178 U.S. 436 (1900)
SMITH
v.
REEVES.
No. 242.
Supreme Court of United States.
Argued April 16, 1900.
Decided May 14, 1900.
ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.
Mr. C.N. Sterry for plaintiff in error.
Mr. Tirey L. Ford and Mr. William M. Abbott for defendant in error. Mr. George A. Sturtevant was on their brief.
MR. JUSTICE HARLAN delivered the opinion of the court.
THIS action was brought in the Circuit Court of the United States for the Northern District of California by the Receivers of the Atlantic and Pacific Railroad Company, a corporation created under an act of Congress approved July 27, 1866, *437 with authority to construct and maintain a railroad and telegraph line beginning at or near Springfield, Missouri, thence by a specified route to the Pacific Ocean. 14 Stat. 292, c. 278.
The original defendant was J.R. McDonald, as Treasurer of the State of California. He was succeeded in office by Levi Rackliffe, W.S. Green and Truman Reeves in the order named.
The relief sought was a judgment against the defendant "as Treasurer of the State of California," for the sum of $2272.80 with interest thereon from the date of the payment of that sum or any portion thereof to the State Treasurer, together with the costs of the action.
Before bringing suit the Receivers of the Railroad Company gave written notice to the Comptroller of the State that they intended to bring an action against the State Treasurer to recover from him the amount of the "taxes paid by the Atlantic and Pacific Railroad Company, and by the Receiver for it, to the State Treasurer as and for taxes assessed against the Atlantic and Pacific Railroad Company in the State of California for the year 1893, by the State Board of Equalization."
The action was brought under section 3669 of the Political Code of California, which is as follows:
"Each corporation, person or association assessed by the State Board of Equalization must pay to the State Treasurer, upon the order of the Comptroller, as other moneys are required to be paid into the Treasury, the state and county and city and county taxes each year levied upon the property so assessed to it or him by said board. Any corporation, person or association dissatisfied with the assessment made by the board, upon the payment of the taxes due upon the assessment complained of, and the percentage added, if to be added, on or before the first Monday in June, and the filing of notice with the Comptroller of an intention to begin an action, may, not later than the first Monday in June, bring an action against the State Treasurer for the recovery of the amount of taxes and percentage so paid to the Treasurer, or any part thereof, and in the complaint may allege any fact tending to show the illegality of the tax, or of the assessment upon which the taxes are levied, in whole or in part. A copy of the complaint and of the summons *438 must be served upon the Treasurer within ten days after the complaint has been filed, and the Treasurer has thirty days within which to demur or answer. At the time the Treasurer demurs or answers, he may demand that the action be tried in the Superior Court of the county of Sacramento. The Attorney General must defend the action. The provisions of the Code of Civil Procedure relating to pleadings, proofs, trials and appeals are applicable to the proceedings herein provided for. If the final judgment be against the Treasurer, upon presentation of a certified copy of such judgment to the Comptroller, he shall draw his warrant upon the State Treasurer, who must pay to the plaintiff the amount of taxes so declared to have been illegally collected; and the cost of such action, audited by the Board of Examiners, must be paid out of any money in the general fund of the treasury, which is hereby appropriated, and the Comptroller may demand and receive from the county, or city and county interested, the proportion of such costs, or may deduct such proportion from any money then or to become due to said county, or city and county. Such action must be begun on or before the first Monday in June of the year succeeding the year in which the taxes were levied, and a failure to begin such action is deemed a waiver of the right of action."
The State Treasurer, represented by the Attorney General of the State, demurred to the complaint upon various grounds affecting the merits of the case, and also moved to dismiss the case upon the ground that the Circuit Court had no jurisdiction of the defendant or of the action.
The demurrer was sustained with leave to amend and the motion to dismiss was denied. Reinhart v. McDonald, Treas'r, 76 Fed. Rep. 403.
An amended complaint was filed but a demurrer to it was sustained, with leave to amend. No further amendment having been filed, the action was dismissed by the Circuit Court. Smith v. Rackliffe, 83 Fed. Rep. 983. That judgment was affirmed in the Circuit Court of Appeals. 59 U.S. App. 428.
Is this suit to be regarded as one against the State of California? The adjudged cases permit only one answer to this question. Although the State, as such, is not made a party defendant, *439 the suit is against one of its officers as Treasurer; the relief sought is a judgment against that officer in his official capacity; and that judgment would compel him to pay out of the public funds in the treasury of the State a certain sum of money. Such a judgment would have the same effect as if it were rendered directly against the State for the amount specified in the complaint. This case is unlike those in which we have held that a suit would lie by one person against another person to recover possession of specific property, although the latter claimed that he was in possession as an officer of the State and not otherwise. In such a case, the settled doctrine of this court is that the question of possession does not cease to be a judicial question  as between the parties actually before the court  because the defendant asserts or suggests that the right of possession is in the State of which he is an officer or agent. Tindal v. Wesley, 167 U.S. 204, 221, and authorities there cited. In the present case the action is not to recover specific moneys in the hands of the State Treasurer nor to compel him to perform a plain ministerial duty. It is to enforce the liability of the State to pay a certain amount of money on account of the payment of taxes alleged to have been wrongfully exacted by the State from the plaintiffs. Nor is it a suit to enjoin the defendant from doing some positive or affirmative act to the injury of the plaintiffs in their persons or property, but one in effect to compel the State, through its officer, to perform its promise to return to taxpayers such amount as may be adjudged to have been taken from them under an illegal assessment.
The case, in some material aspects, is like that of Louisiana v. Jumel, 107 U.S. 711, 726-728. That was a proceeding by mandamus against officers of Louisiana to compel them to use the public moneys in the state treasury for the retirement of certain bonds issued by the State but which it subsequently refused to recognize as valid obligations and directed its officers not to pay. This court said: "It may be, without doubt, easily ascertained from the accounts how much of the money on hand is applicable to the payment of this class of debts; but the law nowhere requires the setting apart of this fund any more than *440 others from the common stock. In the treasury all funds are mingled together, and kept so until called for to meet specific demands. . . . The remedy sought, in order to be complete, would require the court to assume all the executive authority of the State, so far as it related to the enforcement of this law, and to supervise the conduct of all persons charged with any official duty in respect to the levy, collection and disbursement of the tax in question until the bonds, principal and interest, were paid in full, and that, too, in a proceeding in which the State, as a State, was not and could not be made a party. It needs no argument to show that the political power cannot be thus ousted of its jurisdiction and the judiciary set in its place. When a State submits itself, without reservation, to the jurisdiction of a court in a particular case, that jurisdiction may be used to give full effect to what the State has by its act of submission allowed to be done; and if the law permits coercion of the public officers to enforce any judgment that may be rendered, then such coercion may be employed for that purpose. But this is very far from authorizing the courts, when a State cannot be sued, to set up its jurisdiction over the officers in charge of the public moneys, so as to control them as against the political power in their administration of the finances of the State. In our opinion, to grant the relief asked for in either of these cases would be to exercise such a power."
We are clearly of opinion that within the meaning of the constitutional provisions relating to actions instituted by private persons against a State, this suit, though in form against an officer of the State, is against the State itself. In re Ayers, 123 U.S. 443; Pennoyer v. McConnaughy, 140 U.S. 1, 10.
But it is contended that by the section of the Political Code of California above quoted the State has consented that its Treasurer may be sued in respect of the matters specified in that section, and it is argued that this case comes within the decision in Beers v. Arkansas, 20 How. 527, 529, in which it was said to be an established principle of jurisprudence in all civilized nations that while the sovereign cannot be sued in its own courts or in any other without its consent and permission, a State "may, if it thinks proper, waive this privilege, and permit itself to be *441 made a defendant in a suit by individuals or by another State." So in Clark v. Barnard, 108 U.S. 436, 447: "The immunity from suit belonging to a State, which is respected and protected by the Constitution within the limits of the judicial power of the United States, is a personal privilege which it may waive at pleasure; so that in a suit, otherwise well brought, in which a State had sufficient interest to entitle it to become a party defendant, its appearance in a court of the United States would be a voluntary submission to its jurisdiction; while, of course, those courts are always open to it as a suitor in controversies between it and citizens of other States."
It is quite true the State has consented that its Treasurer may be sued by any party who insists that taxes have been illegally exacted from him under assessments made by the State Board of Equalization. But we think that it has not consented to be sued except in one of its own courts. This is not expressly declared in the statute, but such, we think, is its meaning. The requirement that the aggrieved taxpayer shall give notice of his suit to the Comptroller, and the provision that the Treasurer may at the time he demurs or answers "demand that the action be tried in the Superior Court of the county of Sacramento," indicate that the State contemplated proceedings to be instituted and carried to a conclusion only in its own judicial tribunals. If a Circuit Court of the United States can take cognizance of an action of this character, the right given to the Treasurer by the local statute to have the case tried in the Superior Court of Sacramento County would be of no value; for, as the jurisdiction and authority of a Circuit Court of the United States depends upon the Constitution and laws of the United States, it could not refuse to take cognizance of the case if rightfully commenced in it and to proceed to final decree, nor could it, merely in obedience to the laws of the State, transfer it to a state court upon the demand of the State Treasurer. A Federal court can neither take nor surrender jurisdiction except pursuant to the Constitution and laws of the United States.
In Beers v. Arkansas, above cited, it was further said: "As this permission [to be sued] is altogether voluntary on the part of the sovereignty, it follows that it may prescribe the terms *442 and conditions on which it consents to be sued, and the manner in which the suit shall be conducted, and may withdraw its consent whenever it may suppose that justice to the public requires it. Arkansas, by its constitution, so far waived the privilege of sovereignty as to authorize suits to be instituted against it in its own courts, and delegated to its General Assembly the power of directing in what courts, and in what manner, the suit might be commenced. And if the law of 1854 had been passed before the suit was instituted, we do not understand that any objection would have been made to it. The objection is that it was passed after the suit was instituted, and contained regulations with which the plaintiff could not conveniently comply. But the prior law was not a contract. It was an ordinary act of legislation, prescribing the conditions upon which the State consented to waive the privilege of sovereignty. It contained no stipulation that these regulations should not be modified afterwards, if, upon experience, it was found that further provisions were necessary to protect the public interest; and no such contract can be implied from the law, nor can this court inquire whether the law operated hardly or unjustly upon the parties whose suits were then pending. That was a question for the consideration of the legislature. They might have repealed the prior law altogether, and put an end to the jurisdiction of their courts in suits against the State, if they had thought proper to do so, or prescribe new conditions upon which the suits might still be allowed to proceed. In exercising this latter power the State violated no contract with the parties; it merely regulated the proceedings in its own courts, and limited the jurisdiction it had before conferred in suits when the State consented to be a party defendant."
In support of the broad proposition that the State could not restrict its consent to be sued to actions brought in its own courts, counsel refer to Railway Company v. Whitton, 13 Wall. 270, 286; Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 391, and Smyth v. Ames, 169 U.S. 466, 516.
