                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-10-1995

Spence v Straw
Precedential or Non-Precedential:

Docket 94-1866




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           UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT

                     ___________

              Nos. 94-1866 and 94-1916
                    ___________


   KEVIN SPENCE

                          Appellant,

                   vs.

   EDWARD STRAW, ADMIRAL, Director of the
   DEFENSE LOGISTICS AGENCY of the U.S.
   Department of Defense

                          Appellee.


                     ___________


   APPEAL FROM THE UNITED STATES DISTRICT COURT
     FOR THE EASTERN DISTRICT OF PENNSYLVANIA

            (D.C. Civil No. 92-cv-03713)

                     ___________


     Submitted Under Third Circuit LAR 34.1(a)
                   March 27, 1995

BEFORE:   MANSMANN, COWEN and LEWIS, Circuit Judges.

                (Filed   May 10, 1995)

                     ___________
Alan B. Epstein
Jablon, Epstein, Wolf & Drucker
The Bellevue
Broad Street at Walnut
Ninth Floor
Philadelphia, PA 19103

            Attorney for Appellant


Richard Mentzinger, Jr.
Karen E. Rompala
Office of the United States Attorney
Suite 1250
615 Chestnut Street
Philadelphia, PA 19106

            Attorneys for Appellee


                            ___________

                        OPINION OF THE COURT
                            ___________



LEWIS, Circuit Judge.

            In this case we are required to evaluate whether a

party suing under section 504 of the Rehabilitation Act of 1973,

29 U.S.C. § 794, is required to exhaust administrative remedies

provided in Title VII of the Civil Rights Act of 1964, 42 U.S.C.

§2000e-16, and whether suit under the Rehabilitation Act -- with

prior exhaustion of remedies -- is the exclusive means by which a

plaintiff may raise claims against federal agencies relating to

handicap discrimination.    Concluding that the answer to both of

these questions is yes, we will affirm the district court in most

respects, while modifying the court's judgment to conform to our

analysis.
                                 I.

           Because this case comes to us upon grant of a motion to

dismiss, we accept all of the plaintiff's well-pleaded facts as

true.   Bogosian v. Gulf Oil Corp., 561 F.2d 434 (3d Cir. 1977).

According to the recitations in the amended complaint, the

following facts comprise this dispute.

           In early 1992, Kevin Spence applied to the Defense

Logistics Agency of the Department of Defense ("DLA") for the

position of "Sewing Machine Operator (Single Needle)."    He passed

the DLA's competency examination with a score of 85.     The DLA

promptly provided Spence with a Notice of Rating, which confirmed

his score and declared him eligible for the sewing machine

operator position.   On April 23, 1992 Spence passed the physical

examination required for hire.   After passing another performance

examination on June 2, 1992, Spence was notified by the DLA that

he had "been tentatively selected for a permanent position of

Sewing Machine Operator, W-3."

           However, on June 24, 1992 Spence was required to take

an eye examination, and he failed.    The test showed that his

approximate vision in both eyes was 20/50, and the DLA required

sewing machine operators to have at least 20/20 vision in one eye

and 20/40 in the other.   Because he had failed the eye

examination, Spence was informed that the DLA had rescinded his

selection as a sewing machine operator.

           Spence filed a pro se complaint against the DLA in June

1992.   The DLA moved to dismiss that complaint, but that motion

was denied because the DLA had not served counsel which had been
appointed to assist Spence.    When a second motion to dismiss was

properly filed and served, the pro se complaint was dismissed

without prejudice in March 1994 on the ground that it did not

with specificity set forth a cause of action under the

Rehabilitation Act.   The district court noted, however, that new

counsel had recently been appointed for Spence, and that it was

likely that this counsel would be able to set forth Spence's

concerns in a manner providing adequate notice to the DLA of the

nature of plaintiff's claims.    Thus, Spence's new counsel was

allowed 30 days to file an amended complaint.

           This was done.   In the amended complaint, from which

our factual recitation is gleaned, Spence sued Admiral Edward

Straw ("Straw"), Director of the DLA, in his official and

individual capacities, premising jurisdiction upon 28 U.S.C.

