Earl Warren: Harvey Lyle Entsminger, petitioner versus Iowa. Mr. Belin, you may proceed with your argument.
David W. Belin: Honorable Chief Justice and Associate Justices, may it please the Court. The basic issue in this case is what constitutes effective assistance of counsel. The case is on appeal from the Supreme Court of Iowa, and involves the issues of due process and equal protection of the laws and effective assistance of counsel. The petitioner Harvey Entsminger was arrested without warrant on June the 12th, 1964 on a traffic violation. At the time of his arrest the Des Moines Police Apartment were looking for Mr. Entsminger on an alleged bad check charge and he was taken to the police station and arrested and asked to leave his personal effects with the jailer for safekeeping as was customary at the Des Moines police station. Included in these personal effects which were placed in a locker in a safe were two handwritten personal letters written by the petitioner. Two-and-a-half weeks after his arrest, Lieutenant Dawson of the Identification Bureau of the Des Moines police department asked the petitioner to submit a sample of his handwriting and the petitioner refused. Lieutenant Dawson had been present at the arrest two-and-a-half weeks earlier. He remembered that there were two letters that have been placed in the safe and although of these were not instrumentalities of any crime or evidence of any crime, he removed these letters from the safe. Now there's a dispute in the record as to whether or not this was voluntary or not voluntary. In any event, several months later, in October with court-appointed counsel, the indigent Harvey Enstminger was tried for the bad check charge. These letters were used as an important part of the chain of evidence. Mr. Entsminger was convicted. He was sentenced to a term not to exceed 10 years and he is now incarcerated in the Fort Madison Penitentiary in Iowa. Mr. Enstminger asked the court to appoint a new lawyer to represent him to file a motion for a new trial and to file an appeal to the Iowa Supreme Court and in the State of Iowa appeal as a matter of right, a new counsel was appointed, a man by the name of Henry Warnley. He filed a motion for a new trial, and the motion was overruled and the sentence imposed. Then Mr. Warnley had 60 days to file on behalf of the petitioner a notice of appeal, and within this 60-day period, a notice was filed. And that gave Mr. Warnley 90 days to file what we call a printed record on appeal. Unfortunately, at the end of February, the 90-day period expired, there was no record on appeal filed.
Byron R. White: The printed, the printed record is the full record --
David W. Belin: The full record, yes sir.
Byron R. White: -- including any of the testimony that --
David W. Belin: Yes.
Byron R. White: -- is relevant.
David W. Belin: Yes, Justice White. It's --
Abe Fortas: Isn't the counsel, doesn't the Attorney General pretty much concede this part of your case?
David W. Belin: Yes, Your Honor.
Abe Fortas: Now on page, for example, on page 28 of his brief, as well as elsewhere, it seems to me that he suggests that you are entitled to have the case remanded to the Iowa Supreme Court because of the inaction of court-appointed counsel and have the case remanded for carrying the appeal on the basis of the record.
David W. Belin: Yes, Your Honor, Justice Fortas
Abe Fortas: Now, where does that leave us?
David W. Belin: I think that basically, this is the primary relief that we are seeking here although we do raise the additional issue as to whether or not there is a sufficient record before this Court.
Abe Fortas: Sufficient what?
David W. Belin: Sufficient record before this Court because the actual trial transcript has been introduced as an exhibit filed with the record on appeal. Whether or not there is sufficient record before this Court because of the basis of the seizure without warrant of these personal communication.
Abe Fortas: Yes, but the real question, the question then the only remaining question that I see as subject here enlightened -- enlightening me is whether we ought to reach the search and seizure question?
David W. Belin: Yes, Your Honor.
Abe Fortas: Or whether we just ought to remand as the Attorney General if I correctly understand his brief suggests that Iowa Supreme Court for the consideration of the appeal.
David W. Belin: Well --
Abe Fortas: Am I -- am I right in --
David W. Belin: Yes, you're absolutely right, Justice Fortas.
Abe Fortas: Was that --
David W. Belin: That the Attorney -- the Attorney General as a matter of fact in this particular case, the appointed counsel Mr. Warnley finally did serve, after the expiration of this 90-day period, Mr. Warnley did served a notice on the Attorney General specifying his intent to file a record and a brief and although the Iowa Supreme Court had ordered that the case be submitted on a clerk's transcript which is not a transcript of the record at all, that the Iowa Supreme Court set aside that order without prejudice to the Attorney General's office to file a motion to dismiss and I think it's indicative of the Attorney General's office that they did not elect to stand on the technicality of a motion to dismiss, but rather wanted to have the appeal heard in substance. And in this particular case, they are not arguing about sending it down to the Iowa Supreme Court although I think there might be some disagreement between us as to whether or not on the one hand, we argue, at least I argue, that the clerk's transcript system itself is either per se unconstitutional because it permits this very thing happening that happened here, and by the way, I personally have taken a survey of the clerk's transcript cases over the past 15 years in Iowa and out of several hundred cases, there has never been a reversal, at least to the best of my knowledge. And so, I argue that either the clerk's transcript system itself is per se unconstitutional or in the alternative it cannot be used under Douglas, and as reaffirmed this recently as your decision on Mundy, the Missouri case that it cannot be used without some protection of the right for indigent defendants. And so I say there would be not basic issue before we reached the final issue of whether or not we have --
Abe Fortas: I may --
David W. Belin: - the case occurred here.
Abe Fortas: I may be wrong about this, but my reading of the -- my recollection of the Attorney General's brief is that at least state is agreeable having this case remanded to the Iowa courts for consideration of the appeal on the basis of a complete record and with the newly appointed counsel.
David W. Belin: That's correct, Your Honor.
Abe Fortas: So, if that so, I don't see what we've got left here --
David W. Belin: Well (Voice Overlap) --
Byron R. White: Do you mean --
David W. Belin: Yes.
Byron R. White: I would -- I would be interested in knowing whether or not the clerk's transcript system that you call it, is something that is used regularly by lawyers who have examined the record and have decided on their own that there is nothing really to appeal here. Or whether or not -- or whether from the contrary in this case counsel simply neglected the work. I think if a paid counsel sometimes, the paid counsel – we have had cases here or at least request to take cases in which the counsel simply has neglected to take the necessary steps within the required time. And then the -- the defendant who doesn't get his appeal asks for habeas corpus or something else to let -- to make the state give him -- giving him an appeal and know it was -- it's neglected his counsel, his own hired counsel.
David W. Belin: I think --
Byron R. White: What is -- what is it in this case? Is this the way that the Iowa lawyer, appointed lawyer used to -- to -- to let the court know we don't think if there's any merit in the case or do they just not do the work or what?
David W. Belin: Your Honor, I think it happens in both instances. In this particular case for instance, the -- I think the thing that perhaps instigated the late filing of this notice of intent to file the record was a letter from the petitioner to the court appointed attorney and the court appointed attorney wrote back that your case was appealed and as soon as I receive the record, this letter was a letter written on March 9.
Byron R. White: If I may --
David W. Belin: -- they've got to do something when they received the record the transcript in December already. Then later in October of the year, he writes to the petitioner because the petitioner has meanwhile a petition for certiorari to the Iowa Supreme Court which was overruled as being untimely.
Byron R. White: Yes.
David W. Belin: He says, that on the basis of my examination of the record, I don't think you have any basis for appeal or in substance this is what he says. Now I don't know whether or not it was his inadvertence --
Byron R. White: Yes.
David W. Belin: -- or whether or not he really felt that.
Byron R. White: Oh you mean, there's -- the record does contain some expression by him that -- that there's no merit.