Railway Company v. Whitton related to a statute of Wisconsin, giving a right of action, in certain circumstances, where the death of a person was caused by the wrongful act, neglect *443 or default of another person or of a corporation, and which statute provided that the action should be brought in some court established under the constitution and laws of the State. This court held that in all cases where a general right was thus conferred, "it can be enforced in any Federal court within the State having jurisdiction of the parties. It cannot be withdrawn from the cognizance of such Federal court by any provision of state legislation that it shall only be enforced in a state court. . . . Whenever a general rule as to property or personal rights, or injuries to either, is established by state legislation, its enforcement by a Federal court in a case between proper parties, is a matter of course, and the jurisdiction of the court, in such case, is not subject to state limitation."
Reagan v. Farmers' Loan & Trust Co. was an action by a New York corporation against the railroad commissioners of Texas and others to enjoin the enforcement of certain railroad rates established by the statutes of Texas. This court said: "Nor can it be said in such a case that relief is obtainable only in the courts of the State. For it may be laid down as a general proposition that, whenever a citizen of a State can go into the courts of the State to defend his property against the illegal acts of its officers, a citizen of another State may invoke the jurisdiction of the Federal courts to maintain a like defence. A State cannot tie up a citizen of another State, having property rights within its territory invaded by unauthorized acts of its own officers, to suits for redress in its own courts. Given a case where a suit can be maintained in the courts of the State to protect property rights, a citizen of another State may invoke the jurisdiction of the Federal courts."
Smyth v. Ames was a suit in the Circuit Court of the United States against the members of the State Board of Transportation of Nebraska and other persons and corporations, to enjoin the enforcement of certain rates established by a statute of that State for railroads. In that case it was insisted that the relief sought could only be had in an action brought in the Supreme Court of Nebraska, such being the remedy provided by the statute there in question. That provision, it was contended, took from the Circuit Court of the United States its *444 equity jurisdiction in respect of the rates prescribed, and required the dismissal of the bills. This court said: "We cannot accept this view of the equity jurisdiction of the Circuit Courts of the United States. The adequacy or inadequacy of a remedy at law for the protection of the rights of one entitled upon any ground to invoke the powers of a Federal court is not to be conclusively determined by the statutes of the particular State in which suit may be brought. One who is entitled to sue in the Federal Circuit Court may invoke its jurisdiction in equity whenever the established principles and rules of equity permit such a suit in that court, and he cannot be deprived of that right by reason of his being allowed to sue at law in a state court on the same cause of action. It is true that an enlargement of equitable rights arising from the statutes of a State may be administered by the Circuit Courts of the United States. Case of Broderick's Will, 21 Wall. 503, 520; Holland v. Challen, 110 U.S. 15, 24; Dick v. Foraker, 155 U.S. 404, 415; Bardon v. Land and River Improv. Co., 157 U.S. 327, 330; Rich v. Braxton, 158 U.S. 375, 405. But if the case in its essence be one cognizable in equity, the plaintiff, the required value being in dispute, may invoke the equity powers of the proper Circuit Court of the United States whenever jurisdiction attaches by reason of diverse citizenship or upon any other ground of Federal jurisdiction. Payne v. Hook, 7 Wall. 425, 430; McConihay v. Wright, 121 U.S. 201, 205. A party, by going into a national court, does not, this court has said, lose any right or appropriate remedy of which he might have availed himself in the state courts of the same locality; that the wise policy of the Constitution gives him a choice of tribunals. Davis v. Gray, 16 Wall. 201, 221; Cowley v. Northern Pacific Railroad Co., 158 U.S. 569, 583." In Smyth v. Ames the court distinctly reaffirmed what was said upon this point in Reagan v. Farmer's Loan & Trust Co.
These cases do not control the determination of the present question. The Whitton suit was wholly between private parties, and involved no question as to the State or the powers or acts of state officers. In the Reagan and Smyth cases the relief sought was against the proposed action of state officers or *445 agents, and they were not in any sense suits against the State  the relief asked being protection against affirmative action about to be taken by state officers in hostility to the rights of the respective plaintiffs.
In the present case the suit was one to compel an officer of the State, by affirmative action on his part, to perform or comply with the promise of the State as defined in its Political Code, and therefore, as we have said, it is a suit against the State. Nothing heretofore said by this court justifies the contention that a State may not give its consent to be sued in its own courts by private persons or by corporations, in respect of any cause of action against it and at the same time exclude the jurisdiction of the Federal courts  subject always to the condition, arising out of the supremacy of the Constitution of the United States and the laws made in pursuance thereof, that the final judgment of the highest court of the State in any action brought against it with its consent may be reviewed or reexamined, as prescribed by the act of Congress, if it denies to the plaintiff any right, title, privilege or immunity secured to him and specially claimed under the Constitution or laws of the United States.
In our judgment it was competent for the State to couple with its consent to be sued on account of taxes alleged to have been exacted under illegal assessments made by the state board, the condition that the suit be brought in one of its own courts. Such legislation ought to be deemed a part of the taxing system of the State, and cannot be regarded as hostile to the General Government, or as touching upon any right granted or secured by the Constitution of the United States. If the California statute be construed as referring only to suits brought in one of its own courts, it does not follow that injustice will be done to any taxpayer whose case presents a Federal question. For, if he be denied any right, privilege or immunity secured by the Constitution or laws of the United States and specially set up by him, the case can be brought here upon writ of error from the highest court of the State.
Again, it is contended that a State cannot claim exemption from suit by a corporation created by Congress  as was the *446 Atlantic and Pacific Railroad Company  for purposes authorized by the Constitution and laws of the United States. This contention rests upon the ground that the Eleventh Amendment  which was passed because of the decision in Chisholm v. Georgia, 2 Dall. 419  only declares that the judicial power of the United States shall not be construed to extend to any suit in law or equity commenced or prosecuted against one of the United States "by citizens of another State, or by citizens or subjects of any foreign State," and does not forbid an action against a State by a corporation created by Congress. It is further said that although the present case may not be embraced by the clause of section 2, article III, of the Constitution, extending the judicial power of the United States to controversies "between a State and citizens of another State" and to controversies "between a State, or the citizens thereof, and foreign States, citizens or subjects," this suit having been brought by a Federal corporation created for national purposes, Osborn v. U.S. Bank, 9 Wheat. 738; California v. Central Pacific Railroad, 127 U.S. 1; Northern Pacific Railroad Co. v. Amato, 144 U.S. 465, is embraced by the clause of the same article extending the judicial power of the United States, in express words, "to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority."
If the Constitution be so interpreted it would follow that any corporation created by Congress may sue a State in a Circuit Court of the United States upon any cause of action, whatever its nature, if the value of the matter in dispute is sufficient to give jurisdiction. We cannot approve this interpretation.
This question is controlled by the principles announced in Hans v. Louisiana, 134 U.S. 1, 10, 14, 16-21. That was an action brought in the Circuit Court of the United States by a citizen of Louisiana against that State. It was a case that could be said to have arisen under the Constitution of the United States; and the contention was that the Eleventh Amendment did not exclude from the jurisdiction of the Circuit Court a suit brought against a State by one of its own citizens, provided it was one arising under the Constitution or laws of the United States.
*447 In the opinion in that case, delivered by Mr. Justice Bradley, reference was made to the question involved in Chisholm v. Georgia, and to what had been said by leading statesmen, prior to the adoption of the Constitution, in support of the general proposition that sovereignty could not, without its consent, be brought to the bar of any court at the suit of private parties or corporations. This court said: "That a State cannot be sued by a citizen of another State, or of a foreign State, on the mere ground that the case is one arising under the Constitution or laws of the United States, is clearly established by the decisions of this court in several recent cases. Louisiana v. Jumel, 107 U.S. 711; Hagood v. Southern, 117 U.S. 52; In re Ayers, 123 U.S. 443. Those were cases arising under the Constitution of the United States, upon laws complained of as impairing the obligation of contracts, one of which was the constitutional amendment of Louisiana complained of in the present case. Relief was sought against state officers who professed to act in obedience to those laws. This court held that the suits were virtually against the States themselves and were consequently violative of the Eleventh Amendment of the Constitution, and could not be maintained. It was not denied that they presented cases arising under the Constitution; but, notwithstanding that, they were held to be prohibited by the Amendment referred to."
Referring to certain observations made by Hamilton, Madison and Marshall, in refutation of the doctrine that States were liable to suits, the court also said: "It seems to us that these views of those great advocates and defenders of the Constitution were most sensible and just; and they apply equally to the present case as to that then under discussion. The letter is appealed to now, as it was then, as a ground for sustaining a suit brought by an individual against a State. The reason against it is as strong in this case as it was in that. It is an attempt to strain the Constitution and the law to a construction never imagined or dreamed of. Can we suppose that, when the Eleventh Amendment was adopted, it was understood to be left open for citizens of a State to sue their own State in the Federal courts, whilst the idea of suits by citizens of other *448 States, or of foreign States, was indignantly repelled? Suppose that Congress, when proposing the Eleventh Amendment, had appended to it a proviso that nothing therein contained should prevent a State from being sued by its own citizens in cases arising under the Constitution or laws of the United States, can we imagine that it would have been adopted by the States? The supposition that it would is almost an absurdity on its face."
Again: "The suability of a State without its consent was a thing unknown to the law. This has been so often laid down and acknowledged by courts and jurists that it is hardly necessary to be formally asserted. . . . `It may be accepted as a point of departure unquestioned,' said Mr. Justice Miller, in Cunningham v. Macon & Brunswick Railroad, 109 U.S. 446, 451, `that neither a State nor the United States can be sued as defendant in any court in this country without their consent, except in the limited class of cases in which a State may be made a party in the Supreme Court of the United States by virtue of the original jurisdiction conferred on this court by the Constitution.' Undoubtedly a State may be sued by its own consent, as was the case in Curran v. Arkansas et al., 15 How. 304, 309, and in Clark v. Barnard, 108 U.S. 436, 447. The suit in the former case was prosecuted by virtue of a state law which the legislature passed in conformity to the constitution of that State. But this court decided, in Beers et al. v. Arkansas, 20 How. 527, 529, that the State could repeal that law at any time; that it was not a contract within the terms of the Constitution prohibiting the passage of state laws impairing the obligation of a contract. . . . It is not necessary that we should enter upon an examination of the reasons or expediency of the rule which exempts a sovereign State from prosecution in a court of justice at the suit of individuals. This is fully discussed by writers on public law. It is enough for us to declare its existence."
The present plaintiffs, as did the plaintiffs in Hans v. Louisiana, base the argument in support of their right to sue the State in the Circuit Court of the United States upon the mere letter of the Constitution. We deem it unnecessary to repeat *449 or enlarge upon the reasons given in Hans v. Louisiana why a suit brought against a State by one of its citizens was excluded from the judicial power of the United States, even when it is one arising under the Constitution and laws of the United States. They apply equally to a suit of that character brought against the State by a corporation created by Congress. Such a suit cannot, consistently with the Constitution, be brought within the cognizance of a Circuit Court of the United States without the consent of the State. It could never have been intended to exclude from Federal judicial power suits arising under the Constitution or laws of the United States when brought against a State by private individuals or state corporations, and at the same time extend such power to suits of like character brought by Federal corporations against a State without its consent.
The Circuit Court entertained jurisdiction of the cause and dismissed the bill. The Circuit Court of Appeals held that the Circuit Court erred in holding jurisdiction, but affirmed the order of dismissal upon the ground of want of jurisdiction in the latter court to take cognizance of such a case as is here presented. We approve the action of the Circuit Court of Appeals, and its judgment is
Affirmed.


