the probation were violated, the question then pre-
sented is whether or not this court has any jurisdiction
herein. The appellant herein raises the question of law in
this connection on the theory that unless the government
brings the defendant into this court and his suspended sen-
tence is revoked prior to the passing of one year after the
imposition of the suspended sentence, that this court does
not have the power to sentence the defendant herein. Coun-
sel contends that even though the Commissioner, who orig-
inally imposed the suspended sentence of four months, held
a hearing for the violation of the probation and such hear-
ing was held within the one year time and that within the
one year time the Commissioner, in whose court sentence
was originally passed, revoked 60 days of the four months’
sentence, that nevertheless, because by taking an appeal
from the Commissioner’s Court to the United States Dis-
trict Court under the provisions of Sec. 68-9-10, A.C.L.A.
1949, the case being a trial de novo in said District Court,
that unless the hearing on the appeal be held within the
one year period the District Court is without jurisdiction.

In other words, the probationer claims that because the
one year probationary period has expired since the Commis-
sioner’s imposition of the previously suspended sentence
and before the District Court hearing de novo, that the
District Court has no power to affirm the revocation im-
posed by the Commissioner. The applicable section of the
Alaska statutes, Sec. 66-16-31, A.C.L.A.1949, provides:

— 423

“%* %* + No suspension of sentence shall be
tevoked after the expiration of one year from the
date of such sentence * * *”

In none of the authorities cited do we have the exact
situation which we have here, namely, where the court
which had originally imposed the suspended sentence, held
a hearing and revoked the suspension within the time al-
lowed by law, and where thereafter the party against whom
the revocation was invoked took an appeal from the Com-
missioner’s Court, and the hearing on said appeal was held
after the expiration of the one year period.- Appellant con-
tends that the revocation, valid at the time it was made by
the court imposing the sentence, is now of no force and
effect and that the culprit may, by his own act in taking an
appeal, evade serving the revoked portion of his sentence.

Counsel for probationer contends that while an appeal in
this nature would not ordinarily operate in this fashion,
because the Alaska statute provides that on such an appeal
a trial “de novo” must be held, that this in effect makes it
an original action of the District Court; therefore the stat-
ute has operated in that the one year from the date the
original sentence was imposed has expired and this court
is now powerless to take any action herein.

Hi Trial “de novo” as used in the statute, means the
trying anew of an issue that has been previously tried, but
the trial thereof is not limited to the record of the lower
court as in the case of appeals where no trial de novo is
authorized, but a complete new trial shall be held.

HI The legislature obviously intended the provisions
of the statute (Sec. 68-9-10, A.C.L.A.1949) to permit a
litigant in a civil action before a Justice of the Peace where
no record is required, to appeal from a decision with which
he believes himself aggrieved and obtain a full and complete

424 |

new trial before the District Court. Appeal is a remedy to
aid in the accomplishment of justice, not a method to assist
in the evasion of justice. It would be preposterous to sup-
pose the legislature intended it to be used by an appellant
from a proceeding held properly under Sec. 66-16-31 to
evade a penalty properly imposed, by the simple procedure
of appeal.

HEME We are confronted with a further question here-
in. Where the grounds for the revocation of the sentence
is based upon the violation of conditions of the probation
which amount in themselves, to a crime, is it necessary be-
fore a hearing on the revocation of the suspended sentence
may be held that the probationer must be tried and convicted
of the crime alleged? Summary hearings upon the revo-
cation of a suspended sentence have been upheld. What is
required in such hearings is the exercise of conscientious
judgment, and not arbitrary action; that the discretion of
the Court has not been abused; and that the facts revealed
at the hearing satisfy the Court that the modification or
revocation of the sentence, or a part thereof, will serve the
ends of justice. Burns v. United States, 287 U.S. 216, 53
S.Ct. 154, 77 L.Ed. 266; Bernal-Zazueta v. United States,
9 Cir., 225 F.2d 64, 65-68.

HBBE The trial judge who imposed the sentence has
certainly broad discretionary powers to revoke probation,
and the probationer may not complain if he has been given
ample opportunity to appear before the Court imposing the
sentence, and he has been permitted to combat the accusa-
tion or charges against him and there has been no abuse of
discretion on the part of the Court. Escoe v. Zerbst, 295
USS. 490, 55 S.Ct. 818, 79 L.Ed. 1566; Manning v. United
States, 5 Cir., 161 F.2d 827; Jianole v. United States, 8
Cir., 58 F.2d 115; United States ex rel. Campbell v. Bishop,
5 Cir., 47 F.2d 95.

ee 425

I find on review that the determination of the Commis-
sioner was proper and that the appellant is guilty of viola-
tion of the conditions of his probation. He will have twen-
ty days to appear before this Court for action upon this

finding.

255 F.2d 632

MATANUSKA VALLEY LINES, Inc., a corporation and General
Casualty Company of America, a corporation, Lewis BE.
Simpson, Louis Odsather, J, A. Columbus, H. N, Baker, Rus-

sell Swank and Norman G. Lange, Appellants, v. Dorothy
NEAL and Nathaniel Neal, Jr., Appellees,
MATANUSKA VALLEY LINES, Inc., a corporation, and General
Casualty Company of America, a corporation, Appellants,
v. Blanche THOMAS, Appellee.
MATANUSKA VALLEY LINES, Inc., a corporation, and General
Casualty Company of America, a corporation, Appellants,
v. Wordie FRAZIER and Prince Frazier, Appellees,
Nos, 15252-15254,

United States Court of Appeals, Ninth Circuit.
Dee. 28, 1957.

By
~

BI
x

—+—__

Martin, Shorts & Bever, Frank J. Conway, Seattle,
Wash., Hellenthal, Hellenthal & Cottis and Davis, Renfrew
& Hughes and David H. Thorsness, Anchorage, Alaska,
for appellants Matanuska Valley Lines and Gen. Cas, Co.
of America,

Davis, Renfrew & Hughes, David H. Thorsness, An-
chorage, Alaska, for appellants, Simpson, Odsather, Colum-
bus, Baker, Swand and Lange.

Wendell P. Kay, Herald E. Stringer, John R. Connolly,
Anchorage, Alaska, for appellees.

Before ORR, LEMMON and FEE, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

This litigation arose from a collision between a bus and
a truck on a road near Anchorage, Alaska, on November 20,
1951. Three separate actions were brought by women pas-
sengers, who had paid fares required by the bus, and the
husbands of two of them, against Lois Williams, the owner
and driver of the truck, and Matanuska Valley Lines, Inc.,
owner of the bus, each alleging personal injuries as a result
of negligence. Answers were filed by each defendant, and
in two of the cases the bus line cross-claimed against the
truck operator for damage to the bus. The cases were con-
solidated by court order. On trial, jury verdicts totaling
over $100,000.00 were returned against Matanuska and
Williams. Judgment in the consolidated cases consisted of
the following individual recoveries against both defendants:
Dorothy Neal, $75,000.00; Nathaniel Neal, Jr., $17,500.00 ;

ee 429

Wordie Frazier, $5,000.00; Prince Frazier, $3,500.00;
Blanche Thomas, $500.00; together with attorneys’ fees
of $1,845.00 and costs taxed at $276.70, This judgment
was entered on October 14, 1953, against both defendants.
No mention was made of the cross-claim by Matanuska
against Lois Williams, Matanuska filed motions that the
judgment so entered be revised or vacated for failure to
comply with Rule 54(b), Federal Rules of Civil Procedure,
28 U.S.C.A. Likewise, it filed objections to the proposed
judgment, motions to set aside the verdicts, for new trial
and to reduce the amounts of verdicts. These motions were
all denied. An appeal was taken to this Court by Matanuska
from the judgment and the order denying a new trial. This
Court dismissed the appeals because of the provisions
of Rule 54(b), Federal Rules of Civil Procedure This
question was raised by the court itself, since Matanuska
did not appeal from the order of the District Court re-
fusing to vacate the judgment.

Upon remand, Matanuska filed motions to set aside the
verdict or, in the alternative, for a new trial. These mo-
tions were denied. The District Court thereupon reentered
the exact judgment in words and figures which had been
previously entered October 14, 1953, except that the word
“Final” is added to the word “Judgment” in the heading
and the following paragraph is added:

“Tt is Ordered, Adjudged and Decreed that
there is no just reason for delay in the entry
of final judgment upon the verdicts returned by
the jury and received and filed on September
24, 1953, and it is expressly Ordered that such
final judgment be entered.”

1Matanuska Valley Lines, Inc. y. Neal, 9 Cir., 229 F.2d 136.

430 Le

“This entry is dated May 21, 1956. Thereupon, another mo-
tion for new trial was filed by Matanuska and denied. The
present appeals followed.

At the outset, the appeal from the judgment and the de-
nial of the motions for new trial will be considered. Most
of the emphasis has been laid upon the motions for new
trial. In this connection, it must be noted that such motions
were denied by two different judges of this District of
Alaska, Judge Folta, who tried the case with a jury, and
Judge McCarrey. The judges knew the terrain and the
local conditions and were able to decide whether or not the
verdicts should stand. Unless there were specific error at
the trial, then these determinations should be upheld.

Dorothy Neal, Blanche Thomas and Wordie Frazier each
had paid fare for transportation on the bus operated by a
common carrier. Each complaint charged that the collision
between the bus and the truck was “caused by the joint,
concurrent and contemporaneous gross recklessness and
negligence of the defendants.” Lois Williams, the truck
owner and operator, charged that Matanuska was solely
negligent. Matanuska charged that Lois Williams was
alone negligent.

The evidence shows that the truck and the bus were ap-
proaching each other from opposite directions. Each could
have seen the other at a considerable distance. There is
conflicting testimony as to how far each actually saw the
other. The collision took place on a curve. There is tes-
timony indicating that the view of each was obscured to a
certain extent by brush in approaching the curve where the
collision took place. Lois Williams was drunk and did not
exercise due care. Thus negligence of the truck owner was
established.

HE The question is whether there were evidence from
which a jury might draw a reasonable inference that the

ee 431

bus driver was jointly or concurrently negligent. In a colli-
sion of cars proceeding in opposite directions on a highway,
this question ordinarily must be submitted to the triers of
fact. If the road conditions are not ideal, the submission of
the question of negligence of each party to a collision is an
obvious necessity.

However, the duty of a carrier for hire in respect to pas-
sengers who have paid fares establishes an extremely high
degree of care upon its part.

Here the bus driver, who was a woman, did not have a
working speedometer. There is testimony that the bus
was in extremely bad condition otherwise. The bus driver,
Lois Olson, testified that she had known the condition of
the highway at this point for a long period of time, that
she drove the run with the bus regularly. While her testi-
mony is very contradictory and several other versions seem
to be negatived, she finally testified that she saw the ap-
proaching truck five hundred feet away and knew that it
was traveling at a high rate of speed. She knew the con-
dition of the curve upon which the collision occurred.
Testimony showed that this road at this point was a gravel
road, bumpy, full of chuck holes and in a rough condition on
the inside of the curve, upon which side the truck was pro-
ceeding. At this time, it was covered with a light snow and
was icy and slippery. The testimony is quite conflicting as
to speed of the bus, varying from ten miles an hour, which
was the final estimate of the driver, although a previous
statement by her was that she was going from fifteen to
twenty miles an hour. Other witnesses estimated the bus
to be traveling from thirty to thirty-five miles an hour.
There is testimony likewise that the bus and the truck were
traveling at the same rate of speed, and it is an established
fact that the truck was traveling at a high rate of speed.
Under these circumstances, the trial court was quite right

432 —

in ruling that the cause must be submitted to the jury in
order to determine whether or not the bus company was
concurrently or jointly negligent with the truck owner. A
new trial on this ground was properly denied.

HE It was also claimed as a ground for new trial that
erroneous instructions were given by the trial court. The
first related to the rates of speed permissible under the
circumstances. The instruction carefully outlined the vari-
ous conditions under which certain rates of speed were
permissible under Regulations of the Board of Road Com-
missioners, adopted in accordance with Alaska law. It
was stated in the instruction that under the same Regula-
tions the speed was to have been no greater than “reasonable
or prudent” under conditions existing at the time and place.
In view of the record, there is no question that such in-
structions were correct. There was testimony that con-
ditions existed under which each phase of the rule as given
might have applied. The question was left to the jury by
the instruction.

HEME  t is also argued that the trial court was in error
in refusing to allow to defendants more than three peremp-
tory challenges. A.C.L.A. §§ 55-7-41, 55-7-50 (1949).
The company complains that it was not allowed three per-
emptories, although the actions were consolidated and tried
before a single jury, pursuant to Rule 42(a), Federal Rules
of Civil Procedure. The ruling was correct. However,
the trial court offered to allow an additional challenge to
counsel for Matanuska, if good cause were shown to the
court therefor, but counsel demanded “an additional per-
emptory challenge as a matter of right.” The record does
not show that any prejudice resulted from the denial of an
additional challenge, which is a necessity in order to show
error in this type of case. Local 36 of International Fisher-
men & Allied Workers of America v. United States, 9 Cir.,

ee 433

177 F.2d 320, 342. Therefore, on the merits it is obvious
that there was no ground for the appeal.

HEME [n that part of the judgment which relates to the
action brought by Dorothy Neal and Nathaniel Neal, Jr.,
and which was formerly appealed as No. 14,529 and is now
on appeal as No. 15,252, there was an instruction given by
the trial court which related to the determination of the
amount of damages of Dorothy Neal but did not affect the
rights of any of the other appellees. Proper exception was
taken at the time to this instruction, and it formed part of
the basis for the argument for a new trial. The instruction
given read as follows:

“In making an award for permanent loss of
earning power, if any, the present worth of such
award must be determined. The present worth
of a sum of money payable in the future is such
a sum as would, if put at simple interest, at the
rate of return that a reasonable and prudent person
would expect in making investments, amount to
what the plaintiff, Dorothy Neal, could reasonably
expect to earn during her life. To illustrate: the
present worth of $10,000 payable 20 years from
today is determined by using the following for-
mula:

$10,000 $10,000
oa —$5555.55
I plus 20 times .04 18

assuming that 4% interest would be the rate of
return that a reasonable and prudent man would
expect to obtain in making investments. It is
for you to decide what that rate of return, or
interest, would be, considering all the circum-
stances, Similarly the present worth of $1000 to
[|

434 |

be paid over a period of 10 years, with an assumed ©
safe investment rate of 5% is calculated by
dividing $1000 by the sum of one plus the number
of years of life expectancy, times the investment
rate or: :

1000 1000 1000
_ — $666.66
I plus (10 times .05) 1 plus.05 1.5

“After you have determined what the plaintiff,
Dorothy Neal would earn during her life, you
should determine the present value thereof ac-
cording to the foregoing formula, and award her
that sum, if you find her entitled to recover for
loss of earning power.”

This Court disapproves of this instruction, both in form
and in content. It involved giving a formula in figures as
illustrative of the working of the rule said to be applicable.
In the form in which it was given, it was unintelligible when
it is considered that it was given to the jury by word of
mouth and as a part of a very long set of instructions on the
case as a whole. Even if it be conceded that the formula
was correctly announced, it is impossible for this Court to
say that it did not affect the amount of the recovery. It is
to be noted, however, that the question of liability is not
affected. It is true that the court in a prior instruction, in-
dicated other factors relating to damage. These are:

(1) Physical injuries, nature and extent;

(2) Physical pain;

(3) Mental pain;

(4) Future suffering and loss of health;

(5) Past and future loss of time and inability to work.
In view of the fact, however, that Dorothy Neal is entitled
to retain her judgment on the basis of the proven liability

ee 435

of Matanuska, and since it is obvious that she was entitled
to a considerable amount of damages which have already
been awarded, this Court is of the opinion that a new trial
should not be ordered and that the judgment should not be
reversed. This Court has no means of discovering, how-
ever, whether there was or was not any increase in the
damages allowed to plaintiff Dorothy Neal by the jury
beyond those to which she was entitled in view of the testi-
mony at the trial. We believe that the local trial judge is
in a position to review the record and take such other evi-
dence and testimony as he may choose and, if he find said
damages to be excessive, to require plaintiff Dorothy Neal
to file a remittitur to allow her to retain the award to an
adequate but not excessive amount, and, in the event she
will not file such a remittitur if given the opportunity to do
so by the trial court, then to grant a new trial. The judg-
ment in the other respects is affirmed. The judgment as it
pertains to Dorothy Neal is affirmed subject to the condi-
tions above announced,

HE Upon this appeal, questions new in every particular
have been raised by Matanuska, In the record on the pre-
vious appeals, although the motion in the trial court prior
to the first appeal to amend the entry of judgment to con-
form to the provisions of Rule 54(b) was printed, the or-
der of denial thereof by the trial court was not included.
And the later ruling was not assigned as error. Although
a supersedeas bond was printed in the record, no question
-was raised as to its validity. When the present appeals were
taken, Matanuska made motions that the trial court should
discharge the cost bonds and supersedeas bonds filed on the
previous appeal and for a further order exonerating the
sureties thereon. The trial court denied these motions. At
‘the time, appellees moved for judgment on the supersedeas
bonds against the sureties. This motion the trial court like-

436 be

wise denied, Matanuska appealed from the denial of its
motions and attempted to join at least some of the sureties
upon the bonds. We hold the rulings of the trial court were
correct.

In our opinion, reported as Matanuska Valley Lines v.
Neal, 9 Cir., 229 F.2d 136, 138, the direction to dismiss the
appeals was made upon the simple procedural ground of lack
of conformity to the Rule. It was there said:

“Nothing herein is intended to invade the prov-
ince of the district judge * * *.”

And again, in discussing whether a new trial would be man-
datory when the case was sent back, we said :

“The verdicts now stand with no judgment. A

transcript has been made. The case will belong
absolutely to the next trial judge who picks it up.
If he should desire to enter an appropriate judg-
ment, complying with Rule 54(b) and deny a new
trial, a single new appeal could be made herein and
this court has power to order the use of the previ-
ously printed record.”

In any event, upon the new appeals and record, it clearly
appears that the omission of the certificate was a mere cleri-
cal misprision, caused possibly by the belief of the former
judge that the judgment was a finality in that form. -We
hold that the trial court had power and jurisdiction to enter
the judgment on the verdicts. It was a finality except for a
clerical omission, which has now been cured. The fact that
this Court took jurisdiction of the former appeals and dis-
missed them did not destroy the judgment, since the District
Judge has now added the certificate.

The identical text and substance of the judgment, which
was previously entered, were brought into question in this
‘appeal. The District Judge simply added the formal lan-
-guage which was required by this Rule. There was no other

ee 437

change. Therefore, the points raised upon the merits which
have just been adjudicated against Matanuska were identical
upon all these appeals. The same record and briefs were
used in the presentation as on the previous appeal as to the
merits.

Neither the opinion nor the mandate placed the dismissal
upon grounds of lack of jurisdiction in the appellate court.
If the judgment could not have been a finality upon the rec-
ord, the dismissal might have been so founded. For even
the certificate of the trial judge could not make a judgment
final under 28 U.S.C.A. § 1291, if it were not so in fact.”

This Court did note the peculiar situation in the court be-
low. But, as of the present time, it is our policy to dismiss
all appeals which do not conform to Rule 54(b) on the pro-
cedural ground alone. The suggestion of appellees that the
trial court enter a nunc pro tunc order interferes with the
discretion of the trial judge.

If the first appeal had been taken from the refusal of the
former trial judge to make the entry conform to Rule 54(b)
and the record had disclosed that execution issued on the
judgment and a supersedeas bond had been posted, this
Court might have directed an amendment of the judgment
at the time.

The condition of a supersedeas bond, which Matanuska
asked to be discharged, reads as follows:

“The condition of this Bond is that if the Judg-
ment in full herein be satisfied, together with costs,
interest and damages for delay if for any reason
the appeal heretofore taken in this cause be dis-
missed; or if the Judgment be affirmed or modi-

2“The District Court cannot, in the exercise of its discretion [un-
der Rule 54(b)], treat as ‘final’ that which is not ‘final’ within the
meaning of § 1291.” Sears, Roebuck & Co. v. Mackey, 351 U.S. 427,
487, 76 S.Ct. 895, 900, 100 Ld. 1297.

438 Lee

fied and as affirmed or modified be satisfied in full
together with such costs, interest and damages as
the United States Court of Appeals for the Ninth
Circuit may adjudge and award then this Bond
shall be null and void; otherwise to remain in full
force and effect.”
The condition of the bond is that, if for any reason the ap-
peal heretofore taken be dismissed, Matanuska will satisfy
the judgment.

If the face of the bond be considered, the obligation there-
of was in full force and effect. The appeals had been dis-
missed, The judgment should have been paid and satisfied
or the sureties stood liable. The authorities cited by Mata-
nuska have no relevance. The trial court had jurisdiction to
enter judgment upon these verdicts. The judgment, until
modified, was valid between the parties. When technical re-
quirements were fulfilled, this Court had found it valid and
without error.

The trial court, however, did not enter judgment against
the sureties. When Matanuska moved to have another bond
set for these new appeals, the trial court refused, It is to be
noted Matanuska did not offer to substitute new and accept-.
able supersedeas bonds. The effect of the action of the trial
court was to leave all bonds in effect. Matanuska accepted,
all the benefits of this action. New appeals were taken. No
further bonds were posted. By consideration of this Court,
no filing fee was charged on the new appeals, upon motion of
Matanuska. On like motion, the briefs and record on the
merits were considered on the renewed appeals. Matanuska
has had the advantage of the stay of execution for some
years. But it is urged Matanuska is now bankrupt and the
sureties alone will have to satisfy the judgment. If the ex-,
ecution had not been stayed some years ago, appellees might
well have collected from Matanuska alone. Therefore, it is

| 439

not unjust that the sureties should pay the obligation which
they assumed in order to obtain time to present the matter
to this Court.

The former appeals were valid. This Court accepted ju-
risdiction thereof and heard them. We did not attempt to
determine whether an appeal might have been taken in this
controversy which was wholly independent of the claim by
Matanuska and Lois Williams. It may have been a final
judgment irrespective of the Rule? We did not determine
whether the District Court may have abused its discretion
in failing to add this technical clause to the original judg-
ment before the first appeal.4 These questions were not pre-
sented to us. This Court has simply taken the position that
appeals must be dismissed if the judgment does not conform
to the procedural requirements of Rule 54(b).° The provi-
sion is not only for the benefit of litigants, but for the pro-
tection of the court against multiple appeals in a single cause.

3“An adjudication final in its nature as to the general subject of
the litigation may be reviewed without awaiting the determination
of a separate matter affecting only the parties to such particular
controversy.” United States v. River Rouge Imp. Co., 269 U.S. 411,,
414, 46 S.Ct. 144, 145, 70 L.Ed. 839. See Williams v. Morgan, 111
U.S. 684, 4 8.Ct. 638, 28 L.Ed. 559; Forgay v. Conrad, 6 How. 201, 47
U.S. 201, 12 L.Ed. 404; see also Sears, Roebuck & Co. v. Mackey, 351
U.S. 427, 439, 441-442, 76 S.Ct. 895, 100 L.Ed. 1297.

4 Although appellants had moved the District Court to amend the
judgment in conformity with Rule 54(b), the order of denial was not
assigned as error on appeal. If it had been, this Court might have
held the judgment final and that the discretion of the trial court had
been abused. See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 487,
76 S.Ct. 895, 100 La. 1297. In default of such an assignment, dis-
missal was proper.

5 See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 438, 76 S.Ct.

895, 100 L.Ed. 1297, and also see Winsor v. Daumit, 7 Cir., 179 F.2d

. 405, 478. It is obvious that a judgment may be interlocutory or that

on its face it may not be final. In such cases, the language “dis-

missed for want of jurisdiction” would be proper, since conformity
with the statute itself, 28 U.S.C.A, § 1291 is jurisdictional.

440 De

We disapprove of the practice of holding such appeals in
abeyance and in effect directing the trial judge to enter a
nunc pro tunc order certifying “that no just reason for de-
lay” exists. By dismissal of the appeals, the discretion of
the trial judge is not destroyed. Here the remand was for
further proceedings. Complete freedom of action was left
to the District Court. A new trial could have been granted.
A trial on the separate isstie could have been allowed. The
District Judge could have changed the judgment in any way
desired. Our opinion made this all plain. Matanuska Val-
ley Lines, Inc. v. Neal, 9 Cir., 229 F.2d 136.

However, since the trial court did not take any of these
steps, but simply made a certificate which brought the judg-
ment into conformity with the Rule, the ruling refusing to
vacate the bonds was not error.

The judgment as a whole is affirmed, unconditionally as
to items subject of appeals 15,253, 15,254 and the portion
relating to Nathaniel Neal, Jr., subject of appeal in 15,252.
The portion of the judgment relating to Dorothy Neal, also
appealed from in 15,252, is affirmed subject to further pro-
ceedings in accordance with the directions of this opinion.

ee 141

157 F.Supp. 544

SUNTRANA MINING CO., Inc., an Alaskan Corporation, Plaintiff,
y. USIBELLI COAL MINE, Inc., and A. Ben Shallit, d/b/a
Cripple Creek Coal Company, Defendants.

No. 8603.

District Court, Alaska, Fourth Division, Fairbanks,
Jan, 2, 1958,

442

—~—__
E. L. Arnell and George M. McLaughlin, Anchorage,
Alaska, for plaintiff.
Charles J. Clasby, of Collins & Clasby, Fairbanks, Alas-
ka, for defendant Usibelli Coal Mine, Inc.

Robert A. Parrish, Fairbanks, Alaska, for defendant
A. Ben Shallit, d/b/a Cripple Creek Coal Co.

TOLIN, District Judge.

This litigation was commenced by a complaint, since
amended, wherein plaintiff alleged certain hereinafter de-
scribed acts of alleged continuing trespass and maintenance
of a nuisance. The prayer of the complaint seeks injunc-
tive relief and, as amended, the complaint prays for dam-
ages because of losses heretofore suffered. Both defend-
ants raise a challenge to the jurisdiction of the Court. It
is not well taken nor was it supported by citations except
the lease existing between plaintiff and the United States.
Following the custom of courts, this Court will treat first
of the challenge to its jurisdiction.

HE In 1925 the Healy River Coal Corporation entered
into a document entitled “Mining Lease of Coal Lands in
Alaska” wherein and whereby the United States of Amer-

Se 43

ica, through the Secretary of the Interior, leased the de-
scribed lands to said Corporation and granted unto it for
a stated time the exclusive right and privilege to mine and
dispose of all the coal and associated minerals in, upon
or under the described land. By permission of the Sec-
retary of the Interior, the lease was assigned to plaintiff
and this action was brought during the term of the lease.
Section 7 of Article VII of the lease recites, “That in case
any dispute shall arise between the lessor, and lessee as to
any question of fact, or as to the reasonableness of any re-
quirement made by the lessor under the provisions of this
lease, * * * such questions or disputes shall be set-
tled by arbitration in the manner provided for by this sec-
tion, * * *.” There then follows a detailed recitation
of how arbitrators shall be selected, the extent of their
duties and the binding effect of their decisions. Both de-
fendants to this litigation insist that this provision in the
lease makes it mandatory that a dispute of the character
which plaintiff has brought to this Court shall be settled
by arbitration. The simple and obvious answer to this
contention is that this dispute is not one between the lessor
and lessee. It is a dispute between the lessee and two par-
ties whom lessee contends have trespassed and are now
trespassing upon the properties described in the lease.
General reference has been made, but without citation
to any section, to the statutes governing coal lands in Alas-
ka. The Court has found that Title 48 U.S.C.A. begin-
ning at § 432 and continuing through many successive
sections, relates to coal lands in Alaska, but nowhere with-
in these Statutes has the Court found any law relating to
compulsory arbitration of disputes of the character in-
volved in this litigation, Defendants’ jurisdictional point
is, therefore, declared to be without merit.

444 be

[2,3] It is also contended by defendants that the
plaintiff is not in fact a lessee for the reason that the doc-
ument to which reference has been made is not a lease
but does no more than grant a profit or license to plain-
tiff’s predecessor and through unchallenged operation of
the assignment to the plaintiff. The importance of this
point inheres in both defendants’ contention that a mere
licensee does not have the necessary title to support an ac-
tion for trespass. Section 434 of Title 48 U.S.C.A, refers
to “The unreserved coal lands and coal deposits * * *”,
and further recites that “* * * the Secretary shall
offer such blocks or tracts and the coal, lignite, and asso-
ciated minerals therein for leasing, and may award leases
thereof * * *” Section 435 of Title 48 U.S.C.A. re-
fers to privileges of those holding such a lease. Section
438 of the same Title refers to royalties and rentals. Sec-
tion 438a deals with situations under which rentals may
be waived. Section 439 is entitled “Disposal of royalties
and rentals received”, and throughout the coal land Sec-
tions of Title 48 U.S.C.A., the word “rentals” and other
language common to leases is found. A reading of the
document itself discloses that it does grant a license, more
particularly, “* * * the exclusive right and privilege
to mine and dispose of all the coal and associated minerals
in, upon, or under * * *,” But within the same sen-
tence the following is found, “* * * together with
the right to construct coke ovens, briquetting plants, by-
products plants, and all such other works as may be nec-
essary and convenient for the mining and preparation of
coal and associated minerals for market, * * *” It
is important that the rights above referred to are exclu-
sive to the lessee and that in one section of the document
the lessee is required to pay a specified rental based upon
periods of time rather than upon what is taken from the

Se 145;

land, and in another section of the document the lessee is
required to pay a royalty based upon the quantity of coal
shipped or removed from the leased lands. Not only does
the instrument appear to be a combination but the parties
to the document have treated it as being both a lease and
a license and there is nothing in the law of leases or li-
censes which makes them so antagonistic that they cannot
both be declared within the four corners of one agreement.
That is what has been done here. Regardless of the legal
label by which plaintiff’s interest is classified, it is clear that
plaintiff had a right to the immediate possession of the land
thus fulfilling one of the classical requirements which must
be shown in actions of this nature,

The Court finds that the document in evidence entitled
“Mining Lease Of Coal Lands In Alaska” is in fact a lease
and is also in fact an exclusive license to take coal from the
land.

The more substantial controversy is the one described
in plaintiff’s complaint and to which practically all the evi-
dence in the case was directed either in support or refuta-
tion of plaintiff’s allegations. The issues on this phase
of the case are principally factual, no one contending that
the Courts will not appropriately redress the type of tres-
pass pleaded. It appears substantially from the evidence
that the Healy River is a stream flowing in a generally
westerly direction, and is tributary to the Nanana River,
a stream flowing northerly and into the Tanana River
which is a direct tributary of the Yukon River that flows
into the Bering Sea. Near the confluence of the Healy
and Nanana Rivers plaintiff’s predecessor developed a
conventional coal mine. The mine has come by appropriate
sale and assignment of the lease into the possession of
plaintiff Suntrana Mining Co., Inc. The lands thereby
under Suntrana’s possession are riparian to the Healy River

446 a

channel and are situated on both sides of, and under, the
river flood plane. In the area above Suntrana’s leasehold
defendant Usibelli Coal Mine, Inc. has for some years been
engaged in the operation of a coal mine which operates
to a large extent in a different mining method. This is
also true of defendant A. Ben Shallit, d/b/a Cripple Creek
Coal Company. Usibelli and Shallit appear to be lessees
and licensees in the same way the plaintiff enjoys those
statuses. However, the peculiarity of Usibelli’s and Shal-
lit’s operations is that seams of coal have jutted out of the
surface of the earth and these seams extend down below
the surface of the earth. All of this land is hilly or moun-
tainous terrain with Suntrana being at the lowest point,
Usibelli somewhat higher, and Shallit’s operation still high-
er in the above-sea level reference. It has been the custom
of Usibelli and Shallit to remove the earth which acted as
a barrier to immediately reaching the seams of coal by
the use of hydraulic mining methods. In some instances
the seams have been covered in part by layers of gravel
and earth, and in other instances by what is referred to in
much of the testimony as sandstone. Sandstone is not
a true stone at all. That term is a local name given to sand
which has absorbed water and thereafter frozen. It re-
mains in a stone-like solid state until dissolved by heat,
flowing air, or water. Usibelli and Shallit have been giv-
en to exploding large charges of blasting material thereby
loosening the gravel, earth and sandstone and permeating
it with cracks and fissures so that the surrounding air cur-
rents would enter. The next step in the mining opera-
tion has been to play water upon this mass of overburden
from large nozzles called “giants”. The overburden is
thus washed away from the coal seams which remain for
recovery by miners without the necessity of digging tunnels.
The overburden being thus separated from the large body

Se 7

of hill or mountain, seeks the level of the Healy River so
that vast amounts of gravel, earth and melted sandstone
are washed into the stream. Prior to the beginning of these
operations by defendants, the Healy River was in a down-
cutting geological stage but the considerable quantity of
overburden, admitted by defendants to be in excess of 400,-
000,000 tons, has resulted in a building up of the floor of
the river. The Healy River annually is subject to a re-
curring and intermittent high water or flood stage, and dur-
ing high water or flood stage the waters of the Healy River
flow in varying depths over the whole or substantial por-
tions of the flood plane. During such high water periods
the water moves substantial but unknown quantities of solid
materials downstream. Many of the materials eroded from
defendants’ mines by their hydraulic operations are washed
away during seasons of flood. Some of these come to rest
in the bed of the Healy River in such a way as to cause
waters to back up. Other of the overburden washed into
the river has resulted in upbuilding of the flood plane.
However, in the area of the tributary Cripple Creek and
of the Healy River itself above where there has been an
artificial introduction of materials into the flood plane,
the river and creek are still in the geological process of
downcutting or lowering.

Usibelli has been by far the greater contributor of over-
burden into the waters of the river. In his testimony, Mr.
Usibelli, the head of the company, estimated that over
4,000,000 cubic yards of mine waste and overburden have
been removed from his operation and that approximately
64,000 cubic yards have remained deposited in a pit area
located on his leasehold. The remainder, consisting of
3,936,000 cubic yards, has been deposited by Usibelli into
the waters and upon the flood plane of the Healy River.
Much of the coal recovered by Usibelli is put through a

448 Le)

coal washing process whereby further solids are separated
from the coal. Usibelli is upstream from Suntrana’s opera-
tion and the wastes from the washer plant flow into the
Healy River. In his testimony Mr. Shallit estimated that
his operation had deposited in excess of 200,000 cubic
yards of overburden directly into the channel of Cripple
Creek. Cripple Creek is directly tributary to the Healy
River. Prior to Shallit’s hydraulic operations, Cripple
Creek was in the same geological stage of down-cutting
as the Healy River but below the point where Shallit has
introduced overburden into the Cripple Creek it has ac-
creted some of such overburden, the greater body of the
overburden passing on into the Healy River and contribut-
ing to the rise of the floor of the river. The character of
the Healy River has been changed below the points of
both Shallit’s and Usibelli’s introduction of mine wastes
to the point that the geologically down-cutting streams
have reversed their down-cutting trends and the flood
planes have been substantially raised. This has not only
resulted in flood damage to Suntrana’s leasehold but there
is a perpetual threat of further flood damage and there
has been actual trespass to the Suntrana leasehold by the
deposit of Usibelli and Shallit wastes upon portions there-
of. Suntrana seeks to recover damages as well as to have
the protection of a permanent injunction, By consent of
all parties, the question of damages was not inquired in-
to at the trial, that issue having been severed for sepa-
rate trial in event the Court should find that there has been
trespass upon Suntrana’s leasehold by Usibelli or Shallit
or both of them.

HI The Court finds that both Usibelli and Shallit have
committed trespass upon plaintiff’s leasehold and threaten
to continue to do so.

es 149

The most recent adjudication in this type of litigation
within the Territory of Alaska was the case of Erceg v.
Fairbanks Exploration Co.t The unpublished opinion of
the District Court is found in the files of this District as
File No. 3571. Both the District Court and the Appel-
late Court recognized that the situation in the Erceg case,

, which is analogous to that of the case at bar, was such
that an injunction would issue to restrain further con-
duct of the type complained of. Not only well under-
stood principles of equity but many judicial declara-
tions and applications have served to prevent other oper-
ators from like conduct. See City of Oroville v. Indiana
Gold-Dredging Company.” Injunctive relief was also
granted in Costello v. Bowen.* This principle has not
been applied exclusively in Alaska and California but has
been of general application wherever equitable principles
are applied by courts. In 1888 a court in Vermont applied
it in Goodrich v. Dorset Marble Company.* See also,
Guynn v. Wabash Water and Light Company,® where it
was said, “The general rule of property is applicable to a
riparian proprietor, and he is restricted in the management
of his property by such rule. ‘So use your own as not to
injure others,’ ”

Plaintiff is entitled to a Judgment restraining defendants
from depositing overburden or mine wastes into the Healy
River, or placing such overburden and mine wastes so that
they will be washed into the Healy River.

Judgment will await the decision of the issues remain-
ing to be tried.

19 Cix,, 1938, 95 F.2d 850, 9 Alaska 264, certiorari denied 305 U.S.
615, 59 S.Ct. 74, 83 L.Bd. 392,

2 0.0.1908, 165 F, 560.

31947, 80 Cal.App.2d 621, 182 P.2d 615.

460 Vt. 280, 13 A. 636,

51914, 181 Ind. 486, 104 N.E. 849,

fe

450 Le

78 S.Ct. 349
Tillman Foster ETHERTON, petitioner, v. UNITED STATES
of America.

No. 258, Mise.

Supreme Court of the United States.
Jan. 6, 1958,

Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit.

Denied.

UNITED STATES of America, Plaintiff, v. James William VAN
VALKENBURG, Defendant,
No. 1743-KB,

157 F.Supp. 599

United States District Court, D. Alaska, First Division.
Jan. 17, 1958.

451

Roger G. Connor, U. S. Atty., Juneau, Alaska, for plain-
tiff,

C. L. Cloudy, of Ziegler, Ziegler & Cloudy, Ketchikan,
Alaska, for defendant.

KELLY, District Judge.

The Motion to Dismiss Indictment filed by the defend-
ant alleging that the indictment does not state facts suffi-
cient to constitute an offense against the United States
came on to be heard upon the memorandum brief and the
supplemental memorandum brief filed by the defendant
in support of said motion and upon the government’s brief
opposing said motion and the defendant’s reply brief there-
to.

The indictment charges that the defendant violated 18
U.S.C.A. § 1001 when he stated to the Assistant United
States Attorney in Ketchikan that a certain person had
stolen two checks from him and that by means of forgery
she had cashed the same and that at the time he made this
statement the defendant knew the statement was untrue

2

and that this was a false statement of a material fact in a
matter within the jurisdiction of a department of the Unit-
ed States.

Defendant contends (1) that the language of the charge
does not disclose the circumstances under which the false
statement was allegedly made, that the indictment in ef-
fect seeks to charge the defendant with a violation of 18
U.S.C.A. § 1001 for merely failing to tell the truth to an
agent of the Department of Justice when the defendant
was not under a legal obligation to speak or answer the
agent truthfully or otherwise. In support of this conten-
tion, the defendant relies almost wholly on the case of
United States v. Levin, D.C., 133 F.Supp. 88, decided in the
United States District Court for the District of Colorado
in 1953. The defendant also contends (2) that this is not
a matter within the jurisdiction of the Department of Jus-
tice, citing United States v. Stark, D.C.D.Md.1955, 131
F.Supp. 190.

Section 1001 had its origin in a statute passed almost
100 years ago. From 1863 until 1934 the coverage of the
statute was from time to time extended but it was never
limited. Prior to the 1934 amendment there was a re-
striction to false and fraudulent statements or representa-
tions where these would involve pecuniary or property
loss to the government. The 1934 amendment eliminated
this restriction and section 1001 now applies to “ ‘any false
or fraudulent statements or representations’ * * * in
any matter within the jurisdiction of any department or
agency of the United States.”

In United States v. Gilliland, 312 U.S, 86, at page 93,
61 S.Ct. 518, at page 522, 85 L.Ed. 598, the court said:

“The amendment indicated the congressional in-
tent to protect the authorized functions of gov-
ernmental departments and agencies from the

— 453

perversion which might result from the deceptive
practices described. We see no reason why this
apparent intention should be frustrated by con-
struction.”
See also: Cohen v. United States, 9 Cir., 1953, 201 F.2d
386. Marzani v. United States, 83 U.S.App.D.C. 78, 168
F.2d 133, affirmed 335 U.S. 985, 69 S.Ct. 299, 93 L.Ed.
431, United States v. Stark, D.C., 131 F.Supp. 190.

From the history of section 1001, it is apparent that the
statute has constantly been broadened in order to protect
the government from the false claims or statements of
those who knowingly and wilfully make such representa-
tions. The only other limitation seems to be that those
statements must be given in a “matter within the jurisdic-
tion of any department or agency of the United States” to
which the statements are made. The Levin case, supra, is
to the effect that there must be a legal obligation to make
the statement which is falsified and without such legal ob-
ligation no crime is committed under section 1001. There
is nothing in the section from which to infer such a conclu-
sion,

(1) In Cohen v. United States, supra, [201 F.2d 391]
the court discussed the defendant-appellant’s contention that
in order to preserve the constitutionality of the statute the
courts have interpreted it and its earlier counterparts to
apply only to statements alleged to be false which were re-
quired to be made by some law or regulation. The court
said:

“We do not agree. Although the particular
false statements in issue in United States v. Gil-
liland, supra, were contained in reports and affi-
davits which were required to be made, the Su-
preme Court did not indicate that this was an es-
sential condition to the applicability of 18 U.S.

454 Le

C.A. § 80, now § 1001.”
In United States v. Stark, supra, the court said [131 F.
Supp. 205]:

“The purpose seems to be to protect the govern-
ment from the affirmative or aggressive and vol-
untary actions of persons who take the initiative,
or, in other words, to protect the government from
being the victim of some positive statement,
whether written or oral, which had the tendency
and effect of perverting its normal proper ac-
tivities.’ (Emphasis supplied.)

The court in that case was of the opinion that the word
“statement” contemplated an affirmative statement volun-
tarily made for the purpose of making claim upon or in-
ducing improper action by the government against others.

In Marzani v. United States, supra, it was held that [168
F.2d 142]:

“The pertinent statute does not limit the offense
to formal statements, to written statements, or to
statements under oath. It applies to ‘any false
or fraudulent statements or representation, * *
in any matter within the jurisdiction of any de-
partment or agency of the United States.’ ”

In the Marzani case a State Department employee volun-
tarily sought an interview with his superior officer to dis-
cuss a request which had been made for his resignation.
The court held that the employee was subject to prosecu-
tion for false oral statements made in that interview de-
spite the fact that the employee was not required to at-
tend such an interveiw or make the statements, In Cohen
v. United States, supra, the court in discussing the Mar-
zani case said:

“Tt will not suffice to distinguish the cases, as
appellant urges by noting that in the Marzani case

155

the government employee discussed ‘officially’
with his superior an ‘official’ request for his resig-
nation. The point is that the statements as here,
were voluntarily made.” (Emphasis supplied.)

I find, therefore, that there is no necessity under 18
U.S.C.A. § 1001 that the ‘statements or representations”
be made while under a legal obligation to speak as defend-
ant contends.

(2) Defendant in the instant case further contends that
this is not a matter within the jurisdiction of the Depart-
ment of Justice, relying on United States v. Stark, supra.
As to this question which the court discusses in their opin-
ion, they first state:

“The question as to whether on the facts the
matter was within the jurisdiction of the FBI
or the Department of Justice ordinarily would
not arise until the trial of the case and would not
have presently arisen here except for the stipula-
tion of counsel.”
The court further states in referring to the memorandum
opinion of District Judge Caffey in United States v. Nar-
elle (Southern District of New York, July 7, 1944):
“The indictment charged that the matter was
within the jurisdiction of the Department of Jus-
tice. Whether the case was ever tried does not
appear. As the indictment alleged the jurisdic-
tion of the Department the motion to dismiss was
properly overruled.”

It would seem, therefore, that there is no foundation
for defendant’s Motion to Dismiss the Indictment on this
ground. The defendant relies solely on the Stark case
wherein the defendant made false statements while under
oath to agents of the Federal Bureau of Investigation that
he had not bribed employees of the Federal Housing Ad-

456 |

ministration and that he did not know of anyone who had
done so. These were negative statements in response to
questions by the agents of the Federal Bureau of In-
vestigation. The court held as follows:
“T therefore conclude that in the particular situ-
ation here presented, the matter was not within
the jurisdiction of the FBI or the Department of
Justice within the meaning of that phrase as con-
tained in Section 1001.”
“The Sth Amendment provides that no person
shall be compelled to be a witness against himself
in criminal cases. While not strictly applicable
here the construction of section 1001 here sought
by the government seems inconsistent with this
great bulwark of individual liberty. I cannot
think that such an application of the section could
have been within the intent of Congress * * *
The alleged false information * * * were not
statements for the purpose of inducing action by
the government * * *, The clear purpose of
the section was to operate as a shield for defense
rather than as a sword for attack.”
“The points decided herein relate only to the
particular case presented.” (Emphasis supplied)

It is evident that the holding of the court is intended to be
limited to the facts of that case.

The Stark case is easily distinguishable since the indict-
ment herein alleges an affirmative false statement by the
defendant to the Assistant United States Attorney to in-
duce that office to take action against a third person, Such
governmental action is clearly within the jurisdiction of the
office of the United States Attorney.

In De Casaus v. United States, 9 Cir., 250 F.2d 150, the
offense charged against the defendant-appellant was vio-

— 457

lation of 15 U.S.C.A. § 714m, in that the defendant-ap-
pellant made a false statement to an investigating officer
of the Commodity Credit Corporation. In that case the
court said:

“Appellant asserts that the statute which he is
charged with violating does not apply to statements
made to investigating officers. Arguments to that
effect have been universally rejected in cases in-
volving like statutes.” Citing United States v.
Gilliland, supra; Cohen v. United States, supra;
Marzani v. United States, supra.

The opinion in the De Casaus case has just been issued
in our own- circuit and added weight should be given to
their expression on the subject even though the case is not
based on section 1001. It seems clear that they agree with
the cited cases as set out in this opinion.

In view of the foregoing, the Motion to Dismiss the In-
dictment is hereby denied. An order may be entered in
accordance with this opinion.

458 De

355 U.S. 933, 78 S.Ct. 415

George DUSHON, Nels Pilskog et al., petitioners, v. UNITED
STATES of America.
No. 214, Misc.

Supreme Court of the United States.
Jan. 27, 1958,

Supreme Court of the United States. Jan. 27, 1958.

Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit, :

Denied.
253 F.2d 231
George GILBERTSON, Appellant, v. CITY OF FAIRBANKS,
Appellee,
No. 15567.

United States Court of Appeals, Ninth Cireuit.
Feb. 24, 1958.

Le 459

- Edgar Paul Boyko, San Francisco, Cal., for appellant.
William V. Boggess, Fairbanks, Alaska, George’ N:
Sheild, San Francisco, Cal., for appellee.

Before MATHEWS, POPE and LEMMON, Circuit
Judges.

460 be

PER CURIAM.

On August 23, 1956, in the District Court for the Terri-
tory of Alaska, appellee brought a civil action against ap-
pellant. Appellant filed an answer * containing a counter-
claim. The counterclaim was in two counts. Appellee
moved to dismiss both counts, thus, in effect, moving to dis-
miss the counterclaim. The District Court granted the mo-
tion and entered an order which, in effect, dismissed the
counterclaim.” This appeal is from the order.

Three claims were presented in this action—a claim of
appellee against appellant, stated in the complaint, and two
claims of appellant against appellee, stated in the counter-
claim. The order adjudicated appellant’s claims against
appellee, but did not. adjudicate appellee’s claim against ap-
pellant. The determination mentioned in Rule 54(b) of
the Federal Rules of Civil Procedure, 28 U.S.C.A. was not
made, Hence the order was not appealable.$

Appeal dismissed.

1The answer was entitled “Answer and counterclaim.”

2In the order, the counterclaim was incorrectly referred to as
“the action set forth in said first and second counts in [appellant's]
counterclaim.” Obviously, the thing set forth in the two counts
was the counterclaim.

3 Walter W. Johnson Co. y. Reconstruction Finance Corp., 9 Cir.,
223 F.2d 101. See also Kam Koon Wan vy. BE. B. Black Ltd., 9 Cir,
182 F.2d 146; Burkhart v. United States, 9 Cir., 210 F.2d 602; Rus-
sell v. Texas Co., 9 Cir, 211 F.2d 740; Wynn y. Reconstruction
Finance Corp., 9 Cir., 212 F.2d 958; Steiner v. 20th Century-Fox
Film Corp. 9 Cir., 220 F.2d 105; Glens Falls Indemnity Co. v.
American Seating Co., 9 Cir., 225 F.2d 838; Id., 9 Cir., 248 F.2d 846;
Russell v. Hackworth, 9 Cir.,-238 F.2d 503; Bergman v. Aluminum
Lock Shingle Corp., 9 Cir, 237 F.2d 386; Massa yv. Jiffy Products
Co., 9 Cir., 238 F.2d 228,

— 461

158 F.Supp. 821
UNITED STATES of America, Plaintiff, v. Ralph GEiss,
Defendant.
Crim. No, 2329.

District Court, Alaska. Third Division, Nome.
Feb. 27, 1958.

462

William T. Plummer, U. S. Atty., Anchorage, Alaska,
for plaintiff.
Arthur D. Talbot, Anchorage, Alaska, for defendant.

HODGE, District Judge.
Defendant has moved to vacate and set aside the judg-
ment and sentence imposed upon him in this case on April

— 463

28, 1950, for the crime of statutory rape upon a minor child
of the age of eight years, under the provisions of Sec. 2255
of Title 28 U.S.C., upon the grounds that the sentence was
imposed in violation of the Constitution of the United
States in that defendant was denied the public trial guar-
anteed him by the Sixth Amendment to the Constitution.
The pertinent facts as disclosed by the record are as fol-
lows: at the time of trial, and apparently after a jury had
been selected but before any evidence had been offered, the
following proceedings were had:
“Mr. Moody: If the Court please, at this time
I would like to ask that all spectators be excluded
during the trial of this case for the reason that
the prosecuting witness is only of the age of nine
years and would be very reluctant and frightened
to testify in the presence of so many people out in
front. And there are two other witnesses, one of
the age of seven, and eleven years, and I believe
this is a just case where the spectators should be
excluded and it is a case involving rape.
“The Court: Do you have anything you wish to
say, Mr. Olsen?
“Mr. Olsen: Well, Your Honor, of course the
tule is well known that cases have been widely de-
cided that the defendant is entitled to a public
trial and under the circumstances I can see no rea-
son why the Court, if it had a mind to, would
make such a ruling—would grant the request of
the United States Attorney.
“The Court: Well, he is not deprived of a pub-
lic trial merely by the exclusion of spectators.
“Mr. Olsen: I would say that it might be pos-
sible for the Court to limit some type of specta-
tors, possibly such as minors or persons in their

464 EE

minority, but I don’t believe that the Court should
limit—not limit—but keep out other spectators
who are in their majority.

“The Court: Well, minors are always excluded
from cases of this kind, so that would be insuffi--
cient to meet the motion made by the United
States Attorney. I think that in view of the
tender years of the prosecuting witness and other
one of the witnesses referred to by the United
States Attorney and the difficulty of obtaining tes-
timony from them before a large audience I think
that it would be in the furtherance of justice to
grant the motion and therefore the Court grants
the motion. All spectators or members of the
audience except members of the press, members
of the bar, relatives and close friends of the de-
fendant and of the prosecuting witness, or any
other witness underage and witnesses generally
are excluded from the court room. So, unless
you fall within one of the classes just mentioned,
every spectator will be excluded during this trial
and they should clear the court room.”

This order was carried out by a United States Deputy
Marshal, who excluded the general public from the bal-
ance of the trial with the exception of those persons and
groups allowed to be present by the order of the Court.

Following his conviction and sentence, the defendant
moved the Court for a new trial upon the grounds that the
Court erred in granting the Government’s motion to ex-
clude the public from the trial of such case. This motion
was submitted to the trial judge, Hon. George W. Folta,
upon briefs submitted by both parties, raising substantially
the same points and authorities as relied upon here, and was,
denied by the Court. (J. G. 22, page 203, July 27, 1950.)

Le 465.

Defendant gave written notice of appeal from such judg-
ment stating as grounds that the Court erred in excluding
the public from the trial, accompanied by his petition and
affidavit for permission to proceed in the prosecution of the
appeal in forma pauperis. The Court denied such on the
grounds that “the facts, or the record, does not present any
substantial question” (J. G. 22, page 229, Aug. 11, 1950).
The Court did not certify in writing that the appeal was not
taken in good faith, as required by Sec. 1915(a), Title 28
U.S.C.

The defendant took no further action until the filing of
the present motion, over seven years later. He is still con-
fined in the United States Penitentiary at McNeil Island,
Washington, in execution of such sentence.

HI It is settled law that Sec. 2255 is not intended as a
substitute for an appeal from a judgment of conviction and
sentence, and that this remedy may not be used to review al-
leged errors of law which occurred during the trial, which
could have been considered by the Appellate Court on ap-
peal, even though such errors related to Constitutional
rights. Burdix v. United States, 9 Cir, 1956, 231 F.2d
893, certiorari denied 351 U.S. 975, 76 S.Ct. 1041, 100 L.
Ed, 1492; Hickman vy. United States, 8 Cir., 1957, 246 F.
2d 178, 181; Davis v. United States, 7 Cir., 214 F.2d 594,
596; United States v. Trumblay, 7 Cir., 234 F.2d 273, 275.

In exceptional cases a defendant may be deprived
of Constitutional rights under such circumstances as justify
a review of the proceedings in a collateral attack of this na-
ture, where there has been clearly a fundamental miscar-
riage of justice for which no other remedy is presently
available, or the denial of the substance of a fair trial. Hill
v. United States, 6 Cir., 223 F.2d 699 (holding, however,
that the question here raised was subject to review on ap-
peal and hence not one of such exceptional cases); Howell

a

466 be

v. United States, 4 Cir. 172 F.2d 213, 215; Meyers v.
United States, 86 U.S.App.D.C. 320, 181 F.2d 802; Unit-
ed States v. Hamilton, D.C., 97 F.Supp. 123. See also
United States v. Meyers, D.C.Alaska, 139 F.Supp. 724,
quoting from Pulliam v. United States, 10 Cir., 178 F.2d
777.

HI am unable to find that the circumstances here
constitute such an exceptional case, for the reason that the
interpretation of the Constitutional right to a public trial
in cases of this character has been determined adversely to
the contention of the defendant, in this jurisdiction.

Ordinarily the Sixth Amendment precludes the general
exclusion of the public from the trial of a case over the ob-
jection of the defendant, and limits the trial judge to the
exclusion of those persons or classes of persons whose par-
ticular exclusion is justified by lack of space or for reasons
particularly applicable to them. United States v. Kobli, 3
Cir, 172 F.2d 919, 923; Davis v. United States, 8 Cir.,
247 F. 394; Tanksley v. United States, 9 Cir. 145 F.2d
58, 156 A.L.R. 257. In such cases it is held that prejudice
is implied. Davis v. United States, supra; Tanksley v.
United States, supra.

