Petition for Writ of Certiorari — Heisler v. United States

Frepy B. Humezn, MD. and Francis Herz,

Petitioners, —

“Unrrep States or Amenica and JosepH M. CULLEN,

District Director of Internal Revenue Service, San

Francisco, California, and RanpotPx THROWER,

Commissioner of Internal Revenue Service,

Washington, D.C.,

Hester, Stewart, Su.ver & Dantes,

P. O. Drawer 3996,

Carmel, California 93921,

Attorneys for Petitioners.

PRINTING CO.- 562 MISSION STREET - SAN FRANCISCO - CA 94108

II

Ill

IV

SOLER ALTARS RE.

Subject Index

versely disposed of by the United States District Court

for the Northern District of California and by the

United States Court of Appeals for the Ninth Circuit

is one that was never considered by this honorable

court and because of their ever increasing importance

ought to be decided by this court ..................

Flast v. Cohen, 392 U.S. 83 (1968) was misread by

the United States Court of Appeals when it held that

on the above authority appellants lack the requisite

standing to raise the issue of the constitutionality of

Title 26 USCA Section 611, et seq. ................

The petitioners were entitled to have their case heard

by a three-judge constitutional court both in accord-

ance with Rule 35 of the Federal Rules of Procedure

and also on the basis of the various decisions of the

EE Shee neete hVenbeEee ed kd mada dh bs meenneeweeecs

The absence of showing that there are others who are

similarly situated to the petitioners does aot justify

the dismissal of a complaint filed as a class suit ......

NE ered hnhcler nein icabh vaned nde curendienca aes

Page

Opimioms below ..... 22... esccecccccscscccccccccccsocecs 2

SE. aN bKn ent elma bG ale ehedadcieseuvneernesecens 2

NY IEEE one winvinscccncsesicnscnvececcencvaseces 2

Statutory provisions involved .................0..ceecceee —

i i x tocnd cathe iss ebbandenecksccncceses 3

Reasons for granting the writ ...................cccecees 12

I The issues here presented by the complaint and ad-

17

20

Table of Authorities Cited

Cases Pages

Eisen v. Carlisle and Jacquelin (CA 2d 1968) 391 F.2d 555 99

Eisner v. Maycomber, 252 U.S. 189 (1920) .............. 15

Flast v. Cohen, 392 U.S. 83 (1968) ............. 17, 18, 19, 20, 91

Flint v. Stone Tracy Co., 220 U.S. 107 (1911) ............ 15

Frothingham v. Mellon, 262 U.S. 447, 43 S.Ct. 597 (1923). 17,18

Griffin v. Illinois, 351 U.S. 12, 76 S.Ct. 585 (1956) ....... 15

Harper v. Virginia, 383 U.S. 633, 86 S.Ct. 1079 .......... 16

Pollock v. Farmers Loan and Trust Company, 157 U.S. 429

(1895) and 158 U.S. 601 (1895) ...................... 15

Richardson v. United States, 3rd Cireuit 465 F.2d 844,

abn nGenn cueccenonncitebedenaceceuce 23

Sierra Club v. Morton, 92 S.Ct. 1361 (April 19, 1972)..... 16

Skinner v. Oklahoma, 316 U.S. 527, 62 S.Ct. 448 (1942) ...14, 15

Strattons Independent v. Hawbert, 213 U.S. 399 ( 1913) .. 15

Weaks v. Bareco Oil Co. (CCA 7 1941) 125 F.2d 84...... 99

Yiek Wo v. Hopkins, 118 U.S. 356 2.2.2.2... ccc ccc cuese 14

Zemel v. Rusk, 381 U.S. 1, 85 S.Ct. 1271, 14 L.Ed.2d 179

SED sk sia cadanes dabebay wake eked ercnn edie 20, 21

Constitutions

United States Constitution:

I a eee ae 8

TaBLe oF AUTHORITIES CITED iii

Rules

Federal Rules of Civil Procedure: Pages

PPP re eT CeT Per Tere, Te EeT Teer eee Tee 2

EE cid sad een Seiden sans adaneetatbonnemnanenss 20

Statutes

Get, GOR, GED x... oe wnescncaccusnsesssccesncassesuess 15

96 USCA:

ees Ee 00 ER. edi iaadkedtecccsnnddpancenncna assim.

SED iin ckptdeunleene nn eenie h Gumanek nies 12

Cr ) i vcleccagencewachan ania abahanen 3, 7, 8, 10, 11

EE oe gc eig gisa gs ie eee ae bee bemenen : ie ; 3

Ee R's. dig ee ceh anes Gynp ae canwue 7, 8, 10,11

i ME <i nd thi cen aeeee Ka RebA Re Ke ee haere ‘ a 22

28 USCA:

NS MS ins tiene ehadahawaane eine 2

hhh ETT LN ate Nia

Texts

TBM. 39 Cumulative Bulletin No. 1, p. 181 ............ 7

te Mas Seb Dia ee a be ee SO ce

: RASS Mae

PPL PER Bs 8 ee

Iu the Supreme Court

OF THE

United States

OcTOBER TERM, 1972

No.

Frepy B. Hetster, M.D. and Francis HEISLER,

Petitioners,

vs. )

Unrrep States OF AMERICA and JOsEPH M. CULLEN, }

District Director of Internal Revenue Service, San :

Francisco, California, and RANDOLPH THROWER,

Commissioner of Internal Revenue Service, é

Washington, D.C., f

Respondents. 3

PETITION FOR A WRIT OF CERTIORARI :

to the United States Court of Appeals e

for the Ninth Circuit -

The Petitioners, Friedy B. Heisler, M.D. and Fran- k

cis Heisler, respectfully pray that a Writ of Certi- ,

orari issue the review of the judgment and opinion of

the United States Court of Appeals for the Ninth

Circuit entered in these proceedings on June 21, 1972,

from which judgment a Petition for a Rehearing was

2

timely filed. The rehearing was denied on J uly 17,

1972, at which time Petitioners’ suggestion that-a re.

hearing be granted, en banc, was also rejected.

An application for extension of time in which to file

for a writ of certiorari was filed within the time pro-

vided by the Rules and the same was granted by Mr,

Justice Douglas so that the present Petition may be

filed on or before November 27, 1972, included.