David W. Belin: Well, this is a very late expression. It's about several weeks before the --
Byron R. White: What would you say the rule should be? Is there a constitutional rule? Let's assume that this man had hired his own counsel? And his own counsel, instead of taking appeal, then he just didn't do it. What would you -- would you say that it's a constitutional rule that the defendant has -- may have an appeal anyway?
David W. Belin: Your Honor, I think the basic constitutional issues is whether or not the clerk's transcript system can be used as a vehicle by court-appointed counsel because I don't think would happen --
Byron R. White: Yes but that's not my question.
David W. Belin: In your -- in your situation, I don't think there would be any basis for appeal because I don't see any equal protection argument. Now if there was --
Byron R. White: Well, then --
David W. Belin: -- outright --
Byron R. White: -- what if, but do you think there should be a constitutional rule if appointed counsel makes this same error?
David W. Belin: Well, I think that the -- that the dangers are far greater in court appointed counsel doing this because of laziness or inadvertence, whereas I think that the retained counsel is not going let this happen, at least I don't think --
Byron R. White: I guess it happens all the time?
David W. Belin: It does happen, but I don't think the degree is nearly as great. I think that -- I would say this and this is a practical matter, I think that often, a clerk's transcript appeal is used where there are perhaps might not be any basis for appeal because it gives a delay of several months within which the defendant might be able to place as [Voice Overlap]
Byron R. White: But the -- but the appointed counsel, the defendant with hired counsel who haven't -- the hired counsel went through the same procedure, would have received exactly the same treatment as the Supreme Court, wouldn't he?
David W. Belin: Yes, if this were a conscientious effort to do it. As I don't happen to think it was in the Enstminger case and I don't happen to think it is in the great majority of indigent cases.
Byron R. White: What do you mean?
David W. Belin: I think that the likelihood of a -- of a retained lawyer through neglect letting a clerk's transcript system arise is much less than the likelihood of a court-appointed lawyer.
Byron R. White: Do you think this makes a constitutional difference?
David W. Belin: I think it makes a constitutional difference to the extent that if the man could have retained a lawyer, I don't think it would have happened nearly as much as it might have happened in the other situation, yes sir.
Byron R. White: Okay.
Earl Warren: I suppose if -- if the retained lawyer took the money and then did nothing for him and his counsel, I mean, his client had wanted him to do so, he'd be subject to discipline, wouldn't he, by the -- by the Bar for having neglected his professional duty?
David W. Belin: Yes, Mr. Chief Justice. I happen to think that perhaps this should happen in -- in appointed counsel cases also --
Earl Warren: Yes.
David W. Belin: -- but again, you have -- it's a question of judgment. I think the only issue really is whether or not you're going to leave it in the hands of one lawyer to make the determination of whether or not there is merit and I think that we would -- at least I would submit that I think the lawyer is going to make a better calculated decision if he's actually on a retainer as opposed to a situation where you might look on this as a burden upon this time because he's accepting the duty. I mean, he theoretically shouldn't but yes, as a practical matter, I think the situation does arise.
Byron R. White: Well, in Iowa -- the -- by the transcript system, the Iowa Court never gets around looking at the printed record or anything?
David W. Belin: No. And --
Byron R. White: Never passes on anything that was raised on the motion for new trial?
David W. Belin: That's correct, and as a matter of fact, the tragedy here was that there actually was a full transcript of the trial court record available at the time it went up on the clerk, – at the time the Iowa Supreme Court ordered it to submit on the clerk's transcript. But the clerk's transcript does not require imprinted abstract of record at all and so we have the error in Douglas compounded because in Douglas, at least there was a record on appeal. In this case, there is no record on appeal and that's why I really argue in essence that the system itself is per se unconstitutional.
Byron R. White: But is it one step beyond the California as we heard about yesterday?
David W. Belin: Yes sir. Yes, Your Honor. In other words, if -- the reason that I argue that this -- that the clerk's transcript system is really per se unconstitutional is that I don't think you ought to have an appeal in form that's totally void of substance. That's totally void of a record on appeal apart from totally void of a brief and argument. And even if it's a conscious decision on the part of counsel whether he be retained or appointed counsel, I don't think we want to have a judiciary system where we have this sub rows of form of appeal. I'd like to save the rest of this time for any rebuttal although I think there's going to be too much to rebut because I think both the Attorney General's office and at least I feel that in this particular instance that the petitioner's constitutional rights were violated, there is a question of what to do with the clerk's transcript system itself.
Earl Warren: Very well. Mr. Bennett.
Don R. Bennett: Mr. Chief Justice, members of the Court. I'm going to be very brief this morning because as Mr. Justice Fortas has already pointed out, we more or less conceded the case insofar as a remand being necessary. I would give you just a little background. I think you would be interested in the background as to why the Attorney General would be willing to come into Court -- into this Court and confess error on the case. And in fact I would have supposed I wouldn't even be here today but for the fact that the petitioner has raised the question of the underlying merits. I went from the Department of Justice here in town to work for Van Nuys, Lawrence Scalise who is no longer Attorney General of Iowa. And he had brought me in to handle criminal -- criminal appeals and I recall that the first conference we had was about editorials that were being written regarding the clerk's transcript system. The writer of these editorials is a resident of Des Moines and writes for the Des Moines registrant tribunal and he had been suggesting that the clerk's transcript appeal system was used by some attorneys to -- some attorneys to give the appearance of their appointed or the client for which they were appointed actually getting appeal and the client not getting such an appeal and there was some evidence to this effect. But anyway, the Attorney General asked me if I would do some research into it and try to come up with some conclusions and some recommendations. As things worked out, I never had the time to do that research because of the pressing number of appeals and never got into the problem until this Court granted certiorari in the Enstminger case and it's obvious that in the instant case, the petitioner did desire an appeal as was expressed in the record and as you will find in our brief, and I don't think we can say we will relinquish the desire to have plenary review the merits of the proceedings culminating any his conviction and he didn't receive it. I concede to you in all candor that clerk's transcript does not present an adequate record upon which an individual can obtain meaningful review.
Potter Stewart: In this case?
Don R. Bennett: In this case. I have suggested in the brief that there may be cases in which a reversal could occur because of review of the clerk's transcript.
Potter Stewart: Because of the insufficiency of the indictment or something like that?
Don R. Bennett: Or the Griffin versus California error where the instructions are part of the clerk's transcript --
Potter Stewart: The instructions are --
Don R. Bennett: -- and the Court -- yes and the Court has charged the jury relative to the defendant Enstminger to take witness stand.
Potter Stewart: For what?
Don R. Bennett: That should result on reversal?
William O. Douglas: As a matter of question of law?
Don R. Bennett: Yes, Your Honor.
Potter Stewart: Well, what does the clerk's transcript consist?
Don R. Bennett: Well, there's -- unfortunately, there is no uniformity among the various clerks in the state but, by and large, you can expect to find a copy of either the indictment or the information. Iowa uses both systems. A copy of the arraignment, a copy of the -- the arraignment or plea, probably a copy of the verdict, the sentence, most often but not always, the charge to the jury and in this particular case, the clerk's transcript also contained a copy of the motion for a new trial raising the various constitutional issues.
Potter Stewart: So there might be cases as Justice Douglas suggests where the questions is one of law and not at all as to insufficiency of the evidence or rulings on admission of evidence or anything but simply the sufficiency of the indictment or the instructions to the jury as to what the content of the particular offense was or -- where a clerk's transcript would be adequate?
Don R. Bennett: Well, that's correct Your Honor except -- I appreciate that whenever clerk's transcript is used for a review there is no argument. It's not an adversary proceeding at all. It's simply is the court reviewing the clerk's transcript.
Potter Stewart: Well, you --
Don R. Bennett: What happens is the -- the printed record, this is an abstract of the record, it's not usually the full trial record and the trial transcript. The -- oh, I lost my thought early -- the idea was trying to put across --
Potter Stewart: So there is no argument?
