Warren E. Burger: We will hear argument next in United States v. Louisiana. Mr. Claiborne, I think you may proceed whenever you are ready.
Louis F. Claiborne: Mr. Chief Justice, and may it please the Court. This is part -- I wish I could say the last part -- of the final chapter in the dispute between the United States and the State of Louisiana over the mineral resources of the Continental Shelf off the coast of that state, a controversy which has been before this Court since 1948. At the end of the day, Louisiana's more extravagant claims to parts of that Continental Shelf were rejected and its was settled that Louisiana was entitled only to a three-mile belt measured from its coast in the usual way. Finally, in 1975, the Louisiana coastline, that is to say the base line from which that three-mile belt is measured was fixed by decree entered by this Court on June 16th. That decree was jointly submitted by the parties and entered by consent. I immediately stress that that decree, in defining the areas that were federal and those which were state, expressly provided that the coastline defined in it was to be taken as the past and present coastline for all relevant times and purposes. That is to say that true or not, as a matter of law, the coastline was treated as having been unchanged and the portions attributable to the federal and state government unchanged since June 5, 1950, the accounting date, the earliest relevant date, with only three exceptions which fortunately do not concern us here. In three areas, the Court approved the Master's finding that for some periods islands or extensions of the mainland had existed whereas for others they have not. The relevance of this is that all the accounting in this case have been based on that premise, that is that the coastline has not changed in thirty years. Now, although the three-mile line extending from the coastline has not formally been entered by decree here, the parties within a month of the Court's last decision, the decree of June 16, 1975, agreed to that line simply as a matter of mathematical projection, and that description has been submitted to the Special Master and is before the Court and there is no dispute about it.
Potter Stewart: There is no what?
Louis F. Claiborne: There is no dispute between the parties with respect to it. What remains are purely accounting issues, not boundary questions. We are done with geography. We are now quarreling about money, that is to say the monetary consequences of the boundary determinations. We had hoped that no such issue would remain for this Court and indeed it did not appear that there was any disagreement between the parties until 1975 when for the first time Louisiana made the claims which this Court referred to its Special Master on which he wrote a report and which are now before this Court on exceptions to that report. So far as this Court is concerned if it accepts our acquiescence in one of the rulings of the Special Master adverse to the United States with respect to severance tax, which we do not press here, that leaves two issues. The first issue is simply put whether Louisiana must pay over to the United States subject to appropriate offsets the oil and gas revenues which it collected from lessees since June 1950 and which are attributable to federal areas of the Continental Shelf, just as the United States must pay, for the most part has paid to Louisiana the receipts from the same date attributable to state lands.
Potter Stewart: Do you know how much is involved in that, Mr. Claiborne?
Louis F. Claiborne: Approximately $19 million. Louisiana says --
Potter Stewart: This involves Zone 1, so-called?
Louis F. Claiborne: Well, so we thought. In fact, it involves portions, monies from Zone 2 as well, approximately --
Potter Stewart: On the other side, it involves Zone 4, right?
Louis F. Claiborne: There is no issue with respect to Zone 4 because --
Potter Stewart: No, but --
Louis F. Claiborne: There would have been had Louisiana been --
Potter Stewart: It is what you call extravagant claims, it would have involved Zone 4.
Louis F. Claiborne: Indeed, though they would have been more extravagant than Louisiana ever put forward because Zone 4 was defined as that area which Louisiana did not by its most extravagant claims assert.
Speaker: Otherwise it would have been two or three.
Louis F. Claiborne: Indeed. Now, Louisiana says it will keep all of this money attributable to federal lands since 1950, and the Special Master agreed with the state. We have accordingly filed an exception here. The second issue is whether the United States must pay interest or some like sum in respect of the monies attributable to state lands which were "impounded" in the federal Treasury until they were paid over to Louisiana in mid-1975.
Harry A. Blackmun: And were they paid over without interest at that time?
Louis F. Claiborne: They were paid over without interest. There is no complaint that we did not dislodge all of the monies actually received from state lands, with some exceptions which involve complex accounting problems for split leases which the decree permitted to be deferred. There is no --
Speaker: How much interest is involved?
Louis F. Claiborne: We had paid over to Louisiana to date $141 million.
Harry A. Blackmun: What is the interest on that?
Louis F. Claiborne: The interest on that by one computation put by Louisiana would be approximately $88 million.
Potter Stewart: And the Master held that you owed no interest or its equivalent and also held that you were not entitled to get the rents erroneously or royalties erroneously paid to Louisiana?
Louis F. Claiborne: Exactly so, Mr. Justice Stewart.
Potter Stewart: Did I get it correct or incorrect?
Louis F. Claiborne: The Master --
Potter Stewart: I know I am getting old, but it seems to me that I am getting deaf because I don't hear you very well.
Louis F. Claiborne: I'm sorry. It is exactly as you said, Mr. Justice Stewart. The Master held with Louisiana on its claim to retain what we call the federal monies from Zone 1 and partially Zone 2. He held with the United States in that he rejected Louisiana's claim to interest on the impounded funds which we for the most part have long since paid over. Now, I shall address both issues but, being the except all with respect to the federal monies Louisiana retains, I shall concentrate my argument there. As I have indicated, some $19 million are involved. It has been called the Zone 1 issue and so it seemed at first, but later -- and I may say after the accounting filed in in this Court and in the proceedings before the Special Master and in some cases only in the last two or three years, reference having been five years ago, Louisiana has changed its position somewhat and is now resisting, as we understand them -- the Attorney General can correct correct me -- resisting paying any of the monies collected by the state from federal submerged lands in any zone for any period, including the last five years, and indeed including until such time as this Court enters a further decree. Now, it is unfortunately necessary to explain what Zone 1 is. By 1956, both the United States and the state were granting leases, conflicting leases in the area which Louisiana claimed to be its submerged land under the act passed three years earlier. Louisiana sought injunctions and obtained injunctions in its own state courts. We had by this time filed a motion for leave to renew the case in this Court which had been granted and accordingly we applied here. This Court, on the application of the United States, enjoined both parties from granting any new leases and their lessees from drilling any further wells. That situation produced the so-called interim agreement of 1956. That agreement divided the Continental Shelf into the four zones. Zone 1, with which we are primarily concerned, is the area three miles wide and nearest the Louisiana coast. It was fixed on a rough -- and I emphasize rough -- approximation of the area which the United States then believed under then principles, since changed, had been granted by the Submerged Lands Act to Louisiana.
Harry A. Blackmun: Mr. Claiborne, I take it that if the interim agreement had not come into existence, this issue would not be here?
Louis F. Claiborne: Well, Mr. Justice Blackmun, so it seemed, but Louisiana now makes a wholly different argument nonetheless dependent on the interim agreement which is that though they received the money they never really leased our lands because the lease descriptions were such that impliedly they were telling the lessee you drill or occupy federal lands at your own risk, an argument with which I will deal but which is the latest of Louisiana positions. Now, this Court has already clearly held that neither party was bound by the Zone 1 line and indeed it is because of that holding that the major part of the present controversy arises, because the United States was adjudicated to be the true owner of lands within Zone 1. On the other hand, the state was entitled under this Court's decision to the lands seaward of that zone. So the Zone 1 line and the true boundary line do not coincide. One more word about the interim agreement at this point. That agreement did provide Louisiana's primary reliance on this fact, that Louisiana would have exclusive administrative control in that zone, and it was not provided that the revenues derived from its leases there need be impounded; whereas, in Zones 2 and 3 in practice administered by the United States, those revenues must be impounded against the day when the true ownership was decided. In Zone 4, as I have already indicated beyond any Louisiana claim, the United States was free to grant leases and had no obligation to impound.
Harry A. Blackmun: What was the practical reason for that distinction in treatment?