989 F.2d 966
RITZEL COMMUNICATIONS, INC., Plaintiff,v.MID-AMERICAN CELLULAR TELEPHONE COMPANY, a KansasCorporation;  Mac-Tel Co., a Kansas Corporation;Alton Cellular, Inc., a MissouriCorporation, Defendants.Mid-American Cellular Telephone Company;  ThirdParty-plaintiff-Appellee,Barclay Robert Goodwin, Jr.;  Steven L. Johnson;  Emmett M.Capper;  D.C. Taylor;  Tina M. Green;  B & R Communications,c/o Richard N. Brown;  Appollo Communications;  ChannelCommunication, c/o Ted and Delores Landkammer, ThirdParty-defendant-Appellants.
No. 91-3212.
United States Court of Appeals,Eighth Circuit.
Submitted Dec. 2, 1992.Decided March 30, 1993.Rehearing and Rehearing En Banc Denied May 19, 1993.

Frederick H. Riesmeyer, Kansas City, MO, argued, (J. Dale Youngs, on the brief), for appellants.
Mark D. Murphey, Kansas City, MO, argued (James Lieber, on the brief) for appellee.
Before JOHN R. GIBSON, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and BEAM, Circuit Judge.
JOHN R. GIBSON, Circuit Judge.

1
Barclay Robert Goodwin, Jr. and several associates1 appeal from the district court's denial of their motion to stay litigation and compel arbitration.   While this appeal was pending, the Goodwin group proceeded to try the case in the district court.   We now determine that by continuing to litigate in the district court and by failing to seek a stay of the district court proceedings from this court or to otherwise expedite the appeal, the Goodwin group waived any right to arbitrate the purchase and sale agreement.

2
In March 1990, Mid-American Cellular Telephone Company sold one of its wholly-owned subsidiaries, Alton Cellular, Inc., to the Goodwin group of investors.   The terms of the sale are contained in the "Stock Purchase Agreement" dated March 20, 1990.

3
On October 11, 1990, Ritzel Communications, Inc., the broker involved in the sale, sued Mid-American for recovery of a broker's fee.   Mid-American's defense was that the sale to the Goodwin group had never been completed.   On November 20, 1990, Mid-American moved to add members of the Goodwin group as additional parties needed for adjudication of the claims, and this motion was granted March 12, 1991.   Mid-American named members of the Goodwin group as additional parties and, on March 27, 1991, Mid American filed a cross claim against the group.   The district court later termed these filings a third-party complaint.   On May 10, 1991, the Goodwin group filed a motion to dismiss the cross-claim of Mid-American and an alternative motion for a separate trial.

4
On June 28, 1991, the Goodwin group filed a motion to stay litigation and to compel arbitration based on cross indemnification agreements contained in the Stock Purchase Agreement.   The district court denied the motion, concluding that arbitration under the Agreement was elective, not mandatory.2  The Goodwin group appealed.

5
While this appeal was pending, the group continued to litigate in the district court.   On November 5, 1991, it filed an answer to Mid-American's cross-claim and its own amended counterclaim.   It responded to interrogatories and requests for production, participated in the deposition of A. Lawrence Summers, and actively opposed the deposition of Barclay Robert Goodwin.   The group participated in pre-trial conferences (including a settlement conference at which Ritzel and Mid-American settled) and filed numerous motions and documents in preparation for trial.3  Eventually, the parties tried the case in a six-day bench trial which ended on June 3, 1992.

6
In this court, the Goodwin group twice requested and received extensions of time to file briefs.   Under the original schedule, the briefing would have been completed by January 6, 1992.   The group, however, obtained an extension of time to file its brief (originally due November 22), and filed its twelve-page brief on December 24.   Mid-American obtained two extensions, totalling thirty days, to file its brief.   The Goodwin group then obtained an extension to file a reply brief and filed its seven-page brief on March 17, 1992.

7
Until oral argument, the Goodwin group made no request to this court to expedite the appeal or to stay the proceedings in the district court.   We heard argument on June 12, 1992, shortly after the completion of the trial in the district court, but before the district court had entered judgment and issued its findings of fact and conclusions of law.   We then held the appeal in abeyance until the district court issued its final order.

8
On July 29, 1992, the Goodwin group filed a motion in this court requesting that proceedings in the district court be stayed pending our decision.   The Goodwin group argued that because a decision by this court in its favor (i.e., upholding Goodwin's right to arbitrate) would vacate any order of the district court, concern for judicial economy justified the stay.   We denied this motion.

9
In late November, we received a certified copy of the district court's order entering judgment against the Goodwin group, and requested additional briefing on the question of whether the Goodwin group had waived its right to arbitrate by continuing to litigate in the district court.   For purposes of this appeal, we assume, without deciding, that the Goodwin group had a right to demand arbitration.

10
The issue before us then is whether the Goodwin group has waived its right of arbitration by proceeding to trial in the district court, by failing to raise the arbitration issue before this court in a motion either to expedite the appeal or to stay proceedings in the district court, and by delaying its filings in this court.   We conclude that the group has waived its arbitration rights.

11
In light of the strong federal policy in favor of arbitration, any doubts concerning waiver of arbitrability should be resolved in favor of arbitration.  Nesslage v. York Sec., Inc., 823 F.2d 231, 234 (8th Cir.1987).   Nevertheless, we will find waiver where the party claiming the right to arbitrate:  (1) knew of an existing right to arbitration;  (2) acted inconsistently with that right;  and (3) prejudiced the other party by these inconsistent acts.  Stifel, Nicolaus & Co. v. Freeman, 924 F.2d 157, 158 (8th Cir.1991).

12
The Goodwin group drafted the Stock Purchase agreement that contains the arbitration provisions, and thus knew of the existing right of arbitration.   We must determine whether the Goodwin group acted inconsistently with its right to arbitrate and so prejudiced Mid-American.4

13
We have considered similar "inconsistent action" questions in three previous cases.   In N & D Fashions, Inc. v. DHJ Industries, 548 F.2d 722, 728 (8th Cir.1976), we concluded that there had been no waiver when a party responded to the filing of a suit by immediately demanding arbitration and by requesting a stay of proceedings in the district court.   In Nesslage v. York Securities, we affirmed a district court finding of no waiver when a party did not assert its arbitration rights until after the filing of a relevant Supreme Court decision, and when discovery was limited to issues the Supreme Court held to be arbitrable.  823 F.2d at 234.   Finally, in Stifel, we reviewed a waiver question de novo5 and concluded that the party requesting arbitration had acted inconsistently with its right to arbitrate by initiating litigation and participating in discovery.  924 F.2d at 158.   We found no waiver, however, because these inconsistent acts did not prejudice the other parties:  "No issues were litigated and the limited discovery conducted will be usable in arbitration."  Id. at 159.

14
The facts before us, distinguishable from those of the cases just cited, convince us that the Goodwin group acted inconsistently with its right to arbitrate.   First, the group "[s]ubstantially invoke[d] the litigation machinery" before asserting its arbitration right.  E.C. Ernst, Inc. v. Manhattan Const. Co., 559 F.2d 268, 269 (5th Cir.1977), cert. denied, 434 U.S. 1067, 98 S.Ct. 1246, 55 L.Ed.2d 769 (1978).

