# Petition for Writ of Certiorari — Brush v. Commissioner > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0145%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1937 - **Citation:** 300 U.S. 352 ## Text yy 4 ~ we - hy 7 . * a Tare y Ee ee eS a : a eal i4 ~ ‘ Te . “4 2 : : 4 3 2 ; a i. : ) Y + ; a < . eet 4 | x . « y | : sg * pe : - . | | . : ‘ : : : \ z p : < , : 4 a - ee PI > » BS EC EIRRESMSTS- 7 ‘INDEX PAGE Petition . Brief in support of petition bd uo Preliminary statement . ur Opinion ~ Questions presented DP Argument oceania 9 1. The proper protection of municipalities from federal interference requires that ‘usual ‘governmental function” be defined prag- ‘matically. Excessive strictness of definition, should be avoided. The supply of pure water to a’metropolis is a ‘‘usual governmental function”? heal pices © 2. A conflict among the circuits is plainly dis- COUMAIIG aan a laeehatiasiiiasaiemtiesn ae 3. The rule of decision adopted by the Court below will create confusion as to the legal ” limits of the taxing power of the Federal Gov- N ernment and of the States Conclusion li Table of Cases Cited. PAG Block v. Hirsh, 256 U. S. 135. cael inasoion ienie . 13 Columbus v. Mercantile Trust Co., 218 U. S. 645. 11 Flint v. Stone Tracy Co., 220 U. 8. 107_ ae » Fe Halsey v. Helvering, 75 F. (2d) 234 Te Kee Helvering v. Powers, 293 U.S. 214... 2,9, 14 Hoskins v. Commissioner of Internal Revenue, 84 F. I IIIT ceabiseisachubtneecicdsctopshceaomerbalandalasiepiidddeplatocnanetbiatictananaii 2, 10, 14 Jamestown & Newport Ferry Co. v. Commissioner of Internal Revenue, 41 F. (2d) 920 _-__. 8, 14 Matter of Board of Water Supply, 211 N. Y.174......._ 12 Matter of City of New York, 234 N. Y. App. Div. 890... 13 Matter of Gillespie, 272 N. Y. 18...._+: EEE 13 Matter of Van Etten v. City of New York, 296 N . ¥.483 12 McGovern v. City of New York, 229 U.S. 363. 12 New Jersey v..New York, 283 U.S. 336__..____.6, 12 New York City v. Pine, 185 U. S. 93.2. 6, 12 People ex rel. Burhans v. City of New York, 198 N. Y. IEE? - seabhidaasodahanenhinetnndndauhtaahinnbaeesaihdiniiamessasialabanhisigsadabsubethl 12 South Carolina v. United States, 199 U.S. 437__-___ 10 - oe Supreme Court of the United States No. - October Term, 1936. WituiuM Waittock Brusa, Petitioner, against CoMMISSIONER OF INTERNAL REVENUE, PETITION FOR WRIT OF CERTIORARI TO CIRCUIT COURT OF APPEALS, SECOND CIRCUIT. To the Honorable the Supreme Court of the United States: The petition of William Whitlock Brush, petitioner-ap- pellant below, respectfully shows: I. Your petitioner, until lately the Chief Engineer of the Bureau of Water Supply of the City of New York, applied to-the Court below for the review of the determina- tion of the United States Board of Tax Appeals to the effect that his salary, paid for services rendered in that capacity in 1931, was subject to a federal income tax. . Il. The petition to review the determination of the Beard of Tax Appeals came on for hearing before the Cir- cuit Court of Appeals for the Second Circuit on April 8, 1936, before Manton, L. Hann and Cuasz, Cir. JJ., and was argued by counsel; and on July 13, 1936, an opinion was handed down, per Cuasz, Cir. J., sustaining the. determina- tion of the Board of Tax Appeals and declaring your peti- TR ER REST OE ee ae er Te OF ae a TEs eT Bin ene GAA Naina AES A BOL te 2 i ' 2 tioner’s salary as Chief Engineer to the Bureau of Water, Supply of the City of New York subject to federal income . taxes. The opinion is reported in 85 F. (2d) 32. III. Your petitioner submits that the decision below is in conflict with the decision of the United States Circuit Court of Appeals for the Fifth Circuit in Hoskins v. Com- . missioner of Internal Revenue, 84 F. (2d) 627 (1936), and with the decision of the United States Court of Appeals for _ the District of Columbia in Halsey v. Helvering, 75 F. (2d) 234 (1934), and that the conflict. should be resolved by this Court at this time. & IV. Your petitioner avers that the Second Circuit’s de- cision in the instant case -will result in confusion and uncertainty as to the municipal and State agencies which may be taxed by the federal government and, correspond- ingly, which federal agencies may, likewise, be taxed by the several States. V. Your petitioner avers that the supply of pure water to the City of New York, in