Reply Brief — Howe v. United States

IN THE

Supreme Court of the United States

OCTOBER TERM, 1944

No. 433

ALICE HOWE, As EXECUTRIX OF THE ESTATE OF

MARY E. B. HOWE, DECEASED,

Petitioner,

vs.

THE UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE CIRCUIT

COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

REPLY BRIEF FOR PETITIONER.

HERBERT BEBB,

ARNOLD R. BAAR,

29 South La Salle Street,

Chicago, Illinois.

Attorney for Petitioner.

State Law Printing Company, 173 W. Madison St., Chicago--F RAnklin 5501

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IN THE

Supreme Court of the United States

OcTOBER TERM, A. D. 1944

No. 433

ALICE HOWE, As EXECUTRIX OF THE ESTATE OF

MAry E. B. HOWE, DECEASED,

Petitioner,

vs.

THE UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE CIRCUIT

COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

REPLY BRIEF FOR PETITIONER.

To the Honorable Harlan F. Stone, Chief Justice of the

United States and the Associate Justices of the

Supreme Court of the United States:

Your petitioner respectfully shows:

The brief for the United States in opposition to our

Petition for Certiorari makes no attempt to sustain the

Circuit Court of Appeals “immediate enjoyment” test.

See our Petition, page 9.

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The Government’s readoption (p. 7) of the qualified-

by-discretion test, which they had abandoned at the oral

argument, is a confession that they can find in the de-

cided cases no workable test, and hence that it is neces-

sary for this court to clarify the definition of ‘future

imtents.’’ See our Petition, page 17.

The Government’s statements at page 8 have been

covered by our Petition. The trustees are not merely

“authorized” to distribute income; the trust instrument

(Par. 10, R. 8) says they “shall” distribute. From time

to time means at reasonable intervals (R. 68, 69). The

Government’s attempt (middle of p. 8) to distort “other

obligations” relies on printed provisions (See our Peti-

tion, p. 3, R. 9) that on familiar canons of construction

should be regarded as controlled by the typed provisions.

The “building program” (foot of Governmenf’s p. 8)

must be considered in the light of majority control and

of the liquidation purpose (See our Petition pp. 12

and 13). No necessity for separate valuing of income

now appears, (R. 68) but if such evidence should be-

come material the case should be remanded for that pur-

pose. On the Ryerson case, (referred to by the Govern-

ment, p. 9) see our Petition, page 12.

The opposing brief says at page 10, “While the Gov-

ernment is preparing a petition for writ of certio-

-rari in the Disston case because of a conflict with

Fondren v. Commissioner, No. 88 this Term, the Disston

reasoning is confined to gifts to minors and hence is

not applicable here.” We agree that there is conflict

between Disston (CCA 3, July 12, 1944, not yet re-

ported) and Fondren (CCA 5, 141 Fed 2d 419). We

do not agree that “the Disston reasoning is confined

to * * * minors.”

It is our position that the conflict between Disston

and Fondren involves points that are involved in Howe

and that the Government in asserting the Disston-

Fondren conflict is in substance conceding that cer-

tiorari should be granted on Howe so that the cases

may be considered together.

In our Petition, page 19, we demonstrated in parallel

columns a ten-point correspondence between Disston

and Howe. The Government’s naked observation that

“the Disston reasoning is confined to gifts to minors”

does not meet our ten points of correspondence. The

Disston court did not say that it was making a special

rule for minors. It emphasized (no. 4 on p. 19 of our

Petition) the fact that the “value of the gifts” was not

affected and (our no. 5) the fact that the trust merely

recognized what the law “would have interposed.” In

both cases it was applying rules that are not limited

by the boundary between minority and legal age.

The value point traces back to the statement of Con-

gressional intent quoted from U. S. v. Pelzer, 312 U. S.

399, in our Petition, page 16. Where the supposed obsta-

cles to enjoyment are for the benefit of the cestuis, the

value to the cestuis is not reduced. Hence the trust

does not create a future interest under the value test.

This point transcends the minority cases. It applies

with full force to the Howe case.

The Disston statement that a trust is not “future”

merely because it recognizes “what the law * * * would

have interposed,” is similarly not limited to the infancy

field. The principle back of the statement is that the

purpose of Congress was to discriminate against future

interests created by the trust. In our case, as in the

Disston case, there are obstacles to the cestuis’ enjoy-

ment independent of the trust. (Our Petition, p. 15.)

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In Fondren, the majority opinion merely cites some

of the cases cited in the Howe CCA briefs without

giving any further clue as to the ground of decision.

The dissenting opinion, however, says, ‘These children

were given the fullest use, possession and enjoyment

that was possible sensibly to confer upon children of

such tender age. If the reasoning * * * is correct, then

there could never be a substantial gift to a baby except

a gift of a future interest.” This implies that the

cleavage between the Fondren judges was on the same

lines as that between the government’s cases and our

cases, The question which cries for solution is whether

the courts will look at the purpose of trust clauses

having a future aspect (as was done in Lowden, 131

Fed. 2d, 127) and at the legal and economic background

(Disston,..... ; Fondren, dissent; Howe, District Court,

R. 24); or will “look to the form” (Howe, CCA opinion,

R. 57) ; Fondren, majority; and other cases cited by the

Government ).

The Government ignores points III, IV and V ( pages

13 to 17) of our Petition, while we have answered all

points that the Government has made.

Respectfully submitted,

HERBERT Bess,

ARNOLD R. BAar,

Attorneys for Petitioner.