Petition — Kuntz v. Winters National Bank & Trust Co.

1159

No.

IN THE

Supreme Court

PETITION FOR A WRIT OF CERTIORARI

LO Tile COURT OF APPEALS FOR THI

SECOND DISTRICT MIONTGOMERY COUNTY. OHIO

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Questions Presented

Whether federal courts May Entertain suits where a National

Banking Institution has exercised powers enacted by Congress

under provisions of the Federal Reserve Bank Act approved

December 23, 1913 being Section 11(k) as affirmed as within

the power of Congress within Article 1, 8. clause 18 in First

National Bank vs. Union Trust Co.. 244 U.S. 416?

Whether the confusion and conflict in the application of Sec-

tions 6166 and 6166A of the Regulations Of The Commissioner

of Internal Revenue and the Operation Of State Law of Inherit-

ance create an Article III Case and Controversy wherein Man-

damus does not lie under the decision of the United States Tax

Court in Lane v. United States. $22 U.S.T.C. 13,473 (D. Mass

1982)-

That plain error in the decision of a State Court matter based

upon state law is reviewable by the Supreme Court of the

United States if the United States could have been a party or

has a substantial interest in the outcome?

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED i

OPINIONS BELOW ]

JURISDICTIONS ]

CONSTITUTIONAL PROVISIONS, STATUTES

AND REGULATIONS INVOLVED 2

STATEMENT 2

THE PROCEEDINGS IN THE CASE 3

GRANTING 7

APPENDIX

APPENDIX A A-]

APPENDIX B A-2

|

| APPENDIX C A-3

APPENDIX D A-4

APPENDIX E A-5

APPENDIX F A-6

TABLE OF AUTHORITIES

Berkey v. Third Ave. Co., 244 N.Y. 84.94

Cohens v. Virgina.6 Wheat (19 U.S.) 264.404

Crowell v. Benson. 285 U.S. 22.94

Evangelical Luth. Church v. Sablem.

254 N.Y. 161.167

Fernandez v.Weiner. 326 U.S. 340,353

First National Bank of Bay City v. Fellows,

Attorney General of the State of Michigan

First National Bank v. Union Trust Co..

244 U.S. 416

Gregory v. Helvering, 293 U.S. 465,469

Lane v. United States, 822 U.S.T.C. 13, 473

Locke v. United States, 7 Cranch

(11 U.S. 339,347)

Maple Floor Mgf. Assoc. v. United States.

268 U.S. 563, 587

North America Co. v. SEC, 327 U.S. 686,693

Plumley v. Massachusetts, 155 U.S. 461,479

SEC v. Chenery, 318 U.S. 80,92

Union Pacific Railway v. Botsford,

141 U.S. 250,258

Upton v. Tribilock I. Otto, (91 U.S.) 45,48

Wheeler v. Denver, 229 U.S. 342,350

ill

IN THE

Supreme Court of the United States

October Term, 1983

IN THE MATTER OF THE ESTATE OF WILLIAM KUNTZ

PETITITON FOR A WRIT OF CERTORARI TO THE COURT OF APPEALS

FOR THE SECOND DISTRICT MONTGOMERY COUNTY, OHIO

William Kuntz, III, Displaced executor of the estate of Wil-

liam Kuntz, appearing pro se, petitions for a writ of certiorari

to review the Judgment of the Court of Appeals for the Second

District of Montgomery County, Ohio.

OPINIONS BELOW

The Opinion of the Court of Appeals was rendered on the

19th day of May, 1983 in Case Number 7355, reviewing the

Findings and Conclusion of the Probate Court of Montgomery

County, Ohio Case 231191 Docket 290.

JURISDICTIONS

The Final Judgment of The Court of Appeals was entered on

May 31, 1983. A Notice of Appeal to the Supreme Court of Ohio

was filed July 26, 1983 to have The Court of Appeals certify it's

Record to the Supreme Court. In Supreme Court Case No 83-

1153.

