Petition for Writ of Certiorari — Milwaukee & Suburban Transport Corp. v. Commissioner (No. 928)

Supreme Court of the United States

eee Te ‘| ae

a

«

No.

ee

WV AEE &@ SET HRAN TRANSPO

ele Mee

° ° /

‘

‘ww ©

ISSTONEDR ol INTHE Ts BEN!

s

4

CROSS PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

- THE SEVENTH CIRCUIT ,

It 4

bee |

“Se

Titik oe 7

HI feast Mareen >

\{ if AS |,

I re

A f

\\

|

lili

ie

Titi sien

by

| INDEX.-

PAGE

PN oe ees ene chiteesoceshr cek 2

Jurisdiétion ......... Bhyeanascaweviaiwaraneaces 2

Questions presented ........... sehewanns PRO ee 2

Statutes and Regulations involved .......... baa i

py CI eons vneiunins (Maupiek i eawedeatenuniandas 3

Reasons for granting the writ ...... suis volicoebinsids i)

Nas wa Sea neacxedn éhadndvdacanendcncdinck. 9

WIE Se hug Siwscus cca wabiunsaececcdtbeucts 11

CITATIONS.

Cases.

* Burk-Waggoner Oil Assn. v. Hopkins, 269U.S.110.. 7.

_ Burnet v. Harmel (1932), 287 U.S.193 .......2.0.... 7

Commissioner y. H. P. Hood and Sons, Ine. (C. nities

_ RR cave seirnnshadeienchvicmategth 8

Commissioner 7. GD PP. P. sens? ae “(C. A. 2),

PETE bows ss nasnchnwheetes ck ccxchaeveens 6, 8

Commissioner v. Page Oil Co., 129 Fed. Ae wos... 8

Commissioner v. Palmer, Stacy- Merrill (C. A. 9),

BES Wed, 98 GOD oo ccc cccc ccc cececcccnceeeces 6, 8

Commissioner v. Proctor Shop, Ine. (C. A. 9), 82 Fed.

EM ceili occ ge ce ee ace.

Commissioner v. Tower, 327 U. S. 280 .............. 7

Gilbert ‘ Commissioner ((. A. 2, 1957), 248 Fed. 2d

We trent vasd ved cuit ioe. 6

|

ii

Helvering v. Lazarus Company, 308 U.S. 252 ........

Arthur R. Jones Syndicat v. Commissioner (C. A.7),

23, Fed. DED Hon eee a sav sereeescanacascgessees

113° Keiedsem-oeehes hha deaevah te ngn seen tin <neus

Law Ed. 78 ....... eeween's (iekeee end epeecks

rs SI OD as OD en sis naan dete nance

McComb v. Farmers Reservoir and Irrigation Com.

pany, 335 U.S. 809.2222... ‘iepehs Uhasbnawes _

Moore y¥. Commissivuer (CLA, 7), 124 Fed. 2d 991

Oesterreich v. Commissioner ((. A. 9), 226 Fed. 2d

ea ec Varah e ebb OR eH RA ido wae Cane ari

Putnam Est. v. Commissioner, 324 U: S. 393 ..........

Strait v. Northwestern Steel and Iron Works (1912),

MS abc Wt hsa hia se vemendanchs osdunss

418 iden hae kad CaS week ws siwask i By A need

United States v. South Georgia Railroad Company |

(C. A. &, 19GB), 107 Fred. 28 8... cies

United States v. Title Guarantee & Trust Co. ( C.

er te

Washmont Corporation v. Hendricksen ((. A. 9), 137

WM ace rie Pash dnueesns ohscp bean eesuscsse

- Watson v. Commissioner ((. A. 9), 62 Fed. 2d 35....

Statutes.

Internal Revenue Code of 1939:

See. 23 (26 U. S. C. 1952 ed., Sec. | | ereree 5

Sec. 1141(a) (26 U.S. C. 1952 ed., Ses. 1141(a)) ..

: : iti

Internal Revenue Code of 1934:

See. 162 (26 U. 8. C. A., See, 162) . 20.0.2 ll

Sec. 163(a) (26 U.S. C. A., Sec. 163(a)) seececee HM

Sec. 7482 (26 U.S. C: A., See. 7482) ...00.0.000... 6

Miscellaneous. |

Treasury Regulations 111. (1939 Code) : |

Section 29.23 (b)-1 .......23..2....: ap oe OC 11

Treasury Regulations (1954 al | |

pg | eer rere een 11

Wissinstas Statutes, Section 184.6 ( 1) Ue iviiaesen co 3

_ Supreme Court of the United States

_ Octoser Term, 1960.