§ 1331.   Having provided the factual allegations described above,

Spence contended in his amended complaint that those facts stated

two causes of action.   Count One alleged that Spence was a

handicapped individual as defined under section 504 of the

Rehabilitation Act and that he was denied employment as a sewing

machine operator solely because of his slight vision handicap.

Spence contended that the DLA's vision requirements were not

reasonably related to the sewing machine operator position, and

that even if they were, Spence could perform the job with a

slight and reasonable accommodation on the part of the DLA, which

would not unduly burden that agency.    By failing to hire Spence

because of his handicap, Spence contended, the DLA had violated

section 504.
            Count Two of the amended complaint alleged that the DLA

denied Spence equal protection under the Due Process Clause of

the Fifth Amendment by singling him out and unnecessarily

differentiating him because of his vision handicap.    Furthermore,

Spence contended, the DLA's actions were arbitrary and

irrational, because Spence had passed the requisite performance

test showing that he could perform the job of sewing machine

operator.

            Straw filed a motion for summary judgment upon and

dismissal of the amended complaint on two grounds:    (1) Spence

failed to exhaust administrative remedies on his claim in Count

One under section 504 of the Rehabilitation Act prior to filing

suit, and the amended complaint is now time-barred; and

(2) Spence's constitutional claim in Count Two should be

dismissed because the Rehabilitation Act provides exclusive,

preemptive remedies for a plaintiff pursuing handicap

discrimination claims.    The district court agreed, and in a

memorandum and order filed in August 1994, the district court

granted Straw's motion to dismiss the amended complaint with

prejudice (and dismissing the motion for summary judgment as

moot).   Spence timely appealed, and we have jurisdiction of the

district court's final order under 28 U.S.C. § 1291.
                                II.

          We exercise plenary review over a district court's

dismissal of a complaint for failure to state a claim upon which

relief can be granted.   Moore v. Tartler, 986 F.2d 682, 685 (3d

Cir. 1993).   Accepting as true all well-pleaded facts in the

plaintiff's complaint (D.R. v. Middle Bucks Area Vocational

Technical School, 972 F.2d 1364, 1367 (3d Cir. 1992)), the

relevant inquiry is whether under any reasonable interpretation

of those allegations the plaintiff may be entitled to relief

(Holder v. City of Allentown, 987 F.2d 188, 193 (3d Cir. 1993)).

We apply this standard to both of the district court's central

holdings below, first discussing exhaustion of remedies prior to

suing for violation of section 504, and then turning to the

question of whether the Rehabilitation Act provides the exclusive

means of raising allegations of discrimination on the basis of

handicap by federal agencies.

                                A.

                                1.

          Congress passed the Rehabilitation Act of 1973 in part

"to promote and expand employment opportunities in the public and

private sectors for handicapped individuals and to place such

individuals in employment." 29 U.S.C. § 701(8) (1976).   The

Rehabilitation Act approached this goal in a number of ways, but

one strategy focused on prohibiting discrimination against the

handicapped by the federal government, federal contractors and

other recipients of federal funds.
          As originally drafted the Rehabilitation Act required

federal agencies to submit affirmative action plans for

handicapped individuals (section 501(b), codified at 29 U.S.C.

§ 791(b)), required federal contractors to include in their

contracts provisions mandating that the contractor would take

affirmative action to employ qualified handicapped individuals

(section 503, codified at 29 U.S.C. § 793), and stated with

respect to recipients of federal funds that "[n]o otherwise

qualified handicapped individual . . . shall, solely by reason of

his handicap, be excluded from participation in, be denied the

benefits of, or be subjected to discrimination under any program

or activity receiving Federal financial assistance" (section 504,

codified at 29 U.S.C. § 794).   However, as originally drafted the

Rehabilitation Act did not explicitly permit handicapped

individuals to bring claims for violations of its provisions.

          Congress filled this gap in 1978, with the Senate and

House adding different language to what became the Rehabilitation

Act amendments of that year.    See Prewitt v. United States Postal

Service, 662 F.2d 292, 301-04 (5th Cir. 1981) (discussing 1978

amendment process in detail).   The Senate's contribution focused

on provision of a new section in the Rehabilitation Act --

section 505, codified at 29 U.S.C. § 794a.   That provision stated

in section 505(a)(1) that
          [t]he remedies, procedures, and rights set
          forth in section 717 of the Civil Rights Act
          of 1964 (42 U.S.C. 2000e-16) [Title VII],
          including the application of sections 706(f)
          through 706(k) (42 U.S.C. 2000e-5(f) through
          (k)), shall be available with respect to any
          complaint under [29 U.S.C.] section 791
           [Rehabilitation Act section 501] of this
           title . . . .