OPINIONS BELOW

The Opinion of the Court of Appeals is reported as

463 F.2d 375 and appears as Appendix 1 hereto. The

United States District Court for the Northern Distric

of California dismissed the Complaint without an

Opinion.

JURISDICTION

This Petition for Certiorari is filed within the time

allowed under the Rules including the extension of

time granted by Mr. Justice Douglas. This Court’s

jurisdiction is invoked under 28 USCA, Section

1254(1).

—

QUESTIONS PRESENTED

1) Does Title 26 USCA Section 611, et seq. if con-

strued that human depletion is excluded, constitution-

ally discriminate between taxpayers?

2) If Title 26 USCA Section 611, et seq. is con-

strued that it does not cover human depletion among

3

the ‘other natural deposits”, an unconstitutional class

legislation in favor of material depletion is presented ?

3) Does the Complaint permit proceedings as a

class action ?

4) Since the Complaint challenged constitutional-

ity of a Congressional enactment, were Petitioners en-

titled to a hearing before a three-judge constitutional

court?

STATUTORY PROVISIONS INVOLVED

United States Code Title 26, Section 611, “Allow-

ance of Deduction for Depletion”; Section 612, “Basis

for Cost Depletion”; Section 613, “Percentage Deple-

tion”. The foregoing Code Sections appear as Appen-

dix 2.

STATEMENT OF THE CASE

The Complaint was filed on April 2, 1969, on behalf

of the two named Petitioners.

“ ,. as well as on behalf of each and all of the

persons similarly situated whether employed, or

self employed, and support themselves and their

families by their labor, be it manual or otherwise;

such persons are so numerous as to make it im-

practical to bring them all before the Court; .. .

the named Plaintiffs fairly ensure adequate repre-

sentation of all...” (TR 2)*

The Complaint, after alleging jurisdictional refer-

ence and describing the nature of the Complaint as a

*Pagination refers to the transcript of court filed by the Clerk

of the United States Court of Appeals for the Ninth Circuit.

ae ad

class action and describing the Petitioners as residj

in Carmel, Monterey County, California, where they

are both gainfully self-employed, further set forth

that:

The Petitioner, Friedy B. Heisler, is a medical doc.

tor, specializing in the field of psychiatry, with Offices

in Carmel, California. She graduated from high

school and from two years college in Switzerland,

her native country. Thereafter, she studied at the

University of Illinois Medical School where she re.

ceived her degrees, both BS and MD. Upon further

improving her knowledge and experience, she became

a Diplomate, and still later, a Fellow of the American

Psychiatric Association, She was an Assistant Pro.

fessor at the Illinois Neuropsychiatric Institute Med-

ical School. She was on the psychiatric staff of

several State and Federal institutions and was also

consultant for public and private charity organiza-

tions. Presently, she is engaged in full private prae-

tice as a medical doctor and extension instructor at

the University of California at Santa Cruz, and le-

turer in her field. (TR 2 and 3)

The other named Petitioner, Francis Heisler, was

described as a graduate from a school where he

received the Baccalaureate Degree. He studied engi-

neering at the Federal Polytechnical Institute in Zur-

ich, Switzerland, and graduated with the diploma of

an electrical engineer. He was an assistant to the pro-

fessor in electrical engineering at his alma mater and

subsequently became employed as an engineer in Ger-

many, and later a research engineer in Chicago, Ili-

nois, in Which occupation he continued until about

1930. While in Zurich, Switzerland, he studied law at

the Department of Philosophy at the University of

guric. and he also continued law in Chicago, Illinois,

and he received his Degree as a Juris Doctor. He was

admitted to practice law in the States of Illinois and

California, in the District of Columbia and before the

Supreme Court of the United States, as well as before

various District Courts and Courts of Appeals of the

Cnited States. At the present time, he is engaged in

full time practice of law with offices in Carmel and

Chicago and with associate law offices in Berkeley,

California and Washington, D.C. (TR 3)

That at all times pertinent to the issues here, the

Respondent Joseph M. Cullen was, and now is the

District Director of Internal Revenue, San Francisco,

California, and he is a resident of the Northern Dis-

trict of California, within the jurisdiction of this

Court. Respondent Randolph Thrower is presently

the Commissioner of the Internal Revenue Service,

and as such, is the executive in charge of the policy of

said service; Respondent United States is in need of

no identification except that it is the entity which dis-

poses of the taxes illegally and erroneously collected

from the Petitioners and gets along without collecting

depletion allowance granted to others than the Peti-

tioners. (TR 3)

The Complaint was brought for the recovery of the

sums of $1,239.37, $1,443.69 and $2,560.45, erroneously

and illegally assessed by the Respondents against the

named Petitioners as part of their income taxes for

Lp A EEE EAI SMES FREIND OAT Ie we

the respective fiscal years of 1965, 1966 and 1967.

(TR 4)

That on or about April 8, 1968, the Petitioners

submitted to the Respondent District Director of In.

ternal Revenue on form 843, a Claim for the Refund

of taxes illegally, erroneously and excessively collected

and on said form they made a claim for their respee-

tive refunds for the years above-mentioned on the

ground that the Internal Revenue Code of 1954, Title

26, USCA, Section 611, et seq., provides in com.

puting taxable income for a reasonable allowance “for

the depletion and for depreciation of improvements

according to the peculiar conditions in each case.”