MILWAUKEE & SUBURBAN TRANSPORT

o* CORPORATION, |

er. Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE.

OROSS-PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT. |

This cross-petition for a writ of certiorari to review

all of the judgment of the Court of Appeals for the Seventh

Cireuit is filed by the Milwaukee and Suburban Trans-

port Corporation on condition that ‘if the court grants

the petition of the Commissioner of Internal Revenue in

cause No. 843 for a writ of certiorari: to review the ac-

counting method issue as determined by the Seventh Cir-

cuit Court of. Appeals, a writ, of certiorari should also

be granted to review the lower court’s decision on the

interest deduction issue. A conditional cross-petition for

a writ Of certiorari was recognized in McComb v. Farm-

ers Reservoir and Irrigation Company, 335 U. S. 809, in

which certiorari was granted. This petitioner has filed

herewith a-brief in opposition to the petition for a writ

of certiorari in cause No. 843. ,

OPINIONS BELOW.

The opinion. of the Tax Court is not reported. The

opinion of the Court of Appeals is reported in 283 Fai,

2d 279. The opinion of the Tax Court and the opinion

of the Court of Appeals are set forth in Appendix A to

the petition of the Commissioner of Internal Revenue. The

appendix used by the parties in the Seventh Circuit Court

of Appeals has been filed by petitioner as the etek in

cause No. 843.

JURISDICTION.

The judgment ‘of the Coust of Appeals was entered o

October 24, 1960 (Pet. App. A. pp. 60, 61). An extension

was granted to the Commissioner to March 24, 1961, to

file his petition for a writ of certiorari. The jurisdiction

of this court is invoked under 28 U. S. C.; Section 1254 (1).

QUESTIONS PRESENTED. |

1. Whether petitioner can deduct as interest payments

made on a preferred stock which has a fixed maturity

date, which imposed a fixed: obligation on petitioner to

pay out of capital, if necessary, and which represented

‘part of the unpaid balance of the price. on assets dag

chased?

2. . Whether the Federal ial Tax consequences of

a security designated preferred stock by a state statute.

’ but which is in fact debt is to be controlled by state lav

or Federal law? .

3. Whether a uniform standard in applying the Internal

Revenue Code is to be used by the Federal courts in de

termining whether a particular security is in fact debt 0

equity for Federal Income Tax purposes?

3.

. STATUTES AND REGULATIONS INVOLVED.

The pertinent provisions of Section 23 of the Internal

‘Revenue Code of 1939 and of Sections 162 and 163 of.

the Internal Revenue Code of 1954 and of Treasury Rég-

ulations 111-(1939 Code) and Regulations 1.163-1,.(1954

(Code) are reprinted in Appendix D, infra, pp. 11, 12.

STA’ 7 ° .

Petitioner, Milwaukee and Suburban Transport Corpo-

ration, a Wisconsin corporation, was formed to purchase

the assets of the Milwaukee mass transportation system

from the Milwaukee Electric Railway and Transport Com-

f pany (hereinafter called ‘‘seller’’), which was a wholly

| owned subsidiary of Wisconsin Electric Power. Compant

(hereinafter called ‘‘Electric Company’’). The Tax Court

found that the Electric Company was compelled to div est

itself of this mass tratisportation system under the Fed-

eral Public Utility Holding Company Act (Ree. 256). The

Electric Company had tried unsuccessfully for a num-_

ber of years to sell the transit system subsequently pur-

chased by petitioner at a price of $10,000,000. The sellers

wanted cash (Rec. 48) but the petitioners could only raise

$500,000. The seller was fearful that if all notes were

taken, the securities would not be proportionate under the

f Wisconsin Statute (Rec. 41). The ‘seller determined that °

- 44,000,000 in first mortgage bonds would be sold to the

public and the cash proceeds would be delivered to the

seller (Rec. 40). The seller took back $3,000,000 i in junior

secared notes and $3,000,000 in preferred stock.

Despite the use of the preferred stock, the Wisconsin

Commission found a disproportionate amount of securi-

ties senior: to the common stock (Rec. 162). The stat-

ute-is for the protection of. purchasers of securities (Sec.

“— (2) Wisconsin Statutes). To protect possible .