Don R. Bennett: Right.
Potter Stewart: Well, I don't quite follow that because you think that there might be cases where a perfectly -- a perfectly careful lawyer might have one good solid point on appeal which could be fully disclosed and exposed by a clerk's transcript and therefore he wouldn't bother asking for anything else and then he'd go and argue his case and probably win it if let's say there were instructions and violation of Griffin against California. Now what would be --
Don R. Bennett: And this is very conceivable. In my months in the office, this has not happened. The clerk's transcript system has been utilized only where the court reviews it itself and there is no --
Potter Stewart: Without any -- without any --
Don R. Bennett: Right.
Potter Stewart: -- argument? Or without any briefing, I guess. Isn't that right?
Don R. Bennett: Right.
Potter Stewart: No briefing here?
Don R. Bennett: No briefing, no record, just the clerk's transcript. Now this is equivalent by the way to what his Court has spoken off in Griffin versus Illinois. If you -- I think check at Footnote 2 at that opinion, the mandatory record referred to in that case is very similar to the clerk's transcript in our case or in the case of Iowa.
Byron R. White: But in the -- in this case, the state did appoint counsel to represent him on appeal?
Don R. Bennett: Well --
Byron R. White: Didn't they?
Don R. Bennett: Yes. And this case --
Byron R. White: And the sole -- the state furnished him counsel and the counsel either decided this to submit it on the clerk's transcript because he didn't see any merit in it or simply neglected to proceed with the appeal which he's told this company or his client that he was proceeding with. Is there any indication in this record which it was?
Don R. Bennett: I would say that the indications in the record probably go to more of the -- more of neglect of some sort rather than counsel having come to a conclusion that the appeal was frivolous.
Byron R. White: Well then --
Don R. Bennett: Because counsel had written the petitioner on two different occasions; once in March and once again in September indicating that a -- that a brief or a record would be filed.
Byron R. White: Would you say -- or would -- you would suggest then that the constitutional rule in appointed cases, in appointed cases, the -- the appeal would not be disposed of for any reason without a full record in the appearance of counsel.
Don R. Bennett: No, I wouldn't suggest that if I follow your question --
Byron R. White: Well, what I -- what I wonder is that why do you think the defendant should not be charged with the error or neglect of his counsel, like he might well be if the counsel was retained?
Don R. Bennett: In this given -- in this case?
Byron R. White: Well, yes?
Don R. Bennett: Now -- well, in the first place, I am not certain. You -- you addressed the same question to Mr. Belin. I am not certain that if -- if retained counsel did nothing without the knowledge of his client --
Byron R. White: Yes.
Don R. Bennett: – and his client received a clerk's transcript appeal that you wouldn't have a constitutional problem there.
Byron R. White: Well, that's -- that really what I am --
Don R. Bennett: I suppose (Voice Overlap) you could express it -- you could express that in -- in terms of ineffective assistance of counsel or something of that akin and this would entitle that individual to relief. In this case, we have something that -- I have a record here or we have a record, it's not of our making and we have something in this case that goes a step further than that. The court was apprised by the petitioner several days prior to the time that they affirmed his conviction on the clerk's transcripts.
Byron R. White: Would you think the rule as saying that the both appointive and hired counsel -- what is unconstitutional there? Same reason, different lawyer, equal protection.
Don R. Bennett: In the case of a retained counsel?
Byron R. White: Well, you say that it's a constitutional should be the same, what is -- what is the constitutional error if -- if they affirm on a clerk's transcript.
Don R. Bennett: Well, in the case of the indigent --
Don R. Bennett: -- because if you say that they used the clerk's transcript on which to affirm in both -- in both the appointed case and in the retained case, you say that -- that's that -- that's wrong.
Don R. Bennett: Well, in the case --
Byron R. White: -- (Voice Overlap) why is it wrong? What's the constitutional violation?
Don R. Bennett: In the case of the indigent, and in keeping with this Court's decisions starting with Griffin versus Illinois, right on down to the one that the Court decided, I understand a week or a few days ago, you could spell out the constitutional violation where the Indigent is concerned by State stating that he has not received adequate and full plenary review to which he is entitled and the reason he hasn't received it is because he wasn't able to fire an attorney. Had he been able to hire an attorney, he could have kept some control over his attorney. Mr. Enstminger could have -- in checking up now you say you're going to get the brief and where is the brief? Now in the case of the retained attorney, I suppose you could -- I could only say ineffective assistance of counsel, perhaps you could use the Sixth Amendment.
Byron R. White: So really -- that's a -- so, are you conceding in this case a constitutional violation of Equal Protection or of the Sixth Amendment?
Don R. Bennett: This question has bothered me and one that I haven't really come to resolve myself, but I do believe that under this record we would have to concede that this indigent was not or did not obtain whole and effective appellate review to which he was entitled and that within this Court's decisions, he wouldn't be entitled to relief for that reason.
Byron R. White: And yet make the same concession if on the same facts retained counsel did the same thing?
Don R. Bennett: Well, I -- I'm willing to state for the sake of argument that I believe I would make the concession that there would be a constitutional violation if he did nothing and that his client -- and didn't let his client know of anything.
Speaker: Prior on subject like this as to the first absent the [Inaudible] transcript of the trial, and entered in the [Inaudible] as to the [Inaudible] available and the Court ordered complete transcripts as of --
Don R. Bennett: The court ordered a complete transcripts Mr. Justice Harlan before the clerk's transcripts was ever filed?
Speaker: [Inaudible]
Don R. Bennett: At the time of the hearing on the motion for new trial, and at the date of sentencing, the petitioner said he wanted to take an appeal. Counsel had been appointed to help on the new trial, he was requested to stay and assist him in connection with the appeal and the counsel said it was alright, where upon the court said, “I'm appointing this counsel to assist you on appeal and directing that a free transcript be ordered for you.
Byron R. White: The full transcript?
Don R. Bennett: The full transcript, that's his transcript right here, you have it.
Speaker: -- (Voice Overlap) and the [Inaudible] to this Court?
Don R. Bennett: It was --
Speaker: The lawyer is not [Inaudible] and it was considered done, it wouldn't had available as to the complete review --
Don R. Bennett: It was mostly the --
Speaker: -- the full transcript --
Don R. Bennett: -- mostly the fault of the lawyer, yes.
Speaker: Well, are there any problems in it?
Don R. Bennett: I cannot -- in all fairness, I must say that the record shows there was some fault on behalf of the Court.
Speaker: What was that?
Don R. Bennett: The Court was advised by what the petitioner denominated, a petition for writ of certiorari, advised some eleven or 12 days before they ultimately affirmed the conviction on a clerk's transcript, advised in this pleading that he was not happy with -- with the way that counsel was proceeding with this appeal. And so in this case, we have a record which goes a little beyond counsel's inaction. We have a record showing that the Iowa Court was advised that the fact that the petitioner was complaining about the way the appeal went, nonetheless, it was affirmed on the clerk's transcript a few days later.
Byron R. White: Was that the state action you --
Don R. Bennett: Yes, Your Honor.
Byron R. White: And you -- would you -- would you charge the state with the -- with the neglect of any appointed counsel because he was appointed?
Don R. Bennett: No, Your Honor, but to the extent that the clerk's transcript system allows the counsel appointed to represent indigents to do nothing and to the extent that the ultimate per curium opinion leads those indigents into believe that they've got -- leads the indigents in to believing that they've got a full appeal, then there is something wrong with the system.
Speaker: Would you say that matter conflicts [Inaudible] clerk's transcript system in there?