However, the excluding of spectators in a prosecution
for statutory rape in which the prosecuting witness is of
tender age has been held proper, in the discretion of the
Court, in order to prevent a miscarriage of justice. Davis
y. United States, supra; Annotations 156 A.L.R. 265, 289;
48 A.L.R. 265; State v. Holm, 67 Wyo. 360, 224 P.2d 500,
509; United States v. Kobli, supra, 172 F.2d at page 922.

HM The reason for such exception is that although the
Constitutional right of public trial is a substantial one, the
term “public” is a relative one, and its construction depends
upon various conditions and circumstances; and the courts

467

generally concede that the right to have members of the
public present in a case of this character is subject to some
limitations. Hence a trial judge in the exercise of a sound
discretion may exclude members of the public as may be-
come reasonably necessary in order to protect a witness
from embarrassment by reason of having to testify to deli-
cate or revolting facts as a child, or where it is demonstrat-
ed that the one testifying cannot, without being freed from
such embarrassment, testify to facts material to the case.

There is considerable conflict of authorities as to the ap-
plication of this principle. Some courts have limited the
exclusion order to youthful spectators; others to the ex-
clusion of spectators only during the testimony of such
child. However, the principle has been extended by the
Circuit Court of Appeals for this Circuit in three cases
from Alaska which are controlling here. In the case of
Reagan v. United States, 9 Cir., 202 F. 488, on appeal from
a judgment and conviction of statutory rape, the Court held
that an order of the trial court excluding spectators from
the courtroom was not error where there was no showing
that the defendant was prejudiced thereby. In the case of
Callahan v. United States, 9 Cir., 240 F. 683, the Court
held that in a prosecution for statutory rape of a girl under
the age of consent, it was not error to exclude from the
courtroom all persons except litigants, witnesses, officers of
the court, and the press, as violative of the Sixth Amend-
ment, following the Reagan case. In the Case of Tanksley
v. United States, supra, 1944 [145 F.2d 62] the Court re-
fused to extend this rule on appeal from a conviction of
rape of a married woman, 19 years of age, where the issue
of consent was raised, and holds that an exclusion order
was error in a prosecution of this character as violative of
the right of public trial, Judge Denman, in the majority
opinion, disagrees with the dictum in the Reagan case to

468 be

the effect that upon denial of the Constitutional right to a
public trial, the burden falls on the defendant to show that
he was prejudiced by the denial, but agrees with the deci-
sion of the Eighth Circuit in Davis v. United States, supra.
Judge Wilbur, in a dissenting opinion, takes issue with the
majority in some respects, stating that the true rule as to
the fair and reasonable construction of the right of public
trial was stated by Judge Cooley in his work on Constitu-
tional Limitations as follows:

“The requirement of a public trial is for the
benefit of the accused,—that the public may see
that he is fairly dealt with, and not unjustly con-
demned, and that the presence of interested spec-
tators may keep his triers keenly alive to a sense
of their responsibility, and to the importance of
their functions; and the requirement is fairly ob-
served if, without partiality or favoritism, a rea~
sonable proportion of the public is suffered to at-
tend, notwithstanding that those persons whose
presence could be of no service to the accused,
and who would only be drawn hither by a prurient
curiosity, are excluded altogether.”

Where the District Court denied an application to pro-
ceed on appeal in forma pauperis without certifying that
the appeal was not taken in good faith, or for any reason
other than lack of good faith, application could and should
have been made to the Circuit Court of Appeals for such
leave. Smith v. Johnston, 9 Cir., 1940, 109 F.2d 152, 155;
Bayless v. Johnston, 9 Cir., 127 F.2d 531. In such case the
Court of Appeals is authorized by 28 U.S.C. § 1915(b) to
direct, in a proper case, that the expense of furnishing a
record on appeal to an indigent defendant be paid by the
United States. Young v. United States, 8 Cir., 246 F.2d
901; Ingersoll v. United States, 6 Cir, 175 F.2d 191.. In

| 469

such case the Circuit Court may grant leave to submit the
appeal upon the original files of the District Court and a
typewritten brief, or typewritten transcript if necessary.
Rule 10, Rules of the United States Court of Appeals for
the Ninth Circuit, 28 U.S.C. Since the defendant raised
only questions of procedure a transcript of the testimony
would have been unnecessary. Bistram v. United States, 8
Cir., 248 F.2d 343. Hence the right to appeal was not de-
nied the defendant, as earnestly contended by counsel, un-
der the decision of the United States Supreme Court in the
case of Griffin v. Ilinois, 351 U.S. 12, 76 S.Ct. 585, 100 L.
Ed. 891, where a state court refused to allow a petition of
the defendant to provide him with a transcript of the pro-
ceedings in order to perfect his appeal.

As there is no issue of fact for determination requiring
notice to the defendant and an opportunity to be heard, and
as the files and records of the case conclusively show that
the prisoner is entitled to no relief, no notice or hearing is
required.

The motion must therefore be denied.

Dated at Nome, Alaska, this 27th day of February, 1958.

470 be

253 F.2d 284

James A. WILLIAMS, Appellant, v. C. P, COUGHLAN, Ted
McRoberts, Otheal Waitland, La Dessa Nordale, T. N. Gore,
and R. J. McNealy, Appellees.

No. 15780.

United States Court of Appeals, Ninth Cireuit.
Feb. 28, 1958,

James A. Williams, in pro. per.

George M. Yeager, U. S. Atty., Fairbanks, Alaska, for
appellees.

Before HEALY, BONE and ORR, Circuit Judges.

| 471

ORR, Circuit Judge.

Appellant Williams on the 15th day of October, 1956,
caused to be filed in the District Court of Alaska a com-
plaint seeking damages against appellees for alleged wrong-
ful acts. The District Court dismissed the action on the
ground that the statute of limitations had run before the
action was filed. An appeal was taken to this Court and
the judgment of dismissal was affirmed as to appellee
Coughlan. Relative to the remaining appellees, this Court
was unable to determine their status from the record then
before it and took no action as to them.

Subsequently appellant caused the record to be supple-
mented and this Court of its own motion caused the orig-
inal complaint to be filed as a part of the record before it.

Appellant has abandoned his appeal as it affects appel-
lees Waitland, Nordale, Gore and McNealy, but prosecutes
it insofar as appellee McRoberts, a United States Marshal,
is concerned.

The District Court, pursuant to motion duly made, dis-
missed the action against Ted McRoberts on the ground
that the statute of limitations had run before the action
was commenced.

The cause of action against McRoberts as alleged in
the complaint accrued on the 7th day of July, 1953. At
that time appellant was in custody under a sentence of im-
prisonment. 1949 A.C.L.A. section 55-2-6 provides that
“An action against a marshal, coroner, or constable, upon
a liability incurred by the doing of an act in his official ca-
pacity or in virtue of his office’ must be begun “within
three years.”

If the applicable statute in the instant case can be said
to be section 55~2-6, then the elapsed time between July
7, 1953, the date of the accrual of the action, and October
15, 1956, the date the complaint was filed, is more than three

472 |

years. Appellant in his brief asserts and argues that the
complaint was filed on July 15, 1956, but he is clearly mis-
taken in this.

Alaska has an additional statute of limitations which
concerns inmates of prisons. This statute provides:

“If any person entitled to bring an action * *
be at the time the cause of action accrued, * * *

“Third. Imprisoned on a criminal charge, or
in execution under sentence of a court for a term
jess than his natural life.

“The time of such disability’ shall not be.a part
of the time limited for the commencement of the
action, but the period within which the action shall
be brought shall not be extended in any case longer
than two years after such disability ceases.” 1949
A.C.L.A. § 55-2-15,

Appellant was imprisoned at the time the alleged cause
of action arose and was released on December 5, 1953.
In the event this section is applied, then appellant had two
years from and after December 5, 1953, but having failed
to file his complaint until October 15, 1956, the statute
had clearly run.

Counsel for appellee McRoberts has argued in this court
that the appellant, because of his incarceration at the time
the action was filed, had no capacity to sue. For aught
that can be determined from the record, this point was
not raised in the lower court and, inasmuch as the trial
court did entertain the action and render a judgment of
dismissal on grounds of the statute of limitations alone, it
seems rather late to be raising the point at this juncture.
Appellee McRoberts also raises the question of the im-
munity of a United States Marshal from suit. This point
was raised in the court below, but we find it unnecessary
to pass on it because of our holding that the statute of

LE LE)

limitations had run. Appellee evidently considered the
question of the statute of limitations of such little impor-
tance that he did not mention it in his brief.

Affirmed.
160 F.Supp. 30
UNITED STATES of America, Plaintiff, v. 40 ACRES OF
LAND SITUATE IN NENANA RECORDING PRECINCT,

FOURTH DIVISION, TERRITORY OF ALASKA, and Dan
T. Kennedy, et al., Defendants.

Civ. No, A-12883.

District Court, Alaska, Third Division, Anchorage.
March 6, 1958.

=

75

Donald A. Burr, Asst. U. S. Atty., Anchorage, Alaska,
for plaintiff.

Davis, Hughes & Thorsness, Anchorage, Alaska, for
defendant Dan T. Kennedy.

HODGE, District Judge.

Plaintiff in this action seeks to acquire by condemnation
proceedings certain property owned by the defendant Dan
T. Kennedy, consisting of a homestead and improvements
thereon, described as “Tract A” in the complaint herein,
located within the exterior boundaries of Mount McKinley
National Park. Defendant filed an answer raising objec-
tions to the taking, pursuant to Rule 71A(e), Fed.Rules
Civ.Proc. 28 U.S.C. At the time of the trial defendant
raised jurisdictional questions relating to such taking, in
substance as follows: (1) There was no allegation in the
complaint showing the authority of any officer of the
United States to procure the land for the public use claimed,
and hence no authority for such condemnation; (2) there
was no showing of any specific legislative sanction or au-
thority for condemning the land in question; and (3) the
authority for the taking relied upon by plaintiff does not
permit the United States to maintain this action. The
Court reserved decision upon these questions on briefs to
be submitted.

Thereafter plaintiff filed an amended complaint alleg-
ing that the request for the condemnation originated from
the Solicitor for the Department of the Interior in the form
of a letter addressed to the Attorney General of the United
States; and that the Solicitor for such Department is duly
authorized to institute the proceeding for and on behalf of
the Secretary pursuant to Departmental order No, 2509,

476 Le

amendment No. 7. Copies of the letter and order were
attached as exhibits. Defendant then filed a motion to dis-
miss the amended complaint upon the grounds that it does
not state a claim upon which relief may be granted, and
both parties submitted briefs on the issues thus raised.

The Government relies in its complaint and brief upon
two statutory enactments as authority for the taking, be-
ing the Act of August 1, 1888, as amended (62 Stat. 986,
40 U.S.C.A. § 257), and the Interior Department Appro-
priation Act of 1951 (Chap. VII, Public Law 759, 81st
Congress, 64 Stat. 692). The first is what has been re-
ferred to as the general statute relating to condemnation
of private realty for Government use, and provides as fol-
lows:

“In every case in which the Secretary of the
Treasury or any other officer of the Government
has been, or hereafter shall be, authorized to pro-
cure real estate for the erection of a public build-
ing or for other public uses, he may acquire the
same for the United States by condemnation, un-
der judicial process, whenever in his opinion it is
necessary or advantageous to the Government to
do so, and the Attorney General of the United
States, upon every application of the Secretary
of the Treasury, under this section and section
258 of this title, or stich other officer, shall cause
proceedings to be commenced for condemnation
within thirty days from receipt of the applica-
tion at the Department of Justice.” (emphasis
added).

The general appropriation act relied upon provides, so
far as is pertinent here, as follows:

Le LE

“Chapter VII
“National Park Service
“Construction

“For construction and improvement, without
regard to the Act of August 24, 1912, as amended
(16 U.S.C. 451), of roads, trails, parkways, build-
ings, utilities, and other physical facilities; and
the acquisition of lands, interests therein, improve-
ments, and water rights; to remain available until
expended * * *.” (emphasis added).

HBB The Acts of Congress relating to the establish-
ment, boundaries and control of Mount McKinley Nation-
al Park are found in 16 U.S.C.A. §§ 347-353a, incl. By
Sec, 355, adopted March 19, 1932, the boundaries were
changed, apparently including the lands of the defendant,*
who acquired his land by patent from the United States
on May 24, 1930. Neither the original act establishing
such Park nor the amendments thereto contain any specific
authorization to the Secretary of the Interior or any oth-
er public officer relating to the acquisition by condemnation
or otherwise of private lands within the boundaries of the
Park; and no such provision is found in the general stat-
utes relating to the jurisdiction and powers of the National
Park Service. 16 U.S.C.A. §§ 1-18d.

By contrast, numerous instances are found in the stat-
utes relating to the establishment of national parks in which
the Secretary of the Interior, through the National Park
Service, is given express authority to acquire private lands
or property with reference to such particular park or place,
under the provisions of Sec. 257 of Title 40, all being found

1Some question is also raised by Kennedy as to whether or not his
property is actually intended to be included within the Park bound-
aries. However, for the purpose of this motion, the allegations of the
complaint must be taken as true.

478 Le

in 16 U.S.C.A,, as follows: Sec. 47e, Yosemite National
Park; Secs. 81c, 81d, Colonial National Historical Park;
Sec. 164, Glacier National Park, Sec. 242, Theodore Roose-
velt National Memorial Park; Sec. 403i, Great Smoky
Mountains National Park; Sec. 462(d), Historic Sites and
Buildings; Sec. 407m, Independence National Historical
Park; Sec. 1b(7) (1953), Acquisition of Right of Way
for roads within authorized boundaries of national parks,

If it was the intention of Congress to make similar pro-
vision as to Mount McKinley National Park, surely it
would have done so. Instead, the 1932 Act contains the
following pertinent clause:

“# * %* Provided, however, That such iso-
lated tracts of land lying east of the Alaska Rail-
toad right of way and the west bank of the Nenana
River between the north bank of Windy Creek and
the north park boundary as extended eastward are
also included in said park: Provided further,
That nothing herein contained shall affect any val-

id existing claim, location, or entry under the land
laws of the United States, whether for homestead,
mineral, right of way, or any other purpose what-
soever, or shall affect the rights of any such claim-
ant, locator, or entryman to the full use and en-
joyment of his land.” (emphasis added).
A similar clause relating to existing claims or entry under
the land laws is found in the original Act. 16 U.S.C.A.
§ 348.

Tt has been held repeatedly that although the
Federal Government has the power to take private prop-
erty essential to the public welfare, it exercises that power
only pursuant to specific legislation; that express legisla-
tive authority is necessary to authorize the condemnation
of private property for public use, and statutes claimed to

ee | 7)

confer such power must be strictly construed; and that
Sec. 257 of Title 40 confers no general authority to ac-
quire lands by condemnation proceedings but only author-
ity to institute such proceedings in furtherance of or in
execution of authority otherwise granted. United States
v. Rauers, D.C., 70 F. 748; United States v. A Certain
Tract of Land in Cumberland Tp., C.C., 70 F. 940; Unit-
ed States v. Certain Lands in Town of Narragansett, R. I.,
C.C., 145 F. 654; United States v. Fisk Building, D.C.;
99 F.Supp. 592; Carmack v. United States, 8 Cir., 135
F.2d 196; United States v. 43,355 Sq. Ft. of Land in King
County, Wash., D.C., 51 F.Supp. 905; United States v.
Parcel of Land, etc., D.C., 100 F.Supp. 498; Youngstown
Sheet & Tube Co. v. Sawyer, D.C., 103 F.Supp. 569, 575.
Sec. 257 is therefore not sufficient authority to sustain this
action, in the absence of other specific legislation.

Plaintiff also relies upon the General Appropriation
Act above quoted, claiming that the provisions of such
Act appropriating funds for the “acquisition of lands”,
is sufficient to authorize this condemnation, citing United
States v. Beaty, D.C., 198 F. 284; United States v. Gra-
ham & Irvine, D.C., 250 F. 499; Albert Hanson Lumber
Co. v. United States, 5 Cir., 277 F. 894 (affirmed 261 U.S.
581, 43 S.Ct. 442, 67 L.Ed. 809); United States v. North
American Transp. & Trading Co., 253 U.S. 330, 40 S.Ct.
518, 64 L.Ed. 935; United States v. Threlkeld, 10 Cir.,
72 F.2d 464, certiorari denied 293 U.S. 620, 55 S.Ct. 215,
79 L.Ed. 708; Polson Logging Co. v. United States, 9 Cir.,
160 F.2d 712.

Examining these cases I find that the first three support
plaintiff’s contention only to the extent that it is held that
words authorizing the “purchase” of land under appropria-
tion acts or general acts must be deemed to include by im-
plication the right to acquire such lands by condemnation

480 Le

proceedings; but in each case specific authorization to pur-
chase or acquire such land appears. In the case of Albert
Hanson Lumber Co. v. United States [261 U.S. 581, 43
S.Ct. 444] the Supreme Court, on review, said:
“The authority to condemn conferred by * *
(Act of 1888) extends to every case in which an
officer of the government is authorized to procure
real estate for public uses.”
The case of United States v. North American Transp. &
Trading Co. does not relate to condemnation proceedings
but only to the liability of the United States for the taking
of property where not taken under legislative authority.
The cases of United States v. Threlkeld and Polson Log-
ging Co. v. United States do hold that the powers conferred.
upon the Secretary of Agriculture for the construction and
maintenance of roads within the national forest area under
16 U.S.C.A. §§ 471-482 and by appropriation acts are
sufficiently broad to confer the authority to condemn land
for such purpose under 40 U.S.C.A. § 257; and that by
necessity the statutory authorization to procure real es-
tate in such cases may be evidenced by the making of an
appropriation as well as by specific authorization to acquire.
These cases are clearly distinguishable from the case at bar.
The Court in the Threlkeld case recognizes the doctrine
set forth in the case of United States v. Rauers and United
States v. A Certain Tract of Land in Cumberland Town-
ship, above cited, and is in accord with such principle.

HI I am umable to find that the General Appropria-
tion Act relating to all of the national parks, as to which
in many cases specific authority is conferred upon the Sec-
retary of the Interior to acquire private lands, may be con-
strued by “necessary implication” to authorize the con-
demnation proceeding in this instance, especially in view
of the express preservation of the rights of the holders of

Se 181

“land by homestead within the boundaries of the Park,
quoted above.

The letter from the Solicitor of the Department of the
Interior, and the delegation of authority from the Secre-
tary to the Solicitor of the power conferred by Sec. 257,
referred to in plaintiffs amended complaint, do not confer
any authority not granted by Congressional enactment.

It must be concluded that the amended complaint fails
to state a claim upon which the relief sought may be had.
The motion to dismiss is therefore granted. Unless plain-
tiff requests leave to amend its complaint within twenty
days from the date of filing of this opinion, an order may
be presented dismissing the cause of action set forth in
plaintiff’s complaint as to Tract A with prejudice, and with
costs to the defendant Kennedy.

252 F.2d 412

CITY OF ANCHORAGE, a Municipal Corporation, Appellant, v.
CHUGACH ELECTRIC ASSOCIATION, Inc., Appellee,

ANCHORAGE INDEPENDENT SCHOOL DISTRICT, Appellant,
y. CHUGACH ELECTRIC ASSOCIATION, Inc., Appellee,

Nos, 15281, 15232.

United States Court of Appeals, Ninth Cireuit,
Feb. 6, 1958,

Rehearing Denied March 11, 1958,

aN |
g :

Se 185

James M. Fitzgerald, City Atty., Anchorage, Alaska,
E.L. Arnell, Anchorage, Alaska, for appellants.

J. Earl Cooper, Anchorage Alaska, for appellee.

Before DENMAN, POPE and BARNES, Circuit
Judges,

BARNES, Circuit Judge.

The City of Anchorage, Alaska, is a municipal corpora-
tion,t and the Anchorage Independent School District is
a public corporation.® Each is authorized to levy real and
personal property taxes on property situated within their
respective boundaries. Taxes were levied and assessed
upon appellee, the Chugach Electric Association, Inc., a
nonprofit cooperative association, organized under Alaskan
Law to participate under the Rural Electrification Act of
1936 (as amended), 7 U.S.C.A. § 901 et seq., for the year
1954. These taxes went unpaid and became delinquent.
In accordance with the involved and somewhat unique pro-
cedures established by the territorial legislature for the
collection of delinquent taxes,* the delinquent tax rolls
were presented to the District Court for the District of
Alaska, Third Division, for judgment and order of sale
of the property. The cause was heard, judgment entered,
and sale ordered. Appellee then filed motions to dismiss
the judgment and set aside the order of sale. The cases
were consolidated for determination of the motions, argu-
ments had, and an opinion granting appellee’s motion filed
on May 9, 1956,

116-1-1 to 16-1-148, Alaska Compiled Laws Ann.1949,
2 37-8-41 to 87-38-55, A.O.L.A.1949.

8 Municipal corporations: 16-1-35(9), A.C.L.A.1949; Independent
School Districts: 87-38-58, A.0.L.A.1949,

4See 16-1-121 to 16-1-129, A.C.L.4.1949; 37-38-54, A.0.L.A.1949,

486 De

Three grounds ‘were urged by appellee in support of its
motion to dismiss: :

(1) The cooperative association is a governmental in-
strumentality and therefore not taxable.

(2) The property of the association is located wholly
within the Alaska Railroad Reserve, with title thereto in
the federal government, and therefore is not taxable.

(3) The cooperative has been granted specific immunity
from taxation by the Territorial Legislature. The Dis-
trict Court decided the case in appellee’s favor on the third
ground stated, that being determinative.

Appellants challenge the holding of the District Court ®
that Chapter 10, Session Laws of Alaska 1949, was a codi-
fication of all taxing statutes, thereby granting, under § 6
(b), an exemption from municipal and school district taxes
to associations operating utilities under arrangement with
the Rural Electrification Administration; and further, that
Chapter 33, S.L.A.1953, grants appellee an exemption
from these taxes.® We are thus presented with the ques-
tion whether, under the statutes now in force in the Ter-
titory of Alaska, the Chugach Electric Association, an as-
sociation operating under arrangement with the Rural
Electrification Administration, is exempt from taxes law-
fully imposed by municipalities and independent school
districts.

528 U.S.C.A. §§ 1291, 1294.

6 This is not the first time Ch. 10, 8.L.A.1949, the Alaska Property
Tax Act, has been before this Court. In Hess v. Mullaney, 1954, 9
Cir., 218 F.2d 685, this Court held that the manner of collection au-
thorized and the imperfect implementation of the tax imposed by
Chapter 10 were not violative of the federal constitution. In the
recent case of Territory of Alaska v. American Can Co., 1957, 9 Cir.,
246 B.2d 493, it was determined that the special saving clause of
Chapter 22, 8.L.A.1953, which act repealed the Alaska Property Tax
Act, overcame and made inapplicable the general saving clause, 19-
1-1, A.O,L,A.1949.

Se {67
I

Codification

Under the Organic Act of 19127 the Congress of the
United States authorized the levy of property taxes by the
Territory of Alaska* and by incorporated municipalities
within the Territory.® Pursuant to the latter authority,
a general tax for school and municipal purposes was en-
acted by the territorial legislature in 1913.2° With certain
revisions, here inapplicable, the power of municipalities and
school districts to levy taxes remained substantially the
same up to 1949,

The Territory of Alaska did not invoke its power to tax,
given it in 1912, until 1949. In that year the legislature
enacted the Alaska Property Tax Act, Chapter 10, S.L.A.
1949, It is this Act which lies at the heart of the instant
case. The pertinent parts thereof are as follows:

“Chapter 10

“An Act

“Levying a tax on property in Alaska; provid-
ing for collection thereof and allowing certain ex-

787 Stat. 514, now contained in Title 48 U.S.0.A,
848 U.S.C.A. § 79.

91d. § 44.

10 § 627, A.O.L.A.1913.

11°The 1918 Act authorized a tax of 2% and made exempt munici-
pal property, property used exclusively for religious, educational and
charitable purposes, and household furniture of the head of a family
up to $200. The 1949 version of the 1918 Act, 16-1-35(9), A.C.L.A.
1949, left local taxing powers unchanged except to add the property
of veterans organizations and monies on deposit to the list of prop-
erty exempt from taxation. The latter had been added to the list
af exemptions by various intervening amendments. See note 15, in-
fra,

488

emptions; defining offenses and prescribing penal-
ties; and declaring an emergency.

“Be it enacted by the Legislature of the Terri-
tory of Alaska:
* * * * * * * *

“Section 3. Levy of Tax. For the calendar
year of 1949, and each calendar year thereafter
there is hereby levied, and there shall be assessed,
collected and paid, a tax upon all real property and
improvements and personal property in the Terri-
tory at the rate of one per centum of the true and
full value thereof. * * *

“Section 4. Tax Upon Property Within In-
corporated Cities And Districts. The tax levied
under the provisions of Section 3 upon the prop-
erty within the limits of an incorporated city or
town, independent school district or incorporated
school district in the Territory shall be assessed,
collected and enforced in the manner prescribed
by the property tax law of the municipality or dis-
trict, by and at the expense of the municipalities
and districts prorated proportionately between
each, provided that amounts levied but which
prove uncollectible, and the cost of foreclosure on
delinquent accounts shall be borne by the city or
school and public utility district.

“All of the tax levied under this Act which is
so collected shall be remitted to such municipal-
ities or school districts as follows:

* * * * * * * *

“(c) As to cities which are part of an independ-
ent school district the amount of taxes collected
shall be turned over to the city treasurer. The city

Se 18)

treasurer is hereby authorized and empowered to
turn over to the school board such part of the funds
collected as may be determined by the city council
from time to time necessary to efficiently carry
on school functions in said school district, Such
cities may assess and collect an additional tax on
real and personal property situated in said cities
not to exceed the amount allowed by law, which
tax shall be assessed and collected at the same time
and in the same manner as the tax provided in
Section 3 of this Act, which said funds shall be
used by said cities for general municipal purposes.
OR OK

* * * * * * * *

“Section 6. Exemptions.
ES * * * * * * *
“(b) The property of * * * any * *
association operating utilities under arrangement
with the Rural Electrification Administration,
shall be exempt hereunder.
* *, * * * * * *

“(h) Industrial Incentive Clause: The Tax
Commissioner is authorized to grant incentive ex-
emptions hereunder and in the manner and to the
extent hereinafter set forth: * * *%” [Em-
phasis added.]

; | If the provisions of Chapter 10, S.L.A.1949,
above quoted, were a codification of all the property taxa-
tion laws of the Territory of Alaska, as the court below
found, the result would be that the provisions of § 6 ap-
plied to all taxes levied, whether the 1% levied by Chap-
ter 10, or the 3% levied by other taxing units under their
statutory authority. Admitting that codification may take

490 be

place without specific reference to the statutes being codi-
fied and without a general statement that a codification is
intended, we cannot agree with the conclusion that the
Alaska Property Tax Act of 1949 constituted such a codi-
fication. “[T]hose who seek an exemption from a tax
must rest it on more than a doubt or ambiguity.” United
States v. Stewart, 1940, 311 U.S. 60, 71, 61 S.Ct. 102, 109,
85 L.Ed. 40.

HM Relying on the fact that the 1949 Act taxed all
property within the Territory and that the tax collected
pursuant thereto within municipalities or school districts
was to be remitted to said municipalities or districts,” the
court below concluded that, “it cannot be said that the leg-
islature intended that the 1% authorized by this act would
be in addition to that authorized to the municipalities and
independent school districts enumerated above.” We can-
not see why this is so, and do not agree. Congress, in the
Organic Act of 1912, contemplated separate and cumula-
tive taxation by the Territory and local units. Originally
there was authorized a 2% tax by the latter, and a 1%
tax by the former; this has now been increased to 3% and
2% respectively.* The increase was approved by Congress
in 1948; thus at the time Chapter 10, S.L.A.1949, was
enacted there could have been a maximum property tax
of 5% of assessed value. Assuming taxes by local units
were at their allowable maximum of 3%," the total amount
of taxes imposed would be well below the maximum decreed
by Congress.

2 § 4, Ch. 10, S.L.A.1949.
13 48 U.S.0.A. §§ 44, 79.
44 Which they were not! See Note 17, infra.

ee 1S)

School and municipal taxing statutes long ante-date the
territorial tax.%® Such a statute existed at the date the
Territorial Property Tax Act was passed, was amended at
the same session of the legislature which enacted the ter-
ritorial tax,!® and was amended, not re-enacted, by the same
1953 legislature which repealed the territorial property
tax.”

HM “When all the acts are viewed as a whole and con-
strued together,” the legislative intent is clearly not that
of codification. It bespeaks of an additional tax imposed
by the Territory for territorial purposes, one of which was
use of the tax collected within municipalities and school
districts by those respective units.*®

It should be further noted that the exemptions author-
ized by § 6 of Chapter 10 are exemptions from the tax im-
posed “hereunder.” The only tax “imposed” by Chapter
10 is the 1% tax on all property within the Territory. §
4(c) of Chapter 10 allows local units to impose “an addi-
tional tax * * * not to exceed the amount allowed
by law.” It is logical to assume that in enacting the quoted
portion of § 4(c) the legislature was aware of the various
statutes authorizing local units to impose property taxes.
(These have already been mentioned.) Thus it is appar-

415 The very earliest such statute was a 1904 congressional exercise
of power, 33 Stat. 529. For similar legislative action by the Territory
of Alaska see § 627, A.C.L.A.1913; Ch. 97, S.L.4.1923; Ch, 116, S.L.A.
1929; Ch, 33, S.L.A.1931; § 2388, A.C.L.A.1933; Ch. 77, 8.L.A.1935 ;
16-1-35(9), A.O.L.A.1949 ; 37-38-58, A.C.L,A.1949.

16 Ch. 38, S.L.A.1949. ‘This amendment gave municipalities the ad-
ditional power to levy a consumers’ sales tax.

17 Ch. 121, S.L.A.1953, authorized the increase of local taxes from
2% to 3% pursuant to 48 U.S.C.A. § 44.
18 As was pointed out in Hess v. Mullaney, supra, note 6, 213 F.2d

at page 689, this was a form of reimbursement by the Territory to its
local governmental subdivisions,

492 Lt

ent that the legislature itself contemplated the other taxes
then in force and added a new 1% territorial property tax
thereto, for which various exemptions were designated.

The net result of Chapter 10 was to impose a 1% tax
on all property within the Territory, exempting therefrom
certain property as listed in § 6. Such property, wherever
located, including the property of associations operating
utilities under arrangement with the Rural Electrification
Administration, § 6(b), was exempt from the 1% tax, but
was not exempt from whatever property taxes were im-
posed by local taxing units on property located therein.

Il
Effect of Repeal and Present Exemptions

Whatever may have been the scope of the tax imposed
and exemptions allowed by Chapter 10, S.L.A.1949, that
statute was not applicable to the taxes here in issue which
were levied and assessed for the year 1954. Chapter 10
‘was repealed by Chapter 22, S.L.A.1953.% Shortly there-
after, there was enacted Chapter 33, S.L.A.1953, upon
which appellee relies and which is here quoted in pertinent
part:

“Chapter 33

“An Act

“Authorizing and empowering Cities, Munic-
ipalities, School Districts, Public Utility Districts
and other taxing units to classify property for the
purpose of taxation and authorizing the granting
of exemptions to certain classes of property;
making exemptions granted and classifications
made under Chapter 10, Sessions Laws of Alaska,

9 The saving clause, § 2 of Ch. 22, S.L.4.1953, is not pertinent
here. See Territory of Alaska vy. American Can Co., supra, note 6,

Se 1);

1949, binding upon such taxing units; and declar-
ing an emergency.

“Be it enacted by the Legislature of the Terri-
tory of Alaska:

“Section 1, All municipalities * * * and
independent school districts * * * having pow-
er to tax real and personal property, are hereby
authorized and empowered to classify property
for the purpose of taxation and to grant exemp-
tions therefrom for the periods herein prescribed
to certain classes of property as follows:

* * * * * * * *

“Section 3. All exemptions granted * * *
and all classifications heretofore made under the
provisions of Section 6, Chapter 10, Session Laws
of Alaska 1949, shall remain in full force and ef-
fect upon the terms and for the periods granted,
and shall be binding upon the Territory, and all
* % * municipalities, school districts * *
in which the property which is the subject of clas-
sification or exemption is situated, and the ex-
emptions granted and classifications so made shall
apply to all taxes levied and assessed by the * *
municipality, school district * * * where the
property is situated, as fully as though they had
been granted under this Act. The purpose and
intent of this section is to carry into practical ef-
fect all classifications made and exenuptions grant-
ed under the provisions of Chapter 10, Session
Laws of Alaska 1949.

“Section 4. It is declared to be the purpose
and intent of this Act to encourage the establish-
ment of new industry and the construction of new
buildings and structures in the Territory which

494 Ee

ring new payrolls, new settlers and, consequently,
new wealth to the Territory, and which will even-
tually add to the amount of taxable property in
Alaska; and it is enacted for the purpose of au-
thorizing classification of property for taxation.
* * *” [Emphasis added.]

Before proceeding to a discussion of the effect of Chap-
ter 33, S.L.A.1953, it is pertinent to note that subsequent
to its passage the legislature amended the then existing
statute empowering municipalities to tax for school and
general purposes, increasing the authorized amount from
2% to 3%. This amendment, Chapter 121, S.L.A.1953,
however, did no more than that. It retained all the prior
exemptions of similar statutes, but not an exemption for
associations operating utilities under arrangement with the
- Rural Electrification Administration.

THE The essence of appellee’s contention is that the
exemptions of the repealed § 6, Chapter 10, S.L.A.1949,
were re-enacted, in toto, by Chapter 33, S.L.A.1953. This
conclusion is based on the reference to “Chapter 10” in
the introduction to Chapter 33, to “Section 6” Chapter 10,
in the first sentence of § 3 of Chapter 33, and to Chapter
10 in the last or “purpose” sentence of § 3 of Chapter 33.°°
What appellee fails to recognize, and the error we find in
the court below, is that the references to Chapter 10 and
to § 6 thereof contained in Chapter 33 are references to
“classifications made and exemptions granted” under Chap-
ter 10. The scope of exemptions provided by Chapter 33,
S.L.A.1953, is not as broad as appellee would have us find.
The incorporation into Chapter 33 of exemptions allowed

20'The decision below found in favor of appellee’s contention with-
out discussion of Chapter 33: “In conclusion, I find no well-founded
doubt in this case. The legislature has granted an exemption to co-
operatives operating utilities under ‘arrangement’ with the R.E.A.”

Se 195

by Chapter 10 is limited to those arising from “classifica~
tions made and exemptions granted” pursuant to the lat-
ter statute. Which exemptions of § 6, Chapter 10, S.L.A.
1949, so qualify?

§§ 6(a) through 6(g) exempt certain properties by man-
date of the legislature—such property: “shall be exempt
hereunder.” Only § 6(h), the industrial incentive clause
of Chapter 10, makes reference to the classifying of prop-
erty for taxation or to the granting of exemptions. Chap-
ter 33, S.L.A.1953, is, by its § 4 express purpose clause,
similar to § 6(h) of Chapter 10, an industrial incentive
provision. It is not a taxing statute; rather it authorizes
local taxing units to classify certain properties and to grant
exemptions thereto. It is a discretionary enabling act, just
as was § 6(h) of the repealed Alaska Property Tax Act.
Thus we believe it quite clear that the references in Chapter
33 to the repealed Chapter 10 and Chapter 10, § 6 are not
to all the provisions of § 6, but only to those classifying
property and granting exemptions—i. e., those contained
in § 6(h), Chapter 10, S.L.A.1949, Such a construction
of Chapter 33 makes consonant the purpose and intent of
the entire act as stated by the legislature in § 4.

Hy Finally, it is well to again point out that the same
legislature which enacted Chapter 33 subsequently amended
the taxing authority of municipalities, and thereby of school
districts,*! to raise the allowed rate from 2% to 3%. This
statute, Chapter 121, S.L.A.1953, left unchanged the ex-
emptions of the statute it amended.” Absent therefrom
is any exemption which would pertain to the Chugach Elec-

21 See 87-83-53, A.C.L.A.1949,
22 See note 11, supra.

496 |

tric Association. Chapter 121 is a specific school and mu-
nicipal taxing statute. If Chapter 33 were interpreted to
re-enact all the exemptions established by Chapter 10, S.L.
A.1949, there would be both redundancy and inconsistency
between the two pertinent 1953 statutes. Since Chapter
121 was passed within a few weeks of Chapter 33," by
the same legislative body, we find such an intended incon-
sistency and redundancy highly unlikely. The rule of con-
struction which establishes a presumption against surrender
of the taxing power precludes imputation of such inaccur-
acy to the territorial legislature.”

Appellee does not claim to have established any new busi-
ness nor to have constructed any new buildings, so as to
qualify under the industrial incentive provisions of Chap-
ter 33, S.L.A.1953. Rather, the Chugach Electric Asso-
ciation claims to be exempt from property taxation by the
terms of a repealed statute which at first blush might ap-
pear to have been incorporated by reference into the stat-
ute now in force. Chapter 33, read in the light of its ex-
press terminology and stated purpose, cannot be so con-
strued. Chapter 33 does no more than authorize taxing
units of the Territory to grant industrial incentive exemp-
tions and to classify property accordingly.

Hi We conclude, therefore, that there is no statutory
authority exempting the property of appellee from taxa-
tion by the City of Anchorage and the Anchorage Inde-
pendent School District.

23 Ch. 83, 8.L.A.1958, was approved March 16, 1953. Ch. 121, S.L.A.
1953, was approved March 30, 1953.

23a See United States v. Stewart, 1940, 811 U.S. 60, 71, 61 S.Ct. 102,
85 L.Ed. 40.

7
IL

Appellee’s Alternative Grounds

We find the alternative contentions of appellee equally
without merit.

A. The Electric Association is not an agency of
the United States Government simply by virtue of an “ar-
rangement” with the Rural Electrification Administration
pursuant to 7 U.S.C.A. §§ 901-915. The Rural Electrifica-
tion Administration is the government agency. The as-
sociations to whom it provides funds and other assistance
are not. By no concept or canon of construction can the
recipient of federal aid in this situation be considered a
“government instrumentality’** and therefore immune
from local taxation under the supremacy clause of the Con-
stitution, whereby the federal government protects the in-
strumentalities which it has constitutionally created.

B. The City of Anchorage includes within its
corporate limits the Alaska Railroad Reserve.” It is not
shown that the Railroad Reserve is “federal property” or
under the exclusive jurisdiction of the federal government.
Therefore the doctrine that property located upon federally
owned land is immune from local taxation ** is inapposite.

Accordingly, for the reasons set forth hereinabove, the
decision of the District Court must be, and is Reversed,
and the action remanded to the District Court for the Dis-
trict of Alaska for entry of an order reinstating the judg-
ment and ordering the sale.

24Of, Federal Land Bank of St. Paul v. Bismarck Lumber Oo., et
al., 1941, 314 U.S. 95, 102, 62 S.Ct. 1, 86 L.Ed. 65.

28 City of Anchorage v. Akers, D.O.D.Alaska, 1951, 100 F.Supp. 2.

26 See City of Anchorage y. Akers, supra, note 25, and cases cited
therein; James v. Dravo Contracting Co., 1937, 302 U.S. 184, 58 5.
Ct. 208, 82 L.Bd. 155; Standard Oil Co. v. People of State of Cali-
fornia, 1934, 291 U.S. 242, 54 8.Ct. 381, 78 L.Ed. 775.

|

498 |

358 U.S. 829, 79 S.Ct. 48
Lorenzo WHITE, Joyce Harper, and Ruby Fields, petitioners, v.
UNITED STATES of America,
No. 206,

Supreme Court of the United States.
Oct. 13, 1958.

Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit.

Denied.

159 F.Supp. 571

James B, HUKILL, Plaintiff, v. PACIFIC AND ARCTIC RAIL-
WAY AND NAVIGATION COMPANY, a corporation; The
British Yukon Navigation Company, Limited, a corporation;
British Columbia Yukon Railway Company, a corporation;
The British Yukon Railway Company, a corporation and
doing business as White Pass and Yukon Route, et al.,

Defendanis.
Civ. No, A-12871,

District Court, Alaska. Third Division, Anchorage.
March 11, 1958,

Ss
BY)

x
{|
=

Harold J. Butcher, Anchorage, Alaska, for plaintiff.
Faulkner, Banfield & Boochever, Juneau, Alaska, for
defendant White Pass & Yukon Route.

HODGE, District Judge.

Plaintiff brings this action against the several defend-
ants above named, for damages for alleged personal in-
juries sustained by him on November 23, 1954, while in
the employ of the defendants at Skagway, Alaska, due to
the negligence of the defendants, while engaged in unload-
ing a box car for loading aboard a ship moored at such
place. Complaint was filed on November 20, 1956, Sum-
mons was issued but was not delivered to the United States
Marshal or other person appointed, for service. A little
more than a year later, on November 22, 1957, a new
summons was issued and delivered to the United States
Marshal at Anchorage who forwarded it to the United
States Marshal for the First Division, who served sum-
mons and complaint on Norman C. Banfield as “attorney”
for the defendant Pacific and Arctic Railway and Naviga-
tion Company at Juneau on November 29, 1957. The de-
fendant “White Pass and Yukon Route” has moved for

502 De

dismissal of the complaint upon the grounds: (1) that
the action has not been commenced within three years of
the date of the injury, as required by 45 U.S.C.A. § 56;
(2) that no proceedings were taken in the action for a pe-
riod of more than one year after the case was filed, as re-
quired by Rule 16, Uniform Rules of the District Court
for the District of Alaska; and (3) the action has not been
filed in the District of the residence of the defendant, or
in which the cause of action arose, or in which the defend-
ant was doing business, as required by 45 U.S.C.A. § 56.

Hii is necessary first to determine whether or not
this action was brought under the provisions of the Fed-
eral Employers’ Liability Act (45 U.S.C.A. §.51 et seq.),
as was first assumed by the defendant. The plaintiff as-
serts that it was not so brought, in which he appears to be
correct, for although the court would have jurisdiction un-
der this Act if the allegations of the complaint were suffi-
cient, even though not declared in the complaint, it appears
that the acts of negligence complained of were not within,
the purview of the act. Defendant now concedes this
point. Therefore it appears that the general statute of
limitations provided by Sec. 55-2~7, A.C.L.A.1949, of two
years, rather than the specific limitation under 45 U.S.C.A.
§ 56, of three years, would apply in this instance.

HB Matters of procedure are now governed by Rules
3 and 4, Federal Rules of Civil Procedure, 28 U.S.C.A.
Rule 3 provides that:

“A civil action is commenced by filing a com-
plaint with the court”. Rule 4 provides:

“Upon the filing of the complaint the clerk shall
forthwith issue a summons and deliver it for serv-
ice to the Marshal or to a person specially ap-
pointed to serve it. Upon request of the plaintiff

a }

separate or additional summons shall issue against
any defendants”.

These Rules supersede the provisions of the Alaska Code
of Civil Procedure that “an action shall be deemed com-
menced when the complaint is filed and the summons is-
sued”, and that “‘at any time after the action is commenced
the plaintiff may cause a summons to be served on the de-
fendant”. Secs, 55-2-13 and 554-1, A.C.L.A.1949.

HH it appears to be fairly well settled that Rules 3
and 4, F.R.C.P. must be construed together, and that the
filing of a complaint, when followed by lodging of the
summons or writ in the Marshal’s office, will toll the stat-
ute of limitations. Bomar v. Keyes, 2 Cir., 162 F.2d 136,
140 (certiorari denied 332 U.S. 825, 68 S.Ct. 166, 92 L.
Ed. 400); Isaacks v. Jeffers, 10 Cir., 144 F.2d 26; Yudin
v. Carroll, D.C., 57 F.Supp. 793. See also Barron and
Holtzoff, Fed.Prac. & Proc. Vol. 1, Sec. 163, pp. 277~
278, wherein the authors state that the view adopted by
the Federal courts that the filing of the complaint under
Rule 3 commences the action within the meaning of the
statute of limitations,

“is subject to the qualification that delay in three
additional steps—issuance of summons, delivery
to an officer for service, and service of the sum-
mons and complaint on defendant—may nullify
the effect of filing the complaint”.

In this respect the courts have followed decisions in-
terpreting the former Equity Rule from which Rules 3
and 4 were taken, Linn & Lane Timber Co. v. United
States, 236 U.S. 574, 35 S.Ct. 440, 59 L.Ed. 725; United
States v. Spreckels, D.C., 50 F.Supp. 789; United States
v. Hardy, 4 Cir., 74 F.2d 841; United States v. Miller,
C.C., 164 F. 444. To quote from the decision of the Su-

504 [|

preme Court in the Linn & Lane Timber Co. case [236
USS. 574, 35 S.Ct. 441]:

“The bills were filed and subpoenas were taken
out and delivered to the marshal for service before
the statute had run, reasonable diligence was shown
in getting service, and therefore the rights of the
United States against all the patents were saved.
For when so followed up, the rule is pretty well
established that the statute is interrupted by the
filing of the bill.”

In this case the summons was not delivered to the Mar-
shal for service until a year after the expiration of the stat-
ute of limitations. It therefore conclusively appears that
the action was not timely commenced, within the meaning
of the above Rules.

WBBM Plaintiff seeks to excuse the delay in delivery
to the Marshal and service of the summons, by affidavit
showing difficulties encountered in determining the cor-
rect party to be served. Such excuse may more prop-
erly be considered relating to the time for service of sum-
mons. The Rules contain no provision limiting the time
for such service, but the courts have held that they might
inquire into the matter of due diligence in such service.
Schram v. Koppin, D.C., 35 F.Supp. 313. In this respect
the courts have generally treated the question as one of
due diligence on the part of the plaintiff, or the filing of a
complaint and issuance of summons with the bona fide in-
tent to prosecute the suit diligently, provided there was no
unreasonable delay in the service of the summons; and
that if lack of such diligence was found the action was
not commenced within the meaning of the statute of lim-
itations. Barron and Holtzoff, supra, Sec. 163, pp. 279-
280; Schram v. Holmes, D.C., 4 F.R.D. 119; International

ee. 505

Pulp Equipment Co. v. St. Regis Kraft Co., D.C. 55 F.
Supp. 860; United States v. Spreckels, supra.

HH The reported decisions do not indicate whether
such discretion may be exercised relating to failure to com-
ply with Rule 4. However, even though this question may
be considered, I must hold that there was no due diligence
in this case. The affidavit of counsel for plaintiff in sup-
port of this contention recites in substance that plaintiff
submitted the case to him shortly before the statute of lim-
itations would expire; that plaintiff did not know the name
of his employer except that he was employed by the “White
Pass and Yukon Railroad”; that counsel was unable to
find such a corporation doing business in the Territory and
that he therefore filed the complaint against the defendants
named upon documents furnished by plaintiff; that he
made no effort to have the summons delivered to the Mar-
shal for service as he was unable to ascertain which corpo-
ration was responsible for plaintiff’s injuries, and that
“some time passed” before it was possible to determine
which of the several corporations was the proper party
to be served; and that meanwhile he had discussed the
possibility of settlement of the suit with Mr. Boochever
of counsel for defendant, but no settlement was reached.
It further appears that the new summons was issued when
it appeared that one year from the date of filing without
further proceedings would subject the case to dismissal
when no action is taken thereon for more than one year,
under Rule 16 of the District Court Rules.

Mr. Boochever replied by affidavit stating that the four
corporations named were doing business under the trade
name of the “White Pass and Yukon Route”; that Nor-
man C, Banfield of his firm was then listed as agent for
service of process of the British Yukon Navigation Com-
pany, Ltd., and that the date of the conference with coun-

506 |

sel for plaintiff was May 29, 1957 (or approximately six
months before the issuance and delivery of the second
summons).

It therefore appears that plaintiff could have obtained
service with the exercise of reasonable diligence upon ei-
ther such designated statutory agent or, if none was found,
as to any of the defendants named upon the Clerk of the
District Court, pursuant to Sec. 36—-2-1, A.C.L.A.1949.

As aptly stated by Judge Raymond J. Kelly in an anal-
ogous situation, although relating to the rule of laches in
admiralty, in the case of Brown v. Kayler, D.C., 156 F.
Supp. 111, 113, filed November 6, 1957,

“Where statutes of limitation are passed they
point out to those who would use the court that
the courts are open to claimants for the period
permitted under the statute and not thereafter,
and it is only in the case of the gravest injustice,
under most exceptional circumstances, where no
fault inures to the claimant, and then only in the
exercise of sound judgment where real equitable
considerations exist, that the court is permitted
to exercise discretion in waiving the laches com-
plained of”, citing Westfall Larson & Co. v. All-
man-Hubbele Tugboat Co., 9 Cir., 73 F.2d 200.

Hi Finding that the action was not timely commenced,
other grounds of defendant’s motion need not be consid-
ered, except that it should be noted in passing, for future
guidance, that there appears no provision of law, either
Alaska or Federal, that requires such suit to be brought
in the division of the District of Alaska in which the de-
fendant resides, or the injury occurred. The District
Court for the District of Alaska is but one court or dis-
trict, and the jurisdiction of each Division extends over
the Territory; but the court in which the action is pend-

[| 507

ing may, on motion, change the place of trial to another
division. Sec. 53-2-5, A.C.L.A.1949; Matheson v. Unit-
ed States, 227 U.S. 540, 33 S.Ct. 355, 57 L.Ed. 631; United
States v. Hoyt, 7 Alaska 276. The case of Hemmingson
“y, Libby, McNeil & Libby, D.C., 89 F.Supp. 502, 12 Alas-
ka 651, relating to the particular interpretation of the Alaska
Workmen’s Compensation Act, A.C.L.A.1949, § 43-3-1
et seq., does not hold otherwise.

The motion to dismiss will be granted. Unless plaintiff
requests leave to amend within twenty days from the date
of filing of this opinion, an order may be presented dismiss-
ing this action with prejudice.

James A, TAPSCOTT, Plaintiff v. Vernon C, PAGE and An-
chorage Independent School District, a corporation,
defendants.

No. A-14013,

District Court, Alaska. Third Division, Anchorage.
March 14, 1958.

508

John C. Dunn of Butcher & Dunn, Anchorage, Alaska,
for plaintiff.

Raymond E. Plummer, Anchorage, Alaska, of counsel,
for Plummer and Delaney.

E. L. Arnell, Anchorage, Alaska, for defendant Anchor-
age Independent School District.

| 509

HODGE, District Judge.

Plaintiff brings this action for damages for alleged per-
sonal injuries suffered by him through the negligence of
the defendant Page, an employee of the defendant Anchor-
age Independent School District, in the operation of a school
bus owned by the District in transporting children to or
from school, in collision with plaintiffs automobile. The
School District has filed separate motions to dismiss the
complaint upon the grounds that this court lacks jurisdiction
over the subject matter and over the defendant, being
a public corporation performing a government function of
the Territory, and that the complaint fails to state a claim
upon which relief may be granted against said School
District.

HE The rule is firmly established in our law and recog-
nized in this court that where a municipal corporation is
performing a duty imposed upon it as the agency of the
state in the exercise of governmental functions, it is not
liable on account of injuries resulting from the wrongful

- acts or negligence of its officers or employees in the per-
formance of their duties, in the absence of statute imposing
such liability. McQuillin, Municipal Corporations, Vol. 18,
Sec. 53.24; Carr v. City of Anchorage, 14 Alaska 409, 114
F.Supp. 439; City of Fairbanks v. Gilbertson, 16 Alaska
590.

This principle of immunity from tort liability has been al-
most universally extended to school districts, as quasi-mu-
nicipal corporations, in the operation or maintenance of
public schools. 78 C.J.S. Schools and School Districts §
320, pp. 1321-1324; 4 Dillon Municipal Corporations,
(5th Ed.), Sec. 1658; Annotation, 160 A.L.R. 37; Antin
vy. Union High School District No. 2, 130 Or. 461, 280 P.
664; Lovell v. School District No. 13, Or., 143 P.2d 236;

510 be

Rhoades v. School District No. 9, Mont., 142 P.2d 890, 160
ALR.1. .

The principle has further been expressly applied to the
non-liability of school districts for injury resulting from
negligence in the operation of motor vehicles or school
busses for the transportation of pupils. 78 C.J.S. Schools
and School Districts § 322, pp. 1334-1336; Rittmiller v.
School District No. 84, D.C., 104 F.Supp. 187; Thurman
v. Consolidated School District No. 128, D.C., 94 F.Supp.
616; Rankin v. School District No. 9, 143 Or. 449, 23 P.
2d 132.

The rule as to exception from such immunity by statutes
imposing liability is best expressed in McQuillin, Munici-
pal Corporations, supra, Sec. 53.27, as follows:

“If a statute imposes liability on a municipal
corporation for its negligence, it is no defense
that the negligent act was done in the exercise of
a governmental duty. However, an enactment
imposing municipal liability with respect to the
performance of public functions is in derogation
of the common law and will be strictly construed.

An intention to impose liability upon a city will

not be imputed in the absence of language clearly

designed to have that effect” (Emphasis added).
There are such statutes in some states, but none in Alaska.

HI Plaintiff principally relies upon the Alaska statute
relating to actions by and against public corporations, which
he contends imposes such liability, or expressly permits such
actions, being Secs. 56-2-1 and 56-2-2, A.C.L.A.1949,
Sec. 56-2-1 provides that an action may be maintained
by an incorporated town, school district or other public
corporation in its corporate name, and upon a cause of ac-
tion accruing to it in its corporate character, in certain cases.
Sec. 56-2-2 provides as follows:

— 511

“An action may be maintained against any of
the public corporations in the Territory mentioned
in the last preceding section in its corporate char-
acter, and within the scope of its authority, or for
an injury to the rights of the plaintiff arising from
some act or omission of such public corporation”.

This statute may not be construed as imposing liability,
but only as creating a remedy where liability otherwise
exists. The Supreme Court of Oregon has so construed an
identical statute, holding that the statute does not apply
where there is no liability under the rule expressed above,
for acts done by a school district in a governmental capac-
ity. Antin v, Union High School District No. 2, supra;
Lovell v. School District No. 13, supra; Blue v. City of
Union, 159 Or. 5, 75 P.2d 977; Spencer v. School District
No. 1, 121 Or. 511, 254 P. 357. In these cases a clear
distinction is made that the statute gives a remedy only
when the district is liable in its corporate capacity, as dis-
tinguished from governmental capacity. Plaintiff seeks to
distinguish these cases for the reason that the word “omis-
sion” in the statute was later changed to “commission”.
No such distinction appears in the decisions both prior and
subsequent to such amendment. (See especially Blue v.
City of Union, supra, 75 P.2d at pages 981-982). A sim-
ilar Minnesota statute has been likewise construed. Anno-
tation, 160 A.L.R. 96,

The Supreme Court of Washington has adopted a con-
trary rule, holding that an almost identical statute is con-
strued as abrogating the common law rule of tort non-lia-
bility so as to render school districts liable for acts of its
officers or employees, although not so applied to other mu-
nicipal corporations, following an early decision (1907) in
Redfield v. School District No. 3, 48 Wash. 85, 92 P. 770.
See Annotation, 160 A.L.R. 98 and cases cited p. 99, note

512 be

4. However, the Alaska statute was taken from the Oregon
Code (Sec. 334, Carter Code) and hence the decisions of
the Supreme Court of Oregon interpreting such statute are
controlling on this court. Jansen v. Pollastrine, 10.Alaska
316; Starns v. Humphries, 13 Alaska 258, 189 F.2d 357;
Hawkins v. Savage, 14 Alaska 253, 110 F.Supp. 615;
Druxman v. Renhard, 15 Alaska 105, 122 F.Supp. 822.