© ren

ee ad ee

4

purchasers of securities, the Wiseonsin Commissiori frow

both the junior notes and the preferred stock in the seller

(Ree. 163) and thereby avoided the — of propor.

tionate securities.

| While the Tax Court held (Pet. ‘ies A, page 27) (Ree:

271) that there was neither a fixed obligation to pay the

preferred stock nor a’ fixed and definite maturity date.

the Seventh Circuit Court of Appeals found (Pet. App.

A, page 48) the preferred stock had a definite maturity

date (March 1, 1972), that the redemption at maturity

could be paid out of capital and ,was not dependent

earnings. The only restriction is that the corporation i: -

not thereby rendered insolvent. The court further found

that while current dividends are restricted to earnings

(Pet. App. A, page 49), all deferred cumulative dividends

were found to be payable out of capital surplus at re-

demption time. (Such accumulated dividends were equally

payable out of capital regardless of surplus the same a:

the principal amount of the preferred stock.)

_ Seller’s own witness Seybold admitted that the seller

could not take ordinary preferred stock without this spe

-cial redemption provision because that would be owner:

ship (Rec. 44). He testified (Rec. 43) that seller believed’

it was getting preferred stock having ‘‘* * * the general

attributes of such a stock, together with a special redemp-

tion provision * * *.’’ Petitioner’s witness Coleman’s

uncontradicted testimony (Rec. 71) was that the pre:

ferred stock was ititended as debt for the unpaid pur:

chase price.

The government, in a collateral income tax proceedin:

involving this seller, admitted in a written report that

the preferred stock represented a definite and fixed ob-

ligatiori to pay the full face amount of this security a!

maturity (Rec. 238A). The Tax Court refused to receiv

5

this admission oa ‘the government into evidence (Ree.

255) on the grounds that this admission was a conclusion

of the party (Rec. 245, 246, 248 and 249).

The 8. E. C., specifically noting the fixed retirement pro-

visions (Rev. 142), approved the transaction as a. plan

of divestment of ownership by the seller. The Wiscon-

sin‘Commission, as appears from its Opinion (Rec, 156),

was fully apprised of the facts, including the tax benefit

to the seller of $4,500,000 (Rec. 158) and the preferred

_ stock redemption provisions (Rec. 161, 162): The Com-

_mission’s security expert, Mr. Colbert, was objecting

to the approval of the transaction in part because of the

contractual sinking funds on the préferred stock (Rec. 25).

Because of the large depreciation accrual for regula-

tory purposes (Rec. 181), by March of 1958, or slightly

more than five’ years after the purchase, $4, 826 334 of the

$10,000,000 twenty-year obligation was paid off.

Petitioner, on its tax returns. for’ the years 1953 and

1954, deducted as interest the amount of its _payments with

respect to the preferred stock, which payments were dis-

allowed as deductions hy the Commissioner. As _indi-

cated by the Tax Court (Rec. 269), the ultimate ques-

tion is whether petitioner will be allowed an interest de-

duction or whether the seller will receive an equivalent

dividend received credit. Seller’s returns are being held

. open. (Rec. 47),

REASONS FOR GRANTING THE WRIT.

A. Petitioner believes that the decision below is in con-

flict with other Circuit Courts of Appeal and is errone= —

ous. The court, after finding the so-called preferred stock

was a fixed obligation having a fixed maturity date, pay-

able out of eapital if necessary, and, representing the un--

paid balance of a purchase price in a bona fide arm’s

~

6

length transaction, then in effect held that it was not

an obligation but only an equity investment. (Under’ Wis.

consin law, such a contract to redeem is enforceable out of

capital by court action. Strait vy. Northwestern ‘Steel

and Iron Works (1912), 148 Wis. 254.) A true preferred

stockholder, like a common stockholder, has an investment

which is frozen as compared with the creditor who has

right at some time to demand pgymient of his debt. Re-

dempticns of true preferred stock’ are at the option of

the corporation and not the holder as is true in this Cuse.

The confusion in the law on this subject is demonstrated by

John Kelley Co. v. Commissioner, 326 U, S. 521, 90 Law

Ed. 278, where Justice Rutledge (page 531) in dissent-

ing, found that the two cases there considered involved

identical facts situations yet opposite results were reached.

The Kelley case is the only case-heard by this court on this

point. The case was decided by this court on the preposi-

tion that judicial review of the Tax Court was limited to

legal questions. (The scope of judicial review was subse-

quently enlarged by the second session of the 80th Congress

to include review of all questions to the same extent as

decisions of district courts in civil actions tried without

a jury. I. R. C. (1939), Section 1141 (a), re-enacted I. R.¢.