Don R. Bennett: No, I'm not -- I'm not ready to say that as a blanket statement for all cases. Every lawyer that -- who handles any criminal appeals at all in Iowa knows that the clerk's transcript is quite often used as a delaying tactic, a time to let the man put his orders in affair or put his affairs and order. It's also occasionally used where an attorney has reviewed the record, felt that any appeal would be frivolous, goes to his client and advises his client at this sits down and talks about it. The client agrees with the counsel and so he let's go on the clerk's transcript. So there are situations in which the clerk's transcript is certainly being utilized without there being any -- any suggestion of the constitutional taint to its use.
Potter Stewart: It's sort of an abandonment without an appeal, wasn't that what it amounts to but -- but the device it does give the appellant a little more time out of jail?
Don R. Bennett: That's correct. We have suggested to the Iowa Court and some proposed rule changes which they have told us they will consider and which are incorporated in the appendix of our brief that they ought to do way with the clerk's transcript appeal, that what they should do is to dismiss the appeal with prejudice if the record or the briefs are not filed on time or with any -- or with any enlargement of time.
Abe Fortas: Your point here as I understand it is that in this particular case, the court-appointed counsel for the petitioner, that the counsel didn't do his job that the petitioner called that fact to the court's attention that the court ignored that and went ahead and decided this case on the basis of the clerk's transcript and that this amounts to a denial of the right of appeal. Am I right in this statement?
Don R. Bennett: That's substantially it. I -- I would, Mr. Justice Fortas, I would like in all fairness to the Court, to the Iowa Court to say that -- that they did not ignore that notice. This is a situation I -- I realize this is not important where this record is concerned but as a practical matter, I want to tell you about the situation where they simply got more work and they can keep up with and as one hand doing what the other doesn't know. So this petition for writ of certiorari not being proper and informed was summarily denied without even being aware that Harvey Lyle Enstminger was also some place else. But of course we're stuck with the record as it shows. Now, to proceed this a step further, we've asked the Iowa Court in connection with these proposed rule changes that they spell out, what we -- what we think or what this Court might hold to be the obligation of counsel, to spell it out in black and white and tell the attorneys of the State of Iowa what is expected of them whenever they are appointed to represent an indigent and I think that's necessary because in my limited experience I have seen some abuse and this is not been the only case.
Byron R. White: Were you -- are you making the same statements up here if the Court had -- had not decided the appeal, but it just dismissed it on these facts? Though he didn't get his appeal and then -- and for the same reasons --
Don R. Bennett: You would have the same problem, yes.
Byron R. White: Yes.
Don R. Bennett: But I don't think --
Byron R. White: And I suppose you would -- I suppose you wouldn't --
Don R. Bennett: I don't think you would have the problem Mr. Justice White, of the -- of the clerk's transcript system allowing this (Voice Overlap) quite so readily as where you would --
Byron R. White: [Inaudible]
Don R. Bennett: Yes.
Potter Stewart: Is the appointed counsel compensated in your -- in Iowa?
Don R. Bennett: Yes, I point out in my brief that counsel -- the appointed counsel is not expected to gratuitously serve. They are not paid as well as retained lawyers are obviously, but they do get a reasonable compensation, and that varies from court to court.
Potter Stewart: Well, that's a bit --
Don R. Bennett: They are appointed by the District Courts.
Potter Stewart: Certainly, they're under this clerk's transcript system, every lawyer paid for doing nothing at all?
Don R. Bennett: I don't know whether they ever be in a situation like there or not Mr. Justice Stewart.
Potter Stewart: I see.
Speaker: What do you think the effect of this Court [Inaudible] of your recommendations would be suppose this is [Inaudible] Do you think it's going to be [Inaudible] I suppose, this Court [Inaudible]
Don R. Bennett: Mr. Justice Harlan, I assume the Iowa Court will not act upon the proposed rule changes until such time as this Court has decided not only in the Enstminger case but also the California case that was acted upon yesterday.
Speaker: Yesterday, oh.
Don R. Bennett: And I'm sure that whatever guidelines are there might go a long way toward -- they're accepting some proposal like we have filed with the Court.
Byron R. White: Do you think of -- you talked about the clerk's trans -- transcript system, but in this case, in this case, from your argument, the facts are that you have appointed counsel who -- who neglected this to carry through on the appeal. And we say this is a constitutional error or you -- do you -- do you suggest that's it's a constitutional error when the appointed counsel neglects to do his job? And that [Inaudible] about it --
Don R. Bennett: Well, I know that -- I --
Byron R. White: Or at least have come --
Don R. Bennett: I can't come before (Voice Overlap) I can't come before this Court and say that Mr. Enstminger wasn't treated better than was Douglas or was Brown I guess it was, in Lane versus Brown.
Byron R. White: Well, I agree with you in net effect, but -- but you -- I guess you say that the -- the -- at least it's an error when the court knows -- when the court knows that the counsel is being ineffective?
Don R. Bennett: I think that's right. I think -- I think it's an error in either case.
Byron R. White: Yes.
Don R. Bennett: But I think -- simply boils down to what constitutional proposition you're going to pin it to.
Speaker: What -- what is the for hired counsel [Inaudible] that you are [Inaudible]
Don R. Bennett: Well, I think on this record, you get to find the same -- I think on this record, you've got to find the same type of constitutional defect that you found in Lane versus Brown for the relatively unanimous court. This case is not at all -- unlike Lane versus Brown.
Byron R. White: Yes, but that's a -- that was a transcript -- was that a transcript --
Don R. Bennett: That was a transcript problem.
Byron R. White: And the -- that was Indiana?
Don R. Bennett: That was Indiana.
Byron R. White: But that was equal protection?
Don R. Bennett: Well, I don't know that all the scholars are in agreement as to just exactly whether it was equal protection or due process, but one of the two. Lane versus Brown involved a situation where a public defender refused to obtain a transcript so that Mr. Brown, I think, it was could take his appeal. The transcript was a jurisdictional prerequisite to the appeal, to the Indiana Supreme Court.
Byron R. White: The defender is not in this -- this case?
Don R. Bennett: No, it is not this case exactly.
Speaker: This is the transcript, the full transcript of [Inaudible] on about this Court, whether it was this case --
Don R. Bennett: A full transcript --
Speaker: [Inaudible] or something else for the [Inaudible]
Don R. Bennett: The full transcript was made available by the trial court. The Iowa Supreme Court had nothing to do with that. They never saw it.
Speaker: Yes, I know but as far as [Inaudible]
Don R. Bennett: Yes.
Speaker: -- there is no block in his record getting the full transcript?
Don R. Bennett: That's right. He had --
Speaker: And I ask you again, what is the precise constitutional ruling --
Don R. Bennett: Well, under the facts -- under the facts and circumstances in this case, I would still have to comeback and say that it would have to be a denial -- that the indigent was denied full and effective appellate review and I suppose we're talking about either an equal protection or due process problem if it were simply negligence or neglect on it behalf of the counsel, then I suppose we're talking about an ineffective assistance of the counsel which is still a due process proposition as I understand it. Frankly, we are now --
Byron R. White: You are now --
Don R. Bennett: Frankly, I'm floundering a little bit because I haven't given this. I tried to tie it down to some specific phase.
Speaker: -- (Voice Overlap) we, we -- we have to make a rule for this kind that are constitutional rule, to put [Inaudible] matter but have some importance as to whether [Inaudible] have a reason, but perhaps you might not [Inaudible]
Don R. Bennett: Well, Mr. Justice Harlan, I would say this that -- I think it's clear that this man, an indigent designed an appeal from his conviction had the right to full plenary review of the proceedings culminating in that conviction. Now, this he didn't get.
Speaker: He would have had it except for this negligence of his counsel?