An early decision of the District Court for the First
Division in the case of Krause v. Town of Juneau, 1905, 2
Alaska 633, also appears to be contrary to this view; but
this case proceeds upon the proposition that cities are
charged with a duty to maintain sidewalks and hence are
liable for omission to perform that duty; and did not in-
volve an action against a school district, which is distin-
guished in the opinion. Moreover, the case is in conflict
with the rule of tort non-liability since firmly established,
and insofar as it is in conflict here must be overruled.

HI Plaintiff urges that we should follow the “modern
trend” of tightening liability and liberalizing remedies, cit-
ing decisions under the Federal Tort Claims Act, 28 U.S.
CA, §§ 1346, 2671-2680 and referring to the New York
tule, where by statute the State has waived its immunity
from tort liability. As to the former, the Supreme Court
has clearly recognized the distinction between the waiver
of government immunity by such Act and the liability of a
municipal corporation or other public body. Rayonier, Inc.,
y. United States, 352 U.S. 315, 318-320, 77 S.Ct. 374, 1
L.Ed.2d 354. As to the latter, the following quotation
from the annotation in 160 A.L.R. 38 may be enlighten-
ing:

“Thus, it is the general rule in practically every
jurisdiction in this country, outside of the State
of New York, that, in the absence of statutory
liability, school districts, school boards, or similar

De 513

school agencies or authorities, are not liable in
tort for injuries or damage caused by negligence
in the performance of governmental functions”.

It is further contended that as the authority conferred
upon the Territorial Board of Education to provide trans-
portation for school pupils by Sec. 37-2-8(7), A.C.L.A.
1949, is not mandatory, the rule of immunity should not
apply. The converse may be true in certain instances, as
to ministerial duties or functions of municipal corporations.
160 A.L.R. 69; City of Fairbanks v. Gilbertson, supra.
However, this distinction generally has not been applied
with respect to tort liability of municipal schools. Annota-
tion, 160 A.L.R. 69; Antin v. Union High School District,
supra. The absence of such “duty” has been held to not
take the act of transportation out of a governmental func-
tion. Wallace v. Laurel County Board of Education, 287
Ky. 454, 153 S.W.2d 915. The true test to be applied in
this instance is whether or not the transportation of pupils
is a government function, which it is. Rittmiller v. School
District No. 4, supra; Rankin v. School District No. 9,
sapra, 23 P.2d at page 133.

Hl Finally, plaintiff contends that the immunity of a
school district may be waived by the district taking out
liability insurance covering its school busses. In the first
place no such allegation is pleaded in the complaint. How-
ever, even if so pleaded, it has likewise been settled that
the carrying of liability insurance does not impose any lia~
bility or constitute any waiver of immunity in such instance.
Annotation 145 A.L.R. 1336; Rittmiller v. School District
No. 84, supra; Wallace v. Laurel County Board of Educa-
tion, supra. An exception to this rule appears under a

. statute providing for such liability insurance, and then only
to the extent of the insurance carriers’ liability, and not
against any school funds. Taylor v. Knox County Board of

bn |

514 a

Education, 292 Ky. 767, 167 S.W.2d 700, 145 A.L.R. 1333.
Alaska has no such statute.

It appearing that there is no liability of the defendant
School District for the injuries complained of, and that
the complaint fails to state a cause of action against the
District, the motion to dismiss the complaint against said
defendant is granted. Unless leave to amend is requested
within 10 days from the date of filing of this opinion an
order may be entered herein dismissing the cause of action
against Anchorage Independent School District, with costs

to the defendant.

159 F.Supp. 733

Patrick J, KISSANE, Individually, and on behalf of all others
similarly situated, Plaintiff, v. CITY OF ANCHORAGE,

a municipal corporation, et al., Defendants.
No. A-14129,

District Court, Alaska. Third Division, Anchorage.
March 20, 1958, .

=
i)

517

McLaughlin & Atkinson, Anchorage, Alaska, for plain-
tiff,

James M. Fitzgerald, City Atty., Anchorage, Alaska, for
defendants.

HODGE, District Judge.

Plaintiff brings this action for a declaratory judgment
pursuant to 28 U.S.C. § 2201 and Rule 57, Fed.Rules Civ.
Proc., 28 U.S.C.A., seeking to declare invalid Ordinance No.
1278 of the City of Anchorage and Chap. 17, $.L.A.1955,
as amended by Chap. 171, S.L.A.1957, relating to the estab-
fishment of off-street parking facilities; and to enjoin the

518 |

defendant City and its officers from further proceedings or
expenditures under said Ordinance.

The facts in the case are not in dispute, and are principally
covered by pre-trial order, as follows: plaintiff Kissane, a
taxpayer of the City of Anchorage, is the owner, and resides
on the residence property located on Lot 4 of Block 82,
Original Townsite of Anchorage, which is within the zoned
business district described in Ordinance No, 1278, but the
dwelling and lot are used solely as a residence with no im-
mediate use as business property; the City of Anchorage
enacted Ordinance No. 1278 on November 26, 1957, provid-
ing for levy of special assessments for off-street parking
against any and all property within the business district of
Anchorage; one-half of the properties within the business
district, although zoned for business, are presently residen-
tial in character, and used as residences; after enactment of
Ordinance No. 1278 the City Council of the City of Anchor-
age, on the same day, directed the City Engineer to prepare
a comprehensive plan for an off-street parking improvement
district, encompassing the entire business district, and to in-
cur the necessary expenses; simultaneously, the City Coun-
cil of the City of Anchorage directed the City Manager to
prepare resolutions and ordinances calling for a special elec-
tion in the City to authorize the issuance of bonds to finance
the off-street parking improvements and to incur the neces-
sary expenses.

In addition to this stipulation, defendant presented only
the testimony of George O. Matkin, City Engineer, with
respect to the proposed plan for such off-street parking fa-
cilities, from which it appears that the plan encompasses
one single improvement district, embracing all of the zoned
business district of the City of Anchorage; that it provides
for from 12 to 14 parking lots for the use of the public, each
parcel of land to be assessed being within three hundred feet
of a lot; that the assessment of benefits is to be pro-rated in

ee 519

proportion to the cost on a zone system, using a quotient
method of assessing such cost per square foot of the prop-
erty benefited. It also appears that such zones in some cases
overlap, but it is provided that in no case shall the assess-
ment be greater than the zone closest to the facility. It is
conceded that the true benefit to businesses within the dis-
trict would be an increase in the number of customers be-
cause of the availability of parking facilities; and that the
true benefit to residences would be an increased value of the
property for business purposes.

Ordinance No. 1278 was passed pursuant to the provi-
sions of the Acts of the Legislature above mentioned. By
Chap. 17, S.L.A.1955, the Legislature authorized any in-
corporated first or second class city to plan, design, construct
and operate off-street parking facilities if the city council
determines

“that the lack of adequate parking facilities within
the city creates congestion, obstructs the free circu-
lation of traffic, diminishes property values, or en-
dangers the health, safety and general welfare of
the public.”

The Act further provides with respect to financing such
improvements (Sec. 6) as follows:

“Within any limitations imposed by Federal
Law, cities are hereby authorized to finance off-
street parking facilities by issuance of general ob-
ligation bonds; parking fees and special charges;
Territorial and Federal grants and refunds to the
extent available; parking meter revenue; or other
monies available to the city for general use; gift,
bequest, devise, grant, or otherwise. It is not in-
tended by the Legislature to confer, or attempt to
confer, and debt-incurring power prohibited by the
Organic Act of Alaska and later Acts of Congress,

_ 520 be

but, within such limitations on the power of the
Legislature of Alaska, to confer such degree of
authority relating to the subject of this Act as may
be within the power of the Legislature so to con-
fer.”

The 1957 Amendment (Chap. 171, S.L.A.1957) added
this new section (Sec. 7):

“Each City is hereby authorized, subject to spe-
cific authorization and approval of its city council,
to levy special or benefit assessments, equal to the
total cost of land and improvements or only a por-
tion thereof, to be assessed against benefited prop-
erty in proportion to benefit derived, to be paid in
not to exceed ten annual installments at interest
not to exceed 6% per annum. Such benefit assess-
ments are to be determined in accordance with es-
tablished Territorial and local special assessment
practice, after proper notice and hearing, provided,
however, that no assessment shall be levied against
property not located in a zoned business district or
district within a city.”

Plaintiff contends that these Acts and such Ordinance are
not valid for the following reasons: (1) Chap. 171, S.L.A.
1957 is invalid because it conflicts with the due process
clause and equal protection clause of the Fifth and Four-
teenth Amendments to the Constitution; (2) the City of
Anchorage has no authority to incur bonded indebtedness
in order to finance off-street parking facilities under Public
Law 551 of the 79th Congress, Act July 26, 1946, 60 Stat.
701; and (3) the method of levy of assessments under Or-
dinance No. 1278 is invalid and confiscatory of plaintiff's
property, and no special benefits are conferred on plaintiff.
These issues of law will be considered in the order named.

ee 521

(1) The argument in support of plaintiff’s first conten-
tion appears to be that Chap. 171, S.L.A.1957 constitutes a
“special or local law” in violation of 48 U.S.C.A. § 1471, in
that it fails to incorporate the provisions of Secs. 16~1-81
and 16-1-91, A.C.L.A., with respect to the method of cre-
ating a local improvement district and assessing benefits
generally; and that it is vague and uncertain.

Hl The Act does not authorize any particular city
to provide for such improvements but is applicable alike to
each first and second class city. The test as to local or spe-
cial legislation is correctly quoted in plaintiffs brief from
2 McQuillin Municipal Corporations (3rd Ed.) p. 86:

“The test is whether the law operates uniformly
throughout the state upon all persons and localities
under like circumstances. If so, the law is gen-
eral”.

I find no merit in this contention.

The right to incorporate by reference provisions
of Territorial or Federal Law then in effect cannot be ques-
tioned. Alaska Steamship Co. v. Mullaney, 9 Cir., 180 F.2d
805, 815. I am of the opinion that reference to the “estab-
lished Territorial and local special assessment practice” is
sufficient to incorporate by reference the method and prac-
tice provided by the statutes then in force. The “established
practice” thus referred to includes two alternative methods
of establishment of local improvement districts, either (1)
by petition of property owners to the Council (Sec. 16-1—
81), followed by notice of hearing, hearing on objections,
levy and notice of assessment; or (2) by general or special
ordinance (Sec, 16—1-91), also followed by notice of hear-
ing, hearing of objections, levy and notice of assessment.
Ordinance No. 1278 conforms to the latter method; notice
and hearing on objections at the beginning of the work is
provided for by Sec. 18-46; and notice and hearing of ob-

522 Ld

jections to the assessment roll is provided by Sec. 18-48.
The inclusion of the words “and local special assessment
practice” in the statute authorizing this improvement (Ch.
171, S.L.A.1957) cannot conceivably have the effect of “spe-
cial legislation” authorizing local procedure not in conform-
ity with Territorial law.

I am also unable to find that the statute is so vague and
uncertain as to render it invalid. This statute, pursuant to
the general rule of law, should be sustained if a reasonable
interpretation can be given to it.

(2) With reference to the authority of the City of An-
chorage to incur bonded indebtedness in order to finance
the off-street parking facilities provided by Ordinance No.
1278, Public Law 551, 79th Congress, as amended by Pub-
lic Law 496, 82nd Congress, Act July 10, 1952, 66 Stat.
574, provides in pertinent part as follows:

“The City of Anchorage, Alaska, is hereby au-
thorized to issue and sell its bonds in an amount
not to exceed $12,500,000 for the purpose of con-
structing, reconstructing, improving, extending,
bettering, repairing, equipping or acquiring public
works of permanent character for said city.”

“Sec. 2. Such public works shall include but
not be limited to water facilities, sewers and sew-
age-disposal facilities, heating plants and distribu-
tion facilities, electric and steam power and light
plants, and distribution facilities, telephone plants
and distribution facilities, streets and street im-
provements, corporation or equipment yards, city
hall additions, jails, fire halls, libraries, and school
buildings.” (Emphasis added.)

HM it will be noted that the Act provides that the
“public works” contemplated shall include but are not lim-
ited to those specifically named; hence the rule of “expres-

a 5238

sio unius est exclusio alterius” does not apply. Sec. 10 of
the Act further provides that it shall be liberally construed
to accomplish its purpose. In addition to this special Act
applying only to the City of Anchorage, reference is also
made to 48 U.S.C.A. § 44a providing for bonded indebted-
ness by municipalities in Alaska for public works, containing
a similar clause but limited to 10% of the aggregate taxable
value of the property within the corporate limits of the
municipality. Provision for such bonded indebtedness in
compliance with Acts of Congress was also made by Chap.
17, S.L.A.1955. The term “public works” is defined gen-
erally as all fixed works undertaken and carried out by na-
tional, state or municipal authorities designed for public
use, or for some purpose of public necessity, use or conven-
ience. Black’s Law Dictionary, Vol. 4; 35 Words and
Phrases, Public Works, p. 433. There can be no question
but that the off-street parking facilities here involved con-
stitute public improvements or public works and that the
Acts of Congress above mentioned are sufficiently broad to
cover the facilities of the character here proposed. See
cases infra, 159 F.Supp. 737.

(3) We come now to the more important question of
whether or not the method of levy of assessment provided
under Ordinance No. 1278 is invalid as confiscatory, or in
conflict with the due process clause and equal protection
clause of the Fifth and Fourteenth Amendments to the
Constitution. .

Hl The principle is firmly established that only where
an assessment imposed clearly results in such a flagrant
and palpable inequality between the burden imposed and
the benefits received that it amounts to an arbitrary taking
of property without compensation, it violates the due proc-
ess guaranty of the Fourteenth Amendment. Northern
Pacific Terminal Co. of Oregon v. City of Portland, 9

524 Po

Cir., 80 F.2d 738; Henderson Bridge Co. v. Henderson
City, 173 U.S. 592, 19 S.Ct. 553, 43 L.Ed. 823; Branson
y. Bush, 251 U.S. 182, 40 S.Ct. 113, 64 L.Ed. 215; Kansas
City Southern Ry. Co. v. Road Improvement District No.
3, 266 U.S. 379, 45 S.Ct. 136, 69 L.Ed. 335; Morton Salt
Co. v. City of South Hutchinson, 10 Cir., 159 F.2d 897,
901; Larson y. City and County of San Francisco, 182
Cal. 1, 186 P. 757, 763.

Hit has also been generally held that the determina-
tion of assessments by municipal corporations of adjacent
property for local improvements is a matter for the city
council acting in its legislative capacity, and that such de-
termination is conclusive, in the absence of fraud or con-
duct so arbitrary as to be the equivalent of fraud, or so
manifestly arbitrary or unreasonable as to be palpably un-
just and oppressive. Northen Pacific Terminal Co. v. City
of Portland, supra; Larson v. City and County of San
Francisco, supra; Feldhake v. City of Santa Fe, 61 N.M.
348, 300 P.2d 934, 939; McQuillin Municipal Corporations,
Vol. 14, Sec. 38.56, p. 172. Whether a tax is in the form
of special assessments or a general tax, the test is substan-
tially the same, that is whether any benefit, direct and tan-
gible or indirect and intangible, will result to the property
owner. Morton Salt Co. v. City of South Hutchinson,
supra. It is not essential that the benefits must be direct
or immediate, although it is essential that they be based
on more than mere speculation or conjecture. Kansas City
Southern Ry. Co. v. Road District No. 3, supra.

In a leading case of City of Whittier v. Dixon, 24 Cal.
2d 664, 151 P.2d 5, 153 A.L.R. 956, the Supreme Court of
California held that the levy of special assessments for off-
street parking facilities under a California statute is justi-
fied if the improvement is a public one and the property
to be assessed will receive a benefit, holding that the park-

| 525

ing places tend to stabilize a business section by making it
readily accessible to trade, and so benefit the property in
the vicinity. This decision is followed in Alexander v.
Mitchell, 119 Cal.App.2d 816, 260 P.2d 261, 267; and is
cited with respect to the constitutionality of the Act and
the “public use” (although with respect to condemnation
proceedings or acquisition of property for the parking lot),
in City of Menlo Park v. Arteno, 151 Cal.App.2d 261, 311
P.2d 135, 141; and Larsen v. City and County of San Fran-
cisco, 152 Cal.App.2d 355, 313 P.2d 959, 963. This case
is also reported in 153 A.L.R. 956, at page 961, followed
by an annotation, in which the editors have this to say:
“Although an extended search failed to disclose
any other case in point, the correctness of the deci-
sion reached by the Court can hardly be doubted”.

Similarly, an assessment of adjacent property held to be
benefited to pay for the cost of off-street parking space has
been upheld in New York. Ambassador Management Corp.
v. Incorporated Village of Hempstead, 186 Misc. 74, 58
N.Y.S.2d 880.

Plaintiff relies wholly upon the case of Northern Pacific
Railway Co. v. City of Grand Forks, N.D., 73 N.W.2d 348,
wherein the court after an extensive discussion of the sub-
ject held that certain property of the Railway Company
occupied for railroad tracks, a wholesale grocery business,
spur tracks, loading platform, station, and freight house,
could not possibly receive any benefit from a public park-
ing lot for which it had been assessed. This decision recog-
nizes special benefits which may obtain to property in a
business district but qualifies such rule by holding that
special assessments for parking lots which do not give effect
to substantial and material differences in the use of the
property assessed are not apportioned to benefits as re-
quired by the statute; and that the use of a front foot

526 De

method in levying the assessment resulted in more than a
just proportion of the cost of the improvement being as-
sessed against the property of the plaintiff. In the case at
Bar, as noted above, it is conceded that the property of the
plaintiff and others whom he represents would be benefited
as business property in that the value of their property will
be enhanced by the improvement, although not as residence
property.

None of the reported decisions cover the point here
raised as to whether or not residence property may be in-
cluded in the district and assessed for benefits primarily in-
tended for business advantage. Such decision must rest,
then, upon the principles discussed above.

Ht must be concluded that as the property involved
will receive some benefit, gain or advantage from the pro-
posed improvement, the assessment here contemplated can-
not be considered so arbitrary or unjust as to render the
method of assessment invalid as a matter of law. If any
distinction in the method of assessment between business
and residence property is to be made, such must be done
by the City Council, acting in its legislative capacity, upon
hearing of objections provided for by the Ordinance.

Judgment may be entered in favor of the defendants,
dismissing the cause of action herein. No findings of fact
or conclusions of law will be necessary. Upon stipulation
of the parties each shall bear his own costs and attorney
fees.

LE

358 U.S. 101, 79 S.Ct. 222
Thomas B. RUSTAD, Harvey R. Wyborney, Homer C. Skelly, et al.,
petitioners, v. UNITED STATES of America,
No, 425.

Supreme Court of the United States.
Noy. 24, 1958.

Petition for writ of certiorari to the United States Court
of Appeals for the Ninth Circuit.
Denied.

Mr. Justice DOUGLAS and Mr. Justice WHITTAKER
are of the opinion that certiorari should be granted.

160 F.Supp. 248

UNDERWRITERS AT LLOYDS, LONDON, Plaintiff, v. The
ALASKA INDUSTRIAL BOARD, consisting of Henry A.
Benson, Chairman, J, Gerald Williams, Member, Ross P.”
Duncan, Member; Hartford Accident & Indemnity Com-
pany; Woman’s Society of Christian Service (Seward San-
atorium); and Einar Mattson, Defendants.

No. 7692-A.

United States District Court, D, Alaska. First Division, Juneau.
March 26, 1958.

528

R. Boochever, of Fatikner, Banfield & Boochever, Ju-
neau, Alaska, for plaintiff.

J. Gerald Williams, Atty. Gen., of Alaska, for defendant
The Alaska Industrial Bd.

Fred O. Eastaugh, of Robertson, Monagle & Eastaugh,
Juneau, Alaska, for defendants Hartford Acc. & Indem. Co.
and Woman’s Society of Christian Service (Seward Sana-
torium).

Boynton Kamb, Mt. Vernon, Wash., and Howard D.
Stabler, Juneau, Alaska, for defendant Einar Mattson.

KELLY, District Judge.

The plaintiff appeals from an award entered against it by
the Alaska Industrial Board. The decision of the Board
is as follows:

52)

“Applicant Einar Mattson suffered a personal
injury (occupational disease) by accident arising
out of and in the course of his employment by de-
fendant Seward Sanatorium, an insured employ-
er. It is our opinion that the insurance carrier on
the employer’s risk on the last day of harmful ex-
posure, being the last day of employment by Se-
ward Sanatorium, is liable for the payment of
compensation and medical care involved in this
case.

“The Board has made no decision of any degree
of permanent disability.”

Einar Mattson was employed by Seward Sanatorium
from October 15, 1952 until October 12, 1953. He was an
orderly from October 15, 1952 until February 6, 1953 and,
as such, his duties consisted of making beds, bathing pa-
tients, serving food, and other routine tasks of his occupa-
tion of caring for tubercular patients at the Sanatorium.
He was a maintenance man from February 6, 1953 until he
left the employment of the Seward Sanatorium on October
12, 1953, and during that time his duties consisted of per-
forming carpenter repair work about the premises and in
the sick wards.

Chest X-rays were taken of Mr. Mattson during the peri-
od of his employment. The X-ray taken when he began his
employment on October 15, 1952 was negative; one taken
January 14, 1953 and another taken July 15, 1953 were neg-
ative; and one taken when he terminated his employment
on October 12, 1953 was diagnosed at that time as negative
but upon re-examination was found to show a large quadri-
lateral shaped shadow, suggesting a cavity in the peripheral
half of the left first anterior interspace. In June, 1954, an
X-ray taken by the mobile chest X-ray unit in Skagit Coun-
ty, Washington, was questionable and Mr. Mattson was re-

a

530 |

called for a large X-ray and in August, 1954, sputum studies
revealed the presence of acid fast bacilli at which time hos-
pitalization was advised.

Mr. Mattson was admitted to Firland Sanatorium in the
State of Washington on September 17, 1954 and remained
until July 29, 1955 when he was discharged and put under
the care of the Mount Vernon Clinic, Mount Vernon, Wash-
ington. The Firland Sanatorium found that Mr. Mattson
had moderately advanced pulmonary tuberculosis, The X-
rays taken upon admission revealed the area of disease in
the left upper lung field to be in the apical posterior segment
of the left upper lobe.

Mr. Mattson then filed a claim against the Seward Sana-
torium with the Alaska Industrial Board under the Work-
men’s Compensation Act of Alaska. Hartford Accident &
Indemnity Company was the insurance carrier on the Se-
ward Sanatorium during the employment of Mr. Mattson
prior to February 11, 1953 and plaintiff, Underwriters at
Lloyds, London, was the carrier during his employment
from and after February 13, 1953. After termination of
his employment with Seward Sanatorium Mr. Mattson did
carpentry work on his own house for several months until
he began working as a carpenter for a house builder in
Mount Vernon, Washington. He was engaged in the latter
job when he entered Firland Sanatorium.

Plaintiff contends :

(1) that although Mr. Mattson contracted tuberculosis,
it was not a disease which was due to causes and conditions
characteristic of and peculiar to his particular trade, occupa-
tion, process or employment during the time he was a main-
tenance man; and

(2) that if the Board’s finding of exposure during the
period of plaintiff’s coverage is sustained by this Court, the

ee 53)

award should be apportioned between the two carriers in-
volved during the period of exposure.

1

The Workmen’s Compensation Act of Alaska authorizes

compensation for any

“injury by accident arising out of and in the

course of employment, including any disease prox-

imately caused by the employment, which is due to

causes and conditions that are characteristic of

and peculiar to a particular trade, occupation,

process or employment, and to exclude all ordi-

nary diseases of life to which the general public

are exposed; * * *”. A.C.L.A.1949, § 43-

3-38.
Mr. Mattson contracted tuberculosis while working at the
Seward Sanatorium. On that point there is no argument.
The parties agree that during the time Mr. Mattson was
employed by the Seward Sanatorium as an orderly his work
was within the confines of the above section. The question
is whether, during the time Mr. Mattson was employed by
the Sanatorium as a maintenance man, his work was such
as to also come within this section.

This problem has arisen before in Alaska. In Women’s
Division of Christian Service of the Board of Missions etc.
vy. Alaska Industrial Board, 1951, 13 Alaska 166, the Court
held that a janitor in the Seward Sanatorium whose duties
required him to clean floors and corridors in wards, offices
and dining rooms and to dust and clean utility and bath
rooms came under the above section and was entitled to
compensation for contracting tuberculosis. In Board of
National Missions etc. v. Alaska Industrial Board, 1953, 116
F.Supp. 625, 14 Alaska 453, the Court decided that the work
of a missionary in Metlakatla, Alaska, brought him under

532 |

Section 43-3-38 A.C.L.A.1949 when he contracted tubercu-
losis. His duties obliged him to conduct funeral services in
crowded homes containing persons afflicted with active tu-
berculosis, hold weekly prayer meetings with such persons,
visit tubercular patients in the hospitals, etc.

In each of the above cases the Court’s decision was based
on the facts as to whether the employment of the claimant
was such as to come under the quoted section. So, in order
to ascertain whether Mr. Mattson’s employment as a main-
tenance man would bring him under this section we must
look to the facts on which the Alaska Industrial Board based
their decision.

Mr. Mattson’s work as a maintenance man, according to
his testimony, took him into the tuberculosis wards about
twice a week during this time. He further testified that he
came within a few feet of the patients while taking care of
his assigned duties. The Alaska Industrial Board found
from this evidence that Mr. Mattson was exposed to tuber-
culosis while carrying out these duties as well as those of
orderly.

HE A person employed as a maintenance man and car-
penter and who contracted tuberculosis might not come un-
der the above cited section but Mr. Mattson’s duties also
brought him into the tuberculosis wards several times a
week and within a few feet of patients with active tuber-
culosis. This is substantial evidence that the disease was
proximately caused by the employment in the sense that it
was due to causes and conditions characteristic and peculiar
thereto. It has been repeatedly held that upon review of
the entire record, if the findings of the Board are supported
by substantial evidence, such findings are binding upon the
Court. Kennedy v. Alaska Industrial Board, 1956, 138 F.
Supp. 209, 16 Alaska 117. Therefore, the finding of the
Alaska Industrial Board that Mr. Mattson was in contact

Se 53)

with active tubercular patients throughout his employment
at the Seward Sanatorium is affirmed.

2

HI The Board, after finding that Mr. Mattson could
have contracted tuberculosis at any time during the year he
worked for Seward Sanatorium, decided that the insurance
carrier on the employer’s risk on the last day of harmful ex-
posure is liable for the payment of compensation and medi-
cal care involved. Plaintiff contends, however, that the
award should be apportioned between the two insurance
companies who were on the risk during that year.

The Workmen’s Compensation Act of Alaska does not
help us with this question. It is completely silent, so we
must consider the problems inherent in compensation for oc-
cupational diseases and the general law on the subject. In
occupational disease cases there is generally a long period of
expostire without any disability and the date of contraction
of the disease is not ascertainable. Therefore, there has
been difficulty in determining the moment when an employer
and insurer become liable. The solutions which have been
worked out are discussed by Larson in the second volume of
his Workmen’s Compensation Law. Section 95.21 says that
most frequently liability is assigned to the carrier who was
on the risk when the disease resulted in disability, if the em-
ployment at the time of disability was of a kind contributing
to the disease.

Zurich General Accident & Liability Ins. Co. v.
Industrial Commission, 1930, 203 Wis. 135, 233
N.W. 772; Textileather Corp. v. Great American
Indemnity Co,, 1931, 108 N.J.L. 121, 156 A. 840;
King v. St. Louis Steel Casting Co., 1944, 353 Mo.
400, 182 S.W.2d 560; Russo v. Despatch Shops,

534 De

Inc., 1952, 280 App.Div. 1008, 1030, 116 N.Y.S.
2d 788.
Rather than defeat the claim of the employee where the
employment at the time of disability was not of a kind con-
tributing to the disease, the employer at the time of the most
recent exposure which bears a causal relation to the disa-
bility is generally liable for the entire compensation.
Commissioner of Taxation and Finance vy. Nu-Art
Advertising Co., 1936, 271 N.Y. 112, 2 N.E.2d
280, 104 A.L.R. 1209; Pacific Employers Insur-
ance Co. v. Industrial Commission of Utah, 1945,

108 Utah 123, 157 P.2d 800; Travelers Insurance
Company v. Cardillo, 2 Cir., 1955, 225 F.2d 137.
However, the question of which employer is liable is not
before this Court as it is not disputed that Seward Sana-
torium is the employer liable to Mr. Mattson. The decision
of this Court will deal solely with which carrier is liable
where there has been more than one on the risk during the

period of exposure.

Some states, by statute, have adopted the idea of appor-
tionment between carriers, but only one state (California)
has adopted it by judicial decision. Colonial Insurance
Company v. Industrial Accident Commission, 1946, 29 Cal.
2d 79, 172 P.2d 884.

The Federal Longshoremen’s and Harbor Workers’ Com-
pensation Act, 44 Stat. 1424, 33 U.S.C.A., Chapter 18, like
the Alaska Act, has no provisions for apportionment, and in.
Travelers Insurance Company v. Cardillo, supra, [225 F.2d
144] Judge Medina discusses in considerable detail the pre-
cise question that we have here. The question, he says, is
not whether the claimant may recover in this situation but
upon whom shall devolve the burden of paying him. He dis-
cusses apportionment and other methods of payment and
says that, in view of the present state of medical knowledge

S535

relating to occupational diseases and the administrative
problems involved, it would be “sheer folly to seek or expect
to discover a formula” (for payment) “devoid of any possi-
bility of inequity or seeming injustice.” Judge Medina then
discusses the legislative intent of Congress in not including
the theory of apportionment as to employers in the Long-
shoremen’s and Harbor Workers’ Compensation Act, and
for this purpose he refers to the fact that at the hearings
which preceded the passage of the Act apportioment among
employers was suggested and concludes that “it would seem
a fair inference that the failure to amend was based upon
a realization of the difficulties and delays which would in-
here in the administration of the Act, were such a provision
incorporated into it.” In referring to apportionment among
carriers, Judge Medina says:

“There remains the question, which carrier or
carriers are responsible for the discharge of the
duties and obligations of the ‘last employer’ in re-
spect to his principal liability. Here we are frank-
ly groping in the dark. But the conclusion already
arrived at with respect to the liability of the em-
ployer may fairly be thought to mark the path to
be followed here as well. If administrative case
of handling was a consideration of significance in
the formulation of the Act with reference to the li-
ability of the employer, then there is small reason
to suppose that it was the intention of Congress to
inject into the determination of carrier liability the
very same conjectural and unsatisfactory esti-
mates which would have been involved in attempt-
ing to apportion liability among employers. * *
Rather, it would seem far more in keeping with
the Congressional recognition of the over-riding
importance of efficient administration in this area,

536 Le

to conclude that the treatment of carrier liability
was intended to be handled in the same manner as
employer liability, and that the carrier who last
insured the ‘liable’ employer during claimant’s ten-
ure of employment, prior to the date claimant be-
came aware of the fact that he was suffering from
an occupational disease arising naturally out of his
employment, should be held responsible * *”.

(Emphasis supplied.)

It is unfortunate that there are no reports which can be
referred to in connection with the Alaskan Act. However,
as noted above, California is the only state that has applied
apportionment by judicial decision and even though there
is no evidence that the Alaska Legislature considered and re-
jected apportionment, they did not include it and this
Court, in following the weight of interpretation of like stat-
utes, will not write apportionment into the Alaska Act.

In view of the foregoing, the award of the Alaska In-
dustrial Board is affirmed and judgment may be entered ac-
cordingly.

| 537

253 F.2d 652

Richard E. BENNETT, Administrator of the Estate of Evelyn FE,
Bennett, Deceased, Appellant, v. ARCTIC INSULATION,
Inc, and Delbert E. Boyer, Agent, Acting Within the
Scope of His Employment, Appellees.

Richard E, BENNETT, Appellant, v. ARCTIC INSULATION,

Inc., and Delbert E. Boyer, Appellees.
Nos, 15874, 15464,

United States Court of Appeals, Ninth Circuit,
March 26, 1958.

538 |

Robert A. Parrish, Fairbanks, Alaska, for appellant.

Collins & Clasby, Mary Alice Miller, Charles J. Clasby,
Fairbanks, Alaska, Bronson, Bronson & McKinnon, Kirke
LaShelle, Charles Legge, San Francisco, Cal., for appellees.

Before HEALY, POPE and HAMLEY, Circuit Judges.

POPE, Circuit Judge.

These two actions, one for personal injuries, and the other
for wrongful death, arose out of the same automobile acci-
dent. The complaints in both actions contain substantially
identical allegations: that defendant Arctic Insulation was
the owner of a motor vehicle which had been entrusted to
its agent Boyer, the other defendant; that the latter negli-
gently and carelessly left the vehicle unattended, unlocked,
and with the keys therein, in an area where several night
clubs were located at Fairbanks, Alaska; that the agent
Boyer should have known or reasonably have foreseen that
the vehicle might be removed without consent or authority;
that the vehicle was stolen by a soldier who drove it so neg-
ligently that it collided with an automobile in which plaintiff
was driving; that in consequence of such collision plaintiff
Richard E, Bennett received personal injuries, and his wife,
Evelyn E. Bennett, received injuries from which she died.

The court below stistained motions to dismiss both com-
plaints for failure to state a claim, and entered judgment dis-
missing the actions. Upon this appeal the sole question is
whether the plaintiff had set forth a claim upon which he
was entitled to go to trial.

The question of the liability of the owner of a motor ve-
hicle to a third person who is run down by a thief who stole
it while the keys were left in the car, is one which has fre-
quently been dealt with by the courts. A short but adequate
summary of the various ways in which these cases have aris-
en is found in 1951 Wisconsin Law Review at page 740.

Representative cases are also cited in Prosser on Torts, 2nd
ed., pp. 276 and 142. For the purposes of this decision, it is
unnecessary to review the cases at length or to do other than
set forth the reasons why we arrive at our conclusion here.
Suffice it to say that the cases fall into two general categor-
ies: in some of the cases there have been statutes or ordi-
nances which expressly prohibit the owner or operator of a
motor vehicle from leaving his key in the vehicle when it is
unattended; in others there has been no such statute. In
some jurisdictions which have such statutes it has been held
that the owner or operator who has violated the statute be-
comes liable for injuries done to a third person, or to his
property, by a thief who takes the vehicle and causes the in-
juries. Some cases hold otherwise notwithstanding such
statutes. On the other hand, in jurisdictions which like
Alaska have no statute upon the subject, it has generally
been held that there is no liability, although a few decisions
may be found the other way. The cases thus referred to
will be found collected and discussed in the texts cited above.
The question now before us is what rule should be applied
in Alaska. There are no precedents in that jurisdiction.
We must first ascertain what if any duty was owed by
the owner and operator of this motor vehicle to this appel-
lant and his wife in respect to the leaving of the keys in the
ignition switch in this vehicle. We think that a fair state-
ment of the prevailing view as to the test to be applied in de-
termining whether there was any duty to appellant and his
wife is that of Harper & James, The Law of Torts, § 18.2
as follows: “{'T]he obligation to refrain from that particu-
lar conduct is owed only to those who are foreseeably en-
dangered by the conduct and only with respect to those risks
or hazards whose likelihood made the conduct unreasona-
bly dangerous. Duty, in other words, is measured by the

540 De

scope of the risk which negligent conduct foreseeably en-
tails.” *

It has been argued here and below that leaving keys in an
unguarded car foreseeably may encourage and lead to the
theft of the car which in turn may foreseeably lead to haz-
ardous driving of the car by the thief with resultant injury
to third persons. Such was the holding in Schaff v. R. W.
Claxton Inc., 79 U.S.App.D.C. 207, 144 F.2d 532, 533.
Quoting an earlier decision of the same court, Ross v. Hart-
man, 78 U.S.App.D.C. 217, 139 F.2d 14, 158 A.L.R. 1370,
it was said: “In the absence of an ordinance * * *
leaving a car unlocked might not be negligent in some cir-
cumstances, although in other circumstances it might be both
negligent and a legal or ‘proximate’ cause of resulting acci-
dent.” Hence it was said the case should be submitted to
the jury with instructions to find for plaintiffs if they found
the driver was negligent in leaving the car unlocked and that
this was a proximate cause of the,accident.

An opposite view, and one representing the weight of au-
thority was expressed in Richards v. Stanley, 43 Cal.2d 60,
271 P.2d 23, 25. In that case the whole subject of when
the owner of an automobile may be liable for injuries re-
ceived by third persons at the hands of a thief who stole the
car in which the owner had left the keys is exhaustively dis-
cussed. Stating that the question of liability was to be
solved by an inquiry as to whether the owner owed any duty
to the person injured, the court said: “It is an elementary
principle that an indispensable factor to liability founded
upon negligence is the existence of a duty of care owed by
the alleged wrongdoer to the person injured, or to a class of
which he is amember.” Contrasting the cases where a stat-
ute prohibited the leaving of keys in an unattended vehicle,
the court held that where there was no such statute there

1Restatement, Torts, § 281 is the same effect. See Comment “ce”.

De 541

was no duty on the part of the vehicle owner to the person
receiving injuries at the hands of the thief, and that there
was no occasion for submitting the case to the jury for no
duty had arisen.

In our view the same conclusion is called for here, and we
are persuaded that that is the proper view by several consid-
erations, some of which will be found fully discussed in the
California case cited.

It is well recognized that where the owner of a motor ve-
hicle entrusts it to another for the latter’s own use, there is
no liability upon the owner for injuries inflicted by the bor-
rower of the vehicle while he is using it, in the absence of
proof that the borrower was known to be incompetent.
When a friend borrows a car the owner knows it will cer-
tainly be driven, When the owner leaves the key in the car
he does not know that. All that can be said is that he should
anticipate that a thief might take it and drive it. As the
California court put it: “The risk that it will be negligently
driven is thus materially less than in the case in which the
‘owner entrusts his car to another for the very purpose of the
latter’s use.”

It is argued that the person who leaves the keys in the
switch assumes the foreseeable risk not merely that some
thief will drive the car but that the thief will drive it in a
negligent or careless manner, Without questioning the pos-
sibility that it could be demonstrated by statistics or other-
wise, that thieves ordinarily drive recklessly or frequently
have accidents with stolen cars, yet we cannot overlook the
known fact that unmarried male members of a family under
twenty-five years of age also have many accidents when
driving their parents’ automobiles. The parent of a 21 year
old son who is allowed to drive the family automobile must
pay two or three times the ordinary rate for automobile li-
ability insurance. The statistics show the hazard that re-

542 Le

quires this. All statutes aside, the same foreseeability of in-
jury which could be charged to the man who leaves his keys
in the car because thieves are notoriously careless drivers
would also serve to make every parent liable for the torts
of his unmarried son under 25 years of age while driving
the family car. We cannot hold the owner liable in one case
and not in the other.

This is a subject which has been dealt with in many
states by legislative enactment. The Alaska legislature has
not chosen to establish any new duty in respect to leaving
keys in cars. Accordingly we hold that the majority rule is
here applicable, that there was no duty owed by the appellees
to appellants, and that the judgments of the court below

must be affirmed.

254 F.2d 392

Joseph BONNEY, Appellant, v. UNITED STATES of America,
Appellee.
No, 15824,

United States Court of Appeals, Ninth Circuit.
April 22, 1958,

Floyd O. Davidson, Ketchikan, Alaska, for appellant.
Roger G. Connor, U. S. Atty., Jerome A. Moore, Asst.
U.S. Atty., Juneau, Alaska, for appellee.

Before STEPHENS, Chief Judge, and DENMAN and
ORR, Circuit Judges.

PER CURIAM.

Before trial defendant moved to dismiss the indictment
on the ground that it failed to state a criminal offense.

The charges contained in the indictment may be sum-
marized as follows: that the defendant (appellant) obtained
money by falsely representing at the time of its receipt that
the money would be forwarded to certain named dealers to
purchase clothing, but on the contrary defendant (appel-
lant) used the money for his own purposes. The ground of

544 |

the motion to dismiss was that the implied intention to per-
form was merely a promise to do something in the future
and therefore did not come within the scope of a false pre-
tense.

The trial court took the view that the legislative intent in
enacting A.C.L.A.1949, § 65-5-81, was to prohibit the ob-
taining of property by falsely representing present inten-
tions. This construction was contrary to a prior holding
of an Alaska court, United States v. Pearce, 1924, 7 Alaska
246, and is contrary to the weight of authority to the effect
that to be indictable a false pretense or representation must
be an untrue statement of a past or existing fact, not a rep-
resentation or promise as to future events. We recognize
there is authority for the yiew contended for by appellee that
misrepresentation of intention is a misrepresentation of an
existing fact. We are not persuaded by that argument and
hold with the majority opinion that such is not the correct
construction. Many cases could be cited, but we content
ourselves with calling attention to Annotation, 168 A.L.R.
833. The judgment of conviction is vacated and the Dis-
trict Court is directed to grant the motion to dismiss the
indictment.

ee 545

161 F.Supp. 379
CITY OF DOUGLAS, Alaska, a municipal corporation, Plaintiff,
vy. DOUGLAS CANNING COMPANY, Inc., a corporation,
Defendant.
No, 7715-A,

United States District Court, D. Alaska, First Division,
April 24, 1958,

NT EE EE EE EE eee eeeeeeeeeeeeeeeeeee rere

|

547

John H. Dimond, of Faulkner, Banfield & Boochever,
Juneau, Alaska, for plaintiff.

Joseph A. McLean, Juneau, Alaska, for respondent.

KELLY, District Judge.

The City of Douglas, Alaska, the plaintiff herein, is a
municipal corporation of the Territory and as such is the
owner of a pile-driven dock with certain structures erected

548 Le

thereon and an approach thereto, situated on tidelands
within or adjacent to the corporate boundaries of the City.
The approach above referred to is from the adjacent up-
lands to the dock.

A lease was entered into between the plaintiff and the
defendant for a term of 20 years beginning January 1, 1947,
with an option to the defendant to renew the lease for an
additional 20 year period. The annual rental was estab-
lished at $50. The leased premises consisted of the dock,
the approach to the dock, a warehouse, cannery building and
a fish-float thereon or adjacent thereto. The plaintiff re-
served for itself, and for the benefit of the public, ingress
and egress to the dock and use thereof for the shipment of
freight providing said use did not interfere with the can-
nery operations of the defendant. The lease contained
express provisions relating to defaults by defendant and a
termination of the lease. These are set forth in the lease
as follows:

(a) The failure of lessee to pay any rental.

(b) The failure of lessee to keep or perform any of the
terms, covenants and conditions of the lease.

(c) The failure of lessee to pay any taxes due the City
of Douglas or the case tax due under the laws of the Ter-
ritory of Alaska.

(d) The suffering or permitting of defendant of any
lien, encumbrance or charge of any nature to be placed on
the premises.

The lease further provided that in the event of default
on the part of the defendant, the plaintiff had the right
to re-enter the premises, take possession thereof, and de-
fendant agreed that it would upon demand quit and sur-
render possession of the premises to the plaintiff quietly and
peaceably and leave the premises in as good condition and
repair as when then entered thereon, ordinary wear and

519)

tear and damage by the elements excepted. Provisions of
the lease which should be set forth more fully herein are as
follows :
“oe * Lessee * * * is desirous of
leasing the premises * * * for the purpose
of conducting thereon and therein a salmon can-
nery and general fish business.”

“It is the intention of the Lessee to operate a
salmon cannery and general fish business as the
same has been operated thereon for the past thir-
teen years and the Lessee covenants and agrees to
keep the premises leased in good order, repair and
condition at all times during the term of this lease.
%* %* %* the lessee to use its judgment as to

what constitutes good order, repair and condition
ae

“Lessee will have and maintain on the premises
leased certain machinery, appliances, fixtures, etc.
necessary for the operation of a salmon cannery
and if for any reason the machinery, appliances,
property etc., or any considerable portion thereof
shall be removed from the City of Douglas with-
out similar machinery, appliances etc., being in-
stalled in its place, or, in other words, if the prem-
ises are dismantled as a cannery or cease to be used
as a cannery and the machinery transported from
the limits of the City of Douglas, then the City of
Douglas, the Lessor, may, at its option, cancel this
Lease and retake possession of the premises, and
in that case the Lessee agrees to quit and surren-
der possession of the premises to the Lessor in
as good order and condition as when entered upon,
and to make no further claim for the leased prem-
ises.””

550

“* % 3 and the Lessee agrees (to) pay the
cost of driving piling sufficient to properly support
the buildings and the equipment therein and suffi-
cient to maintain the dock in a substantial condi-
tion * * ¥”

“It is further mutually agreed that the Lessee
shall undertake to carry out the provisions of this
Lease in good faith and conduct the salmon can-
nery and fish business on the premises during the
term hereof.”

“It is understood and agreed that one of the con-
siderations for the leasing of the premises here-
inabove described, in addition to the annual rental
to be paid in cash, is to sectre to the City of Doug-
las the salmon canning and fish business as an in-
dustry which will furnish some employment to
some of its inhabitants, and also to secure to the
City the city taxes which may be assessed upon the
value of the Lessee’s machinery, appliances, and
property placed on the leased premises, not includ-
ing, however, the premises themselves or additions
placed thereon for the purpose of carrying out the
terms of the lease and carrying on the salmon
canning and general fish business, and also to
secure to the City the revenue which will accrue
to it from the packing of salmon through the
regular case tax to be paid the Clerk of the Dis-
trict Court at Juneau and which is refunded under
the law to the City; and the Lessee agrees that it
will pay all such case taxes as accrue each year on
all salmon packed at the rates fixed by law.”

“All buildings, permanent improvements and
additional structures placed on the leased prem-
ises by the Lessee shall at the termination of the

SS 5)

Lease become the property of the Lessor, but this
shall not include machinery, appliances or fixtures
which can be removed without any permanent
damage to the structures, and provided further
that all such structures, additions, improvements
and new construction placed thereon by the Lessee
shall be subject to the terms of this Lease without
any additional charges to the Lessee.”

On June 25, 1957, the plaintiff gave notice in writing to
the defendant that it had committed substantial breaches
of the lease and that the lease was terminated. The alleged
breaches are substantially as follows:

1. One of the most material considerations for the
leasing of the premises by the plaintiff to the defendant was
that the plaintiff would secure to itself a salmon canning
and general fish business as an industry which would fur-
nish employment to inhabitants of the City and taxes to
the City; that the defendant has not conducted on the
leased premises a salmon canning or fish business for sev-
eral years and therefore has completely failed to provide
any industry which would furnish employment to the in-
habitants of the City of Douglas or which would provide
adequate tax revenue.

2. That another material provision of the lease requires
the company to have and maintain on the leased premises
certain machinery, appliances, fixtures and so forth neces-
sary for the operation of a salmon cannery; that about 1951:
the defendant permitted the removal of a sufficient amount
of machinery from the leased premises so that a salmon
cannery could not be operated; that the machinery removed
included a filler, cutter, seamer, fish house, conveyor belts,
fish ladders and can loft machinery; and that the retorts
have not been hooked up for some years.

552 Le

3. That the defendant has failed to keep the leased
premises in good order, repair and condition, and allowed
the collapse and destruction of the warehouse in January,
1956, and has failed to rebuild said warehouse; and that
the fender piling on the face of the dock has not been kept
in repair.

Defendant refused to accede to the demand to surrender
the leased premises and this action was instituted to re-
cover possession of the premises. Defendant contends that
it has substantially complied with all the terms of the lease;
that a fish business in the form of a crab shellfish plant was
operated on the premises until the 1957 season; that the
provision in the lease that it was the intention of the lessee
to operate a salmon cannery and general fish business on
the premises is not a covenant restriction; it claims that
such a provision authorizing use of the premises for a
specified purpose is merely permissive and not restrictive;
it further claims that all of the machinery necessary for
the operation of a salmon cannery still remains on the
premises except the machinery which in the ordinary course
of business is leased on an annual basis from the Continental
Can Company.

L

At the trial, the evidence showed that the defendant has
not operated a salmon cannery on the leased premises since
1948, A sublease was given to Olympic Seafoods, Inc. in
July 1951, and they processed crab and shrimp until Decem-
ber, 1953. Following the termination of this sublease, no
use was made of the premises by the defendant. In 1956,
a sublease was given to Roy Furfiord & Co. who processed
crabs on the premises between July and September, 1956.
The sttbleases were agreed to by the plaintiff. Since that
time, the defendant has made no use of the premises. The

es | 553

defendant admitted that it had no offers to sublease and
that it had no plans to use the premises itself and indi-
cated that this was due to poor fishing conditions and a
low market price for canned salmon, and it has likewise
been unable to make any effort since this suit was filed on
account of the pendency of such litigation.

The defendant claims that the processing of crabs and
shrimps is a “general fish business” and that even if it were
not that plaintiff’s consent to the subleases waived a breach
of the lease, if any, as to the conducting of a salmon can-
nery. It is unnecessary to decide those points. If the fail-
ure to conduct a “salmon cannery and general fish business”
is a breach, then the defendant has breached the lease in
its failure to conduct any business since September, 1956.
The question then is whether the lease contains such a
covenant and if so what the result of a breach will be.

Reference is here made to the provisions of the lease
previously set out in detail. The rent provided in the lease
is $50 a year and the lessee also covenants to pay taxes on
its equipment and to keep the premises in good repair and
it is to use its judgment as to what constitutes good repair.
That is the only consideration for the lease of this publicly
owned dock, the buildings thereon, and a fish float if there
is no covenant that the defendant conduct a salmon can-
nery and general fish business on the premises.

TH [f such is the case, then there is grave doubt as to
whether the lease is valid. The premises leased belong to
the public and are to be used for the public good and the
lease of such premises would be valid only if reasonable in
all respects. Le Feber v. Northwestern Heat, Light & Pow-
er Co., 1903, 119 Wis. 608, 97 N.W. 203; Griffin v. Okla-
homa Natural Gas Corp., 10 Cir., 1930, 37 F.2d 545, 548;
Wilmington Parking Authority v. Ranken, Del.1954, 105
A.2d 614, 634; Risser v. City of Little Rock, 1955, 225

554 a

Ark, 318, 281 S.W.2d 949, 950-951; McQuillin, Municipal
Corporations, 3rd Ed., Vol. 10, Sec. 29.100. To lease the
public dock for forty years for the consideration discussed
above does not seem reasonable.

However, it is clear from the provisions of the lease that
the material consideration for the lease was that a salmon
cannery and general fish business would be carried on by the
lessee. The lease sets out that the lessee is desirous of
carrying on a salmon cannery and general fish business on
the premises; that it is its intention to carry on such a busi-
ness as the same has been operated thereon for the past thir-
teen years; that if it does not maintain on the premises the
machinery necessary for the operation of a salmon cannery
or permits a considerable portion to be removed, or permits
the premises to be dismantled as a cannery or cease to be
used as a cannery, and the machinery transported from the
City, then the lessor may cancel the lease and retake pos-
session of the premises; that the defendant shall undertake
in good faith to carry out the provisions of the lease and
conduct the salmon cannery and fish business during the
term of the lease; and that it is agreed that one of the con-
siderations in addition to the annual rental is to secure to
the City the salmon canning and fish business as an indus-
try which will furnish some employment to some of its in-
habitants, and will secure to the City taxes on the value of
lessee’s machinery and will secure the revenue which will
accrue to the City from the packing of salmon. It is evi-
dent that the primary purpose of the lease was to obtain an
operating salmon cannery on the City-owned dock and in
the opinion of this Court, the obligation to do so was ex-
press and mandatory.

HBB It is true, as a general rule, that a lease of prem-
ises for a specified purpose without exclusion of other pur-
poses does not necessarily involve an obligation on the part

55

of the tenant to use it for such purpose or to use it at all.
Thompson on Real Property, Sec. 1319. But, it is also true
that such an obligation may be implicit throughout the lease
without any express provision. 51 C.J.S. Landlord and
Tenant § 337 a, pp. 1023-1024. Here there is an express
provision for cancellation of the lease if the premises cease
to be used as a cannery and further the provisions of the
lease as a whole constitute no other interpretation. To con-
stitute an express covenant, no formal, technical, or precise
terms are required, but whenever the intent of the parties
can be collected out of the instrument, for the doing or not
doing of a particular thing, that is sufficient to make an
express covenant. Thompson on Real Property, supra.

HEME However, should this Court have considered that
there was no express covenant that the lessee conduct a
salmon cannery and general fish business on the premises,
then the Court should give effect to what the parties really
intended, and the lease must be read and considered as a
whole in arriving at the intention of the parties. Bovin v.
Galitzka, 1929, 250 N.Y. 228, 165 N.E. 273. Further, it
is proper to consider the situation of the parties, the subject
matter involved, and the object the parties had in view and
intended to accomplish. Reilley v. Kroll, 1941, 197 La.
790, 2 So.2d 214; 51 C.J.S. Landlord and Tenant § 337,
p. 1026.

HI it has been held in Roach v. Matanuska Valley
Farmers Cooperating Ass’n, D.C.1949, 87 F.Supp. 641, 12
Alaska 512, affirmed 9 Cir., 1951, 188 F.2d 162, that a
lease, like every other contract, ought to be construed
against the party who drafted it. The evidence in this
case was in conflict as to the preparation of the lease. It
would appear that the lease was basically one between the
City and a previous lessee who leased the dock for a can-
nery. However, the lease was varied by insertions which

556 a

were of benefit to the defendant such as the words “general
fish business” and “The lessor agrees to allow the lessee
to use its judgment as to what constitutes good order, re-
pair and conditions of dock and facilities.” In Beck v.
F. W. Woolworth Co., D.C.1953, 111 F.Supp. 824, it was
held that where the lease had been prepared by the lessee,
and the lease had been examined by lessors and the final
draft had incorporated requested changes, the rule that the
lease will be construed against the party who prepared it
was not applicable. The situation is the same here, except
that it was the lessee instead of the lessor who requested
changes in the lease so the provisions of the lease cannot
fairly be construed against either party. Considering the
lease and the law as to interpretation, it is inescapable that
the lease was given by the City for the material purpose
of having a salmon cannery operating on the premises which
would be an asset to the City and was taken by the defend-
ant corporation for the purpose of operating a salmon can-
nery which would produce a profit for its stockholders, and
with the understanding on the part of both parties that
should the premises cease to be used as a cannery, then the
lessor could terminate the lease.

HEEB Courts do not favor forfeitures and it is the gen-
eral rule that provisions in leases permitting forfeitures are
to be strictly construed against the lessor. 51 C.J.S. Land-
lord and Tenant § 102. However, where the terms of the
contract which affect the alleged breach are clear, and call
for forfeiture, as in this case, then a forfeiture is unavoid-
able if the alleged breach does in fact exist. In the case
of Urban Properties Corporation v. Benson, 116 F.2d 321,
323, the Court of Appeals for the Ninth Circuit quoted with
approval the following:

“The rule that a forfeiture clause is to be strict-
ly construed means simply that no wider scope is

Se. 557

to be given to the language employed than is plain-
ly required. It does not require the court to put a
strained or over-technical construction upon the
language employed, ignoring the essence of the
condition imposed * * *, No artificial dis-
tinctions are to be taken advantage of or quibbling
indulged in to the end that a person plainly and
palpably coming within the scope of the forfeiture
clause may by ‘some hook or crook’ escape the
penalty of forfeiture.”

