Reply Brief — Robinson v. Kusper

IN THE

Supreme Court of the United States

OctTosper TERM. 1978

No. 77-1637

R. B. ROBINSON, inpimipuaLLy AND as NEXT OF FRIEND OF

C. K. ROBINSON, A MINOR: AND IN A REPRESENTATIVE CAPAC

ITY ON BEHALF OF ALL SETTLORS AND NATURAL PERSON

BENEFICIARIES OF TRUSTS.

vs

STANLEY T. KUSPER. Couwnry CLERK OF THE COUNTY oF

COOK, ET Al

Respondents

REPLY.

WILLIAM R. DILLON. WILLIAM H. AVERY

CONCANNON DILLON SNOOK SIDLEY & AUSTIN

4 MORTON One First Nationa! Plaza

ill West Washington Street Chicago, Blinois 60603

Chicago, Ilinois 60602 Counsel for Petinoner

Counsel for Petitioner

Gunthorp Warren Proting Company. Chicago ¢« Finencie! 66565

ow. +

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I. Respondent Finds No Support in the Record for His

Contention That the Illinois Supreme Court's Opin-

ion Did Not Deprive Petitioner of Her Property

Without Due Process of Law .................

Il. Petitioner Has Not Waived the Impairment of Con-

tract Issue and Petitioner's Contract Rights Have

Se EE Sédccdedcccessecescesdéseeee

A. Petitioner Has Not Waived the Impairment of

EE GEE coé-cenccedcesssuunuseess

B. Petitioner's Contract Rights Have Been Im-

i sbecetedeénssouesevecessseenes

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AUTHORITIES.

American National Bank and Trust Co. v. Kusper, 69 Til.

EES ee ee ree 3

Bouie v. Columbia, 378 U. S. 347 (1964) ............ 7,8

Columbia Railway, Gas & Electric Co. v. South Carolina,

EE 11

Cross Lake Shooting & Fishing Club v. State of Louisiana,

nn -tadvevsededecessecesensees 10

Hanley v. Kusper, 61 Ill. 2d 452 (1975) ............ 4, 6,8

Lake Shore Auto Parts Co. v. Korzen, 49 Ill. 2d 137

0 wea e cle ebkes c dustbeweekesceos 3

Lake Shore Auto Parts Co. v. Korzen, 54 Ill. 2d 237

iy ST a ee 3

Mobile & Ohio R. Co. v. State of Tennessee, 153 U. S.

ie i ea dddaks buaweeseeeece 11

New York Rapid Transit Corporation v. New York, 303

I a a a a 11

Terre Haute & I. R. Co. v. Indiana, 194 U. S. 579 (1904) 10

TVA v. Hill, U.S.___, 57 L. Ed. 2d 117 (Advance

EE EES ES Sane 5

Wilson v. Standefer, 184 U. S. 399 (1902) ............ 11

Worthy v. Bush, 262 Ill. 560 (1914) ................ 9

Yazoo & Mississippi Valley Railroad Co. v. Adams, 180

i ee Ge GED 6 beee cowcccccecccenuceccvcases 11

IN THE

Supreme Court of the Gnited States

OctToser TERM, 1978

No. 77-1637.

R. B. ROBINSON, INDIVIDUALLY AND AS NEXT OF FRIEND OF

C. K. ROBINSON, A MINOR; AND IN A REPRESENTATIVE CAPAC-

ITY ON BEHALF OF ALL SETTLORS AND NATURAL PERSON

BENEFICIARIES OF TRUSTS.

Petitioner,

vs.

STANLEY T. KUSPER. County CLERK OF THE COUNTY OF

Cook, ET AL.,

Respondents.

REPLY.

RESPONDENT FINDS NO SUPPORT IN THE RECORD FOR

HIS CONTENTION THAT THE ILLINOIS SUPREME COURT'S

OPINION DID NOT DEPRIVE PETITIONER OF HER PRO-

PERTY WITHOUT DUE PROCESS OF LAW.

The respondent's brief in opposition on the issue of due

process is predicated exclusively on the legal principle that a

mere difference of opinion in the interpretation of a statutory

enactment does not constitute a violation of due process, which

he attempts to support solely by extensive quotations from the

prior opinions of the Illinois Supreme Court with secondary

references to statutory rules of construction and the debates of

2

the Illinois Constitutional Convention whose proceedings were

terminated prior to the mailing of the official Report to the

people stating that trusts were exempt.