The Petitioners in their claim set forth that they did,

in fact, improve their “natural deposits” by obtaining

an education in schools and outside; Petitioner Friedy

B. Heisler becoming a psvchiatrist, teacher and a lee-

turer, and Petitioner Francis Heisler hecoming an en-

gineer, lawyer and lecturer; hoth of them having prae-

ticed their respective professions honorably for more

than thirty years and they are still so practicing,

They further claim that sinee they are within the

reach of the Biblical age of three score vears and ten

it is to he expected that their “natural deposits” and

the “improvements thereof”, will he gradually de-

pleted and in a foreseeable time, will undoubtedly

wholly disappear. They requested a refund from the

Respondent District Director of Internal Revenue in

accordance with the Constitutional command of due

process and within the equal protection of the law

and further in accordance with the depletion allow-

ance provided for other taxpayers under Sections 611,

7

612, and 613(b) of Title 26 USCA. They requested

the maximum depletion allowance provided in said

Title, Le., twenty-seven and a half percent of the in-

come tax jointly paid by them during the years 1965,

1966 and 1967. (TR 4)

Subsequently, under the date of February 18, 1969,

the Respondent District Director of Internal Reve-

nue informed Petitioners that their claim for the year

1966, in the amount of $2,560.45 was disallowed be-

cause “the examination did not disclose any basis for

reducing this tax liability.” The Respondent District

Director also informed Petitioners that “the issue

raised by your claim for refund has been considered

during this examination and determined to be unallow-

able because the depletion allowance claimed did not

meet any requirement of Section 611 of the 1954

Internal Revenue Code and T.B.M.39 Cumulative

Bulletin No. 1, page 131,” and the claim so presented

by Petitioners for the year 1966 for refund in the

amount representing twenty-seven and a half percent

of the taxes jointly paid by them for such year was

disallowed, and further that the Petitioners received

no information from the Respondent District Director

of Internal Revenue as to the allowance or disallow-

ance of their claims filed for the years 1964 and

1965: however, the claims having been filed more

than six months prior to the filing of this suit and no

action was taken by the Respondent District Director

of Internal Revenue concerning the same, it is as-

sumed, and so to be considered, that the claims for

the years 1964 and 1965 were disallowed, as was the

claim for the year 1966. (TR 5)

ODI SEE RELIES NG NN REO

8

The Complaint alleged that the Respondent Distri¢

Director of Internal Revenue’s interpretation of the

Internal Revenue Code of 1954, Title 26 USCA, 611,

612 and 613(b) is wholly erroneous, illegal and yp.

constitutional. The interpretation is to the effect that

depletion allowance is to be granted for such “natural

resources” as oil and gas wells, minerals, timber, and

many other natural deposits, but not be granted for

such “natural resources” as a person’s ability to earn

a livelihood. Such interpretation by the Respondent

District Director of Internal Revenue is immoral and,

for that reason alone, and for other reasons, is un-

constitutional, to boot, and is particularly contrary

to the constitutional precept of due process of law as

set forth in the Fifth Amendment to the Constitution

of the United States and contrary to the precept of

the equal protection of the law. The interpretation of

the above statute by the Respondent District Director

of Internal Revenue represents an insidious discrim-

ination or classification which is patently arbitrary and

utterly lacking in rational justification. The interpre-

tation so made by the Respondent District Director of

Internal Revenue is unjustifiable, unfair and violative

of due process. (TR 5 and 6)

The Complaint also alleged that it is contrary to due

process and contrary to the equal protection of the

law when the Respondent District Director of Inter-

nal Revenue holds that the ‘‘natural resource” such as

clay used or sold for the manufacture of drainage

and roof tile and flower pots, is to be granted a 5%

depletion allowance but none is to be granted to the

Petitioners for the depletion of their “natural re

<ources” and the “improvement” thereof. It is clearly

contrary to due process and the equal protection of

the law when the Respondent District Director of In-

ternal Revenue grants fifteen percent depletion allow-

ance to such natural resources as china clay, sagger

day and clay used for the purposes dependent on

its refractory properties, irrespective of whether or not

such natural resources are inexhaustible or not, while

holding that Petitioners are not entitled to depletion

allowance of their natural resources, even if it is a

foregone conclusion that their’ natural resources, in

absence of a miracle, will be thoroughly exhausted.

The interpretation and the holding referred to above

by the Respondent Director of Internal Revenue that

a twenty-seven and a half percent depletion allow-

ance is to be granted on oil and gas wells, irrespective

of whether they are to be exhausted sooner or later,

hen he holds that twenty-three percent depletion al-

lowance is to be granted on sulphur and anorthosite

clay, asbestos, or graphite and/or mica, irrespective

of whether or not such resources will be exhausted

while he holds that no depletion allowance is consid-

ered allowable for the soon totally exhausted natural

resources of the Petitioners and the improvements of

their resources. (TR 6 and 7)

The Complaint further alleged that no part of the

named Petitioners’ claim has been credited, remitted,

refunded to them and therefore the full amount

claimed as refund together with interest from the

respective dates of the alleged overpayment is now

due from the Respondents to the Petitioners.

10

The Complaint also alleged that because of the de.

nial of the Respondent District Director of Internal

Revenue of Petitioners’ refund claims for the years

1964, 1965 and 1966 it is to be expected that similar

claims for the years subsequent to 1966 during which

Petitioners will be called upon to file their income tax

returns, will be similarly denied unless this Honorable

Court intervenes and grants its order upon the Re

spondents to refund to the named Petitioners twenty-

seven and a half percent of the taxes paid by them

for the years 1964, 1965 and 1966 in the amounts here.

inabove indicated. (TR 7)

And further the prayer of the Complaint was set

forth to the effect:

“(1) That the plaintiffs are entitled to a refund

and that the defendant District Director of In-

ternal Revenue ought to pay to them the sums of

$1,239.37, $1,443.69 and $2,560.45, with interest

thereon, from April 15, 1965, April 15 1966 and

April 15 1967 respectively at the rate of six per-

cent, together with costs and disbursements of

this action.”

And as a further relief, the Petitioners asked that

if the interpretation of the Respondent District Di-

rector of Internal Revenue denying Petitioners’ claim

for refund of twenty-seven and a half percent of their

respective taxes be upheld by the U:S. District Court,

then the Petitioners said that Title 26 USCA, Sections

611, 612 and 613(b), is unconstitutional because it

represents insidious discrimination or classification

which is patently arbitrary and utterly lacking in ra-

tional justification, and for the purpose of determin-

11

ing the constitutionality of said act referred to and

hecause of the importance of the issues, the Petition-

ers hereby requested the convocation of a three-man

constitutional Court to pass upon the issues therein

raised as to the unconstitutionality of Title 26 USC

611, 612 and 613(b).