adequate amounts, is a ‘‘usual : governmental function’’, and that the claim of the federal government, upheld by the Court below, that.it may swbject your petitioner’s salary to federal income taxes, amounts to an unwarranted and dangerous extension of the doctrine of Hélvering v. Powers, 293 U. S. 214 (1934), and is other- wise contrary to law.. Wugrerore, for reasons stated more fully in the an- & ° wae P ° cote nexed brief, your petitioner prays that a writ of certiorari - may be issued out of and under the seal of this Court, directed to the United States Circuit Court of Appeals for the Second Circuit, commanding the said. Court to certify and send to this Court; on a day certain to be therein designated, a full and complete transcript of. the F) I . . . . — —— Uae ——_—-- + eee record and all proceedings of the said Circuit Court of Appeals for the Second Circuit in this cause, being No. 246 on its calendar for the October Term, 1935, to the end that the case may be reviewed and determined in this Court, as’ provided in Title 28, § 347 of the Code of Laws of the United States, and that the said final. decree. of the said Circuit Court of Appeals for the Second Circuit in this cause, and every part thereof, may be reviewed by this Court, and the | determination of the said Circuit Court of Appeals for the Second Circuit, as well as the determination of the United. States Board of Tax Appeals, which was affirmed by the said Circuit Court of Appeals for the Second Circuit, may be reversed and a mandate issued directing the redetermina- tion of the amount of your petitioner’s income taxes for the year 1931, as prayed for in your petittoner’s petition to the said Board of Tax Appeals; and your petitioner prays for such other and further relief as to this Court shall seem Just and proper; and your petitioner will ever pray. Dated: New York, N. Y., October 8, 1936. Wituiam Wuittock Brusa, Petitioner. Boykin C. Wricut, Cares ©, Par.in, ~ Counsel for Petitioner, 63 Wall Street, New York, N. Y. ae ee ae —s wore etre hee oe perenne ASS SS eR ESRD TIS SE FEO EE SET PELL ee ee ee eet ee ee Sues s : a os BB rnin saan aire itn sae Paw = Supreme Court of the United States No. - October Term, 1936. Wituium Wurritocx Brusx b J Petitioner, agaist CoMMISSIONER OF INTERNAL REVENUE, BRIEF IN SUPPORT OF PETITION FOR CERTIORARI. The City of New York is, with the exception of a negli- gible area, supplied with water from a system owned and — operated by the Bureau of Water Supply. Private enter- prise demonstrated -its inadequacy to the task as far back as the year 1833. See N. Y. Laws 1833, ch. 36; N. Y. Laws 1834, ch. 256. Steadily developing over a period of 100 years, the municipal water supply‘system now represents an outlay of $480,000,000 (R. 23), and is the result of special statu- tory powers of eminent domain exercised in counties far beyond the city limits.t No profit flows from the system’s operations, the loss fur- the year 1933 being $7,000,000 (R. 33). - Water is, of.course, supplied to the City itself (e. g., for fire hydrants, sewage disposal, street cleaning purposes and public buildings) as well as to private consumers, and the Bureau’s expenses are apportioned between public service and private service in the ratio of 25.2% and 74.8% (R. 21). But petitioner’s entire salary was adjudged taxable.* *We may suggest to the Court that there are many employees of the Bureau who give their entire time to the public service functions of the Bureau, 3 g., those who operate the high pressure water system used only to extinguish res. ¥ ae aia e8? TEER. SM ITT Sete wd Boe RE AE LEAL BSE ERT LE A a he In asserting that the petitioner had no right to exclude his salary as such engineer from his taxable income for the year 1931, the Government wrote him as follows (R. 9): “Tt is held that the supplying of water by water plants to the residents of a community constitutes the discharge of a proprietary function as distinguished from an essential governmental function, conse- As quently the compensation of the officers and em- ployees of such plants is subject to Federal Income Tax:.’’ -(Italies ours.) an ethployee (chief engineer) of the Bureau of Water Supply, the body charged with the operation of the system, the petitioner has duties which the Court below described _as follows (R. 44-45) : ‘During 1931, the petitioner was regularly em- ployed, as he had been previously for many years, by the city of New York as the engineer in charge of its Bureau of Water Supply. This was a statutory of- fice for which he had duly qualified. He was paid a fixed salary and was charged in general with the re- sponsibility for supervising the maintenance of an adequate supply of pure and wholesome water for the city of New York and its inhabitants. The water for public and private use in that city for the most part, though not wholly, comes from an enormous system owned by the city which has cost about half a billion dollars and which must be still further en- larged to meet the ever growing demands upon it. Petitioner’ s duties require him to make surveys, plans _and reports relative to improvements and enlarge- ments of the system as well as to maintain,in good condition the reservoirs, mains and equipment al- ready possessed.”’ — This Court need not go beyond its own records for proof of this. See New York City v. Pine, 185 U. S. 93 (1902) ; McGovern v. City of New York, 229 U. S. 363 (1913) ; New Jersey v. New York, 283 U. S. 336 (1931). TORR So PapRENpR Shey ROBB one. Md eee = 7 ————————— ig in at A ikl RS RR La RR a NAB OES ig oll - We digress for a moment to point out that the salary of a taxpayer with practically identical duties was held exempt in Halsey v. Helvering, 75 F. (2d) 234 (U.S. Ct. of Appeals for the Dist. of Columbia, 1934). The Court’s statement of the duties of the taxpayer (an engineer em- ployed by two New Jersey towns) in the latter case illus- trates the conflict between the two appellate. Courts. They | said (p. 235): A “* * * the official duty of the taxpayer as township -engineer was to advise the town government in all engineering matters, specifically including the con- struction, maintenance, and alteration of streets and ways, sewers, waterworks, and lighting systems; to prepare plans and specifications for such works; to advertise for bids; and to maintain custody of the plans, maps, and documents thereof, keeping them up to date by appropriate entries or new papers - Showing changes and alterations.” (Italics ours.) Opinion Below. In delivering the opinion of the Cireuit Court of Ap- peals, Judge Cuasr, after summarizing the facts, and the argumeiits put forward by petitioner, and after acknowl- edging the magnitude of the undertaking, said (R. 46): ““* * * but it is not equally clear that private enter- prise adequately encouraged could not do it as well. To say that it could not-in the light of common know!l- edge as to modern private achievement in business on a vast scale would seem to deny probability. In any event such an assertion is not adequately sup- ported by evidence in this record.”’ z Y 5 Ki 2 & “ ’ J i ‘ 4 ¢ 2 a i ; } 4 a { ® ie Mae TN ay lat ie De cari He then went on to state that while water was indispensible to the inhabitants, the conduct of a municipal water supply A napa at ae tes a ay 8 > t ‘ 3 os ' : J system is not ‘‘an activity necessary to its [the City’s] existence as a government.’’ He added (R. 47-48) : ‘On the contrary, due regard mmust be had to dis- tinguish between those activities which, though impressed with a public interest and sometimes, even often, performed by government are nevertheless .done in a proprietary capacity in supplying to the public for a direct charge what it could, and otherwise would, procure ‘from private sources and those services which have become the usual activities of government because purely governmental power is in some degree essential to their performance.’’ Questions Presented. © Upon the record as outlined above, the petitioner main- tains that the following questions of law arise for the determination of this Court: 1. The supplying of water to Greater New York for use by the City itself and its inhabitants being an under- taking which cannot be either competently or safely left to private enterprise and having been conducted by the Government for over a century, should not the salary of a municipal employee serving as engineer to the Bureau of Water Supply be exempt from federal income taxes? 2. In order to receive immunity, must the activity of the municipality be ‘‘necessary to its existence as a government’’ (R. 47), or is it sufficient that the activ- ity is ‘‘essential to the normal life of the commun- ity’’? Jamestown etc. Co. v. Commissioner, 41 F. (2d) 920 (1st Cire., 1930), and other cases post, p. 15. ‘ ] Pe ae SE ie ae i ee te ede ARGUMENT. 