The respondent endeavors to support his claim that Peti-

tioner’s Statement of the Case is “incomplete in certain essential

respects.” by quoting exclusively from the prior Illinois Supreme

Court’s opinions which relied on Senate Joint Resolution 67,

without any reference to supporting factual data in the record.

It is this very inability to square the opinions of the Illinois

Supreme Court with the record which leads to petitioner’s claim

that the court’s action was arbitrary and capricious. Nowhere

does the respondent deny or refute petitioner's factual allega-

tions which are the basis of her claim, namely that: .

1) It was the Illinois General Assembly (not a minority

thereof) which refused to approve the official Report until

it had been corrected to read that personal property

“owned by or held in a fiduciary capacity for the benefit

of natural persons is exempted from taxes; that which is

owned by corporations, [trusts,] etc. is subject to taxes”

(added language underlined, deleted language in brackets).

2) The approved corrected Report, pursuant to the

requirements of law, was published in pamphlet form (Blue

Pamphlet) by the Illinois Secretary of State and mailed to

every registered voter prior to the general election of

November 3, 1970.

3) Senate Joint Resolution 67 was adopted by a

minority of the General Assembly and did not purport

to be adopted either pursuant to or in accordance with

Section 2 of Article XIV of the Illinois Constitution of

1870 or with the provisions of the act regarding the

manner of submitting constitutional amendments to the

voters.

4) Senate Joint Resolution 67 was adopted subsequent

to the adoption of the corrected Report by the Illinois

General Assembly.

ee

_ e

3

5) Senate Joint Resolution 67 was never mailed to the

electorate and the contents of said resolution were never

made known to petitioner or to the electorate in any man-

ner whatsoever prior to the election at which Article IX-A

was adopted by the voters.

6) Petitioner read the official pamphlet mailed to her

and other Illinois voters which specifically stated in the

portion of the pamphlet devoted to arguments against the

proposed amendment, that personal property “owned by

or held in a fiduciary capacity for the benefit of natural

persons is exempted from taxes;”.

The respondent seeks to find his sole refuge in statements

emanating from the Illinois Supreme Court which have no

foundation in the facts and are nowhere supported in the

record.

It is apparent from the Illinois Supreme Court's statement in

the instant case that “It is unnecessary to reexamine these mat-

ters here.” (American National Bank and Trust Co. v. Kusper,

69 Ill. 2d 374, See Appendix p. A. 17) that the error the Illinois

Supreme Court persists in, and which deprives Petitioner of her

property without due process of law, is the Court's continued

reliance on Senate Joint Resolution 67. In the Lake Shore Auto

Parts Co. v. Korzen decisions, the Illinois Supreme Court con-

cluded in the language of Senate Joint Resolution No. 67 (A.

44-45) that “the meaning of Article IX-A is that ad valorem

taxation of personal property owned by a natural person or by

two Or more natural persons as joint tenants or tenants in com-

mon is prohibited,” (49 Ill. 2d 137 at 148 and 54 Ill. 2d 237 at

239) and therefore, concluded that “Trustees and other fiduci-

aries, . . .. do not own property as natural persons, aid they

were not exempted from taxation by Article IX-A” (54 Ill. 2d

237 at 239).

The Respondent's Brief In Opposition at pages 10 and 11

quotes from the opinion of the Illinois Supreme Court in

4

Hanley v. Kusper, 61 Ill. 24 452 (1975) as to why the Illinois

Supreme Court refused to rely on the Official Report of the

Illinois General Assembly and instead relied upon the Explana-

tion and Senate Joint Resolution No. 67 in construing Article

IX-A as follows:

" . . [T]he court is not justified in relying upon arguments

against a proposed constitutional amendment ‘as seen by

the minority’ to determine its meaning after adoption”.

(Hanley v. Kusper, 61 Ill. 2d 452 at 460.)

The Illinois Supreme Court and the State’s Attorney are in

error.

First, they are mistaken when they refer to the statement as

being an argument against “as seen by the minority”. The entire

Illinois General Assembly, and not just a minority thereof,

refused to adopt a report which stated that trusts were taxable,

and, instead, approved the report only after the report had been

corrected to state that trusts were exempt from personal property

taxation. The Illinois Supreme Court's reference to the argu-

ments against portion of the report as being an argument

advanced by a minority of the Illinois General Assembly is,

therefore, clearly erroneous.