This was overruled on September 21, 1983. Petitioner asserts

that jurisdiction is available in the Supreme Court turning on

among others the Federal Reserve Act passed into law on De-

cember 23, 1913 as affirmed by this court in the case of First

9

National Bank of Bay City v. Fellows, Attorney General Of The

State Of Michigan, on the relation of the Union Trust Company,

et. al being Case Number 764 of the October Term of 1916

argued March 22, 23 1917—Decided June 11, 1917 244 U.S.

416.

CONSTITUTIONAL PROVISIONS, STATUES AND

REGULATIONS INVOLVED

The Federal Reserve Act of December 23, 1913, generally

Section 11(k). Sections 6166 et seq of the Internal Revenue Code

with regards to the payment of Federal Estate Tax obligations

as recently amended by the Tax Reform Act of 1976 effecting

qualifications for closely held business interested as reamended

under Code Section 267 (c) (4).

Matters raised under the Lane Case being 5 U.S.C. $702: 28

U.S.C. §1331, 1361; 26 U.S.C. $7421 (a).

Article I, §8, Clause 18 of the Constitution as recognized in

the First National Bank of Bay City Opinion by Chief Justice

White with Mr. Justice Van Devanter dissenting citing the Act

of June 3, 1864 as stated on pgs. 430 and 431 of 244 U.S. 416

with Mr. Justice Day concurring in the dissent & Ohio R.C.

2109.44.

STATEMENT

Since the Passage of the Federal Reserve Act of 1913 as

affirmed in the 1917 case First National Bank of Bay City v.

Fellows-National Banking Institutions have been granted the

power to engage in appropriate tunctions to compete with Rival

State Corporations. Additionally, Section 11(k) provided for per-

mits to be granted to National Banking Institutions to act as

Trustee, Executor, Administrator, . . . in First National Bank

drawing upon the very elder propositions of McCulloch v.

Maryland Andosborn v. Bank that there is a natural connection

between the business of banking and the carrying on of Federal

ws

Fiscal Operations. There is none . Apparently, between such

operations and the business of settling estates 244 U.S

423). Further . this being so, there is in the legislation a

direct invasion of the sovereignty of the state which controls not

only the devolution of estates of deceased persons and the

conducting of private business within the state, but as well the

creations of corporations and the qualifications and duties of

such as may engage in the business of acting as trustees, execu-

tors and administrators. Such an invasion the court may declare

and may prevent by its order operating upon the offending

agency. . . .(244 U.S. 423). Thus, the power to operate in the

state probate court was confirmed as a matter of Federal Consti-

tutionality when petitioner's grandfather was yet in his early

years. Petitioner therefore contends that because of the prior

decisions of this court and the interests of the United States in

the subsequent enactment and collection of Federal Estate tax

by Congress provide an ample basis for the court to exercise its

jurisdiction in granting a Writ of Certiorari to the Court Of

Appeals For Montgomery County, Ohio

THE PROCEEDINGS IN THE CASE

William Kuntz, Sr. died on March 5, 1983. A resident of

Montgomery County, Ohio. At the time of his death he was the

Chairman of North Central Mortgage Corporation. A packager

of VA and FHA Loan and Commercial mortgage maker. a Di-

rector of the Peter Kuntz Lumber Company and a Director of

Scioto Savings And Loar. , A state chartered Savings Institution.

a shareholder in all the toregoing and other affiliated lumber

companies located in several midwestern states.

On March 11, 1986, William Kuntz, II], grandson of the

deceased and Petitioner and Paul W. Heintz, an Officer and

Director of the Peter Kuntz Lumber Company were appointed

Co-Executors under the Will of the Deceased. admitted into

probate. On September 11, 1980, several months after the

commencement of the Administration of the Estate of the De-

ceased, William Kuntz, Sr. Winters National Bank and Trust

Company now, Bank-One Ohio's Largest Bank, made an appli-

cation supported by several members of the Local Probate Bar

representing the respective parties to remove Petitioner for

among others failing to sell certain minority shares in the Estate

of the Deceased and to dispose of the residence of the De-

ceased. Such application was clearly calculated to be heard on

December 4, 1950 one day prior to the due date for the filing of

a Federal Estate Tax Return in the Estate of the Deceased,

William Kuntz, Sr.