1. The proper protection of municipalities from fed- eral interference requires that “usual govern- mental function” be defined pragmatically. Ex- cessive strictness of definition should be avoided. The supply of pure water to a metropolis is a “usual governmental function’. ; It will be recalled that in Helvering v. Powers, 293 U.S. 214, 225 (1934), the States(were admonished that they could not ‘‘withdraw sources of revenue from the federal tax- ing power by engaging in businésses which consti- tute a departure from usual governmental functions and to which, by reason of their nature, the federal taxing power would normally extend.’’ (Italics ours.) The substitution of ‘‘usual governmental functions’’ for the formerly prevalent phrase ‘essential governmental functions’’ is one of the most noteworthy features of the Powers case.* Yet the Court below seems to have over- looked the change, and to have confined the privilege of city employees against the federal taxation of their salaries to employees engaged in functions the suspension of which would suspend government itself. Governments in the world today must carry on activities which are outside of the meaning of the verb ‘‘to govern”. Governments cannot rest content with the issuance of commands and prohibi- tions. They must in modern societies purvey services. Of * The origin of the earlier phrase is traceable to Flint v. Stone Tracy Co., 220 U. S. 107, 172 (1911). It was devised to accentuate a distinction between “those operations of the States essential to the execution of its governmental functions, and which the State can only do itself, and those activities which are of a private character”. Oe ee See. Se 10 course we appreciate the wisdom of, the rule in South Caro- lina v. United States, 199 U.S. 487 (1905), that States can- not withdraw unlimited areas from the field of federal ' taxation. _ ng ? Now it is clear that it is ‘‘usual’’ for municipalities to operate their own waterworks. In the Municipal Index and Atlas, 1934-35 Edition, a list is given on pages 120- 132 of political units (of 10,000 population) which are served by waterworks. Out of 969 separate waterworks 779 or 80.39% are municipally owned and operated, and only 190 or 19.61% are privately owned and operated. An exam- ination of earlier editions of this reference work shows a steady rise in the percentage of municipally owned and operated waterworks. Unless we are. to reject facts and wander along the by-paths of metaphysics and sophistry, the syllogism would seem complete, and the petitioner’s - right to tax exemption established. To sanctify the dictum (for dictum it certainly was) in Flint v. Stone Tracy Co., 220 U. S. 107, 172 (1911), that it ‘is no part of the essential governmental functions of a State to providé means of transportation, supply artificial light, water and the like’’, and to regard the utterance as an immutable edict comparable to the laws of the Medes and the Persians, is to close one’s eyes to the eternal processes of change and development that go on unceasingly in our political affairs. We know of no principle compelling a federal court to hold that, even if it be assumed that water -supply was not generally regarded as a usual governmental function in 1911, that activity cannot become one by the gradual unfolding of civic history... On the contrary, in Hoskins v. Commisstoner of Internal Revenue, 84 F. (2d) 627 (Sth Cire., 1936), the Court took pains to point out that - in considering whether a given activity (%. e., running a FR BRI RELL PR AE aa A on af LP eee Fe Fe Le AP et ee Me la a eh OS a a i AOA eS oF . - elle ee eee . = Sia ntbes sat Retentianey eaedinls “3 ee NES AB ap ne oa eS egal te Se ne EES bial Sie tte 11 : . . ° _ cafeteria in connection with a public school) was properly a governmental function and those engaged in it properly exempt from federal taxation, it should consider actualities and not be bound by views prevailing in times past. Even before Flint v. Stone Tracy Co., supra, this Court had made pronouncement upon the subject of the duty of municipalities in reference to waterworks in Columbus v. Mercantile Trust Co., 218 U. 8. 