Most of the cases in which forfeiture has been denied
by equity are those that involve breaches for nonpayment
of rent. The reason for this is that the provision for for-
feiture when the rent has not been paid is generally con-
strued as one intended merely as security for the payment
of money. Pomeroy’s Equity Jurisprudence, 5th ed., Vol.
2, Sec. 453, p. 290. The situation in the instant case is
entirely different, for there has been a breach of the pur-
pose for which the lease was given and such is incapable of
pecuniary ascertainment. There can be no just compensa-
tion decreed for this breach and that is why the rule as to
equitable relief against forfeitures is inapplicable under
these circumstances. Peirce v. New York Dock Company,
2 Cir., 1920, 265 F. 148, 156; Pomeroy, supra, pp. 292—
293. In the case of Empress Theatre Company v. Horton,
8 Cir., 1920, 266 F. 657, 664, it was stated:

“% %* * That, while relief against forfei-
tures may be granted where, as in failure to pay on
time fixed money rents or installments of the pur-
chase price of lands, damages from the breach are
certain, and adequate compensation may be made,
such relief is never granted where the damages
from the breach because of which the forfeiture
is incurred cannot be ascertained with reasonable

- 558 a

certainty. (Citing cases.) That there is no in-
superable objection to the enforcement of a for-
feiture by a court of equity, and, when that is more
consonant with the principles of right, justice, and
morality than to withhold relief, or when there is
full, clear, and strict proof of a legal right to a
forfeiture, equity follows the law and enforces it.
(Citing cases.) * * *”

2.

HI There is also the question of a breach of the lease
by the removal from the premises of part of the salmon
canning machinery. The lease sets forth that the machinery,
appliances, fixtures, etc. necessary for the operation of a
salmon cannery will be maintained on the premises and
if for any reason the machinery, appliances, property etc.,
or any considerable portion thereof shall be removed, or if

. the premises are dismantled as a cannery, then the City
may cancel the lease.

It is the practice for a considerable portion of the salmon
canning machinery to be leased from a can company, and
the defendant herein leased such machinery from the Con-
tinental Can Company, Inc. According to testimony, the
usual business practice is to keep the machinery from year
to year and it is not returned to the Can Company unless
the cannery closes or‘different machinery is required. It
is not returned at the end of each canning season. The de-
fendant herein returned all such leased machinery to the
Can Company. In 1956 an inventory was taken of the
cannery equipment and at that time the premises were not
“geared up” for the operation of a salmon canning line.
Essential equipment for such operation was not contained
on the premises, and the boiler, retorts and iron chink,
though on the premises, were not hooked up and there was

Se 559

no system of conveyor belts essential to the operation of a
one-pound salmon canning line. In other words, defendant
does not have the equipment necessary for the operation of
a salmon cannery on the premises or within the City of
Douglas and has not had for some years. Under this evi-
dence, it is obvious that the certain machinery necessary
for the operation of a salmon cannery or a considerable
portion thereof has been removed from the leased premises
and that such action on the part of the defendant consti-
tutes a breach of the lease.

3.

HE The next alleged breach is as to the provision in
regard to maintenance and repairs. The defendant agreed
to maintain and repair the premises and to use its own judg-
ment as to what constituted such repairs. It also agreed to
drive sufficient piling to maintain the dock in substantial
condition. At the time the defendant leased the premises,
the dock was in a run-down condition due partially to the
fact that native piling had been used to build the dock and
it was in need of replacement. Part of the dock rotted
away and about one-half of it was rebuilt in 1952 by the
Territory of Alaska under the terms of a contract between
it and the City of Douglas. The defendant built a new
cannery building in 1948 and tore down the old one. This
new cannery was blown down in a windstorm and rebuilt
by the defendant in 1952 and still stands.

The ten-foot wide approach to the dock fell into disrepair
and eventually had to be replaced. The defendant paid the
approximate cost of replacing the ten-foot approach and
the plaintiff paid an additional sum in order that the new
approach would be twenty feet wide. Previous to the
time that the new approach was built, a warehouse had
fallen into a state of disrepair and collapsed and when the

560 EE

new approach was built a portion of the dock covered by the
warehouse was rebuilt as a part of the approach but the
warehouse was not replaced. It has been shown that the
total square feet in the old cannery buildings and the ware-
house was not as great as that in the new cannery building.
At the present time, the dock and the cannery building are
in a good state of repair except for the fender pilings on
the face of the dock which are in need of replacement.

Tt would seem that there was a breach of the lease when
the defendant let part of the dock collapse because pilings
were not driven to support the dock, and again when the
warehouse fell into the water for the same reason. The
City at the time of these occurrences made no complaint.
Instead, the City made financial arrangements to have the
Territory rebuild part of the dock, they allowed the defend-
ant to tear down the old cannery building and put up a new
one and they agreed to join with the defendant in erecting
a twenty-foot approach to replace the ten-foot one, which
approach would cover part of the area where the warehouse
had stood. The City, by these acts, has waived any breach
which occurred. As to the fender pilings which need re-
placement, if the lease were to continue, the defendant
would have to pay for the replacement cost of the pilings
but it is not such a breach as would end the lease.

In view of the foregoing, the sole and exclusive possession
of the leased premises should be restored and delivered to
the plaintiff. Judgment and decree in accord with this
opinion may be prepared and entered.

EE 561

161 F.Supp. 269
UNITED STATES of America, Plaintiff, v. Martin Reggie
BOOTH, Defendant,
No. 1731-KB.

District Court, Alaska, First Division, Ketchikan.
April 25, 1958,

562 be
C. Donald O’Connor, Asst. U. S. Atty., Ketchikan, Alas-

ka, for plaintiff.
Charles W. Hughes, Ketchikan, Alaska, for defendant.

KELLY, District Judge.

This case was set for trial by jury on a two count In-
formation, filed in this court on October 22, 1957. Count
One, charging assault and battery, was dismissed on motion
of the Government at the suggestion of the complaining
witness, Frank Bolton. The defendant appeared in court
with his attorney and pleaded guilty on April 21, 1958, to
Count Two of the Information charging driving while un-
der the influence of intoxicating liquor.

In view of an earlier motion directed to the jurisdiction
of the court and in view of the recent decision of the Dis-
trict Court of the Third Division, District of Alaska, Peti-
tion of McCord, 151 F.Supp. 132, the Government, as
well as the Court, felt it was necessary to go fully into the
question of the Court’s jurisdiction in this case, as well as in
violations of territorial law committed in the community
of Metlakatla, Alaska. Accordingly, the Assistant United
States Attorney, C. Donald O’Connor, on behalf of the
Government, prepared and filed a most exhaustive brief
on the points involved herein and because of the excellence
of this brief, the Court adopts the same, with a few addi-
tions and appropriate rewording, as his opinion.

Metlakatla is a community made up of Indians who,
emigrated prior to March 3, 1891, for purposes of religious

De 563

and economic freedom, from British Columbia to Alaska,
their descendants, and Alaska natives who have subse-
quently joined them. The United States Government set
aside the Annette Islands in the Alexander Archipelago in
Southeastern Alaska for their use by 48 U.S.CA. § 358
(March 3, 1891, Chap. 561, Sec. 15, 26 Stat. 1101).

The present community includes descendants of the orig-
inal settlers, Indians who have been admitted as members
of the community after leaving communities of Haida In-
dians in Alaska, and communities of Thlingit Indians in
Alaska, and also native Eskimos and Aleuts who have been
admitted as members of the community. Testimony ad-
duced at a hearing in connection with the jurisdiction of
the court disclosed that at least one Eskimo member of the
community has served on the Metlakatla City Council.
The present Mayor of Metlakatla was originally a Thlingit
Indian from Sitka, Alaska.

There is no tribal organization in Metlakatla and in fact,
the original settlers expressly renounced their tribal affilia-
tions prior to coming to the Annette Islands. The chief
executive officer of Metlakatla is the Mayor. The commu-
nity also has a Council and Magistrate. The community is
independent and well developed from a commercial stand-
point. In the past it has always been assumed that terri-
torial law applied to Metlakatla.

Testimony of two witnesses was introduced by the Gov-
ernment. Mr. Henry F. Littlefield, Sr., Mayor of Metla-
katla, and Mr. A. H. Ziegler, attorney for the city, were
both’sworn and testified to the facts concerning the migra-
tion of the original group of Indians from British Columbia
to Annette Island, and to the other facts which are more
fully set out hereinafter.

The evidence produced by the Government showed, first,
that the Indians of Southeastern Alaska live under entire-

564 a

. ly different conditions from the Indians on the Tyonek
Reservation and therefore the provisions concerning In-
dian country have no application to them, and

Second, that Metlakatla, by its history, is not a tradi-
tional Indian Reservation for the reasons:

1. That it has no tribal organization;

2. It is not made up of aboriginal Indians but largely
of the descendants of immigrants who came from Canada
during the 19th century; and

3. That Metlakatla is not an Indian Reservation but
rather a reservation for Indians who came from British
Columbia, their descendants, and Alaska natives who choose
to join them. In effect, the word natives includes Eskimos
and Aleuts, and in actual fact there are Aleut and Eskimo
members of the community who are not of the Indian race.

The Government then points out the following points in
its argument:

1. That the Indians of Southeastern Alaska live under
entirely different conditions from the Indians on the Tyonek
Reservation and the provisions concerning Indian Country
have no application to them.

The decision in the McCord case was narrowly restricted
in its application to the facts of that case. At page 136,
Judge McCarrey stated:

“This decision should not be interpreted by
members of the native groups, be they Indian or
Eskimo, as a general removal of the territorial
penal authority over them, for the reason that this
court will take judicial notice that there are few
tribal organizations in Alaska that are functioning
strictly within Indian country as defined in 18 U.S.
C.A. § 1151 et seq. As I have said, only when the
offense fits distinctly within the provisions of the

ee 565

applicable federal law will territorial jurisdiction
be ousted, Testimony indicates that the Tyonek
area, unlike most areas inhabited by Alaska na-
tives, has been set aside for the use of and is
governed by an operational tribal unit. Under
these conditions, I can see no alternative but to
order the release of the petitioners.”

There is no area in Southeastern Alaska that is expressly
“set aside for the use of and is governed by an operational
tribal unit” and certainly Metlakatla does not come within
this limitation. That there are numerous groups of Indians
in Alaska who have no tribal-type affiliation is borne out by
the terms of the Wheeler-Howard Act which, when it was
extended to Alaska by 25 U.S.C.A. § 473a, provided:

“473a. Same; application to Alaska

“Sections 461, 465, 467, 468, 475, 477 and 479
of this title shall after May 1, 1936, apply to the
Territory of Alaska; Provided, That groups of
Indians in Alaska not recognized prior to May 1,
1936, as bands or tribes, but having a common
bond of occupation, or association, or residence
within a well-defined neighborhood, community,
or rural district, may organize to adopt constitu-
tions and bylaws and to receive charters of incor-
poration and Federal loans under sections 470,
476, and 477 of this title. May 1, 1936, ch. 254,
§ 1, 49 Stat. 1250.”

Compare this with Section 476, applying to American In-
dians in general, which reads as follows:
“Any Indian tribe, or tribes, residing on the
same reservation, shall have the right to organize
for its common welfare, and may adopt an appro-
priate constitution and bylaws * * *”

566 Le

It is readily seen that the Wheeler-Howard benefits can
safely be limited to tribes in the United States without run-
ning the risk of taking benefits from large groups of un-
organized Indians.

In Southeastern Alaska there are many groups of non-
tribal Indians and therefore special language was neces-
sary to bring the Indians of Southeastern Alaska within
the terms of the Wheeler-Howard Act.

That the Indians of Southeastern Alaska are to be treat-
ed differently from the Indians of the Tyonek reserve and
perhaps other Indians in the Interior of Alaska as well as
in the United States is apparent from the decision of Judge
Folta in the case of United States v. Libby, McNeil
& Libby, D.C.1952, 107 F.Supp. 697, at page 699:

“ke 8 in the ensuing 54 years the Indians
of Southeastern Alaska, and particularly the
Haidas, have not only abandoned their primitive
ways and adopted the ways of civilized life but
are now fully capable of competing with the
whites in every field of endeavor * * * It is
a matter of common knowledge that today the
Indians of Southeastern Alaska prefer the white
man’s life despite all its evils and shortcomings
Ok OK

“Whatever may be said in justification of reser-
vations in the unsettled regions of Alaska, they are
viewed as indefensible in Southeastern Alaska,
and generally condemned by whites and Indians
alike as racial segregation and discrimination in
the worst form * * *,”

It would seem that in view of the development of the
Indians in Southeastern Alaska and their participation in
every phase of the life and economy of the white man that
every presumption should be indulged in to avoid the ef-

a 567

fects of racial segregation and discrimination and to rec-
ognize the non-existence of Indian Country in South-
eastern Alaska.

As early as 1886 the District Court in Alaska, Judge
Dawson, said (In re Sah Quah, 31 F. 327, 328) specifically
referring to the Indians at Juneau:

“Many of them have connected themselves with
the mission churches, manifest a great interest in
the education of their youth, and have adopted
civilized habits of life. Their condition has been
gradually changing until the attributes of their
original sovereignty have been lost, and they are
becoming more and more dependent upon and
subject to the laws of the United States, and yet
they are not citizens within the full meaning of
that term.

“From the organization of the government to
the present time, the various Indian tribes of the
United States have been treated as free and in-
dependent within their respective territories, gov-
erned by their tribal laws and customs, in all mat-
ters pertaining to their internal affairs, such as
contracts and the manner of their enforcement,
marriage, descents, and the punishment for crimes
committed against each other. They have been
excused from all allegiance to the municipal laws
of the whites as precedents or otherwise in relation
to tribal affairs * * *,

“* 3 >& but does the rule * * * apply to
the Indians of Alaska? JI think not, and for
various reasons. The United States has at no time
recognized any tribal independence or relations
among these Indians, has never treated with them
in any capacity, but from every act of congress

568 Le

in relation to the people of this territory it
is clearly inferable that they have been and now
are regarded as dependent subjects, amenable to
the penal laws of the United States, and subject
to the jurisdiction of its courts. Upon a careful
examination of the habits of these natives, of
their modes of living, and their traditions, I am in-
clined to the opinion that their system is es-
sentially patriarchal, and not tribal, as we under-
stand that term in its application to other Indians
Ok ae

The authority of this case was recognized by Judge Mc~
Carrey in the McCord case, supra. He felt that the pe-
culiar tribal circumstances of the Tyonek group warranted
an exception from the general holding of the Sah Quah
case,

Later, when a territorial government was formed, the
reasoning of the Sah Quah case suggested that all of the
Indian inhabitants came within the jurisdiction of the
territorial laws. An excellent discussion of the history of
the Indian Country provisions is found in Iron Crow v.
Oglala Sioux Tribe of Pine Ridge Reservation, 8 Cir., 231
F.2d 89. That case demonstrates that it was the policy of
the United States Government to allow Indian tribal or-
ganizations to maintain their traditional forms of self-
government, and to recognize the tribes as dependent
sovereignties. Southeastern Alaska has never known tribal
organization since the purchase of Alaska from Russia.

Further evidence that Alaska Indians—even those in
remote communities—are subject to Alaska territorial law,.
is 48 U.S.C.A. § 172, providing that teachers in the Alaska
School Service designated by the Secretary of the In-
terior may be appointed by the Attorney General as special
peace officers with authority to:

es 569

“oe % ok arrest, upon warrant duly issued,
any native of Alaska charged with violation of any
of the provisions of the Criminal Code of Alaska
(Act March 3, 1899, Chap. 429, Thirtieth Stats.
at Large, Pages 1253-56), or any amendment
thereof, or any white man charged with the viola-
tion of any of said provisions to the detriment of
any native of Alaska * * * and any person so
arrested shall be taken * * * before a United
States Commissioner or other judicial officer for
trial * * * March 3, 1909, ch. 266, 35 Stat.
837.”

|| It is to be noted that the only schools under the
jurisdiction of the Secretary of the Interior are provided
for in Section 169, schools “for and among the Eskimos
and Indians of Alaska * * *,” Therefore, it is obvious
that congress considered the criminal code of Alaska to
be applicable to Indians not living in white communities.

HE 2. Metlakatla is not an Indian reservation in the
traditional sense and accordingly is not Indian country.
18 U.S.C. § 1151 defines Indian country as:

“(a) all land within the limits of any Indian

reservation under the jurisdiction of the Unit-

ed States Government, * * * (hb) all depend-

ent Indian communities within the borders of the

United States whether within the original or sub-

sequently acquired territory thereof, and whether

within or without the limits of a state, and (c) all

Indian allotments, the Indian titles to which have

not been extinguished * * *.”

Subsection (b) does not apply to Metlakatla because
Metlakatla is not dependent as a community and any bene-
fits available to the residents as Indians are the same as

570 Le

those available to any Indian in Alaska, including Indians
living in apartment houses in Ketchikan. Furthermore, it
is doubtful that Metlakatla could be considered “within
the borders of the United States.” Congress could have
used language such as “within any state or Territory,” or
“within the United States, its Territories and Possessions.”

Subsection (c) pertains to allotments, which is a word
of art, applying to the General Allotment Act, 24 Stat. 388,
25 U.S.C.A. § 331 et seq. and other statutes which refer
to land patented to individual Indians. It has been held
in numerous cases that such a tract within an organized
reservation is Indian country. Therefore, only if Met-
Jakatla is “land within the limits of any Indian reservation
under the jurisdiction of the United States government”
is Metlakatla Indian country.

Tt has been held that all reservations are not necessarily
Indian country, United States v. Celestine, 215 U.S. 278,
279, 285, 30 S.Ct. 93, 95, 54 L.Ed. 195:

“* %* >« But the word ‘reservation’ has a
different meaning, for while the body of land
described in the section quoted as ‘Indian country’
was a reservation, yet a reservation is not neces-
sarily ‘Indian country.’ The word is used in the
land law to describe any body of land, large or
‘small, which Congress has preserved from sale
for any purpose. It may be a military reservation,
or an Indian reservation, or, indeed, one for any
purpose for which Congress has authority to pro-
vide, and, when Congress has once established
a reservation all tracts included within it remain
a part of the reservation until separated there-
from by Congress * * *,”

It is to be noted that in the McCord case, supra, Judge
McCarrey expressly pointed out that the Tyonek group was

ee 571

a tribe presided over by a Chief. He said, 151 F.Supp.
at page 133:

“There is no dispute as to the fact that the peti-
tioners and victims are full-blooded Indians and
that they and their ancestors, for a long period of
time, have resided in this area * * *.”

On the same page there are numerous references to the
tribe and the Chief of the tribe. Judge McCarrey also
notes on the same page:

“All of the inhabitants in that area, except a
white school teacher who resides there a portion
of the year, and a Hawaiian who is married to a
member of the tribe, are all native Indians
and members of the tribe.”

Metlakatla, on the other hand, is more an “Immigrant and
Alaska Native Reservation” than an Indian reservation.
Judge McCarrey cites the reasons for the Indian country
provisions as follows: (at page 134)

1. “* * * their (tribe) independent status,
established by treaty, evidences a congressional
intent to relieve them of the rule of the Territory,
and, second, that the tribes must be protected from
the restraints of a society they do not under-
stand and into which they have not yet become
assimilated. * * * the federal court system
may afford the Indian protection from a fre-
quently unfriendly and occasionally hostile com-
munity until the time arrives when he is more ade-
quate to defend himself, * * * the reluctance
of the state authorities to assume the government
of a large and tax-free population within its
borders.”

None of these reasons have any application to Metlakatla.
Testimony shows that the original Metlakatlans could

572 |

not come to Alaska with Father Duncan until they had
formally renounced their tribal allegiance. The present
membership of the community includes a racial and na-
tional mixture of British Columbians, Alaska Haida
Indians, Alaska Thlingit Indians, and non-Indian Aleuts
and Eskimos. The only government consists of a Mayor
and village council. There has never been a Chief or medi-
cine man at Metlakatla. The bylaws of the community
do not call for allegiance to any tribe, although they do
call for the members:
“J. To be faithful and loyal to the Govern-
ment of the United States of America.
“2. To be loyal to the local government of
our Community, to obey its ordinances and
regulations, and to obey all applicable laws of the
Territory of Alaska and of the United States.
“3. To cooperate earnestly in all endeavors
for the education of our children, for the advance-
ment of the Community and for the suppression
of all forms of vice.”

The original settlors of Metlakatla came to the Annette
Islands, not because they were removed there after losing
a war but because they sought religious and economic free-
dom in the United States as an alternative to oppressive
conditions in British Columbia. The people of Metlakatla
need no protection from the restraints of our society and
they do understand our law.

The evidence has shown the various stages of their
economic development and as Judge Folta noted in the case
of United States v. Libby, McNeil & Libby, supra: there
is little, if any, unfriendly or hostile community attitude
toward the Indians,

The residents of Metlakatla pay Territorial income taxes,
school taxes, gasoline taxes and generally all forms of

a 573

state taxes paid by other residents of Alaska. There has
been no reluctance demonstrated by Alaskan authorities to
govern the Indians of Southeastern Alaska.

Judge McCarrey cites the case of United States v.
Chavez, 1933, 290 U.S. 357, 54 S.Ct. 217, 78 L.Ed. 360,
defining “Indian country” as:

“Any unceded lands owned or occupied by an
Indian nation or tribe of Indians * * *,”
While this may be broad enough to cover the Tyonek area,
it has no application to Metlakatla.

Furthermore, Section 1151 talks in terms of “Indian
country” and “Indian reservations.” Wherever Congress
has intended the word “Indian” to include Aleuts and Eski-
mos, an express statement to that effect has been made, such
asin 25 U.S.C.A. § 479, wherein it is stated:

“For the purposes of said sections (Wheeler-
Howard Act), Eskimos and other aboriginal peo-
ples of Alaska shall be considered Indians.”

See also 48 U.S.C.A. § 358a.

Metlakatla could conceivably become a community pre-
dominantly Eskimo or Aleut. There is nothing in the In-
dian country statute that expresses an intent to govern
Eskimos or Aleuts or groups containing Eskimos or Aleuts,
or, for that matter, Alaska natives generally, or immigrant
Indian communities,

Evidence of congressional intent not to consider Met-
Jakatla as a reservation can be found in 48 U.S.C.A. § 358a,
where it is stated:

“The Secretary of the Interior is authorized
to designate as Indian reservation any area of
land which has been reserved for the use and
occupancy of Indians or Eskimos by Section 356
of this title * * *.”

574, De

The only geographical area covered by Section 356 is
Metlakatla and the Secretary of the Interior has never made
such a designation.

- Metlakatla is a reservation only in the most general
meaning of the word. District Judge Jennings, in United
States v. Alaska Pacific Fisheries, D.C.Juneau, 1916, 5
Alaska 484, on page 487, said of Metlakatla:
“ce 3k 3 a reservation is created for them—

not an ordinary Indian reservation, within

whose limits they are to be confined, but a reserva-

tion which shall be their home, if they choose to

make it their home—where the race may multiply

and increase, and develop under the guiding hand

of a high officer of government.”

The entire population of Metlakatla could move to
Ketchikan—even against the will of the Alaska Native
Service, and the Department of the Interior. If they
choose to remain in Metlakatla and utilize the land set
aside for them, it is a matter solely within their choice.

How, then, can they be considered dependent people on
a par with traditional reservation Indians and in need of
special protection from state law?

It is therefore the opinion of this Court that none of the
Indians of Southeastern Alaska, including the residents of
Metlakatla, are within the definition of Indian country as
set out in the United States Criminal Code, and that this
Court should accept jurisdiction of this matter,

575

356 U.S. 320, 78 S.Ct. 735
ALASKA INDUSTRIAL BOARD and Carl E. Jenkins, Petitioners,
v. CHUGACH ELECTRIC ASSOCIATION, Inc., a Corpo-
ration, and General Accident, Fire and Life Assurance Cor-
poration, Ltd.
No. 303.

Argued April 8, 1958,
Decided April 28, 1958,

576 be

Mr. John Dimond, Juneau, Alaska, for the petitioners.
Mr. Frederick O, Eastaugh, Juneau, Alaska, for the re-
spondents.

Mr. Justice DOUGLAS delivered the opinion of the
Court. .

This case presents an important question under the Alaska
Workmen’s Compensation Act, 2 Alaska Comp.L.Ann.1939,
§ 43-3-1 et seq. Petitioner Jenkins, an employee of re-
spondent Chugach Electric Association, was injured in the
course of his employment. Three surgical operations were
required: amputation of his left arm at the shoulder; am-
putation of four toes on his left foot; and later, amputation
of his right leg below the knee. Though the injury oc-
curred in September 1950, the left foot had not healed three
years later. Asa restilt Jenkins was for a rather long period
totally disabled. Respondents made “temporary disabil-
ity’? payments to Jenkins for approximately 38 weeks

1Section 43-8-1 of the Act makes the following provision for
“temporary disability”:

“For all injuries causing temporary disability, the employer shall
pay to the employee, during the period of such disability, sixty-five
per centum (65%) of his daily average wages. And in all cases where
the injury develops or proves to be such as to entitle the employee
to compensation under some provision in this schedule, relating to
cases other than temporary disability, the amount so paid or due him
shall be in addition to the amount to which he shall be entitled un-
der such provision in this schedule.

“Payment for such temporary disability shall be made at the time
compensation is customarily paid for labor performed or services ren-
dered at the plant or establishment of the employer liable therefor
and not less than once a month in any event.

Ss 377

($95.34 a week or a total of $3,645). At that point they
decided that Jenkins had been totally and permanently dis-
abled * since the date of the last amputation and was there-
fore entitled to a lump-sum award of $8,100 under the Act
and no more. They thereupon sent him a check for that
amount less the $3,645 already received, wiz. $4,455.

Jenkins then applied to the Alaska Industrial Board for
continuing benefits for temporary disability, despite his re-
ceipt of the lump-sum award for permanent total disability.
The Board allowed him temporary total disability from the

“The average daily wage earning capacity of an injured employee
in case of temporary disability shall be determined by his actual
earnings if such actual earnings fairly and reasonably represent his
daily wage earning capacity. If such earnings do not fairly and rea-
sonably represent his daily wage earning capacity, the Industrial
Board shall fix such daily wage earning capacity as shall be reason-
able and have a due regard for the nature of his injury, the degree of
temporary impairment, his usual employment and any other factor
or circumstance in the case which may affect his capacity to earn
wages in his temporary disabled condition.”

2 Section 48-3-1 of the Act defines total permanent disability as
follows:

“The loss of both hands, or both arms, or both feet, or both legs,
or both eyes, or any two thereof, or hearing in both ears, shall con-
stitute total and permanent disability and be compensated according
to the provisions of this Act with reference to total and permanent
disability.

“Amputation between the elbow and the wrist shall be considered
equivalent to the loss of an arm, and amputation between the knee
and the ankle shall be considered equivalent to the loss of a leg.”

3 Section 43-3-1 of the Act provides:

“Where any such employee receiving an injury arising out of, and
in the course of his or her employment, as the result of which he or
she is totally and permanently disabled, he or she shall be entitled
to receive compensation as follows:

“If such employee was at the time of his injury married he shall be
entitled to receive Seven Thousand Two Hundred Dollars ($7,200.00)
with Nine Hundred Dollars ($900.00) additional for each child under
the age of eighteen (18) years, but the total to be paid shall not ex-
ceed Nine Thousand Dollars ($9,000.00).”

578 be

date of the last amputation. This temporary total disability,
said the Board, “continues to this date, no end medical re-
sult having been reached.”

Respondents thereupon instituted this action in the Dis-
trict Court to set aside the Board’s decision, That court re-
versed the Board, holding that an award of temporary total
disability could not be granted under the Act for physical
disability arising from the same accident in which a sched-
uled, lump-sum award for total permanent disability had
been granted. 122 F.Supp. 210. The Court of Appeals,
sitting en banc, affirmed, by a divided vote, modifying the
judgment. 245 F.2d 855. By that modification the lump-
sum award was not to be reduced by the amount received as
temporary disability prior to that time. The case is here on
a petition for certiorari. 355 U.S. 810, 78 S.Ct. 50, 2 L.Ed.
2d 29,

The Court of Appeals reasoned that the lump-sum award
for permanent total disability was intended to represent a
capitalization of future earnings. It concluded, therefore,
that Jenkins had been compensated by the lump-sum award
for any loss of future earnings and that he could not get a
further award for loss of earnings, the lump-sum award be-
ing intended “as a maximum award.” Id., 245 F.2d at
page 862.

HE We read the Act differently. The lump-sum awards
for total or permanent disability under this Compensation
Act ignore wage losses. Whatever the employee may have
made before, whatever his wages may be after the injury,
the award is the same. To that extent it is an arbitrary
amount. But it is the expression of a legislative judgment
that on average there has been a degree of impairment and
whatever may be the fact in a particular case, the lump sum
should be paid without more. See 2 Larson, Workmen’s
Compensation, § 58-10,

579)

There may, nevertheless, be a continuing ability to do
some work; and as long as that remaining ability exists
there is a factual basis for temporary disability awards.
That seems to be the theory of the Act for it extends those
awards to “all injuries causing temporary disability” and
bases them on the “average daily wage earning capacity”
of the injured employee,* as determined by the Board. That
award takes care of the lost wages during the healing period
and until the employee is able to return to work though per-
haps at a different job and at reduced pay. It also compen-
sates him for any temporary loss of earning power based on
the “wage earning capacity” > that remains after the injury.
The Court of Appeals assumed there was “no remaining
ability to work” and therefore “no foundation for tempo-
tary disability benefits.” 245 F.2d at page 862. But the
Act, we think, is drawn on a different hypothesis. It seems
to provide a system of temporary disabilities to all who are
injured, whether their injuries are disfigurement,® partial
permanent disability,” total and permanent disability,® or so
minor as to fall in lesser categories. Any other reading
would seem to be hostile to the benign purpose of this legis-
lation. Cf. Baltimore & Philadelphia S. Co. v. Morton, 284
U.S. 408, 414, 52 S.Ct. 187, 189, 76 L.Ed. 366.

HI Respondents maintain that Jenkins’ claim was not
timely filed and that for other reasons also the Board had

4Note 1, supra.
5 Note 1, supra.

6 Section 48-3-1 provides:

“The Industrial Board may award proper and equitable compensa-
tion for serious head, neck, facial, or other disfigurement, not exceed-
ing, however, the sum of Two Thousand Dollars ($2,000.00).”

7 Section 43-8-1 provides a schedule of partial permanent liability
for losses of thumbs, toes, fingers, arms, legs, eyes, nose, and ear.

8 See note 2, supra.

580 —

no jurisdiction to enter this award. These questions were
decided adversely to respondents by the Court of Appeals
and no cross-petition was sought here. Those questions are
therefore not open to respondents at this stage. LeTulle v.
Scofield, 308 U.S. 415, 421-422, 60 S.Ct. 313, 316, 84 L.
Ed. 355.

The judgment is reversed and the cause is remanded to
the District Court for proceedings in conformity with this
opinion.

Reversed.

Mr. Justice WHITTAKER, believing that an injured
workman cannot be, or be legally compensated as, both
“totally and permanently disabled” and “temporarily totally
disabled” at one and the same time under the Alaska Work-
men’s Compensation Act, would affirm for the reasons
stated by the Court of Appeals, 245 F.2d 862.

255 F.2d 735

Jim PENNY WELL, Petitioner, v. Honorable J. L. McCARREY,
Jr., Respondent.
‘No. 15976.

United States Court of Appeals, Ninth Circuit.
May 8, 1958.

582 Le

Peter J. Kalamarides, Anchorage, Alaska, Edgar Paul
Boyko, San Francisco, Cal., for petitioner.

Wm. T. Plummer, U. S. Atty., Anchorage, Alaska, for
respondent.

Before STEPHENS, Chief Judge, and POPE and
HAMLEY, Circuit Judges.

HAMLEY, Circuit Judge.

This matter is before us on our order to show cause why
a writ of prohibition and a writ of mandamus should not is-
sue, and upon respondent’s return thereto.

The petitioner, Jim Pennywell, is presently in danger of
being apprehended and imprisoned under a bench warrant
authorized to be issued by the District Court for the District
of Alaska, Third Division. Asserting that the named dis-
trict court is without jurisdiction in the matter, Pennywell
seeks in this proceeding to prohibit respondent, Honorable
J. L. McCarrey, Jr., judge of that court, from the further
exercise of jurisdiction therein. He also desires an order
requiring respondent to vacate his order under which the
bench warrant was issued.

The following facts, with indicated exceptions, are not
in dispute: On February 1, 1956, Pennywell was arraigned
in the magistrate’s court, city of Anchorage, on a charge of
selling intoxicating liquor without first obtaining a liquor li-
cense. This was alleged to be a violation of City Ordinance
No. 1031, § 401.3 of the Anchorage General Code. On
February 3, 1956, cash bail in the sum of two hundred dol-
lars was posted for Pennywell by W. N. Johnson. Petition-
er was convicted of the charge in the magistrate’s court on
February 8, 1956, and was fined in the sum of two hundred
dollars. The magistrate set the bail on appeal in the sum of
five hundred dollars. Pennywell gave immediate oral notice
of appeal.

— 583

Later on that day, Pennywell decided to pay his fine and
abandon the appeal. By agreement between Pennywell and
Johnson, the latter arranged with the clerk of the magis-
trate’s court to have the two-hundred-dollar cash bail re-
leased as such and accepted as payment of the fine.t Penny-
well later repaid Johnson this sum of money.

Petitioner apparently failed to advise his attorney that he
had paid the fine and had abandoned the appeal. The clerk
of the magistrate’s court also apparently failed to make a
‘sufficient record of this transaction. As a result, the matter
of perfecting an appeal to the district court proceeded with-
out interruption. On March 8, 1956, a transcript of the rec-
ord was filed in the district court. On the same day, an ap-
peal property bond in the sum of five hundred dollars was
posted with the clerk of that court. The case was set for
trial de novo in the district court on October 29, 1956, be-
fore the Honorable Edward P. Murphy, a visiting judge.”

1In his return, respondent denies that the fine was paid on the
day oral notice of appeal was given. He further alleges that, after
such oral notice was given, the clerk of the municipal court, “without
authority,” applied to the payment of the fine the bail money deposit-
ed by Johnson. Respondent's memorandum opinion, dated April 10,
1958, however, recites that the bail money was applied to the fine on
the date Pennywell was convicted and gave oral notice of appeal.
‘The averment in respondent's return, that the transfer of funds to
accomplish payment of the fine was “without authority,” is not fur-
ther explained or documented. In an affidavit filed by an assistant
city attorney of the city of Anchorage, it is alleged that the fine was
paid to the clerk of the magistrate’s court “in due course.” We will
accept this as the fact.

2In respondent’s return, it is stated: “* * * Petitioner was
unquestionably unaware of the unauthorized application of the bail
money to the payment of the fine by the clerk of the municipal court,
as he thereafter perfected his appeal to the district court without
making any reference to such application of the bail money.” While
it is probably immaterial, the true explanation seems to be that the
appeal was perfected by Pennywell’s attorney, who had not been ad-
vised by his client or the clerk of the magistrate’s court that the fine
had been paid,

584 a

Before the date set for trial, the attorney for the city of
Anchorage learned that Pennywell had paid his fine in the
magistrate’s court and had abandoned the appeal. On Oc-
tober 24, 1956, therefore, he filed a motion in the district
court to dismiss the appeal. The grounds stated in this mo-
tion are that Pennywell “has paid the fine imposed by the
magistrate and therefore the appeal is moot. * * *”
The motion was supported by the affidavit of the clerk of
the magistrate’s court, to the effect that Pennywell had paid
the fine which had been imposed. Responsive to this. mo-
tion, Judge Murphy, on October 29, 1956, ordered the ap-
peal dismissed.* No appeal was taken from this order.

Pennywell, acting on the assumption that the criminal
proceedings were at an end, did not, of course, pay the fine a
second time. The clerk of the district court, however, con-
strued the district court order of October 29, 1956, as re-
quiring Pennywell to pay to that office the two-hundred-dol-
lar fine which had been already collected by the magistrate’s
court. Therefore, about seventeen months after entry of
the order dismissing the appeal, the clerk requested respon-
dent to issue a bench warrant for Pennywell’s arrest. This
was done in a routine manner and at a time when twenty
other bench warrants were requested, and, in acting thereon,
respondent was apparently not made aware of the facts of
this particular case.

3 This order is evidenced by a minute entry in the clerk’s docket,
and two signed orders, all dated October 29, 1956. ‘The minute en-
try reads: “It is Ordered that Appeal be, and it is hereby, Dis-
missed.” ‘The decretal paragraph of the first signed order reads: “It
is Hereby Ordered that the Appeal in the above entitled case be dis-
missed and Judgment be entered as given below.” The second signed

order reads:

“The above-entitled cause having been dismissed by this Court on
the 29 day of October, 1956, and the defendant having paid his fine
before having taken an appeal to this court,

“Now, Therefore, it is ordered that the judgment of the City Mag-
istrate be and it is hereby entered as the judgment of this Court.”

ee 585

Pursuant to this request, respondent, on March 20, 1958,
ordered that a bench warrant issue for failure to pay the
fine. The bench warrant was issued on March 24, 1958,
and, on March 28, 1958, Pennywell was arrested.

On the day Pennywell was arrested, his attorney filed a
motion to set aside the judgment and all prior proceedings
in the district court pertaining to these criminal proceed-
ings.4 Pennywell was released on his own recognizance
pending consideration of the above motion. The motion
was argued and denied on the day it was filed—March 28,
1958.5

Counsel for Pennywell, on April 7, 1958, sought to ob-
tain reconsideration of the order of denial entered on March
28, 1958. This request was denied and the court entered an
order to the effect that, if Pennywell did not pay the fine to
the clerk of that court by 5:00 p. m., on April 11, 1958, a
second bench warrant would issue.®

On the next day, April 8, 1958, counsel for Pennywell
and the attorney for the city of Anchorage again sought re-

4This motion was supported by the affidavit of the attorney for
the city of Anchorage. It is therein recited that Pennywell paid the
fine imposed by the magistrate on the same day that he gave oral
notice of appeal. It is also stated that the clerk of the magistrate’s
court “erroneously forwarded the record of appeal on March 8, 1956,
to the Clerk of the District Court. * * *”

5In denying the motion, the court stated: “* * * This motion
is denied as the matter is already res judicata based upon the judg-
ment of Judge Murphy heretofore having been entered. This Court
obtained jurisdiction over the case and subject at the time it was
appealed and has never lost it. The Court hereby directs that the
fine be paid to the Clerk of this Court forthwith and failing therein,
the Court will issue a bench warrant to re-arrest the Defendant for
having failed to pay the fine to this Court. * * *”

6On this occasion, the court stated: “If the defendant has paid
the fine into the wrong court that is his problem and he will then
have a suit against the court which he paid it into to have the same
refunded.”

586 |

consideration of the order of March 28, 1958. Again this
was refused. Later the same day, counsel for Pennywell
wrote to the court, calling attention for the first time to a de-
cision filed in that court on August 30, 1957, by visiting
Judge Ernest A. Tolin, in Woo v. City of Anchorage, D.C.,
154 F.Supp. 944. In that decision, Judge Tolin held that
the city ordinance under which Pennywell was convicted is
void. No judgment, however, had been entered in the Woo
case.

On April 10, 1958, respondent filed a memorandum opin-
ion taking note of the decision in the Woo case. This opin-
ion closes as follows:

“s« % > Tf counsel for the appellant, or the
City of Anchorage, will prepare a proper motion
and order recalling the second bench warrant and
requesting this court to hold the matter of the pay-
ment of the find [fine] into this court in abeyance
pending the ultimate determination of the George
D. ¥. Woo case, supra, the same will be granted.”

Instead of following this suggestion, petitioner the next
day filed the instant proceeding for writs of prohibition
and mandamus.

Hi The facts recited above indicate, without doubt,
that the orders of the district court authorizing issuance of
bench warrants for the arrest of Pennywell are void. The
appeal to the district court became moot as soon as Penny-
well, on February 8, 1956, paid in full the fine imposed by
the magistrate’s judgment of that date. Recognizing this,
and acting upon the motion of the appellee in that proceed-
ing, Judge Murphy entered an order dismissing the appeal.
The district court was thereafter without jurisdiction to en-
force collection of the fine a second time.

It is now too late to challenge the correctness of Judge
Murphy’s order dismissing the appeal, and respondent does

| 587

not do so. In any event, what Judge Murphy did is fully
sanctioned by what the same district court did in City of
Seldovia v. Lund, D.C., 138 F.Supp. 382. There, a defend-
ant took an appeal from a judgment of conviction in which
a jail sentence was imposed. He thereafter elected to serve
the sentence. This fact did not come to light until near the
end of the trial de novo in the district court, and neither
counsel even then asked for dismissal.

The court nevertheless dismissed the appeal on its own
motion. In his well-reasoned and documented opinion in
that case, Judge McCarrey said (at page 383) :

“I find that the defendant’s right to appeal
becomes moot upon his having served the time
and/or paid the fine imposed by the lower court.
Hanback v. District of Columbia, D.C.Mun.App.
1943, 35 A.2d 189; Reed v. United States, D.C.
Mun.App., 93 A.2d 568; Gillen v. United States,

9 Cir., 199 F.2d 454; 24 C.J.S. Criminal Law
§ 1668; 18 A.L.R. 867; Tropp v. State, 17 Ok.
Cr. 702, 186 P. 737, * * *”

The effort of respondent to collect the fine a second time
is not based on the ground that the appeal was improperly
dismissed. Rather, respondent proceeded on the theory

- that, an appeal having once been initiated, the dismissal
thereof, for whatever reason, resulted in making the judg-
ment of the magistrate’s court that of the district court.
Because of this, the court held, the judgment could be dis-
charged only by payment of the fine to the clerk of the dis-
trict court. In this connection, attention is called to the
following language contained in one of the orders of Octo-
ber 29, 1956: “* * * The judgment of the City Magis-

588 EE

trate be and it is hereby entered as the judgment of this
Court.” 7

HH In our view, neither the quoted language contained
in the order, nor the statute from which it was derived,
was intended to, or validly could, impose upon Pennywell
the duty to pay the fine a second time. Dismissal of an ap-
peal for mootness, because the penalty imposed has been
paid, is judicial recognition that the penalty has been validly
paid. If validly paid, it cannot be again assessed. That
would be not only double jeopardy, but double penalty.

There seems to lurk in the background of this case a con~
troversy between the magistrate’s court and the district
court as to which court is entitled to receive the fines in
cases of this kind. We do not now undertake to pass judg-
ment in any such controversy. We do hold that it is a
controversy which does not concern Pennywell. He has
paid his penalty in full, and should not be further harassed.

It may well be, as respondent indicates in his memoran-
dum opinion, that entry of a judgment in the Woo case
would provide Pennywell with another ground for escaping
further sanctions. But Pennywell does not need another
ground, Moreover, he is entitled to the immediate peace
of mind which will come with judicial recognition that the
jurisdictional ground he now advances entitles him to the
relief he seeks.

vInclusion of this language in the order was doubtless inspired by
§ 69-6-9, A.C.L.4.1949, which reads:

“Judgment on appeal. That when an appeal is dismissed the ap-
pellate court must give judgment as it was given in the court below,
and against the appellant, for the costs and disbursements of the
appeal. When judgment is given in the appellate court against the
appellant, either with or without trial of the action, it must also be
given against the sureties in his undertaking according to the nature
and effect thereof.”

P| 589

It is ordered that respondent vacate the order of April
7, 1958, authorizing the issuance of a bench warrant for the
arrest of Jim Pennywell, and recall the bench warrant issued
thereunder. It is further ordered that respondent be, and
he is hereby, prohibited from the further exercise of juris-
diction in the matter of The City of Anchorage, Alaska v.
Jim Pennywell, Cr. No. 3384.

255 F.2d 288

Richard Edgar LEWIS, Appellant, v. UNITED STATES of
America, Appellee.
No. 15733.

United States Court of Appeals, Ninth Cireuit.
May 26, 1958,

ee

Edgar Richard Lewis, Steilacoom, Wash., in pro. per.

Wm. T. Plummer, U. S. Atty., Anchorage, Alaska, for
appellee.

Before FEE and CHAMBERS, Circuit Judges, and
JAMES M. CARTER, District Judge.

PER CURIAM.

It appearing that there is no merit in the contentions of
appellant, the judgment of the District Court denying the
motion of Richard Edgar Lewis for relief tinder Title 28
ULS.C.A. § 2255 is affirmed.

590 Dn

258 F.2d 791

Matt L, KAMPER, Appellant, v. FAIRBANKS LOCAL 1234,
UNITED BROTHERHOOD OF CARPENTERS AND JOIN-
ERS OF AMERICA and George Davis, Appellees,

No, 14989.

United States Court of Appeals, Ninth Cireuit.
May 29, 1958.

Robert J. McNealy, Fairbanks, Alaska, for appellant.
George B. McNabb, Eugene V. Miller, Fairbanks, Alaska,
for appellee.

a  D
Before DENMAN, BONE and POPE, Circuit Judges.

PER CURIAM.

Appellant brought this action below to compel the Fair-
banks Local to restore his membership in the appellee Union.
asserting that he was wrongfully, unlawfully and malicious-
ly expelled therefrom. In a second cause of action he
claimed damages alleged to have been suffered by him in
consequence of such alleged wrongful expulsion. The
action was dismissed for want of jurisdiction to entertain
it. Upon appeal here the cause was argued and submitted
but decision of this court was withheld awaiting decision
of the Supreme Court in the case of International Associa-
tion of Machinists v. Gonzales which has now been de-
cided by that court. See 356 U.S. 617, 78 S.Ct. 923, 2 L.Ed.
2d 1018.

Upon the authority of that decision, the judgment of the
court below is reversed and the cause is remanded with
directions to take such further proceedings as may be con-
sistent with the decision of the Supreme Court in the case
cited.

592 Le

257 F.2d 56

Glenn P. MAULDING, Appellant, v. UNITED STATES
of America, Appellee,
No. 15512.

United States Court of Appeals, Ninth Circuit.
May 29, 1953,

S
BY)

a ee entemmmnnnnennn nine... |

595

T. N. Gore, Jr., Fairbanks, Alaska, Edgar Paul Boyko,
Anchorage, Alaska, for appellant.

George M. Yeager, U .S. Atty., Paula A. Tennant, Asst.
U.S. Atty., Fairbanks, Alaska, for appellee.

Before HEALY, POPE, and HAMLEY, Circuit Judges.

HAMLEY, Circuit Judge.

Glenn P. Maulding, a trailer dealer in Fairbanks, Alaska,
was tried and convicted on a charge of feloniously and
wrongfully converting to his own use the sum of $2,500,
the property of the Bank of Fairbanks. It was alleged in
the indictment that this sum had been received by Maulding
for the sale of a house trailer. The trailer, according to the
indictment, was the property of the bank, pursuant to a bill
of sale from Maulding to the bank. It was further alleged
that the bank had given Maulding custody of the trailer “in
trust.” The described acts were alleged to have been done

596 De

in violation of § 65-5-62 of the Alaska Compiled Laws An-
notated 1949, entitled “Embezzlement by Bailee.” *

On this appeal, Maulding contends that, under the un-
disputed facts, it must be held, as a matter of law, that no
relationship of bailor and bailee existed between the bank
and appellant, and that the statute relied upon is there-
fore not applicable. On this ground, he specifies as error
the denial of his motion for judgment of acquittal made at
the close of the evidence offered by the government, and the
denial of his motion for a new trial.

Appellee has moved to dismiss the appeal on the ground
that the motion for judgment of acquittal was waived, and
that denial of a motion for a new trial is not reviewable in
this court.

HE Appellant waived the motion for judgment of
acquittal made and denied at the close of the government’s
case, when he thereafter produced evidence in his own
behalf. Mosca v. United States, 9 Cir, 174 F.2d 448. This
being the case, we cannot now review the action of the trial
court in denying that motion.”

1Section 65-5-62 of the Alaska Compiled Laws Annotated 1949,
reads in part as follows:

“That if any bailee, with or without hire, shall embezzle; or wrong-
fully convert to his own use, or shall secrete, with intent to convert
to his own use, or shall fail, neglect, or refuse to deliver, keep, or ac-
count for, according to the nature of his trust, any money or prop-
erty of another delivered or intrusted to his care or control, and
which may be the subject of larceny, such bailee, upon conviction
thereof, shall be deemed guilty of embezzlement * * *, And
every mortgagor of persondl property having possession of prop-
erty mortgaged shall be deemed a bailee within the provision of this
section.” '

2No similar motion was made at the close of all the evidetice.
Such a motion was made on the fifth day following the return of,the
verdict. But such a motion can then be made only as a renewal of
a similar motion uiade and denied at the close of all the evidetide.
Rule 29(b), Federal Rules of. Criminal Procedure, 18 U.8.C.A. There

ee 597

HI The trial court, however, considered the legal ques-
tion as to whether a relationship of bailor or bailee existed
as having been raised by the motion for a new trial. That
court dealt with the question at length in its comprehensive
decision denying that motion. United States v. Maulding,
D.C., 147 F.Supp. 693, 16 Alaska 566. Such denial was
specified as error. This court will review the ruling on a
motion for a new trial for error of law or abuse of discre-
tion. Cavness v. United States, 9 Cir., 187 F.2d 719, 722.
We therefore conclude that the question is properly before
us. The motion to dismiss the appeal is denied.®

The following undisputed facts are to be considered in
determining whether a bailor-bailee relationship existed be-
tween the bank and Maulding, within the meaning of the
statute. In order to finance the acquisition of trailers for
purposes of sale, Maulding entered into a “Floor Plan
Agreement” with the Bank of Fairbanks. This agreement
was not introduced in evidence. Thereafter, in May, 1952,
according to an invoice introduced in evidence, Manhattan
Trailer Sales, of California, sold the trailer in question to
the bank for a purchase price of $2,510.39. The invoice
indicates that the trailer was shipped to the bank. Maulding
prepaid the freight.
being no such motion which could be renewed, the motion made
after return of the verdict was ineffective for any purpose. Mosca
v. United States, supra. This defect was apparently understood by
all concerned, for the trial judge did not deal with this motion in his
decision denying the concurrently-made motion for a new trial. Nor

is there any specification of error involving this post-verdict motion
for judgment of acquittal.

3Since the question appellant raises may be considered under his
specification of error directed to the motion for a new trial, we need
not determine whether we could notice it, in any event, under the
“plain error” rule, Rule 52(b), Federal Rules of Criminal Procedure,
18 US.0.A.

598 a

On June 16, 1952, the bank “floored” the trailer with
Maulding after he executed a trust receipt with attached
promissory note and a bill of sale. The trust receipt, as
indicated on its face, was issued pursuant to the Uniform
Trust Receipts Law of Alaska, chapter 40, $.L.A.1951. In
this instrument, Maulding acknowledged receipt of the
trailer, designated “Trust Property.” The trailer was stated
to have an “invoice price” of $2,510.39, and a “minimum
sale price” of $3,750. .

The trust receipt also constitutes an acknowledgment by
Maulding (designated “Trustee”) that a “security interest”
in the trailer (called “Trust Property”) remains in the bank
(designated “Entruster”) “until payment in full by the
Trustee of the note annexed hereto.” The receipt contains
a number of conditions and agreements. Maulding agreed
to return the trailer “on demand and in good order and
unused.” He agreed to hold the trailer as “trustee” for the
bank, but with the right to exhibit and sell it “for the ac-
count” of the bank for cash and for not less than the
minimum price specified in the instrument. Maulding, as
“trustee,” also agreed, in the event of such a sale, (1) to
notify the bank promptly, (2) to hold the proceeds “in
trust” for the bank, and (3) to deliver such proceeds
promptly to the bank.

Maulding also agreed, in this instrument, that he would
not rent, mortgage, pledge, encumber, use for demonstra-
tion, operate, or otherwise use the trailer. He further
agreed that he would make no sale of the trailer “except
as trustee for the Entruster,” and that “a security interest”
in the trailer “remains and is fully preserved in the En-
truster until payment of the note. * * *” The trust

De 599

receipt contains a clause, quoted in the margin, making
reference to the “Floor Plan Agreement.” *

The promissory note signed by Maulding, which was at-
tached to the trust receipt, is for the sum of $2,500, payable
on demand to the order of the bank. It contains a clause
referring to the Floor Plan Agreement, quoted in the mar-
gin. The bill of sale from Maulding (denominated “ven-
dor”) to the bank is in the usual form for such instru-
ments.

On May 9, 1953, Maulding sold the trailer to Glenn and
Janette Hanneman for the sum of $2,800 in cash. Maulding
used all of the proceeds of this sale for other personal and
business obligations. He did not notify the bank of the
sale or account for, or deliver to, the bank any of the pro-
ceeds. In September or October, 1953, the bank learned
of the sale. Maulding was not then in Alaska.

HI A ‘relationship of bailor-bailee arises when the
owner, while retaining general title, delivers personal prop-
erty to another for some particular purpose upon an express

4"This Trust Receipt is issued under the Floor Plan Agreement,
and any amendments thereto, dated June 16, 52, and executed and
delivered by the Trustee to the Entruster and is subject to the pro-
visions thereof. Upon the occurrence of any of the events specified
in the said Agreement, the Entruster is entitled to repossess the
Trust Property without demand and otherwise in the manner and
with the effect provided in said Agreement. If the Entruster shall
find it necessary to protect or enforce its rights hereunder by legal
proceedings or otherwise, the undersigned agrees to pay promptly all
taxes, costs, charges, expenses and disbursements including reasona-
ble attorneys’ fees.”

5 This Note is issued under the Floor Plan Agreement, and any
amendments thereto, dated June 16, 1952, and delivered by the under-
signed to the above-named payee and is subject to the provisions
thereof. Upon the occurrence of any of the events specified in the
said Agreement, the principal hereof may become forthwith due and
payable in the manner, upon the conditions and with the effect pro-
vided in said Agreement.”

600 |

or implied contract to redeliver the goods when the purpose
has been fulfilled, or to otherwise deal with the goods ac-
cording to the bailor’s directions. Earhart v. Callan, 9 Cir.,
221 F.2d 160, 163.

The parties and the trial court have assumed that the
determinative question here is whether Maulding held the
trailer as a bailment within the meaning of some such gen~
eral definition of the term,

But Maulding was not charged with, or convicted of,
embezzling the trailer. He was tried and convicted on a
charge of converting to his own use $2,500 of the sum
received by him from the sale of that trailer.®

This may have been an embezzlement of funds received
as agent for another,” and may be punishable as such under
§ 65-5-61 of the Alaska Compiled Laws Annotated 1949,
Conversion of the funds (which was charged), as distin-
guished from conversion of the trailer (which was not
charged), was not, however, an “embezzlement by bailee,”
under § 65-5-62, unless the $2,500 was being held as a
bailment.

|i As indicated by the definition set out above, per-
sonal property can become the subject of a bailment only if
the owner, while retaining general title thereto, delivers it to
another for some particular purpose. The bank had neither
possession nor ownership of the $2,500 prior to its acquisi-
tion by Maulding. The bank, therefore, was not a bailor,
and Maulding was not a bailee of that money,

6In three other similar criminal cases which have been called to
our attention, the defendant was charged with embezzlement, lar-
ceny, or conversion of the entrusted property, and not of the mis-
appropriated proceeds of the sale. See People v. Moses, 375 Ill. 336,
31 N.B.2d 585; State v. Edwards, 345 Mo. 929, 187 S.W.2d 447; Com-
monwealth v, Williams, 98 Pa.Super. 92.