Among other allegations made by the attorneys of the Na-

tional Bank where the Petitioner had failed to sell certain secu-

rities including securities in Rival Financial Institutions being

interests in North Central Financial Corporation and Scioto

Savings and Loan, a State Chartered Institution, to the Peter

Kuntz Company. In the proceedings held before Probate Judge

Zimmers, among other facts established; it became apparent

that Applicant, Winters National Bank And Trust Company, had

made it filing over two weeks before any written offer was ever

made to Petitioner by the Peter Kuntz Company of which

Petitioners Co-Executor was an Officer and Director.

Further, it was established that several weeks after the Com-

mencement of the Administration of the Estate a sensational

crime widely reported in the local press occured at the resi-

dence of a doctor adjacent to the residence of the Deceased in

Dayton, Ohio. It was further established in the hearing that

Petitioner was of the opinion that this publicity had adversly

effected the marketability of the Residential Real Estate in the

Estate of the Deceased. Without further elaboration at this

point Petitioner proposes that the Applicant, Winters National

* Bank And Trust Company, apparently engaged in collusion as it

would be otherwise impossible to establish how Petitioner would

be expected to have failed to accept an offer he had not yet even

received.

The necessity of having documents reduced to writing has

long been established as a matter of legal significance.

“The English Statue of Frauds, which was enacted in 1676

and which became effective in 1677,” provides in part that “all

declarations or creations of trusts or confidences of any lands,

tenements, or hereditaments, shall be manifested and proved

by some writing.”

In the present case Petitioners trustee, Winters National

Bank And Trust Company, was complaining of Petitioners fail-

ure to act where to an observing eye there could not have been

an operative offer made prior to the action to

turn the administration ot the estate to the banks own ends in

seeking Petitioners removal.

Further, the record is devoid of any manifestation that Peti-

tioner had been provided with any factual financial data where

he might make an informed Judgment that the law would re-

quire a fudicary. Further, “the existence of collusion implies the

existence of fraud,” McKenna: Wheeler v. Denver, 229 U.S.

342, 350.

“Abuse of corporate position, influence, and access to infor-

mation may raise questions so subtle that the law can deal with

them effectively only by prohibition” Frankfurter, Sec. v. Che-

nery, 318 U.S. 80, 92.

Petitioners trustee being of considerable financial stature has

“the advantage of prolonged litigation lies with the

party able to bear heavy expenses.” Brandeis: Crowell

v. Benson, 285 U.S. 22, 94

In the proceedings before Judge Zimmers it was Petitioners

contention that the tax pavable to the Federal Government was

open to a review of making several favorable elections as estab-

lished by Congress. This is well established.

“The legal right of a taxpayer to decrease the amount

of what otherwise would be his taxes, or altogether

‘avoid them, by means which the law permits, cannot

be doubted,” Sutherland: Gregory v. Helvering, 293

U.S. 465, 469°

As Petitioner has now been removed by the assembled mem-

bers of the Local Probate Bar he cannot seek an independent

Federal review of the tax matter as espoused in the case of Lane

6

t. United States, $22 U.S.T.C. 13. 473 Where the District

Court did not have any jurisdiction to enjoin the Secretary of

the Treasury from addressing the closely held business Estate

Tax Treatment that this Petitioner contends is available in this

Estate matter. As established in the direct testimony in the

hearing before the probate court that Petitioner had made the

proper protective election to preserve the possible tax savings

notwithstanding the efforts of the bank. It was also clear that no

other beneficiary made any appearance or was represented by

counsel. Petitioner is of the belief that the trustee now Admin-

istrator, Winters National Bank and Trus: Company, does or

cares little for any favorable tax treatment for the Estate of the

Deceased, William Kuntz, Sr. Those driving motives behind

the effort of the Winters National Bank And Trust Company are

more fully addressed in Appendix (XX) and reflect the basis for

the subterfuge engaged in by the “trustee”