Petitioners, pursuant to 28 USC 2403, advised the

United States that they may claim Title 26 USCA and

Sections 611, 612 and 613(b) unconstitutional and did

so by forwarding two copies of the Complaint, to-

gether with a Summons required by the Code. (TR 7

and 8)

The Respondents on August 22, 1969, filed their

Notice of Motion to Dismiss on the grounds that—

“(1) The suit may not be maintained as a

class action;

(2) Plaintiffs are not entitled to a depletion

allowance for their ability to earn a livelihood;

(3) The depletion allowance does not deprive

plaintiffs of due process of law and deny then

(sic) equal protection of the law;

(4) Plaintiffs do not have standing to ques-

tion the constitutionality of the depletion allow-

ance ;

(5) Declaratory and injunctive relief may not

be granted with respect to plaintiffs’ challenge

of the constitutionality of the depletion allow-

ance ;

(6) A single judge has the power to dismiss

this action notwithstanding the purported con-

stitutional questions raised by the plaintiffs and

their application for a three-judge Court. (TR

9 and 10)”

DI o> A em

12

On April 21, 1970, the United States District Judge

denied—without opinion—the application to convene

a three-judge Court and further granted the Motion

to Dismiss filed by the Respondents. (TR 75)

On the same date the Judgment was entered to the

effect that the petitioners’ complaint be dismissed

with prejudice. (TR 73)

Petitioners filed their Notice of Appeal on June 18,

1970 (TR 76), Designation of Contents of Record

on Appeal (TR 78 and 79), Statement of Points

Relied Upon on Appeal by Plaintiffs-Appellants (‘TR

80), their Cost Bond on Appeal (TR 81).

REASONS FOR GRANTING THE WRIT

I

THE ISSUES HERE PRESENTED BY THE COMPLAINT AND

ADVERSELY DISPOSED OF BY THE UNITED STATES DIs-

TRICT COURT FOR THE NORTHERN DISTRICT OF CALI-

FORNIA AND BY THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT IS ONE THAT WAS NEVER CON-

SIDERED BY THIS HONORABLE COURT AND BECAUSE OP

THEIR EVER INCREASING IMPORTANCE OUGHT TO BE

DECIDED BY THIS COURT.

Title 26 USCA Section 611, subsection (a) under

the heading of General Rule provides, among others,

that—

‘‘in the cause of mines, oil and gas wells, other

natural deposits, and timber, there shall be al-

lowed as a deduction in computing taxable in-

come a reasonable allowance for depletion or for

depreciation of improvements, according to the

peculiar conditions in each ease . . .”

Peta. oa PREC OAM CB Be SF Db EAR A PA BS COP PB I PS ABA VR DA

13

The term “‘other natural deposits” distinguishes be-

tween mines, oil and gas wells on the one hand and

timber on the other. Furthermore, Congress provided

that a “reasonable allowance for depreciation of im-

provements be granted” and ‘‘according to the pecu-

liar conditions in each case.”

Petitioners in their complaint argued that the

“other natural deposits” included their ‘‘natural re-

sources”, i.c., their ability to earn a livelihood. They

also claimed that the statutory term as used in 26

USCA 611 ‘‘for depreciation of improvements” in-

dudes the improvement which they made upon their

“natural deposits” by obtaining advanced education

in schools and outside. They also set forth in their

Complaint that since they are within the reach of the

Biblical age of three score years and ten it is to be

expected that their ‘‘natural deposits” and the ‘‘im-

provements thereof” will be gradually depleted and

in a foreseeable time will undoubtedly wholly disap-

pear. They further claimed in their Complaint with

more truth than poetry that unlike the output of

mines, oil and gas wells which may or may not be

depleted, their ‘natural deposits” will, in absence of

a miracle, undoubtedly disappear by total depletion.

Petitioners’ request for refund filed with the Dis-

trict Director of Internal Revenue, pursuant to the

provisions of Form 843 of the Internal Revenue

Code of 1954, which claim for refund was denied,

and the Complaint charged that such denial is con-

trary to due process and contrary to the equal pro-

tection of the law.

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14

The Complaint then presented the constitutional

issue of stating that if the interpretation of the Dis.

trict Director of Internal Revenue is upheld by the

Court then Title 26 USCA Section 611, et seq., ig

unconstitutional because it represents insidious dis.

crimination and class legislation which is clearly

arbitrary and has no rational justification.

Neither of the above issues, i.e., whether human

depletion is included in Title 26 USCA Section 611,

et seq., nor the question of the constitutionality of

the above Code if human depletion is not included

was ever considered by this Honorable Court, The

lack of consideration and decision by this Honorable

Court justifies the granting of certiorari to review

the judgment below.

The United States Court of Appeals agreed that

the District Court had jurisdiction over the refund

claim presented by Petitioners to the Internal Reve-

nue Service, however, it held that—

“The Appellants, however, do not fit within the

statute. Their bodies and skills are not among

the ‘other natural deposits’ for which the In-

ternal Revenue Code allows a deduction for per-

centage depletion.”

This ipse dixit holding does not square with the oft

repeated holdings of this Court that Congress in-

tended by enacting Title 26 USCA Sections 611, et

seq. to enact a constitutionally permissible law and

not one which constitutionally discriminates in favor

of material holdings as against the ability to earn a

living. Yick Wo v. Hopkins, 118 U.S. 356; Skinner _

15

». Oklahoma, 316 U.S. 527, 62 S.Ct. 448 (1942) and

Grifin v. Minois, 351 U.S, 12, 76 S.Ct. 585 (1956).

From debate in Congress it appears that in fact

intended to tax incomes uniformly throughout the

United States. Such intention is shown by 28

Stat. 509, 553. While it is true that this Court invali-

dated that statute in Pollock v. Farmers Loan and

Trust Company, 157 U.S. 429 (1895) and 158 USS.

601 (1895), the reasoning behind that holding appears

to he quite tenuous, if not totally abandoned in the

face of subsequent decisions of this Court.

Uniform taxation was incorporated in the Six-

teenth Amendment to the Constitution which was

ratified in 1913. Without reversing Pollock, supra,

this Court sustained corporate income tax as an

excise ‘measured by income ... on the privilege of

doing business in corporate form.” Flint v. Stone

Tracy Co., 220 U.S. 107 (1911).