Louis F. Claiborne: Because, Mr. Justice Blackmun, it was recognized and largely correctly that most of Zone 1 would in any event go to Louisiana even though it was known then that the boundary was not accurate. Louisiana asked and the United States agreed to allow it to enjoy some of the revenues from this area and therefore since most of those revenues would in any event remain with Louisiana, it seemed right and fair to permit Louisiana to enjoy those revenues without a duty to impound. It would, however, have been nonsense and most improvident for the United States to have agreed to waive all its claims to revenue there without waiving its claim to title. And this Court has made it clear that there was no way for a title, indeed title has been adjudicated there, because, after all, this case was primarily one about mineral revenues, not about abstract title. It would have permitted, as Louisiana says it did permit, Louisiana largely to drain the area and to return to us twenty years later or perhaps twenty-five years later an empty title, the oil and gas drained from it. That is precisely what Louisiana says we agreed to. Why we should have done so is hard to fathom. Now, I have indicated that Louisiana's resistant to our claim is in respect to Zone 1 monies between the date of the agreement, October 1956, and the date on which it ended for this purpose, June 1975. But they are not satisfied to resist only those claims, they also resist the claim for some $3.3 million derived from Zone 2 which is in no way committed to them by the agreement. They also resist a claim to an additional $500,000 derived before the agreement was entered into from Zone 1, and they also resist a claim to any amounts since this Court's degree fixing the boundary, in June 1975. Now, the basic question is why shouldn't Louisiana be required to pay over the monies derived from federal lands, just as the United States is required to do likewise with respect to state lands. Ever since 1950, the rule of the case has been that the owner of the lands is entitled to the revenues, regardless of who first received them. That obligation has been deferred over and over again but it has never been varied. The Special Master himself said this would certainly be the case in the absence of any adjudication or agreement between the parties to the contrary, and we entirely endorse that statement. So we look to see whether there was a ruling by this Court which authorizes the exception from what had otherwise been the law of the case, and we find everything to the contrary. In 1950, this Court established the basic rule. Each party must account since June 5, 1950, the date on which this Court's decision in the Louisiana case was entered. That was forgiven for the first three miles by the Submerged Lands Act. But in 1960, this Court made clear that that was the extent of the waiver. In 1960, seven years after the Submerged Lands Act, and four years after the '56 agreement, and yet Louisiana consented to the entry of a decree which explicitly requires it to account and pay over eventually all sums derived from federal lands with no exception for Zone 1. In 1965, a supplemental decree followed the same formula and, most importantly, in the most recent decree, in 1975, the Court entered by consent a decree expressly requiring Louisiana to account for unimpounded monies since June 1950 derived from federal lands. Louisiana admits that that is the money we are talking about, but they say the accounting is for information only. Why it should have undertaken or the Court should have burdened it with the not inconsiderable task of computing receipts for thirty years if nothing were to turn on it escapes us. There is paragraph 13 of the decree which says that the interim agreement remains in effect to the extent not inconsistent with the decree, but it would be inconsistent with the provisions of the decree requiring accounting and payment if the interim agreement provided otherwise. It does not. It was not then understood to do so. When that decree was entered, it must be clear that all parties believed the accounting obligation had finally come to fruition. Now, when we look at the agreement itself, we derive no different conclusion. Of course, the agreement can't possibly excuse the failure to pay monies in Zone 2 or monies derived before the agreement was ever entered into, even though those were resisted presumably on other grounds. But as to the '56 and '75 monies, the text of the agreement is very clear that there is no waiver of any rights. It is a working agreement. It is a modus vivendi. It was deliberately tailored so as to avoid either parties giving up anything permanently. Louisiana could administer, Louisiana could enjoy for the time being revenues and nothing more. As I have already indicated, it would not have made sense for us to retain our claim to title in this area and waive our right to revenues in the area at the same time. That would have been nothing more than an incentive for delay. Nor did either party so understand the agreement as Louisiana now maintains if we look at how they behaved afterwards. Louisiana repeatedly consented to the entry of decrees which strictly speaking foreclosed its argument today. Indeed, in 1966 when it filed an account, in 1975 when it filed an account, it admitted an obligation to pay some of these revenues which it now denies. Now, the Master stressed a quite different point which was a provision of the Outer Continental Shelf Act; that provision is to the effect that when payments are made pursuant to an agreement with the state, the payments by the lessee to the state shall be taken as compliance with what would otherwise be the requirement of payments to the Secretary. It seems to us perfectly plain on the face of the statute that what that means is no more than that the lessee is not in default while he is paying, as the United States has agreed with Louisiana, he may pay the state. It in no way excuses the state from refunding that money when it is determined that the area was a federal one. Finally, Louisiana makes the novel argument that they didn't really lease our lands, and they give you a diagram which suggests that in most instances a little sliver turned out to be federal, but most of the lease was really state lands. That is very deceptive. First of all, there are many cases in which 90 percent, 50 percent or a larger portion of the lease was federal. There are indeed 145 leases in which the entire area described in the lease turned out to be federal lands. In those circumstances, to say that the monies are not attributable to the federal area is an argument that I don't suppose Louisiana would advance. And yet can the result turn on whether it is 10 percent of the lease area or 50 percent or 100 percent, or can it turn on whether there was actual drilling, because Louisiana concedes that the lion's share of the money we are talking about, some $12 million, derives from royalties directly received from the portion of the lease that is federally owned. In that case, it can hardly be said that the money does not derive, in the words of the decree, from the federal lands.
Byron R. White: None of Area 4 turned out to be Louisiana's?
Louis F. Claiborne: It is not surprising, Mr. Justice White, since it was indeed beyond any argument that Louisiana had been able to --
Byron R. White: No bargaining power?
Louis F. Claiborne: No. There was, of course, a surface symmetry to Louisiana's conceding what they weren't claiming, but it hardly seems a quid pro quo. One word on the interest issue. Here, of course, the Master ruled with the United States and we entirely endorse the reasoning of this report. He addressed both of Louisiana's arguments, somewhat inconsistent but never mind. The first was that the United States had a duty to invest these funds and, having failed to do so, it must in equity be held to the consequence if it had done what it was obliged to do. As to that, the Master said, in our view entirely correctly, that indisputably -- these are his words -- the interim agreement does not specifically provide for the payment of interest upon any part of the funds impounded pursuant to it. And indeed Louisiana, for all present purposes, I think concedes that that is so. But, they say, there was a tacit understanding that the United States would some time or other invest the funds, to which the Master answers, the evidence in this case clearly negatives any such understanding upon the part of the parties to the interim agreement.
Byron R. White: Well, it wouldn't make any difference to your submission, would it, Mr. Solicitor General, if the United States had invested it.
Louis F. Claiborne: If we had invested it not pursuant to the agreement but for our own purposes, which would have served no interest of the United States, taking from one pocket and putting it in the other, but it wouldn't have made any difference, I quite agree. Now, Louisiana further says we unjustly enriched ourselves because we didn't do what the agreement required which was to segregate the funds. The Master said, incontrovertibly, it seems to us, the Treasury does not keep money or cash in an office safe, obviously the cash is going to be freely used in the same way that a bank uses the depositor's money. It must keep a strict account, it must put it down as potential liability, so when the day comes that money will be available without a congressional appropriation. Those are important reasons for treating it as different from ordinary money of the Treasury. The cash, of course, is to be freely used. If I may, I reserve the remaining few moments for rebuttal.
Warren E. Burger: Very well. Mr. Attorney General.
William J. Guste, Jr.: Mr. Chief Justice, and may it please the Court. You have come to the end almost of a long, long day and we in Louisiana are trying to come to the end of long, long lawsuit. And if I may for just a moment, I would like to bring you back to the story that happened because you must know the facts to have a feel for it, you can't feel for it by the academic expressions that are contained in these briefs. In 1956, the United States of America filed suit in this Court to stop all leasing out in the Gulf off Louisiana's coast. Now, between 1947 and 1956, and industry had begun to build, and fellows who were fishermen became skippers on boats bringing people out to the rigs, and we brought people from Texas and Alabama and Mississippi who want to work in the shipyards building rigs for the Outer Continental Shelf development, and this industry was beginning to burgeon in 1956 when the United States governments comes to this Court and says let's stop all this leasing because Louisiana is actually leasing on some land that belongs to us. This Court issued an injunction and that injunction literally brought the economy of south Louisiana to a standstill. People couldn't go to work. They stopped building the rigs. They didn't know what they were going to do. The economy was faced with a possible discretion, so Louisiana runs up to the Department of the Interior and says, look, we've got to do something to get this business going again, you're throwing people out of work, you're depriving us of income, it's going to hurt a lot of good people. So the government says, well, I will tell you what we'll do. The then Secretary of the Interior took a pencil and he figured out what was the most shoreward line that could possibly be the coast of Louisiana and he drew that line, and it is called the Chapman line. And after he drew that line, he said I will tell you what we will do, the Submerged Lands Act gives you three miles out from the Chapman line by law and we will let you administer what the law gives you, and you can hold those proceeds. Then they said from that three miles to the next three miles, and three miles beyond that, we are going to keep the money. Do you think Louisiana could argue about it? Do you think this is an arm's length agreement where two parties are sitting down like in a free discussion? Louisiana was forced to accept. They said, okay, you keep the money that you derive from that area, and when you find out whose money it is, we want you to give it back. And then the United States says and we believe everything beyond that nine miles, which they call Zone 4, is ours, so we won't impound that, we will hold it. So everybody to those discussions called that agreement an escrow agreement, and they wrote in the agreement that the government would impound and hold intact those funds until it was decided who they really belonged to and then pay out from those impounded funds the money that belonged to Louisiana. Now, what Louisiana's position is, that that contract itself is pure and simply a trust agreement. Not once is the word "trust" used in the contract, but that is the simple reason that the law that authorized the writing of that contract used the word "impound" so the government, in its carefulness, traced the law and used the word "impound." But for nineteen years the United States government has held money that belongs to the State of Louisiana, and it turns out that for nineteen years it used that money and it saved the cost of borrowing for nineteen years, and instead of impounding and holding it intact like an ordinary escrow agent is obliged to do under law, they used the money. Instead of --
Warren E. Burger: The United States is not an ordinary escrow agent though, wouldn't you agree?