With regards to the Residential Property the record does not

speak to the private motive of the Petitioner in seeking an

rearrangement of the affairs of the Estate. Petitioner as a bene-

ficiary at any time on his request required the residence to be

held for his individual benefit

“Where the trust property is real property and the

interest if the beneficiary is an interest in fee, has

interest descends as real property”

Scotts Abridgement of the Law of Trusts 264 13.1

Wherein the interest of petitioner’saunt was somewhat differ-

ent

“Where, however, although the trust property is real

estate, vet the interest of the beneficiary is limited to

a term of vears, his interest is personal property.”

Scotts ibid

If Petitioner had wished the residential property for his own,

why would he construct such a complex transaction when in fact

he had the right as a beneficiary to obtain the property on

request. Petitioner contends that his proposed transaction was a

sound response in light of the impairment to the property caused

by the sensation that occured next door.

“Few formulas are so absolute as not to bend before

the blast of extraordinary circumstances”

Cardozo: Evangelical Luth. Church v. Sablem, 254

N.Y. 161.167

Having established that the proposed transaction was not

dissimilar to one that was conducted between the interests of

Petitioners grandmother who died five years prior to these

events, Winters National Bank and Trust Company. Petitioners

Aunt and this same company it is inconsistent that the National

Bank now object to what it had condoned, even directed in the

prior transaction that was the basis for this proposal to fund the

estate with the funds that were available in the trust account

from the proceeds of life insurance policies that were paid upon

the death of William Kuntz, Sr.

In compliance with the section of Ohio Law Appendix (A-] )

and the language of the trust document appendix (A-2) Peti-

tioner only sought what the law provides.

GRANTING

Petitioner contends that it is vital to the integrity of the

administration of the estate that review be granted at this stage

in the proceeding.

Once the present administrator Winters National Bank &

Trust Company has paid over the taxes and added its numerous

charges the estate will be considerably depleted. Petitioner's

remedies will almost certainly be reduced to a suit for damages

against the trustee-administrator Winters National Bank & Trust

Company. He will be denied the benefit that was the intent of

the bestower in seeking to balance the interest of the benefici-

ary with that of Mr. Heintz and The Peter Kuntz Company of

which this estate is the largest single shareholder. Thus, a mul-

tiplicity of litigation will ensue such that the concept of Judicial

economy will be ignored and that the Trustees, Winters Na-

tional Bank & Trust Company, created by Congress, will be

able to prevail by economic coercion.

It should be noted that the bank is neither an heir nor an

other interested party except by designation of the testator.

“The taking of possession of inherited property is one

of the most ancient subjects of taxation known to the

law.

Stone: Fernandez v. Weiner, 326 U.S. 340. 353

Thus, when it was established that Congress could invade

State Law and Sovereignty as affirmed in First National Bank of

Bay City. a logical proposition would follow and as such an

Article III controversy rightly exists. As the fundamental pur-

pose of litigation is to resolve disputes. or as in this case there

are mixed State and Federal Nterplay’sthat comprise current

estate administration it would be patently unfair to allow a

National Banking Institution to arrive at a result contrary to the

intent of Congress without the check of Independent Federal

review when the United States has a substantial interest.

“The end of litigation is justice. Knowledge of the

truth is essential thereto.”

Brewer: Union Pacific Railway v. Botsford, 141 U.S.

250, 255

When the tax laws of this Country prohibit underpayment. it

should not condone overpayment when such is contrary to the

legislation of Congress in these tax matters. No surcharge or

other levy was sought against petitioner. Merely his removal for

failing to sell to other family members shares of stock.

“Historical ties and associations combined with stra-

tegic holdings of stock. can on occasion serve as a

potent substitute for obvious modes of control.