645 (1910), saying (p. 658) : ‘No higher police duty rests upon municipal authority than that of furnishing an ample supply of _ pure and wholesome water for public and domestic uses. The preservation of the health of the com- munity is best obtained by the discharge of this duty, to say nothing of the preservation of property from fire, so constant an attendant upon crowded condi- tions of municipal life.’’ , We submit that the legislature was both right and rea- sonable, in concluding in 1833 and in adhering to that view ever since, that supplying water to New York City was an act ‘‘which the State [or its political subdivisions] can only do for itself,’’—the phrase used in Flint v. Stone Tracy Co., 220 U.S. 107, 172 (1911). While the Court probably intended us to apply a priori tests to determine whether an activity might be so charac- terized, nevertheless we submit that the more obvious illus- trations, which we cite in the margin,* may be supple- mented by illustrations evolved from a posteriori or experi- ential tests as well. And we maintain that the case at bar presents a perfect practical instance of an activity ‘which the State can only do itself’’: ba The Governor of a State (or the Mayor of a City), the members of the legislature, the judiciary and the law-enforcing agencies, are by virtue of their functions clearly within the group envisaged in the quoted phrases. ee a ee 12 ‘The population of Greater New York, as shown by the 1930 census, was 6,930,446. In developing its water sup- ply system, the City has already spent $480,000,000 (R. 23). This, as the Court well knows, has involved condemning for reservoirs and other instrumentalities related to water supply purposes areas of ground many square miles in extent, and situated far beyond the city limits: It is more than questionable whether private capital could have been assembled in sufficient quantities to carry. on the needed construction operations. And since, as an incident to these operations, it has been made the City’s express duty (L. 1905, ch. 724, § 35, as amended by L. 1928, ch. 525, 45) to build and maintain highways and bridges in the vicinity of the reservoirs, and to give police protection to neighboring localities during the period of construction (7bid.), addi- tional reasons are revealed for not trusting to private capital to carry out the enterprise. The wide geographical areas exploited in connection with the maintenance of a supply adequate to the City’s expanding needs may be discerned by reference to the fol- lowing cases: New York City v. Pine, 185 U. S. 93 (1902), Byram River, Westchester County; McGovern v. City of New York, 229 U. 8. 363 (1913), lands in Ulster County; New Jersey v. New York, 283 U.S. 336 (1931), headwaters of Delaware River, Delaware, Sul- livan, Orange and Rockland Counties; People ex rel. Burhans v. City of New York, 198 N. Y. 439 (1910), lands in Ulster County; Matter of Board of Water Supply, 211 N. Y. 174 (1914), lands in Ulster County; Matter of Van Etten v. City of New York, 226 N. Y. 483 (1919), Esopus Creek, Ulster County ; * 6 it Ae one — é be ey << ez bs] @ 13 Matter of Gitlespie, 272 N. Y. 18. (1936), Esopus Creek, Ulster County; Matter of City of New York (Mohansic Lake), 234 App. Div. 890 (2nd Dept., 1931), lands in Yorktown, Westchester County. It was, therefore, quite reasonable for the legislature to - determine, in its wisdom, that the City should not have to trust to the dubious efficacy of private capital but should be empowered to do the acts and complete the enterprise itself. While the quoted phrase, ‘‘which the State can only do itself’’, presupposes a fairly absolute standard of possibil- ity or impossibility, yet a legislative determination that an . act can only be done by the State should, like any other “‘declaration by a legislature concerning public conditions that by necessity and duty it must know,”’ Block v. Hirsh, 256 U. S. 135, 154 (1921), be respected by the Courts, until shown to be mistaken by a more impressive array of evi- dence than can be found in the record in the instant case. We therefore submit that the Court below erred in cavalierly disregarding the findings of the State legislature and in concluding—recklessly concluding, we are tempted to say—that to deny the adequacy of private enterprise to this stupendous task is “‘to deny probability’? (R. 46). On the contrary, the Court’s conclusion itself is in utter disre- gard not only of probability but of actuality, and of a cen- tury of civic history. 