Petitioners claim that their ability to earn a living

must be construed to be among ‘‘the other natural

deposits” referred to in Title 26 USCA Sec. 611,

which clearly is in line with the holdings of this

Court in which it describes income as the ‘“‘gain

derived from capital, from labor, or from both com-

bined”, including therein the “profit gained through

a sale or conversion of capital assets.” See Strattons

Independent v. Hawbert, 213 U.S. 399 (1913) and

Eisner v. Maycomber, 252 U.S. 189 (1920).

The uniform taxation intended by Congress is with-

out question and so is the inclusion of human effort

in the depletion provision. This is shown by the In-

16

ternal Revenue Act in the 1920’s providing for a 25%

deduction of the earned income from the total tax.

able income. While it is true that this recognition

of human ability to earn a living as a “‘natura] Te-

source” for taxation purposes was reduced and later

wholly disappeared was the result not of Congres.

sional intent but of the new dialectics which made

material values supreme at the cost of all others,

However, as Mr. Justice Douglas said in Harper y,

Virginia, 383 U.S. 633, 86 S.Ct. 1079:

“The Equal Protection Clause is not shackled

by the political theory of a particular era, In

determining what lines of unconstitutionality are

discriminatory, we have never been confined to

historic notions of equality, any more than we

have restricted due process to a fixed catalogue

of what was at a given time deemed to be the

limits of fundamental rights.”

The Internal Revenue Service in rejecting Peti-

tioners’ claim for refund based on the depletion al-

lowance allocated to their ability to make a living is

not in line with the dissent of Mr. Justice Blackman

in Sterra Club v. Morton, 92 S.Ct. 1361 (April 19,

1972), who said:

‘Must our law be so rigid and our procedural

concepts so inflexible that we render ourselves

helpless when the existing methods and the con-

stitutional concepts do not quite fit and do not

prove to be entirely adequate for new issues.”

Petitioners submit that the decision below ought to

be reviewed and that therefore the Petition for a

Writ of Certiorari ought to be granted.

17

II

7 v. COHEN, 392 U.S. 83 (1968) WAS MISREAD BY THE

UNITED STATES COURT OF APPEALS WHEN IT HELD

THAT ON THE ABOVE AUTHORITY APPELLANTS LACK

THE REQUISITE STANDING TO RAISE THE ISSUE OF THE

CONSTITUTIONALITY OF TITLE 26 USCA SECTION 611,

ET SEQ.

The Court below held that

‘on the claim that 26 USCA’ Sections 611, ef

seq. are unconstitutional, the Heislers lacked the

requisite standing to raise this issue.” Flast v.

Cohen, supra.

The above further ipse dixit does not express the

thoughts as were expressed by this Court speaking

through Chief Justice Warren. Flast, supra, as Pe-

titioners submit, stands for a holding that they have

standing even by the interpretation of the law by the

sole dissenter, Mr. Justice Harlan, As we read Jus-

tice Harlan’s dissent, he would have classified Peti-

tioners as ‘‘non-Hohfeldian” plaintiffs who have stand-

ing to complain not qua taxpayers, but as ‘*private

attorneys general.” Reading the majority opinion in

Flast, supra, it is clear that the Court set for itself

the task

“tg decide whether the Frothingham barrier

should be lowered when a taxpayer attacks a

federal statute .. .”

In the Flast, supra, case Chief Justice Warren

followed the commentators when he analyzed the

Frothingham holding and stated that

“the concrete reasons given for denying standing

to a federal taxpayer suggest that the court’s

&

;

&«

18

holding rests on something less than a constity.

tional foundation . . . the petitioner in Frothing.

ham was denied standing not because she was a

taxpayer but because her tax bill was not large

enough.”

and then he added

“‘to the extent that Frothingham has been rm.

jected as resting on policy considerations, it has

been classified as depending on assumptions not

consistent with modern conditions.”

Even when applying the yardstick used in Froth-

ingham, Petitioners submit that their interest in the

issues expressed monetarily is not a minescule one

since their claim for refund was in the respective

amounts of $1,239.37, $1,443.69 and $2,560.45 for the

years of 1965, 1966 and 1967, and as the Complaint

alleges that they expected that their claim for refund

for the years following 1967 would be not less than

$2,500.00. However, it is submitted that this yardstick

was substantially abandoned in the Flast, supra, hold-

ing where it was held that:

“‘Standing has been called one of ‘the most amor-

phous (concepts) in the entire domain of public

law,’ some of the complexities peculiar to stand-

ing problems result because standing ‘serves, on

occasion, as a shorthand expression for all the

various elements of justiciability.’ In addition,

there are at work in the standing doctrine the

many subtle pressures which tend to cause policy

considerations to blend into constitutional limi-

tations.”

19

and further that

“Despite the complexities and uncertainties, some

meaningful form can be given to the jurisdic-

tional limitations placed on federal court power

by the concept of standing. The fundamental

aspect of standing is that it focuses on the party

seeking to get his complaint before a federal

court and not on the issues he wishes to have

adjudicated. The ‘gist of the question of stand-

ing’ is whether the party seeking relief has ‘al-

leged such a personal stake in the outcome of the

controversy as to assure that concrete adverse-

ness which sharpens the presentation of issues

upon which the court so largely depends for

illumination of difficult constitutional questions’.

Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691,

703, 8 L.Ed. 2d 663 (1962). In other words, when

standing is placed in issue in a case, the question

is whether the person whose standing is chal-

lenged is a proper party to request an adjudica-

tion of a particular issue and not whether the

issue itself is justiciable.”

Petitioners submit that here, as in the Flast case,

supra,

“their complaint contains sufficient allegations

under the criteria we (The Supreme Court) have

outlined (in the Flast case) to give them stand-

ing to invoke a federal court’s jurisdiction for

an adjudication on the merits.”

The Court below erred when it held that Petitioners

had no standing and to review that holding a Petition

for Certiorari ought to be granted.

Itt

THE PETITIONERS WERE ENTITLED TO HAVE THETR cage

HEARD BY A THREEJUDGE OONSTITUTIONAL Covnr

BOTH IN ACOORDANCE WITH RULE 35 OF THE FEDERA,

RULES OF PROCEDURE AND ALSO ON THE BASIS OP rap

VARIOUS DECISIONS OF THE COURTS.