Section 505(a)(1), codified at 29 U.S.C. § 794a(a)(1).

           Section 505(a)(2), in turn, provided a private cause of

action for handicapped individuals against providers and

recipients of federal assistance, stating:
          The remedies, procedures, and rights set
          forth in Title VI of the Civil Rights Act of
          1964 [42 U.S.C. §2000d et seq.] shall be
          available to any person aggrieved by any act
          or failure to act by any recipient of Federal
          assistance or Federal provider of such
          assistance under [29 U.S.C.] section 794 of
          this title [Rehabilitation Act section 504].


Section 505(a)(2), codified at 29 U.S.C. § 794a(a)(2).

           At the same time the Senate was focusing on new section

505, the House "extended section 504's proscription against

handicap discrimination to `any program or activity conducted by

an Executive agency or by the United States Postal Service

. . . '"   Prewitt, 662 F.2d at 302. In short,
           by its 1978 amendments to the Rehabilitation
           Act, Congress clearly recognized both in
           section 501 and in section 504 that
           individuals now have a private cause of
           action to obtain relief for handicap
           discrimination on the part of the federal
           government and its agencies. The amendments
           to section 504 were simply the House's answer
           to the same problem that the Senate saw fit
           to resolve by strengthening section 501 [by
           adding section 505]. The joint House-Senate
           conference committee could have chosen to
           eliminate the partial overlap between the two
           provisions, but instead the conference
           committee, and subsequently Congress as a
           whole, chose to pass both provisions, despite
           the overlap.


Id. at 304.
           Because of the less than artful manner in which

Congress amended the Rehabilitation Act, the statutory provisions

produce an apparently incongruent enforcement scheme.    Federal

agencies may, by the terms of the Rehabilitation Act, be sued for

violation of either section 501 or 504 of the Act.    If a party

sues a federal agency for violation of section 501 by pursuing a

claim under section 505(a)(1), Title VII remedies are

"available."   29 U.S.C. § 794a(a)(1).   Under Title VII, the

remedies available include any remedies for discrimination

provided by the federal agency itself.    42 U.S.C. § 2000e-16(c).

The Supreme Court has explained that when Title VII remedies are

available, they must be exhausted before a plaintiff may file

suit.   And although section 505(a)(1) states only that Title VII

remedies are "available" when one complains of a violation of

section 501, "the legislative history leaves no doubt that

Congress meant to require exhaustion of administrative remedies

[in such cases] just as in ordinary Title VII actions."

McGuinness v. United States Postal Service, 744 F.2d 1318, 1320

(7th Cir. 1984), citing S.Rep. No. 890, 95th Cong., 2d Sess.

18-19 (1978); 124 Cong. Rec. 30578 (1978) (remarks of Senator

Cranston); and Prewitt, 662 F.2d at 303-04.   Thus, a party is

barred from suing a federal agency for violation of section 501

if he or she has failed to exhaust administrative remedies under

Title VII.

           However, an aggrieved party may also sue a federal

agency for violation of section 504 -- which Congress amended in

1978 to prohibit discrimination by federal agencies -- by
pursuing a claim under section 505(a)(2).   Section 505(a)(2),

however, states that the "remedies, procedures, and rights of

Title VI" -- and not Title VII -- are available.    29 U.S.C.

§ 794a(a)(2) (emphasis added).

           Spence argues that since he sued the DLA for violation

of section 504, Title VII remedies were not available to him and

need not have been exhausted.    Appellant's Br. 11-12.

Furthermore, he correctly notes that although we have not

directly ruled on the issue of whether Title VI remedies must be

exhausted before suit may be brought to enforce section 504, we

have ruled that exhaustion of remedies is not required when a

claim is brought pursuant to Title VI.    Id. 12, citing Chowdhury

v. Redding Hospital & Medical Center, 677 F.2d 317 (3d Cir.

1982).   Thus, Spence concludes, he did not have to exhaust any

administrative remedies before filing suit.