William J. Guste, Jr.: No, I don't agree, Mr. Chief Justice Burger. The United States government in this case is the plaintiff, and when it comes in as a plaintiff it loses its sovereignty. It comes in as any other suitor and is subject to all of the laws and agreements of any other suitor. Now, all through the case, Your Honor, and even in his introductory statement today, learned counsel for the government says this is an interest claim, and he did that so that he could lead the Master into those line of cases which refer to cases in the Court of Claims that the government simply cannot pay interest unless it is provided for by specific statute or by contract. And sure enough, the Master followed that line of thought, but that is not what the case is. We are not in the Court of Claims. This is the United States Supreme Court in a case between two sovereigns, not an individual citizen trying to make a claim in the Court of Claims. We are claiming that for the use and benefit of our own money they owed us the obligation to invest that money as a prudent escrow agent would do for the benefit of the ultimate beneficiary that we were; otherwise Louisiana negotiators would be giving away something they had no right to give away.
Potter Stewart: Well, it is an interest claim, where interest is an equivalent, isn't it?
William J. Guste, Jr.: No. Please, it is not merely semantics. We are claiming the value of the use of that money by the United States. Now, often the courts have used --
Potter Stewart: Another way of saying that is interest.
William J. Guste, Jr.: Wait, please. Often the courts have used interest as a measure of value of the use of money, but there is a difference and we are claiming the value of the use of that money, albeit this Court in its wisdom may choose to value it at the interest that the United States saved by using Louisiana's money.
Potter Stewart: How would you value it?
William J. Guste, Jr.: I think I would value it the same way. But the basic legal distinction is different. We are not suing for interest on a debt. We are suing for interest on our own money.
Potter Stewart: When you hire money, what you pay is interest.
William J. Guste, Jr.: That's correct. We don't agree, however, that that is what this suit is about. In ordinary parlance, when you borrow money -- but we didn't lend the government our money on which they should pay us interest. They in effect confiscated our money and said unless you let us confiscate it, we are not going to let you drill and that is the point that I want to get across. That is more of a confiscation for which they owe us just compensation. All right. Now, a sovereign state is not the same.
Potter Stewart: What if the United States had held your money in a separate fund, never used it, just deposited it in some bank somewhere and there it sat and drew no interest whatsoever.
William J. Guste, Jr.: That is the tin can theory. They would be so derelict in all law that relates to trust obligations that they would owe us damages for failing to invest it, and that is the law and there is a line of cases cited in our brief to --
Potter Stewart: And damages would be the interest that the money would have earned?
William J. Guste, Jr.: If you wish to measure them in that way. You may see fit to find some other way.
Warren E. Burger: What is the legal rate when they are over in the Court of Claims?
William J. Guste, Jr.: Well, you know we rely in our brief on an 1841 statute that says that the government shall invest trust funds and government securities at 5 percent. Now, over the years rates have varied from time to time and our calculation for the -- this amounts to $88 million, according to Louisiana's calculation which was based on buying short-term securities, because we never knew when this case might come to an end, and at the end of each short-term security maturity the money would be reinvested and then compounded in that way, and that is the manner in which we arrived. You may not see fit to arrive at it that way. The government does in the brief. But some manner of computing the value of the use by the government of Louisiana's money ought to be determined, and we don't feel that immunity is a defense. Now, the Master gives only two factual points in support of his conclusion that the agreement itself doesn't impliedly require investment at interest for the benefit of Louisiana. And those two reasons are, one, he says the subject was never discussed, and that is true. It wasn't discussed whether the United States would pay interest and it wasn't discussed whether they would not pay interest; neither side brought it up. So that is not conclusive as to what the parties to the agreement thought. Then he brings out the second point but, do you know, he says the Louisiana witnesses who negotiated this contract admitted that the reason they didn't bring it up was because they knew the United States wouldn't agree to pay it, so he says that solves it. Well, first of all, that is a subjective consideration. But he doesn't report to it is Court the rest of what they thought. They didn't bring it up, their testimony shows, because they felt it was contained implicitly in the words of the contract, than this was an escrow agreement and that the escrow agent, to wit, the United States, was obliged to pay that interest when it finally made the distribution. That is why they didn't bring it up. So if you want to take what they had in their minds when --
Harry A. Blackmun: That is a rather remarkable argument, if I understand you correctly. You are saying that they secretly knew the United States would not accept a condition which they thought was implicit in the understanding.
William J. Guste, Jr.: That's right, they --
Harry A. Blackmun: In other words, they horn swoggled the United States.
William J. Guste, Jr.: Oh, no. No, no, no, because the United States didn't bring it up either. There is testimony in the record by the same that the witnesses that the United States didn't bring it up because they knew Louisiana wouldn't agree to it. Neither party brought it up.
Harry A. Blackmun: You mean the Louisiana witnesses so testified?
William J. Guste, Jr.: What's that?
Harry A. Blackmun: You are saying the Louisiana witnesses testified as to the reason why the United States representatives didn't bring it up?
William J. Guste, Jr.: That's why they thought --
Harry A. Blackmun: Well, how did they know that?
William J. Guste, Jr.: Well, they wouldn't, know that, Your Honor, but if you are going to take -- of course they wouldn't know it, but they presumed that the reason the United States didn't bring it up was the same reason that they wouldn't bring it up. But that is neither here nor there. If you are going to take --
Harry A. Blackmun: Well, their presumption as to what the United States negotiators may have thought surely has no probative value whatsoever, does it?
William J. Guste, Jr.: And their presumption about what they had in their minds has only probative value if you take the entire context of what they had in their minds, and what they had in their minds was these words that have been written down and handed to us by the United States that imply that that escrow agent has to pay interest to us.
Harry A. Blackmun: Well, if that was so clearly in their minds, I find it remarkable that they wouldn't discuss the rate of interest.
William J. Guste, Jr.: Listen, I always learned if you've got your case, one, you shut up.
Harry A. Blackmun: Well, apparently you didn't have the case, one, at least at the Master's level.
William J. Guste, Jr.: But we thought so at the table of negotiation, so that was the intention of our people at that time. And the fact of the matter is once you demolish these subjective thoughts, you come to the real evidence and the real evidence -- and it is stated to be factually correct in the report of the Master -- is, one, the negotiators for Louisiana and the United States, both refer to this agreement as an escrow agreement, before and after the agreement was confected. Now, it is argued in the brief and it was alluded to --
Harry A. Blackmun: Let's go back a step. Do you think the United States understood, when they signed this agreement and called it an escrow agreement, that they were going to pay interest?
William J. Guste, Jr.: If they knew the law of escrow and the responsibility of trustees, certainly the knew it.
Harry A. Blackmun: But you just said, I take it, that subjectively the Louisiana negotiators knew that the United States had no intention or paying interest.
William J. Guste, Jr.: They thought that.
Harry A. Blackmun: Well, you can't have it both ways. I mean you can't say that the United States signed an escrow agreement and they must have intended to pay interest and yet they didn't.
William J. Guste, Jr.: They felt that what would govern would be the words of that contract, and I have to tell you --
Harry A. Blackmun: Well, Louisiana did --
William J. Guste, Jr.: Yes.
Harry A. Blackmun: -- but what about the United States, not intending to pay interest?
