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monitor the Whitewater and Ironwood transactions and in allowing
the messes to happen.1
II.
In addition to being arbitrage bonds, the bonds were also
taxable industrial development bonds under section 103(b)(1) of
the 1954 Code.
Petitioners have conceded that the Whitewater and Ironwood
bonds were industrial development bonds within the meaning of
1 What I have in mind here was said by Judge Learned Hand
in the landmark tort case in which he made it clear that a
normative standard of care and reasonableness--that courts are
authorized to determine and impose--trumps the customary
practices of a particular industry:
Is it then a final answer that the business had
not yet generally adopted receiving sets? There are,
no doubt, cases where courts seem to make the general practice of
the calling the standard of proper diligence; we have indeed
given some currency to the notion ourselves. Indeed in most
cases reasonable prudence is in fact common prudence; but
strictly it is never its measure; a whole calling may have unduly
lagged in the adoption of new and available devices. It never
may set its own tests, however persuasive be its usages. Courts
must in the end say what is required; there are precautions so
imperative that even their universal disregard will not excuse
their omission. But here there was no custom at all as to
receiving sets; some had them, some did not; the most that can be
argued is that they had not yet become general. Certainly in
such a case we need not pause; when some have thought a device
necessary, at least we may say that they were right, and the
others too slack. The statute does not bear on this situation at
all. It prescribes not a receiving, but a transmitting set, and
for a very different purpose; to call for help, not to get news.
We hold the tugs therefore because had they been properly
equipped, they would have got the Arlington reports. The injury
was a direct consequence of this unseaworthiness. [The T.J.
Hooper v. Northern Barge Corp., 60 F.2d 737, 739 (2d Cir. 1932);
citations omitted.]
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