           However, we reject Spence's analysis, having been

particularly persuaded by Judge Posner's lucid statutory

construction of the Rehabilitation Act in McGuinness, a case

closely analogous to the one before us.   In McGuinness, an

applicant for a job as a postman with the Milwaukee office of the

United States Postal Service was rejected on the ground that his

flat feet and hammer toes rendered him physically unfit for the

job.   He appealed his rejection to the general manager of the

Postal Service's employee relations division, but when he was

told by the general manager that the decision was final, he did

not "take the next step open to him, which would have been to

consult with the Postal Service's equal employment opportunity
counselor, followed (if necessary) by the filing of a formal

complaint."   McGuinness, 744 F.2d at 1320.

          Instead, McGuinness sued the Postal Service, seeking

damages and the next available postman vacancy.   The district

court dismissed McGuinness's complaint and, significantly,

refused to permit him to amend the complaint to state a claim

under section 505(a)(1) because he had failed to exhaust his

administrative remedies.   On appeal, the Seventh Circuit affirmed

the district court's dismissal, modifying it only to make clear

that dismissal was without prejudice to McGuinness "bringing a

new suit if and when he exhausts his administrative remedies."

McGuinness, 744 F.2d at 1321.

          McGuinness argued that he did not have to exhaust

administrative remedies because his suit was being asserted under

section 504, rather than 505(a)(1).   However, the court of

appeals rejected that contention in language that is applicable

here:
          Although section 504 has been held applicable
          to employment discrimination as well as other
          forms of discrimination against the
          handicapped by recipients of federal money
          . . . it is unlikely that Congress, having
          specifically addressed employment of the
          handicapped by federal agencies (as distinct
          from employment by recipients, themselves
          nonfederal, of federal money) in section 501,
          would have done so again a few sections later
          in section 504. Moreover, as McGuinness
          himself is quick to point out, section 505
          does not make Title VII remedies available to
          people complaining of a violation of section
          504; instead, in subsection (a)(2), it makes
          Title VI remedies available to them.
          McGuinness made no attempt to exhaust Title
          VI remedies either. Now it is true that he
           probably would not have been required to do
           so even if section 504 were applicable to his
           claim. Title VI remedies -- which involve
           things like cutting off federal funds to the
           discriminator -- are not designed to help
           individuals . . . . But that is beside the
           point. The point is that it would make no
           sense for Congress to provide (and in the
           very same section -- 505(a)) different sets
           of remedies, having different exhaustion
           requirements, for the same wrong committed by
           the same employer; and there is no indication
           that Congress wanted to do this -- as of
           course it could do regardless of what might
           seem sensible to us -- when it added section
           505 in 1978.


McGuinness, 744 F.2d at 1321 (citations omitted).    The Seventh

Circuit concluded that either an individual should not be

permitted to sue a federal agency under section 504, or

alternatively that an individual asserting a claim based upon

section 504 must first exhaust Title VII remedies.   Id. at

1321-22.

           We note that although our sister circuits have not been

entirely consistent in the manner in which they have reached the

ultimate result, the Seventh Circuit's resolution of the

exhaustion issue in McGuinness is consistent with other courts of

appeals that have faced the question of whether a plaintiff must

exhaust Title VII remedies before bringing suit under section

504.   One court of appeals has explicitly ruled that an

individual may sue a federal agency or the Postal Service only

under sections 501 and 505(a)(1).   See Boyd v. United States
Postal Service, 752 F.2d 410, 413 (9th Cir. 1985).    Other courts

of appeals have found that if a litigant sues a federal agency
under sections 504 and 505(a)(2), he or she must satisfy Title

VII remedies so as not to evade the remedial scheme developed by

Congress in the Rehabilitation Act.   Prewitt v. United States

Postal Service, 662 F.2d 292 (5th Cir. 1981); Smith v. United

States Postal Service, 742 F.2d 257 (6th Cir. 1984); Morgan v.

United States Postal Service, 798 F.2d 1162, 1164-65 (8th Cir.