7 See Coney v. State, 100 Tex.Cr.R. 380, 272 S.W. 197.

a 601

It follows that, if the indictment is to be read literally as
‘charging embezzlement by bailee of the money and not the
trailer, the judgment of conviction cannot stand.

We will proceed, however, to consider what the result
would be if the indictment is read as charging embezzlement
of the trailer by bailee. This is the light in which the par-
ties and the trial court dealt with the case. The prime ques-
tion then becomes one of determining whether a bailor-
bailee relationship existed between the bank and Maulding
concerning the trailer.

As before indicated, the transaction was intended to give
application to the “Uniform Trust Receipts Law,” enacted
in Alaska in 1951. In all relevant respects, the Alaska stat-
ute is identical with the Uniform Trust Receipts Act
adopted and approved in 1933 by the National Conference
of Commissioners on Uniform State Laws.*

In the act, an “entruster” (here the bank) is defined as
the person who has taken a “security interest” in goods,
documents, or instruments under a trust receipt transaction.
Purchase-money chattel mortgages and conditional sales
vendors are specifically excluded from the term “entruster.”
Section 1(3). A “security interest” is defined in § 1(12) as
follows :

“(12) ‘Security interest’ means a property in-
terest in goods, documents or instruments, limited
in extent to securing performance of some obliga-
tion of the trustee or of some third person to the
entruster, and includes the interest of a pledgee
and title, whether or not expressed to be absolute,
whenever such title is in substance taken or re-
tained for security only.”

8 Handbook of the National Conference of Commissioners on Uni-
form State Laws (1933), pages 88-89; 9C Uniform Laws Annotated,
pages 220, 231-272.

602 Le

HA trust receipt transaction, within the meaning of
the act, occurs when the entruster or any third person de-
livers to another (“trustee”), for the purpose described in
the act, goods, documents, or instruments in which the en-
truster has, or is to acquire for new value, a security interest,
under a writing designated a “trust receipt” describing the
goods, documents, or instruments, and reciting that the en-
truster will retain or acquire a security interest therein.
Section 2(1, 2). One of the purposes for which such a
transaction may be entered into is to permit the trustee to
sell the goods, documents, or instruments described in the
trust receipt. Section 2(3) (a).

Where the trust receipt gives the trustee liberty of sale
and he sells to a buyer in the ordinary course of trade, such
buyer takes free of the entruster’s security interest in the
goods sold. Section 9(2) (a). An entruster who retakes
possession under the terms of the trust receipt may, after de-
fault by the trustee, sell the goods, documents, or instru-
ments “‘for the trustee’s account.” The trustee receives any
surplus from the proceeds of such a sale, after payment of
expenses and satisfaction of the trustee’s indebtedness. Sec-
tion 6(3) (b).

All provisions of the trust receipt and attached promissory
note involved in this case are consistent with these statutory
provisions. The bill of sale which Maulding gave the bank
is absolute in form and, considered separately, is not con-
sistent with a normal trust receipt transaction. Such in-
struments, however, are to be read in context with the entire
transaction, and as only confirmatory of the intention of the
parties to give to, or retain for, the entruster a security
interest.?

9Davis v. Aetna Acceptance Co., 293 U.S. 328, 55 S.Ct. 151, 79

L.Ed. 898; General Finance Corp. v. Krause Motor Sales, 302 Ill.
App. 210, 23 N.E.2d 781. In Bank of America National Trust & Sav-

ee 603

This brief description of the nature of trust receipt trans-
actions is enough to indicate that there are substantial differ-
ences between such a transaction and a bailment.

Hl A bailor has a general property interest in the prop-
an entruster has only a security interest. A bailee
has no property interest in the bailment. Thus, upon
repossession and sale by the bailor, the bailee has no interest
in the proceeds other than as compensation for services
performed while holder of the property. The trustee in
a trust receipt transaction, on the other hand, usually has a
property interest in entrusted property which entitles him
to the surplus proceeds of any sale, upon repossession by the
entruster.

HB No debtor-creditor relationship exists between a
bailor and bailee, and the bailee may return the property to
the bailor without incurring liability. On the other hand,
in a trust receipt transaction, a debtor-creditor relationship
always exists between a trustee and his entruster. The trus-
tee cannot discharge his obligation by returning the prop-
erty.°

ings Ass’n v. Nat. Funding Corp., 45 Cal.App.2d 320, 114 P.2d 49, it
was held that the entruster had only a lien, though he held the reg-
istration of legal title to the automobile.

10 The trial court considered that Maulding had no obligation to
the bank unless he sold the trailer. In the court’s opinion, it is stat-
ed: “Contrary to the contention of the defendant, it will be observed
that the promissory note attached to the trust receipt in this case con-
tains no such unconditional promise to pay, but becomes due only
upon a sale of the property by the dealer or trustee, in which event
he is obligated to deliver the proceeds of sale to the entruster; other-
wise, to return such property.” 147 F.Supp. at pages 696-697.

‘We do not so read the promissory note. It is payable “on demand.”
‘The note is made subject to the “Floor Plan Agreement,” which is not
in evidence. The trial court believed that the substance of this agree-
ment is set forth in the “Conditions and Agreements,” of the trust
receipt. Assuming this to be true, we find nothing therein which un-

604 a

There is a wide divergence of judicial opinion as to the
true nature of trust receipt transactions. This is, perhaps,
largely due to the fact that many courts have sought to:
identify such transactions with one or another of the com-
mon-law forms of security transactions. Thus, courts have
found such transactions to be more like conditional sales
than chattel mortgages, and vice versa; more like condi-~
tional sales than pledges; more like chattel mortgages than.
pledges; more like bailments than conditional sales, or
chattel mortgages, or pledges." The result has been a con-
siderable divergence of judicial view as to the nature of
trust receipt transactions. This divergence of view, how-
ever, is less noticeable in cases decided since the widespread
enactment of the Uniform Trust Receipts Act.

The fact is that trust receipt transactions possess some of
the characteristics of conditional sales, chattel mortgages,
and bailments with authority to sell. In substantial respects,
however, a trust receipt transaction does not entirely meet
the test of any of these other security forms. It makes use

dercuts the trustee’s obligation to pay $2,500 “on demand,” in the
event the entruster chooses to rely upon the promissory note instead
of securing possession of the trailer.”

11 See the annotation of cases in 49 A.L.R. 282 et seqg.; 87 A.L.R.
802 et seq.; 101 A.L.R. 453 et seq.; and 168 A.L.R, 359. Illustrative
of what has just been said are In re Sweet’s Estate, 224 Iowa 589,
277 N.W. 712; Ahrens Refrigerator Co. v. R, H. Williams Co., 176
Okl. 5, 54 P.2d 200; General Motors Acceptance Corp. v. Whiteley,
217 Iowa 998, 252 N.W. 779; and Maxwell Motor Sales Corp. v.
Bankers’ Mtg. and Securities Co., 195 Iowa 384, 192 N.W. 19, holding
that a trust receipt transaction involves not a bailment, but a con-
ditional sale. In McLeod-Nash Motors, Inc, vy. Commercial Credit
‘Trust, 187 Minn. 452, 246 N.W. 17, 87 A.L.R. 296, it was held that
such a transaction involves not a bailment, but a chattel mortgage.
On the other hand, Holcomb & Hoke Mfg. Co. v. N. P. Dodge Co., 123
Neb. 142, 242 N.W. 367; and Brown v. Billington, 163 Pa. 76, 29 A.
904, held that a trust receipt transaction involves a bailment and not
a conditional sale.

De 605

of a different and independent form of security device.”
We have stated above the prime differences between a trust
receipt transaction and a bailment. The differences between
such a transaction and conditional sales, chattel mortgages
and pledges, are not here relevant.

Appellee cites Holcomb & Hoke Mfg. Co. v. N. P. Dodge’
Co., 123 Neb. 142, 242 N.W. 367, as holding that the legal
effect of the trust receipt there in question was to establish
the relationship of bailor and bailee.

The Holcomb case so holds in a transaction quite similar
to that now under consideration. But as authority for that
conclusion, Holcomb cited, as its sole authority, General
Motors Acceptance Corp. v. Hupfer, 113 Neb. 228, 202
N.W. 627.13 In the latter case, however, the entruster re-
tained full property interest in the automobiles, and the
dealer had no authority to sell the property without the
written release of the entruster upon payment of a stipu-
lated sum. This was not a trust receipt transaction of the
kind contemplated by the Uniform Act or by the parties in
the instant case.

Appellee also cites Oil City Motor Co. v. C. I. T. Corp., 10
Cir., 76 F.2d 589, 104 A.L.R. 240, which announces a hold-
ing similar to that of the Holcomb case. The Oil City case
involved a suit by an automobile dealer to recover for as-
serted ustrious interest exacted of it in connection with

12 As Professor Phillip W. Thayer has said, it is “an instrument
sus generis.” 16 Washington Law Review (1941) “Trust Receipts,”
pages 1, 12,

13 Said the court (242 N.W. at page 369): “* * * It would ap-
pear unnecessary to determine where the weight of authority may be
in other jurisdictions, as this court in the analogous case of Gen-
eral Motors Acceptance Corp. v. Hupfer, 113 Neb. 228, 202 N.W. 627
held a similar transaction not to constitute an absolute sale, mort-
gage, conditional sale, or lease, but to establish the relation of bailor
and bailee, * * *”

606 Le

trust receipt transactions. The court held that the entruster
did not lend money, but only extended credit, with regard
to which the statute concerning usury had no application.
In reaching this conclusion, the court held that, under the
transaction there involved, title to the automobiles vested
in the financing agency with possession in the dealer as trus-
tee. The dealer, it was held, had the privilege of acquiring
title by making payment of the purchase price,

HE We do not undertake to pass upon that court’s
analysis of the transaction there under examination. It is
clear, however, that if the analysis is correct, no trust re-
ceipt transaction, as contemplated by the Uniform Act, was
involved. In transactions under the act, the dealer has the
prime property interest in the goods, and the financing
agency only a security interest.

It is our conclusion that the trust receipt transaction here
in question did not create a bailor-bailee relationship be-
tween the bank and Maulding.“ It follows that his con-
version of the trailer which was the subject of the trust
receipt could not be “embezzlement by bailee,” within the
meaning of the Alaska statute.

HI We therefore hold that it was error to deny the
motion for a new trial. The form of relief which we must
accord is to remand with direction to grant appellant a new
trial. But appellee will perceive that, in view of the opinion
herein expressed, the appropriate course is to move for dis-
missal of the indictment.

Reversed and remanded for further proceedings not in-
consistent with this opinion.

Judge Healy heard the oral argument, but did not par-
ticipate in the decision in this case.

“This view accords with the opinion expressed by George B.
McGowan in his book entitled “Trust Receipts,” Ronald Press (1947),

page 134,

Se () 7

Romeo ALIN, Plaintiff, v. ALASKA EMPLOYMENT SECUR-
ITY COMMISSION, consisting of Rev. Geo. Boileau, S. J.,
member, Denny G. Breaid, member, Tom Canifax, member,
Truman C. Emberg, member, and W. T. Kegley, member,
Defendants,

No. 3945-KA.

District Court, Alaska. First Division, Ketchikan.
June 6, 1958,

608

Floyd O. Davidson, Ketchikan, for plaintiff,
Dickerson Regan, Juneau, for defendants.

KELLY, District Judge.

This matter is before this court upon an appeal from a
decision of the Alaska Employment Security Commission
(hereinafter “Commission”) denying the plaintiff (herein-
after “claimant” unemployment benefits. The facts are as
follows:

ee = 6)

Prior to August 6, 1957, the claimant was an employee
of the Ketchikan Spruce Mills, Inc., (hereinafter “Spruce
Mills”) and was a member of Local M-193 International
‘Woodworkers of America (hereinafter “Union”). On that
date a work stoppage occurred at the plant due to a labor
dispute between the plant and the Union local, which labor
dispute continued until December 7, 1957. On August 27,
1957, claimant was employed with Ellis Air Lines at
Ketchikan, Alaska, (hereinafter “Ellis”), which employ-
ment continued until October 15, 1957. On that date the
claimant was laid off by Ellis. Claimant claims that on
September 18, 1957, he notified the employer personally
that he was officially terminating his status as an employee
of the Ketchikan Spruce Mills, Inc.

Claimant applied for unemployment benefits on October
23, 1957, but was not allowed any unemployment compen-
sation until December 24, 1957, which was two weeks after
the work stoppage, because of the labor dispute, had
ceased. Claimant claims that in this action he is entitled
to unemployment compensation for the period from October
29, 1957 (six weeks after September 18, 1957), to Decem-
ber 24, 1957. In the record made by the Commission at the
hearing, Exhibit B is an employer’s report of the claimant’s
separation dated October 15, 1957, and mailed October
24, 1957, by Ellis, wherein it was stated that the claimant
was laid off because “he was hired extra to fill in during
vacations’ and leaves,” and that it was “temporary job—
vacation relief.” Exhibit D is a statement signed by the
claimant dated October 30, 1957, in which he states that
“The Spruce Mills was on strike this is the reason I quiete
the and fine another job. I am willing to go back to work
if the Spruce Mills, will reopen again.” (sic) On Decem-
ber 16, 1957, R. L. Anderson, Chief of Benefits, Employ-
ment Security Commission, filed a non-monetary determina-

610 a

tion holding that the claimant was disqualified from August
6, 1957, to December 7, 1957, by reason of work stoppage
due to the labor dispute.

Exhibit G, which is the notice of appeal filed by the
claimant, sets forth the following as his reasons:

“T officially quit my job at the Ketchikan Spruce
Mill on 9-18-57, and accepted other employment.
In fact, I had gone to work at the Ellis Air Lines
on August 27, 1957, and did not terminate from
that work until 10-15-57, at which time I was
layed off. I believe I should be entitled to benefits
after serving a six~weeks disqualification for
quitting the job at the Spruce Mill.”

Exhibit C, dated October 31, signed by M. Walicki, states
that claimant notified the Spruce Mills on September 18th
that he was officially quitting as an employee of the Spruce
Mill. He contends he expected to be kept on permanently
at Ellis, although the facts, including his own testimony, re-
veal no basis for such expectation,

The appeal referee held a hearing in Ketchikan on Janu-
ary 21, 1958, at 1:30 p. m. at which testimony was taken.
At this hearing the claimant testified substantially as fol-
lows: That he was employed at the Ketchikan Spruce Mills
and that the union to which he belonged went on strike on
August 6, 1957; that for the next two weeks he was work-
ing with the strike and picket line; then he quit his job at
the Spruce Mills around the middle of September; mean-
while he had gone to work for Ellis on August 27th; that
at the time he quit his job at the Spruce Mills he was ad-
vised that he would lose his seniority rights and insurance
benefits; that he ceased working at Ellis because the fore-
man notified him about a week ahead of time that he was
through working down there because the boys came back

DT

from their vacations to take their own jobs which the claim-
ant had taken over.

Edward J. Decker, business agent for Local M-193 In-
ternational Woodworkers of America, testified that the
claimant was a paid-up member of the union and that he
had paid his dues six months in advance in August, and was
a member in good standing at the time of the hearing.

Mr. Clyde S. Courtnage, comptroller of the Spruce Mills,
testified that there was a labor dispute and that the claim-
ant was a picket at the Spruce Mills from the beginning
of the dispute until the actual signing of the contract in
settlement thereof on December 7, 1957.

Claimant denies he was on picket duty after he went to
work for Ellis and his witness Decker likewise testifies to
this effect although Decker did state that he talked to
claimant quite often “on the sidewalk” and that once in a
while claimant would stop in just to see how things were
going on and that he still comes in the office once in a while
for a conversation. The Court assumes that “on the side-
walk” means where the picket line was operated in front
of the Spruce Mills during the entire work stoppage, and it
is possible Mr. Courtnage may have seen claimant with the
pickets and assumed he was on picket duty although actual-
ly he may not have been. However, the fact that he still
maintains union membership and the further fact that he
still drops into the union office once in a while to see how
things are going on, would warrant the Commission,
in connection with the other testimony at the hearing, in
finding that the claimiant did intend to resume work at the
Spruce Mills if and when work was there resumed. The
plaintiff was recalled for further testimony and stated that
he was on picket duty at the beginning of the strike and
after that he went to work for Ellis. When asked what kind
of an understanding he had when he went down with Ellis

612 a

he answered, “They offer me this job. They explain to me
they couldn’t offer steady job,” and that he took some other
fellows’ places while they were on vacation, and that when
he went to work they assured him that they were going to
hire him for a couple of months.

On February 5th the Alaska Employment Security Com-
mission at the meeting held in Juneau found as follows:

“After consideration was given to all available
information, it was the opinion of the Commission
that the last regular employment of the claimant
was with the Ketchikan Spruce Mill, that the
work with Ellis Airlines was not considered regu-
lar permanent employment, and that the intent
of the claimant according to his statement was to
return to the Ketchikan Spruce Mill. Mr. Breaid
made a motion that in accordance with Section
741(i) of the Alaska Act [Sess.Laws 1957, c. 169,
§ 28] it is determined that the claimant’s unem-
ployment was due to a stoppage of work existing
because of a labor dispute at the premises of his
last regular employment (Ketchikan Spruce Mill),
and that claimant be denied benefits from August
6, 1957 to December 7, 1957 at which time the
work stoppage caused by the labor dispute was
ended. Mr. Kegley seconded the motion; car-
ried unanimously.”

The issue to be determined by this Court is whether or
not there was stibstantial evidence in the record to support
the conclusion of the Commission. Did the claimant, in
good faith and without intention to circumvent the Em-
ployment Security Act, remove himself from the employ of
the Spruce Mills on August 27, 1957, to such an extent that
he was no longer a part of the labor dispute then existing
at the Mill? In order to be entitled to unemployment com-

LY

pensation commencing six weeks after his voluntary quit
from the Spruce Mills on September 18, 1957, Section
741(b) of the Employment Security Act as amended re-
quires a six-week period of disqualification following a
voluntary quit without good cause.

HEME he burden of proof is on the claimant to estab-
lish that he is eligible for benefits, and in this instance the
burden is upon the claimant to show that the labor dispute
was not the cause of his continued unemployment. Where
the findings of fact of the Commission are supported by
substantial evidence it is conclusive and binding upon this
Court and should not be set aside. Even where the facts
are in dispute or where reasonable minds may differ as to
the inferences and conclusions to be drawn from the evi-
dence, review must be made in the light most favorable to
the administrative tribunal.

The questions which were before the Commission for
determination were as follows:

(1) Was the claimant’s unemployment voluntary?

(2) Was it due to a stoppage of work then existing
because of a labor dispute at the immediate factory, estab-
lishment or other premises at which he was last employed?

(3) Did the claimant, in good faith and without intention
to circumvent the Employment Security Act, remove him-
self from the employ of the Spruce Mills on August 27,
1957, and terminate at that time his connection with the
labor dispute then existing at the Spruce Mills?

(4) Was the “quit” notice or resignation of the claimant
on September 18 made in good faith and did it have any
effect upon the situation of the claimant with reference to
the work stoppage?

Paragraph (c), Chapter 5, Section 809, ESLA 1955,
provides:

614 Led

“(c) The jurisdiction of the reviewing court
shall be confined to questions of law, and, in the
absence of fraud, the findings of fact of the Com-
mission, if supported by substantial evidence shall
be conclusive. * * *”

HE From the record as presented, the Commission had
ample grounds to make a determination that the claimant,
being out of work because of a work stoppage due to a
labor dispute, was employed only temporarily during the
course of the work stoppage to fill in for employees of
Ellis who were on their vacation; that he retained his
union membership and appeared on the picket line and
intended to return to work for the Spruce Mills when the
work stoppage was over and employment was resumed, and
that if it were not for the strike, the claimant would be em-
ployed at the striking plant during the period claimed, and
that his unemployment was voluntary. The Court finds
that the Commission’s findings were supported by substan-
tial evidence and are therefore conclusive.

We now come to a consideration of the question of law
raised by claimant. He contends that Chapter 5, Section
741(i) of the First Extraordinary Session Laws of 1955,
refers merely to the last place where claimant was employed
and not to the last regular employment as contended by the
Commission; that therefore he is entitled to unemployment
benefits for the period from October 29, 1957 (two weeks
after his release by Ellis) to December 24, 1957 (when he
became eligible for unemployment benefits by reason of
the termination, on December 7, 1957, of the work stoppage
caused by the labor dispute). In Exhibit G (notice of ap-
peal), however, he claims to be entitled to benefits after
serving a six weeks disqualification for quitting his job at
the Spruce Mills September 18, 1957. This six weeks would
expire October 30, 1957.

SO)

Claimant further contends in his brief that his employ-
ment by Ellis completely terminated his connection with the
Spruce Mills. But he later personally went to the Spruce
Mills on September 18, 1957, to inform them of his desire
to quit his Spruce Mills job. He also contends that under
the Alaska statute Ellis was the establishment where he
was last employed and his release there being involuntary,
he is entitled to benefits.

Of course, he cannot claim benefits for the same
period from both the Ellis and the Spruce Mills jobs. In
view of his contention that Ellis is the last employer under
the law, this will be first considered.

; | Where the Act itself, as here, does not define the
meaning of the term “last employed” it would seem that the
Commission could properly construe it to mean in effect
“last regularly employed.” To do otherwise would open
the door to unlimited abuse. It would permit a striker to
obtain any sort of temporary work and when it was termi-
nated to apply for benefits for the loss of the temporary job
even though the work stoppage still continued.

Both parties discuss the case of Mark Hopkins, Inc., v.
California Employment Commission, 1944, 24 Cal.2d 744,
151 P.2d 229, 231, 154 A.L.R. 1081. In that case the Cal-
ifornia Supreme Court reversed the granting of benefits
by the California Employment Commission under some-
what similar facts. In its opinion the court stated:

“The termination of a claimant’s disqualifica-
tion by subsequent employment thus depends on
whether it breaks the continuity of the claimant’s
unemployment and the causal connection between
his unemployment and the trade dispute. Such
employment must be bona fide and not a device to
circumvent the statute. (citing cases) It must

616 be

sever completely the relation between the striking
employee and his former employer. The strike
itself simply suspends the employer-employee rela-
tionship but does not terminate it. (citing cases)
Mere temporary or casual work does not sever this
telationship for it does not effectively replace the
former employment. The worker expects its
termination and does not look forward to that con-
tinuity of work and income that characterizes
permanent employment. (citing cases) Similarly,
part-time employment of a claimant does not break
the causal relation between the trade dispute and
his unemployment. (citing cases) Only perma-
nent full time employment can terminate the dis-
qualification. If bona fide, it completely replaces
the claimant’s former employment, terminating
whatever relation existed between the claimant
and his former employer. It must be judged
prospectively rather than retrospectively, with re-
gard to the character of the employment, how it
was obtained, and whether it was in the regular
course of the employer’s business and the cus-
tomary occupation of the claimant. (citing cases)
In the absence of special circumstances, employ-
ment of a short duration admits of an inference
that it was not entered into in good faith with
the intent that it be permanent. * * *

“The undisputed evidence shows that the work
secured by the claimants during the hotel strike
was stop-gap employment, and that the claimants
had not forfeited their employment in the struck
establishments, * * *”

As the Delaware Unemployment Security Commission
stated in Case #7608—Del.R., cited in Commission’s brief:

LS

“* %* 9 The position of these claimants is that the
Commission is absolutely bound to a literal construction of
the words ‘last employed,’ and that no matter what the
length of the new employment was or the intention in the
mind of the person obtaining such new employment as to
the permanency thereof, the Commission is bound to find
the claimant entitled to benefits. Such an interpretation
of the act we think is not only contrary to the intention of

the legislature, but would lead to the most absurd results.
Ok OK

In Unemployment Compensation Commission of Terri-
tory of Alaska v. Aragon, 329 U.S..143, 67 S.Ct. 245, 250,
91 L.Ed. 136, the Supreme Court said:

“& %* & Here, as in National Labor Relations
Board v. Hearst Publications, Inc., 1944, 322 U.S.
111, 131, 64 S.Ct. 851, 860, 861, 88 L.Ed. 1170,
the question presented ‘is one of specific applica-
tion of a broad statutory term in a proceeding
in which the agency administering the statute must
determine it initially.’ To sustain the Commis-
sion’s application of this statutory term, we need
not find that its construction is the only reason-
able one or even that it is the result we would
have reached had the question arisen in the first
instance in judicial proceedings. The ‘reviewing
court’s function is limited’. All that is needed to
support the Commission’s interpretation is that it
has ‘warrant in the record’ and a ‘reasonable basis
in law’, National Labor Relations Board vy.
Hearst Publications, Inc., supra; Rochester Tele-
phone Corp. v. United States, 1939, 307 U.S.
125, 59 S.Ct. 754, 83 L.Ed. 1147.”

This Court finds that the Commission had before it sub-
stantial evidence from which it could find that claimant

“618 |

was unemployed because of a labor dispute from August
6, 1957, until December 7, 1957; that he accepted casual
temporary stop-gap employment to fill in for employees of
Ellis who were on vacation; that such temporary employ-
ment did not make Ellis the place where “last employed”
within the meaning of the Alaska statute.

The determination of the Commission is sustained.

162 F.Supp. 939

UNITED STATES of America, Plaintiff, v. 40 ACRES OF
LAND, SITUATE IN NENANA RECORDING PRECINCT,
FOURTH DIVISION, TERRITORY OF ALASKA, and
Dan T. Kennedy, et al., Defendants.

No. A-12883,

District Court, Alaska. Third Division, Nome.
Tune 13, 1958.

William T. Plummer, U. S. Atty., Donald A. Burr, Asst.
U.S. Atty., Anchorage, Alaska, for plaintiff.

Davis, Hughes & Thorsness, Anchorage, Alaska, for de-
fendants.

HODGE, District Judge.

Plaintiff has moved the undersigned judge of the above
entitled court to reconsider his opinion filed herein on March
10, 1958, wherein the Court sustained a motion of the de-
fendant Dan T. Kennedy to dismiss plaintiff’s complaint
(D.C., 160 F.Supp. 30, 17 Alaska 473). The motion to
reconsider is granted and the Court has considered the mat-
ter anew upon briefs submitted by both parties.

Plaintiff relies in support of its principal contention that
the authority for the taking of the land in question is evi-
denced by the Interior Department Appropriation Act of
1951, 65 Stat. 248 and the Act of August 1, 1888 (40 U.S.
C.A. Sec. 257), upon four decisions other than the cases
previously considered in such opinion. The case of United
States v. Carmack, 329 U.S. 230, 67 S.Ct. 252, 91 L.Ed.
209, reversing the Circuit Court of Appeals, 8 Cir., 151 F.
2d 881, following retrial of case cited in my original opin-

620 Ld

ion, 8 Cir., 135 F.2d 196, involves a proceeding instituted
by the United States to condemn land as a site for a post-
office, in reliance upon several Federal statutes, including
the Public Buildings Act of May 25, 1926 (40 U.S.C.A.
§ 341), and the General Condemnation Act above referred
to (40 U.S.C.A. § 257). The Public Buildings Act gave
specific authority to the Secretary of the Treasury (later
the Federal Works Administrator) “to acquire by pur-
chase, condemnation or otherwise, such sites * * * as
he may deem necessary * * *.” The Court holds that
the United States has inherent power to appropriate land
determined necessary for the public use, when such power
is exercised by Congress. To quote from the opinion (329
USS. at page 240, 67 S.Ct. at page 256) :

“The considerations that made it appropriate
for the Constitution to declare that the Constitu-
tion of the United States, and the laws of the
United States made in pursuance thereof, shall
be the supreme law of the land make it appropri-
ate to recognize that the power of eminent domain,
when exercised by Congress within its constitu-
tional powers, is equally supreme.”

“We find in the broad terms of the Public Build-
ings Act authority for the designated officials to
select the site they did. We find, in both Acts,
authority for them to acquire by condemnation
the site thus lawfully selected.” +

1To the same effect see United States v. Fisk Building, D.C., 99
F.Supp. 592, 598, wherein the Court said “The power of eminent do-
main is inherent in the Government as an aspect of sovereignty, sub-
ject to the requirement of the Fifth Amendment that just compen-
sation be paid. Albert Hanson Lumber Co. v. United States, 261 U.S.
581, 43 S.Ct. 442, 67 L.Hd. 809. However, the power to condemn may
be exercised only when explicitly authorized by statute,” citing the
Carmack case (Carmack v. U. S., 8 Cir, 185 F.2d 196).

DY

The right of the United States to condemn land is con-
ceded by the defendant and is certainly not denied by this
Court, but I agree with the defendant’s contention that the
question here is whether the United States, through Con-
gress, has exercised that right.

The case of United States v. Village of Highland Falls,
2 Cir., 154 F.2d 224, does not hold as contended by plain-
tiff that one Congress cannot preclude another from exer-
cising the power of eminent domain, but holds rather that
such power is one which even the State Legislature cannot
surrender; and relates to the question of a state divesting
itself of such governmental authority by contract. This
case is clearly not applicable here.

The recent decision of the District Court for the District
of Columbia on March 24, 1958, of Seneca Nation of In-
dians v. Brucker, 162 F.Supp. 580, 582, holds that Con-
gress may, by general legislation, override the provisions
of an Indian treaty where the intent of Congress to do so
is clear, and that an appropriation act which appropriated
money for the construction of the Allegheny Reservoir
Project “manifested a clear Congressional intention to au-
thorize the construction of the project”; and that since
the project was specifically authorized by the appropriation,
the right to condemn land for such purpose must be upheld.
Similarly, the case of the United States v. 5,677.94 Acres of
Land, etc., of Crow Reservation, D.C., 152 F.Supp. 861,
holds that an appropriation act making specific appropria-
tions for preconstruction work on the Yellowtail Dam, fur-
nishes sufficient authority for taking of the land within the
boundaries of the Indian reservation, when considered with
the General Condemnation Act. These decisions deal with
appropriations for a specific project, relying upon authority
of the Threlkeld (United States v. Threlkeld, 10 Cir., 72
F.2d 464) and Polson (Polson Logging Co. v. U. S., 9

622 a

Cir., 160 F.2d 712) cases cited in my original opinion, and
are likewise not applicable here.

Plaintiff also cites the legislative history of the Interior
Department Appropriation Act for 1951 as indicating the
intent of Congress to provide for the acquisition of private-
ly owned land in the Mount McKinley National Park. Such
history adds nothing to what has already been said on
this subject, and that is that the appropriation mentioned
was for the “general acquisition of privately owned lands
within park and monument boundaries”; and as we have
seen, there were many Acts of Congress granting specific
authority to condemn lands as to certain specified national
parks, but no such provision as to Mount McKinley Na-
tional Park.

Plaintiff concedes that Sec. 257 of Title 40 alone is not
sufficient authority for its complaint, but contends that the
Court “appears to have overlooked the fact that 40 U.S.
C.A. Sec. 257 contains a general grant of power to officers
of the Federal Government to condemn property when such
officers are authorized by Congress to procure real estate”.
This is an understatement, for this Court certainly did not
overlook such fact. However, plaintiff also contends that
the cited Appropriation Act “contains a specific grant of the
power to acquire land for park purposes”, which “the Court
fails to recognize”. No such specific grant of power with
reference to Mount McKinley Park is found in any cited
statute. In order to sustain such power there must be a
clear intent of Congress, either by conferring “broad pow-
ers” such as held in the Polson and Threlkeld cases, or by
specific action as in the Seneca and Crow cases. To sus-
tain the contention of plaintiff would be to stretch the rule
of “legislation by implication” beyond the powers of this
Court: -

De

In reference to that portion of my opinion relating to the
preservation of the rights of homesteaders or entrymen to
the full use and enjoyment of their land provided by the Act
of Congress creating the Park (16 U.S.CA. § 348, and
1932 amendment, § 355a), plaintiff cites the Yosemite
Valley Case (In re Yosemite Valley), 1872, 15 Wall. 77,
82 U.S. 77, 21 L.Ed. 82, and Stockley v. United States,
260 U.S. 532, 43 S.Ct. 186, 67 L.Ed. 390, which deal with
the question of whether a party, by mere settlement upon
lands of the United States under pre-emption laws or as an
entryman under homestead laws, acquires such a vested
interest in the premises as to deprive Congress or the Gen-
eral Land Office of the power to divest it by a grant to
another party. These decisions are not in point. Although
such reservation may not be controlling, yet such specific
Act of Congress seems important in determining the intent
of the Congress with relation to condemnation of private
land in Mount McKinley Park.

Plaintiff also contends that reference in the Court’s opin-:
ion to legislation relating to other park areas should not
serve as a “formula so as to decipher or evaluate such laws
or legislation upon a comparison basis”, and that the com-
parison made is not justified. Again, such Acts were cited
to show the clear intent of Congress as to other national
parks to condemn or acquire lands which, significantly, is
not mentioned in the Act creating Mount McKinley Park.
Incidentally, Congress has recently manifested the same in-
tention in an Act to authorize the establishment of the
Petrified Forest National Park in the State of Arizona
(Public Law 85-358, 85th Congress, March 28, 1958, 72
Stat. 69), which specifically authorizes the Secretary of the
Interior to acquire in the public interest any non-Federal
land or interests in land within the area authorized to be
established by such Park,

624 be

[1,2] Finally, plaintiff contends that the Government
cannot be held liable for costs in the absence of specific au-
thorization by Congress, citing United States v. Patter-
son, 5 Cir, 206 F.2d 345; and that there is no statutory
authority for taxing costs against the United States in
this instance. This position appears to be correct.

Finding that Congress has not either expressly or by clear
intendment authorized the condemnation of land within the
Park area here involved, I must adhere to my former opin-
ion, except as to the matter of costs. Order dismissing
plaintiff’s complaint and this action as to Tract A may be
presented accordingly. Findings of fact and conclusions of
law will not be necessary.

254 F.2d 137

Lorenzo WHITE, Joyce Harper and Ruby Fields, Appellants, v.
UNITED STATES of America, Appellee.

No. 15667.

United States Court of Appeals, Ninth Cirouit,
April 11, 1958,

Rehearing denied June 25, 1958,

—

Robert J. McNealy, Everett W. Hepp, Fairbanks, Alas-
ka, for appellants.

George M. Yeager, U. S. Atty., Paula A. Tennant, Asst.
U.S. Atty., Fairbanks, Alaska, for appellee.

Before MATHEWS, HEALY and LEMMON, Circuit
Judges.

PER CURIAM.

On May 25, 1956, appellants (Lorenzo White, Joyce
Harper and Ruby Fields *) and others were indicted in the
District Court for the Territory of Alaska. The indictment
was in seven counts, Count 1 charged appellants with hav-
ing violated § 4724(b) of the Internal Revenue Code of
1954, 26 U.S.C.A. § 4724(b).* Count 2 charged appellants
with having violated 21 U.S.C.A. § 174, Counts 3 and 7
charged appellants with having violated 18 U.S.C.A. § 371.
Counts 4 and 5 did not charge any of the appellants with
any offense. Count 6 charged Fields with having violated
18 U.S.C.A. § 1716, but did not charge White or Harper
with any offense. Appellants were arraigned, pleaded not

1Also known as Ruby Jeanette Fields, as Ruby Mayfield and as
Pearline Adams.

2 Penalties for violating § 4724(b) are prescribed in § 7237(a) of the
Internal Revenue Code of 1954,

626 Le

guilty, had a jury trial, were found guilty as charged, were
sentenced * and have appealed. Appellants’ brief contains
no specification of errors. We have examined the record
and have found no reversible error.

Judgments affirmed.

162 F.Supp. 751

Harold R. JONAS, Plaintiff, v. BANK OF KODIAK, an Alaska
Banking Corporation, and Fidelity-Phenix, a Foreign Insur-
ance Corporation, Defendants,

No, K-12876,

District Court, Alaska, Third Division, Anchorage.
Tune 27, 1958,

3Three judgments were entered—one sentencing White, one sen-
tencing Harper, one sentencing Fields.

4 Our Rule 18, 28 U.S.C.A. provides:

“I. Counsel for the appellant shall file with the clerk of this court
20 copies of a printed brief * * *

“2. This brief shall contain * * *

“(a) In all cases a specification of errors relied upon which shall be
numbered and shall set out separately and particularly each error
inténded to be urged. * * *” .

627

John S. Mansuy, Jr., Kodiak, Alaska, for plaintiff.

John C. Hughes, of Davis, Hughes & Thorsness, An-
chorage, Alaska, for defendant Bank of Kodiak.

628 —

John C. Dunn, Anchorage, Alaska, for defendant Fideli-
ty-Phenix Fire Ins. Co.

McCARREY, District Judge.

Plaintiff Harold R. Jonas brought this action against the
Bank of Kodiak and Fidelity-Phenix Fire Insurance Com-
pany, a corporation, to recover insurance on the Gas Screw
Nedra, which had been destroyed by fire.

Plaintiff acquired the boat under contract of conditional
sale, dated June 22, 1954, from Thomas Wick. Prior to
the sale, Thomas Wick, as owner of the boat, obtained in-
surance covering loss by fire in the sum of $8,000 from the
Fidelity-Phenix Fire Insurance Company. The contract
of conditional sale provided, among other conditions, the
following:

“3. The Vendees agree to keep the property
herein insured with a reputable insurance compa-
ny agreeable to the Vendor, and giving property
damage and general liability coverage, and in an
amount agreeable to the Vendor and naming the
Vendor as the insured, and in which policy the
Vendees may insure their equity by reason of this
Contract of Conditional Sale.”

The insurance was obtained through the insurance de-
partment of the Bank of Kodiak, After sale of the boat
by Wick to Jonas, no attempt was made by either Wick or
Jonas, or by the Bank of Kodiak, to transfer the insurance
policy or to obtain a rider covering Jonas’s interest in the
boat under the contract of conditional sale.

After plaintiff purchased the boat, however, he paid to
the Bank of Kodiak the premiums due on the insurance, re-
ceiving from the bank receipts in his own name; and over
the course of three (3) years, plaintiff paid insurance pre-
miums for the Nedra to the Bank of Kodiak, as evidenced

a 629

by receipts admitted in evidence, on a policy for $8,000
of insurance. The receipts from the bank variously recite:
“Nedra coverage,” “Boat Nedra Insurance” and “Fid.
Phenix ‘Nedra’ ”, etc.

The Gas Screw Nedra was destroyed by fire on Septem-
ber 13, 1956. When plaintiff attempted to recover from the
insurance company for the face amount of the policy, he
was informed that there was no coverage for his interest in
the boat. The insurance company paid to Wick the sum of
$3,161.80, the balance due to him under the contract of
conditional sale, obtaining from Wick a complete release.
The Bank of Kodiak agreed and offered to refund to the
plaintiff Jonas the unearned premium on the insurance poli-
cy for the year in which the loss occurred, which the plain-
tiff refused to accept. Inasmuch as the Bank of Kodiak
and Fidelity-Phenix denied any liability whatsoever to
plaintiff, this action was filed,

Fidelity-Phenix contends that inasmuch as there was no
contract with the plaintiff, there is no liability on its part
under the policy and that its policy protected only the in-
surable interest of the conditional vendor, Thomas Wick.

There is no dispute that for a period of three (3) years
plaintiff paid to the Bank of Kodiak the premiums on the
policy and the bank, in turn, forwarded the premiums to
the insurance company. Plaintiff either obtained insurance
by the payment of his premiums for insurance in the amount
of $8,000, or he did not obtain insurance. If he did not
obtain any insurance, he is entitled to recover from the
Bank of Kodiak the full amount of premiums which it col-
lected from him. On the other hand, if plaintiff did obtain
insurance, or if the Bank of Kodiak was negligent in any
way, then plaintiff should not only recover from the bank
the amount of premiums paid, but the entire amount of his
loss occasioned by the fire.

630 Le

Even though the bank may contend that it did not know
of the sale of the boat by Wick to Jonas, there is no ques-
tion that it did know it was selling insurance in the amount
of $8,000 and giving receipts in the name of Harold Jonas
for premiums collected from him for that amount of insur-
ance.

If the bank was negligent in any way, it can be held re-
sponsible to plaintiff for failing to obtain the amount of
coverage for which it was collecting premiums from plain-
tiff,

In the case of Hampton Roads Carriers, Inc., v. Boston
Insurance Co., D.C., 150 F.Supp. 338, at page 343, the
Court says:

“An insurance agent who undertakes to secure
a specified coverage is liable in damages to the ap-
plicant for failure to procure such insurance, and
this liability extends to negligence as a result of
which the specified risk is not included in the
policy * * ¥*”

In the case at bar, the bank knew of the policy. It knew
it was obtaining premiums on insurance in the amount of
$8,000 on the Gas Screw Nedra, and it gave its receipts to
plaintiff in plaintiff’s name covering this vessel. There was,
therefore, a duty upon the bank, either as broker or agent,
to see that the plaintiff was named as the party insured.

Stark v. Pioneer Casualty Co., 139 Cal.App. 577, 34
P.2d 731, was an action predicated upon negligence. The
plaintiff paid the premiums to defendant and obtained re-
ceipts for the premiums paid. The Court found in this case
that there was no language tending to inform the applicant
that she was not insured when the premiums were paid, in
the receipts given to her.

In the case before this court, the receipts of the bank
show the money was received andthe premiums paid for

| 631

“Nedra coverage,’ “Boat Nedra Insurance” and “Fid.
Phenix ‘Nedra’,” supra. There is no language whatsoever
in these premium receipts to indicate to plaintiff that he was
not insured for the full value of the vessel, to-wit, $8,000.
As the bank received the premiums in payment of an in-
surance policy, then there was a duty upon the bank to
notify the plaintiff that the premiums would not give him
the coverage for which he was paying, so that he could
protect himself in some other manner.

In Valdez v. Taylor Automobile Company, 129 Cal.App.
2d 810, 278 P.2d 91, the complaint was predicated upon
the negligence of the defendant in failing to procure full
coverage. At page 95 of 278 P.2d the Court says:

«ek %* it is argued that since the jury im-
pliedly found there was no contract to obtain pub-
lic liability and property damage insurance for
plaintiff, defendant had no duty to procure that
insurance; and in the absence of a contractual
duty, plaintiff cannot recover for defendant’s neg-
ligent failure to do so. The argument is falla-
cious. It is well established that a person may be-
come liable in tort for negligently failing. to per-
form a voluntarily assumed undertaking even in
the absence of a contract so to do. A person may
not be required to perform a service for another
but he may undertake to do so—called a voluntary
undertaking. In such a case the person under-
taking to perform the service is under a duty to
exercise due care in performing the voluntarily
assumed duty, and a failure to exercise due care
is negligence * * * (Emphasis supplied.) If
the defendant receives the plaintiff’s property or
papers, and undertakes, without consideration, to
obtain insurance, * * * he assumes a duty to

632 |

use proper care in the performance of the task.
* * * In many cases the court has laid stress
upon the fact that the plaintiff has relied upon the
conduct of the defendant to his damage, and has
indicated that this is essential to liability * * *
the company was bound either to furnish the in-
surance or to decline to do so within a reasonable
time, and that having failed to perform its duty it
was liable for the actual damage not exceeding the
amount of insurance purchased.”

Hl In the case at bar, even though the bank may
have been a volunteer in procuring Jonas’s insurance pay-
ments, nevertheless, there was a liability placed upon it
either to furnish the insurance paid for, or to notify plain-
tiff that he did not have insurance. Failure to so notify the
plaintiff I believe to be negligence on the part of the bank.
As a consequence the defendant bank is liable to the plain-
tiff for the entire amount of the loss. The policy in this
case was in the face amount of $8,000. At the time of the
fire Wick’s insurable interest was satisfied by the insurance
company in the amount of $3,161.80; therefore, judgment
for plaintiff should be in the amount of $4,838.20.

TI There is no evidence before the court to indicate
that the bank was the agent of the insurance company. If
the bank could have established such agency, then the loss
would have fallen upon the insurance company. Inasmuch
as the bank failed to establish this agency, judgment will be
rendered against the bank solely.

163 F.Supp. 339

Allen CHURCHILL, Plaintiff, v. Bertha McKAY, Defendant.
No, 3967-KA.

District Court, Alaska, First Division, Ketchikan.
Tuly 8, 1958,

634 |

Floyd O. Davidson, Ketchikan, Alaska, for plaintiff,
Victor P. Guns, Ketchikan, Alaska, for defendant,

KELLY, District Judge.
This matter comes before the court on a motion to dis-
miss filed by counsel for the defendant.

The reason assigned for the motion is that the com-
plaint filed herein does not state a cause of action. We feel
that the motion is well taken, that the complaint does not
state a cause of action, and that the motion should be grant-
ed. This motion should be considered as a motion for sum-
mary judgment under Rule 12(b) Fed.Rules Civ.Proc., 28
ULS.C.A. and under Rule 56 the case should be dismissed
with prejudice.

The complaint sets forth that the plaintiff was the owner
and operator of a taxicab, duly licensed to operate in Ket-
chikan, Alaska, and that the defendant was the Municipal
Clerk of the City of Ketchikan, Alaska, and was required by
Territorial statute to:

“x # file and duly keep all the records
and public papers of the city.” Sec. 16-1-63,
A.C.L.A.1949;
that it was her further duty and responsibility to keep and
preserve the ordinances and resolutions passed by the Com-
mon Council and approved by the Mayor of Ketchikan;
that it was the custom and practice for the Municipal Clerk
of Ketchikan to copy the original ordinances of the City
into a separate so-called “ordinance book” which ordinance
book was the source used for public reference. The Mu-
nicipal Clerk would keep the original ordinances in a file or
place separate and apart from the ordinance book, and this
ordinance book was the source of information to the public
generally as to the contents of the ordinances of said city;
that on September 16, 1953, the Common Council and the

[| 635

Mayor of Ketchikan passed and approved Ordinance Num-
ber 506 to regulate the business of the operation of taxicabs
in this city and prescribing penalties for failure to adhere to
the requirements thereof. Section 27 of said ordinance
provided as follows:
“Manifests. Every holder (of a certificate of
public convenience and necessity) shall maintain a
daily manifest upon which is recorded all trips
made each day, showing time and place of origin
and destination of each trip and the amount of
fare. The forms for each manifest shall be of a
character approved by the Police Department.
“Every holder of a certificate of public conven-
ence and necessity shall retain and preserve all
manifests in a safe place for at least the calendar
year next preceding the current calendar year, and
said manifests shall be available to the Police De-
partment.”

Section 30 of said Ordinance Number 506 makes it a
misdemeanor for anyone to violate the terms thereof and
subjects the violator to a fine of $300 and/or 30 days in
the city jail.

Plaintiff further claims that the defendant copied or caus-
ed to be copied the original of Ordinance Number 506 into
the said ordinance book and in the process of so doing, she
negligently and carelessly omitted to copy the second para-
graph of Section 27 as set forth above, which paragraph
requires that taxicab manifests be made available to the
Police Department. The ordinance, as copied into the or-
dinance book, was then signed in longhand in ink by the
Mayor of the City of Ketchikan and attested in the same
manner by the defendant as City Clerk; that such ordinance
as copied was held out to the public as the official Ordinance
Number 506; that thereafter the defendant made numerous

636 be

mimeographed copies of Ordinance Number 506 as it was
contained in the ordinance book; that these copies omitted
the second paragraph of Section 27 as passed by the Coun-
cil and signed by the Mayor originally; these mimeograph-
ed copies were then distributed to the owners and operators
of taxicabs within the City of Ketchikan, including the
plaintiff.

In the month of October, 1957, two police officers of the
City of Ketchikan approached the defendant and demanded
of him his taxicab manifests for certain previous months
of 1957. The plaintiff referred to his mimeographed copy
of Ordinance Number 506 and told the police officers that
the ordinance did not require him to produce his manifests
and the police officers then caused the plaintiff to be arrest-
ed, charged with refusing to give the said manifests to the
officers in violation of the original Ordinance Number 506.

Plaintiff was then lodged in the Ketchikan City Jail and
required to furnish bail for his release; was tried by the
Municipal Magistrate in Ketchikan and was there convicted
and fined. Appeal was taken to the District Court for the
District of Alaska, First Judicial Division at Ketchikan,
where a verdict of Not Guilty was directed by the Court.

Plaintiff alleges that the acts of the defendant in copying
and causing to be copied the original of said Ordinance
Number 506 into the ordinance book and by failing to dili-
gently compare the original with the copy in the ordinance
book, and by causing to be distributed to the plaintiff such
erroneous copy, constituted gross and culpable negligence
and carelessness and that said negligence and carelessness
caused damage to the plaintiff in the sum of $600 incurred
for attorney fees in defending himself in the Municipal
Court and on his appeal; damages of $5,000 caused by the
humiliation, inconvenience, discomfiture, mental anguish
and suffering of plaintiff in being put through the ordeal of

| 637

defending himself in two courts as aforesaid. Plaintiff fur-
ther claims punitive and exemplary damages in the sum of
$2,500 for gross and culpable negligence and carelessness
as aforesaid.

The suit is not brought against the City of Ketchikan or
the City Clerk as the agent of the City, but is brought
against the defendant as an individual.

HH) The defendant contends, in support of her motion,
that it is basic in the law of negligence that there be some
duty running from the defendant to the plaintiff, and that
the plaintiff is here attempting to hold the defendant per-
sonally liable for actions accomplished by the defendant in
an official capacity, and is citing as the specific duty relied
upon that section of the Territorial law which requires the
Municipal Clerk to file and keep all records and public pa-
pers of the City; that the defendant as an individual ac-
complished none of the acts complained of, and that any
act or acts so done were in the discharge of her duty for her
principal, the City of Ketchikan.

The plaintiff, in his memorandum brief, cites the case of
Florio v. Jersey City, 1925, 101 N.J.L. 535, 129 A. 470,
471, 40 A.L.R. 1353, which case upholds the right of an in-
jured person to sue a city fireman who was charged with
the performance of a certain public duty or service, which
was to drive a fire truck through the public streets to go put
out fires for public protection, and cites dicta from that case
to the effect that where a servant of a municipality (in that
case, a fireman) is required to perform his duty in a proper
and careful manner, and when he negligently fails to do so
and in the performance of his duty negligently injures an-
other, his official cloak cannot properly be permitted to
shield him against answering for his wrongful act to one
who has suffered injury thereby.

638 |

It is significant that the plaintiff has cited no case where
a public official, either elected or appointed, of a munici-
pality was liable personally for negligence in the perform-
ance of a duty required by law that should be done by such
official in his official capacity, and even states flatly that the
plaintiff is not suing for an act done in the performance of
a statutory duty.

The defendant points out that in the Florio case, above
cited by the plaintiff, the following statement of the court
appears:

“The principle to be extracted from the cases in
our own state and in foreign jurisdictions where
the common law prevailed appears to be that for
an injury resulting to an individual from a failure
of care on part of a municipality or of a public
officer invested with the performance of certain
public duties no action will lie, for the reason that
negligence that is nothing more than nonfeasance
created no liability.”

The plaintiff cited the annotation of 40 A.L.R. 1353, at
page 1361 but in that annotation the qualification of the
general rule of liability is set forth as follows:

“Tt seems that where the duty of a municipal
officer is discretionary or judicial, he is not per-
sonally liable for negligence in the discharge of
his duty * * *” (citing Browne v. City of
Bentonville, 1910, 94 Ark. 80, 126 S.W. 93;
Walker v. Hallock, 1869, 32 Ind. 239; Steele v.
Dunham, 1870, 26 Wis. 393).

See also:

“Public officer, charged with discretionary duty,
unless guilty of willful wrong, is not liable for
mistaken judgment or erroneous performance of

a 639

duty.” Fidelity & Casualty Co. of New York v.
Brightman, 8 Cir., 53 F.2d 161.
and

“Tt is well settled in this state that, when a pub-
lic officer is charged with duties which call for an
exercise of his judgment and discretion, he is not
liable for an erroneous performance, unless he has
been guilty of willful wrong, malice, or corrup-
tion.” Schooler v. Arrington, 106 Mo.App. 607,
81 S.W. 468, 469.

The defendant owed no duty, while acting as City Clerk,
to the plaintiff, either in her official capacity or as an in-
dividual. The situation is entirely different from an em-
ployee of a city driving a vehicle, upon which authority the
plaintiff appears to rely. The mere charge of negligence
and carelessness as to an individual in the pleadings, is not
sufficient.

The foregoing shall constitute Findings of Fact and Con-
clusions of Law unless the parties desire additional Find-
ings or Conclusions.

Judgment in accordance herewith may be submitted.

640 Ld

163 F.Supp. 508
Jack Paul BROWN, Libelant, v. Dean KAYLER, Chris Dahl
and Joe Doe, d/b/a Kayler-Dahl Fish Company,
Respondents,
No, 87738-KA,

District Court, Alaska, First Division, Ketchikan,
Tuly 8, 1958,

Es 641

A. H. Ziegler (of Ziegler, Ziegler & Cloudy), Ketchikan,
Alaska, for libelant.

F. O. Eastaugh (of Robertson, Monagle & Eastaugh),
Juneau, Alaska, for respondents.

KELLY, District Judge.

This matter comes before this court upon exceptions to
the second amended libel filed herein by the respondents.
The court had heard the exceptions to the first amended
libel filed herein and after oral argument and briefs from
the parties, filed an opinion allowing the exceptions of re-
spondents and allowing libelant 30 days from November
7, 1957, in which to file an amended libel. It is this which
is now before us.

A careful reading of the second amended libel does not
disclose to this Court‘any facts pleaded, which, if proven,
would be sufficient to excuse the delay in filing this action,
nor does it disclose any new facts which, if proven on the
trial, would overcome the presumption of prejudice which
exists as set forth in the former opinion herein. The pre-
sumption of prejudice still exists, and libelant’s claim that
no prejtdice to respondents has resulted by reason of delay
cannot be considered because the presumption exists and
nothing in the second amended libel removes it.

The element of laches still exists and nothing in the sec-
ond amended libel states any facts which make it inequita-
ble to apply this doctrine here. As a matter of fact it would
be extremely inequitable not to apply it. The libelant wait-
ed almost two years and just before the statute of
limitations would run, filed suit. However, the action was
brought against improperly named parties and for that
reason was dismissed.

All of the cases cited by the libelant show circumstances

which did not exist here. In Walker v. Benjamin Foster
fe

642 |

Co., D.C., 92 F.Supp. 402, the amended complaint contained
the necessary allegations to overcome the presumption of
prejudice. No such facts are pleaded here. In McDaniel
v. Gulf & South American Steamship Co., Inc., 5 Cir., 228
F.2d 189, the court found that the positive averments of
the libel disclosed a case of clearly excusable delay because
of the mental condition of the libelant arising by reason
of a fractured skull as a result of the accident about which
the action arose. In the case cited by libelant, The Fulton,
5 Cir., 54 F.2d 467, an equitable reason appeared for not
applying the bar of laches and this consisted of protracted
negotiations for settlement. In Gardner v. Panama Rail-
road Co., 342 U.S. 29, 72 S.Ct. 12, 96 L.Ed. 31, the peti-
tioner had diligently sought redress and had twice within
the year following her injuries brought suit. The second
action abated through an act of Congress and not through
any fault of her own, and the United States Supreme Court
determined that there was excusable delay for these reasons.