William J. Guste, Jr.: I don't know what they thought. But I have to say this, everybody thought -- and this is uncontradicted evidence in the record -- everybody thought that this agreement was short-lived. There is testimony that they thought it might be six months, maybe a year, a year at the most that it would last. And I think that has some bearing. I want to --
Harry A. Blackmun: Which way do you run it, that they would or that they should or shouldn't pay interest?
William J. Guste, Jr.: No, I would run that to the effect that, no matter what they thought, interest would have to begin at the end of the longest period of time, a year and six months, because that is all they were thinking about, all of the parties at that table. Instead, the thing goes on for nineteen years.
Harry A. Blackmun: Why wasn't any of the principle ever paid over, by the way?
William J. Guste, Jr.: All right. Some of it was. In 1965, this Court had made an interim determination that some bays belonged to Louisiana, and a distribution was made at that time of $37 million.
Harry A. Blackmun: With interest or without?
William J. Guste, Jr.: No, just a check for the principle, no interest.
Harry A. Blackmun: Well, wouldn't your claim for interest have been good then?
William J. Guste, Jr.: No, and I will tell you why. At that time this Court specifically retained jurisdiction to settle all accounting matters relating to this case with the final decree, so there was no reason to bring it up then when that determination would be made after the final decree and we did not bring it up.
Harry A. Blackmun: Except that I suppose you are certainly claiming interest on that amount that was paid over to you?
William J. Guste, Jr.: Yes, certainly we are.
Harry A. Blackmun: Well, I would have thought somebody would have stopped interest on that amount by paying interest.
William J. Guste, Jr.: Well, I wish they had. They didn't and we didn't ask for it and they claim that is --
Harry A. Blackmun: And not a murmur about interest at that time?
William J. Guste, Jr.: Not a murmur. Now --
Harry A. Blackmun: Did it even cross your mind at that time?
William J. Guste, Jr.: I only became Attorney General --
Harry A. Blackmun: Well, you are speaking for the United States and you ought to be able to speak --
William J. Guste, Jr.: Well, there is nothing in the record and I really don't know those things. I see my time is up. Let me just end by saying that we also argue that equity requires it. They unjustly enriched themselves at the expense of Louisiana and the law of condemnation requires it because they acquired our property against our will in effect and used it and benefitted. Thank you.
Warren E. Burger: Mr. Ellis.
Frederick W. Ellis: I was on the case at that time. Your Honor, in further response to the question raised, our Attorney General was not, and there was a demand, a formal resolution of the Louisiana legislature enacted, I believe in 1967 -- it is in the record of the case, it has been argued in brief -- whereby the Louisiana legislature formally requested, noting the passage of time that these funds remaining in the controversy then be invested. It was a reaction not merely by an Attorney General but all the representatives of the people of Louisiana who were incensed at the treatment at that time and resulted in --
Harry A. Blackmun: Let's back up a second -- and interest paid over?
Frederick W. Ellis: There was not interest paid over, no, sir.
Harry A. Blackmun: I know, but the resolution should have said invested and interest paid.
Frederick W. Ellis: Well, investments may be by dividends also, such as Gulf State Utilities Company, et cetera. We would not have minded if the return had been in the form of dividends rather than merely interest.
Harry A. Blackmun: I know, but you say investing it, you say that automatically implies that any return comes to you?
Frederick W. Ellis: To the winner, for the benefit of the ultimate winner of the contested funds.
Warren E. Burger: That is a unilateral wish that the legislature expressed. You say the United States or any other adversary party is bound by the unilateral wishes of one of the parties?
Frederick W. Ellis: It was communicated to the United States as a request pursuant to what was construed as a duty of the United States under the agreement, Your Honor.
Warren E. Burger: Communicated, that doesn't make an agreement, does it?
Frederick W. Ellis: That's correct, that was not, no.
Speaker: Was there any response from the United States?
Frederick W. Ellis: There was. The United States did not agree with the request and it --
Speaker: It formally said no, there is no such understanding?
Frederick W. Ellis: They denied understanding and authority to make investments. We had requested that they be invested in banks. Now, turning to --
Harry A. Blackmun: Mr. Ellis, before you leave that, did I correctly understand you to say you would not have objected. If they had invested in companies that produced dividends like Gulf State Utilities?
Frederick W. Ellis: Yes, sir, interest is not the only thing --
Harry A. Blackmun: Equity securities would have been --
Frederick W. Ellis: Yes.
Harry A. Blackmun: And who would have borne the risk of loss?
Frederick W. Ellis: Of course, the trustee would have had prudent responsibilities to invest soundly.
Harry A. Blackmun: But all of this is implied, that where the risk of loss is and what the rate of return would be and all the rest of it?
Frederick W. Ellis: Yes, Your Honor. Turning to the Zone 1 issue and I --
Lewis F. Powell, Jr.: You said the United States refused to acknowledge that request of the legislature? Was that a formal document of any kind?
Frederick W. Ellis: There was a letter in response to it. It is referred to in --
Lewis F. Powell, Jr.: Is it in the record?
Frederick W. Ellis: I believe it is in the record, yes.
Lewis F. Powell, Jr.: From whom is it?
Frederick W. Ellis: I do not recall the name of the official offhand. I believe it was a Mr. Carlock.
Lewis F. Powell, Jr.: Who is Mr. Carlock?
Frederick W. Ellis: I believe he was Fiscal Assistant Secretary for the Department of the Treasury.
Harry A. Blackmun: He must have cited some authority for it, an Assistant Secretary.
Frederick W. Ellis: Yes.
Warren E. Burger: Fiscal Officer of What?
Frederick W. Ellis: The Department of the Treasury, which was the entity holding the funds. Turning to the Zone 1 issue -- and I respectfully submit, Your Honors, that it is indeed only a Zone 1 issue -- I could not have been more shocked if the United States had stood before this Court and posed the issue as to how many times do I beat my wife. There were assumptions implicit in the United States statement of the issues that are just simply incorrect and grossly inaccurate. For example, the statement that we have not paid or credited funds in Zones 2 or 3, we have. Our accounting show this. Our defenses are solely made in our pleadings as to Zone 1; 145 leases are referred to in Zone 2, we have made credits in our accounting. I don't know how the United States got this. Additionally, the United States in stating the issue as it has has built an assumption on an important factual issue that the Master found contrary of the assumption. Let me read this, "The United States respectfully excepts to the report of the Special Master insofar as he recommends overruling its objections to the accountings" -- and it goes on and refers to the funds -- "as derived from or attributable to submerged lands adjudicated to be within the exclusive domain of the United States." The assumption is explicit. As in a question related to wife beating, there is no question but what the funds are derived from or attributable to the United States, and quite to the contrary of this assumption, the Master upon the consideration of 118 lease documents and approximately another 80-something documents that were in the lease files related to them, 200-plus documents altogether, the testimony of numerous witnesses about the custom in the industry, understanding what these phrases in these mineral documents meant, the Master found as a fact at the bottom of page 18 of his report -- and the language was inserted in all of them -- that is was leasing the right to extract minerals only -- and we were paid only for it -- from those parts of the described areas belonging to the state of Louisiana, and I quote that as language from the granting language of the mineral lease, or such as were "owned by the state of Louisiana." We have an appendix to our brief, Appendix 1, which details at length the language of these various leases, and the rents, the bonuses, the rentals were computed on the basis of what was owned by Louisiana. Indeed, we doubtlessly got smaller bids because there were some areas in controversy. There was only one area where a bay was one by the United States, and that was Caillou Bay, and this involved two leases, leases granted before 1950 and the revenues from the time before 1950 we were not obliged to account for. Every other one under the language of the Court's decree in 1975, which tracks back to the history of the language in 1950, every other one of those leases contain language such as the Maser had used there. And as the Master found, these rentals were not derived from. That is the first of two major points we make, is that the monies claimed by the United States were simply not derived from the areas of Zone 1 --
William J. Brennan, Jr.: Mr. Ellis, can I just ask you one question about that. I understand the language of the lease to refer to the area belonging to the State of Louisiana --
Frederick W. Ellis: Yes.
William J. Brennan, Jr.: -- but is there a finding by the Master that in fact no revenues were derived from the areas that were ultimately adjudged to belong to the United States?
Frederick W. Ellis: Yes, that language I just read.
William J. Brennan, Jr.: Well, I don't read that language to say that. Maybe I missed something. Would that language, would you suggest, cover a lease that just happened to turn out to be covered only land that actually belonged to the United States?
Frederick W. Ellis: In that event there would be --
William J. Brennan, Jr.: Well, there were some, weren't there?