Don R. Bennett: Well, except for the neglect of his counsel apparently and to that extent, he was denied due process. He wasn't -- he wasn't given the type of appeal to which he wan entitled as a matter of due process.
Speaker: Now are you saying that we should rule with the constitution as a matter that the man fails to get review because of negligence and proper conduct of his counsel, that that is a constitutional error that vitiates the appeal?
Earl Warren: Did you not tell us also that in your opinion the -- the court was responsible to some extent for him not having this appeal because the prisoner informed the court that his counsel was not assisting him and that in spite of that, the court without more decided the case summarily without any review or any investigation --
Don R. Bennett: That's --
Earl Warren: -- of any kind?
Don R. Bennett: That's right Mr. Chief Justice.
Earl Warren: And that's the state action, I assume that you --
Don R. Bennett: Oh, that's -- that is --
Earl Warren: -- that you would rely on in coming to a conclusion that he'd either not have due process or he'd not have equal protection of the laws.
Don R. Bennett: And that's correct. I think that's a more expressly spelled out in Mr. Belin's brief, but on the facts of this case, we do have a mixture of both of these things.
Earl Warren: Yes.
Potter Stewart: But it was the ultimate action of the Supreme Court of Iowa which cutoff this man's right to a meaningful appeal. That is the action of the Supreme Court of Iowa, deprived the man to the help of counsel in arguing an appeal or in briefing an appeal, or in sync to it, that the Supreme Court of Iowa had a full record before it and that ultimately was the action of the Supreme Court of Iowa that resulted in the -- in those deprivals, isn't that right or deprivations, I think?
Don R. Bennett: Well, I don't think any action that -- I don't believe that the Supreme Court itself deprived the man of counsel in a meaningful sense because counsel had been appointed in the trial court but --
Potter Stewart: Well, I know, but they – and they knew that and they knew that the man wanted a plenary review and argument of the full record and knowing that and I'm not describing or attributing any fault, but is the way it worked. This was all before the Court and with that all before the Court, the Court decided his case on this clerk's record without any argument or without any briefing?
Don R. Bennett: That's correct.
Potter Stewart: And thereby, deprived him of the other meaningful appeal on this --
Don R. Bennett: And without any --
Potter Stewart: -- on that state actions, isn't it?
Don R. Bennett: Yes.
Abe Fortas: Well, actually this may not raise a problem of a distinction between situation in which there's appointed counsel and the situation which there's a retained counsel, because I assume that if something of the same sort had happened and a defendant had -- an appellant had told that Iowa's Supreme Court that he had retained the counsel, but that for some reason, retained counsel was not prosecuting his appeal. The Iowa Supreme Court would take whatever action was appropriate in the circumstances to see that the man's appeal was not defeated?
Don R. Bennett: If -- if it were not possible for the -- in this situation Mr. Justice Fortas, if it were not possible for the defendant to retain further counsel, the Court would see that counsel was appointed -
Abe Fortas: Good point.
Don R. Bennett: -- to represent him.
Abe Fortas: Yes.
Don R. Bennett: And this happens all the time.
Potter Stewart: And equal protection doesn't relate exclusively to wealth and poverty and has a broader coverage that that, doesn't it as Mr. Justice Fortas suggests?
Don R. Bennett: Yes, I believe so. Well, I'd like to -- since Mr. Belin has pressed the merits of the search and seizure and self-incrimination argument, I'd like to take just a few seconds to explain to the Court why --
Justice Bernnan: [Inaudible] do you think we're going to have to [Inaudible] than that?
Don R. Bennett: Well, I don't think so.
Justice Bernnan: That was what Mr. Belin raised but I wondered the why we have to spend time on it?
Don R. Bennett: Alright I --
Justice Bernnan: Those -- those issues aren't here, are they?
Don R. Bennett: Well, Mr. Belin thinks they are. He expressed them. Apparently, the merits were pressed in Douglas versus California as I recall I believe Mr. Justice Clark and Mr. Justice Harlan's dissenting opinion and one of the footnotes indicates that they were pressing the merits on this Court in Douglas versus California and the Court didn't decide them. But I would say this, you've got a copy of the trial transcript up here and you don't have to read it too carefully to find out there is some real difficult question on whether a man consented to these -- to the use of these papers or whether within Schmerber versus California, he hasn't waived any -- waived any argument on the merits of search and seizure and self-incrimination argument because of his failure to raise timely objections. If there are no further questions, thank you Your Honors.
Earl Warren: Mr. Belin.
David W. Belin: I'd like to make two comments if I may, first with regard to the merits of the case. I think it's the duty of all appointed counsel to raise every possible issue for submission to this Court. And to the extent that I feel that there are substantial errors in the merits, I've done this, number one for the inherent issues themselves and number two, to show the failures of the clerk's transcript system which wouldn't disclose any of these errors whether its appointed counsel or whether it's retained counsel or anything else and I think the inherent defect of the clerk's transcript system --
Byron R. White: It also bears -- it also bears on whether or not the counsel made any -- actually decided [Inaudible]
David W. Belin: Yes, that's the very point Your Honor. The -- the fact that with these issues, there was no substantive appeal even assuming that the counsel would have been a retained counsel. I think, it creates the issues of equal protection and also the question about effective assistance of counsel. And that's why I've urged that the system itself of a clerk's transcript appeal where there was no record on appeal in the true sense of the word and of course the fact that there's never been a reversal, I think is indicative of the kind of practical operation this system has that there is not been a reversal of a clerk's transcript appeal at least in the 15 years that I know of.
Byron R. White: Mr. Belin, what if there are two cases before the Iowa Supreme Court exactly like this one where the exactly the same thing happened and one of the case the counsel was appointed and in the other case, the counsel was retained? Exactly the same thing [Inaudible] in this case, do you think it will have the identical results?
David W. Belin: Your Honor, my personal belief is it there should be because I don't think that there has been in the one appeal that the defendant has as a matter of right. If there is negligence on retained counsel, or negligence on appointed counsel, I don't think that you can say that this constitutes an appeal. And as a matter of fact --
Byron R. White: What's the deprivation, [Inaudible] deprivation as to both of these --
David W. Belin: I would say effective assistance of counsel in both situations. And I think you know --
Hugo L. Black: What would be the ineffective assistance of counsel?
David W. Belin: No presentation of either a record or a brief -- or brief in arguments, so that the court itself --
Hugo L. Black: Failing to file -- failing to file a proper bill of exceptions or what have you told us?
David W. Belin: Failure to file a record, fail to file a brief in argument while knowingly, in a state procedure that it really be -- it's the state procedure itself that permits this thing to happen.
Byron R. White: Well, what's the -- what's the state charge if anything in an appointed counsel situation?
David W. Belin: In the appointed counsel --
Byron R. White: I mean in the -- in the retained counsel?
David W. Belin: In the retained counsel there is a question of state action. I don't know if you could or could not charge it. You can have state action where the state appoints a counsel, and particularly in this case where the state was aware for this petition for certiorari. I think there is a serious constitutional question as to whether you can charge the state with state action where it retained counsel.
Byron R. White: There would be the same with the retained counsel?
David W. Belin: Pardon?
Byron R. White: If the same thing happened with the retained counsel, it would be the same for –
David W. Belin: If -- if the -- if the state were aware of the fact ahead of time as it was in this case because the petition for certiorari, if you remove -- I mean the petition of certiorari to the Iowa Supreme Court where Mr. Enstminger –-
Hugo L. Black: Do you call that a --
David W. Belin: Pardon?
Hugo L. Black: Do you call that a constitutional defect that the counsel didn't file a paper?
David W. Belin: Mr. Justice Black, I don't think the counsel -- the fact that the counsel doesn't file a paper makes it a constitutional defect.