1986); Doe v. Garrett, 903 F.2d 1455 (11th Cir. 1990).   Finally,

in Milbert v. Koop, 830 F.2d 354 (D.C. Cir. 1987), the District

of Columbia Circuit determined that it need not decide whether

suits by individuals under sections 504 and 505(a)(2) are barred,

but noted that courts that had allowed suits under those

provisions had required exhaustion of Title VII remedies prior to

suit, and strongly suggested plaintiffs suing federal agencies

for handicap discrimination in the future "seek relief under

section 501 rather than under section 504."   Id. at 357.    After

examination of this case law, and adopting Judge Posner's

analysis in McGuinness, we conclude that a plaintiff must exhaust

Title VII remedies before bringing suit under sections 504 and

505(a)(2) of the Rehabilitation Act, just as he or she must

before suing under sections 501 and 505(a)(1) of the Act.1
1
 .    Spence relies principally upon three cases: Camenisch v.
University of Texas, 616 F.2d 127 (5th Cir. 1980), vacated on
other grounds, 451 U.S. 390 (1981), Pushkin v. Regents of
University of Colorado, 658 F.2d 1372 (10th Cir. 1981), and
Greater Los Angeles Council on Deafness, Inc. v. Community
Television of Southern California, 719 F.2d 1017 (9th Cir. 1983).
However, those cases are distinguishable: in each of those cases
the defendant contended only that Title VI remedies had to be
exhausted. Camenisch, 616 F.2d at 133-36; Pushkin, 658 F.2d at
1381-82; Greater Los Angeles Council on Deafness, 719 F.2d at
1021; see also Smith v. Barton, 914 F.2d 1330 (9th Cir. 1990)
(stating that since "administrative remedies" under section 504
                               2.

          The DLA argued to the district court that under the

regulations governing the filing of discrimination complaints

with the DLA, Spence had 45 days from the date of the alleged

discrimination in which to contact an Equal Employment

Opportunity counselor at the DLA.    Joint Appendix ("J.A.") 67,

citing 29 C.F.R. § 1614.105(a)(1).   The agency further noted that

Spence could have sought an extension of the 45 day period
(..continued)
result only in "suspension or termination of the federal
assistance to the institutional recipient" (i.e., Title VII),
exhaustion is not required). There was no indication, therefore,
that any of those courts addressed the applicability or relevance
of Title VII remedies. Furthermore, we note that the Fifth
Circuit subsequently limited its Camenisch holding to suits
involving claims against federal grantees -- in suits against
federal agencies under the Rehabilitation Act, parties are
required to exhaust their Title VII remedies. Prewitt v. United
States Postal Service, 662 F.2d 311, 314 (5th Cir. 1981). And as
explained in the text, in Boyd v. United States Postal Service,
752 F.2d 410 (9th Cir. 1985), the Ninth Circuit found that
individuals may sue federal agencies only under sections 501 and
505(a)(1) of the Rehabilitation Act, undercutting Spence's
reliance upon Greater Los Angeles Council on Deafness.

      Spence also argues that our decisions in Chowdhury v.
Redding Hospital & Medical Center, 677 F.2d 317 (3d Cir. 1982),
and Cheyney State College Faculty v. Hufstedler, 703 F.2d 732 (3d
Cir. 1983), suggest that exhaustion of administrative remedies is
not required prior to filing suit under sections 504 and
505(a)(2). We disagree. Chowdhury and Cheyney State College
Faculty stand for the proposition that a party need not exhaust
Title VI remedies before filing a suit claiming a violation of
that statute. Although in Chowdhury we drew support for our
conclusion that exhaustion is not required under Title VI from
cases construing section 504 of the Rehabilitation Act
(Chowdhury, 677 F.2d at 322), neither Chowdhury nor Cheyney State
College Faculty involved a claim under the Rehabilitation Act,
thus neither case discussed whether a litigant pursuing a claim
under sections 504 and 505(a)(2) has any duty to exhaust Title
VII remedies. We decline to turn obiter dictum in Chowdhury into
a holding here.
pursuant to 29 C.F.R. § 1614.105(2), which permits an agency to

extend the 45-day time limit of subsection (a)(1) of the

regulation
             when the individual shows that he or she was
             not notified of the time limits and was not
             otherwise aware of them, that he or she did
             not know and reasonably should not have been
             known [sic] that the discriminatory matter or
             personnel action occurred, that despite due
             diligence he or she was prevented by
             circumstances beyond his or her control from
             contacting the counselor within the time
             limits, or for other reasons considered
             sufficient by the agency . . . ."