15
Mid-American filed its crossclaim against the Goodwin group on March 27, 1991.   The Goodwin group's first response was not to demand arbitration, but to file (on May 10, 1991) a motion to dismiss, or in the alternative, to sever the cross-claim for a separate trial.   The group's motion argued that it was improper for the group to be a party, that Mid-American had failed to join necessary parties, and that Mid-American had failed to state a claim with respect to Count III (a request for an accounting).   Thus, before asserting the intent to arbitrate (on June 28, 1991), the group submitted the dispute to the court for resolution by either court order or a trial.

16
The motion for dismissal represents a substantial, active invocation of the litigation process.   With this motion, the group initiated steps in the litigation and required responsive actions by Mid-American rather than immediately demanding arbitration.   Moreover, the alternative motion is even more inconsistent with the arbitration rights;  in essence, the Goodwin group requested a trial.6

17
We think the Goodwin group's actions here resemble those described in two cases where other circuit courts found a waiver.   In S & H Contractors, 906 F.2d at 1514, a party waived its arbitration rights by filing a motion to dismiss, opposing discovery, and taking the depositions of five of its opponent's employees.   In the present case, we have less pretrial discovery activity, but do have the group's additional inconsistent acts of intentional delay and failure to expedite the appeal, which may have led to an unnecessary six-day trial on the merits.

18
In St. Mary's Medical Center v. Disco Aluminum Products, 969 F.2d 585, 587 (7th Cir.1992), a party waited ten months before asserting its arbitration rights and, in the interim, filed a motion to dismiss and an alternative motion for summary judgment.   The Seventh Circuit concluded that the delay and the submission of the case by filing the motion to dismiss were inconsistent with the desire to arbitrate.  Id. at 589.   The court also stressed the alternative motion for summary judgment.  Id.  The Seventh Circuit recognized that waiver depends on the circumstance of each case.   Id. at 588.   Although the Goodwin group did not engage in the same long delay in asserting its arbitration rights, the filing of motions directed to the merits is similar.

19
In addition, the group's conduct in this court is inconsistent with arbitration rights.   By failing to request a stay in this court or to move to expedite the appeal and by delaying the process of appeal so that oral argument did not occur until after the trial on the merits in the district court, the group squandered the economies of arbitration and gave the appearance of having no sincere interest in avoiding litigation of the dispute.

20
The Goodwin group argues that its re-assertion of arbitration rights in the district court was sufficient and it did not have to pursue "voluntary" and "extraordinary" remedies in this court.7  The group portrays itself as helplessly swept along towards trial, bound by its obedience to the orders of the district court.   These arguments are unpersuasive.

21
First, there is nothing extraordinary about asking this court to stay proceedings in the district court.   We have, on numerous occasions, entertained motions to stay proceedings in the district court pending appeal of a district court's determination of arbitrability.8  See, e.g., Flink v. Carlson, 856 F.2d 44, 47 (8th Cir.1988);  Cox v. Piper, Jaffray & Hopwood, Inc., 848 F.2d 842, 843 (8th Cir.1988);  Brotherhood of Painters v. Lord & Burnham Constr.  Corp., 705 F.2d 998, 999 n. 1 (8th Cir.1983);  see also S & M Constructors, Inc. v. Foley Co., 959 F.2d 97 (8th Cir.)  (granting oral argument on a motion for a stay of arbitration pending appeal), cert. denied, --- U.S. ----, 113 S.Ct. 184, 121 L.Ed.2d 129 (1992).

22
Arbitration clauses in agreements are designed to resolve disputes without costly litigation.   When a party appealing the denial of its arbitration rights ignores the available means to avoid wasteful litigation pending appeal, it is acting inconsistently with those rights.   By failing to make the simple effort of requesting a stay in this court and by proceeding to trial on the merits in the district court, the Goodwin group defeated the whole purpose of the arbitration clause on which it claims to rely.   After filing its notice of appeal in this court, the Goodwin group briefed its case in a leisurely fashion and allowed the appeal to proceed toward oral argument without notifying this court that trial was imminent.9  Had a motion to stay been filed in this court or had the court been informed of the impending trial, it is highly likely that some decision could have been made to prevent the procedural situation we now face;  namely, an assertion to compel arbitration after both parties have gone through the trouble and expense of a full trial.

23
Further, the Goodwin group's own actions delayed completion of the briefing on appeal.   Had briefing been concluded on schedule in early January, it is likely that the case would have been set for argument in April.   Significantly, the Goodwin group's short briefs hardly justify the forty-day extension of time sought.   The failure to promptly brief the case and to give notice of the trial is inconsistent with the Goodwin group's arbitration rights.

24
The prejudice to Mid-American is obvious and substantial.   The trial involved four days devoted to presenting Mid-American's case.   Mid-American called five witnesses, recalling one to the stand on three additional occasions.   The Goodwin group presented its testimony in a full day of trial, calling three witnesses, and twice recalling a Mid-American witness.   Closing arguments consumed a sixth trial day.   Needless to say, a flurry of costly and time-consuming filings required by court order preceded the trial.10

25
When we heard argument in this appeal, the trial was complete but the district court had not yet rendered its decision.   The parties informed us at argument that the district court had indicated it would probably issue its decision by mid-July or early August at the latest.   In this posture, we deemed it appropriate to hold our proceedings in abeyance until the district court issued its final order.   We reasoned that, should the district court decide the issues in favor of the Goodwin group, the appeal could well be moot.   At that point, the costs and expense of trial had been incurred.   It was not until July 29, 1992, however, that the Goodwin group filed a motion arguing judicial economy and requesting that we lift our order, and stay the proceedings in the district court.   We denied this motion.   After a full trial in the district court and an argument on the appeal, the group's professed concern for judicial economy was hollow.   The Goodwin group, having allowed the trial to proceed, would have been content with a decision in its favor in the district court and, if it lost there, would seek a second bite at the apple through its interlocutory appeal.   This fact only underscores our conclusion that the Goodwin group acted in a manner inconsistent with any contractual arbitration rights that it might have possessed.

26
Whether there is waiver depends on the particular facts before us.   After examining all the circumstances, we conclude that because the Goodwin group substantially opted for litigation before asserting its arbitration rights, ignored every clear means of either expediting its appeal or staying the district court proceedings, and fully tried its case, the Goodwin group acted inconsistently with its arbitration rights.   We hold that the Goodwin group waived its right to arbitration, and therefore, dismiss the present appeal.

1
 The Goodwin group consists of Barclay R. Goodwin, Jr., Steven L. Johnson, Emmett M. Capper, D.C. Taylor, Tina M. Green, B & R Communications, Appollo Communications, and Channel Communications

2
 The Goodwin group repeatedly "renewed" to the district court its demand for arbitration in subsequent pleadings.   Specifically, it requested arbitration in a September 24, 1991, motion to stay proceedings pending appeal and to stay litigation and compel arbitration, in a November 12, 1991, motion to dismiss the cross-claim, and in a December 4, 1991, motion to refer certain factual and legal issues to arbitration.   The district court denied all of these motions without comment

3
 These included amended pleadings, statements of factual and legal issues to be presented at trial, proposed findings of fact and conclusions of law, witness lists, exhibit lists, designation by the Goodwin group of deposition testimony of A. Lawrence Summers with objections filed by Mid-American, a stipulation as to identification and foundation of exhibits, revisions of these filings, various motions to amend pleadings, and a motion in limine filed by the Goodwin group

4
 The issues actually tried in the district court were the same issues that would have been subject to arbitration

5
 Although Mid-American raised the waiver issue in the district court, the court did not reach the issue because it denied arbitration on the basis of the contract language.   Other circuits have considered the question of waiver, even though the district court had not ruled on it.   See, e.g., S & H Contractors v. A.J. Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir.1990), cert. denied, 498 U.S. 1026, 111 S.Ct. 677, 112 L.Ed.2d 669 (1991)

6
 This initial choice to litigate distinguishes the present case from these on which the Goodwin group chiefly relies.  See Britton v. Co-op Banking Group, 916 F.2d 1405 (9th Cir.1990) (pro se party pursues informal settlement before seeking arbitration and actively resisted discovery after arbitration motion denied);  Sibley v. Tandy Corp., 543 F.2d 540 (5th Cir.1976) (motion to stay filed simultaneously with answer), cert. denied, 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977)

7
 The cases cited by the Goodwin group do not support the proposition that it can never be necessary to take "voluntary" actions to avoid waiver

8
 While not requiring that parties denied a stay in the district court seek one in the Court of Appeals, this sequence of events is clearly recognized in Federal Rule of Appellate Procedure 8(a)

9
 It was only in a motion to dismiss the appeal, filed by Mid-American two days before argument, that this court learned for the first time that there had already been a trial on the merits in the district court

10
 See supra note 3


758 F.2d 657
Williamsv.Pecorella
84-3961
United States Court of Appeals,Ninth Circuit.
3/12/85

1
W.D.Wash.

AFFIRMED


483 F.2d 1332
157 U.S.App.D.C. 329
Bedneyv.Godwin
71-2004
UNITED STATES COURT OF APPEALS District of Columbia Circuit
9/28/73

1
D.C.D.C.

AFFIRMED


628 F.2d 887
Fed. Sec. L. Rep.  P 97,666Paul T. MARTIN and Harold Bridges, Plaintiffs-Appellants,v.T. V. TEMPO, INC., et al., Defendants-Appellees.
No. 79-1232.
United States Court of Appeals,Fifth Circuit.
Oct. 23, 1980.