Hugo L. Black: Maybe it's one that has to be filed in order to get the appeal? The civil rules are upheld, just absolutely upheld with provision that the failure to appoint – file papers to the civil court, the lawyer's case can be dismissed by the judge.
David W. Belin: That's correct Your Honor. And as a matter of fact, it could have been -- it could have happened here. But at least, if that would have happened, you wouldn't not have had a formal opinion of the Supreme Court affirming the conviction and I think the fatal defect of the clerk's transcript system is that instead of dismissing it which I think they could do if they were to dismiss it what they do is that they affirm they wouldn't appeal the man has as a matter of right under -- under the period -- the one paragraph, one paragraph per curium opinion says based on the record, we have before us, we find no error. In other words, that's the way the opinion was in this case. And my position is that the clerk's transcript system doesn't permit a record. This as Justice Stewart says that theoretically, it's possible to have an error shown so far as instructions are concerned, but in practice, it just doesn't work that way.
Potter Stewart: I'm looking at -- through the statement of -- the statement of facts in your brief and I thought I'd seen that -- that Mr. Enstminger himself had written to the Supreme Court, well, I don't see that. I don't find --
David W. Belin: Well, yes -- yes, Your Honor. You can find the actual petition for writ of certiorari on page 27 that Mr. Enstminger wrote of the record on the ground --
Potter Stewart: 27 of the record
David W. Belin: -- record, yes, Your Honor. And you see he knows how he was charged with the crime and he makes the claim with regard to the use of his papers. And Mr. Enstminger then points out the appointment of the attorney and on page 28 of record, you can see that Mr. Enstminger assumes that there was a record filed but no brief. What Mr. Enstminger didn't know when he did that is that there was no record filed --
Potter Stewart: Yes. And this -- and this was dated --
David W. Belin: That was --
Potter Stewart: It's dated -- it's dated October 8th, 1965?
David W. Belin: Yes, and the opinion --
Potter Stewart: Where did that fall in the chronology?
David W. Belin: Well, the -- the dismissal of the petition for writ was on October 18 and the opinion was on October 19th.
Potter Stewart: About 10 days after?
David W. Belin: Yes sir. By the way in the record, I might say there is a typographical error in the record that shows in the record itself, I think in one portion of the opinion was on October 10th, actually it's on October 19th -- and I think in our brief and in the brief of the Attorney General that shows October 19th.


Hilbert P. Zarky: If the Court please, in my remaining time -- no authority which we say exist for these partial certificates. On pages -- beginning at the bottom of page 60 and 61 of our brief in Allen-Bradley, appears in Section 124 (f) which is the crucial Section -- this interpretation we disagree with on the Court of Claims. That Section is entitled, “determination of adjusted basis of emergency facilities,” and says this, “In determining, for the purposes of subsection (a),” which is the basic definition, “the adjusted basis of an emergency facility,” that's the basis on which you take your tax amortization. “One, there shall be included only so much of the amount otherwise constituting such adjusted basis.” As it's properly attributable to such construction, reconstruction, erection, installation or acquisition after December 31, 1939, as either the Secretary of War or the Secretary of the Navy, and that now includes the WPB by transfer, has certified as necessary in the interest of national defense during the emergency period. And the statute goes on to say, “It should be under regulations approved by the President.” Now, we scarcely offer this section as a model of legislative draftsmanship. It is not the clearest choice of language in the world, but we believe that the statute is broad enough to encompass the congressional intent.
Earl Warren: Well, I -- I -- suppose we get some more of that point in the next case, will we?
Hilbert P. Zarky: I hope to elaborate on it (Voice Overlap) --
Earl Warren: Thank you. Thank you, Mr. Zarky. Mr. Peters.
Harvey W. Peters: Mr. Chief Justice, may it please the Court. In as much as the Government is here requesting whether determination and judgment granted the Allen-Bradley Company by the Court of Claims be reversed, I think it proper that we consider exactly what was before the Court of Claims in the case there. Reading from the record, page 4, paragraph (c) of the Allen-Bradley Company petition states, "In connection with such expansion and pursuant to the provisions of Section 124 of the Internal Revenue Code of 1939, the plaintiff filed for and was issued nine necessity certificates. In each and every instance, the duly designated certifying authority determined that the facilities described in the plaintiff's application for a necessity certificate were necessary in the interest of national defense. However, in three instances, the duly designated certifying authority certified less than 100% of the cost of the facilities described in and covered by the necessity certificate as amortizable under Section 124 of the Internal Revenue Code of 1939. In other words, in our petition, we pleaded the fact that these facilities in every case had been determined to be necessary for national defense. We pleaded also that the duly designated certifying authority cut the cost for amortization purposes to an amount less than 100%. Now, in an answer filed by the Government which is contained beginning on page 11 of the record, reading there, "Admits the allegations of paragraph 6 (a), (b) and (c)." The portion I quoted from just a moment ago is included in paragraph 6 (c) and was admitted to by the Government. The Government filed its answer in the Court of Claims on November 15th, 1955. In order to get the matter expeditiously taken cared of, we filed a motion for a summary judgment on November 21st, 1955 or less than one week after the answer was filed. In our motion for a summary judgment, we emphasized the fact that the Government had admitted to all of the essential facts and the Government had offered no defense. As a matter of fact, the only item even constituting a slight defense in the Government's answer is the prayer wherefore defendant phrased that plaintiff take nothing from it in this suit and that the same be dismissed with cause against the plaintiff. Now, in our motion for a summary judgment, we request that the facts are found as stated in the petition filed on behalf of the plaintiff, the Allen-Bradley Company. And number two, that judgment shall be entered for plaintiff, the Allen-Bradley Company against the defendant, in the United States of America for the sum of $178,000 and so forth. Well, at that stage of the proceeding, what did the Government do? The Government filed an answer which the Government generally stated that the Government is still litigating the issue and believes its position taken in a week in so higher power and so forth to be correct. It pointed to the fact that the Tax Code Of The United States in the case of National Lead had decided the case adversely to the Government too and I am quoting now from the Government's answer. “However, an appeal was filed from that decision with the Court of Appeals for the Second Circuit which was argued on January 13th, 1956 but has not yet been decided by that Court. If the Court of Appeals for the Second Circuit decides the issue in favor of the Government. The question will undoubtedly be ultimately decided by the Supreme Court of the United States. Again, nothing further by way of the defense other than the information that the litigation was continuing and that there was a possibility of review by the United States Supreme Court. Now, the National Lead opinion, the National Lead case was decided by the Second Circuit Court of Appeals on February 14th, 1956. And the case was submitted by the parties in the Court of Claims without argument on March 5th, 1956, at which time, again the Government filed a one-page defendant's memorandum of additional authority citing the National Lead case decision by the Second Circuit Court of Appeals. Now, the point I want to make is I do not consider the Supreme Court of the United States as a trial court. I do not consider that the Government should be in the position of sitting back and stating nothing, giving no position, giving no authority, not even stating the grounds upon which it is seeking to defeat our claim until the petition for certiorari was filed with the United States Supreme Court. And I might state in that respect that it is set forth in our brief, that is quite well-established and it is contained in the rules of the Court of Claims that if there is an affirmative defense, the matter should be raised in a pleading. And in this particular case, I want to emphasize the fact that the Government cannot claim that it had no knowledge of the position that it would ultimately hope to advance in this Court, because as a matter of fact, the National Lead decision of the Second Circuit was almost one week short of a-month-old when the case was submitted without argument. Getting to the matter of the --
Stanley Reed: But what -- I don't quite grasp your point that the Government had filed the -- the petition, had it? And you -- you had filed the man --
Harvey W. Peters: The taxpayer had filed a petition with the Court of Claims in which we alleged that these certificates, that these facilities were found 100% necessary and the Government agreed with that contention. We, of course, pointed out in our petition that the certifying authority did limit the cost for amortization purposes.