2. A conflict among the circuits is plainly discernible. The Court below stated in its opinion (R. 49): ‘“‘The petitioner’s work in furtherance of the supply. of water by the city of New York as above outlined and for which he has been paid thé salary taxed is not, in the light of the foregoing considerations, part Horie Se Se Rn a rs es Oe ers fe : R RN be oer BN. A ies Frans SEAR aI OO Oo ing See GT PAE Se ‘ * " ‘ * evade Mr hae ’ 2 roo re Sissel eee 14 of what his employer has to do to perform its neces- — sary functions as a political subdivision of the state of New York. So the salary of the petitioner was not part of the expense attendant upon the exercise of what may be said to be usual governmental powers, Helvering v. Powers supra, or in the doing of what the states have traditionally engaged.”’ The Second Circuit’s holding in the instant case lim- iting immunity to what is ‘‘necessary’’ for the City to.do to maintain its existence as a political subdivision of the State, and the further emphasis upon tradition, are in sharp con- . flict with Hoskins v. Commissioner of Internal Revenue, ante, p. 10, where the Fifth Circuit took’ pains to point out that in the light of present day conditions, the running of a cafeteria in connection with a public school was ‘‘now’’ a proper. governmental activity, entailing as a result the exemption from federal taxation of the salary of the super- intendent of the cafeteria. There is also manifest a sharp contrast with Jamestown & Newport Ferry Co. v. Commis- sioner of Internal Revenue, 41 F. (2d) 920 (1st Cire., 1930), holding that the income of a ferry company, of which the town of Jamestown, R. I., held a majority of the stock, was ' exempt from federal income taxes on the ground, among others, that the ferry was ‘‘essential to the normal life of this community’’ (p. 923), a markedly broader and more liberal test than that of necessity to existence as a political subdivision, adopted by the Court below. ‘Fhe decision is also ‘in conflict-with Halsey v. Helvering, ante p. 7, a case where the salary of a township engineer with duties practically identical with those of the petitioner was held exempt by the United States Court of Appeals for the District of Columbia. 2 err Sith? Ale i esr Ay ess 3. The rule of decision adopted by the Court below will create confusion as to the legal limits of the taxing power of the Federal Government and of the States. The logic of the Second Cireuit’s decision limiting, as it does, immunity from taxation to functions ‘‘necessary’’ to existence as a governmental body must inevitably lead to the conclusion that the Federal Government can tax the total income received by a municipality from its supply of water, and income derived by the State or its subdivisions from canals, waterways, parks, ete. The decision would seem to lead, correlatively, to a wide extension of the powers of the State to tax federal agencies, including among others, the Tennessee Valley Authority. Conclusion. We submit that the case merits.the attention of this Court because the status for federal tax purposes of mu- nicipal water supply employees has not yet been passéd upon by this Court; because the problem, raised by one type or another of subdie. servant, has given rise to sharp conflicts among the Circuit Courts of Appeals; because it is but a short step from taxing this petitioner to taxinig the municipal enterprise itself; because (in cities of over 10 000 population) there are 779 municipally owned waterworks in the country whose employees, numbered by the thou- sands, are affected by the decision below; and because fed- eral interference with their relations impinges upon vital points in city government, , the provision of adequate protection against fire os ‘an of adequate means for sewage disposal and the cleaning of the streets. Set 2 . — a al 16 The Petition ter Certiorari Should be Granted. October 8, 1936. - Respectfully submitted, ; . Boykin C. Wricut, Cuares C. Partin, 4 | Counsel for Petitioner, F . 63 Wall Street, - : New York, N. Y. sk ee eee en eee ee --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0145%3A02. Public record. Not legal advice.