(1954) Section 7482.) The court, in holding that a fixed

obligation was nonetheless equity, is in conflict with other —

courts of appeal. Commissioner v. 0. P. P. Holding Cory.

(C. A. 2), 76 Fed. 2d 11, page 12; Commissioner v. Palmer.

Stacy-Merrill (C. A. 9), 111 Fed. 2d 809; Commissioner v.

Proctor Shop, Inc. (C. A. 9), 82 Fed. 2d 792; Gilhert v.

Commissioner (C. A. 2, 1957), 248 Fed. 2d 399, 402; 1. S.

v. South Georgia Railroad Company (C. A. 5, 1939), 107

Fed, 2d 3, at page 5; Washmont Corporation v. Hendrick:

‘sen (C. A. 9), 137 Fed. 2d 306, at page 308.

2. The decision below, in contending that the test is

whether the preferred stock was ‘‘subject to ‘the -risks of

7

the venture,’ ignores the fact that all debts are exposed

to the risks of the venture. If measured by the risk,

common stock in a strong corporation would have less risk.

than a first mortgage debt in a failing company. The other

reason advanced, viz., that: the security was called ‘pre-

ferred stock, seems to be the actual basis for the deci-

sion. The question then ix: Are these cases to be de-

cided by labels even though an obligation to, pay is pres-

_ ent? Using the label as a criterion for determination.

conflicts with the many cases holding that substance and

not labels contro]. Helvering v. Lazarus Company, 308

U. S. 252, page 255; Moore v. Commissioner (C. A. 7),

124 Fed. 2d 991, at page 993 ; Oesterreich v. Commissioner

(C. A. 9), 226 Fed, 2a 798, at page 801. In Watson. v.

Commissioner (C. A. 9), 62 Fed. 2d 35, it was held that

the designation and interpretation of. an agreement by

a state regulatory vommission should be ignored in in-

‘terpreting Federal Income Tax laws. More important,

if the label supplied by state statute is controlling, Fed-

eral Income Tax consequences will depend on state law con-

trary to the many cases holding that while state law de-

termines the rights of the parties, income tax consequences

are purely ‘a federal question. Burnet v. Harmel (1932),

287 U. S. 103, 110; Putnam Est. v. Commissioner, 324 U. S.

393; Burk-Wagqoner Oil Assn. v. Hopkins, 269 U. S. 110:

Lucas v. Earl, 281 U. S. 111; Helvering v. Clifford, 309

U.S? 331; Commissioner v. Tower, 327 U. S. 280; Com-

pare U. S. y. Kintner (C. A. 9, 1954), 216 Fed. 2d 418,

holding a group of physicians were a corporation even

though under state law such a corporation would be un-

lawful. .

3. The court’s statement below that because insolvency -

would prevent collection, the preferred stock is subordi-

nate to other creditors and inferentially is not a debt, is

in conflict with the cases holding subordination of a debt.

»

and even complete inability to pay does not destroy the

debt. Keebey’s, Inc. v. Paschal (C. A. 8, 1951), 188 Fed:

2d 113; Commissioner v. H. P. Hood avid Sons, Inc. (€. A.

_1), 241 Fed. 2d 467, at page 470; Commissioner ¥. Proctor

Shop, Inc. (C. A. 9, 1936), 82 Fed. 20: 792, where the credi-

tors ranked ahead of the preferred stock (page 793) ; Com-

missioner v. Page Oil Co., 129 Fed. 2d 748.

4. The court’s reliance on. the fact that current divi-

dends conld only’ be paid out of earnings although at re.

demption time all deferred dividends had to be paid out of

capital if necessary is in conflict with fhe cases holding

“that the yield on a debt can be deferred providing the

yield must in all events be paid on a date certain. (om.

missioner v. H. P. Hood and Sons (C. A. 1), 141 Fed. 2d

- 467, page 470; Commissioner v. O. P. P. Holding ee

- tion (C. A. 2), 76 Fed. 2d 11, at page 12.

5. The decision below is in conflict with eases holding

that if for reasons personal to the parties a debt ix cast

as preferred stock, it is still a debt. U.S. v. Title Guar.

_antee & Trust Co. (C. A. 6), 133 Fed. 2a 990,; Arar 2.

Jones Syndicate v. Commissioner (C.. A. 7), 23 Fed. 2d 833:

Commissioner v. Proctor Shop, Inc. (C. A. 9), 82 Fed. 2d

792 ; Commissioner v. Palmer, Stacy-Merrill (C. A 9), 111

Fed. 2d 809.

9

z CONCLUSION. .