Petitioners’ complaint carried two thrusts. The first

argued that under the assumption of the constitution.

ality of a congressional enactment they ought to be

not excluded from the benefit of the law as the In.

ternal Revenue Service by refusing to grant their

refund did do. Secondly they claimed that if the

Court should hold the interpretation of the Internal

Revenue Service proper, then it must hold that Title

26 USCA Section 611, et seq., is unconstitutional as

class legislation. Petitioners submit that this two

pronged claim should have prompted the District

Court to convene a three-man court and that such

claim was upheld by the Supreme Court of the

United States in Flast, supra, when it was said by

the majority of the Court, with one member dissent-

ing, that

“‘the government argues that a three-judge court

should not have been convened because appellants

question not the constitutionality of the Elemen-

tary and Secondary Education Act of 1965, bat

its administration. The decision in Zemel v. Rusk,

381 U.S. 1, 85 S.Ct. 1271, 14 L.Ed.2d 179 (1965),

is dispositive on this issue. It is true that ap-

pellants’ complaint states a non-constitutional

ground for relief, namely, that appellees’ actions

in approving the expenditure of federal funds

for allegedly unconstitutional programs are in

excess of their authority under the Act. How-

21

ever, the complaint also requests an alternative

and constitutional ground for relief, namely, a

declaration that, if appellees’ actions ‘are within

the authority and intent of the Act, the Act is

to that extent unconstitutional and void.’ The

Court noted in Zemel v. Rusk, supra, ‘[W]Je have

often held that a litigant need not abandon his

nonconstitutional arguments in order to obtain

a three-judge court.’ (citing cases) The complaint

in this ease falls within that rule.”

Petitioners submit that their Complaint falls within

the rule set forth in Zemel and quoted with approval

in Flast, supra, and that, in consequence, they were

entitled to a hearing before a three-judge court and

the holding of the United States Court of Appeals

to the contrary requires the granting of a writ of

certiorari.

IV

THE ABSENCE OF SHOWING THAT THERE ARE OTHERS WHO

ARE SIMILARLY SITUATED TO THE PETITIONERS DOES

NOT JUSTIFY THE DISMISSAL OF A COMPLAINT FILED AS

A CLASS SUIT.

The holding of the United States Court of Appeals

states :

“The Appellants styled their action a class action.

However, there was no showing that any other

members of the purported class filed the requisite

demands for refund. 26 U.S.C. §7422.”

Petitioners admit that in their Complaint they made

no showing that other members of the class did file

the requisite demands for refund. However, they

maintain that such a showing is not required. They

believe that they complied with the requirement of

22

the law when in their Complaint they set forth tha

the issues are presented on their own behalf:

‘*.. . as well as on behalf of each and all of the

persons similarly situated whether employed or

self-employed and support themselves and their

families by their labor, be it manual or otherwise,

such persons are so numerous as to make it im-

practical to bring them all before the court. . ..

the named plaintiffs fairly insure adequate rep.

resentation of all... .”

Petitioners believe that that was all that was re.

quired of them to do notwithstanding the argy-

ment of the respondents. There was no showing that

there are not others who filed their refund claim with

the Internal Revenue Service under 26 U.S.C. §7422,

Therefore, they submitted that the Court erred to

dismiss the class suit since the usual and customary

procedure would have been for the District Court

to set a reasonable date within which to amend the

Complaint and bring in the additional name of those

plaintiffs who qualified within the class. The dis-

missal of the class claim out of hand was error.

As it was said that Rule 23 pertaining to class

actions is a remedial rule that should be liberally

construed and applied. This treatment was accorded

original Rule 23 (See Weaks v. Bareco Oil Co. (CCA

7 1941) 125 F.2d 84) and the comparable construction

and application of the revised rule was found to be

proper among others in Eisen v. Carlisle and Jacquelin

(CA 2d 1968) 391 F.2d 555 where it was said:

“But to dismiss a class suit in its insipiency be

fore claimants have been given an effective op-

23

portunity to join would be a disservice to the

class action as envisioned in the new rule. Indeed

we hold that the new rule should be given a

liberal rather than a restrictive interpretation,

Escott v. Barchris Construction Corporation 340

F.2d 731, 733 (2nd Cireuit 1965) Cert. denied

999 U.S. 816, 86 S.Ct. 37, 15 L.Ed.2d 63 (1966)

and that dismissal in limine of a particular pro-

ceeding as not a proper class action is justified

only by a clear showing to that effect and after

a proper appraisal of all the factors enumerated

on the face of the rule itself.” See also Richard-

son v. United States, 3rd Circuit 465 F.2d 844,

decided July 20, 1972.

This holding supports Petitioners’ contention as to

the propriety of the class suit.

CONCLUSION

For the reasons set forth a Writ of Certiorari

should issue to review the judgment of the Opinion

of the United States Court of Appeals for the Ninth

Circuit.

Executed in Carmel, California, this 14th day of

November, 1972.

Respectfully submitted,

Francis HEISLER,

HEIsLER, STEWART, SILVER & DANIELS,

Attorneys for Petitioners.

(Appendices Follow)

SNES 2 TRISTE WI - “ - SENET S TS De aes aa regal

Appendix |

No. 26,121

United States Court of Appeals

for the Ninth Circuit

; Friedy B. Heisler, M.D., and

Francis Heisler,

Plaintiffs and Appellants,

vs.

- United States of America and Joseph

- M.Cullen, District Director of Inter-

nal Revenue Service, ete., et al.,

Defendants and Appellees. |

[June 21, 1972]

On Appeal from the United States District Court

for the Northern District of California

Before: CHAMBERS, BROWNING and KILKENNY,

Cireuit Judges.

~ Per curiam:

In this tax case the district court had jurisdiction

over the refund claim under 28 U.S.C. § 1346(a) (1).

The appellants, however, do not fit within the statute.

- Their bodies and skills are not among the “other nat-

ii

ural deposits” for which the Internal Revenue Coy

allows a deduction for percentage depletion.

On the claim that 26 U.S.C. sections 611 et 64,

are unconstitutional, the Heislers lack the requisite

standing to raise this issue. Flast v. Cohen, 392 Ug

83 (1968).