Frederick W. Ellis: I believe there was one or two out of the 118 --
William J. Brennan, Jr.: Well, what do you say about those?
Frederick W. Ellis: I say that --
William J. Brennan, Jr.: Louisiana keeps that money, too?
Frederick W. Ellis: Of course, we have a name for it in the civil law, the sale of the hoke. It is like the sale of the cast of a fisherman's net. If you have any right there or if anything materialized from it, it is covered. If it does not materialize, if the fish are not in the net, it does not win the lawsuit.
William J. Brennan, Jr.: The language in the lease, in my example the language in the lease wouldn't require them to pay any money to you.
Frederick W. Ellis: That's correct.
William J. Brennan, Jr.: Then it was paid by mistake to you.
Frederick W. Ellis: Not necessarily. Your Honor --
William J. Brennan, Jr.: Well, it turns out that they were paying money on land that was not owned by Louisiana but by the United States.
Frederick W. Ellis: Not on land but on the right that might or might not exist. There was, Your Honor, additionally payments to the United States. There were dual payments, in many instances, by oil companies and we reached agreement, the United States and Louisiana, that in the instance of dual payments we would not object to the accountings; where we got paid and they got paid back in the early fifties, some of this was going on in that instance. Now, in an instance where both governments were paid -- and I believe that happened in many instances --
William J. Brennan, Jr.: Mr. Ellis, let me just be sure I understand. Do you take the position that there is no extraction of minerals in area subject to the jurisdiction of the United States where the payment was made to Louisiana?
Frederick W. Ellis: That there was no extraction of minerals in areas won by the United States?
William J. Brennan, Jr.: As I understand the case, the United States claims that there is a certain area over which they had jurisdiction --
Frederick W. Ellis: Yes.
William J. Brennan, Jr.: -- which was leased out by Louisiana from which Louisiana derived revenue, and that revenue was generated by oil under the jurisdiction of the United States. Do you disagree with that?
Frederick W. Ellis: Yes, I disagree with that because the leases described and leased only --
William J. Brennan, Jr.: I understand what the leases say. I am talking about the physical facts, that there may have been some money paid by an oil company to Louisiana because they took some oil out of the area subject to the jurisdiction of the United States. You say that didn't happen?
Frederick W. Ellis: I don't believe that happened, Your Honor. Incidentally --
William J. Brennan, Jr.: Tell me this, then, did the Master find that it did not happen?
Frederick W. Ellis: I do not recall that there was an explicit negation of that happening, Your Honor. There were so-called unit agreements which are pooling a agreements which it was agreed would be revised under an amendment to the interim agreement of 1956, which it was agreed would be revised after the interim agreement -- pardon me, after the final degree in the case to revise the participation. Incidentally, let me turn to some of the language of that interim agreement to make the point that apart from the question of what was derived from and even conceding arguendo only for the moment that we were to lose, still there would be the position of Louisiana, based upon the fact that the interim agreement, rights under which were reserved in paragraph 13 of the Court's decree of 1975, conferred upon Louisiana the right to lease and the right to retain the revenues from that leasing. Incidentally, on that problem, Your Honor, the Master did explicitly make a finding, a fact finding upon the hearing of the testimony of the witnesses, upon the reading of the documents and the cross-interpretation of it, that there was an intent for both the United States as to Zone 4 -- and the deal was the same as to both governments -- and Louisiana as to Zone 1 to not only grant leases but to receive and retain the revenues under that leasing arrangement. For example, as language in the interim agreement that explicitly relates to the retention of payments, also this agreement as between -- I refer to page 18a of the government's brief, the last sentence of subparagraph (c) of paragraph 14 of the interim agreement - "Also, this agreement as between the United States and the State of Louisiana, shall continue in effect as to the payments made with respect to such lease." It was contemplated that payments would be made under the lease, and even after the decree the agreement would continue to be effective, to have sort of legalized and authorized those payments that have been made to the party authorized for them to be made under the agreement. Additionally, in the language of the interim agreement, this stipulation and agreement shall terminate as to any area -- this is in paragraph 14, the second paragraph thereof -- shall terminate as to any area upon the final settlement or determination of the aforesaid controversy with respect to such area, and the word "thereafter" then appears -- and thereafter the successful party shall have exclusive jurisdiction and control over the area so determined. We received a contract right, Your Honor, of exclusive jurisdiction and control over Zone 1, and that is all we are claiming here, Your Honor. It has been incorrectly represented that our position relates to Zone 2 and Zone 3. This is all we are claiming here, is a right in Zone 1 in this connection, under this provision. I would like to point out too that if there is broad language of the decree, indeed there is, that sums derived -- and this is the position of the United States -- that all sums derived from mineral leasing or from mineral resources from property belonging to the other government should be paid to the other government, then, Your Honors, I submit that the very reasoning of the United States on the Zone 1 claim sustains the claim of Louisiana to the sums of money derived from the natural resources of Louisiana through financial benefits enjoyed by the United States through the use of the mineral leasing revenue of Louisiana, and that this Court has already adjudicated that issue. Thank you.
Warren E. Burger: You have about four minutes remaining, Mr. Claiborne.
Louis F. Claiborne: Mr. Chief Justice, and may it please the Court. I think I can be very brief and use less than that allotted time. One, two answers to questions asked by the Court with respect to the interest issue. It should be known that Louisiana received monthly reports from 1956 to date indicating precisely how much money was impounded in the Treasury. Those reports very clearly reflected during all that period that no interest or other increment was being added to the fund, therefore no question of surprise. Secondly, in 1960, four years after the agreement had been in effect, Louisiana's congressional delegation, both Senate and all members of the House, the Attorney General of Louisiana and the legislature of Louisiana concurred in requesting not that the funds be invested, not that interest be paid, but that the monies in the Treasury be transferred to Louisiana banks so that they could enjoy the free use of that money. That request was denied on the ground that it would set an unfortunate precedent. Then Louisiana received its $34 million in 1966, no complaint about the failure to add interest. In 1967, the Louisiana legislature, as represented, did memorialize federal officials to hence forward -- not for the past -- please respectfully request is their language, invest these funds. No claim that there was a duty to invest, no claim that they had a right to interest for the sums they had just been paid, but simply a request to change the agreement for the future, in effect. The Fiscal Assistant Secretary of the Treasury responded that Treasury regulations forbid him from making any such investment in the absence of statutory authority. It may be that the '56 agreement could have been amended to so provide. Louisiana did not suggest it. They didn't take the matter further. They never said another thing about it until 1975. Now, they could have asked for an amendments of the agreement. Or if the duty already arose under the '56 agreement, obviously they could have come to this Court and said we will not accept the response by federal officials.
Byron R. White: What if you had invested it? Suppose there had been statutory authority available to the fiscal officer to invest the money and he went out and invested it and interest was earned on it.
Louis F. Claiborne: I think, Mr. Justice White, that if the agreement had accordingly been amended --
Byron R. White: Well, I am talking about this agreement. This agreement didn't call for investing or interest, but you nevertheless invest it.
Louis F. Claiborne: That might properly be viewed as an implied amendment of the agreement done at the request of Louisiana, the acquiescence of the United States with respect to monies held under the agreement. One could say that had varied the agreement and --
Byron R. White: Well, what if you had invested it from the outset?
Louis F. Claiborne: Well, in these circumstances I don't, think we would owe interest because the agreement doesn't provide for it, but there would be an equitable claim that we should have some of the benefit of it. As far as the --
Byron R. White: Then why isn't there an equitable claim that they should have the benefit of your use of the money? I mean, you have used it for your benefit.
Louis F. Claiborne: The equities are no stronger against our use of the money than they are with respect to Louisiana's use of our money for thirty years on which we claim no interest and have no right to claim any interest. It was part of the bargain that Louisiana would enjoy these revenues until such time as they lost the land, if that day should come. It was also part of the bargain that the United States would hold and use the funds in escrow in the Treasury. That bargain was made, it was never varied, and both parties had agreed to it.
Warren E. Burger: Thank you, gentlemen. The case is submitted.


Earl Warren: Number 112, James H. Gray as Chairman of the Georgia State Democratic Executive Committee et al., Appellants, versus James O'Hear Sanders. Mr. Murphy.