Daniel I. MacIntrye, Atlanta, Ga., Stan Durden, Jefferson, Ga., for plaintiffs-appellants.
Parker, Johnson & Cook, G. Donald Johnson, Atlanta, Ga., for defendants-appellees.
G. William Long, III, Atlanta, Ga., for Sylvia Walls, Colonial Press & John Graff.
Appeal from the United States District Court for the Middle District of Georgia.
Before VANCE, FRANK M. JOHNSON, Jr., and THOMAS A. CLARK, Circuit Judges.
PER CURIAM:

1
Plaintiffs Martin and Bridges filed a multicount complaint alleging violations of federal and state securities laws,1 antitrust violations, common law fraud and breach of contract.  After discovery was accomplished, both sides moved for partial summary judgment on the question whether the Associate Publisher Agreements sold to plaintiffs by defendants are securities under federal and state law.2  The district court ruled that the agreements are not securities.  It dismissed the federal and state securities claims with prejudice and dismissed all other claims without adjudication.  Martin and Bridges appeal only with respect to the ruling on their securities claims.

2
The undisputed facts were stated in the trial court's order as follows:

3
Defendants are the innovators, owners and principal actors behind the T. V. Tempo magazine, a small weekly publication listing television schedules and carrying advertisements.  The magazine is distributed at no charge to the consumer; revenues are derived from the sale of advertisements primarily to local merchants.  Plaintiffs' investment in Associate Publisher Agreements entitles them to an exclusive franchise to sell advertisements for and arrange distribution of T. V. Tempo magazines in a defined area, typically one county.  Defendants are obligated under the agreement to provide initial training and other assistance to the Associate Producer and any employees he might hire.  All revenues from the sale of local advertisements are the property of the Associate Producer who does all of the billing.  The Associate Producer must pay his own and employee expenses, must pay for the composition and printing of the magazines distributed in his area and must also pay a service fee to the defendants.  Any revenues remaining after payment of these expenses are the Associate Producer's profit.  For the purposes of the present motions the court accepts plaintiffs' contentions that as investors they held no reasonable expectation of control over the composition, quality and printing of the magazines or the price to be charged for advertising.  With minor limitations, however, they were free to sell advertising space to anyone in their local area and to assist the buyer in arranging the rough composition for his advertisement.

4
At various times during 1976 plaintiffs acquired franchises covering a number of counties or parts of counties in Georgia and Florida.  The venture proved to be unsuccessful and plaintiffs ultimately went out of business.  They allege that in offering and selling the franchise agreements defendants knowingly made material misrepresentations of fact on which they relied.  They sought recovery of substantial sums alleged to have been paid by them to defendants together with interest and attorneys fees.  The various contentions of the parties center on the single question addressed by the district court: is the franchise agreement a security.

5
The starting point is the Supreme Court's definition in SEC v. W.J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946):

6
(A)n investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party . . . .

7
Id. at 298-99, 66 S.Ct. at 1103.3  See 15 U.S.C. §§ 77b(1) and 78c(a)(10).  Our opinion in SEC v. Koscot Interplanetary, Inc., 497 F.2d 473 (5th Cir.1974), dealt with the subsequent development of the law with respect to the third element of the Howey test, "solely from the efforts of (others)."  Concluding that a literal application of the test is unwarranted, id. at 480, we held that the proper standard was that explicated in SEC v. Glenn W. Turner Enterprises, Inc., 474 F.2d 476 (9th Cir.), cert. denied, 414 U.S. 821, 94 S.Ct. 117, 38 L.Ed.2d 53 (1973), "whether the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise," id. at 482.  SEC v. Koscot Interplanetary, Inc., 497 F.2d at 483; accord, Cameron v. Outdoor Resorts of America, Inc., 608 F.2d 187, 193 (5th Cir.1979), modified on other grounds, 611 F.2d 105 (5th Cir.1980).

8
In United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 95 S.Ct. 2051, 44 L.Ed.2d 621 (1975), the Supreme Court noted but declined to express any view as to the correctness of the Turner standard.  Id. at 852 n.16, 95 S.Ct. at 2060 n.16.  It did, however, reaffirm that

9
(t)he touchstone is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others . . . .  In such cases the investor is "attracted solely by the prospects of a return" on his investment.

10
Id. at 852, 95 S.Ct. at 2060.

11
The district court viewed the agreements as no different than ordinary franchise agreements that the courts have uniformly found not to be investment contracts.  Koscot, on the other hand, emphasized the indispensable presence of "schemes in which promoters retain immediate control over the essential managerial conduct of an enterprise and where the investor's realization of profits is inextricably tied to the success of the promotional scheme" in finding that a pyramid sales scheme constituted a security.  Koscot distinguished on that basis "a conventional franchise arrangement, wherein the promoter exercises merely remote control over an enterprise and the investor operates largely unfettered by promoter mandates."  497 F.2d at 485.  Plaintiffs argue that defendants retained the real authority and control that determined the success or failure of the enterprise.  They also stress the amount of consulting and management services that defendants represented that they would perform, contending that only simple ministerial tasks were required on the part of plaintiffs.

12
In the present posture of the case, plaintiffs are entitled to have us view the material evidence in the light most favorable to them and to indulge every reasonable inference from those facts in their favor.  American Telephone & Telegraph Co. v. Delta Communications Corp., 590 F.2d 100, 102 n.1 (5th Cir.), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979).  Even so viewed, however, the evidence demonstrates that the agreement fails to meet the Koscot test.

13
Plaintiffs may have been misled as to the prospects for success or the amount of effort required to sell advertising, but there is less indication that they were misled as to who was to perform what function.  Illustrative testimony of appellant Martin is in point:

14
Q. When you were getting ready to buy all these franchises, you understood that T V Tempo was going to provide start-up training to get the business going; is that right?  Training your employees for you?

15
A. Right.  Whatever training was necessary.

16
Q. And they were going to come along and provide ongoing advice as to how to run?

17
A. Right.

18
Q. Now that is typical of just about any kind of franchise, I would suppose?

19
A. Right.

20
Q. You didn't understand they were going to run the business for you though, did you?

21
A. No, no.

22
Q. You knew your employees were going to have to run the business, and they were going to be advised and counseled by the T V Tempo representatives?

23
A. Right.

24
The testimony of appellant Bridges is to the same effect:

25
Q. You didn't expect the T V Tempo franchise to run itself, though, did you?

26
A. No, it will not run itself.  That's the reason you hire a Manager.

27
Q. It's got to have someone on the scene running it?

28
A. Right.  Nothing will run by itself.

29
Q. Did anybody from T V Tempo or Colonial Press or Barrett-Walls Inc., or any of the individuals that are in this lawsuit-did any of them tell you that you couldn't run the business yourself, if you wanted to?

30
A. Well, I think they expected me to run the business under their procedures and policies but-or expected the managers to run it.

31
Q. You don't think, if you hire somebody good to run one, that it will be a money-producing business?

32
A. Not to the extent that they say it would be.  I think T V Tempo might be good for an owner-operator, but not for an investor.  I think it's foolish.

33
Q. You think the only way you can really make one go is to operate it yourself?

34
A. Right, and then take a lot of long, hard hours.

35
In this franchise arrangement, plaintiffs had immediate control over the essential managerial conduct of the enterprise and defendants exercised merely remote control.  The efforts of plaintiffs were the undeniably significant ones in determining profit or loss.  See generally Bitter v. Hoby's International, Inc., 498 F.2d 183, 184-85 (9th Cir.1974).

36
The testimony of Mr. Martin also supports the district court's finding that the failure of T. V. Tempo, Inc. would not necessarily doom plaintiffs' local activity.  Because revenues were dependent on local sales activities and production could be obtained from other sources, plaintiffs' enterprise could have survived as an independent entity.  See id. at 185.  The testimony of plaintiffs themselves thus does not square with the test for a security under Koscot and Howey.  In summary, we hold that these franchise agreements were not securities.

37
Plaintiffs urge that the district court erred in failing to analyze the franchise agreement under the so-called "risk capital" approach.  We previously have taken note of this alternative to the Howey test but have not embraced it.  SEC v. Koscot Interplanetary, Inc., 497 F.2d at 482 n.13.  In addition, plaintiffs' argument must fail on the facts, for as the evidence shows defendants did not obtain "risk capital" from plaintiffs and, even if they had, the franchise agreements provided no benefit to plaintiffs from application of risk capital to defendants' business.

38
Having concluded that the agreements were not securities, the district court dismissed with prejudice not only the federal securities claim but also the state securities claim.  We conclude that dismissal of the state claim should have been without prejudice.  Pharo v. Smith, 621 F.2d 656, 673-675 (5th Cir.1980); 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3567, at 351 & n.36.1 (1980 Supp.).  We modify the judgment of the district court so to hold.

39
The district court's dismissal with prejudice of the federal securities claim is AFFIRMED.  Its dismissal of the state securities claim is MODIFIED so that such dismissal is without prejudice and as so modified is AFFIRMED.  Its judgment in all other respects is AFFIRMED.

40
MODIFIED in part and AFFIRMED.

1
 Sections 12(1) & (2) and 17 of the Securities Act of 1933, 15 U.S.C. §§ 77l and 77q; sections 10, 15(a) and 29(b) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78o et seq. and 78cc, and Rule 10b-5, 17 C.F.R. § 240.10b-5; sections 3, 5 and 12(a) of the Georgia Securities Act of 1973, Ga.  Code Ann. §§ 97-103, 97-105 and 97-112(a) (1976)

2
 Our review is influenced by the fact that both sides moved for summary judgment.  As we observed in Pharo v. Smith, 621 F.2d 656, 664 (5th Cir.1980), "(t)hat motion amounted to a representation by the moving counsel, as officers of the court, that the case was fully at issue, that all theories of liability and all defenses had been presented, and that the case was ripe for summary treatment."