The appellants style their lawsuit a class action,

However, there is no showing that any other men-

bers of the purported class filed the requisite demands

for refund. 26 U.S.C. § 7422.

The judgment is affirmed.

Appendix 2

STATUTORY PROVISIONS

(Title 26 USCA)

(611. Allowance of deduction for depletion

(a) General rule-—In the case of mines, oil and

gas wells, other natural deposits, and timber, there

shall be allowed as a deduction

in computing taxable income a reasonable allow-

ance for depletion and for depreciation of im-

provements, according to the peculiar conditions

in each case; such reasonable allowance in all

cases to be made under regulations prescribed by

the Secretary or his delegate. For purposes of

this part, the term “mines” includes deposits of

waste or residue, the extraction of ores or min-

erals from which is treated as mining under sec-

tion 613(¢). In any case in which it is ascertained

as a result of operations or of development work

that the recoverable units are greater or less than

the prior estimate thereof, then such prior esti-

mate (but not the basis for depletion) shall he

revised and the allowance under this section for

subsequent taxable years shall be based on such

revised estimate.

(b) Special rules.—

(1) Leases——In the case of a lease, the

deduction under this section shall be equi-

tably apportioned between the lessor and

lessee.

iv

(2) Life tenant and remainderman—y

the case of property held by one person for

life with remainder to another person, the

deduction under this section shall be com.

puted as if the life tenant were the absolute

owner of the property and shall be allowed

to the life tenant.

(3) Property held in trust—In the cage

of property held in trust, the deduction

under this section shall be apportioned be

tween the income beneficiaries and the trus-

tee in accordance with the pertinent provi-

sions of the instrument creating the trust, or,

in the absence of such provisions, on the

basis of the trust income allocable to each.

(4) Property held by estate.—In the case

of an estate, the deduction under this section

shall be apportioned between the estate and

the heirs, legatees, and devisees on the basis

of the income of the estate allocable to each.

(c) Cross reference.—

For other rules applicable to depreciation

of improvements, see section 167.

Aug. 16, 1954, ¢. 736, 68A Stat. 207; Sept. 2, 1958,

Pub.L, 85-866, Title I, § 35, 72 Stat. 1632.

§612. Basis for cost depletion

Except as otherwise provided in this subchapter,

the basis on which depletion is to allowed in respect

of any property shall be the adjusted basis provided

section 1011 for the purpose of determining the

pon the sale or other disposition of such prop-

Aug. 16, 1954, ¢. 736, 68A Stat. 208.

in

gain u

erty.

(613. Percentage ge depletion

(a) General rule-—In the case of the mines, wells,

and other natural deposits listed in subsection (b),

the allowance for depletion under section 611 shall

he the percentage, specified in subsection (b), of the

gross Income from the property excluding from such

gross Income an amount equal to any rents or

royalties paid or incurred by the taxpayer in respect

of the property. Such allowance shall not exceed 50

percent of the taxpayer’s taxable income from the

property (computed without allowance for depletion).

For purposes of the preceding sentence, the allowable

deductions taken into account with respect to ex-

penses of mining in computing the taxable income

from the property shall be decreased by an amount

equal to so much of any gain which (1) is treated

under section 1245 (relating to gain from disposition

of certain depreciable property) as gain from the sale

or exchange of property which is neither a capital

asset nor property described in section 1231, and (2)

is properly allocable to the property. In no case shall

the allowance for depletion under section 611 be less

than it would be if computed without reference to

this section.

(b) Percentage depletion rates—The mines, wells,

and other natural deposits, and the percentages, re-

ferred to in subsection (a) are as follows:

Lee NR

SSVI PE ESOS IP NT RE MR

(1) 27% percent—oil and gas wells.

(2) 23 percent—

(A) sulfur and uranium; and

(B) if from deposits in the United Stat,

—anorthosite clay, laterite, and

syenite (to the extent that alumina and ap.

minum compounds are extracted therefrom),

asbestos, bauxite, celestite, chromite, coryp.

dum, fluorspar, graphite, ilmenite, kyanit,

mica, olivine, quartz chystals (radio grade),

rutile, block steatite tale, and zircon, and ons

of the following metals: antimony, beryllium,

bismuth, cadmium, cobalt, columbium, lead,

lithium, manganese, mercury, nickel, plati-

num and platinum group metals, tantalum,

thorium, tin, titanium, tungsten, vanadium

and zinc.

(3) 15 percent—

(A) metal mines (if paragraph (2) (B)

does not apply), rock asphalt, and vermie-

lite; and

(B) if neither paragraph (2) (B), (5) o

(6) (B) applies, ball clay, bentonite, chin

clay, sagger clay, and clay used or sold for use

for purposes dependent on its refractory prop-

erties,

(4) 10 percent—asbestos (if paragraph (2)

(B) does not apply), brucite, coal, lignite, per-

lite, sodium chloride, and wollastonite.

vii

(5) 7% pereent—clay and shale used or sold

for use in the manufacture of sewer pipe or

prick, and clay, shale, and slate used or sold for

use as sintered or burned lightweight aggregetes.

(6) 5 pereent—

(A) gravel, peat, pumice, sand, scoria,

shale (except shale described in paragraph

(5)), and stone, (except stone described in

paragraph (7));

(B) clay used, or sold for use, in the man-

ufacture of drainage and roofing tile, flower

pots, and kindred products; and

(C) if from brine wells—bromine, calcium

chloride, and magnesium chloride.