B. D. Murphy: Yes, Your Honor, may it please the Court. This is an appeal from a decision by a three-judge District Court which held unconstitutional Georgia's statute describing the county unit system of nominating a party of candidates for state offices and enjoining the party of authorities against holding the primary of 1962 or any primary under a county unit system. The history of the county unit system of Georgia is set forth to some extent in the opinion of the Court. The law is also stated to some extent in the briefs of counsel. It may be worthwhile for me to state it here as briefly as I may. Georgia, of course, is one of the original 13 states. When it became a state, it consisted mainly in a few certain areas along the Atlantic coast. I've forgotten how many counties we had at that time. Well, I think it was six or seven. The state officers were elected by the legislature. The Constitution assigned certain num -- a certain number of representatives to each county. I think Liberty County had 14. Some of the other counties had two, some had four. The town in Port of Savannah had two that represent that trade. The town in Port of Sunbury had two to represent that trade. That was the legislative body. As I say, the legislative body elected the county -- the state officers. We had no election of governor by the people until 1823. Early in the history of the state -- the political history of the state, the county's unit system of nominations developed. It started by caucuses in the legislature, members of the legislature who belong to the Democratic Party would get together and nominate their candidate for governor. In the same manner, the members of the Whig Party and the legislature would get together and nominate the Whig candidate for governor. Gradually, they began to invite to those caucuses members of the party from counties that were represented in legislature by the opposite party. The Whig members would invite democrats from -- or invite Whigs from counties who didn't have Whig representatives and the democrats would do the same thing. Our convention system of nomination grew out of that. We never had any direct primaries in Georgia until about 1890 and I think the direct primaries in Georgia grew out of the probably the strength of what was then known as the Populist Party. The final election of the officers for the state had been -- have always, since election by the people was inaugurated about 1823 by a majority vote of all the voters. The legislature meets and canvasses the vote and declares the person having the majority of all the votes to be the governor or the state -- Secretary of the State as the case may be. And, if nobody is elected, they have a -- the legislature proceeds to elect a governor from the -- either the two or three highest. We had a situation of that sort in 1946 when the governor-elect died before the time came to inaugurate and the legislature elected from some write-in candidates, and the Supreme Court held they couldn't do that and if the old governor continued to hold office and he hadn't resigned, the lieutenant governor-elect was to be the governor until there could be an election. That, of course, has nothing to do with this particular question. But I say, the county unit system developed in that way. Finally, they began to have direct primaries for the election. They first began to have primaries for the election of delegates to the conventions. Then, they began to have -- some of the delegates were elected by mass meetings. Your Honors will find a complete history of the county unit system in the report of the case of Turman against Duckworth in the 68 F.Supp. 744 which was the first county unit lawsuit we had. The practice was entirely a party practice. There was never any law on the subject and the convention was the final nominating authority until the adoption of the Neill Primary Act of 1917. Prior to that time, delegates were, although committed to the man who -- candidate who carried their county, did not always vote in a conformity without amendment and frequently there were convention fights. The one which produced the Neill Primary Act, so-called, was in 1914 when there were three candidates for the United States Senate and neither of them had a majority of the county unit votes. And, that was a convention contest which lasted a number of days and was finally resulted in a nomination of Senator Thomas W. Hardwick who was not the leading candidate in the vote of the people. The legislature passed the Neill Primary Act in 1916. Incidentally, it's named for Cecil Neill who was the Speaker of the House of Representative of Georgia at that time and who came from one of the city counties, Muscogee. Well, it was vetoed by Governor Harris, who was then governor of Georgia and who also came from one of the city counties, Bibb. It was reenacted in 1916 and near 1917, and it was then approved by the new governor. The Neill Primary Act made no substantial change in the nominating process. It does not require primaries. It never has required primaries. It does not abolish conventions, but it provides that whenever a dem -- a political party has a primary, the person -- the candidate for any office who carries -- gets the most votes in the county, it's in plurality of votes and it's still a plurality not a majority, is entitled to the unit votes of that county on the county unit basis and that the candidate who gets the majority of all of the county unit votes is entitled to the nomination, and that can be ascertained and declared without a formal convention vote. Incidentally, in some years when there's another -- it's not the year the elected governor don't even have a convention in Georgia. The Democratic Party does. Always in the convention, the Democratic Party and the Democratic Conventions -- so far as I know, the Republican parties never had one in Georgia. Always in the Democratic Conventions, each county is entitled to two votes for each member in the Lower House of the General Assembly. Georgia has, now, 159 candidates. It had a 137 in 1877 when the Constitution of 1877 was adopted. The -- it has what is called a 3-2-1 ratio of legislative representation in the House of Representatives. The eight largest counties have three representatives. The next 30 have 2 and the rest have 1. As I say always, in the convention and in computing the nominating units on the county unit system, the counties have had two votes -- each county has two votes for each member of the House of Representatives to which the county is entitled. That is -- that was the party practice before the Neill Primary Act was enacted and it has been the party practice and the provision of the Neill Primary Act since that time.
Potter Stewart: General Murphy, this case doesn't involve at all, at least certainly doesn't involve directly, that the system under which your 3-2-1 – your 3-2-1 system for election of the State House Representative?
B. D. Murphy: It's not involved in this case at all, except that that was, until an amendment of 1962, the method whereby Union votes were allocated to the various counties.
Potter Stewart: Well, it was derivative. It was derived from that.
B. D. Murphy: This is from the county --
Potter Stewart: But this --
B. D. Murphy: -- from the representation of the Lower Houses of the General Assembly and that had always been the rule.
Potter Stewart: I just want to be sure in my -- so I can understand the argument as we go on that we're not -- that there's not involved here legislative apportionment as such at all for your state legislature.
B. D. Murphy: The apportionment as such. Now, I say, in 1877, we had 137 counties in Georgia. We may have too many but they all created by the Constitution. And, that Constitution provided there should be no more. In 1903 or 1904, they amended the constitution. The legislature amended it and proposed it to the people. The people ratified it to add -- bring the number of counties up to 145, and enough additional counties were created to bring the number of counties up to 145. It has not always been the eight highest with the three representatives but that's the way it is now and was cite one time, it was 6, and 26 in one. And, the -- since that time, a number of counties had been three which brought the total, at one time, up to 161. Each one of those counties was created by separate constitutional amendment proposed by the General Assembly and ratified by the people at the general election. Sometime ago -- some years ago, two of the counties have been created many years before were merged with Fulton County. Those were Camilla and Milton, I believe. So, now, we have 159 counties. The Neill Primary Act, that I said a moment ago, didn't changed the county unit system as it had been followed by the party up until that time. It did provide that the convention couldn't change the result of the primary as respects to right of a candidate who got the most votes in a particular county to the vote of that county on the unit basis and provided that nobody was part of the majority of the county unit votes for governor or United States Senate, that should be a run-over primary between the two highest candidates for those two officers alone. And all the other state officers, the candidate with the most county unit votes, the plurality county votes was to be the nominee. The can -- the Neill Primary Act does not apply to the congressional district primaries. It leaves to the determination of the congressional committee or to the executive committee of the party in the district, whether or not it will have a primary on a popular vote basis or on a county unit basis. But, if it is held on a county unit basis, then the unit votes to which the county -- which each county would be the entitled would be the same as fixed in the Neill Primary Act, that is two for each representative in the Lower House in the General Assembly. In 1946, the first suit challenging the validity of the Georgia county unit system was filed in a three-judge court in the Northern District of Georgia. That was filed by Mr. -- Mrs. Turman against the Chairman of the State Democratic Executive Committee. There was a companion case filed by Cook, a man named Cook, against the Secretary of State which related to the Fifth Congressional District of Georgia. It so happen that in 1946, the governor of the c -- the democratic candidate for governor who received the highest number of unit -- the majority of unit votes did not receive the highest number of popular votes. He didn't -- there were two candidates and the man who got the highest number of unit -- majority of unit votes was the second in popular vote. And, that brought about the case of Turman against Duckworth. That was heard before a three-judge court and the three-judge court have decided against the plaintiffs there and it was appealed to this Court. The appeal here was dismissed. I don't want to take to go into whether or not this Court dismissed the appeal because they were moot or for any other reason. The record shows what happened. That was shortly after the decision of this Court in the case of Colegrove versus Green from Illinois. In 1915, there was another suit brought in the United States District Court for the Northern District of Georgia by a Mr. South and his associate whose name I've forgotten. That was the case of South versus Peters, Mr. Peters being then challenged in the State Democratic Executive Committee. That was tried before a three-judge court composed of Judge Sibley, Judge Andrews, and Judge Hope. And, I say Judge Hope or Judge Sibley because he was then the senior judge, I think, of the Fifth Circuit Court of Appeals and, we think in Georgia, a very able judge. Judge Sibley wrote a very strong opinion upholding the county unit system and it's set forth in the case -- in that case in the 89 F.Supp., at 672. I will not undertake to read it, but he goes into the history of the county unit system again, as he had done earlier in Turman versus Duckworth. That case was also appealed to this Court and it was, here, as I read the decision of this Court, affirmed. In the meantime, MacDougall versus Green had been decided by this Court.