3
 The Howey court stated that "(s)uch a definition necessarily underlies this Court's decision in Securities Exch.  Commission v. C.M. Joiner Leasing Corp., 320 U.S. 344 (64 S.Ct. 120, 88 L.Ed. 88) . . . ."  328 U.S. at 299, 66 S.Ct. at 1103


49 Cal.2d 849 (1958)
GARLAN EPLEY, Respondent,
v.
AMELIA CALIFRO, as Administratrix, etc., et al., Defendants; LENA CALIFRO, Appellant.
Sac. No. 6671.
Supreme Court of California. In Bank.
Mar. 26, 1958.
 Barbagelata, Zief & Carmazzi and Henry J. Broderick for Appellant.
 Francis M. Arnoldy and Heenan & Arnoldy for Respondent.
 SHENK, J.
 This is an appeal by the defendant Lena Califro from an order entered August 26, 1955, granting plaintiff's motion to vacate an order entered July 21, 1955. The order of July 21 was made pursuant to the provisions of Code of Civil Procedure, section 581a.  [fn. 1] It dismissed the action as to Lena and her codefendant Mareck. The order appealed from was based on the asserted ground that the prior order was inadvertently made. The defendant Mareck did not appeal.
 The issues presented on appeal are whether the order of *851 August 26 is an appealable order and whether the trial court erred in vacating its prior order of dismissal.
 The record consists of the clerk's transcript. It shows that on March 22, 1951, a complaint was filed for $2,300 due on an open book account naming as defendants Thomas T. Califro, Andy Mareck and several fictitious Does. Summons was issued and served. On May 1, 1951, a demurrer was filed on behalf of Thomas Califro, Lena Califro (sued as Jane Doe) and Andy Mareck by and through the law firm of Rich, Carlin and Fuidge. On May 4 the demurrer was withdrawn and the defendants were given 15 days to answer. In October a notice of taking a deposition by the plaintiff was served on these attorneys. No further pleadings were filed by the defendants' attorneys in the action. On December 14, 1951, a document was filed entitled "Answer and Cross-Complaint." The answer denied the allegations of the complaint and the cross-complaint prayed for damages in the sum of $100,000 on behalf of the cross-complainant, Thomas T. Califro. This document was signed "Thomas T. Califro in Pro Per." The verification stated that Thomas T. Califro "is one of the defendants in the above entitled cause; that the attorneys of record for the defendants having withdrawn and resigned as such, he now appears herein in his proper person for himself and for the defendants and cross-complainant. ..." It was signed "Thomas T. Califro." The document was served on counsel of record who have represented the plaintiff from the commencement of the action and on this appeal. On September 26, 1952, counsel for plaintiff filed an answer to the cross-complaint. The affidavit of service shows that it was served by mail on September 30, 1952, on the law firm of Hewitt and McBride. Notice of motion to set the case for trial was served on these attorneys. The cause came on for trial on July 21, 1955. The Minute Order of that date shows that attorney J. W. O'Neil appeared as counsel for Amelia Califro, Administratrix of the Estate of Thomas T. Califro, deceased, and that the court ordered the action dismissed as to defendants Mareck and Lena Califro "according to Section 581a of the Code of Civil Procedure." The trial proceeded as to the remaining defendants and the case was submitted. Insofar as the record shows no judgment has been entered.
 While the case was under submission and on August 2, 1955, one of the plaintiff's attorneys of record filed a notice of motion to vacate the order of submission and to set aside the order dismissing the action as to the defendants Lena *852 Califro and Andy Mareck. The pertinent portions of the supporting affidavit state: "Subsequent to the submission of said cause, your affiant further reexamined the Answer and Cross-Complaint filed by Thomas T. Califro in the above entitled action and discovered in the verification thereof that Thomas T. Califro appeared in propria persona for himself and as attorney for defendants in said action. That Thomas T. Califro was an attorney at law, duly admitted and licensed to practice as such in all the Courts of California, appears in affiant's affidavit on file in said action, and therefore, said Thomas T. Califro was entitled to appear not only for himself, but on behalf of said defendants." Notice of this motion was served only on the attorney for the administratrix of the deceased defendant Thomas T. Califro. On August 26 the court made an "Order Setting Aside Order of Dismissal" which stated that the order of July 21 dismissing the action as to two defendants had been "inadvertently made" by the court. The order recites that notice of the motion to vacate had not been given to the defendants Lena Califro or Andy Mareck or their attorney; that the attorney for the administratrix had advised the court that he was not and never had been the attorney for either of those defendants, and that he had appeared solely on behalf of the administratrix. The clerk's register of that date states: "Aug. 26. Motion to vacate submission, denied, by stipulation. Court ordered motion to vacate Order of Dismissal granted. Case to be re-opened as to defendants Lena Califro and Andy Mareck only." On November 2, 1955, a "Substitution of Counsel" was filed by defendant Lena Califro substituting her present counsel for the law firm of Rich, Carlin and Fuidge. This paper was signed by her former and present counsel of record and by herself.
 [1] The plaintiff urges that the order of August 26 is not an appealable order. His argument is based upon the fact that some of the allegations of the cross-complaint refer to damages suffered by the "defendants" and that the court took no action and made no decision regarding the cross-complaint. Section 581d of the Code of Civil Procedure provides that the dismissal of an action by the court shall be entered upon the minutes and upon the clerk's register, and that when entered upon the minutes it shall constitute a judgment and be effective for all purposes. The order of dismissal was entered upon the minutes of the court and upon the clerk's register of actions and, therefore, constituted a final judgment. The *853 order of August 26 vacating the order of dismissal was a special order made after final judgment and appealable under the provisions of section 963, subdivision 2, of the Code of Civil Procedure. Nicholson v. Henderson, 25 Cal.2d 375 [153 P.2d 945], and Krug v. Meehan, 106 Cal.App.2d 554 [235 P.2d 410], relied upon by the plaintiff, are not in point because, for the reasons hereinafter stated, the cross-complaint was not regularly filed.
 The appellant urges that the order of August 26 was in excess of the court's jurisdiction and was void. In making the order of July 21 the court impliedly found and concluded from the undisputed facts that the complaint was filed on March 22, 1951; that summons was issued and served forthwith; that on May 1, 1951, the firm of Rich, Carlin and Fuidge filed a demurrer and a demand for a bill of particulars; that this appearance constituted them as attorneys of record for the defendants; that there was no substitution of those attorneys in the manner provided by law; that more than three years had elapsed from the date of service of summons; that plaintiff failed to have judgment entered; that no stipulation for extension of time was on file; that no answer was filed by the attorneys of record for the defendants, and that no authority appeared for Thomas T. Califro to file an answer and cross- complaint on behalf of his codefendants. The judgment of dismissal could only be made after an examination of the facts and the application of the legal principles involved. It appears beyond question that this order correctly reflected a judicial determination and that the minute order correctly sets forth the decision of the court on that date.
 The order of dismissal was set aside without notice on the ground that it was inadvertently made. It is stated by counsel for the plaintiff, and not denied, that at the hearing on July 21 the attention of the court was not called to the fact that Thomas T. Califro was an attorney at law or to the contents of the verification to the answer and cross-complaint. [2] It must be assumed that the contents of the verification were judicially known to the court at that time. (Hollenbach v. Schnabel, 101 Cal. 312, 316 [35 P. 872, 40 Am.St.Rep. 57]; 18 Cal.Jur.2d 471.) While a reporter's transcript has not been furnished on this appeal, the parties concede that the facts as to the purported substitution of attorneys were before the court and that Thomas filed the answer and cross-complaint on behalf of himself and his codefendants. His authority to do so was in direct issue. On the record the court could *854 only have concluded that no authority appeared for Thomas to represent his codefendants and therefore that as to them no answer or cross-complaint was regularly filed.
 The verification contained nothing which would avoid the mandatory provisions of section 581a. The only attorneys of record for the appellant were Rich, Carlin and Fuidge. No substitution or change of attorneys was made in the manner provided by sections 284 and 285 of the Code of Civil Procedure.  [fn. 2] [3] The attorney of record has the exclusive right to appear in court for his client and neither the party himself nor another attorney should be recognized by the court in the conduct or disposition of the case. (People v. Merkouris, 46 Cal.2d 540, 554, 555 [297 P.2d 999]; Wells Fargo & Co. v. City & County of San Francisco, 25 Cal.2d 37, 42 [152 P.2d 625].) [4] Under section 285 written notice of the substitution of a new attorney must be given to the adverse party. Until then the attorney of record must be recognized as his exclusive representative.
 [5] That Thomas T. Califro was an attorney at law gave him no legal right to represent his codefendants for the reason that they were still represented of record by other attorneys. [6] The court's unawareness of Thomas's status as an attorney was not material to its determination that no answer had been filed and that dismissal was mandatory. It could not serve as the basis for an order setting aside the dismissal on the ground of inadvertence or clerical error. The order of August 26th constituted a new decision after reconsideration of the facts and the applicable legal principles. [7] As stated in Bastajian v. Brown, 19 Cal.2d 209, 214 [120 P.2d 9], citing Stevens v. Superior Court, 7 Cal.2d 110, 112 [59 P.2d 988], "While a court has power to set aside judgments and orders inadvertently made which are not actually the result of the exercise of judgment, it has no power, having once made its decision after regular submission, to set aside or amend judicial error except under appropriate statutory procedure." In *855 view of the factual situation appearing in the record, the trial court had no discretion but to dismiss the action against the appealing defendant.
 The portion of the order of August 26, 1955, which purported to vacate the dismissal of the action as to the appellant Lena Califro is reversed.
 Gibson, C.J., Carter, J., Traynor, J., Schauer, J., Spence, J., and McComb, J., concurred.
 "1. Upon the consent of both client and attorney, filed with the clerk, or entered upon the minutes;"
 "2. Upon the order of the court, upon the application of either client or attorney, after notice from one to the other. ..."
 " 285. Notice of change. When an attorney is changed, as provided in the last section, written notice of the change and of the substitution of a new attorney, or of the appearance of the party in person, must be given to the adverse party. Until then he must recognize the former attorney."
NOTES
[fn. 1]  1. Section 581a provides in its pertinent part: "All actions, heretofore or hereafter commenced, must be dismissed by the court ... on its own motion ... if summons has been served, and no answer has been filed, if plaintiff fails, or has failed, to have judgment entered within three years after service of summons, except where the parties have filed a stipulation in writing that the time may be extended."
[fn. 2]  2. " 284. [Change of attorney.] The attorney in an action ... may be changed at any time before or after judgment ... as follows:


64 B.R. 638 (1986)
In the Matter of Dorothy E. MARTIN, Debtor.
Vivian A. HOUGHTON, Trustee, Plaintiff,
v.
Carl P. HOVATTER, Defendant.
Bankruptcy No. 84-399, Adv. No. 85-70.
United States Bankruptcy Court, D. Delaware.
August 4, 1986.
Vivian A. Houghton, Wilmington, Del., trustee of the Estate of Dorothy E. Martin.
Benjamin F. Shaw, III, Georgetown, Del., for Carl P. Hovatter.