Murphy: North American Co. v. SEC, 327 U.S. 686,

693

“The whole problem of the relation between parent

and subsidiary corporation is one that is still enve-

loped in the mists of metaphor”

Cardozo: Berkey v. Third Ave. Co., 244 N.Y. 84, 94

g

As such:

“The idea that the capital of a corporation is a football

to be thrown into the market for the purposes of

speculation, that its value may be elevated or de-

pressed to advance the interests of its managers, is a

modern and wicked invention”

Hunt: Upton v. Tribilock 1. Otto, (91 U.S.) 45, 45

Such as stated in petitioners appendum there lies the basis

for granting Petitioners a Writ with regards to the conduct of

Winters National Bank & Trust Company.

“Men do not usually employ so much labor for noth-

ing. If they use mystery without an object, they must

expect to excite suspicion. To do away with that sus-

picion they ought to show an object.”

Marshall: Locke v. United States, 7 Cranch (11 U.S.

339, 347)

Pious protestations and smug preambles but inten-

sify distrust when men are found busy with schemes

to enrich themselves through circumvention”

McKenna: Maple Floor Mgf. Assoc. v. United States,

265 U.S. 563, 587

“The Constitution of the United States does not se-

cure to anyone the privilege of defrauding the public”

Harlon: Plumley v. Massachusetts, 155 U.S. 461, 479

“Any who wield a large amount of power should al-

ways feel the check of power. The very principle on

which the nation exists is that no person shall rise

above power”

Justice Brandeis

Other People’s Money

“It is most true that this court will not take jurisdiction

if it should not, but it is equally true that it must take

jurisdiction if should. .. We have no more right to

decline the exercise of jurisdiction which is given.

LO

The one or the other would be treason to the Consti-

tution

Marshall: Cohens v. Virginia. 6 Wheat (19 U.S.) 264

$04

Wherefore, petitioner prays that this application be granted

APPENDIX

APPENDIX A

Section 2109.44 Ohio Revised Code

Fiduciaries not allowed to have dealings with the Estate

exception

Fiduciaries shall not buy trom or sell to themselves nor shall

they in their individual capacities have any dealings with the

Estate, except as expressly authorized by the instrument creat

ing the trust and then only with the approval of the Probate

Court in each instance; but. no Corporate Fiduciary shall be

permitted to deal with the Estate, any power in the instrument

creating the trust to the contrary notwithstanding. This section

does not prohibit a fiduciary from making an advancement when

such advancement has been expressly authorized by the instru

ment creating the trust or when the probate court approves

APPENDIX B

SECTION I

Revocable Living Trust Agreement between William Kuntz

of Montgomery County, Ohio, and Winters National Bank and

Trust Co. at Davton, Ohio

To make loans, secured or unsecured, to the Grantor's Estate

with liability for the non-payment thereof

SECTION kK

Or to insure the prompt payment of Taxes

APPENDIX C

AFFIDAVIT OF WILLIAM E. COHEN C.P.A.

Case 231191 Docket 290 Page 59]

Probate Court-Montgomery County, Ohio

IN THE MATTER OF THE ESTATE OF

WILLIAM KUNTZ, DECEASED

I, William E. Cohen, first being duly cautioned and sworn all

according to law depose and state as follows

1) In the spring of 1981 while being emploved by Alexander

Grant and Company. CPA‘s, at the request of the attorney for

William Kuntz III, being IRV Zipperstein Esq., 20 West Mon-

ument Street, Dayton, Ohio, I reviewed the financial date of

the Estate of William Kuntz

2) I was asked to determine whether or not provisions of

I.R.S. REGULATIONS Section 6166, etc. would apply

3) It appeared that the stock of the Peter Kuntz Company

and subsidiaries exceeded the statutory requirements of the

I.R.S. Code 6166, etc, and that an election to defer substantial

estate taxes was available

4) Further affiant saveth naught

William E. Cohen /s

Sworn to and before me and subscribed in my presence by

said William E. Cohen this 22nd day of February, 1983

].F. Towle, Notary ‘s

\-4

APPENDIX D

Rule 12 of the Rules of Probate

Description and valuation of stock in Decedants Estate inven-

torv in the schedule of assets from § six 1 to be filed in a

Decendant Estate every itemized listing of corporate stock

must be proc eeded by one ot the following svmbols

What is commonly known as a close corporation must be

proceeded by CC and it must be valued by a duly appointed an

qualified appraiser

APPENDIX E

AFFIDAVIT OF ROBERT L. STEELE, C.P.A.