Arthur J. Goldberg: (Inaudible)
B. D. Murphy: Your Honor, I thought that the -- I'll be glad to look at it and refresh my recollection, but I thought that the judgment of the three-judge court was affirmed by this Court.
Arthur J. Goldberg: It was, but (Inaudible)
B. D. Murphy: Well, it may have been. If so, it may be that the late -- the last case, Baker versus Carr, answers those questions. Now, the next case that we had was in the Supreme Court of Georgia. That was the case of Cox versus Peters. That case was dismissed on demurrer by the trial judge in the Superior Court of Meriwether County, and that dismissal was affirmed by the Supreme Court of Georgia and that appeal was dismissed in this Court for warrant of a substantial federal question. The next attack on the county unit system was a suit brought in the United States Court for the Northern District of Georgia by Mayor Hartsfield of Atlanta against the Chairman of the Democratic Executive Committee and others which the trial judge dismissed and refused him to empanel a three-judge court. And this Court did not allow an appeal from that decision. So, the Justice thought that a rule to show cause should be issued, but it was not issued and that appeal was not granted. Now, that ended the litigation about the Georgia county unit system until the decision of this Court in Baker versus Carr. We had a new suit in the Northern District of Georgia which was heard by a three-judge court and that's the case we have here.
Potter Stewart: Do these cases, maybe you've told us and I don't need -- we don't need to know in detail, but do these cases all involve the same issue that's involved here, that is the election of statewide executive and judicial officers or --
B. D. Murphy: Yes.
Potter Stewart: -- or were some of them de -- were some of them an attack on the legislative apportionment system?
B. D. Murphy: None of them was an attack on the legislative apportionment.
Potter Stewart: They were all --
B. D. Murphy: They --
Potter Stewart: They were all of a piece of the kind of litigation we have before us now.
B. D. Murphy: That's correct. As a matter of fact, I think, the petition in this case was copied almost verbatim from South versus Peters. It was filed on the same day of the decision in Baker versus Carr. I will say that in South versus Peters, the election involved there -- the election in 1950, I think it was 1950, also involved the election for the nomination of the United States Senate. Now, this case was filed and immediately after Baker against Carr. I don't think it's improper to say. That was, of course, a great deal of conversation among Georgians, Georgia politicians about the effect of that decision and there were numerous conferences on the subject, and the legislature was called into extraordinary session. It was actually an extraordinary session at the time of the hearing in the court below in this case. As a matter of fact, it passed and the governor approved on -- the judgment in this case was -- or the hearing was concluded. I'm not sure whether judgment was entered on that day or the next day. The governor approved a statute which amended the Neill Primary Act and these respects, I said a little while ago we have 159 counties in Georgia, and the new Act allocated unit votes to the various counties in accordance with the bracket system that's set forth in the Act and is in the, I think, in the briefs and is also in the opinion of the Court. No longer was the number of votes of the county -- number of unit votes to which the county was entitled based twice than the number of the representatives in the lower House to give us in. The Act provides, new armies will have it, that all counties with the population of less than 15,000 shall have 2 unit votes. Counties with a population between 15 and 20 or 25, I'm not sure which, will have 3 and so on. Finally, it gets up to a bracket where they allocate additional votes at the rate of 2 for each 15,000 additional population. Under the county unit system, as it was enacted by that statute, Fulton County which had 6 unit votes under the old system and now has 40. No county has less than two, however small the population may be. The Court of -- the three-judge court held that this new -- that the Neill Primary Act, as amended by the Act of 1962, was unconstitutional because it was invidiously discriminatory against people who lived in -- against the plaintiff and others similarly situated, if they have been a resident of Fulton County. I overlook, saying that the new Act provides that, in order to be nominated in the first primary, the candidate must receive not only a majority of the county unit votes but a majority of the popular votes. And, if he does not receive a majority of the county unit votes and no county receives a majority of the county unit votes and a majority of the popular votes, there's a run-over primary between the candidate receiving the greatest number of county unit votes and the candidate receiving the greatest number of popular votes. Unless, it so happens that the candidate will receive the greatest number of county unit votes, also received the greatest number of popular votes, but not a majority of either or both. Then, it run-off is between the candidate with the highest number of county unit votes and the candidate with the highest number of popular votes but, in that run-off primary, the candidate who receives the majority of the most county unit votes, without being a majority because there'd be only two, is declared the nominee. There was this additional change in the nominating process that, as respects, officers -- candidates for officers, other than governor and United States Senate, the same rule applies of requiring the majority, both the county unit vote and the popular vote. And, if there is no majority of both, then the two highest candidates would have to run again. Now the --
Potter Stewart: That happens with the one who got the highest unit votes when --
B. D. Murphy: The one who gets the highest unit --
Potter Stewart: -- unit votes?
B. D. Murphy: Of course he has to have a majority because there's going to be two.
Potter Stewart: A majority of the units?
B. D. Murphy: Majority of the units. He's entitled to nomination. I say it makes that change in the nominating process, as embodied in the Neill Primary Act. The Neill Primary Act requires only plurality of county unit votes of candidates other than the governor and United States Senate. Whereas, this Act, as I read it, requires the same sort of majority for all the candidates than it does for governor and United States Senate. Now, the Court in this case said that this Act was invidiously discriminatory and it set forth its definition of invidious discrimination in the opinion and enjoined the Secretary of State, who was the state official who handles elections and putting in the voter's name on the ballot with the general election who is nominated under the Act or by virtue of the county unit system. Now, enjoined the party authorities from holding any primary in 1962 or any other time. Under any county unit system, unless it was such a county unit system as it would not be invidiously discriminatory under the opinion that was filed by the Court in this case. As I read that opinion, it provides that the county unit system will not be invidiously discriminatory if it allocates unit votes to counties on a basis of population or if it allocates unit votes on the basis of – on the law of equal proportion that relates to the assignment of the representatives in Congress and will not be discriminatory if -- but it provides that no discrimination will be deemed invidious if there's no greater discrimination against any county than there is against the laws -- against any state in the assignment of electoral votes at the last election for president and vice-president of the United States. I'm not sure that I know where that theory would lead Georgia with reference to the assignment of county unit votes.
Potter Stewart: The position of the government of that part of the Court's opinion and decree should be excised. Would you agree that it was perhaps unnecessary to the decision of this case no matter how it was decided, whether it was decided --
B. D. Murphy: Well, if you -- if this Court holds that the Neill Primary Act is unconstitutional for --
Potter Stewart: That's really all that's before us, isn't it?
B. D. Murphy: No, sir. It's not all that's before here. There's also before you the question of whether or not the Democratic Party in Georgia, without any state law.
Potter Stewart: Well, that yes, that's before us.
B. D. Murphy: They can hold a primary on a county unit basis.
Potter Stewart: But, it -- but, there is not before us any other alternative system, is there?
B. D. Murphy: No, sir. There's been -- none has been adopted. As a matter of fact, when this case was handed down, the State Democratic Executive Committee met and revised its rule so as to provide for a popular vote and the primary then was held in September 1962.
Potter Stewart: No stay was requested in this Court, was there?
B. D. Murphy: No stay was requested in this Court.
Potter Stewart: There was a stay requested in --
B. D. Murphy: But there was denied in the court below, and I don't -- now, as I say, if the Court holds that the Neill Primary Act, as amended, is unconstitutional, as did the trial court, then the next question is what can the Democratic Party in Georgia do about it? Under this decree, it can hold a democratic primary on a county unit basis, to hold it only on a popular vote basis, although it may if the Court permits this formula that was set forth by – for the court below to stand. It may hold the primary on the county unit basis, provided it meets the requirements of the Court's idea about what will not be invidious discrimination. Now, it's the position of the appellants here as stated in our brief and is -- I think we stand upon that the county unit system, as it existed in Georgia at the time of the amendment of the Act of 19 -- the Mandatory Act of 1962 and, as it now exists, is that and represents a proper exercise of legislative power by the state. Of course --
John M. Harlan II: It did not strike -- the Court did not strike down the money as such, did it?