(7) 15 pereent—all other minerals (including,

but not limited to, aplite, barite, borax, calcium

carbonates, diatomaceous earth, dolomite, felds-

par, fullers earth, garnet, gilsonite, granite, lime-

stone, magnesite, magnesium carbonates, marble,

mollusk shells (including clam shells and oyster

shells), phosphate rock, potash, quartzite, slate,

soapstone, stone (used or sold for use by the mine

owner or operator as dimension stone or orna-

mental stone), thenardite, tripoli, trona, and (if

paragraph (2)(B) does not apply) bauxite, flake

graphite, fluorspar, lepidolite, mica, spodumene,

and tale, including pyrophyllite), except that,

unless sold on bid in direct competition with a

bona fide bid to sell a mineral listed in paragraph

(3), the percentage shall be 5 percent for any

such other mineral (other than slate to whia

paragraph (5) applies) when used, or sold fy

use, by the mine owner or operator as rip mp

ballast, road material, rubble, concrete

or for similar purposes. For purposes of thi,

paragraph, the term ‘‘all other minerals” does ng

include—

(A) soil, sod, dirt, turf, water, or moses.

or

(B) minerals from sea water, the air, ¢

inilar inexhaustibl

(ce) Definition of gross income from property—

For purposes of this secticn—

(1) Gross income from the property —The

term “‘gross income from the property” mean.

in the case of a property other than an oil or gas

well, the gross income from mining.

(2) Mining.—The term “‘mining” includes no

merely the extraction of the ores or minerak

from the ground but also the treatment processes

considered as mining described in paragraph (4)

(and the treatment processes necessary or ine-

dental thereto), and so much of the transport of

ores or minerals (whether or not by comma

carrier) from the point of extraction from th

ground to the plants or mills in which such treat-

ment processes are applied thereto as is not in ex-

cess of 50 miles unles the Secretary or his delegate

finds that the physical and other requirements

—

wreFenTwrTsset»

are such that the ore or mineral must be trans-

ported a greater distance to such plants or mills.

(3) Extraction of the ores or minerals from

the ground.—The term “extraction of the ores

or minerals from the ground” includes the ex-

traction by mine owners or operators of ores

or minerals from the waste or residue of prior

mining. The preceding sentence shall not apply

to any such extraction of the mineral or ore by

a purchaser of such waste or residue or of the

rights to extract ores or minerals therefrom.

(4) Treatment processes considered as mining.

—The following treatment processes where ap-

plied by the mine owner or operator shall be

considered as mining to the extent they are ap-

plied to the ore or mineral in respect of which

he is entitled to a deduction for depletion under

section 611:

(A) in the ease of coal—cleaning, break-

ing, sizing, dust allaying, treating to prevent

freezing, and loading for shipment:

(B) in the case of sulfur reeovered hy the

Frasch process—cleaning, pumping to vats,

cooling, breaking, and loading for shipment;

(C) in the ease of iron ore, bauxite, ball

and sagger clay, rock asphalt, and ores or

minerals which are eustomarily sold in the

form of a ernde mineral product—sorting,

coneentrating, sintering, and substantially

equivalent processes to bring to shipping

grade and form, and loading for shipment,

(D) in the case of lead, zine, copper, gold,

silver, uranium, or fluorspar ores, potash, anj

ores or minerals which are not

sold in the form of the crude mineral prj.

uct—crushing, grinding, and beneficiation by

concentration (gravity, flotation, amalgams.

tion, electrostatic, or magnetic), cyanidation,

leaching, crystallization, precipitation (byt

not including electrolytic deposition, roast.

ing, thermal or electric smelting, or refining),

or by substantially equivalent processes or

combination of processes used in the separa-

tion or extraction of the product or produets

from the ore or the mineral or minerals from

other material from the mine or other natural

deposit ;

(E) the pulverization of tale, the burning

of magnesite, the sintering and nodulizing of

phosphate rock, and the furnacing of quick-

silver ores;

(F) in the case of calcium carbonates and

other minerals when used in making cement

—all processes (other than pre-heating of the

kiln feed) applied prior to the introduction

of the kiln feed into the kiln, but not inelud-

ing any subsequent process;

(G) in the case of clay to which paragraph

(5) or (6)(B) of subsection (b) applies—

xi

crushing, grinding, and separating the min-

eral from waste, but not including any sub-

sequent process; and

(H) any other treatment process provided

for by regulations prescribed by the Secre-

tary or his delegate which, with respect to

the particular ore or mineral, is not incon-

sistent with the preceding provisions of this

paragraph.

(5) Treatment processes not considered as

mining—Unless such processes are otherwise

provided for in paragraph (4) (or are necessary

or incidental to processes so provided for), the

following treatment processes shall not be con-

sidered as “mining”: electrolytic deposition,

roasting, calcining, thermal or electric smelting,

refining, polishing, fine pulverization, blending

with other materials, treatment effecting a chem-

ieal change, thermal action, and molding or

shaping.

(d) Application of percentage depletion rates to

certain tarable years ending tn 1954.—

(1) General rule—At the election of the tax-

payer of any property (within the meaning of

the Internal Revenue Code of 1939), the percent-

age specified in subsection (b) in the case of any

mine, well, or other natural deposit listed in such

subsection shall apply to a taxable year ending

h after December 31, 1953, to which the Internal

Revenue Code of 1939 applies.

~~ oe FQ Se onrTrewaa TA Pr Tse Tse er CUR

, 38o& f= &

(2) Method of computation—The allowang

for depletion, in respect of any property fo

which an election is made under paragraph (1)

for any taxable year, shall be an amount equl

to the sum of—

(A) that portion of a tentative allowance,

computed under the Internal Revenue Code

of 1939 without regard to paragraph (1) of

this subsection, which the number of days

in such taxable year before January 1, 1954,

bears to the total number of days in such

taxable year; plus

(B) that portion of a tentative allowance,

computed under the Internal Revenue Code

of 1939 (as modified solely by the applica.

tion of paragraph (1) of this subsection),

which the number of days in such taxable

year after December 31, 1953, bears to the

total number of days in such taxable year.

Aug. 16, 1954, e. 736, 68A Stat. 208; Sept. 2, 1958, Pub.

L, 85-866, Title I, § 36(a), 72 Stat. 1633; Tune 30, 1960,

Pub.L. 86-564, Title III, § 302(a), (b), 74 Stat, 291.

Oct. 16, 1962, Pub.L. 87-834, §13(e), 76 Stat. 1034.

Sept. 2, 1964, Pub.L. 88-571; §6(a), 78 Stat. 96:

Nov. 13, 1966, Pub.L.. 89-809, Title IT, §§ 207(a),

208(a), 209(a), (b), 0 Stat. 1579, 1580.

208(a), 209(a), (b), 80 Stat. 1579, 1580.