MEMORANDUM OPINION AND ORDER
HELEN S. BALICK, Bankruptcy Judge.
The Trustee of the bankruptcy estate of Dorothy E. Martin filed a complaint against *639 Carl P. Hovatter. Ms. Martin and Mr. Hovatter were formerly married. Before their separation and divorce, Mr. Hovatter filed a Chapter 7 bankruptcy and received a discharge from joint marital debts on September 28, 1981. They separated on or about July 1, 1982, were later divorced and Ms. Martin filed a Chapter 7 bankruptcy case on November 14, 1984, listing the same joint marital debts. The Trustee's complaint asks the court to find these debts non-dischargeable as to Carl Hovatter under 11 U.S.C. § 523(a)(5) and direct him to reimburse the estate of Dorothy E. Martin for all marital indebtedness he assumed under a separation agreement dated March 18, 1983.
The Trustee moved for summary judgment. During the course of briefing, counsel for Mr. Hovatter raised the issue of whether the Trustee has standing to seek a determination of dischargeability.
Standing is an aspect of justiciability under Article III of the United States Constitution and the court's jurisdiction can be invoked only when the standing requirement is satisfied. Libertarian Party of Florida v. State of Florida, 710 F.2d 790 (11th Cir.1983). Standing, since it goes to the very power of the court to act, must exist at all stages of a proceeding. Safir v. Dole, 718 F.2d 475 (D.C.Cir.1983). Thus, the issue of standing is a jurisdictional question that cannot be waived and can be raised at any time. National Coalition to Ban Handguns v. Bureau of Alcohol, Tobacco & Firearms, 715 F.2d 632 (D.C.Cir. 1983).
Consequently, the merits of the action cannot be addressed until the question of the Trustee's standing has been resolved.
Section 727(a) of Title 11 provides that the court shall grant the debtor a discharge unless certain specific conditions are met. Subsection (c)(1) specifically grants standing to a trustee or a creditor to object to the granting of a discharge of all debts in a case. Section 523 uses the word "discharge" in the context of excepting from discharge a particular debt and focuses on specific debts involving specific creditors. Although subsections (c) and (d) are not applicable to actions under § 523(a)(5), they suggest that all "§ 523 actions" lie with the specific creditors. BR 4007(a) which tracks the language of former Rule 409(a) reinforces this suggestion by designating the debtor or any creditor as persons entitled to file complaints to determine dischargeability of a debt. Thus, in sharp contrast to § 727(c)(1), no power to obtain a determination of dischargeability is given a trustee under the statutory language of either § 523 or BR 4007(a). In re Lagrotteria, 42 B.R. 867 (Bkrtcy.N.D.Ill. 1984); Vaccariello v. Lagrotteria, 43 B.R. 1007 (D.C.1984).
Further, there is no statutory duty imposed on a trustee to object to the dischargeability of particular debts under § 523. The trustee in a bankruptcy case has specific duties enumerated in 11 U.S.C. § 704 which he is obligated to perform in a competent and professional manner. One of these duties is to oppose a debtor's discharge for the benefit of all creditors of the estate, if appropriate. It would be an unwarranted burden upon the trustee to impose the additional requirement of investigating each creditor's claim against a debtor to ascertain whether or not such debt might be determined to be nondischargeable. In re Overmyer, 26 B.R. 755 (Bkrtcy.S.D.N.Y.1982).
Since the Trustee lacks standing, jurisdiction is absent and the complaint must be dismissed.


449 U.S. 1068
101 S.Ct. 799
66 L.Ed.2d 614
Philip M. KLUTZNICK, Secretary of Commerce, et  al., applicants,v.Hugh L. CAREY et alNo. A-567
Supreme Court of the United States
December 30, 1980

The application of the Solicitor General for a stay pending appeal to the United States Court of Appeals for the Second Circuit was presented to Justice Marshall as Circuit Justice, and by him referred to the Court.  The application was directed to that portion of the judgment entered December 29, 1980, by the United States District Court for the Southern District of New York, case No. 80 Civ. 4550, that precludes the Bureau of the Census from certifying to the President the population totals for New York and the state-by-state census tabulations, on December 31, 1980, as mandated by 13 U.S.C. § 141(b).  The application is hereby granted.  This order shall remain in effect pending disposition of the appeal by the Court of Appeals.
Justice STEVENS took no part in the consideration or decision of this application.
Justice MARSHALL, dissenting.

1
In this case, applicant Secretary of Commerce and others seek a stay pending appeal, of an order of the United States District Court for the Southern District of New York, enjoining the Census Bureau from certifying the official tabulation of New York State's population to the President as required by 13 U.S.C. § 141(b). Respondents include the city of New York and its Mayor;  the Governor of the State;  and several voters and taxpayers in various city, congressional, and state senatorial and assembly districts who filed suit in District Court alleging that the 1980 census was conducted in a manner that will inevitably result in an undercount, largely in low-income areas populated by members of minority groups.  Specifically, respondents alleged that the master address registers used by the Census Bureau were grossly inadequate and that the followup check of the master address registers by Postal Service and census workers was grossly inadequate.  Respondents' ultimate contentions were that the resulting undercount not only will cause New York to lose at least one congressional seat to which it is entitled when reapportionment is made pursuant to the 1980 census, but that it will also result in the dilution of the votes of New York residents vis-a-vis those of residents of other States, and will cost New York City and the State vast sums of money distributed under federal revenue sharing and other programs with statutory formulas tied to the census.

2
The District Court initially entered a preliminary injunction against the Census Bureau:  It found that respondents had established a clear possibility of irreparable harm to the efficacy of their votes, and that respondents were likely to succeed because they had submitted significant evidence concerning Census Bureau mismanagement and had raised serious questions as to whether some of the Bureau's policies and procedures were carried out in an arbitrary and irrational manner. The District Court declined to stay the preliminary injunction, and on appeal, the Court of Appeals for the Second Circuit affirmed the District Court's denial of a stay.  The Court of Appeals found that respondents had demonstrated a possibility of irreparable harm and had also shown sufficient prospect of success on the merits to justify a preliminary injunction, and that the District Court did not disregard traditional equitable principles in issuing the preliminary injunction.

3
On December 22, 1980, the District Court entered final judgment in favor of respondents.  The court found that the Bureau's implementation of the census was improper in several respects and that the Bureau's mismanagement of the census had resulted in a significant undercount in New York.  The District Court ordered the Bureau to adjust the actual census data regarding New York in a reasonable and scientific manner to compensate for the disproportionate undercount, and it enjoined the Bureau from certifying New York's population totals to the President on December 31, 1980, as required by statute. Applicants then brought this stay application.

4
Most of applicants' memorandum in support of their stay application is devoted to arguing that the respondents are unlikely to succeed on the merits of the case.*  On the sparse record before this Court, I am not prepared to conclude that respondents cannot prevail on the merits.  The Court of Appeals rejected applicants' claim that respondents cannot prevail on the merits and, as noted, the District Court has ruled against applicants as has at least one other District Court.  For me, the crucial issue in ruling on this application is applicants' inability to show that there is a substantial likelihood that they will suffer irreparable harm if a stay is not issued.  The only thing applicants point to is that the Census Bureau will be unable to comply with the December 31 deadline if the District Court's order is not stayed.  But as the Court of Appeals pointed out, there is nothing sacrosanct about the December 31 deadline.  If the District Court's conclusion is correct, the inability to meet the deadline is the Bureau's own fault.  Moreover, the actual reapportionment of seats based on the 1980 census will not commence until some later date and there is nothing about the District Court's order that prevents this reapportionment from taking place well in advance of the 1982 congressional elections.

5
Applicants' failure to prove irreparable harm from denial of their stay application stands in marked contrast to the irreparable harm that will be inflicted on respondents if the Census Bureau is allowed to certify inaccurate (at least according to the District Court) results to the President.  Applicants have not suggested that there is any procedure for correcting these "inaccurate" figures once they are reported to the President and he transmits them to Congress as required by statute, and these figures will presumably be the basis for the reapportionment of congressional seats and a variety of federal revenue grants.  The members of minority groups and other residents of low-income areas who were not counted by the Census Bureau will therefore suffer the irreparable injury stemming from the undercount.  Thus, it appears that granting the application not only fails to preserve the status quo, it may actually moot the underlying controversy. In these circumstances, I cannot agree that a stay must issue.

*
 Applicants also rely on Justice Stewart's stay of the District Court's decision in Young v. Klutznick, 497 F.Supp. 1318 (ED Mich. 1980).  In that case, the District Court enjoined the Census Bureau from certifying population totals for any States by December 31, 1980.  But in this case, unlike in Young, the District Court order only applies to New York's population totals. Thus, applicants cannot rely on the alleged interest of various States in using the census figures for redistricting purposes for state legislatures.


680 F.2d 352
UNITED STATES of America, Plaintiff-Appellee,v.Walter L. BALLARD, James R. Clark, Ronald B. Pruitt and JohnL. Burns, Defendants-Appellants.UNITED STATES of America, Plaintiff-Appellee,v.Walter BALLARD, Defendant-Appellant.
Nos. 79-5268, 80-5752.
United States Court of Appeals,Fifth Circuit.