It is unnecessary to go into all of the cases cited by li-
belant in his supporting brief for the reason that in accord-
ance with the previous opinion of this Court, the libelant’s
second amended libel discloses no equitable reason for the
Court making any change in the decision rendered.

None of the matters stated in the second amended libel
is sufficient to excuse libelant’s failure to file his libel within
the period allowed by the statute of limitations, A.C.L.A.
1949, § 55-2-7, and no facts are pleaded therein which
would overcome the presumption of prejudice cloaking the
respondents.

The foregoing shall constitute Findings of Fact and
Conclusions of Law unless the parties desire additional
Findings or Conclusions.

Respondents will prepare and present proper judgment
in accordance herewith.

643

22 F.R.D, 221
Harry W. OLSEN, Plaintiff, v. INTERNATIONAL SUPPLY
CO., a corporation, R. C. Wright, also known as Bob Wright,
also known as Robert C. Wright, Defendants.
No. A-8585.

District Court, Alaska. Third Division, Anchorage.
Tuly 21, 1958,

Dn YY

Albert Maffei, Anchorage, Alaska, for plaintiff.
Donald A. Burr, Arnell & Burr, Anchorage, Alaska, for
defendant Robert C. Wright.

McCARREY, District Judge.

This case was originally tried by the court sitting without
a jury after the defendant had requested a jury trial
under Rule 38, Fed.Rules Civ.Proc., 28 U.S.C.A. and was
an action for wages due and owing the plaintiff and alleg-
edly wrongfully withheld by the defendant. Judgment was
for plaintiff and was entered in May of 1956.

The defendant, Robert C. Wright, has now filed a
motion to set aside the “* * * void judgment and for
other relief” for the reason that the judgment was entered
in violation of the Fifth and Seventh Amendments to the
United States Constitution, and for the further reason that
the judgment was entered in violation of Rules 38, 39 and
55(b) (2) of the Fed.R.Civ.P. Two questions of law are
to be determined by this court based upon this motion:

a. Does a party to a proceeding who has made applica-
tion for a jury trial, in conformance with Rule 38
of the Fed.R.Civ.P., waive his right to trial by jury under
the Constitution of the United States and the rules, in
a civil case, when he fails to appear at the time set down
for trial?

b. After a defendant has appeared by way of an-
swer and counterclaim, can the defendant be defaulted if
he fails to appear at the time the case is set down for trial?

No useful purpose would be served by a recitation of
the facts leading up to the date of the trial in this case,
based upon the decision announced herein, other than to
state that the defendant personally failed to appear at the
time his case was set down for trial, although his counsel
was present, and, finding that his client failed to show,

646 |

moved the court for an order allowing him to withdraw
as counsel to the case for the reason that he was unable to
contact his client. This motion was granted.

So far as I am able to find in the law, the answer to the
first question has never been determined by way of decision
under Rule 39 of the Fed.R.Civ.P., although legal com-
mentators infer that a party may waive his right of trial
by jury by failing to appear at the time of the trial. 5
Moore’s Federal Practice, 173-175. It is to be noted that
in the case in which the author’s comments were made
(Bass v. Hoagland, 5 Cir., 1949, 172 F.2d 205, 210) the
attack upon the judgment was collateral, whereas in the
case before the court it is direct. A majority of the state
decisions seem to also hold that a litigant waives his
right of trial by jury when he fails to appear at the time
of the trial. 50 C.J.S.Juries § 95, p. 801.

Interesting as it may be as conjectural law generally, I
find that the answer to this is substantive law of the Terri-
tory of Alaska, and, as such, takes it out of the procedural
rule 39 Fed.R.Civ.P. § 55-7-91, A.C.L.A.1949 provides
as follows:

“Waiver of trial by jury. Trial by jury may be
waived by the several parties to an issue of fact, in
actions on contract, and with the assent of the
court in other actions, in the manner following:
First: By failing to appear at the trial; * * *.”

Although this matter was briefed by both sides, neither
counsel has noted the stibstantive law in his brief.

HE am of the opinion that in a federal court when
a party fails to appear at the time the case is set down
for trial, even though he has complied with the demand for
jury under Rute 38, Fed.R.Civ.P., he thereby waives his
right of trial by jury.

Le

HE (Now to law point number two, supra, which is
governed by Rule 55, Fed.R.Civ.P., there being no sub-
stantive law of the Territory of Alaska to the contrary.
Counsel for the plaintiff did not move or ask for a
default under Sections (a) or (b) of Rule 55. Rule 55(a)
provides as follows:

“Entry. When a party against whom a judg-
ment for affirmative relief is sought has failed to
plead or otherwise defend as provided by these
rules and that fact is made to appear by affidavit or
otherwise, the clerk shall enter his default.”

The words “otherwise defend” have been interpreted by
the courts to mean:

“The words ‘otherwise defend’ refer to attacks
on the service, or motions to dismiss, or for better
particulars, and the like, which may prevent de-
fault without presently pleading to the merits.”
Bass v. Hoagland, supra [172 F.2d 210].

“This does not require that to escape default
the defendant must not only file a sufficient answer
to the merits, but must also have a lawyer or be
present in court when the case is called for a trial.”

Bass v. Hoagland, supra.

The facts in the Bass case disclose that the defendant had
an attorney up to the time of the trial and had filed proper
answers, motions and counterclaims. Applying the facts
of the Bass case to the one presently before the court, the
defendant was not in default at the time of the trial or
thereafter. It has also been held that entry of default un-
der 55(a) is a mere formal matter and under 55(c) and
60(b), Fed.R.Civ.P., the trial judge may allow an answer
at his discretion. Orange Theatre Corporation v. Rayherstz
Amusement Corporation, 3 Cir., 1942, 130 F.2d 185,

648 Le

Hi The defendant’s relief lies under Rule 60, Fed.R.
Civ.P., and this court has already adjudicated the defend-
ant’s rights under that rule. (See minute order in record,
February 7, 1958.)

For the reasons stated, the motion to set aside void judg-
ment is denied and plaintiff is hereby directed to submit a
formal written order to that effect.

259 F.2d 268

Morris ALBERT, Appellant, v. UNITED STATES of America,
Appellee.
No. 15896,

United States Court of Appeals, Ninth Circuit,
Tuly 14, 1958.

Rehearing Denied July 30, 1958.

Morris Albert, appellant, in pro. per.
George M. Yeager, U. S. Atty., Jay A. Rabinowitz, Asst.
U.S. Atty., Fairbanks, Alaska, for appellee.

Before FEE, CHAMBERS and BARNES, Circuit
Judges.

PER CURIAM.

HH Appellant was indicted, tried, and convicted by a
jury in the District Court for the District of Alaska, Fourth
Judicial Division, for the offense of armed robbery (A.C.
L.A.1949, § 654-24), On May 21, 1956 a fifteen (15)
year sentence was imposed. An appeal from this conviction,
filed May 26, 1956, was never perfected. On February 18,
1957 appellant filed a “Petition of Motion to Vacate Sen-
tence” which the district court properly treated as a mo-
tion pursuant to 28 U.S.C. § 2255. This motion was de-
nied by the district judge on May 28, 1957 after careful
consideration and examination of the files and records of
the case. Appellant filed on November 5, 1957 a second
“Petition to Vacate Sentence.” This petition, improperly
filed in the Third Judicial Division, was transferred to the
Fourth Division, the sentencing court, and filed therein No-
vember 22, 1957. The petition was denied November 27,
1957 upon the authority of 28 U.S.C. § 2255, which pro-
vides: .

650 —

“* 3 = The sentencing court shall not be re-
quired to entertain a second or successive motions
for similar relief on behalf of the same prisoner.”
This appeal is from the denial of the second petition for
relief under section 2255 (28 U.S.C. § 1291).

Careful consideration of the allegations of error con-
tained in the first and second petitions convinces us that
the district judge was correct in his exercise of the dis-
cretion granted him by the above quoted provision. The
two petitions are, in all material aspects, substantially alike.

HE Appellant contends that he was entitled to a hear-
ing on the second petition. He is so entitled “unless the
motion and the files and records of the case conclusively
show that the prisoner is entitled to no relief.” The latter
is the case here.

The decision of the district court is affirmed.

COLBY LUMBER COMPANY, Incorporated, and Hansen & Row-
land, Inc, of Alaska, Plaintiffs, v. ALASKA INDUS-
TRIAL BOARD, consisting of Henry A. Benson, Chairman,
J. Gerald Williams, Member and Ross P, Duncan, Member,
and Gus George, Defendants.

No. 7774-A.

District Court, Alaska. First Division, Juneau.
July 31, 1958,

Robert Boochever, of Faulkner, Banfield & Boochever,
Juneau, Alaska, for plaintiffs.

652 Le

M. E. Monagle, of Robertson, Monagle & Eastaugh,
Juneau, Alaska, for defendant Gus George.

KELLY, District Judge.

HI This matter comes before the court upon an appeal
by the Colby Lumber Company and their insurance carrier
(hereafter “employer”) from an award of the full Board
dated February 5, 1958, which award affirms the decision
of Chairman Henry A. Benson and member Ross P. Dun-
can dated November 21, 1957, as follows:

“We find that a reasonable allowance for that
expense while obtaining physio-therapy and out-
patient care is $8 per day. After May 1 it ap-
pears that applicant obtained an apartment and
prepared his own meals and we find that an allow-
ance of $160 a month is reasonable. Applicant
traveled by bus from his hotel and apartment to
the clinic and hospital for out-patient care and we
find that an allowance of $10 a month from Sep-
tember 1, 1955 to December 31, 1956, or a total
of $160 is reasonable. Upon the termination of
his temporary disability applicant requested return
transportation to his home in Haines, Alaska and
we find that an allowance of $73.97 is reasonable.”

The facts as to the accident and the injury are not in dis-
pute. The facts upon which the award was based are set
forth in the findings of fact. The employee lives in Haines,
Alaska and was employed there by the employer, where he
suffered an injury to the left hand on May 4, 1955, which
required extensive hospitalization and surgery. The find-
ings of fact further held that the evidence was conclusive
that following employee’s hospitalization and treatment at
Juneau, subsequent to the injury, the employee returned to
Haines, where he was seen by Dr. C. C. Carter, who ad-

Se 653

vised that he obtain a specialist’s care at Seattle, Washing-
ton. The employee went to Juneau, Alaska, where he await-
ed transportation to Seattle. During this waiting period,
through no fault of his own, he acquired expenses for
hotel lodgings in the amount of $73.44, and meals in
the amount of $90, for a total of $163.44. Upon arrival
in Seattle he was given a daily course of physiotherapy
treatments. Upon the conclusion of this treatment he was
given a permanent disability rating of 50% of the loss of the
use of the hand. The representative of the carrier discuss-
ed settlement and employee was referred to a hand
specialist, Dr. Morris J. Dirstine, in Seattle, who evaluated
the disability at 75% and recommended surgery, which was
performed, and on February 4, the employee was rated as
having reached maximum improvement, able to return to
work with a residual loss of 50% of the use of the left
hand. No written agreement was entered into between
the representative of the insurance carrier and the employee
as to the allowance which was to be paid for living expenses
while receiving out-patient care while in Seattle. The
decision held that a reasonable allowance for these expenses
while obtaining physiotherapy and out-patient care was
$8 per day. After May Ist it appears the employee obtained
an apartment and prepared his own meals and he was al-
lowed $160 a month by the Board as a reasonable allow-
ance therefor, The employee traveled by bus from his hotel
and apartment to the clinic and hospital for out-patient
care and he was granted an allowance by the Board of $10
per month from September 1, 1955 to December 31, 1956,
or a total of $160. They further allowed him $73.97 as
a reasonable amount for transportation to his home in
Haines, Alaska, from Seattle.

The question is presented as to whether the Alaska In-
dustrial Board may grant “cost-of-living” expenses to a

654 Lt

claimant who is undergoing medical treatment for a pro-
longed period of time at a place other than his resi-
dence. Pursuant to Section 43-3-2, A.C.L.A.1949, as
amended by Chapter 141, S.L.A.1955, an employer is obli-
gated to provide an injured employee:

“® > 3 such medical, surgical, chiropractic,
osteopathic or other attendance or treatment,
nurse and hospital service, medicine, crutches and
apparatus for such period as the nature of the in-
jury or the process of recovery may require
OK Re

Section 43-3-21, A.C.L.A.1949 requires any insurer of the
employer’s responsibility to the employee for medical treat-
ment to asstime:

“% «3 all the obligations to pay physician’s
fees, nurse’s charges, hospital services, hospital
supplies, medicine, prosthetic devices, transporta-
tion charges to the nearest point where adequate
medical facilities are available * * *”

Other provisions of the act subject the insurance policy
to the act, and provide the conditions under which the insur-
ance company must pay and discharge its liability to an in-
jured employee.

Hl The above provisions make no express reference to
“living expenses,” and in the absence of express grant, and
barring circumstances which by implication may permit the
Board to exercise certain powers incidental to the powers
enumerated so as to effectuate the purposes of the act, the
Board is limited in its authority to permit an injured em-
ployee to recover only for those medical expenses which an
insurer and employer are required to pay under the above
mentioned provisions. See Trigg v. Industrial Commission,
1936, 364 Ill. 581, 5 N.E.2d 394, 108 A.L.R. 153; Utah

TS)

Copper Co, v. Industrial Commission of Utah, 1920, 57
Utah 118, 193 P. 24, 13 ALL.R. 1367.

Under the facts of the instant case, the claimant was
single while undergoing medical treatment in Seattle, and
was receiving total disability compensation at that time.
The facts are much the same as those presented in Clark
v. Fedders-Quigan Corp., 1954, 284 App.Div. 430, 131
N.Y.S.2d 575, wherein a claimant receiving total disability
compensation requested reimbursement for living expenses
incurred while undergoing a climate change to correct his
injury. The court held that the Board was without au-
thority to grant living expenses where his living expenses
did not exceed his normal expenses while living at home.
At most, the Alaska Industrial Board would have implied
authority to grant living expenses under the facts found
by the Board only where such expenses became incidental
to the expressly mentioned medical expenses due to their
excess over the normal living expenses of the employee
while at home. The purpose of total disability compensa-
tion is to protect the otherwise wage-loss of the employee,
and to a large extent, was brought about to insure the em-
ployee as nearly as possible of a standard of living equal to
that prior to his injury. The granting by the Board
of living expenses to an employee while undergoing medical.
treatment would be a duplication of the object of total disa-
bility compensation, where the employee’s living expenses
do not exceed the expenses he would have incurred while
living at home. The fact that the claimant was single, and
that the cost of living is lower in Seattle, is evidence
that the employee’s expenses while undergoing treatment
in Seattle were not in excess of what he would have incurred
had he remained in Alaska. Clark v. Fedders-Quigan
Corp., supra.

656 |

HI There is also presented the question as to whether
the plaintiff is entitled to reimbursement for living expenses
paid the employee prior to the Board order requiring
that plaintiff pay such expenses. The facts disclose that
sums of money for the claimant’s living expenses were paid
voluntarily to the employee’ in addition to total disability
compensation. The plaintiff requests that these volun-
tary payments in excess of total disability compensation be
credited against the amount due the claimant for his partial
disability. For his argument, the plaintiff cites Section 43—
344, A.C.L.A.1949, which provides:

“No such review shall affect such award, order
or settlement as regards any moneys already
paid, except that an award or order increasing the
compensation rate may be made effective from the
date of injury, and except that if any part of the
compensation due or to become due is unpaid an
award or order decreasing the compensation
rate may be made effective from the date of in-
jury, and any payments made prior thereto in
excess of such decreased rate shall be deducted
from any unpaid compensation, in such man-
ner and by such methods as may be determined
by the Industrial Board.”

At once, it may be noted that this section is not applicable.
It has reference solely to amounts paid in accordance with
the statutory scheme, and under a plan contemplated by
the Workmen’s Compensation Act. This section is ap-
plicable only wheré an employer pays compensation within
limitations of the statute, and an order is entered de-
creasing the rate of compensation owed the employee.
However, where total disability is paid the claimant, and
voluntary payments are made to the claimant in addi-
tion to the total compensation, it cannot be said that such

‘

657

payments were made under the statutory scheme, and
there is nothing to show that the plaintiff intended that
these sums be applied against the final award since they were
never intended as compensation in the first instance, but
were paid only as an act of benevolence. Had the em-
ployee consented to their application against a final award,
the result would be different. Bobertz v. Hillside Tp.,
1940, 14 A.2d 495, 18 N.J.Misc. 399; Krupp v. J. C. Pen-
ney Co., 1938, 51 Ariz. 228, 75 P.2d 692. Contra, Don
Clawson Drilling Co. v. Finch, OkL1954, 277 P.2d 127. .
In the absence of statutory authority, the plaintiff is not
entitled to a credit against the award for partial disability
in the amount of the excess voluntary payments.

The foregoing shall constitute findings of fact and con-
clusions of law unless the parties desire additional find-
ings or conclusions.

This matter is remanded to the Alaska Industrial Board
for revision of the award, consistent with this opinion.
Proper orders to accomplish this will be presented.

a

658 Le

PHILLIPS PETROLEUM COMPANY and/or Cravens, Dargan &
Company, Plaintiffs, v. ALASKA INDUSTRIAL BOARD,
consisting of Henry A. Benson, Chairman, J. Gerald Wil-
liams, Member, and Ross P. Duncan, Member, and William
McKenzie, Defendants.

No. 7746-A,

District Court, Alaska. First Division, Junean.
Aug. 2, 1958.

mr
Ye)
|

Robert Boochever, of Faulkner, Banfield & Boochever,
Juneau, Alaska, for plaintiffs.

Robert J. Annis (of Robertson, Monagle & Eastaugh),
Juneau, Alaska, Bell, Sanders & Tallman, Anchorage, Alas-
ka, for defendant McKenzie.

KELLY, District Judge.

This matter comes before this court upon an appeal by
the Phillips Petroleum Company and its insurance carrier,
Cravens, Dargan & Company (hereafter “employer”) from
the finding of the Alaska Industrial Board (hereafter
“Board”) made December 18, 1957. . The employee had
been paid temporary disability compensation under the
provisions of the Workmen’s Compensation Act, A.C.L.A.
1949, § 43-3-1 et seq. by the plaintiffs in the amount of
$3,400 for the period December 17, 1955 through August
10, 1956.

Ss 651,

The employee-claimant suffered a herniated disc injury
in the lower region of his back while in the employ of the
plaintiff. Three doctors recommended an operation for
the condition, which the employee refused to undergo for
“domestic and personal reasons,” but stated that at some
future date he would undergo the operation.

The employee filed an application for the adjustment
of his claim with the Board, and on May 24, 1957, a hear-
ing was held before the full Board. No oral testimony
was taken at that hearing. The Board made an award,
finding that the employee had refused to undergo surgery;
that had the employee undergone the necessary surgery
he would have been temporarily disabled until September
1, 1957.

The Board further found that the maximum permanent
disability without surgery was 40% of total and the Board
was of the further opinion that the maximum permanent
disability that might be anticipated in normal cases of this
kind would be 40%. The Board granted the employee
temporary total disability compensation to September 1,
1957.

The employer claims that the employee was without suf-
ficient legal justification to refuse the operation, and that
the employer should not be held further responsible for
any damage suffered by the employee. Medical testimony
indicated that the condition of the employee could be cor-
rected only to a 20% permanent partial disability.

The employer claims also that although the employee
had been placed upon compensation at the maximum rate
of $100 a week and was paid this compensation from the
time he left work until August of 1956, he actually was
employed a great portion of this time; that he admitted
on cross examination that he worked in Anchorage for
the City Bus Lines for a period of five days and that he

662 a

further worked two days in Anchorage on a welding job.

-Employer claims that under the 5-day week setup, they
are entitled to a refund for one and two-fifths weeks at
$100 a week or a total of $140. Employer further claims
that the employee returned to Oklahoma and admitted
that he assisted his wife in the operation of her restaurant
from the time he returned to Oklahoma on February 1,
1956, until the date of the taking of his depositions in Au-
gust of 1956, and although he did not actually receive any
wages for this work, he did perform substantial work dur-
ing all this period of time.

Employer claims that the employee’s condition became
fixed in August of 1956 and that as to this the doctors are
allin substantial agreement.

The Employer presents the issues in this appeal as fol-
lows:

(1) That the employee is barred from addition-
al compensation over and above the compensation
already paid him by reason of his refusal to un-
dergo surgery as recommended by the doctors.

(2) That in the event he is not barred from
additional compensation as is requested, the period
of total temporary disability should be found to
have terminated as of August 10, 1956 and that it
should be found that the employer had overpaid
compensation, for the period the employee was
working in Anchorage and drawing maximum
compensation, in the sum of $140, and that in
addition he should be barred from obtaining com-
pensation during the period he was assisting his
wife in her restaurant in Oklahoma.

(3) That in the event additional compensation
is allowed employee for the period of conva-
lescence involved in an operation, the amount of

Se 66 :;

permanent partial disability should be reduced to
20%, which is the amount the doctors agree would
result if an operation were performed.

It is recognized that an injured workman will
be denied a right to compensation from his employer for
any disability which may be removed or modified by sur-
gical treatment not involving serious suffering nor at-
tended by great danger, where the employee refuses to
undergo such an operation. Sultan & Chera Corp. v. Fal-
las, Fla.1952, 59 So.2d 535; Walker v. International Pa-
per Company, Miss.1957, 92 So.2d 445. The law contem-
plates that the injured workman will do everything humanly
possible to restore himself to his normal strength so as
to minimize his damages, and where he fails to do so, the
consequent disability results from the voluntary conduct
of the employee, and not the injury. Morono v. Cody,
1955, 99 N.H. 479, 115 A.2d 650. It is only where an
injured employee’s refusal to undergo surgical treatment
is termed reasonable that his refusal will not act as a bar
to further compensation. The test of “reasonableness”
is to be determined in the light of consideration of the
degree of pain accompanying the operation, consequent in-
convenience to the employee, and possible risk of life at-
tending the nature of the operation. Each of these factors
is to be considered in relation to the possible benefit that
may be derived from the operation, so that a determina-
tion may be properly made as to whether a refusal is jus-
tified. United States Coal & Coke Co. v. Lloyd, 1947,
305 Ky. 105, 203 S.W.2d 47; Dyer v. General Motors
Corporation, 1947, 318 Mich. 216, 27 N.W.2d 533.

The facts of the instant case are much the same as those
presented in Alexander vy. Chrysler Motor Parts Corpo-
ration, 1949, 167 Kan. 711, 207 P.2d 1179. In that case,
testimony was given that a total correction by operation

664 |

for a back injury was slight. At most, only a partial cor-
rection could be achieved, leaving the employee with a 10%
permanent disability. In consideration of the pain and
suffering of the employee if he were to undergo the opera-
tion, coupled with the risk of the operation itself, the court
concluded that the possible correction of the back injury
to only a permanent partial disability of 10% was suffi-
cient justification for the employee to refuse surgical treat-
ment, and the court could not conclude as a matter of law
that the refusal was unreasonable and disturb the findings
of fact. In numerous other cases involving “back inju-
ries,” the courts have been reluctant to require claimants
to submit to major operations as a condition to continued
compensation, due to the nature of the operation. Sultan
& Chera Corp. v. Fallas, supra; United States Coal &
Coke Company v. Lloyd, supra.

HI Although the employee did not state specifically
that he feared the consequences and suffering of the opera-
tion, the claimant’s refusal to submit to surgical treatment
couched in the language of “domestic and personal rea-
sons” is sufficiently broad as to warrant a finding that the
claimant contemplated some grave consequences result-
ing from the operation, whether such contemplation be
founded in fear of life or suffering, or over-burdening in-
convenience. The seriousness of disc operations, the at-
tendant suffering, and the fact that the operation could .
effect at most only a correction of the injury to a 20% per-
manent partial disability, should not warrant a finding
that the refusal to submit to the operation was unreason--
able.

TM The plaintiff also contends that the Board unlaw-
fully extended payments for total disability beyond a pe-
riod during which the employee’s condition became “fixed,”
that is, at such time as the claimant was restored to the

Se 665

maximum recovery that his injury would permit. Two
physicians testified that the claimant was restored to a
“fixed” condition as of August, 1956, and a third physi-
cian testified that at the time of his examination in Febru-
ary in 1957, the claimant was restored to his normal
strength, as far as his injury would permit. This lat-
ter physician did not examine the claimant prior to Feb-
ruary 1957, and, apparently, there is no contradictory
testimony to the examinations of physicians who exam-
ined the claimant in 1956. The Board granted total dis-
ability compensation to the claimant until September of
1957 on the basis that had the claimant undergone the op-
eration which he refused to undergo, he would have been
disabled totally until the expiration of that date.

Pursuant to Section 43-3-1(e) A.C.L.A. Cumulative
Supplement (1958) a workman’s compensation claimant
is entitled to temporary total disability payments, and such
amounts paid or due the claimant “shall be in addition to
the amount to which he shall be entitled” under provisions
of the act relating to scheduled allowances for total par-
tial disability. Libby, McNeill & Libby v. Alaska Indus-
trial Board, 9 Cir., 1951, 13 Alaska 401, 191 F.2d 262,
certiorari denied 1952, 342 U.S. 913, 72 S.Ct. 359, 96 L.
Ed. 683. In Gorman y. Atlantic Gulf & Pacific Co., 1940,
178 Md. 77, 12 A.2d 525, at page 529, the period of tem-
porary total disability is defined as:

“* * * the healing period or the time dur-
ing which the workman is wholly disabled and un-
able by reason of his injury to work. It is, there-
fore, a separate and unitary period of compensa-
tion, and as such is distinguished from a permanent
partial disability.”

Hl In determining compensation payments for tempo-
rary total disability, the fact that a condition can be diag-

666 Dn

nosed as partially permanent is not conclusive as to the
termination of the period for which total temporary com-
pensation must be made to the claimant. A claimant is
entitled to compensation for temporary total disability dur-
ing the period of convalescence and during which time the
claimant is unable to work, and the employer remains lia-
ble for total compensation until such time as the claimant
is restored to the condition so far as his injury will permit.
The test is whether the claimant remains incapacitated to
do work by reason of his injury, regardless of whether
the injury at some time can be diagnosed as a permanent
partial disability. Vader v. State Industrial Accident Com-
mission, 1940, 163 Or. 492, 98 P.2d 714; Allen v. Depart-
ment of Roads and Irrigation of State, 1948, 149 Neb. 837,
32 N.W.2d 740; Monaco v. Albert Maund, Inc., 1952, 17
N.J.Super. 425, 86 A.2d 279. The Alaska statute must
be given this construction to determine the legislative in-
tent.

The testimony of the examining physicians clearly shows
that the claimant’s condition was “fixed” in August of
1956. The claimant should not be allowed to prolong the
period of compensation through speculative argument that,
had he undergone an operation, he would have been dis-
abled until a later date. At all times the claimant is under
a duty to mitigate his damage, and where his condition is
fixed prior to an operation, and he chooses to forego that
operation, he must elect to take his condition as is, and
cannot avail himself of the recovery period of an operation
to reap additional benefits, where in fact he never consented
to surgical treatment.

In a majority of jurisdictions, total disability is not to
be determined by a claimant’s inability to engage in work
similar to that performed at the time of his injury, but the
test is whether the employee can engage in some activity

667

to maintain his prior earning power. Clark v. Henry &
Wright Mfg. Co., 1950, 136 Conn. 514, 72 A.2d 489;
Lumbermens Mut. Casualty Co. v. Cook, 1943, 69 Ga.App.
131, 25 S.E.2d 67; McCall v. Potlatch Forests, 1947, 67
Idaho 415, 182 P.2d 156; Dierks Lumber & Coal Co. v.
Lindley, 1938, 182 Okl. 185, 77 P.2d 44; Elliot v. Gooch
Feed Mill Co., 1946, 147 Neb. 612, 24 N.W.2d 561. Yet,
there are a number of jurisdictions that limit total dis-
ability solely to the inability of the employee to engage in
work of a similar nature, and wages earned from an occu-
pation other than the employee’s normal occupation are not
to be considered in determining compensation liability.
Dobson v. Apex Coal Co., 1939, 150 Kan. 80, 91 P.2d 5;
Reeves v. Union Sulphur Co., La.App.1940, 193 So, 399;
Texas Employers’ Ins, Ass’n v. Moran, Tex.Civ.App.1953,
261 S.W.2d 855. In Vanney v. Alaska Packers Ass’n, 1949,
12 Alaska 284, the test for total disability was proposed
as “what the employee has lost by reason of his injuries.”
Although this case involved seasonal employment, the
tule is sufficiently broad as to permit wages earned from
a non-related employment to be considered in fixing com-
pensation payments.

Notwithstanding the above conflict as to the effect of
post-injury earnings on total compensation payments, there
is recognized the rule in practically all jurisdictions that
the ability of an employee to engage in “light or occasion-
al” work does not negative a finding that the employee is
entitled to total compensation. Jersey City Printing Co.
v. Klochansky, 1950, 8 N.J.Super. 186, 73 A.2d 742; Blue
Diamond Coal Co. v. Phillips, 1947, 303 Ky. 693, 198 S.
W.2d 799; Vader v. State Industrial Board Accident
Commission, 1940, 163 Or. 492, 98 P.2d 714; In re Iles,
1941, 56 Wyo. 443, 110 P.2d 826; Byouk v. Industrial
Commission of Colorado, 1940, 106 Colo. 430, 105 P.2d

668 a

1087; Geis v. Packard Motor Car Co., 1921, 214 Mich.
646, 183 N.W. 916; White v. Tennessee Consolidated Coal
Co., 1931, 162 Tenn. 380, 36 S.W.2d 902; Franzen v.
Blakeley, 1952, 155 Neb. 621, 52 N.W.2d 833. Conse-
quently, even in those jurisdictions that allow wages of a
nonrelated work to be considered in fixing the amount
due for compensation, the work must be of a substantial
nature. It appears that if an employee cannot compete for
remunerative employment in any general field of human
endeavor, but can obtain occasional employment under
rare conditions at small remuneration, then such earnings
shall have no effect on total compensation. The real basis
for such a ruling is that since through the employee’s in-
jury he lost his total earnings, and by statute the employer
is limited in the amount he must compensate the employee,
the earnings from slight or occasional work offset the
difference between the compensation and total lost wage.
Only a few jurisdictions permit “occasional or light work”
to affect total compensation. Fullerton Fuel & Supply
Co, v. Industrial Commission, 1931, 343 Ill 53, 174 N.E.
900; Leaver v. Midvale Co., 1948, 162 Pa.Super. 393, 57
A.2d 698; Wareham v. United States Rubber Co., 1947,
73 R.I. 207, 54 A.2d 372, The majority of jurisdictions
apply the so-called “odd-lot” doctrine to determine wheth-
er the employer is entitled to a variance in compensation
payments, which refers to the ability of the employee to
obtain light or occasional employment only during the pe-
riod of his alleged disability. Where it is applicable, no.
recovery should be allowed for amounts paid for total dis-
ability, although the employee did earn some income.

In the instant case, it appears that the Board found the
employment of the claimant as a temporary or part time
bus driver, as well as the assistance of the claimant to his
wife in her restaurant operations, as “light and/or occasion-

Se 6659)

al” work, not of a sufficient regularity to show an im-
provement in the employee’s condition. It appears that
the fact of occasional earnings is not quite so importank
as the physical condition of the employee to earn income
with a degree of regularity. While earnings are eviden-
tiary of the condition of the employee, they do not per se
entitle the employer to retribution. 2 Larson, Sec. 57.21
(1958). Apparently, the courts do not distinguish “tem-
porary total disability” from “permanent total disability,”
in determining the effect of “light or occasional” work on
compensation payments. Vader v. State Industrial Acci-
dent Commission, supra.

HI The facts of the instant case disclose that the em-
ployee-claimant left Alaska to reside in Oklahoma within
six months after the date he left work for the plaintiff.
This court has previously decided that the Board must con-
sider the pay scale of similar employment at the residence
of the claimant in determining compensation awards. Hohn
v. Alaska Industrial Board, D.C.1957, 150 F.Supp. 519.
The Board should have used the pay scale in Oklahoma in
awarding compensation for the period employee was lo-
cated in that state.

The foregoing shall constitute Findings of Fact and
Conclusions of Law unless the parties desire additional
Findings or Conclusions,

This matter will be remanded to the Board for a rede-
termination of the award consistent with this opinion.
Proper order will be presented.

670 be

258 F.2d 356

Phillip DANIELS, Appellant, v. UNITED STATES of America,
Appellee.
No, 15718.

United States Court of Appeals, Ninth Cireuit,
Aug. 4, 1958,

——
Phillip Daniels, Steilacoom, Wash., for appellant.

Wm. T. Plummer, U. S. Atty., George N. Hayes, Asst.
U.S, Atty., Anchorage, Alaska, for appellee.

Before ORR, FEE and BARNES, Circuit Judges,

Dt 671

PER CURIAM.

On December 1, 1952, appellant plead guilty to a viola-
tion of section 654-1, Alaska Compiled Laws Annotated,
1949 (murder in the first degree). He was sentenced to
life imprisonment.

On September 29, 1956, appellant filed a motion in the
District Court, Third Division, Alaska under 28 U.S.C.A.
section 2255 to set aside and vacate the judgment of con-
viction entered on his plea of guilty.

On November 23, 1956, the District Court denied the
motion. An appeal was taken from said judgment of de-
nial to this court. .

On May 28, 1957, 9 Cir, 246 F.2d 194, 17 Alaska 179,
this court affirmed the order of the District Court.

On July 5, 1957, appellant filed a second motion under
28 U.S.C.A. section 2255 setting up the identical grounds
set forth in his first motion. This second motion was de-
nied on July 26, 1957, by the District Court on the ground
that “the sentencing court shall not be required to enter-
tain second or successive motions for similar relief on
behalf of the same prisoner.” The instant appeal is from
said second denial of relief under section 2255.

The identical relief was asked in both petitions, hence
the District Court exercised a sound discretion in dismiss-
ing the second petition and its order is affirmed.

Affirmed.

672 be

163 F.Supp. 875

UNITED STATES of America, Plaintiff, v. Herbert F.
SCHAUB, C. A. Zaruba, and Wilfred C. Stump,
Defendants.

No, A-3838-K,

District Court, Alaska. First Division, Ketchikan.
Aug. 9, 1958,

C. Donald O’Connor, Asst. U. S. Atty., Ketchikan, Alas-
ka, for plaintiff.

W. C. Stump, of Stump & Bailey, Ketchikan, Alaska,
for defendants,

KELLY, District Judge.

This matter is before the court on a bill to quiet title to
property in the Tongass National Forest which the defend-
ants claim under a mineral entry based upon the sand and
gravel on said property. The land involved includes a
portion of one mining claim and an entire second claim.

The government also seeks a permanent injunction
against defendants from digging and excavating upon the
land involved or from interfering in any way with the
use of said lands by the United States.

The important question to be decided here is whether
land containing sand and gravel is subject to entry where
ordinary sand and gravel only is involved.

The facts show that this claim contained very little of
what is considered sand or high-grade gravel, but was of
a low grade and contained many stones or rocks which had
to be processed and crushed and its main use was for road
building, either as a base or for use in rough concrete.
There is no claim that the sand or gravel in this property
was exceptional or of an extremely high grade or that it
possessed any peculiar property or characteristic which
would give it a special value.

The defendants claim that under certain circumstances

sand and gravel could support a mineral entry.
Lt

674 be

This Court holds that the mineral entries of the defend-
ants are valid and that the relief sought by the government
must be denied.

The decisions of the Land Department, supplemented.
by judicial interpretations of the Act of 1872, have failed
to set forth a clear and consistent formula as to what may
be considered as mineral within the meaning of the min-
ing laws. To this extent no real precedent has been estab-
lished as to the scope of mineral as embraced in the min-
ing statutes. Anchorage Sand & Gravel Co., Inc., v. Schu-
bert, D.C.Alaska 1953, 114 F.Supp. 436. The several
statutes dealing with mineral lands should be considered
in relation to one another so as to effect the proper intent
of Congress in the regulation of use and occupation of
mineral lands. United States v. Sweet, 1918, 245 U.S.
563, 38 S.Ct. 193, 62 L.Ed. 473. Any determination as
to the question whether sand and gravel may be considered
as mineral within the purview of the mining laws must be
made in consideration of the entire statutory scheme.

By virtue of the Act of July 26, 1866, c. 262, 14 Stat.
251, Congress provided for the first statutory sanction of
appropriation of public mineral lands for private use. This
statute was superseded by the Act of May 10, 1872, c. 152,
17 Stat. 91, 30 U.S.C. Sec. 22, which was designed pri-
marily to encourage mining, and which provided that:

“Except as otherwise provided, all valuable
mineral deposits in lands belonging to the United
States, both surveyed and unsurveyed, shall be
free and open to exploration and purchase, and the
Jands in which they are found to occupation and
purchase, by citizens of the United States and
those who have declared their intention to become
such, under regulations prescribed by law, and ac-
cording to the local customs or rules of miners in

Ee 675

the several mining districts, so far as the same are
applicable and not inconsistent with the laws of
the United States.”

The first test for the determination of what is to be con-
sidered as mineral within the meaning of the above statute
was set forth in a circular of instructions issued by the Com-
missioner of Land Department in 1873. 1 Lindley on
Mines 163 (3rd ed. 1914). The test was:

“x 3% ok whatever is recognized as a mineral
by the standard authorities on the subject, where
the same is found in quantities and quality to ren-
der the land sought to be patented more valuable
on this account than for the purposes of agricul-
ture, should be treated by the office as coming with-
in the purview of the mining act of May 10, 1872.”

Under earliest decisions of the Land Department, it ap-
pears that gypsum, limestone, marble, alluvial deposits,
gravelly soil and granite were considered as minerals with-
in the purview of the Act of 1872. W.H. Hooper, 1 L.D.
560 (1881); H. P. Bennet, Jr., 3 L.D. 116 (1884). It is
significant to note that the valuation test of minerals was
not in their use, but was limited solely to the consideration
of whether the land was more valuable because of their
presence than for agriculture. In applying this test, it was
decided in Freezer v. Sweeney, 1889, 8 Mont. 508, 21 P.
20, that stone deposits suitable for building purposes would
subject such deposits to application of the mining laws.

The Land Department saw fit to deny some claims that
were based on stone deposits useful for building purposes
only, although previous opinions indicate that the Land
Department was disposed to uphold claims where the land
was more valuable because of stone deposits than for agri-
culture, without reference to building purposes or any oth-
er use. Conlin v. Kelly, 12 L.D, 1 (1891). Minerals are

676 |

not limited solely to metalliferous substances. Mullan v.
United States, 1886, 118 U.S. 271, 6 S.Ct. 1041, 30 L.Ed.
170; Northern Pacific Railway v. Soderberg, 1903, 188
US. 526, 23 S.Ct. 365, 47 L.Ed. 575.

The Land Department refused to uphold a claim based
on sand and gravel deposits useful only for construction
purposes, Zimmerman v. Brunson, 39 L.D. 310 (1910).
Yet, prior and subsequent to the Zimmerman decision, the
Land Department did recognize claims founded on stone
deposits that could be used for special purposes, such as
monumental or ornamental, as distinguished from purely
building purposes. McGlenn v. Wienbroeer, 15 L.D. 370
(1892); Van Doren v. Plested, 16 L.D. 508 (1893) ; Ben-
nett et al. v. Moll, 41 L.D, 584 (1912); Stephen E. Day,
Jr., et al., 50 L.D. 489 (1924)...

Following the Zimmerman case the Land Department
reversed itself, stating in Layman et al. v. Ellis, 52-L.D.
714, 721 (1929), that:

“There is no logical reason in view of the latest
expressions of the department why, in the adminis-
tration of the Federal mining laws, any discrim-
ination should be made between gravel and stone
of other kinds, which are used for practically the
same or similar purposes, where the former as
well as the latter can be extracted, removed and
marketed at a profit.” .

In a Solicitor’s Opinion in 54 1.D. 294 (1933), the Land
Department was advised that gravel deposits useful for
highway construction would be subject to the application
of the mining laws. In United States v. Barngrover, 57
LD. 533 (1942), the test was again repeated that any sub-
stance that could be removed from the earth and marketed
at a profit so as to have a positive commercial value, would
be within the statutory concept of mineral. Other decisions,

: 677

though not involving interpretations of the Act of 1872,
have held gravel to be a mineral. United States v. Harris,
5 Cir. 1940, 115 F.2d 343; Praeletorian Diamond Oil
Ass’n v. Garvey, Tex.Civ.App.1929, 15 S.W.2d 698.

HB it appears that Congress had in mind that all
lands valuable for stone shall be included within the pur-
view of the mining laws. By the Act of August 4, 1892,
c, 375, 27 Stat. 348, 30 U.S.C. Sec. 161, Congress en-
larged the scope of the mining laws, so as to make entry
for building stone possible under provisions of the Act
of 1872. There seems to be no doubt that Congress in-
tended the coverage of the mining laws to be broad enough
to permit gravel and sand to be the basis of a claim un-
der the mining laws as a valuable mineral deposit. Ad-
ditional support for this view is found in the passage of the
Act of July 23, 1955, c, 375, Sec. 3, 69 Stat. 367, 30 U.S.C.
Sec, 611, expressly exempting common varieties of sand
and gravel from provisions of the mining laws. The pur-
pose of this section was to amend the Act of July 31, 1947,
61 Stat. 681, and the mining laws generally, so as to pro-
hibit the further location and removal of sand and gravel
from the mineral lands of the United States. See H.Rep.
730, U.S.Code Congressional and Administrative News,
p. 2474 (1955). Impliedly, this section acknowledges that
prior to the passage of the Act of 1955, common varieties
of sand and gravel were subject to provisions of the Act
of 1872. The claims here involved were located June 27,
1951, four years prior to this amendment.

Although the sand and gravel located by the defendants
may be of a coarse variety, there is nothing explicit or im-
plicit within the mining statutes requiring mineral deposits
to be useful for special purposes. Sand and gravel of the
type sought to be located by the defendants is relatively
scarce in Alaska, and being such, are items of value in them-

678 |

selves, Their property characteristics are far more suit-
able for building purposes than the type to be found close
to or on the coast, due to chemical composition of coastal
substances. In this sense, the sand and gravel in question
is of a superior type. There is no doubt that the land con-
taining the sand and gravel was greatly appreciated in value
attributable to its presence. No reason can be found to
exist to warrant a distinguishing of gravel from other de-
posits used for a similar purpose which the Land Depart-
ment has consistently upheld as being within the purview
of the Act of 1872. The statute makes express reference
to “valuable mineral deposits.” The use of such deposits
and their demand are helpful only so far as they determine
valuation. Mineral deposits may be just as valuable for
one purpose as another, and because a deposit may be lim-
ited in its use only for one purpose, there is no reason to
deny application of the Act of 1872 if the deposit is val-
uable and can be marketed at a profit. There is no dispute
that the sand and gravel were chiefly valuable for road
building and concrete mix. But, if the lands containing
these deposits were as valuable and yielded profits com-
parable to lands containing high-grade sand suitable for
glass-making, and the latter would come within the Act
of 1872, no distinction can be conceived that would justify
a different result.

At the time of the passage of the Act of 1872, a great
deal of the lands were unexplored. It would be a far
stretch of the imagination to assume that Congress intended
to limit the mining laws only to those minerals known to
possess a great value at the time the statute was enacted,
where the express intent of Congress was to develop the
mining resources of the United States, so as to give value
to a greater number of things in the promotion of manu-
facturing and the arts. To stimulate the growth of our

a 679

country, Congress encouraged mining activities, and in do-
ing so, intended that substances that can be taken from the
earth and marketed at a profit, be subject to the applica-
tion of the mining laws.

Therefore, under the mining laws in effect when the en-
try herein was made, such entry was valid and the govern-
ment’s claims should be denied.

The foregoing shall constitute Findings of Fact and
Conclusions of Law unless the parties desire additional
Findings or Conclusions.

Defendants will present proper orders and decree in ac-
cord with this opinion.

258 F.2d 563

Thomas B. RUSTAD, Harvey R. Wyborny, Homer O. Skelley,
Chazles Diven and James Johnson, Appellants, v. UNITED
STATES of America, Appellee.

No, 15720,

United States Court of Appeals, Ninth Circuit,
Tune 30, 1958.

Rehearing Denied Sept. 9, 1958,

loa)
oS

681

Faulkner, Banfield & Boochever, Juneau, Alaska, for ap-
pellants.

Roger G. Connor, U. S. Atty., Jerome A. Moore, Asst.
U.S. Atty., Juneau, Alaska, for appellee.

Before POPE, BARNES and HAMLEY, Circuit
Judges.

BARNES, Circuit Judge.

If a vessel sought to go south from the City of Wrangel
situated on the northernmost tip of Wrangel Island in
southeast Alaska, it could proceed along the easterly side
of the island through the Eastern Passage, Blake Channel,
and Anan Creek area to a point immediately south of
Wrangel Island and north of Deer Island in Ernest Sound,
or, it could sail along the westerly side of Wrangel Island
through Zimovia Strait to the same point in Ernest Sound
north of Deer Island. All of these named bodies of water
are in the Anan section of the “Sumner Strait Regulatory
District,” as delineated on the Southeast Alaska Commer-
cial Fisheries Maps, published by the United States Fish and
Wildlife Service.

At about 12:30 p. m. on July 12, 1956, the defendants’
vessel was found fishing commercially at a point allegedly

682 a

located within Zimovia Strait. The Captain and four
members of the crew (appellants herein) were arrested, and
charged with a violation of 48 U.S.C.A. § 222,+ which
makes violations of regulations issued by the Secretary of
Interior under the authority of 48 U.S.C.A. § 221, criminal
offenses. 48 U.S.C.A. § 226* provides for fine and im-

1 Title 48 U.S.0.A. § 222. “Unlawful fishing in areas; no exclusive
rights to be granted; citizens

“Wrom and after the creation of any such fishing area and during
the time fishing is prohibited therein it shall be unlawful to fish
therein or to operate therein any boat, seine, trap, or other gear or
apparatus for the purpose of taking fish; and from and after the
creation of any such fishing area in which limited fishing is permit-
ted such fishing shail be carried on only during the time, in the man-
ner, to the extent, and in conformity with such rules and regulations
as the Secretary prescribes under the authority herein given: Pro-
vided, That every such regulation made by the Secretary of the In-
terior shall be of general application within the particular area to
which it applies, and that no exclusive or several right of fishery
shall be granted therein, nor shall any citizen of the United States
be denied the right to take, prepare, cure, or preserve fish or shell-
fish in any area of the waters of Alaska where fishing is permitted by
the Secretary of the Interior. June 6, 1924, ¢. 272, § 1, 48 Stat, 464;
Tune 18, 1926, c. 621, 44 Stat. 752; 1939 Reorg. Plan No. IL, § 4),
eff. July 1, 1989, 4 F.R. 2731, 53 Stat. 1438.”

2 Title 48 U.S.C.A. § 226. “Violation of fishing laws; punishment ;
forfeiture

“Any person, company, corporation or association violating any pro-
visions of sections 221-228 or 230-241 of this title, or of any regula-
tion made under authority of said sections shall, upon conviction
thereof be punished by a fine not exceeding $5,000 or imprisonment
for a term of not more than ninety days in the county jail or by both
such fine and imprisonment, and in case of the violation of section
2833 of this title there may be imposed a further fine not exceeding
$250 for each day the obstruction therein declared unlawful is main-
tained. Every boat, seine, net, trap and every other gear and appli-
ance used or employed in violation of said above-mentioned sections
and all fish taken therein or therewith shall be forfeited to the Unit-
ed States and shall be seized and sold under the direction of the court
in which the forfeiture is declared at public auction and the pro-
ceeds thereof after deducting the expenses of sale shall be disposed
of as other fines and forfeitures under the laws relating to Alaska.

De 683

prisonment for any such violation, i. ¢., fishing in a closed
area. The regulations which defendants were charged in
the information with violating were sections 121.3 and 121.4
of Alaska Commercial Fisheries Regulations, 1956.

The case was tried before a jury in the District Court of
the First Judicial District of Alaska where Zimovia Strait
is located. (48 U.S.C.A. § 101.) The sole issue submitted
to the jury was whether or not appellants’ boat was fishing
in Zimovia Strait. All defendants were convicted, A mo-
tion for a judgment notwithstanding the verdict was denied.
Captain Rustad was fined $1,500, the crew $750 each; and
the balance of their catch was forfeited. Appeal lies here.
28 U.S.C. § 1291. H

Alaska Fisheries Regulations Section 121.4, in effect on
July 12, 1956, and for some time prior thereto, reads:

“With the exception of Ernest Sound and the
vicinity of Anan Creek, fishing * * * is pro-
hibited except from * * * July20 * * *78

Alaska Fisheries Regulations Section 121.3 read on July
10th and prior thereto as follows:

“Fishing * * * in Ernest Sound and the
open waters in the vicinity of Anan Creek (ex-
cluding Zimovia Strait) is prohibited except from
* ee July 15 * e HNE

Proceedings for such forfeiture shall be in rem under the rules of ad-
miralty. June 6, 1924, c. 272, § 6, 43 Stat. 466.”

3 Alaska Fishery Regulations § 121.4 reads in its entirety:

“Open season; exception. With the exception of Ernest Sound
and the vicinity of Anan Oreek, fishing, other than trolling, is pro-
hibited, except from 6 o’clock antemeridian July 20 to 6 o’clock post-
meridian August 24. During this season the weekly closed period,
except for trolling, is extended to include the period from 6 o'clock
postmeridian Friday to 6 o’clock antemeridian Monday.”

4Alaska Fishery Regulations § 121.3 read in its entirety:

“Open season, Ernest Sound and Anan. Fishing, other than troll-
ing, in Ernest Sound and the open waters in the vicinity of Anan

684 be

On July 11, 1956, Regulation § 121.3 was amended to
strike the words “July 15” and to substitute therefor the
words “July 12.” This amendment was published at Wash-
ington, D. C., on July 11, 1956. The early opening day in-
formation was conveyed to the Fish & Wildlife Service in
Alaska by telegram which read as follows:

“Alaska Fishery Regulation 121.3 amended to
open Anan and Ernest Sound section at six o’clock
antemeridian July twelve. This action taken be-
cause adequate early escapement of pink salmon
assured in Anan Creek as revealed by ground
survey of stream and aerial survey of approaches
by FWS officials July seven. Advise interested
parties.” [Defendants’ Exhibit A.]

It is noted this contained a specific reference by number to
the regulation amended, and instructed the Wildlife Service
to inform all interested parties. The Service sent telegrams
to various fisheries asking that interested parties be advised
of the earlier opening date, but these telegrams contained
no reference to the regulation number. They read:

“The Ernest Sound and Anan section of the
Sumner Strait District will open at 0600 am July
12 instead of July 15, Please advise interested
parties.” [Defendants’ Exhibit B.]

(1) Failure of the court to rule as a matter of law that
the regulation was invalid because of indefiniteness.

(2) The two telegrams amended the regulation sought
to be enforced so as to open Zimovia Strait for fishing
on July 12, or estopped the government to deny it was
open.

Oreek (excluding Zimovia Strait) is prohibited except from 6 o’clock
antemeridian July 15 to 6 o'clock postmeridian August 18. During
this season the weekly closed period, except for trolling, is extended

to include the period from 6 o’clock postmeridian Friday to 6 o’clock
antemeridian Monday.”

De 685

(3) The same telegrams rendered the regulations invalid
because of indefiniteness.

(4) Failure to give defendants’ requested instruction No.
1

(5) The giving of Government Instruction No. 10,

(6) In withholding government Exhibits A and B from
the jury room.

Hl The indefiniteness relied on in point one is the use of
the term “Zimovia Strait.” Appellants point to their Exhib-
it C, a United States Department of Agriculture Map de-
lineating the boundaries of the “Tongass National Forest,”
extending some eight hundred miles north and south. I¢
is true that from that government map it would be difficult,
though not impossible, to determine where Zimovia Strait
starts and ends. But we assume accomplished seamen would
not rely on a Department of Agriculture Map any more than
they would rely on an oil company’s road map, or a World
Atlas showing the North Pacific Ocean on one page. On
Appellee’s Exhibit 1, for example the Zimovia Straits are
clearly marked and can hardly be missed by anyone reading
the navigational chart (which that Exhibit is) with the de-
gree of intelligence to be expected of the licensed master of
a vessel. These commercial fishermen were not Sunday
sailors landlocked most of the week. They used a map with
fathoms, shoalings and magnetic compass markings on it.
Government’s Exhibit 1 was in fact on the fishing vessel at
the time of arrest. As might be expected, it was a United
States Coast and Geodetic Survey Map, No. 8161, covering
“Ernest Sound, Eastern Passage, and Zimovia Strait,” a
total area extending some forty to fifty miles north and
south. The point of arrest and the point where the vessel
was fishing was 1.4 miles northwest of Thorns Point and
immediately opposite the letter “R” in the words Zimovia
Strait, as they appear on this map tlien being used,

686 Le

Of the many fishing boats out on the opening day, none
but this captain and crew had any difficulty in determining
the limits of Zimovia Strait and where they should not
fish.

Appellants cite in support of their position that Zimovia
Strait is an indefinite description of the boundaries of the
proscribed territory those cases involving fishing at the
mouth of rivers where the limits of the river’s mouth have
not been designated by statute, such as Booth v. United
States, 9 Cir., 1925, 6 F.2d 500. From this it is argued
that either the exact longitude or latitude of the area must
be stated, or that the area itself must be physically marked—
that without such aids the regulation, of necessity, was so
uncertain and indefinite as to be unenforceable for lack of
due process. Appellee does not dispute the validity of such
a rule of law, but urges that it is not here applicable, that the
statutes employed words or phrases having a technical or
other special meaning, well enough known to enable those
within their reach to correctly apply them, or having a well
settled common-law meaning. Connally v. General Con-
struction Co., 1926, 269 U.S. 385, 391, 46 S.Ct. 126, 70
L.Ed. 322.

With two valid theories of law presented, within which
should this regulation fall? Our opinion is that the regula-
tion is reasonably clear for the purposes intended. Zimovia
Strait is clearly marked on the maps introduced in evidence.
Zimovia Strait is no river mouth which may have a chang-
ing and indeterminate location, but a well-defined land con-
formation clearly marked on the official charts of the Unit-
ed States Coast & Geodetic Survey Maps. It would seem
that the reference to Zimovia Strait in the regulation would
be perfectly clear to those concerned and technically quali-
fied, as would be commercial fishermen in the area.

De 687

HI Defendants’ second point is that the telegrams of
July 11(a) either opened Zimovia Strait to fishing or (b) at
least are sufficient to estop the government from prosecuting
those reasonably relying on those telegrams, or (c) they
amend the regulation to make it vague and indefinite and
therefore invalid. Appellee counters that the telegram (Ex-
hibit A) is not capable of any interpretation other than the
one found by the trial court—that it merely changed the op-
ening dates for fishing in the areas covered by § 121.3, i. e.,
Ernest Sound and the Anan Creek areas, excluding the Zi-
movia Strait area.