B. D. Murphy: No, sir. It struck down the Act we had.
John M. Harlan II: Yes.
B. D. Murphy: And said you could have one if you -- the party could hold -- of course the party -- the Act, being unconstitutional, is left to the party but the party did not know and take the word out. The -- a system that would be in conformity with the Court's opinion, the party simply reverted to the majority vote and the last election was held on majority vote basis. Now, we needed to have a reapportionment here. So, that's not on its way up here because we had -- as a matter of fact, the Court never have granted appeal to judgment and express this --
Byron R. White: Mr. Murphy, you don't -- do you contend that the -- that, without there being a state Act which had been set aside, you say the party did something or you -- is there any part of your argument that the state action would -- would --
B. D. Murphy: I don't think so, Your Honor.
Byron R. White: Or do you think that the record --
B. D. Murphy: I think that Baker versus Carr answers that question that this Court can deal with what I'm trying to say here that, where the Act --
Byron R. White: That's the primary.
B. D. Murphy: Sir?
Byron R. White: That's the primary.
B. D. Murphy: This is a primary, yes.
Byron R. White: This is a primary and it's a party primary.
B. D. Murphy: It's a party primary, yes.
Byron R. White: No -- you raise no question about it being a state action?
B. D. Murphy: No, sir. We raise no question about it being state action. I think we have passed all that questions. I think this Court is --
Byron R. White: Or any question about the case being moot?
B. D. Murphy: It would be moot if it related only to the 1962 election, but the judgment of injunction is broad and sweeping. It's enjoined this forever against holding a primary under county unit basis under the county unit system unless we do it according to what the Court says would not be invidiously discriminatory.
Byron R. White: Well, would you tell me how the -- why this is state action?
B. D. Murphy: Why it is a state action?
Byron R. White: Yes. Let's assume there was no statute whatsoever stated in your argument relating county unit, but there's the party rule only.
B. D. Murphy: Well, I think it is -- we would contend --
Byron R. White: After all, the party was the one who decided to hold a popular --
B. D. Murphy: That's correct. I think, under the decision of this Court, this Court will hold this at state action, and I don't mean to say by that but I agree with it but I say my point --
Byron R. White: Now, what --
B. D. Murphy: -- in trying to flog the dead horse on that question.
Byron R. White: What decisions are those?
B. D. Murphy: Terry against Adams and these other cases, the classic case. I wouldn't say that -- the law of Georgia doesn't require primary. It doesn't require primary for any purpose and the Neill Primary Act, as it existed before the Court struck it down as unconstitutional, unless we can get to this Court to reverse it, doesn't require a primary.
Byron R. White: I suppose then if the primary is state action, so is the convention.
B. D. Murphy: That's the contention on the other side and I think that's what this Court decided and I don't think --
Tom C. Clark: Well, it's the only where the state is predominantly what party, where the Pentagon has an election.
B. D. Murphy: Well, that exact question was that where Judge Sibley in -- the only time is have been considered, I think authoritatively, was by Judge Sibley in South against Peters and he said it was not equivalent to election.
Hugo L. Black: He said what?
B. D. Murphy: That it was not equivalent to election, the democratic nomination.
Tom C. Clark: We have several times it was -- I think, have used the word “tantamount to election.”
B. D. Murphy: Yes.
Tom C. Clark: In the Jayberg --
B. D. Murphy: Well, in the Jayberg, I don't know whether the Court might review that situation again in view of the fact that there is an elected republican senator in Georgia and we've got a republican senator in the state senate who was elected in November.
William J. Brennan, Jr.: Mr. Murphy, now that you've tried the popular primary, are you suggesting that the party would like to return, nevertheless, to the --
B. D. Murphy: To the county unit system?
William J. Brennan, Jr.: County unit system.
B. D. Murphy: Well, we think that the county -- the Democratic Party of Georgia would have a right to adopt any method of nominating its candidates if it sees prompt.
William J. Brennan, Jr.: Without suggesting that it intended to return.
B. D. Murphy: How is that?
William J. Brennan, Jr.: Without suggesting that it intended to return.
B. D. Murphy: Yes sir. I have no idea as I'm not a member of the State Democratic Executive Committee and I don't know how or what the next committee will do. I will say this, the only time that the dominant political factor in Georgia heretofore has changed from the county unit system was 1908, I believe, when Governor Hoke Smith who, by which of being a governor was well dominating the Executive Committee, reverted to the popular vote plan and abandoned the county unit system and he was very silently defeated for that reason, and since then, they've been back on the county unit basis. Now --
Byron R. White: But, would you say that if the party decided to nominate by a convention, that -- and that the convention was organized on the same basis as the -- on the county unit basis, that we have a state action in this case?
B. D. Murphy: Well, I don't think you would and I think if the Democratic Party want to have a state convention to nominate its candidates, it ought to be allowed to do so and I think it could do so, most of the other states could.
Potter Stewart: Now, wouldn't it -- would it or would it not be allowed to do so under the outstanding injunction?
B. D. Murphy: I think, probably, it would, Your Honor.
Potter Stewart: That's what I think, too.
B. D. Murphy: The outstanding injunction enjoining them against holding any primary.
Potter Stewart: It just relates to primary, is it not?
B. D. Murphy: It just relates to primary.
Potter Stewart: I suppose, under that injunction, a Democratic Party, if it wanted to, could have a dozen party leaders meet in the smoke-filled room and nominate all your statewide officials.
B. D. Murphy: Well, that's what the republicans do in Georgia.
Potter Stewart: Well, that's all the republicans in Georgia, I suppose.
B. D. Murphy: I think -- I didn't mean to be facetious, Your Honor.
Potter Stewart: I know you weren't and I wasn't -- well, we both were a little bit.
Hugo L. Black: Well what's the -- what's the republican run-off?
B. D. Murphy: Well, Your Honor, they nominate the candidate for governor. I mean, it's in this record. I suppose the only man who knew about it was Judge Tuttle who happens to be a republican, and he set out in this record in outlining the history of the Georgia politics and the Georgia county unit system how it is that -- in the opinion of the Court, how it is that they nominate candidates, the republicans nominate candidates. And, they have a county unit system. It's sort of like ours. But, he says that the Republican Party of Georgia, although judiciary it is probably not action normally anyone from the statewide office during this century, uses a convention system for nominating for state office and presidential election here. The convention also selects a State Central Committee which has the power to nominate candidates between quadrants of conventions which are held during presidential election here and its elect meets the county at mass meetings to the state and the primary toll in Georgia.
Potter Stewart: Well, I -- General Murphy, going back to Justice White's and my inquiry, in your opinion, it would not be a violation of this injunction if the democratic party in Georgia decided to have a few party leaders and nominate the state officials, would it?
B. D. Murphy: I don't think so. I don't know how well it had to find election is to do it that way --
Potter Stewart: Well, it's been a q --
B. D. Murphy: But I don't think it would be a violation of this injunction. I started to say that the republican quite operates that way in Georgia and did nominate a candidate for governor in 1962 and he qualified by getting a requisite number of signatures on his nominative petition.
Arthur J. Goldberg: (Inaudible)
B. D. Murphy: Well, I don't know of any case in Georgia where a republican or any other party has not elected a candidate for state office since I have been old enough to vote. I, again, remember back to reconstruction but the only reason that the Democratic Party elects the state officer -- of course, that's the way the people vote in the final election in November and he has to get a majority of all the votes cast. Ordinarily, he doesn't have any opposition. I agree that that's true, but the only reason why that is so is because that's the way the people vote and, this year, there would've been a republican candidate who would've polled a very substantial vote. The Republican Party got about 35 -- between 35% and 40% of the votes in 1960 for in the presidential election. And, Mr. -- the candidate, unfortunately, was killed in an automobile accident and didn't get to make the race, but they did nominate a very fine --
Hugo L. Black: I can understand that you have raised any -- asked us to overrule or reconsider Smith and Allwright?
B. D. Murphy: No, sir.
Hugo L. Black: -- or Terry versus Adams.
B. D. Murphy: No, sir, we have not. We have not.
Hugo L. Black: And then your vote said that this was state action, did it not?
B. D. Murphy: Yes, sir, and we are not undertaking to reargue those questions, that is this difference, I think, in classic case and in the Allwright case that, in those cases, the primary was required by the law in the County in Georgia.
Earl Warren: We'll recess now.