Second, it was erroneous for the Illinois Supreme Court

to state that it cannot rely on arguments against the proposition

to determine its meaning after adoption. The arguments against

the proposal, as well as the explanation of the proposal and

arguments in favor of the proposal were all submitted by the

Illinois General Assembly to the electorate prior to the elect-

orate’s adoption of Article IX-A, and the entire “Blue Pamphlet”

must be given effect in construing Article IX-A. Obviously,

a proposition to amend the constitution is but a proposal

proffered by the General Assembly to the electorate to either

adopt or to reject as the electorate, by its vote, determines.

Third, the Illinois Supreme Court’s statement that it is not

justified in relying upon “arguments” shows a fundamental mis-

ili i a

5

understanding of the nature of the argumentation form of pre-

sentation. The statement of the Illinois General Assembly that

personal property “which is owned by or held in a fiduciary

capacity for the benefit of natural persons is exempted from

taxes; that which is owned by a corporation, etc. is subject to

taxes” is a clear and precise statement of fact devoid of any

possible ambiguity. It was this factual statement from which

the argument followed, namely, that the proposal was ciscrim-

inatory because it exempted individuals and trusts for the

benefit of individuals while continuing to tax corporations and

like entities. For the Respondent to argue that “the meaning of

Article IX-A was uncertain to . . . . the 76 General Assembly

....” and that there was a “lack of any legislative history as to

Article IX-A’s meaning. . . .” is directly contrary to the facts,

and is contradictory of the official journals of both the House

and Senate of the 76th Illinois General Assembly relating to the

adoption of the corrected report, and is directly contradictory to

the sworn Affidavits of both the Republican and Democratic

leaders of the Illinois Senate (Appendix p. A 57-58) who were

responsible for the introduction of the proposed constitutional

amendment adding Article IX-A, and is directly contrary to the

sworn Affidavit of the member of the Illinois House (Appendix

p. A 53-55) who submitted the corrected report to the 76th

Illinois General Assembly for its approval, all of which provide

the strongest evidence that the Illinois General Assembly, as it

specifically so stated, intended that trusts for the benefit of

natural persons be exempt. See TVA v. Hill, .... U.S.

57 L. Ed. 2d 117 (Advance Sheet No. 1) decided on June 15,

1978 wherein this Court recognized its duty to give effect to

the plain intent of an Act of Congress.

It is important to note that the delegates to the constitutional

convention obviously did not have available to themselves at

their meetings of June 19, June 25, June 30, August 8 and

August 9, 1970 copies of the official pamphlet as the same

was not mailed to the voters until the first of September 1970,

6

at the earliest. Likewise, it is apparent that they could not

have had the legislative record of the adoption of the corrected

report, otherwise some reference would have had to have been

made to it in their debates and there would have been no un-

certainty as to the exemption of traditional trusts. In any event,

what the constitutional convention delegates thought or did not

think about the issue is wholly immaterial as to legislative in-

tent and voter understanding, which alone are to be considered

in construing constitutional amendments.

For the Illinois Supreme Court to conclude, in its present

opinion and in three prior opinions, that personal property

“which is held in a fiduciary capacity for the benefit of natural

persons” is taxable, despite the General Assembly’s statement

to the contrary in the Blue Pamphlet sent to the voters, is to

state that a coordinate branch of government purposely set

out to mislead and misinform the petitioner.

The Brief In Opposition also relies on the Illinois Supreme

Court's statement in Hanley v. Kusper, 61 Ill. 2d 452, at 460,

that none of the Plaintiffs analyzed the key words of the Explana-

tion of the proposed amendment which stated that Article IX-A

would not affect personal property taxes “levied against cor-

porations and other entities not considered in law to be indi-

viduals.” Contrary to the Court’s statement, the Petitioner read

not only the explanation but the entire contents of the official

Report and concluded that the obvious purport of the language

in the explanation was that the exemption would not apply to

the tax levied against corporations and other like business en-

tities not considered in law to be individuals. In this respect, it

should be noted that the “Explanation of the Amendment” in

the official Report mailed to the electorate appeared at the end

of the Report after the electorate had been advised that personal

property “owned by or held in a fiduciary capacity for the benefit

of natural persons is exempted from taxes;” (Appendix p. A.