The trial court was correct in his view that the telegrams
were not ambiguous or subject to any interpretation other
than that a change in opening day had occurred. These de-
fendants were commercial fishermen; their whole livelihood
was regulated by the Secretary of the Interior pursuant to
these regulations. They certainly were or should have been
familiar with them. The telegram to the Wildlife Service
(Exhibit A) specifically names the section being amended
and thereby eliminates all possibility of confusion. The
wire to the Fisheries (Exhibit B) names the districts only,
but mentions the original date of July 15th, thus indicating
first, that only the day is being changed, and second, that
no areas subject to an opening day other than July 15th
(such as those governed by the July 20th date of § 121.4
which includes Zimovia Strait) are affected by the amend-
ment. Any other interpretation would render the reference
to July 15th meaningless.

In support of the argument for ambiguity, appellants
point out that it was broad daylight, that they were not hid-
ing, and that they did not run from sight of the arresting of-
ficer’s plane. Appellee points out in reply that of the two
hundred and seventy-five boats out on opening day near
the legal areas, appellants’ boat was the only one in the for-

688 a

bidden area. We think the trial judge was correct in his
conclusion that the meaning and effect of the amending tele-
grams was not ambiguous.

HH Once it is established that the regulation was not
ambiguous and did not open the area to fishing, any instruc-
tion on reliance upon ambiguity becomes irrelevant and is
nothing more than an attempt to get before the jury that is-
sue of law, and its interpretation, decided against appellants
by the court as a matter of law.

As to the instruction concerning burden of proof, it was
concerned only with the absence of need to prove intent—to
that end the court said the government need only prove the
act. However, instructions 3 and 4 stated the government’s
entire burden correctly; No. 5 was devoted solely to the
subject of reasonable doubt. And, No. 18 warned the jury
not to consider just one instruction, but to make their de-
cision in the light of all the instructions given. No. 10, com-
plained of, in no way misled the jury and was not intended
nor did it in fact establish a different burden of proof.

HH] Exhibits A and B were properly withheld from the
jury after the court had decided as a matter of law the jury
could not determine the alleged questions of ambiguity and
estoppel. If correct in its rulings, as we have said it was,
there could be no purpose in submitting Exhibits A and B to
the jury.

The judgment is affirmed.

POPE, Circuit Judge (concurring).

I find myself in accord with substantially everything that
is stated in the court’s opinion. The only qualification I
would make is the statement that the date of Sec. 121.4 in-
cludes Zimovia Strait. Had the appellants raised the point
I think it would be a serious question whether the prohibi-
tion stated in that section extended to Zimovia Strait, thus

Le 689

raising doubt as to whether there was any closed season in
that strait. The section contains an express exception:
“With the exception of Ernest Sound and the vicinity of
Anan Creek”. But that area would appear to include Zi-
movia Strait, for the drafters of Sec. 121.3 found it neces-
sary to make an express exclusion of this strait. That is, a
reading of 121.3 seems to indicate that “Ernest Sound and
* * %* the vicinity of Anan Creek”, so described, would
ordinarily include Zimovia Strait.

But such a point was not preserved at the trial nor made
in the specifications of error here, If the matter were en-
tirely clear, and if it were plain that the regulations simply
did not provide any prohibitions as to Zimovia Strait, we
might be called upon to notice the point as a plain error un-
der Criminal Rule 52(b), 18 U.S.C. But I am satisfied
that the matter is not so plain, but that there is sufficient
ambiguity in this part of the regulations so that we may ac-
cept the administrative construction of the section under the
rule of Norwegian Nitrogen Products Co. v. U. S., 288 U.S.
294, 315, 53 S.Ct. 350, 77 L.Ed. 796, and cases there cited.
Cf. Doyle v. Fox, 9 Cir., 234 F.2d 830, 833. Hence we are
not called upon to notice a point not made by the parties.

On Petition for Rehearing

PER CURIAM.
The petition for rehearing is denied.

POPE, Circuit Judge (dissenting).

In my concurring opinion of June 30, 1958, I noted the
reason there is doubt as to whether there was any closed sea-
son in Zimovia Strait at the time stated in the information.
However I stated my concurrence in the judgment of affirm-
ance on the ground that the point had not been raised at the
trial or on appeal here and I felt that under the circum-

be

690 a

stances we would not be called upon to notice the point as a
plain error under Fed.Rules Crim.Proc. Rule 52(b), 18 U.
S.C.

Upon the petition for a rehearing appellants have called
attention to the fact that if the regulations did not provide
any prohibition as to Zimovia Strait, then the information
did not state an offense. They also note that under Criminal
Rule 12(b) (2), the failure of an information to charge an
offense shall be noticed by the court at any time. The peti-
tion further suggests that there is no substantial proof of an
administrative construction of the regulations such as that
which I refer to in my former opinion.

Tam bearing in mind the proposition that a person should
not be fined or imprisoned for violation of a statute or reg-
ulation which is ambiguous or uncertain. Since I think it
is a serious question whether the regulations, as framed, ac-
tually prohibited fishing in Zimovia Strait at the time in
question, I think now that we should grant a rehearing
since Rule 12(b) (2) would appear to make it appropriate
for us to consider the matter.

It is suggested that at the time of the alleged offense ap-
pellants had reason to think the regulations covered this
area, and did not then act in reliance upon these defects.
Thus other fishermen stayed away.

I would doubt that a person could be convicted of viola-
tion of a regulation that did not cover his case, just because
the accused thought it did.

a 691

258 F.2d 191

W. S. PEKOVICH and Admiralty Alaska Gold Mining Company,
a Corporation, Appellants, v. Minnie COUGHLIN, as
Executrix of the Estate of Robert E. Coughlin, Deceased,

Appellee.
No, 15683.

United States Court of Appeals, Ninth Cirouit.
July 9, 1958.

Rehearing Denied Sept. 12, 1958,

6

92

Joseph A. McLean, Juneau, Alaska, Fred J. Wettrick,
Seattle, Wash., for appellants.

Faulkner, Banfield & Boochever, Juneau, Alaska, for ap-
pellee.

Before BONE, BARNES and HAMLEY, Circuit
Judges.

a 693

BONE, Circuit Judge.

This is an appeal from a decree of the lower court order-
ing individual appellant Pekovich to transfer and deliver to
appellee, Executrix of the Estate and widow of Robert
E. Coughlin, four thousand shares of common stock of ap-
pellant Admiralty Alaska Gold Mining Co., an Alaska
Corporation (herein Corporation) and awarding to appellee
her costs and disbursements herein, including an attorney’s
fee of $450.00.

The court below found as a fact that there was insufficient
evidence (indeed there was none) to show that appellant
Corporation authorized or ratified the later noted and so-
called “agreement” between appellant Pekovich and appel-
lee’s decedent, hereafter Coughlin. As indicated above, the
decree ran against Pekovich alone.

From the pleadings and undisputed testimony, it would
appear that on February 1, 1954, the then Secretary-Treas-
urer of Corporation tendered his resignation to its Board
of Directors, asserting that the salary was not sufficient for
the amount of work entailed by the position. His resig-
nation was accepted and on the same date Coughlin was
selected to take over the duties of this office, pursuant to a
suggestion made by Pekovich.

On February 5, 1954, Pekovich delivered to Coughlin a
letter in his own handwriting which read as follows:

“This will confirm my understanding with you
that if you take care of the bookkeeping and other
necessary things in connection with the D.M.E.A,
Admiralty Alaska matter I will give you in com-
pensation therefor or cause to be given you 4,000
(four thousand) shares of the Admiralty Alaska
Gold Mining Co. stock.”

Appeliant and appellee are in general agreement that the
“understanding” referred to in the Pekovich letter was a

694 |

“contract” or “agreement” entered into between Coughlin
and Pekovich.

Coughlin began to perform the duties of Secretary-Treas-
urer of Corporation in February of 1954 and continued to
so act until his death on September 22, 1955. At the time
he and Pekovich made this “agreement” (February, 1954)
the financial position of Corporation was such that it did
not have sufficient cash to pay the customary salary of
$75.00 per month to the new Secretary-Treasurer. How-
ever, in May of that same year, its cash position improved,
and Coughlin, at that time drew as a salary for himself an
amount equal to $75.00 per month for each of the months
he had held the position of Secretary-Treasurer. He there-
after continued to draw a salary of $75.00 per month for
the remainder of his term in office. The block of corporate
stock mentioned in the above noted Pekovich letter was
never delivered to or demanded by Coughlin, nor did
Pekovich ever tell Coughlin or any one else that he (Peko-
vich) would not deliver the stock.

It is appellee’s contention (and was apparently the view
of the court below) that the “understanding” claimed to be
evidenced by the Pekovich letter of February 5, 1954, was
in fact a “contract” which obligated appellant Pekovich to
deliver over to Coughlin the block of 4,000 shares of stock
of Corporation in addition to the salary of $75.00 per month
which Coughlin was to receive from Corporation; that the
said stock was to be given to Coughlin as an added induce-
ment to him to accept the position and perform the duties
of the office to which he had been appointed at the sugges-
tion of Pekovich,

Appellant here urges, as he contended below, that the
promised corporate stock was to be the full compensation to
Coughlin for the work of Secretary-Treasurer; that it was
a method of compensating Coughlin commensurate with the

| 695

then financial condition of the Corporation, He also con-
tends here that when Coughlin began drawing a cash salary
for himself he thereby “elected” to accept this cash salary
from Corporation in liew of taking and/or accepting the
4,000 shares of stock from Pekovich as his full compensa-
tion for services.

In support of this position, Pekovich presented in evi-
dence testimony showing that the customary salary for the
job, both before and after Coughlin’s term, was $75.00
per month; that during Coughlin’s term Corporation pro-
vided office space and clerical help which services had not
previously been provided under the “policy” of Corporation.
The only substantial evidence in support of the Pekovich
interpretation of the agreement with Coughlin is to be found
in the testimony of Pekovich in which he undertook to ex~
plain what this “agreement” really meant to the contracting
parties.

Arrayed against this interpretation are statements of a
number of witnesses who testified to conversations had with
the deceased Coughlin which would indicate that Coughlin
believed the Pekovich letter was given to evidence the exist-
ence of a previous agreement under which Pekovich would
deliver to him the shares of stock as an added incentive
to take on the duties of Corporation Secretary-Treasurer.*
Supplementing this evidence are certain items brought out
during the testimony of appellant’s witnesses tending to
show that Pekovich had never indicated in any way to
Coughlin that the “understanding” and/or “agreement”
between the men mentioned in the letter quoted above was
terminated by Coughlin when he started drawing a salary.

This testimony was admitted in evidence under the so-called dead-
man’s statute of Alaska which specifically allows such testimony
where one of the parties to an action by or against an executor ap-
pears in his own behalf. Alaska Compiled Laws Annotated § 58-6-1,
1949.

696 Le

The evidence also revealed that Pekovich was not only
the principal stockholder in Corporation but was also its
General Manager, a relationship that gave him a vital stake
in its welfare. It seems clear that the trial judge was
persuaded that Pekovich was familiar with the general
course of corporate business affairs, including Coughlin’s
exact relations to the Corporation at and during the time
and times here pertinent.

Further, it was indicated in the evidence that though the
work in the position of Secretary-Treasurer has increased
substantially from the standpoint of accounting since the
demise of Coughlin, that from the standpoint of necessary
correspondence the position has had a great decrease in the
amount of time necessary to properly fulfill the duties since
the time that Coughlin was occupying that office.

Y | The problem before this Court is one of inter-
pretation and construction of the terms of a contract, and
as such is a question of law to be determined by the court.
Republic Pictures Corp. v. Rogers, 9 Cir., 213 F.2d 662,
665. The letter of February 5, 1954 is ambiguous on its
face. It is equally susceptible to the interpretation placed
upon it by either appellant or appellee. The trial judge was
faced with the duty of determining just what “under-
standing” had been reached between Pekovich and Coughlin
sometime shortly before February 5, 1954, since both parties
were relying on the letter bearing that date as evidence of
some sort of binding agreement. It is obvious that the
judge had to construe the meaning of this vague letter by
recourse to the facts developed in the evidence,”

2 Appellant was restrained in bis appraisal of the litigation when
in his brief he advises us that “this case presents a peculiar situa-
tion.” The trial judge stated that “the matter of this whole thing
here was handled in a careless, slipshod manner.”

a 697

The trial court seems to have reached the conclusion
that Pekovich’s acts prior to Coughlin’s death indicated that
he (Pekovich) placed the same meaning on the “under-
standing” as had Coughilin, and the evidence was sufficient
to support that view. This being the case, the “under-
standing,” i. e., the contract between Pekovich and Coughlin
is enforcible as interpreted by the parties themselves even
though it is ambiguous on its face. Restatement of Con-
tracts § 235(e); Williston on Contracts, Rev.Ed. § 623;
Pacific Portland Cement Co. v. Food Machinery & Chemical
Corp., 9 Cir., 178 F.2d 541, 554.

HE The only evidence which runs counter to such a
construction is the testimony of Pekovich himself. It is
hornbook law that the weight to be given the testimony of
witnesses must be determined by the trial judge. He had
the opportunity to view the demeanor of the witnesses in
this case, and obviously he did not believe Pekovich when he
testified that his “understanding” was that the stock he was
to give Coughlin was to be full compensation for Coughlin
and to be in lieu of any cash salary.

HE The obscurities in this record afford no sound
reason for disagreeing with the conclusion reached by the
trial judge as to just what “understanding” was reached
between Pekovich and Coughlin as to the compensation for
Coughlin’s services. We conclude that the findings of fact
and conclusions of law of the trial court as to the construc-
tion of the contract in controversy find support in the evi-
dence.

The decree awards $450.00 to appellee as an attorney’s
fee. Award of this sum is not supported in view of the
court’s conclusion of law that $340.00 is a reasonable attor-
ney’s fee. The decree appealed from is therefore modified
to allow an attorney’s fee of $340.00. As so modified, the
decree is affirmed.

698 a

Alexandria SPRACHER, Plaintiff, v. George James
SPRACHER and O. Kraft and Son, a corporation,
Defendants.

No. K-18236,

District Court, Alaska. Third Division, Anchorage.
Sept. 29, 1958.

oS

700

Russell E. Arnett, Anchorage, for plaintiff.

James K. Tallman, of Bell, Sanders & Tallman, Anchor-
age, for defendant George James Spracher.

John S. Mansuy, Jr., Kodiak, for defendant O. Kraft &
Son.

McCARREY, District Judge.

This matter was tried by the Court without a jury and
was a simple action for divorce based upon the grounds of
incompatibility, coupled with a prayer, under a separate
cause of action, that a conveyance made by the defendant
Spracher to one O. Kraft & Sons, Inc., an Alaskan corpo-
ration, be set aside for the reason that the conveyance was
made by the defendant Spracher to prevent plaintiff from
collecting any support or maintenance from the defendant
Spracher.

The defendant, George James Spracher, had been served
through his counsel and, although notified for trial, neither

Le 701

this defendant nor his counsel appeared. The defendants,
O. Kraft & Sons, Inc., appeared and was represented by
counsel.

In a pre-trial conference, it was stipulated as follows:

(1) That the defendant Spracher acquired title to Lot
5 in Block 33, East Addition to the Townsite of Kodiak,
Alaska, U. S. Survey 2538B, by warranty deed, on Febru-
ary 19, 1952, and that he mortgaged the same to the Bank
of Kodiak on January 30, 1953, some eight months prior
to his marriage to the plaintiff, which was on August 24,
1953.

(2) That the defendant Spracher conveyed said proper-
ty to the defendant O. Kraft & Sons, Inc., after the mar-
riage of the parties, and that the plaintiff did not join in said
conveyance.

(3) That the consideration for the Spracher to O. Kraft
& Sons, Inc., conveyance was the discharge of the defend-
ant Spracher’s obligation or liens against the real property
in the amount of $2,277.51, and the further payment to
him of $1,722.49 for a total of $4,000.

(4) That the sole issue to be determined by the Court
between the plaintiff and the defendant O. Kraft & Sons,
Inc., was whether the property here in question was “the
family home or homestead” of the parties within the mean-
ing of 22-3-1, A.C.L.A.1949, as amended by Chapter 145,
$.L.A.1953. The Court feels it can not finalize the action
in this matter unless all rights before it are adjudicated
regardless of the stipulation of the parties. I am of the
opinion that the attorneys by their stipulation do not fully
realize the effect of a homestead exemption in Alaska.

Chapter 145, S.L.A.1953 provides as follows:

“22-3-1. Manner of executing conveyances:
Joinder of husband and wife. A conveyance of
lands, or of any estate or interest therein, may be

702 Lt

made by deed, signed and sealed by the person
from whom the estate or interest is intended to
pass, * * *; Provided, however, that in all
deeds or conveyances of the family home or home-
stead made by a married man, or a married
woman, the husband and wife shall join in such
deeds or conveyances, subject to the following
provisions :

“Said requirement that a spouse of a married
person join in any deed or conveyance of the fam-
ily home or homestead shall not create a proprie-
tary right, title or interest in such spouse not
otherwise vested in such spouse.

“Failure of such spouse to join in such deed or
conveyance shall not affect the validity thereof,
unless such spouse appears on the title, and such
deed or conveyance shall be sufficient in law to
convey the legal title to the premises therein de-
scribed from the grantor to the grantee; Pro-
vided, however, such deed or conveyance is other-
wise sufficient; and Provided further that no suit
has been filed in a court of record in the judicial
division in which the real estate affected by such
deed or conveyance is located within one year
from the date of recording of said deed or con-
veyance by the spouse failing to join in such deed
or conveyance to have said deed or conveyance
set aside, altered, * * *.”

The plaintiff timely filed suit under this law.

The plaintiff testified that she began living with the de-
fendant Spracher upon the property here in question, in
1951, which was prior to the time that the defendant
Spracher obtained title to the same, supra; also, that the
property was mortgaged by the defendant Spracher, with-

| 703

out her signature, to the Bank of Kodiak, prior to her mar-
tiage to the defendant, supra. The evidence further dis-
closes that over the years the defendant Spracher became
indebted to various concerns and people in the City of
Kodiak for living expenses, plus costs of repairs on the
premises, and that he executed a mortgage in order to pay
off these creditors. The plaintiff testified that on April 6,
1956, the defendant Spracher became enraged with her and
virtually hand-wrecked the home of the parties, at which
time she left the premises because of its uninhabitable con-
dition, and that she did not return to live therein until some-
time in February 1957, which was at the behest of
her husband. However, trouble immediately ensued and
she was forced to leave the premises again.

The plaintiff admitted she knew there was a mortgage
upon the premises prior to the time that she was married to
the defendant, and she thought the mortgage was in the
sum of $2,000.

HE No evidence was adduced by the plaintiff to show
that she made any effort to liquidate the mortgage, despite
defendant Spracher’s pleading in answer to the complaint
that the conveyance complained of to O. Kraft & Sons, Inc.,
had been made to prevent foreclosure. Plaintiff did testify
that she acquired a cabin sometime prior to her moving
in and living with defendant Spracher, which she said she
later sold for about $200, which sum was used in part to
retire the mortgage to that extent. The plaintiff failed com-
pletely to prove that the defendant O. Kraft & Sons, Inc.,
was a party to the fraud complained of in her complaint.
Thus, based upon the record, the defendant O. Kraft &
Sons, Inc., appears to be a bona fide purchaser for value of
the property. Although plaintiff is in a court of equity
seeking equitable relief, she has not tendered or offered to

704 be

tender to the purchaser, O. Kraft & Sons, Inc., any reim-
bursement.

HI There is strong authority to the effect that a bona
fide purchaser for value without actual or constructive no-
tice of a homestead may take free of any adverse claim
based upon such an interest. Willingham v. Slade, 1900,
112 Ga. 418, 37 S.E. 737; Lunt v. Neeley, 1885, 67 Iowa
97, 24 N.W. 739; National Bond & Mortgage Corp. v. Da-
vis, Tex.Com.App., 1933, 60 S.W.2d 429; 2 Tiffany Real
Property #578.

HI find that the plaintiff is entitled to an absolute
divorce from the defendant and entitled to $75.00 per
month for the support of the minor child Edward James
Spracher. I further find that real property; namely, Lot
5 in Block 33, East Addition to the Townsite of Kodiak,
Alaska, U.S.Survey 2538B, was the “* * * family
home or homestead * * *” within the meaning of
22~-3-1, A.C.L,A.1949, as amended by Chapter 145, S.L.A.
1953,

However, Sec. 22-3-1, A.C.L.A.1949, as amended
by Chapter 145, S.L.A.1953 states: “ * * * require-
ment that a spouse or a married person join in any deed
or conveyance of the family home or homestead shall not
create a proprietary right, title or interest in such spouse not
otherwise vested in such spouse. (Emphasis supplied.)

“Failure of such spouse to join in such deed or convey-
ance shall not affect the validity thereof, unless such spouse
appears on the title, and such deed or conveyance shall be
sufficient in law to convey the legal title to the premises
therein described from the grantor to the grantee; * *”,
Plaintiff has proved no proprietary right, title or interest
in said property in question. Thus under the above statute
the plaintiff’s homestead interest is what is commonly re-

| 705

ferred to as a “worrying asset” during coverture. Thus
plaintiff has a right to occupy the homestead during
coverture regardless of O. Kraft & Sons, Inc., title to the
property, but plaintiff obtains no right, title or interest in
the property by this occupancy.

HI There is a conflict of authority as to. whether a
wife’s homestead rights in her husband’s property survive
a divorce. The general rule is that they do not: 40 Corp.
Jur.Sec. Homesteads Sec. 160C (1944). Under the word-
ing of Sec. 22-3-1, A.C.L.A.1949, supra, where no right,
title or interest is created in a spouse other than what was
vested in that spouse already, the better rule, and the rule
which I believe should be followed in this jurisdiction, is
that such rights do not survive the divorce.

HEM The homestead right was created to protect the
family from total loss of its abode due to judgments and
executions on unsatisfied debts. It was not enacted, as it
clearly states, to create any new right, title or interest other
than the right of occupancy in property used as a home-
stead by members of the family. If the Legislature chooses
to expand the homestead rights of a spouse, in order to
protect their rights under factual situations similar to these,
I am of the opinion that it would be in keeping with good
social policy. Therefor I hold that a homestead interest
under Sec. 22-3-1, A.C.L.A.1949 (supra) is not a restric-
tion on alienation and only as it regards rights to occu-
pancy will it be treated as such.

Counsel for the plaintiff is hereby directed to submit
Findings of Fact and Conclusions of Law for the Court’s-
signature.

706 be

165 F.Supp. 785

Dorothy NEAL et al, Plaintiff, v. MATANUSKA VALLEY
LINES, Inc., a corporation, et al., Defendant.
No, A-8214,

District Court, Alaska, Third Division, Anchorage.
Sept. 30, 1958,

707

Wendell P. Kay, Anchorage, Alaska, for plaintiff.
Davis, Hughes & Thorsness and Hellenthal & Cottis,
Anchorage, Alaska, for defendants.

708 be

McCARREY, District Judge.

This segment of the case comes before this court upon
remand of the Ninth Circuit Court of Appeals, 255 F.2d
632, 637, to determine:

“* * %* whether there was or was not an in-
crease in the damages allowed to plaintiff Dorothy
Neal by the jury beyond those to which she was
entitled in view of the testimony at the trial.”

The court then goes on to state, in connection with this
remand, as follows:

“We believe that the local trial judge is in a
position to review the record and take such other
evidence and testimony as he may choose and, if
he find said damages to be excessive, to require
plaintiff Dorothy Neal to file a remittitur to allow
her to retain the award to an adequate but not
excessive amount, and, in the event she will
not file such a remittitur if given the opportunity
to do so by the trial court, then to grant a new
trial. The judgment in the other respects is af-
firmed. The judgment as it pertains to Dorothy
Neal is affirmed subject to the conditions above
announced.”

A review of this entire case is not necessary for a de-
termination of the matter pending before this court. Suf-
fice it to say that the plaintiff Dorothy Neal, and others,
were seriously injured in a bus accident on the 20th day
of November 1951, and that initially the Circuit Court of
Appeals disapproved an instruction given by the original
trial court concerning the stibject of damages. The jury
awarded the plaintiff Dorothy Neal the sum of $75,000.
The instruction in question pertained to the plaintiff
Dorothy Neal only. However, the court, in its opinion,
found that:

ee 709

“Tt is to be noted, however, that the question of

liability is not affected.”
The court then went on to state:

“Tn view of the fact, however, that Dorothy
Neal is entitled to retain her judgment on the basis
of the proven liability of Matanuska, and since it
is obvious that she was entitled to a considerable
amount of damages which have already been
awarded, this Court is of the opinion that a new
trial should not be ordered and that the judgment
should not be reversed.”

In conformance with the direction of the higher court,
this court has considered the entire original record which
related to all elements of damages suffered and sustained
by the plaintiff Dorothy Neal but has not considered any
other aspect of the original record for the reason that the
appellate court sustained the trial court in every other as-
pect of the case. (Supra.) I have also heard the testi-
mony of the plaintiff and other witnesses, including ex-
perts called by the respective parties.

Now to the sole question as to whether the award of
damages by the jury in the original trial was excessive.
(Supra.)

At the time of the accident, the plaintiff was a female
person 24 years of age and was some two to three months
pregnant. The evidence discloses that the plaintiff enjoyed
reasonably good health and, at the time of the accident,
was employed as a housekeeper in one of the local hotels
where she had been employed for a period of months earn-
ing approximately $50 per week.

The plaintiff sustained serious and numerous injuries at
the time of the accident, among which are the following:

1. Broken femur of the left leg.

710 De

2. An aseptic necrosis of the head of the left
femur in which the head of the left femur had
absorbed rather than held so that she was left with
an incomplete left. hip joint.

3. A broken ulna on the right arm.

4. Multiple contusions, abrasions and lacera-
tions.

As a result of the accident, the plaintiff Dorothy Neal
was in the hospital from November 20, 1951, until March
26, 1952, being bedridden a good portion of the time. On
the date she left the hospital, she was on crutches which
she had to use thereafter for approximately eight months.
While in the hospital, she was seized with an attack of
sugar diabetes. After her release from the hospital, a
child was born on June 20, 1952, which had to be sent to
her relatives in the States to be cared for since the plain-
tiff was stricken with tuberculosis necessitating her going
to a sanatorium on August 17, 1952, where she remained
until August 28, 1954.

The plaintiff now walks with the aid of a cane; is unable
to dance at all; must wear flat heels; suffers daily painful
attacks caused, in part, by the prosthetic device which she
has in her hip, and by a healed break in the same leg. She
is unable to pursue the type of employment she was equip-
ped to perform before the accident, and, in fact, is unable
to do her own ironing and is otherwise limited in the pur-
suit of her household activities as the result of this acci-
dent.

The experts testified that the pain and suffering will con-
tinue indefinitely, and they can only give an informed guess
as to the extent of the future pain and suffering. However,
until Mrs. Neal has a hip-fusion operation, the pain in her
hip will continue. The fusion of the hip is not recommend-
ed until the prosthetic device completely fails, which fact

| TL

is a reasonable certainty based upon limited statistics in this
field.

HEME ‘Shough the matter before the court is now gov-
erned by the Federal Rules of Civil Procedure, rule 59, 28
US.C.A., rather than Sec. 55-7-132, A.C.L.A.1949,
Morgan Electric Co., Inc. v. Neill, 9 Cir., 1952, 13 Alaska
717, 198 F.2d 119, the standard set in a case under Sec.
55-7-132 still governs. Linge’s Adm’r v. Alaska Tread-
well Co., 1906, 3 Alaska 9, holds that if the verdict is ex-
cessive, the power to disturb it rests in the discretion of the
court, but this discretion does not supplant that of the jury.
It is also a well-established general principle of law through-
out the courts of the United States that a court will not set
aside the finding of a jury unless their verdict is clearly
excessive and not supported in fact in the record. If there
is sufficient evidence to support the jury’s verdict, the dis-
cretion of the court ceases. Garrison v. United States, 4
Cir., 1932, 62 F.2d 41; Berry v. United States, 1941, 312
U.S. 450, 61 S.Ct. 637, 85 L.Ed. 945.

HBB There are two courses open to the court if the
jury’s verdict in the instant case is excessive:

1. To apply remittitur. This can only be done with
the consent of the prevailing party, in this case Dorothy
Neal. Cyclopedia of Federal Procedure, Sec. 32.07.

2. To grant a motion for new trial if the prevailing
party does not agree to remittitur.

However, before the court reaches either of the above
questions, it must decide no matter what test the jury used,
if the verdict was excessive.

The case of Eller v. Crowell, Mo.1951, 238 S.W.2d
310, 316 sets the basic standard for excessive damages in
a personal injury case,

712 a

“In determining this question it is usual to con-
sider the nature and extent of appellant’s injuries
and losses, his diminished earning capacity, give
some consideration to economic conditions and
compare the award with awards approved in com-
parable cases. There is no exact formula.”

Two cases with similar fact situations, where the ver-
dict was not excessive, are as follows:

1. Hilleary v. Earle Restaurant, Inc., D.C.1952, 109
F.Supp. 829. In this case, a woman of 85, in extremely
good health, fell on defendant’s steps and broke her hip.
The defendant was adjudged negligent and plaintiff was
awarded $22,000. Plaintiff suffered continual dull pain
and swelling of the leg three years after the injury at age
88, and experts testified it would get no better. Where
plaintiff could do light housework before her injury, now
she could do no work at all.

2. Lewis v. W. T. Grant Co., D.C.1955, 129 F.Supp.
805. In this case, a 63 year old woman suffered an ex-
tremely painful hip fracture which, however, left her with
no permanent disability. The jury awarded plaintiff
$17,172, and the court said it was in no way excessive.

In both the above cases, the verdicts upheld were greater
than the instant verdict, taking into account comparative
injury and life expectancy.

HH In the present case, it was shown that Mrs. Neal
was earning approximately $2,500 per year at the date of
her injury when she was 24 years of age. The New York
Life Insurance Co., using the Standard Commissioners
Mortality Table (1941), will issue an annuity to pay $2,500
for life to a woman age 25 for the present cost of $76,765.
Thus, on loss of income alone, as Mrs. Neal is precluded
by permanent injury from doing her former work (and,

a 713

in fact, from doing all but the lightest of household tasks),
her recovery could be sustained. However, as Mrs. Neal
also suffered costly medical bills, aggravated pulmonary
tuberculosis, deprivation of the right to see her first-born
child for three years, and continuous pain and suffering to
date, with the prognosis of its continuance indefinitely, the
verdict can in no way be deemed excessive on the facts.

I, therefore, find that the damages awarded by the jury
‘were not excessive.

Counsel for the plaintiff is hereby directed to submit find-
ings of fact, conclusions of law, and a judgment in con-
formance with this finding, within ten days, for the court’s

signature.
260 F.2d 415
Obie Wilson STAPLETON, Appellant, v. UNITED STATES of

America, Appellee,
No. 15477.

United States Court of Appeals, Ninth Circuit.
Oct. 22, 1958,

= } 1
BR

ct
io

Rl
Le

17

Floyd O. Davidson, Ketchikan, Alaska, for appellant.

Rober G. Conner, U. S. Atty., Edward R. Reifsteck, C.
Donald O’Connor, Asst. U. S. Attys., Juneau, Alaska, for
appellee. :

Before HEALY and CHAMBERS, Circuit Judges, and
SOLOMON, District Judge.

SOLOMON, District Judge.
This is an appeal from a judgment of conviction and
sentence imposed by the District Court in Alaska. The ap-

718 P|

pellant Stapleton was tried on an indictment containing
three counts alleging theft of certain tools and equipment;
three counts alleging receipt of this property, knowing it
to have been stolen; and three counts alleging embezzle-
ment of the same property. After pleading not guilty to
all counts, Stapleton was found guilty on the three theft
counts and was acquitted on the counts alleging receipt of
stolen property. The three embezzlement counts were dis-
missed during the trial at the Government’s request.

The Government’s case showed that Stapleton, an em-
ployee of the Fish and Wildlife Service, was engaged in
protecting streams from unauthorized fishing, and in this
work he operated from his own boat in the vicinity of a
mica mine. He frequently visited the camp of this mine.
In July, 1955, the camp was left unguarded for a brief peri-
od. Shortly thereafter, it was discovered that certain tools
and equipment were missing. They were subsequently
found in Stapleton’s boat. Stapleton’s defense consisted
primarily of his own testimony, uncorroborated, that he had
purchased the items from two Canadian Indians,

On this appeal, Stapleton alleges six errors.

I.

At the trial, Stapleton moved to dismiss the three theft
counts on the ground that they failed to allege the commis-
sion of any crime. The trial judge denied the motion, and
Stapleton urges this ruling as reversible error.

The indictment charged:

Count One

(Vio. Sec. 65-541 A.C.L.A.1949)
“That on or about the 22nd day of July, 1955,
at the B.C. Mica Mines, Ltd., at Sitkland Island
in the Territory of Alaska and within the jurisdic-

| 719

tion of this Court, Obie Wilson Stapleton did
wilfully take and carry away an electric generat-
ing plant, said plant being of a value in excess of
$100.00, and being then and there the property of
the B.C. Mica Mines, Ltd., with intent to deprive
the said owner thereof.”

The other two counts were identical except that in thessec-
ond count the property taken was a gas chain saw, and in
the third count a box of tools. Stapleton contends that all
of these counts are defective because they failed to allege
an essential element of the offense of larceny; namely, that
the taking was without the consent of the owner of the
property.

HEBD The general rules for determining the sufficiency
of an indictment are well settled. Indictments are now im-
mune from the technical challenges permitted at common
law. They will be held sufficient if as a practical matter
they state the elements of the offense clearly enough to en-
able the defense to prepare for trial and to plead a judgment
in bar of a future prosecution for the same offense. Preju-
dice to the defendant is a controlling consideration. See
Hagner v. United States, 1932, 285 U.S. 427, 52 S.Ct. 417,
76 L.Ed. 861; Hopper v. United States, 9 Cir., 1944, 142
F.2d 181; Elwert v. United States, 9 Cir., 1956, 231 F.2d
928.

HM Appellant suffered no prejudice in the preparation
of his defense. Counsel for Stapleton, with commendable
frankness, conceded that his preparation for trial had not
been hindered by the omission of which he complains. Fur-
thermore, the Government submitted evidence tending to
prove lack of consent by the owners of the property, and
the jury was instructed that such lack of consent was an
essential element of the offense. The indictment is ade-

720 De

quate to protect Stapleton from any further prosecution for
the same offenses charged here. We conclude that the al-
leged defect in the indictment did not prejudice Stapleton.

HH However, Stapleton contends that, regardless of
prejudice, an indictment which fails to allege all of the ele-
ments of the offense precisely and expressly cannot support
a finding of guilty. This argument disregards the nature
and function of the indictment under modern concepts of
criminal procedure. An indictment is not required to set
out all those elements of the offense which must be found by
the jury before they may find the accused guilty. It is suffi-
cient “that the necessary facts appear in any form, or by
fair construction can be found within the terms of the in-
dictment.” Hagner v. United States, supra, 285 U.S. at
page 433, 52 S.Ct. at page 420, 76 L.Ed. 861. In other
words, all the essential elements need not be stated directly
if they are necessarily implied. Hopper v. United States,
supra, 142 F.2d at page 184. Nor need the indictment ex-
clude all exceptional circumstances which might serve to
take the alleged acts out of the criminal category. Rose v.
United States, 9 Cir., 1945, 149 F.2d 755. The indictment
here alleged a wilful taking with intent permanently to de-
prive the owner of the property. We think that lack of
consent is implicit in this language. The indictment is not
a model pleading, but in our opinion it is legally sufficient
to charge the appellant with the crime of grand larceny,

I.

HE The Court instructed the jury:

“The essential elements of grand larceny, as
charged in Counts I, II and III of the Indictment
are: (1) That at the time and place fixed in
Counts I, II and III of the Indictment, the defend-
ant did take, steal and carry away the property al-

*

| 721

leged to have been taken in said Counts of the In-
dictment, or some part thereof, with the intent on
the part of such defendant to convert the same to
his own use and to permanently deprive the own-
ers thereof without the consent of the said own-
ers,

“(2) That the defendant took said property
wilfully, unlawfully and feloniously, that is to
say, intentionally and without legal justification.”

Appellant admits that this instruction is a correct state-
ment of the law, but he contends that the court erred in
giving it because “The trial court is without power to
change or amend an indictment with respect to matters of
substance.”

We have already found that the indictment is sufficient.
This instruction, which clearly and succinctly sets forth
all of the essential elements of the crime of grand larceny
which the Government was required to establish, strength-
ens our firm belief that the appellant was not and could not
have been prejudiced by the alleged omissions of the indict-
ment.

The court did not err in giving this instruction.

Il.

Stapleton complains that he was prejudiced by the ad-
mission of testimony and documents which tended to show
that he had sworn falsely in applying for employment with
the United States Fish and Wildlife Service. Such false
swearing is a crime, but appellant was not so charged. The
Government adduced this testimony to rebut testimony
concerning Stapleton’s general good character and the man-
ner in which he performed his Government job. Stapleton
admitted on cross-examination that he had been convicted

[|

722 EE

of two offenses, one involving a misdemeanor and the other
involving a violation of the narcotics laws.

HE The defense introduced as a character witness Fred
Headlee, the man who had hired Stapleton for one sum-
mer’s work with the Fish and Wildlife Service. Headlee
testified that good character traits, particularly honesty, are
important in obtaining employment with that Service. He
also stated that he had not heard anything against Staple-
ton, although he was not familiar with Stapleton’s general
reputation. On cross-examination, Headlee testified that
he was unaware of Stapleton’s narcotic conviction when he
hired him and that had he known of such conviction it
would have made a difference in his decision to hire Staple-
ton, Timely defense objections were made to these ques-
tions which elicited this information, and we believe they
were properly overruled. The defense had attempted to
use Stapleton’s government employment as proof of his
good character, and the Government was entitled to show in
rebuttal that his full record was not known to those who
hired him.

HH The Government subsequently recalled Stapleton,
and asked him whether when seeking employment, he had
told John Wendler, another Fish and Wildlife Service offi-
cial, that he had no prior criminal record. Stapleton’s coun-
sel objected to this question, but before the judge could rule,
Stapleton denied that he had made such a statement. He
was subsequently contradicted by Wendler. Regardless of
the possible merits of the defense objection, Stapleton’s
voluntary answer precluded him from asserting the objec-
tion at the appellate level.

HE The last effort of the Government to prove that
Stapleton obtained government employment by false state-
ments consisted of the introduction in evidence of Staple-

| 723

ton’s application for employment. When recalled for cross-
examination, and when asked about having orally denied
prior convictions, Stapleton volunteered the information
that in his application for employment he had admitted his
criminal record. An objection to further questions about
this document was overruled. However, when the docu-
ment was offered in evidence, it was admitted without ob-
jection.

We think the defense failed properly to preserve this
question for our consideration. The defense objected to a
question put to Stapleton on cross-examination. Although
the objection was overruled and Stapleton was required to
answer the question, his answer was self-serving and re-
sulted in no prejudice to him. The defense did not object
to the documentary proof offered by the Government to
contradict Stapleton. This document not only showed that
Stapleton had made false statements in his employment
application, but that he also falsely testified at the trial.

At the trial stage, appellant did not request that any of
the testimony about which he now complains be stricken or
that its consideration by the jury be limited in any way.
Nor did he assert any objection which might be broad
enough to permit us to consider his present contentions.

Iv.

HI Several Government witnesses testified as to state-
ments made by Stapleton concerning the circumstances un-
der which he acquired possession of the stolen property.
They also testified concerning offers by him to make “deals”
in connection with the prosecution of this case. The trial
judge did not instruct the jury that the oral admissions of
a party are to be viewed with caution. Such an instruction
is required in all proper cases by Title 58, Chapter 5, Sec-
tion 1, A.C.L.A.1949, Although appellant neither request-

724 EE

ed such an instruction nor objected to its omission, he now
asks that we reverse his conviction on the ground of plain
error under Rule 52(b), Federal Rules of Criminal Pro-
cedure, 18 U.S.C.A.

HE We have carefully examined the entire record,
and we are satisfied that no plain error was committed.
Unlike Stephenson v. United States, 9 Cir. 1954, 211 F.2d
702, this is not a case in which the appellant was connected
to the offense charged solely by his own admissions. Here
there were many other circumstances which tended to con-
nect Stapleton with the theft of the property. The camp
was in a secluded area; he was in that area at the time of
the theft; he had knowledge of the property on the float;
he made frequent calls at the float; he had the stolen goods
in his possession about a month after the theft; and he
later sold these goods. Under the circumstances of this
case, we see no reason to relieve appellant of the conse-
quences of his failure to raise this point at the trial stage
by considering it now under the claim of plain error. Her-
zog v. United States, 9 Cir., 1956, on rehearing, 235 F.2d
664, 666-667; original opinion, 9 Cir., 1955, 226 F.2d
561.

v.

HHI Stapleton claims that a portion of the court’s in-
struction on inferring theft from possession of stolen prop-
erty is erroneous on the ground that it shifted to him the
burden of proving his innocence. We do not agree with
appellant’s interpretation of this instruction, In addition,
no stich objection was made at the trial stage, and therefore
may not be considered on appeal, Rule 30, Federal Rules
of Criminal Procedure. We are satisfied that it does not
constitute plain error so as to permit us to consider it under

| 725

Rule 52(b), Federal Rules of Criminal Procedure. Her-
zog v, United States, supra.

VI.

HE The court instructed the jury on Stapleton’s credi-
bility as a witness as follows:

“The law makes the defendant in a criminal ac-
tion a competent witness: In determining his
credibility, you have a right to take into consider-
ation the fact that he is the defendant and is inter-
ested in the outcome of this trial. This interest is
of a character possessed by no other witness and
is therefore a matter which may seriously affect
the weight and credit to be given his testimony,
and one which should be seriously considered by
you in determining what weight you will give his
testimony considered in connection with all the
other evidence.”

Stapleton contends that this instruction is erroneous and
constitutes reversible error because it tended to destroy the
presumption of innocence to which he was entitled and
because it unduly singled out his testimony and interest.

There is no merit in either contention.

This instruction follows closely the instruction approved
and the rules laid down in Reagan v. United States, 157
US. 301, 310, 15 S.Ct. 610, 39 L.Ed. 709. In numerous
cases, instructions directing attention to the interest of a
defendant in the outcome of the trial have been approved.
E. g. Papadakis v. United States, 9 Cir, 1953, 208 F.2d
945, 954. There was no disparagement of appellant’s tes-
timony or intimation that he was not entitled to the pre-
sumption of innocence or to the other presumptions avail-
able to defendants in criminal cases.

726 Le

Neither was appellant singled out as the only witness
whose testimony deserves scrutiny.
The court admonished the jury:

“You are to consider these instructions as a
whole. It is impossible to cover the entire case
with a single instruction, and therefore, you
should not single out one particular instruction
and consider it by itself.”

This is precisely what appellant seeks to do here.

The court gave another instruction—Instruction No, 22
—which appellant admits is “entirely adequate” and “is
broad in scope and deals with the effect and value of evi-
dence and the credibility of all witnesses, including the de-
fendant”.

We agree with this characterization. The instruction
complained of, particularly when considered with Instruc-
tion No. 22, was fair and proper.

HM We have carefully examined the whole record,
and we are convinced that the appellant had a fair trial and
that he was proved guilty beyond a reasonable doubt.

The judgment of conviction is therefore affirmed.

LE

ADMIRALTY-ALASKA GOLD MINING CO., a corporation, and
Sayre & Toso, Inc. a corporation, Plaintiffs, v. Henry
BENSON, as Commissioner of Labor, J. Gerald Williams, as
Attorney General, and Ross P. Duncan, as Insurance Com-
missioner, comprising The Alaska Industrial Board, and
Myrtle Gobin, for herself and as Guardian of the Minor
Children of Sam W. Elsom, Deceased, Defendants.

No. 7785-A.

United States District Court, Alaska. First Division, Juneau.
Oct. 22, 1958,

728

Robert J. Annis, of Robertson, Monagle & Eastaugh,
Juneau, Alaska, for plaintiffs.

i

Le 72!

Robert Boochever, of Faulkner, Banfield & Boochever,
Juneau, Alaska, for defendant Myrtle Gobin,

KELLY, District Judge.

This matter comes before this Court on an appeal by
the Admiralty-Alaska Gold Mining Co., a corporation, and
Sayre & Toso, Inc., a corporation, its insurance carrier,
(hereafter “employer”) from an award of the Alaska In-
dustrial Board in which the Board held that in addition
to the surviving spouse receiving the statutory death award
in the sum of $9,000 under subsection A 2 of Sec, 43-3-1
A.C.L.A.1949, as amended, the petitioner herein, the for-
mer wife, divorced and remarried, of the deceased em-
ployee, as guardian of the children born of the marriage
of the petitioner and said deceased employee, was awarded.
under subsection A 5 of said act as amended, the sum of
$9,000 as guardian of said minor children, with an addi-
tional $1,800 for each child, (the total amount under sub-
section A 5 not to exceed $15,000) so that the total award
resulting from employee’s death would amount to $24,000.

The facts as found by the Board are substantially as
follows:

Sam W. Elsom was killed as the result of an accidental
injury arising out of and in the course of his employment
with the employer at Funter, Alaska, on April 18, 1957.

The deceased employee had formerly been married to
Myrtle Elsom, now Myrtle Elsom Gobin, and as issue of
said marriage there were five minor children at the time
of the employee’s death, all under the age of 18 years.

The mother of these children, the petitioner herein, had
obtained a divorce from the deceased employee in Mon-
tana on December 15, 1949. This decree of divorce did
not provide for payments to be made to the plaintiff wife
therein (the petitioner here) for support and mainte-

730 P|

nance of the children, whose custody was awarded to their
mother. Thereafter, the deceased employee herein did
contribute small amounts to the support of the children
of approximately ten payments of $25 to $35 each over
the period since the divorce (about eight years), and also
from time to time sent clothing and made promises to the
children and to their mother that he would make regular
support payments at such time as he obtained steady em-
ployment.

The deceased employee, after his divorce as aforesaid,
married Thelma Elsom, whose claim for a widow’s award
of $9,000 under subsection A 2 of the act as amended
was not contested. The former wife, Myrtle Elsom, the
petitioner herein, after her divorce from the deceased
employee, married James Gobin. The children were not
adopted by Mr. Gobin or anyone else. It is apparent that
Gobin has supported these children since this marriage.

Myrtle Elsom Gobin was duly appointed guardian of the
five minor children, and filed the application for adjustment
of claim, seeking compensation for the minor children
under the provisions of the Alaska Workmen’s Compensa-
tion Act.

After stating the facts as aforesaid, the Board then
sets forth that the claim presents questions involving the
construction of subsections A 2, A 3, and A 5 and of Sec.
38 of the Act.

Subsection A 2 provides for an award to the surviving
spouse of a deceased employee, and there is no argument
or dispute regarding the fact that the surviving widow of
the deceased employee should receive the $9,000 under this
section,

The Board then points out that subsection A 3 specifies:

“that ‘when such married employee’ had chil-
dren under 18 years, his widow shall be entitled

Le 73)

to receive the sum of $1,800 for each such child,
but not to exceed the sum of $6,000 for such de-
pendent children.” (Emphasis supplied.)
and the Board further points out that subsection A 5 of the
act specifies:
“that where the deceased employee was a widower
but left one or more minor orphan children, the
sum of $9,000 shall be paid to a guardian ap-
pointed for said children with an additional sum
of $1,800 for each additional orphan child, the to-
tal amount not to exceed $15,000.00.” (Emphasis
supplied.)

The Board then further points out that Section 43-3-
38 A.C.L.A.1949, defines a “child” or “children” as one
under the age of 18 years depending upon the injured em-
ployee for support, and defines a “widower” as including
one who is divorced and is not required by decree of di-
vorce to contribute to the support of his former wife.
(Emphasis supplied.)

The Board further found that the minor children named.
were actually and legally dependent upon the deceased em-
ployee for support, following which, the Board made this
finding:

“We also hold that this finding, actual depend-
ency, as opposed to legal dependency, is not re-
quired under the Alaska definition and that since
the natural father had a continuing obligation to
support his minor children, the children were ‘de-
pendent’ regardless of actual dependency. See
Juneau Lumber Company v. Alaska Industrial
Board, [D.C.] 15 Alaska 101, 122 F.Supp. 663.”

The Board found further that the deceased employee
was a “widower” under the provisions of the Alaska act;
and goes on to say:

732 be

“Had that term not been intended to encompass
one who remarried after his divorce, the legislature
would certainly have included such a limitation
on its definition.” .

Section 43-3-38 of the Act, giving the definitions of
terms, defines, for the purposes of the Act, “child” or “chil-
dren” to mean those under the age of 18 years depending
upon the injured employee for support.

The term “widower” shall include one who is divorced
and is not required by the decree of divorce to contribute
to the support of his former wife.

The term “married” shall include one who is divorced
but is required by the decree of divorce to contribute to the
support of his former wife.

There is no dispute as to whether the surviving spouse,
the second wife of the deceased, is entitled to death bene-
fits under subsection A 2 of the act. Although the de-
ceased was married at the time of his death, the Board
also found subsection A 5 where the deceased dies a widow-
er, to be applicable. The decision of the Board in allow-
ing the claimant an award under this latter section was
clearly erroneous.

Apparently the Board was of the opinion that Sec-
tion 43-3-38 in defining a “widower” as one who is di-
vorced but under no obligation by decree of divorce to
support his former wife, provided an absolute test of ap-
plicability of subsection A 5, without reference to other
provisions of the act or the remarriage of the deceased.
It is the opinion of this Court that Section 38 merely en-
larges the scope of the term “widower” so as to give the
same effect to divorce, tmaccompanied by a decree of sup-
port, as death of a spouse might have during the lifetime
of the deceased under provisions of the act. A “widower”
is generally to be regarded as one who has lost his wife

Se 733

through death, and has not remarried. Canal National
Bank of Portland v. Bailey, 1947, 142 Me. 314, 51 A.2d
482; Calvert v. Fisher, Tex.Civ.App.1953, 259 S.W.2d
944, By statutory definition, a “widower” may also in-
clude one who is divorced. In accordance with the above
decisions, the legislature must have intended the term
“widower” to embrace the ordinary lexicographical mean-
ing of the word with the exception of Section 38, There
is no reason to suspect that the legislature contemplated
that remarriage of a divorced employee would have a dif-
ferent consequence than remarriage of an employee who
has lost his wife through death, in determining whether
the employee was a widower at the time of death. The
provisions under which the claimant seeks death benefits
must be given a time-of-death construction, and since the
deceased had remarried and was survived by his second
wife, he was not a widower within the meaning of the act
and subsection A 5 is not applicable.

Additional support for this view is found in the con-
sistent reference to the maximum sum of $15,000 payable
under provisions of the act as death benefits. It is obvious
that the legislature contemplated this amount as the maxi-
mum payable in all events in total, and not merely the
maximum payable under each of the several separate pro-
visions. The various sections providing for death bene-
fits are not mutually exclusive of one another so as to be
given independent consideration and construction. There
is no indication that the statutory scheme envisions mul-
tiple payments by the employer. In considering the above
limitation, it would appear that the legislature had in-
tended subsection A 5 to be applicable only in the circum-
stance where subsection A 2 failed to apply by reason of
the fact that no spouse survived the deceased. Otherwise,
the limitation on the amount payable as death benefits

734 be

could be grossly exceeded. It is also to be noted that
amounts payable under the act where the deceased died
a widower are similar to those payable where the deceased
was married at the time of death. This similarity strongly
stiggests that amounts payable under subsection A 5 were
payable only as an alternative where subsection A 2 did
not apply. For the above reasons, it cannot be assumed
that the legislature intended that the deceased could be
both married and a widower at the time of death so as to
justify payments under subsection A 5 to the claimant as
guardian of the deceased’s children in her custody.

HE We now come to consideration of whether bene-
fits may be awarded the claimant under subsection A 3 for
the children in her custody. The claimant relies on the
case of Juneau Lumber Company yv. Alaska Industrial
Board, D.C.1954, 15 Alaska 101, 122 F.Supp. 663 for
the proposition that children of a deceased workman are
conclusively presumed to be dependent upon him for sup-
port, and, that the claimant is therefore entitled to benefits
for their welfare. However, the Court is not inclined to
view that case as controlling the facts as found here. In
that case, a widow of a deceased workman claimed bene-
fits for a foster child of the deceased living with the de-
ceased and claimant at the time of death. In the instant
case the children of the deceased were neither living with
the deceased nor his widow at death, but had been in the
custody of the former wife of the deceased since 1949. It
is the former wife who seeks compensation under the above
provision.

Subsection A 3 provides that:

“In those cases where such married employee
had a child or [minor] children under the age of
eighteen (18) years at the time of his death, his
widow shall be entitled to receive in addition to

735

the sum above specified, the sum of One Thousand
Eight Hundred Dollars ($1,800.00) for each child
under the age of eighteen (18) years, or child
wholly dependent on his or her parents for sup-
port by reason of mental or physical incompe-
tency * * *”

The classes of children provided for by the above quoted
subsection are children under eighteen years, or incompe-
tent children dependent upon the deceased regardless of
age. However, it does not appear that the legislature had
in mind that benefits were to be paid without qualification.
It is reasonable to assume that children under eighteen
are incapable of providing for their own support. What
is suggested by the above subsection is to relieve the widow
of a deceased workman of the burden of providing for sup-
port for children under eighteen years living with the par-
ents in the ordinary circumstance where the father dies,
shifting the burden of the children’s support to their moth-
er, The fact that any benefits payable under this subsec-
tion were payable only to the widow gives added signifi-
cance to the view that it was this situation evisioned by
the legislature in providing benefits. Yet, where children
have lived with their mother, the former wife of the de-
ceased, independently of the deceased for a number of
years prior to his death, and where the mother has main-
tained their support apart from any contribution of the
deceased, the subsection does not contemplate benefits for
the claimant who is providing for the children. The de-
ceased employee was not required to support these children
by the divorce decree. The mother’s second husband, the
children’s stepfather, had apparently assumed the responsi-
bility of support of the children. Had the legislature in-
tended these benefits be awarded the claimant for the chil-
dren under the existing facts, it would have provided for

736 EE

a method of payment other than that presently confined
to the widow. In no sense of the term can the claimant
be considered a widow, and it does not appear that any
additional burden has been incurred by the claimant as a
result of the death of the deceased. As the subsection now
provides, benefits for the children are governed by cir-
cumstances which exist at death. Since the children were
neither in the custody of the deceased nor his widow, no
benefits should be allowed.