Stanley Reed: Yes.
Harvey W. Peters: Now, throughout all of these proceedings in the Court of Claims, the Government has never advanced the point as to why our certificate should be denied other than the law. They have never -- that the administrative authority, in other words, had the authority to issue fractional claims. Now, in its brief before this Court, the Government, I -- I get the point now that you're asking, Mr. Justice. The Government raises a point we're guilty of laches, that if we had any relief, it was to go back to the certifying authority. Now, for the first time, that point is raised.It was never raised before even though the -- the Government had knowledge of the Second Circuit Court of Appeals' opinion in the National Lead case. Now, let's go on to the matter of the law.First of all, in the briefs, there is some rather broad language dealing with the matter of the authority of the certifying authority to issue fractional certificates. In the first place, we claim that isn't at issue here. We claim that the Government has admitted we had a 100% certificates even though the certifying authority limited us as to the amount of the cost.I think it important to specify. And when we use language such as the alternative of issuing a certificate or of having the Government finance the facility, there are several other things that should be given some consideration. In the first place, when an application was filed or when a certificate of necessity was granted, there was no knowledge as to ultimate cost. The application gave the estimated cost. For instance, as the record shows in our case on page 5, we filed an application with estimated cost of $927,000. When the final cost was computed, the cost for amortization purpose was a $1,014,000 or approximately 10% more than the estimate. Now, there was no element of control over that, whether you put a -- a percentage figure in there or not. Again, on the record on page 6, we filed an application estimated cost $274,600, the eventual cost only $126,000. And in like manner, the third certificate varied also as to the final cost in relation to the estimated cost. Now, it has been stated here that the purpose of this partial certificate or partial cost certificates was to allow a certificate in cases where it was decided that a partial certificate was better than the Government financing and or the Government building the facilities. Once again, I want to point out that in the case of our certificates, there were involved buildings which were immediately adjacent to the taxpayer's buildings. Now, I think the taxpayer might have had some question about putting an office building -- or I mean a factory building connecting up with its own building, floor-by-floor. Secondly, there was involved special machinery and that special machinery was entirely within the know-how of the Allen-Bradley Company. It wasn't the type of machinery that you could buy at commercial sources. It could only be built by the Allen-Bradley personnel and under the supervision of Allen-Bradley engineers. In other words, it wasn't just the case of the Government going out and purchasing a milling machine. There is also been made the comment that originally, 100% certificates were issued, but at later, our productive capacity was inflated to, or shall we say, increased to quite an extent. And at that point, the War Production Board decided that we had enough of defense facilities acquired under certificates and perhaps this was the time in which the Government could consider the post-war usability and the amount of money that the Government could realize out of the sale of these facilities in the post-war world. Now, let's examine that a moment.
Speaker: Could I ask you a question at this point --
Harvey W. Peters: Yes, Mr. Justice.
Speaker: -- about the mechanics of these transactions. When you first started on your facility, do you submit an estimate to the Government as to what it's going to cost?
Harvey W. Peters: You submit a physical description --
Speaker: Physical description.
Harvey W. Peters: -- and an estimate of the cost. I emphasized that first because that was the most important.
Speaker: All right. Now, at that stage when it's approved, do you know whether you're going to be -- is there any discussion as to whether it's going to be a 100% certificate or 35% certificate?
Harvey W. Peters: When it is approved, they issued the certificate in the terms up to 80% of the cost. There is no understanding, though, Mr. Justice as to the dollars of cost. You see what I mean, whether it's double or half or three-fourths, it's 80% of whatever actual cost was finally incurred.
Speaker: Why the 80%?
Harvey W. Peters: Well, I wouldn't -- and of course it's the question we're asking too, but the theory behind it is that that is the excessive cost induced by the war. Putting it another way that these facilities could have been purchased in 1939 for one-fifth of what they cost in 1942 and 1944, and the 80% is being subject to amortization.
Speaker: But then later on -- excuse me, later on then you get a further certificate which may be a 50% certificate or a --
Harvey W. Peters: Well, we have three certificates, Mr. Justice Harlan. We have one for 80%, one for 85% and the last one which is the smallest amount here at issue was only 35%.
Earl Warren: When was that issued, Mister --
Harvey W. Peters: The 35% certificate was issued in April of 1945, the 85% in March of 1944 and the 80% in December of 1943.
Earl Warren: Why -- why did you wait 12 years to bring this petition?
Harvey W. Peters: Well, Your Honor, because in our opinion, this is a tax case. It involves that statute but was described by Mr. Zarky, involves a direction to the Commissioner of Internal Revenue to -- as to his method of computing the adjusted basis, the cost for tax purposes.
Earl Warren: But still, I wonder why you would wait all that -- all that time. Was that the only explanation?
Harvey W. Peters: Mr. Justice, I can give this explanation too. If it wasn't for a question of waiting, having been in tax practice all my life, I think the Government would in many instances that be cut short revenue. In many instances, they based their contentions upon the basis of decisions and opinions and analysis of law that were not prevalent when the tax return was filed.
Speaker: The question that I was -- maybe I haven't made it clear. At the time that you agreed with the Government to go ahead with this facility, was there a representation by the Government that you were going to get a 100% -- a 100% certificate?
Harvey W. Peters: No, there was not, Mr. Justice.
Speaker: There was not.
Harvey W. Peters: These type of certificate issued in National Lead was -- which we have discussed a few moments ago was the same type we have.
Speaker: 80%.
Harvey W. Peters: Yes.
Speaker: And you accepted that certificate and went ahead on that basis?
Harvey W. Peters: We -- we went ahead and built the facility, that is right. And on -- in our tax return, we amortized only 80% of the cost.
Speaker: 80%.
Harvey W. Peters: And the contention here before the Court was raised by claims for refund filed later.
Speaker: So, you -- you went ahead with your construction accepting the 80%. You filed your tax returns on the basis of the 80% and then later on, you sued for a claim -- sued for refund.
Harvey W. Peters: That is -- that is correct.
Speaker: What gave rise to that?
Harvey W. Peters: Well, I would presume it was the Court of Claims action on the Wickes --
Speaker: Government is trying to tax you on some other basis?
Harvey W. Peters: -- (Voice Overlap) case.
Speaker: I beg your pardon?
Harvey W. Peters: I would presume it was the Court of Claims' opinion in the Wickes case.
Speaker: In other words, yes.
Harvey W. Peters: Of course you must remember, Mr. Justice, those years were open under the statute of limitation --
Speaker: I appreciate that.
Harvey W. Peters: -- which is a knife that cuts two ways.
Felix Frankfurter: You found you -- according to your view, you found that you had rights which another litigant has established.
Harvey W. Peters: Had established for us, you might say. Yes, Mr. Justice Frankfurter.
Stanley Reed: Did -- did I understand that they never gave a 100% certificate to anybody? I -- I've got the contrary impression from the Government's argument.
Harvey W. Peters: It is my understanding that after this change in the fall of 1943, they did not give 100% certificates, shall we say except in a few instances. I know neither way.
Stanley Reed: Yes. Well, before 1943?
Harvey W. Peters: Then, they were entirely 100% certificates.
Stanley Reed: Well, why did they put the 100% in?
Harvey W. Peters: Because that is how -- this is my explanation. That is how the certifying authority analyzed the law. In other words, that the question was, what is the physical use of these facilities?
Stanley Reed: But why would they --
Harvey W. Peters: And if -- if the physical --
Stanley Reed: -- give you a dollar?
Harvey W. Peters: There's no -- no dollar question in (Inaudible) --
Stanley Reed: It cost a billion dollars?