29 C.F.R. § 1614.105(2).     The DLA contended that since it was

undisputed that the alleged discriminatory act had occurred back

in 1992 and that Spence had not exhausted his Title VII remedies,

the 45-day time limit had run on his ability to pursue those

remedies, such administrative action was now barred, and his

amended complaint should therefore be dismissed with prejudice as

untimely.2

             The district court dismissed Spence's section 504 claim

for failure to exhaust administrative remedies, but failed to
note whether that dismissal was with or without prejudice.     We

believe that the complaint should be dismissed as premature,

rather than untimely, and without prejudice to Spence's potential

to file suit again upon exhaustion of administrative remedies.

We note that the regulations cited by the DLA state that the


2
 .    On appeal, the DLA does not state whether it continues to
maintain that Spence's claims are time-barred -- or potentially
premature.
agency may decide to accept an otherwise untimely administrative

complaint "for other reasons considered sufficient by the

agency."   29 C.F.R. § 1614.105(a)(1).    Although we are skeptical

whether the DLA will consider Spence's possible argument that he

did not know that he had to exhaust Title VII remedies before

suing under sections 504 and 505(a)(2) "sufficient reason" to

extend the 45-day deadline, that issue is for the DLA to

determine in the first instance.     Cf. McGuinness, 744 F.2d at

1320-21 (interpreting similar provision in 29 C.F.R.

§ 1613.214(a)(4), and clarifying that dismissal in that case was

"without prejudice to [McGuinness] bringing a new suit if and

when he exhausts his administrative remedies").     Thus, we will

clarify the district court's order dismissing this action to note

that Spence may maintain another suit if he pursues his Title VII

remedies, the DLA excuses his failure to file the complaint

during the 45 days following the alleged discriminatory act, and

he exhausts the relevant procedures.     We offer no view as to the

appropriate outcome; instead, we emphasize that this is a matter

for the DLA, not us, to determine.

                                B.

           The district court dismissed Spence's claim that the

DLA denied Spence equal protection under the Due Process Clause

of the Fifth Amendment (and that the DLA's actions were arbitrary

and irrational) on the ground that the Rehabilitation Act

provides the exclusive means by which a litigant may raise claims

of discrimination on the basis of handicap by federal agencies.
Spence challenges that holding, as well, but we agree with the

district court's conclusion.

          Given that we have found that a litigant must exhaust

administrative remedies under Title VII before filing suit

against a federal agency alleging discrimination on the basis of

handicap under sections 504 and 505(a)(2) of the Rehabilitation

Act, it would be anomalous to permit a litigant to avoid that

remedial scheme by simply asserting an independent constitutional

claim premised upon the same facts.   As the Seventh Circuit

explained in McGuinness in rejecting a similar claim under the

Fifth Amendment, "[A]ny effort to avoid sections 505's

requirement of exhausting administrative remedies by challenging

the same conduct under another provision of law must fail because

it would `allow [Congress's] careful and thorough remedial scheme

to be circumvented by artful pleading.'"   McGuinness, 744 F.2d at

1322, quoting Brown v. General Services Administration, 425 U.S.

820, 833 (1976).3   Thus, although a litigant may raise claims

such as those asserted by Spence in a suit following exhaustion

of Title VII remedies, he or she may not do so without first

pursuing those remedies.
3
 .    Courts have held that section 504 does not prevent a
litigant from asserting a separate theory that is not simply a
disguised handicap discrimination claim. E.g., Smith v. Barton,
914 F.2d 1330, 1334 (9th Cir. 1990) (Rehabilitation Act does not
bar a claim under 42 U.S.C. § 1983 based on alleged violations of
a First Amendment right to association, since plaintiffs "allege
violations that are unrelated to issues of handicap
discrimination"). While we do not foreclose that possibility, we
find that Spence's due process/equal protection argument is
essentially identical to his argument under the Rehabilitation
Act, and therefore is barred absent prior exhaustion of Title VII
remedies.
                              III.

          We will modify the judgment of the district court to

clarify that dismissal of Spence's suit is without prejudice to

Spence bringing another suit under the Rehabilitation Act if and

when he exhausts his Title VII administrative remedies under the

Act. In all other respects, the district court will be affirmed.
_________________________