Unit B*
July 12, 1982.
Bruce S. Rogow, Nova University Law Center, Fort Lauderdale, Fla., for Ballard.
Ellis C. McCullough, Houston, Tex., for Clark.
Olney G. Wallis, Houston, Tex., for Pruitt and Burns.
G. Ernest Caldwell, Houston, Tex., for Burns.
Judy S. Rice, W. Christian Hoyer, Asst. U. S. Attys., Tampa, Fla., for plaintiff-appellee.
Appeals from the United States District Court for the Middle District of Florida.
ON PETITION FOR REHEARING
Before MARKEY**, Chief Judge, and HILL and HENDERSON, Circuit Judges.
PER CURIAM:

1
The United States has filed a petition for rehearing asserting that we misunderstood certain facts which were crucial to our disposition of this case.  We deny the petition, but we modify our opinion (reported at 5th Cir., 663 F.2d 534) as explained below in order to clarify the grounds upon which we reversed the appellants' convictions.

2
The appellants1 were convicted on charges of conspiracy and mail fraud in violation of 18 U.S.C. §§ 371 and 1341.  The charges were based on their involvement in a scheme in which corporate employers were allegedly defrauded when their employees failed to disclose the existence of a manipulative system of reselling oil (a "daisy-chain") and the participation of the employees in the system of payoffs that resulted from the daisy-chain.2  We held that a breach of fiduciary duty of honesty or loyalty involving a violation of the duty to disclose could only result in a criminal mail fraud where the information withheld from the employer was material and that, where the employer was in the private sector, information should be deemed material if the employee had reason to believe the information would lead a reasonable employer to change its business conduct.  663 F.2d at 540-41.  We found that Ballard and Burns could not have failed to disclose material information to their employers even if they had withheld their knowledge of the daisy-chaining scheme since the companies could not have used the information to alter their conduct.  Pruitt and Clark, in turn, could not have been guilty of aiding and abetting.  Underlying these conclusions was our understanding that the evidence showed that the regulatory scheme effected through the Federal Emergency Petroleum Act ("the Act") would have prevented Charter and Signal-the oil companies for which Ballard and Burns worked-from obtaining a higher market price for their oil.3

3
In its petition for rehearing, the government argues that Charter and Signal suffered actual monetary loss as a result of the appellants' alleged misconduct.  The government contends that we overlooked the detriment suffered by Charter and Signal because we did not understand (1) that the appellants' scheme was in operation before the regulatory scheme imposed by the Act became effective or (2) that the evidence was inconclusive that Charter and Signal received their maximum price for oil under the regulatory scheme.

4
After reviewing the record and the original briefs submitted on appeal, we conclude that these arguments are being presented for the first time in the petition for rehearing.  The government, from the beginning of the trial to its end, pursued the broad theory that the mail fraud statute is violated whenever the mail is used to further a scheme in which an employee accepts unauthorized compensation.  The trial court instructed the jury that a deliberate breach of fiduciary duty constitutes a "scheme to defraud" under the mail fraud statute and that an employee's fiduciary obligation includes "a duty to make a full and fair disclosure to the employer of any personal interest or profit which the employee expects to derive or has derived from any transaction in which he participates in the course of his employment."  Transcript vol.  XXI at 224-25.  In arguments to the jury the government emphasized that any acceptance of unauthorized compensation would constitute fraud under these instructions.4  E.g., id., vol.  XX at 54; id., vol.  XXI at 182-85.  There was no attempt to show at trial the type of detriment which we have held is necessary for a breach of fiduciary duty to work a criminal fraud.  For that reason, the argument that actual detriment existed is not sufficiently supported by the evidence adduced at trial.5

5
First, the record does not establish that the scheme alleged by the government antedated both the Act and the regulations pursuant to the Act.  The trial judge was never asked to take judicial notice of the time the Act and regulations became effective, nor did the government bring the correct date of price controls to the attention of the jury.  During most of the trial the testimony simply refers to the government controls as being in effect at the time of the daisy-chaining transactions.  Where specific times are indicated, they tend to support the idea that all the transactions took place after the price controls were in effect.  For example, one government witness testified on cross-examination: "I believe there was some type of pricing regulations in effect during '73.  I do not know whether it was Phase 1, Phase 2, Phase 4, or the existing regulations that occurred after the Arab embargo."  Transcript, vol.  X, Testimony of Dudley K. Parker at 73.  Another government witness testified on cross-examination that "price ceilings started back on March 15, along with the allocation program."  Id., vol.  IX, Testimony of O. J. Tauber at 208.  Since the government contends that the appellants' scheme began in April of 1973, such testimony indicates that no oil transactions occurred before price controls went into effect.

6
The government's second contention-that the convictions can be upheld because maximum profits were not being received by Signal or Charter-must also be rejected.  The government cites testimony indicating that Charter and Signal were not able to determine, after price controls went into effect, whether they had received the best prices for their products on each transaction on which the appellants were receiving profits.  Standing alone, though, such testimony does not permit the conclusion that each corporate employer did not receive its maximum profit.  Moreover, the government conceded in its brief on appeal that the selling corporations were receiving maximum prices.  The government's own brief described the appellants' scheme as follows:

7
In order to increase the amount of profits gained by the selling corporations (and thus increase the amount of his own commissions), Granlund arranged for the oil to be "daisy-chained" from one selling corporation to another before it reached FPC.  Each seller charged its legal limit by adding its profit margin to its purchase price, the price became increasingly higher and the defendants split the profits and commissions paid to Granlund.

8
Brief for Appellee at 13-14 (emphasis added).

9
It will not do that on motion for rehearing the government for the first time questions its own prior concessions and shores up its own trial strategy by arguing here that the corporate employers suffered an actual loss of profits because there might have been a short period of time at the commencement of the activities of the appellants when price controls and allocation programs had not come into effect or because the corporate employers were not receiving maximum profits on the transactions in question during the regulatory scheme.  Clearly, from the record, the prosecution did not undertake to urge or prove at trial the theories offered here.  It cannot be concluded, from what was offered in evidence by the government, that the jury could have found beyond a reasonable doubt that the appellants had deprived corporate employers of their employees' faithful services in a manner that would have constituted mail fraud under § 1341.  The conduct as proven did not, as explained in our opinion, constitute the crime charged, and the convictions cannot stand on the state of this record.  Under the unusual circumstances of this case, fraud resulting from the alleged breaches of fiduciary duty was not demonstrated; absent such proof, the government's evidence set forth only what some would characterize as distasteful business manipulations and transactions which ought not be acceptable in commerce.

10
We modify our opinion to clarify that the convictions were based (impermissibly) on mail fraud and that no regulatory violation was submitted to the jury as a theory for prosecution.  We make no judgment as to the regulatory proscriptions regarding daisy-chaining under the Act or any other price or allocation controls which were promulgated by Congress or the Department of Energy.6  Accordingly, we eliminate that paragraph of our opinion at 663 F.2d 544 which begins with the sentence: "Our disposition of these cases is in no way a condonation of the appellants' behavior."  At 663 F.2d 536, we modify our language to read: "In the complex laws and regulations then controlling the marketing of oil, none (was shown at trial to have) prohibited this practice."

11
With these observations and modifications, the Petition for Rehearing is DENIED.

*
 Former Fifth Circuit case, Section 9(1) of Public Law 96-452 October 14, 1980

**
 Honorable Howard T. Markey, Chief Judge for the U. S. Court of Customs and Patent Appeals, sitting by designation

1
 The appellants referred to herein are Walter L. Ballard, James R. Clark, Ronald B. Pruitt, and John L. Burns.  The other appellant whose claims were considered in our opinion was Raymond F. Granlund, who died on November 15, 1981.  His death was certified to us after the opinion had issued, and we then ordered that his appeal be dismissed as moot and that the district court vacate the judgment and dismiss the indictment against him

2
 The daisy-chaining scheme is described at 663 F.2d 536-39

3
 We have retained use of the Act as a time reference for allocation and specific pricing regulations for petroleum products herein in order to be consistent with our opinion.  However, that is somewhat misleading; according to a letter this court received from the Department of Energy:
(p)rice controls were promulgated even prior to enactment of the Emergency Petroleum Allocation Act ... under the authority of the Economic Stabilization Act of 1970 ("ESA").  In this regard, the ESA vested in the Cost of Living Council (CLC) the authority to regulate the prices at which petroleum products were sold.  Pursuant to an Executive Order, on June 13, 1973 the CLC implemented a "freeze" on, among other things, the selling prices of petroleum products as part of Phase III of its wage and price stabilization program.  Although those regulations did not require the calculation of maximum lawful prices, they "froze" the actual selling prices in effect during the summer of 1973.  On August 19, 1973 the CLC promulgated, as part of Phase IV, specific pricing regulations governing the sale of petroleum and petroleum products.  6 C.F.R. Part 150, Subpart L (38 Fed.Reg. 22536, August 22, 1973.)  Those controls were adopted and continued by the Federal Energy Office on December 27, 1973.  10 C.F.R. Part 212 (39 Fed.Reg. 744, January 2, 1974).  These regulations generally required sellers to determine maximum lawful prices.

4
 The government had sought a similar instruction which would also have obviated the need to show a detriment to the employer.  Transcript, vol.  XIX at 245-46

5
 We recognized in our opinion that, in the absence of price regulations, payments such as those received by the appellants could be captured in the form of higher prices by the corporations at the beginning of the daisy-chain.  See 663 F.2d at 541.  Thus, in an unregulated market, the detriment necessary for a finding of mail fraud in a case such as this would be shown by mere receipt of kickbacks.  Part of the appellants' defense in this case was, however, that price and allocation regulations precluded the corporations from capturing those profits.  It was thus necessary for the government to prove otherwise in order to establish guilt beyond a reasonable doubt

6
 The Department of Energy contends that its regulations did prohibit daisy-chaining, contrary to dicta in our opinion.  Whether that is true is unnecessary to our resolution of this case since no regulatory violations were alleged and since the government did not contend at trial that the corporate employers suffered actual detriment because their employees subjected the companies to potential liability for illegal profits and civil penalties under the regulatory scheme