39-44 at A. 43.) A traditional trust for a natural person whose

purpose is not the operation of a business for profit cannot be

said to be an entity comparable to a corporation.

7

For the reasons heretofore noted in the Petition for a Writ of

Certiorari and in this Reply to the Brief In Opposition, we

respectfully submit that the property of the Petitioner, and the

property of all settlors and natural persons who are beneficiaries

of trusts in Illinois have been taken without due process of law.

If, as held by this Court in Bouie v. Columbia, 378 U. S. 347

(1964) where the defendants were deprived of due process of

law by a decision of the Supreme Court of South Carolina which

held that the acts of the defendants in remaining on the premises

of another receiving notice to leave fell within a statute pro-

hibiting “entry upon the lands of another. . . . after notice from

the owner or tenant prohibiting such entry. . . .”, then certainly, a

person’s due process rights have been violated where a person

creates a trust after having been specifically advised by the

legislature that trusts are exempt from personal property taxa-

tion and a State Court refuses to give effect to the expressed

intent of the legislature and of voter understanding and holds

such trusts not to be exempt.

Il.

PETITIONER HAS NOT WAIVED THE IMPAIRMENT OF

CONTRACT ISSUE AND PETITIONER’S CONTRACT RIGHTS

HAVE BEEN IMPAIRED.

A. Petitioner Has Not Waived the Impairment of

Contract Issue:

The Respondent urges that the Petitioner has waived her

right to urge the impairment of contract issue.

The simple answer to the Respondent’s contention is that

the Petitioner herein was neither a party to nor represented by

a party in any of the prior cases in the Illinois Supreme Court,

none of the parties to the prior cases having created a trust

in reliance on the Illinois General Assembly's statement that

trusts for natural persons would be exempt if Article IX-A

were adopted by the People of Illinois.

At page 20 of Respondent's Brief in Opposition, it is stated:

“In short, by failing to raise the issue in any prior pro-

ceeding in Illinois, thereby precluding the Illinois Supreme

Court from considering the question, petitioner's counsel

is barred under the doctrine of waiver from raising the

issue now for the first time.” (Emphasis Added. )

The fact that Petitioner's counsel in this case was involved

as an attorney in Hanley v. Kusper, 61 Ill. 2d 452, in which

this Petitioner was not a party nor represented by a party in

no way bars the Petitioner from raising the issue of impairment

of contract herein. Nor can it be said that Petitioner should

have raised this issue in the State Court in the instant case

unless it can be said that Petitioner should have anticipated that

the Illinois Supreme Court would hold trusts for natural persons

not exempt from taxation despite the express statement of the

Illinois General Assembly to the contrary. This is exactly what

this Court held in Bouie v. Columbia, 378 U. S. 347 could

not be anticipated, and was the very reason this Court held due

process rights violated in Bouie.

We respectfully submit, therefore, that the issue of impair-

ment of contract rights did arise for the first time by reason of

the decision of the Illinois Supreme Court in the instant case,

and that Petitioner is not barred from having this Court pass

on such issue.

B. Petitioner's Contract Rights Have Been Impaired.

Petitioner, in her Petition For a Writ of Certiorari, noted

that if the Illinois General Assembly had adopted Senate Joint —

Resolution No. 67 subsequent to December 23, 1970, when

Petitioner created her trust in reliance upon the prior official

Report of the Illinois General Assembly which stated that trusts

for natural persons were exempt from personal property taxa-

tion under Article IX-A, that there would have arisen a classic

issue of whether the Illinois General Assembly by subsequent

legislative action had impaired the obligation of a contract.

9

Petitioner asserted, and reasserts, that a clear cut issue of im-

pairment of contract remains where the subsequent legislative

actions on which the Court relied and which gave rise to the

impairment was in the form of a Resolution to which the Illinois

Supreme Court gave the effect of law, and which was never

made known to Petitioner or to the Illinois electorate. Unless

citizens are to be charged, as a matter of law, with a knowledge

of legislative action shown only on the official journals of state

legislatures but not communicated or otherwise made known to

its citizens, then such subsequent legislative action can be

utilized in the future by legislative bodies as a form of entrap-

ment for the unwary citizen who relies upon prior legislature

action communicated to the electorate but negated by subsequent

legislative activity not communicated to or made known to its

citizens prior to the citizen taking action in reliance upon the

prior legislative activity.