Case 231191 Docket 290 Page 59]

Probate Court— Montgomery County, Ohio

IN THE MATTER OF THE ESTATE OF

WILLIAM KUNTZ, DECEASED

I, Robert L. Steele, having been first duly cautioned and

sworn all according to Law, depose and state as follows;

1) I was duly appointed a special appraiser for the estate of

William Kuntz which was confirmed by entry on August 22

1980.

2) That the Appraisers met on the 16th of July, 1980 in the

offices of the Peter Kuntz Company at 120 West Second Street

Dayton, Ohio, for a presentation by Mr. Heintz as to the values

of the Common Stock of the Peter Kuntz Company

3) The presentation was made for the Peter Kuntz Company

for the vear ending Oct. 31, 1979. The vear prior to the date of

death of the deceased.

4) That the Appraisers met again on the 22 of July, 1980 at

3481 Office Park Drive, Davton, Ohio and there decided the

value of the 7,670 shares of the common stock of the Peter

Kuntz Company in the estate of William Kuntz

5) I do not recall being further contacted by the Winters

Bank with regard to the other shares in the estate

6) Further. affiant saveth naught

Robert Steele /s

Sworn to and before me and subscribed in my presence by

said Robert L. Steele this the 21st day of February, 1983

S.]. Buzza. Notary ‘s

\-6

APPENDIX F

AFFIDAVIT OF WILLIAM KUNTZ, III

Case 231191 Docket 300 Page

Probate Court—Montgomerv County. Ohio

IN THE MATTER OF THE ESTATE OF

WILLIAM KUNTZ. DECEASED

I. William Kuntz. III, being first duly cautioned and sworn

all according to law depose and state as follows

1) Iam the removed Executor in the Estate of W illiam Kuntz.

and Beneficiary of the Estate and Trust Administered by Win-

ters National Bank and Trust Company

2) In preparation for filing objections to the accountings of

the Estate herein. I obtained from Third National Bank and

Trust Company the records pertaining to the transfer of

$13,469,085.20 with regards to North Central Mortgage Com-

pany

3) That the Deceased, William Kuntz. was Chairman of North

Central Mortgage Company

4) In preparation for these objections filed herein, I re-

quested an audited financial statement from the Accountants for

North Central Financial Corporation. Formerly known as North

Central Mortgage Company. Which was declined at the direc-

tion of the Officers of North Central

5) Further I requested the gross revenues and total mortgage

servicing portfolio of North Central for the Fiscal Year 1980.

which was declined

6) That it is to the best of my knowledge that the gross

revenues of North Central exceeded $80.000.000 in 1980 and

the Mortgage Portfolio exceeded $325,000.000 in 1980

7) To the best of mv knowledge, this transaction resulted in a

book value lost to the estate's interest in the Peter Kuntz Com-

pany and the shares of North Central Financial Company for-

as North Central Mortgage Company, of

merly known

approximately $1,077,526.S0

S) Further, that Winters National Bank and Trust Company

as the lead banking institution, received for itself and for the

account of others a sum in excess of $7,302.610.70. As attached

hereto and marked Exhibit ‘] through ‘6, being copies of wire-

transfers from Third National Bank and Trust Company to par-

ties this sale

9) Further. afhiant saveth naught

William Kuntz. III /s

Sworn to and before me and subscribed in my presence by

the said William Kuntz, III, this 22nd day of February, 1953

\V.L. Georgeff. Notary /s