Harvey W. Peters: Yes. You would -- you would give an estimate as to what the cost would be?
William J. Brennan, Jr.: But because -- because it was merely an estimate, they gave you the certificate when you began your work -- before you began your work.
Harvey W. Peters: Yes, Your Honor.
Stanley Reed: So, they -- they phrased it in percentage because they didn't know what the cost is going to be?
Harvey W. Peters: No, that is not correct because they didn't know what the cost was going to be in the earlier days of this either and yet they gave 100% certificates.
Stanley Reed: Well, I was thinking in the whole -- during the whole period.
Harvey W. Peters: No.
Stanley Reed: They never knew what the actual cost is going to be and perhaps for years after they gave you the certificate.
Harvey W. Peters: No, they did not. As a matter of fact, it was the Commissioner of Internal Revenue who gave the final answer as the cost. Because let's assume -- I think this might help explain it. Let's assume that a manufacturer purports to devote 100,000 square foot of area, the manufacturing gets a certificate, $2 million. And then, the Commissioner of Internal -- of Internal Revenue through his agents finds out that only one-fifth of that was devoted to manufacturing. Let's assume the other 80% was devoted to employ amusements, bowling alleys and what have you, the Commissioner could strike out the portion that was not devoted to war production. In other words, the Commissioner of Internal Revenue through his agents was in fact the final fact finding person here involved. And you see, I might point out one of the --
Stanley Reed: Did you ever got a dollar certificate from him? This is the only thing you've ever got.
Harvey W. Peters: That is all. And as a matter of fact --
Stanley Reed: And from your own accounts, you determined what the cost was?
Harvey W. Peters: Yes, subject to verification by the Commissioner, of course.
Stanley Reed: I understand. And -- and subject to verification and then you'd -- if you had a -- what -- what is the limit, 20% deduction per year?
Harvey W. Peters: Five years.
Stanley Reed: Five years. Well that would be 20 --
Harvey W. Peters: 20%.
Stanley Reed: You have 100%, you'd take off 20?
Harvey W. Peters: That's right. I want to point this out though --
Stanley Reed: Well, may I ask, did you ever get any suggestion when this change was made from 100% to the -- less than 100% --
Harvey W. Peters: There are only --
William J. Brennan, Jr.: -- and there'd be tax effect as a consequence?
Harvey W. Peters: No, Your Honor. Only in the respect that in correspondence as is shown by the record, they did point out in this first certificate here at issue that they were cutting down the certificates from 100% to something less. And as a matter of fact, they suggested 25%.
William J. Brennan, Jr.: But did they say anything? My -- my question is, was there any suggestion that that was going to make a tax difference, a difference in treatment for tax purposes? When did you first learn that?
Harvey W. Peters: Well, I presume we learned it by force of the fact that this certificate was addressed to the Commissioner of Internal Revenue. It wasn't addressed to us, and we got a copy of it.
William J. Brennan, Jr.: Well, I -- I still don't quite understand when it was you first appreciated that --
Harvey W. Peters: Well, I would presume when we received the certificate, the copy of the certificate.
William J. Brennan, Jr.: And that was about the time before the construction was done or any of it?
Harvey W. Peters: Yes. That is correct, Your Honor.
William J. Brennan, Jr.: And you had an idea then that there might be a different tax consequences.
Harvey W. Peters: We would be shut down. That is correct.
William J. Brennan, Jr.: But you did nothing, I gather, until that time.
Harvey W. Peters: We did nothing at that time. Of course, one should appreciate that this company, like many others, was busy in producing these things and in getting the facilities created. Now, if I could, I'd like to speak just a moment on the alleged reason for this change of principle.
Felix Frankfurter: May -- may I --
Harvey W. Peters: Yes, Mr. Justice.
Felix Frankfurter: -- trouble you by interrupting to ask? Did I understood you right -- the right to say that the Commission of Internal Revenue could have made the reductions.
Harvey W. Peters: He could to the extent that we didn't follow our original application, Mr. Justice Frankfurter.
Felix Frankfurter: But he couldn't, on the merit, to say this is not for war purpose or certainly not as the dollar --
Harvey W. Peters: Yes. As a matter of fact, he did in one case.
Felix Frankfurter: And you have acknowledged that he has such power?
Harvey W. Peters: Oh, yes. In the case of Arkansas -- let me cite this, Arkansas-Oklahoma Gas Company 12 -- Tax Court 1208. The taxpayer had a certificate of necessity covering intangible drilling and development cost of gas wells. Nevertheless, the Tax Court held amortization of such cause was not allowable even though the taxpayer had a certificate because it didn't fit of the description of the law.
Felix Frankfurter: Well, if I will be a little bit that the Commission of Internal Revenue should have that power? And yet, it should be denied to the body peculiarly adopted to make such a decision instead of an existence in part for determining such facts (Inaudible) I mean, whatever the statute that doesn't allow it doesn't allow.But in construing the statute, I must say I should be influenced by the statute. The Commissioner of Internal Revenue influence or (Inaudible) --
Harvey W. Peters: Your -- Your Honor --
Felix Frankfurter: -- what that body was (Inaudible)
Harvey W. Peters: -- there is no doubt in my mind that the Commissioner of Internal Revenue had the final authority to decide whether or not you complied with your application, what your cause were. In other words, it is easy to be presumed that some taxpayers might have loaded this facility cost and tried to charge everything in there. And it -- it was the -- within the discretion of the Commissioner to take out whatever didn't belong in there, particularly, where your building. As I mentioned before, the Allen-Bradley Company was building a special machinery in its own shops. Well, obviously, there's quite an accounting question there as to what part of cost were applicable to those machines.
Stanley Reed: But that doesn't mean that the Commissioner had any authority to determine whether they were appreciable or not, assuming that they had lived up to the certificate.
Harvey W. Peters: It is our position that that is the distinguishing element. The Commissioner of Internal Revenue had nothing to do with the determination of the physical necessity in the facilities. That is the point exactly. Now, we are not denying, and I'd like to emphasize that. We are not denying that the certifying authority had the right to say that certain of these facilities were partially -- partially necessary for the war effort and partially not necessary. To explain that, let's assume we had 100,000 square foot of factory floor area and 25% was going to be an employees recreation room. They might have said, “Well, that part is not a defense facility,” but that has nothing to do with the cost factor that's here involved.Now finally, in 1943, they say that because we had such an inflation in our productive facility that the Government decided there were some post-war use they want to capture. Now frankly, I submit that's somewhat awkward if not ridiculous. If in 1940, our productive facilities were overbuilt and Congress recognized the fact, well what was it in 1943 or 1944 when 10 or 12 billion more had been added? And just how could we ascribe a post-war use after seeing the 10 or 12 billion more of facilities added to the pile. One last point. There has been some comment in the briefs that this is unfair. Now, what was the incentive under this amortization privilege? It was the possibility of having a usable plant after the war was over. I'm not going to deny that. I'm going to insist upon it, because the Second Revenue Act of 1940 said, “We will take every cent of your income above normal.” In other words, if you are a corporation or some other employer and you're going to put five million more in -- in additional plant, the Second Revenue Act and succeeding Revenue Act said, “We are going to take every cent of that income." Well, where was the incentive for building a million dollar plant?It was exactly in this amortization provision. In other words, since your income was 85% taxable anyway, you could, by building a million dollar plant have an actual cost of $150,000. At the end of the war, that plant might be useless, but at least you would have suffered nothing but that you would have had a new plant at a cost of $150,000. Thank you.
Earl Warren: Mr. Zarky. Oh -- oh pardon me. Pardon, I thought that -- is there more time here to --
Speaker: (Inaudible)
Earl Warren: Oh, oh, on the other side. Yes, of course.Of course, the case is the other way, it isn't this time.