At most, benefits would be allowed the claimant in the
situation found here only if the children were wholly de-
pendent upon the deceased for support. By decree of di-
vorce, custody of the children was granted to the claimant,
but the deceased was not required by the decree to contrib-
ute to their support. The facts found by the Board indi-
cate that the deceased had made approximately ten pay-
ments of $25 or $35 for the care of the children over an
eight or nine year period. It is obvious that these contri-
butions made by the deceased were wholly inadequate for
support purposes. Even when coupled with occasional
gifts of clothing, it would not appear that in any sense of
the term could the children be said to be dependent upon
the deceased for support. Drouin v. Ellis C. Snodgrass
Co., 1941, 138 Me. 145, 23 A.2d 631; Brooks v. Bethle-
hem Steel Co., 1952, 199 Md. 29, 85 A.2d 471. It must
also be pointed out that the legal right of children to sup-
port from their parents is a separate and distinct right than
that arising to claimants by virtue of the Workmen’s Com-
pensation Act. The use of the term “wholly dependent”
within the act suggests something other than mere legal
or moral responsibility as grounds that would entitle the
claimant to benefits. Drouin v. Ellis C. Snodgrass Co., su-
pra; Brooks v. Bethlehem Steel Co., supra. There is some
evidence that the deceased made promises to the claimant

Se 737

that he would contribute to the support of the children.
Yet, as gathered from the relatively few payments made
by the deceased, and the number of intervening years be-
tween the divorce and death of the deceased, the promises
were quite illusory. And it does not appear that any re-
liance whatsoever was made by the claimant on these
promises, :

The Court is not unmindful of the continued responsi-
bility placed on the claimant and her present husband for
the support of the children. However, the Court is not
prepared to lend itself to the task of supplementing legisla-
tion by judicial opinion so as to entitle the claimant to bene-
fits, where the extent of the rights of the parties involved
are set forth in the statute. For the reasons stated, the
claimant is entitled to no benefits under subsections A 3
and A 5.

This matter will be remanded to the Board for a redeter-
mination of the award consistent with this opinion. Prop-
er order will be presented,

a

738 Le

166 F.Supp. 423

In the Matter of ALASKA PLYWOOD CORPORATION, Debtor.
No. BK-213.

District Court, Alaska. First Division, Juneau.
Oct. 23, 1958,

3
BS

+

Robert Boochever (of Fatlkner, Banfield & Boochever),
Juneau, Alaska, for debtor.

M. E. Monagle (of Robertson, Monagle & Eastaugh),
Juneau, Alaska, for Secretary of the Treasury (mortga-
gee).

Thomas B. Stewart, Juneau, Alaska, for trustee and
substitute trustee.

Howard D. Stabler, Juneau, Alaska, for preferred share-
holders,

KELLY, District Judge.

Pursuant to the Act of July 1, 1898, c. 541, 30
Stat. 545, as amended by the Act of June 22, 1938, c. 575,
52 Stat. 900, 11 U.S.C.A. § 642, the court is vested with
discretionary powers so as to permit reasonable allow-
ances to trustees and to stockholders’ committees for serv-
ices rendered in corporate reorganization proceedings ap-
proved by the court. In re Moorhead Knitting Co., D.C.
1944, 58 F.Supp. 93; In re Hydraulic Machinery, Inc.,
D.C.1949, 87 F.Supp. 666; In re International Power Se-
curities Corp., D.C.1953, 112 F.Supp. 46. And, any de-
termination as to whether such allowances should be made
is not dependent on a successful adoption or final approval
of a plan of reorganization, Smith vy. Central Trust Co.,
4 Cir., 1944, 139 F.2d 733; In re Vernan Mfg. Co., D.C.
1950, 92 F.Supp. 861. In the event that reorganization
does not take effect and the insolvent corporation is adjudi-
cated bankrupt, the court may properly determine the meth-
od of payment of any reorganization expenses under Sec-
tion 246 of the Bankruptcy Act (11 U.S.C.A. § 646). In

71

view of the fact that reorganization was unsuccessful, and
in accordance with applicable provisions, the Court permit-
ted allowances only in the sum of $14,911.69.

It appears that the salable assets of the Alaska Plywood
Corporation are encumbered by a mortgage held by the
now defunct Reconstruction Finance Corporation, The
Secretary of the Treasury has succeeded to the rights of
the mortgagee. There is much doubt as to whether a sale
of the secured assets of the corporation would yield suffi-
cient funds to satisfy the mortgage completely. The stock-
holders’ committee and trustee request that the allowances
permitted them be given priority against the mortgaged
assets,’so as to satisfy their claims prior to that of the
secured creditor. The final plan of reorganization was
approved by all parties concerned, with the exception of
the corporate debtor.

HI Generally, reorganization expenses and allowances
are to be accorded priority over other claims of creditors.
State of Missouri v. Earhart, 8 Cir., 1940, 111 F.2d 992,
certiorari denied 1940, 311 U.S. 676, 61 S.Ct. 43, 85 L.Ed.
435. Under earliest decisions of the bankruptcy laws, it
was well settled that general administrative expenses in
corporate reorganization proceedings were not chargeable
as a first lien against proceeds from the sale of assets cov-
ered by a mortgage to the detriment of the mortgagee. If
the lienholder did not initiate the proceedings, or otherwise
consent to the attempted reorganization, priority would
be allowed him to the full extent of his lien. In re Torchia,
3 Cir., 1911, 188 F. 207; In re Louisville Storage Co.,
D.C.1936, 21 F.Supp. 897, affirmed Louisville Title Mort-
gage Co. v. Louisville Storage Co., 6 Cir., 1938, 93 F.2d
1008; In re Forty-One Thirty-Six Wilcox Bldg. Corp., 7
Cir., 1938, 100 F.2d 588. In the absence of the secured
creditor’s consent to the reorganization proceedings, it was

742 be

only where expenses incurred by the trustee directly pre-
served the mortgaged property that such expenses would
be afforded priority as a first lien against secured assets.
Miners Sav. Bank of Pittston, Pa. v. Joyce, 3 Cir., 1938,
97 F.2d 973.

Subsequent to the above decisions, the law as to meth-
od of payment of reorganization expenses upon adjudica-
tion of bankruptcy of a debtor corporation was set forth
in the Act of June 22, 1938, c. 575, § 1, 52 Stat. 901, 11
US.C.A. § 646. This section provides :

“Upon the dismissal of a proceeding under

this chapter, or the entry of an order adjudging

the debtor a bankrupt, the judge may allow rea-

sonable compensation for services rendered and re-

imbursement for proper costs and expenses incur-

red in such proceedings prior to such dismissal or

order of adjudication by any persons entitled there-

to, as provided in this chapter, and shall make pro-

vision for the payment thereof, and for the pay-

ment of all proper costs and expenses incurred

by officers in such proceedings.”
Although this provision to a degree would apparently liber-
alize the method of payment of allowances, a number of
courts adopted the former rulings as interpretation of this
enactment. In re Centralia Refining Co., D.C.1940, 35
F.Supp. 599; In re Freeport Standard Dairy Corpora-
tion, 7 Cir., 1941, 124 F.2d 783; John Hancock Mutual
Life Ins. Co. v. Casey, 1 Cir., 1943, 139 F.2d 207.

However, other courts have taken a different view of
this enactment, and have held that the court is vested with
discretionary powers under this section in allowing lien
priority. In the decision of In re Riddlesburg Mining Co.,
3 Cir., 1955, 224 F.2d 834, 837, the court expressed the
belief that:

DL)

“Section 246 of the Bankruptcy Act, 11 U.S.
CA. § 646, gives the judge authority to allow
reasonable compensation for administrative ex-
penses incurred during a reorganization attempt.
There is no limitation with regard to secured or
unsecured assets. Whether, and to what degree,
the mortgage creditors should run a risk of loss
in order to make possible a reorganization was
wholly within the discretion of the district judge,
who properly exercised his discretion.”

In the above case, a mortgagee vigorously objected to any
efforts of reorganization, and reorganization did not prove
to be successful. Free assets were insufficient to satisfy
the expenses of reorganization proceedings. Although the
element of consent of the mortgagee to the proceedings
was lacking, the court charged the mortgaged property
with expenses of reorganization. However, it does not
appear that the mortgagee was benefited by any expenses
incurred during the reorganization proceedings.

This same view was adopted in First Western Savings
and Loan Ass’n v. Anderson, 9 Cir., 1958, 252 F.2d 544.
Yet, in this case, trustee’s allowances were denied lien
priority against secured assets where free assets were in-
sufficient to satisfy the allowances. It is to be noted that
no definite plan of reorganization had been proposed, nor
does it appear that the mortgagee consented in any way
to the proceedings. However, expenses incurred preserv-
ing the secured assets, such as items of repair and police
protection, were allowed as a first lien, since the expenses
tended to retain the value of the assets intact for the mort-
gagee and benefited him to some extent. This decision
is not conclusive as to the circumstances found here, since
the court did recognize the discretion of the judge in cases
such as this in fixing lien priority, and further recognized

744 |

that the exercise of such discretion is dependent on the
facts of each case.

The court, in First Western Savings and Loan Ass’n v.
Anderson, supra, emphasized that the discretion of the
judge in allowing lien priority is not absolute. In exercis-
ing judicial discretion, the court pointed out that the judge
must consider the substantive rights of the secured cred-
itor, and should not impair his rights in the secured assets
of the insolvent corporation unless it can be shown that
the equities lie with those to whom the allowances have
been permitted. If in every instance secured assets could
be charged indiscriminately with expenses of reorganiza-
tion upon adjudication of bankruptcy, the value of secured
transactions would be greatly diminished. To determine
where the “equities” lie, the court set forth certain enumer-
ated factors to guide the judge in exercising his judgment
as to whether lien priority should be permitted for allow-
ances, Among these factors to be considered are consent
of the secured creditor to the reorganization proceedings,
the expectation of consummating a plan of reorganiza-
tion, benefits bestowed on the secured creditor, the co-
operation of the secured creditor in efforts to formulate a
plan of reorganization, the interests sought to be protected
through the proceedings, and the diligence of the trustees
in their endeavor to provide an acceptable plan for all par-
ties concerned. It is now to be considered whether these
standards shall permit lien priority for the awarded allow-
ance.

At the time the petition was filed for reorganization of
the Alaska Plywood Corporation, there was every reason
to expect that reorganization of the insolvent corporation
could be achieved. The initial plan of reorganization was
reasonable on its face, and provided in detail the neces-
sary steps to reestablish the corporation to a condition where

DY

it could again resume its operations... For this reason the
Court approved the plan of reorganization. A successful
dealer in plywood materials had been contacted, and it was
expected the dealer would be of great value as an adequate
source of distribution for company sales. The plan met
with general approval of stockholders and creditors, with
the exception of the secured creditor, who objected to a
distributor arrangement based on an exclusive sales con-
tract.

Although the proceedings were instigated primarily in
consideration of stockholders and the debtor corporation,
the plan of reorganization called for gradual reduction
of the mortgage debt, and duly considered the interests of
the secured creditor. It was in deference to the secured
creditor that alternative plans were proposed. With this
in mind, the Court feels that the efforts of the trustee and
committee to formulate an acceptable plan to all parties
interested in the proceedings were commendable.

Hn presenting its claims to the Court, the mortgagee
expressed the desire not to waive any interest in the se-
cured assets. The rejection of the initial plan of reorgan-
ization by the mortgagee was unquestionably made in good
faith. However, at no time during the formulation of the
various plans did the mortgagee expressly object to the
teorganization proceedings. On the contrary, the mort-
gagee expressed an attitude of considerable interest in any
proposed plans, and to this extent encouraged the trustee
and the stockholders’ committee in expending their time
and services in formulating the plans of reorganization.
The mortgagee’s only objection upon the adjudication of
bankruptcy of the insolvent corporation was directed to the
amount of the allowances to be awarded for their services
in the proceedings, and in so doing impliedly consented
to the proceedings as such. See In re Torchia, supra.

746 |

Although no benefits were bestowed on the mortgagee, it
appears that the secured creditor would have benefited by
the proceedings had they proved successful, in that the
secured assets were apparently insufficient to satisfy the
mortgage. The proceedings were finally terminated when
the trustee felt that the reorganization lacked sufficient in-
vestment appeal. In virtue of these considerations, the
Court feels that the facts of this case are within the per-
missible limits of the decision of First Western Savings
and Loan Ass’n y. Anderson, supra, and that lien priority
should be allowed the trustees and committee for the al-
lowances awarded them.

The foregoing shall constitute findings of fact and con-
clusions of law unless the parties desire additional findings
or conclusions.

Order in accordance herewith may be submitted.

Le TAT

22 FR.D. 475

Byron A, GILLAM, Plaintiff, v. A. SHYMAN, Inc, formerly
Alaska Distributors Co., Inc. a corporation; Al Shyman,
personally; K & L Distributors, Inc, a Washington cor-
poration; Joe Hart; Russ Eddy; Irving Zeigman; An-
heuser-Busch, Inc.; Manischewitz Wine Co., a corporation;
Mogen David Wine Corporation, a corporation; Hiram
Walker & Sons, Inc. a corporation; Canada Dry Ginger
Ale, Inc., a corporation; The Calvert Distilling Co.; The
Old Taylor Distilling Co.; The American Distilling Co.,
Inc.; Olympia Brewing Co., Inc.; Fleischmann Distilling
Corporation; Joseph Schlitz Brewing Co.; Stanley Levine;
Irving Levine; John Kearney; and Jack Guard, Defend-
ants.

No, A-14484,

District Court, Alaska. Third Division, Anchorage.
Oct. 29, 1958.

Bell, Sanders & Tallman, Anchorage, Alaska, for plain-
tiff.

Plummer & Delaney, Anchorage, Alaska, and Bogle,
Bogle & Gates, Seattle, Wash., for defendants A. Shyman,
Inc., Joe Hart and Russ Eddy.

| 749

Wayne D. Calderwood, Anchorage, Alaska, for defend-
ant Al Shyman as an individual.

Wendell P. Kay, Anchorage, Alaska, for defendant Jack
Guard.

S. J. Buckalew, Jr., Anchorage, Alaska, for defendant
John Kearney.

Peter J. Kalamarides, Anchorage, Alaska, and Franco &
Bensussen, Seattle, Wash., for defendants K & L Distribu-
tors, Inc., and Irving Zeigman.

McCARREY, District Judge.

This is an anti-trust suit and comes before the court upon
a motion made by the plaintiff to require the defendant Al
Shyman, Inc., to pay costs and to strike the answer of de-
fendant Al Shyman, Inc., for the reason that one Al Shy~
man failed to appear at the noticed time for the taking of
the deposition. Although named as one of the defendants
in the case, the defendant Al Shyman was not served; how-
ever, counsel did appear for him in the early stages of the
case, but the Court is now advised by other counsel that
counsel appearing for Al Shyman earlier was not author-
ized to do so.

As will be noted from the caption of this case, the de-
fendants are numerous. Among them appears the corpo-
ration A. Shyman, Inc., which has been served through its
agents in Alaska, Hart and Eddy, and which has formally
appeared,

Many motions have been filed by the various litigants
and the file is voluminous, as is generally the circumstance
in this type of case,

Counsel for the plaintiff caused the following notice of
taking to be served upon certain attorneys of record and a
subpoena duces tecum upon the wife of the defendant Al
Shyman, at Seattle, Washington, The notice served was
as follows:

750 Le

“In the District Court for the District of Alaska,
Third Division

“Byron A. Gillam,

Plaintiff,
vs. No, A-14,484
A. Shyman, Inc, formerly ee Nee
Alaska Distributors Co. Inc. Notice to Take Deposition

.@ corporation, et al.,

Defendants.
“To
The above named Defendants, and S. J. Buckalew, Jr., Wendell
P. Kay, Plummer & Delaney and Peter Kalamarides, their at-
torneys of record:

“Please Take Notice that at 10:00 o’clock A. M. on the 12th
day of September, 1958, in Room 1621 of the Northern Life Tower
building at Seattle, Washington, the plaintiff, Byron A. Gillam, will
take the deposition of Al Shyman upon oral examination pursuant to
the Federal Rules of Civil Procedure, before Joe Wheeling, reporter
and Notary Public. The oral examination will continue from day to
day until completed.

“Bell, Sanders & Tallman
Attorneys for plaintiff
“By: /s/ Bailey B. Bell

Bailey B. Bell”

The subpoena duces tecum which was served was as fol-

lows:
“United States District Court
for the

Civil Action File No.

“Byron A, Gillam, Subpoena
vs. Duces Tecum
A. Shyman, Inc., formerly Alaska
Distributors Co., Inc., a corpora-
tion, et al.
“To

Al Shyman

“You Are Hereby Commanded to appear in Room 1621,. Northern
Life Tower, Seattle, Washington, District of , at

| WEST

Seattle in the city of ‘Washington, on the 12th day
of September, 1958, at 10:00 o’clock A.M. to testify on deposi-
tion in the above entitled

action, and you are to bring with you the documents and records de-
scribed in the hereto attached list.

“august 29, 1958.

“Bell, Sanders & Tallman Wm. A. Hilton ;
Attorney for Plaintiff Glerk
Box 1599, Anchorage, Alaska By /s/ Rosemary Rice
Address Deputy Clerk,
(Seal)

“Return on Service

“Received this subpoena at September 4th, 1958 on
and on 9/8/58 at 11:25 AM.

I served it on the within named by substitution by serving Mrs. Al

Shyman, his wife by delivering a copy to her and tendering to her
the fee for one day’s attendance and the mileage allowed by law.t
“Dated 9/8/58 » 1958. /s/ 3. Winkenwerder
By J. Winkenwerder

“Service Fees
Travel 1.00 §
Services 1.00

Total 2.00

“Subscribed and sworn to before me, a Notary Public this
ninth day of September, 1958.
“/s/ Muriel L, Penn
“Muriel Z. Penn
“Note:—Affidavit required only if service is made by a person other
than a United States Marshal or his Deputy.

“1. Fees and mileage need not be tenderd to the witness upon service

of a subpoena issued in behalf of the United States or an officer or
agency thereof. 28 USC 1825.”

“Documents and Records to Be Produced

“1, All of the following described items in your posses-
sion and custody, or in the possession and custody of A.

752 Le

Shyman, Inc., formerly Alaska Distributors, Inc., which
pertain in any way to the sale of liquor to any retail or
wholesale liquor dealer in the Territory of Alaska:
“General ledgers, journals, or daybooks, books of ac-
count of ledger accounts, bank statements, checkbooks or
check stubs and cancelled checks, cash books, cash register
tapes, balance sheets, profit and loss statements, inventories,
reports of audit, federal income tax returns, property tax
statements on Alaska property, license tax statements, liq-
uor tax statements, contracts, orders, invoices, shipping
documents, receipts, bills, debit or credit memoranda, inter-
office memoranda, file memoranda, documentary enclosures
referred to in any of the foregoing, and any other docu-
ments serving the functions of any of the above classes of
documents, whether customarily described as above or not.
“2, Originals or copies of any kind (including printed,

mimeographed, carbon, ditto, photostat, microfilm, etc.) of
letters, telegrams, cablegrams, notes and memoranda (in-
cluding memoranda of conversations by telephone or face
tc face) in either direction between the firm of A. Shyman,
Inc., formerly Alaska Distributors, Inc., or you personally,
and any of the following:

(a) Any governmental or public body or officer

having power to regulate liquor retailers.

(b) Any supplier or potential supplier of liquor;

(c) Any purchaser or potential purchaser of liq-

uor;

(d) Any defendant herein;

(e) Any employee or former employee of plain-

tiff or of any defendant;

(f) The Anchorage office of A. Shyman, Inc.,

formerly Alaska Distributors, Inc., from January

1, 1957 up to the 12th day of September, 1958;

| 153

concerning business transacted and business refused with
all persons, or corporations, in Alaska, as well as contro-
versies or disputes between the plaintiff and any of the de-
fendants, application by plaintiff for a liquor retail store
license in or about March of 1957 and up to the present
date, meetings of defendants in or after March, 1957, all
written or oral agreements among defendants in or after
March 1957,

“3, All records and correspondence concerning re-
straints caused by any of the defendants, of trade and com-
merce in the wholesale and retail sales of liquor or other
beverages in, or to be shipped or transferred to, Alaska; all
records and correspondence showing efforts of plaintiff to
buy any brand of liquor or beverage; all records and cor-
respondence concerning monopolies of commerce by any
of the defendants.

“4, All sound tapes, together with an instrument for
playing them back, which in any way pertain to the sale of
liquor to Byron A. Gillam d/b/a Kutrate Kid, or to the re-
fusal by any person or firm to sell to him.”

As the file discloses, the wife of the defendant Al Shy-
man, who was served with the subpoena for Al Shyman,
notified one of counsel for the defendant Al Shyman, Inc.,
that a subpoena for Mr, Shyman had been served on her.
Counsel for Mr. Shyman, who was then absent from the
City of Seattle, phoned Mr. Shyman that a subpoena duces
tecum for him had been served upon his wife and also ad-
vised the defendant not to obey the subpoena as counsel
was of the opinion that it was not proper.

In conformance with the subpoena duces tecum and no-
tice, the plaintiff’s counsel made a trip to Seattle in an at-
tempt to take Al Shyman’s deposition. He incurred ex-
penses in the sum of $549.86.

Lt

754 |

HE The plaintiff argues that the defendant, Al Shy-
man, is an officer or managing agent of the corporation.
However, a thorough check of the file in the case reveals
that the complaint lists him only as a distributing agent. It
is obvious that a distributing agent is not synonymous with
an officer or managing agent. Plaintiff further argues that
notice to take the deposition of Al Shyman was notice to
take the deposition of Al Shyman, Inc., through its presi-
dent, Al Shyman, This is contrary to the facts. Both the
notice and subpoena refer to defendant Al Shyman in his
individual and not his representative capacity.

HEME The only question to be decided is whether in a
notice of taking a deposition it is necessary to name a cor-
porate official in his official representative capacity in order
to invoke the penalties of Rule 37(d), Fed.R.Civ.P., 28
U.S.C.A., for failure to appear at the time and place desig-
nated in the notice for the taking of his deposition,

While an exhaustive search has been made to find a case
in point, I find that there is a paucity of authority on this
precise point. The only case on the subject is Harry Van
Tilzer Music Publishing Company v. Feist, D.C.1941, 2
F.R.D. 96, which indicates that a corporation agent must
be named in his official capacity to be properly noticed that
he will be deposed for the corporation. I find that since the
notice of taking as against Al Shyman was not in his offi-
cial representative capacity (See Rule 30(a), Fed.R.Civ.P.,
case law cited supra), it was not sufficient to render appro-
priate any remedies for failure to appear under the rules.
Rule 37(d), Fed.R.Civ.P., supra.

HE The subpoena duces tecum calling on Al Shyman
to appear personally as a witness fails because it was not
personally served and was not issued out of the federal
court having jurisdiction over his person. A careful read-
ing of the notice and the subpoena leads me to believe that

Le 155

plaintiff did not know in what capacity it was trying to de-
pose Shyman, as the list of articles to be brought to the
deposition hearing includes both corporate and personal
records of the defendant Shyman. Further indication that
plaintiff was confused in his procedure is found in the fact
that if Shyman was a party defendant, he did not need a
subpoena to force him to appear, only a notice. If Shyman
was to appear in his corporate capacity, he did not need a
subpoena either as the corporation was a qualified defend-
ant. The only need for a subpoena would be if plaintiff
considered Shyman a witness and as this seems to have been
the case, it was not properly served.

For the reasons stated, the motion to strike the answer
of the defendants and for costs is denied,

166 F.Supp. 739

Harold R. JONAS, Plaintiff, v. BANK OF KODIAK, an Alaska
Banking Corporation, and Fidelity-Phenix, a Foreign
Insurance Corp., Defendants.

No. K-12876,

District Court, Alaska. Third Division, Anchorage,
Oct, 24, 1958.

756

John S. Mansuy, Jr., Kodiak, Alaska, for plaintiff.

Davis, Hughes & Thorsness, Anchorage, Alaska, for
defendant Bank of Kodiak.

John C. Dunn, Anchorage, Alaska, for defendant Fidel-
ity-Phenix,

McCARREY, District Judge.

This action arose when the plaintiff filed a complaint
against the defendant Bank of Kodiak and defendant Fidel-
ity-Phenix Insurance Company in order to collect on a
policy of marine insurance.

The case was set for trial at Kodiak at the request of
the plaintiff who resided in Kodiak. Neither defendant
seriously objected to the trial setting in Kodiak.

This court takes judicial notice of the fact that
there is but one attorney in Kodiak. This necessitates travel
expenses for most attorneys whenever trials are held in
Kodiak, and, in this case, as the only attorney in Kodiak
was representing the plaintiff, the defendant, of necessity,
retained other counsel.

HME Defendant Fidelity-Phenix Insurance Company
prevailed at the trial and, in conformance with Rules 13

De 15T

and 25 of the Uniform Rules of the District Court for the
District of Alaska, it applied to the clerk of this court for
an order taxing its costs to the plaintiff. The costs were
listed as $500 attorney’s fee, $69.30 round-trip airline ticket
Anchorage to Kodiak, $5.60 cab and bus fares to and from
the airports in Anchorage and Kodiak, and $20 hotel room
and meals in Kodiak. The clerk disallowed all the items
as costs except the $500 attorney’s fee, citing two Alaska
‘cases as authority: Humphries v. Starns, 1949, 87 F.Supp.
374, 12 Alaska 535, and Roden v. Empire Printing Co.,
1955, 135 F.Supp. 665, 16 Alaska 28.

This court is of the opinion that the case of Humphries
v. Starns, 1949, 87 F.Supp. 374, 12 Alaska 535, is not in
point because the factual situation in that case does not
indicate whether the Kansas attorney actually performed
the claimed travel to Alaska. The court in the Humphries
case, supra, did not promulgate a dictum indicating whether
it would have awarded attorney travel expenses if the at-.
torney had proved that he actually had performed the travel
‘claimed. However, the court noted that there was no pro-
vision for attorney travel expenses under any Alaska stat-
cute. The Alaska statute governing attorney fees, Sec. 55-
11-55, A.C.L.A.1949, does not mention traveling expenses
for attorneys, and, as other taxable costs are specifically
set out in the statute, it would seem that the Territorial
Legislature meant to deny them.

The second case cited in the clerk’s decision, Roden v.
Empire Printing Co., 1955, 135 F.Supp. 665, 16 Alaska 28,
is in point. In that case plaintiff prevailed in a libel action
and was awarded ordinary and punitive damages. The
plaintiff then asked as costs a mileage allowance for his
attorneys who traveled from Anchorage to Ketchikan. The
court denied this allowance stating that there was no pro-
vision in the statutes or regulations pertaining to attorney

758 De

travel expenses as costs. This court feels that regardless
of the fact that there is but one attorney in Kodiak, if a
precedent has been set in the face of extenuating circum-
stances (punitive damages were recovered, supra), that
precedent should be followed. If attorneys feel that their
travel expenses should be taxable as costs, they should seek
redress from the Legislature.

167 F.Supp. 373

Clyde L. McGILLVRAY, Max McGillvray, James G. Barry and
John A. Nilles, copartners doing business under the firm
name and style of McGillvray Brothers, Plaintiffs, v. W.
D. GROSS, Defendant.

No. 3996-KA,

District Court, Alaska, First Division, Ketchikan,
Nov. 18, 1958.

wo
~

Gore & Jernberg, by R. L. Jernberg, Ketchikan, Alaska,
for plaintiffs.

W. C. Stump, of Stump & Bailey, Ketchikan, Alaska, for
defendant.

KELLY, District Judge.

This matter comes before the court on motion for sum-
mary judgment, supported by affidavits and various ex-
hibits introduced by the defendant. The significant facts,
admitted to by the parties and upon which judgment is.
claimed are relatively simple. It appears that the plaintiff
and the defendant entered into a construction contract in.
the early part of December of 1956, calling for substantial
completion of the defendant’s building by the plaintiff
contractor on June 15, 1957. An article in the contract
provided for $50 in liquidated damages for each day of
delay by the plaintiff in the completion of the contract,
the liquidated damages to be deducted from the contract.
price. In total, the date of completion exceeded the date-
of performance by 94 days. The contract further provided
that upon erection of the defendant’s building, an architect’s
certificate of approval was to be issued, and the balance
due the plaintiff under the contract was to be paid. In addi-

| 761

tion to the architect’s certificate, the architect submitted a
letter to the defendant whereby he stated that 48 of the
94 days’ delay in erection of the defendant’s building was
to be attributed directly to the fault of the plaintiff.

On November 18, 1957, the plaintiff received a letter
from the defendant in which he notified the plaintiff that
he expected to deduct the penalty of $50 per day from the
contract balance. The plaintiff was thus put on notice of
the defendant’s intent. On November 20, 1957, a copy of
the architect’s letter was forwarded by the defendant to
the plaintiff, together with a check in the sum of $13,540.92,
bearing the notation that it was the “balance of basic con-
tract less $50.00 per day for 48 days.” Any reasonable
person would know that the wording on the check was
clearly in accord with the letter of November 18, and in
full payment of the debt if accepted. The check was ac~
cepted and cashed by the plaintiff. Defendant requests
summary judgment alleging accord and satisfaction as a
bar to the plaintiff's action for the amount due under the
contract price in the sum of $2,400.

HBB it is a settled principle that to invoke the doc-
trine of accord and satisfaction, there must exist a genuine
and good faith dispute as to the amount alleged to be due
the creditor, so as to supply “‘sufficient consideration for an
agreement of accord on an unliquidated demand.” Texas
‘Water Supply Corp. v. Reconstruction Finance Corp., 5
Cir., 1953, 204 F.2d 190, 195. There can be no question
that the balance due under a contract is liquidated and is
not subject to the application of this doctrine. However,
due to the provision in this contract for a stipulated sum
of liquidated damages for each day of delay in completion
of the defendant’s building, and since that completion ex-
ceeded the specified date recited in the agreement between
the parties, a dispute does exist as to any amount that the

762 a

defendant is entitled to offset against the contract price for
the plaintiff’s delay, and the existence of such dispute is ad-
mitted by the parties. As the defendant correctly contends,
uncertainty in the amount of a setoff or counterclaim ren-
ders the contractual debt unliquidated. Stanley-Thompson
Liquor Co. v. Southern Colorado Mercantile Co., 1919, 65
Colo. 587, 178 P. 577, 4 A.L.R. 471.

Where acts and declarations accompanying pay-
ment of a disputed claim make it known to the creditor that
the check is tendered in full satisfaction of the debt, the
law implies that the check can be accepted only upon that
condition, and upon use and retention of the check by the
creditor the debtor is discharged from any further liability.
Deuches v. Grand Rapids Brass Co., 1927, 240 Mich. 266,
215 N.W. 392; Hynes v. Hynes, 1947, 28 Wash.2d 660,
184 P.2d 68; United States, for Use of Glickfeld v. Kren-
del, D.C.1955, 136 F.Supp. 276.

The court need only consider whether the letter
of November 18, 1957, together with the check and attached
letter forwarded to the plaintiff on November 20, 1957,
constitute sufficient legal notice to the creditor that the check
was tendered in full satisfaction of any claim against the
defendant. There is no doubt that this requisite has been
fulfilled. By the terms of the contract between the parties,
the balance owed the plaintiff was to be paid by the defend-
ant upon approval of the building by the architect, subject
to any deductions for liquidated damages. The ¢ontract
further specified the amount of damages for each day of
delay in the completion of the building. In notifying the
plaintiff of the defendant’s intention to apply the amount
of liquidated damages against the balance due under the
contract in accordance with the above terms of the agree-
ment, and in further indicating to the plaintiff through the
notation on the face of the check, together with the ac-

Le 7163

companying letter that the amount payable reflected this
disputed adjustment, the defendant gave ample notice to
the plaintiff that the check was tendered in full satisfaction
of any claim against the defendant. Upon the cashing of
the check by the plaintiff he consented to the terms of the
payment and is bound by them.

Accordingly, the proposed findings of fact, conclusions
of law and judgment will be signed and filed by the court

in ten days,

John L, O’DEY, Plaintiff, v. Ernest MATSON, Defendant.
Civil No, A-11,992

District Court for the District of Alaska, Third Division.
7 Nov. 24, 1958,

764 Le

Bell, Sanders & Tallman, Anchorage, Alaska, attorneys.
for plaintiff.

Davis, Hughes & Thorsness, Anchorage, Alaska, attor-
neys for defendants.

McCARREY, District Judge.

This action arose when the plaintiff filed a complaint
involving personal injuries against the defendant on March
9, 1956. The complaint was amended on April 17, 1956,
and the defendant answered and counterclaimed on May
14, 1956. The case was then set for trial by jury but be~
fore it came up on the calendar the plaintiff died, apparently
from natural causes. Plaintiff’s administratrix then made
a motion to be substituted as party plaintiff. The court
approved this substitution on October 17, 1958, whereupon.
the defendant made a motion that the cause be dismissed
on the grounds that personal injury actions in Alaska, if
not adjudicated, abate on the death of the injured party.

a 165

The question to be answered in this case is whether per-
sonal injury actions in Alaska abate on the death of the
injured party before final adjudication. The statutes in
point are as follows:

Section 61-7-1, A.C.L.A.1949, “Cause of action not
surviving. A cause of action arising out of an injury to the
person dies with the person of either party, except as pro-
vided in section 61-7-3,” (wrongful death) “but the pro-
visions of this chapter shall not be construed so as to abate
the action mentioned in section 55-3-13,” (death after
verdict) “or to defeat or prejudice the right of action given
by section 55-3-8.” (Parent or guardians right to sue
for the death of their child.)

“Chapter 102 An Act (S.B. 18). To provide for the sur-
vival of a cause of action arising out of personal injury
or death after the death of the tortfeasor by amending
Sec, 61-7-1 A.C.L.A.1949,

“Be it enacted by the Legislature of the Territory of
Alaska: .

“Section 1. That Sec. 61-7-1 A.C.L.A.1949 is hereby
amended to read as follows:

“Sec, 61-7-1. Survival Of Cause Of Action Arising Out
Of Injury To Person Or Death After Death Of Wrong-
doer. Causes of action arising out of personal injury or
death, caused by the wrongful act or negligence of another,
shall not abate upon the death of the wrongdoer, and the
injured person or the personal representatives of one meet-
ing death, as above stated, shall have a cause of action
against the executor, administrator or trustee of the estate
of the deceased wrongdoer.

“Approved March 24, 1949.”

“§ 61-7-2. Causes of action surviving: Executor’s or
administrator’s right of action, All other causes of action
by one person against another, whether arising on contract

766 |

or otherwise, survive to the personal representatives of
the former and against the personal representatives of the
latter. When the cause of action survives, as herein pro-
vided, the executors or administrators may maintain an
action thereon against the party against whom the cause
of action accrued, or, after his death, against his personal
representatives.”

|_| The plaintiff states that until the act of arch 24,
1949, supra, was passed there was no survival in cases of
this type. Plaintiff is correct on this point. See Ishmael
v. City Electric of Anchorage, Inc., D.C.Alaska 1950, 12
Alaska 721, 91 F.Supp. 688. Plaintiff next argues that the
act of March 24, 1949, supra, was substituted for the for-
mer act, Sec. 61-7-1, A.C.L.A.1949, supra, and as Sec.
61-7-2 now modifies this act rather than Sec. 61-7-1, A.C.
L.A.1949, supra, personal injury actions do not abate on
the death of the injured party. There is a fallacy in the
plaintiff's argument. The Journal of the Senate of Alaska
1949, page 191, shows that the act of March 24, 1949,
supra, was an amendment, not a substitute. Even if the
act of March 24, 1949, supra, were treated as a substitute,
to construe it to allow survival of personal injury actions
after the death of the injured party from non-connected
causes would make no sense, Clearly the act of March
24, 1949, supra, was meant to create an exception to the
common law rule expressed in Sec. 61-7~1, A.C.L.A.1949,
supra. If the Territorial Legislature meant the act of
March 24, 1949, supra, to confer more than its literal mean-
ing would imply, a simple all-inclusive survival statute
would have accomplished this. The intent of the legisla-
ture inferred from their act of March 24, 1949, supra, is
that actions no longer abate when the wrongdoer dies, but
do abate when the injured party succumbs from non-
causally connected matters. Sec. 61-7-2, A.C.L.A.1949,

De 767

supra, does not modify Sec. 61-7-1, A.C.L.A.1949, supra,
as regards personal injury actions which were singled out
by the legislature, in accordance with the common law, for
special attention, To apply Sec. 61-7~2, A.C.L.A.1949,
supra, to modify the act of March 24, 1949, supra, is mean-
ingless since the act of March 24, 1949, supra, is only an
exception, and this would be applying an exception to an
exception.

I can well sympathize with plaintiff’s predicament, but
I cannot rewrite the laws of Alaska where the legislative
intent appears to be clear.

HB A careful study of the laws of Oregon, from
whence the law in Alaska on this subject came, further
leads this court to the same conclusion: that claims for
relief for personal injury do not survive the death of the
injured party if the death is not causally connected with
the injuries in question. See Secs. 1-311, 8-901, 8-902,
8-904, and 9-701, Oregon Compiled Laws Annotated (1940,
1947) and the cases thereunder.

Dated at Anchorage, Alaska, this 24th dav of November
1958.

768

BR. B. BOWLBY, Plaintiff, v. Jesse J. DANIELS, Defendant.

No, A-11265

District Court, Alaska. Third Division, Anchorage.
Dee. 31, 1958.

769

James K. Tallman, of Bell, Sanders & Tallman, Anchor-
age, for plaintiff.

John C. Hughes, of Davis, Hughes & Thorsness, An-
chorage, for defendant.

770 |

McCARREY, District Judge.

The plaintiff filed an action for malicious prosecution
which arose when the defendant had the plaintiff arrested
for horse theft. The case was tried by a jury, and at the
close of the plaintiff's case, the defendant moved for a
directed verdict under Rule 50, Fed.R.Civ.P., 28 U.S.C.A.,
which was denied without prejudice. Thereafter, at the
conclusion of the case, the’defendant renewed the same
motion and the Court ordered a verdict directed in favor of
the defendant.

The plaintiff then filed a motion to reconsider the
directed verdict, which was denied, but since I am unable
to find any case law in Alaska on the subjects of malicious
prosecution or standards for directing a verdict, I feel that
a written opinion is appropriate.

Before recounting the evidence adduced at trial, the
standard for directing a verdict in Alaska should be deter-
mined. A research of this subject discloses that there are, at
present, two standards for directing a verdict. There
differences involve the jurisprudential problem of the proper
function of a jury in civil cases.

a. One favors substantial control by the trial
judge over the decisions of the jury.

b. The other holds to the theory that a trial
judge should only act as a guide for the jury in
its determinations.

The rule in the federal system used to be the one where-
in the judge held substantial control of the jury. See
Pennsylvania Railroad Co. v. Chamberlain, 1933, 288 U.S.
333, 53 S.Ct. 391, 77 L.Ed. 819. The standard used in
that case is best articulated by the authors, Field & Kaplan,
as noted in their book, “Materials for a Basic Course in
Civil Procedure,” p. 576 (1953).

De 771

“It is possible to conclude that the trial judge
may direct a verdict against the proponent upon all
the evidence in the case—evidence both favorable
and unfavorable to the proponent—if he deter-
mines although there is evidence of every fact
which the proponent must establish, that he would
be duty bound to set aside a verdict for the pro-
ponent should the jury return one for him because
it would be against the weight of the evidence.
This method of disposing of the question ob-
viously involves passing upon the credibility of
witnesses (sic) by the judge. It means that if
the judge concludes that viewing the whole of
the evidence no reasonable jury should find a
verdict for the proponent that then the jury
should not be permitted to consider the evidence.”

This standard is embodied in the substantive law of
Alaska.

“Sec. 55-9-12 A.C.L.A.1949. What consti-
tutes cause not sufficient to be submitted to jury.

A cause not sufficient to be submitted to the jury is

one where it appears that if the jury were to find

a verdict for the plaintiff upon any or all the

issues to be tried the court ought, if required,

to set it aside for want of evidence to support

it?
See also Shoup v. Marks, 9 Cir., 1904, 128 F. 32; Begenish
v. Gates, 1905, 2 Alaska 511.

The present standard I now find in the federal system
is set out in Wilkerson v. McCarthy, 1949, 336 U.S. 53,
69 S.Ct. 413, 93 L.Ed. 497. This standard is that of the
second school of thought, supra, and again this is well con-
sidered by the same authors in “Materials for a Basic
Course in Civil Procedure,” supra, as follows:

772 —

“The prevailing view, the other possible test or
standard, is that in passing on a motion for a
directed verdict the trial judge considers only the
evidence favorable to the proponent, completely
disregards all unfavorable evidence and deter-
mines whether a reasonable jury from the evi-
dence before them—viewed in its most favorable
light for the proponent—could find every fact
exists which must exist to sustain the proponent’s
case. In each test the judge must determine what
a reasonable jury can conclude. The first test in-
volves passing on credibility of witnesses; the
second does not.”

Which standard for directing a verdict is applicable to the
courts of Alaska? The answer is both. The federal stand-
ard, which is independent of the Fed.R.Civ.P. and which
is set out in the Wilkerson case, supra, is applicable in the
Alaska courts in cases where federal jurisdiction is exclu-
sive. Where the District Court of Alaska sits as a territorial
court in non-federal matters, the standard embodied in
Sec. 55-9-12, supra, is applicable.

I As the case in question was of a local nature in-
volving no federal question, the applicable standard for
directing a verdict is that found in Sec. 55-9-12, supra.
Under this standard the trial judge may take into account,
in deciding whether to direct a verdict, the credibility of
the witnesses produced.

HBB There are four elements to the tort of malicious
prosecution, which is a common law action in the Territory
of Alaska, since there are no statutes on this subject. They
are as follows:

a. A criminal proceeding instituted or contin-
ued by the defendant against the plaintiff.

Es 773

b. Termination of the proceeding in favor of
the accused.
c. Absence of probable cause for the pro-
ceeding.
d. “Malice,” or a primary purpose in insti-
tuting the proceeding other than that of bringing
an offender to justice. “Law of Torts,” Prosser,
p. 645 (1955).
~ The element this opinion is concerned with is (c), absence
of probable cause. The evidence adduced at trial on the
subject of probable cause was as follows:

Hi The plaintiff, R. B. Bowlby, testified that he entered
negotiations with the defendant, Daniels, to buy a used
truck on or about the Ist of July 1955. Daniels, at that
time, was owner and manager of the Consignment Lot
which dealt in such vehicles, After considerable nego-
tiating, the plaintiff agreed to buy a 1949 Dodge truck.
The agreement to purchase was to the effect that Bowlby
would transfer to Daniels a two year old buckskin horse
with certain tack and pay $100, for which Daniels would
transfer the truck to him. Bowlby testified he informed
Daniels that he wanted the truck to make a trip to Havre,
Montana, and that in reply to this statement Daniels said,
“The truck was good enough to go to Mexico.” Mrs.
Bowlby then made out a bill of sale for the horse and tack
and gave it, plus $100, to Daniels. Daniels in turn gave a
negotiable certificate of title for the truck to Bowlby.
Bowlby testified he was satisfied with the deal at this point
and that he drove off in his truck. Bowlby then testified that
a few days later he heard a rod knock in the truck. Hearing
this knock, he put the truck up on blocks and had his wife
remove the pan (his hand being in a cast from a previous
accident). Mrs. Bowlby, he testified found #2 crankshaft
bearing scored. Bowlby then testified that he cut paper

714 |

shims and put them in between the insert bearings and the
connecting rod before his wife tightened up the rod again.
With this done, he drove to Daniels’ lot and complained.
He testified that he asked Daniels to “rescind” the contract.
Daniels refused and Bowlby thereupon left the truck in
Daniels’ yard with the negotiable certificate of title and told
the defendant that he was going to get the horse. He found
the horse at Daniels’ place, and after talking to the young
daughter of the Defendant, he and his wife took the horse
and tack. Bowlby then testified that they stopped at a
police station on their way home and reported the incident.
Daniels came home shortly thereafter and found the horse
and tack gone and immediately went to the United States
Attorney and signed the complaint.

Bowlby called as his next witness a subsequent buyer of
the truck (12 days after Bowlby left it in Daniels’ yard).
This witness, on cross-examination, testified that the truck
ran well for the two years that he owned it and that he never
had any work done on it. Absolutely no evidence was sub-
mitted that Daniels had the truck fixed between the time ©
Bowlby abandoned it in his yard and the time Supple, the
new buyer, bought it.

Hi Thus, the question to be decided is: Could Daniels
reasonably believe that Bowlby, using only Bowlby’s and his
witnesses’ testimony, committed larceny.

Larceny is defined as follows:

“Sec. 65-541 ACLA 1949 Supp. Larceny of
money, etc.: Description in indictment. That if
any person shall steal any money, goods, or
chattels, or any Government note, or bank note,
promissory note, or bill of exchange, bond, or
other thing in action, or any book of accounts,
order, or certificate, concerning money or goods,
due or to become due or to be delivered, or any

to base a conviction.

deed or writing containing a conveyance of land
or any interest therein, or any bill of sale, or
writing containing a conveyance of goods or
chattels or any interest therein, or any other
valuable contract in force, or any receipt, release,
or defeasance, or any writ, process, or public
record, the property of another, such person shall
be deemed guilty of larceny, and upon conviction
thereof, if the property stolen shall exceed in value
one hundred dollars, shall be punished by im-
prisonment in the penitentiary not less than one
nor more than ten years; but if the property
stolen shall not exceed the value of one hundred
dollars, such person, upon conviction thereof,
shall be punished by imprisonment in the county
jail not less than one month nor more than one
year, or by fine not less than twenty-five nor more
than one hundred dollars; Provided, That in all
prosecutions for the larceny of money wherein an
exact description of the number and denomination
of the coin or other money taken cannot be given,
it shall be sufficient to allege that the same was
lawful money of the United States, or of any
other country or countries as the case may be,
and the value thereof in money of the United
States.”

“The wrongful taking of another’s property
without his consent and with no apparent purpose
of returning it is, in the absence of explanatory

715

A statute like the above requires felonious intent on which
Would it be reasonable for Daniels
to believe that Bowlby had a felonious intent when he took
the horse from Daniels? 32 Am.Jur. 137, p. 1048, defines
larceny as follows:

116 Lt

circumstances, evidence of an intent to deprive the
owner wholly of his property.”

Some might argue that Bowlby took the horse under a
mistake of fact, believing it to be his. However, from his
own testimony he knew Daniels had title to the horse as
he kept asking Daniels to “rescind” the contract. It is
unusual that he would use the legal term “rescind” in
connection with the contract, but it clearly points out the
fact that Bowlby knew he was taking Daniels’ property
when he took the horse.

Prosser, supra, at page 652, has this to say:

“Malicious prosecution is an action which runs
counter to obvious policies of the law in favor of
encouraging proceedings against those who are
apparently guilty, and letting finished litigation
remain undisturbed and unchallenged. It never
has been regarded with any favor by the courts,
and it is hedged with restrictions which make it
very difficult to maintain. Chief among these is
the requirement that the plaintiff must sustain the
burden of proof that the criminal proceeding was
initiated or continued by the defendant without
‘probable cause.’ This is true even though the de-
fendant is found to have acted with ‘malice,’
for an improper purpose, since it is the part of
a good citizen to bring about the prosecution of
those who are reasonably suspected of crime, and
the addition of a personal motive should not
result in liability for performing a public obliga~
tion. The existence of such ‘malice’ does not
create even an inference that probable cause was’
lacking.

“Probable cattse has been defined as ‘a reason-
able ground of suspicion, supported by circum-

stances sufficient to warrant an ordinarily prudent
man in believing the party is guilty of the offense.’
It resembles very closely the reasonable conduct
under the circumstances which is the fundamental
issue in negligence cases. It includes first of all a
belief in the possible guilt of the accused, since the
reasonable man will not prosecute another whom
he believes to be innocent; and this belief must
be one as to the fact of guilt, rather than as
to the possibility of securing a conviction. While
it need not approach absolute certainty as to the
facts, and it is not inconsistent with a considerable
element of doubt, it must be more than mere con-
jecture or unfounded suspicion. Beyond this, the
belief must be supported by appearances known to
the defendant at the time, and a prosecution in-
stituted without probable cause cannot be justified
by anything, short of guilt in fact, which comes to
the knowledge of the defendant later. The ap-
pearances must be such as to lead a reasonable man
to set the criminal proceeding in motion. The
defendant is not necessarily required to verify
his information, where it appears to be reliable;
but where a reasonable man would investigate
further before beginning the prosecution, he may
be liable for failure to do so. All such factors
as the reliability of the source, the availability of
further information and the difficulty of obtaining
it, the reputation of the accused and his oppor-
tunity to offer an explanation, and the apparent
necessity of prompt action, are to be considered
in determining whether it was reasonable to act
without seeking verification.

TT

778 Le

“Since probable cause is a matter of the ap-
pearances presented to the defendant, a mistake
of fact as to the conduct of the accused will of
course not prevent its existence. Some courts
have held that a mistake of law, as to whether
such conduct amounts to a criminal offense, or to
the particular offense charged, cannot protect
the instigator of prosecution, apparently on the
antique and questionable theory that he is re-
quired at his peril to know the law. For the most
part such cases have involved mistakes of law
so extreme that they appear unreasonable even for
a layman to make. The better view which is
supported by a few decisions, would seem to be
that a reasonable mistake of law should stand upon
the same footing as a mistake of fact, and will not
preclude probable cause.”

In the absence of any statutory or case law to the con-
trary, I am of the opinion that the above rule should be
adopted as the rule on the subject of probable cause in mali-
cious prosecution.

A glance at the criminal calendar of this court should
‘be enough to convince anyone that there is too much “self
help” in violation of the laws of the Territory to permit
wide encouragement of actions for malicious prosecution.
I am of the opinion that orderly and methodical practices
and procedures should be followed in this enlightened day
and age, and in respect to the archaic doctrine of “self
help,” the same should be abandoned, and parties should
‘be encouraged to report possible crimes to the proper offi-
-cials and to use the available and accepted legal due process
-of law to redress their wrongs.

If there was a breach of warranty in this contract, and
this does not seem likely taking Bowlby’s evidence in its

Se 77)

best light, Bowlby’s remedy was a civil suit, not self help.
A reasonable man in Daniels’ position could only believe
that his horse had been stolen, as in fact it had.

I am, therefore, of the opinion that where the plaintiff
has failed to prove, by any evidence, absence of probable
cause, an essential element of a malicious prosecution ac-
tion, the court had no other recourse but to direct a verdict in
favor of the defendant.

79 S.Ct. 274

TERRITORY OF ALASKA, Petitioner, v. AMERICAN CAN
COMPANY, Fidalgo Island Packing Company,
Libby, McNeill & Libby, Inc., et al.
No. 40,

Argued Dee. 9, 1958.
Decided Jan. 12, 1959.

a)
isa

Se 7S)

Mr. J. Gerald Williams, Juneau, Alaska, for the peti-
tioner.

Mr. W. C. Arnold, for the respondents.

Mr. Justice DOUGLAS delivered the opinion of the
Court.

Alaska, while a Territory, enacted a law which
levied a tax at the rate of 1 percent on all real and personal
property. 1.1949, c. 10, § 3. The tax was challenged in
litigation without success. Some paid the tax voluntarily;
others became delinquent. In 1953 the tax statute was re-
pealed. 1.1953, c. 22. Thereafter petitioner instituted the
present suits to collect taxes owing for the years 1949 to
1952, inclusive. The District Court granted a motion to
dismiss, holding that no liability for these taxes had sur-
vived the repeal. D.C., 137 F.Supp. 181, 16 Alaska 71.
The Court of Appeals affirmed. 9 Cir., 246 F.2d 493, 17
Alaska 280. The case is here by a petition for writ of cer-
tiorari which was granted in view of the fiscal importance
of the question to Alaska.

HE Alaska has a general law, saving rights accrued tn-
der a statute that is repealed.» The lower courts, however,

1See Mullaney vy, Hess, 9 Cir, 189 F.2d 417; Hess v. Mullaney. 9
Cir., 213 F.2d 635,

2 Alaska Comp.L.Ann.1949, § 19-1-1, reads as follows:

“The repeal or amendment of any statute shall not affect any of-
fense committed or any act done or right accruing or accrued or any
action or proceeding had or commenced prior to such repeal or
amendment; nor shall any penalty, forfeiture or liability incurred
under such statute be released or extinguished, but the same may be
enforced, continued, sustained, prosecuted and punished under the
repealing or amendatory statute save as limited by the ex post facto
and other provisions of the Constitution, in which event the same
may be enforced, continued, sustained, prosecuted and punished un-
der the former law as if such repeal or amendment had not been
made.”

782 —

held that this case was governed not by that provision but
by § 2(a) of the repealing Act which reads as follows:
“Section 1 of this Act ® shall not be applicable
to:
“(a) any taxes which have been levied and as-
sessed by any municipality, school or public util-
ity district under the provisions of Chapter 10,
Session Laws of Alaska 1949, as amended, or
which are levied and assessed during the current
fiscal year of such municipality, school or public
utility district”.

Tt was held that this specific enactment qualifies the
general repeal law and that the purpose of the 1953 Act
was to wipe out any and all liabilities to pay taxes under
the repealed law that had accrued prior to the date of re-
peal. Support for that conclusion was found in the title
of the 1953 Act which includes the words “excepting from
repeal certain taxes,” no qualifications whatsoever being in-
dicated.

We take a different view. Section 2(a) of the 1953 Act,
as we read it, has nothing to do with any taxes other than
those payable to a municipality, a school or public utility
district, none of which is here involved. If it had done no
more than save all accrued taxes in those categories, the
case would be in quite a different posture. Section 2(a),
however, does not do that. It was protective of munici-
pal school or public utility taxes in a much broader way.
It saved first, those taxes that had been “levied and as-
sessed” and second, those to be “levied and assessed during
the current fiscal year.” This was to make sure, as the dis-

3 Section 1 of the 1953 Act provides:

“That Chapter 10, Session Laws of Alaska, 1949, as amended by
Chapter 88, Session Laws of Alaska, 1949, be and it is hereby re-
pealed.”

33

sent below said, that municipalities and school and public
utility districts (though not the Territory itself) would
have the right to levy and collect the old taxes for the cur-
rent year 1953, whether before or after the repealing Act
had taken effect. So construed, § 2(a) carves no exception
from the general saving statute and does not interfere with
the collection of unpaid taxes which accrued prior to re-
peal.

HI We are reinforced in this conclusion by the legis-
lative history of the bill* that became the repealing Act, a
history of which we take judicial notice. See United States
vy. American Trucking Ass’ns, 310 U.S. 534, 547, 60 S.Ct.
1059, 84 L.Ed, 1345. And see Wigmore on Evidence (3d
ed. 1940) § 2577. The bill as introduced “cancelled, re-
pealed and abrogated, and declared null and void” “all ac-
crued and unpaid taxes” under the 1949 Act. That provi-
sion was deleted, however, by a House Committee, and it
never became part of the law. The bill passed the House
without it. The present § 2(a) was added in the Senate;
and the House agreed. If we adopted the construction
taken below we would be reading into the Act by implica-
tion what the Legislature seemingly rejected.

The judgment of the Court of Appeals is reversed and,
as there are other questions which were raised by the ap-
peal (9 Cir., 246 F.2d 493, 495, 17 Alaska 280), but not
reached by that court, the cause is remanded to it for pro-
ceedings in conformity with this opinion. It is so ordered.

Judgment of Court of Appeals reversed and cause re-
manded with directions.

4We refer to the Alaska House and Senate Journals and to the
original bill as introduced in the House which is on file with the
Secretary of Alaska, a copy being certified by him.

784 a

Mr. Justice FRANKFURTER and Mr. Justice HAR-
LAN took no part in the consideration or decision of this

case,