The fact that citizens are not charged with knowledge of

legislative action shown only on the official journals of the State

legislature has been recognized by the Illinois Supreme Court

in Worthy v. Bush, 262 Ill. 560 (1914) when the Court stated

at page 562:

“It has never been the doctrine of this court that judicial

notice will be taken of the contents of these legislative

journals.”

We respectfully submit that if a State legislature by such a

course of action can evade the constitutional guaranty against

impairment of contract, then the constitutional guaranty be-

comes meaningless.

Respondent's statement at page 22 of the Brief in Opposition

that the authority of this Court does not reach mere errors

committed by a state court when passing on the validity or

effect of a contract under the laws in existence when it was

made has no application whatsoever where subsequent legisla-

tive action is given effect by a Court which impairs the obliga-

10

tion of contract. The case cited in Respondent's Brief in support

of this argument, Cross Lake Shooting & Fishing Club v. State of

Louisiana, 224 U. S. 632 specifically holds to the contrary,

noting at page 639 of its opinion that “when the State Court,

either expressly or by necessary implication, gives effect to a

subsequent law of the State whereby the obligation of the con-

tract is alleged to be impaired, a Federal question is presented.

In such a case it becomes our duty to take jurisdiction and to

determine the existence and validity of the contract what obliga-

tions arose from it, and whether they are impaired by the

subsequent law.” (224 U. S. 632 at 639).

The Illinois Supreme Court, in construing Article IX-A, has

refused to give effect to the prior official report mailed to the

electorate, which specifically stated that trusts for natural per-

sons were exempt, and, in so doing, had indisputably relied on

the subsequently -dopted Senate Joint Resolution No. 67, there-

by giving it the effect of law.

Repeated decisions of this Court have held, that while de-

cisions of state courts are entitled to great respect, this Court

itself must construe the contract to determine whether or not

legislation impairs the obligations of contract. In Terre Haute &

I, R. Co. v. Indiana, 194 U. S. 579 (1904) this Court, in

overruling the construction given to a charter by a state Court,

concluded at page 587:

“We are driven to a different construction of the charter,

notwithstanding the deference naturally felt for the de-

cision of a state court upon state laws.”

Prior to reaching such conclusion, this Court had previously:

noted: ;

“Therefore the question is properly here whether these

Statutes impaired the rights of the railroad under the

Constitution of the United States. For in order to determine

whether the later legislation impairs those rights, this

court must decide for itself what those rights were.” (Em-

phasis Added) (194 U. S. 579 at 587.)

11

For similar decisions of this Court so holding, see: New York

Rapid Transit Corporation vy. New York, 303 U. S. 573, 593

(1938); Columbia Railway, Gas & Electric Co. v. South

Carolina, 261 U. S. 236, 246, 247 (1923); Yazoo & Mississippi

Valley Railroad Company v. Adams, 180 U. S. 41, 44 (1901):

Wilson v. Standefer, 184 U. S. 399, 411, 412 (1902); and

Mobile & Ohio R. Co. v. State of Tennessee, 153 U. S. 486,

492, 493 (1894).

As previously noted in the Petitioner’s Petition for a Writ of

Certiorari; this Court, on numerous occasions, has noted that

if this Court were bound by decisions of State Courts constru-

ing contract rights and whether the same were impaired by sub-

sequent legislation, there would never be a case in which this

Court could pass on alleged impairment of such rights.

We respectfully request this Court to declare Senate Joint

Resolution No. 67 unconstitutional, null and void as being sub-

sequent legislative activity impairing the obligation of contract.

In so doing, the Illinois Supreme Court will no longer be able

to rely upon Senate Joint Resolution No. 67 in construing

Article IX-A and will, we respectfully submit, be forced to give

effect to the Official Report of the Illinois General Assembly

which specifically advised the electorate that personal property

which is “held in a fiduciary capacity for the benefit of natural

persons is exempted from taxes” under Article [X-A. Only then

will the clear legislative intent and voter understanding to ex-

empt trusts for the benefit of natural persons have been realized.