Examination of the innumerable cases on this subject

will demonstrate that there are no standarda to be used

other than costly litigation to determine thé problem: here '

involved. If the label. used is detérminative of the ques-

tion, the income tax consequences’ will be -controlled by

state rather than. Federal law. Because of the obvious

conflict of the decision of the court below with numerous:

other decisions of the various circuit courts of appeal, ‘this

case merits review.

: Respectfully. submitted,

on R. Trscnen,-

Rospert THORSEN,

- W. W. Brownrng,.

Dae L. Sorpen,

- Attorneys for Petitioner.

April 1961.

cen

ll

Internal Revenue Code of 1939: |

. Sec. 23. Depucrions From Gnoss’ Income.

In computing net income there shall be allowed as

_ deductions :

- * a s e P a

(b) Iwreazer.—aAll interest paid or accrued within

the taxable fear on indebtedness, except en indebted-

ness ineurred or continued to purchase or carry obili:

gations (other than obligations of the United States

. iseued after September 24, 1917, and originally sub-

seribed for by the taxpayer) the interest upon which

is wholly exempt from the taxes imposed by this chap-

Treasury Regulations 111 (1939 Code) :°

> Sac. 29.23 (b)-1. Isreest. Interest paid or ac-

erued within the year on indebtedness may be de-

ducted from gross income * ° °. ;

| ° e ° * ; _?

_* © © So-called interest on preferred stock, which.

‘is in reality a dividend, thereon, cannot be deducted

in computing net income.-* *** =

Internal Revenue Code of 1954: . tore

Sac. 162: Trade or Business Expenses. (a) In Gen-

eral—There shall be allowed as a deduction all the ~

ordinary and necessary expenses paid or incurred

during the-taxable year in carrying on any trade or

business eee

"Internal Revenue Code of 1954:

Buc. 163 (a) General Rule—There shall be allowed

as a deduction all interest paid or acerued within the

taxable year on indebtedness. —

12

Treasury Regulations ,

Sac. 1.163-1 (1954 Code) : > ae

Interest Deduction in General. (a) 7 as oe

erwise provided in. sections 264-267, inclusive, intem

est paid or accrued within the taxable vear on it

edness shall be allowed as a deduction in comp

taxable income.

8 ® P e ; ‘ e. « . 2

(ec) * * * Se-called interest on preferred 3

which i is in reality a dividend thereon, cannot be +

ducted in computing taxable income. * * ”

v

Olhce-Suprema Court, U.S,

E COPY | . FILED

MAY 10 1961

No. 928 JAMES R. BROWNING, Clerk

iene, ei —- wee

In the Supreme Court of the United States

' OCTOBER TERM, 1960

PEE BES PLEA *

MILWAUKEE & SUBURBAN ‘TRANSPORT CORPORATION,

PETITIONER

Bs . 3

% ee

VU.

COMMISSIONER OF INTERNAL REVENUE

ON CROSS PETITION POR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

MEMOR ANDUM FOR THE COMMISSIONER OF

INTERNAL REVENUE

IN OPPOSITION

ARCHIBALD Cox,

Solicitor General,

Department of Justice,

’ Washington 25, D.C.

0 LEE EEK ELODIE NS BOSS!

is

; Iu the Supreme Court of the United States

OCTOBER TERM, 1960

t

n

‘

- No. 928

MILWAUKEE & SUBURBAN TRANSPORT CORPORATION, _

PETITIONER |

Vv.

late

COMMISSIONER OF INTERNAL REVENUE

-_

| ON CROSS PETITION FOR A WRIT OF CERTIORARI TO THE

¥ UNITED STATES COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

ig

MEMORANDUM FOR: THE COMMISSIONER. OF

INTERNAL REVENUE a,

IN OPPOSITION

4 We respectfully invite the attention of the Court to

Ahe following facts, which show that the cross petition

Was filed out of time: |

a

pe The judgment of the Court of Appeals was entered

mm October 24,1960. The cross petition was not

Received for filing in this Court until April 26, 1961,

days subsequent to the entry to judgment. Peti-

rt mer sought no extension of time, and its er'oss peti- -

Filon was in any event filed beyond the time which

ae

_ (1)

9

would have been available to it if the maximum

extension of sixty days had been applied for and

' granted.* It seems plain, therefore, that the cross

petition should be denied or dismissed for failure to

file within the time specified by 28 U.S.C. 2101(c).

Respectfully submitted,

ARCHIBALD Cox,

nas Solicitor General.

May, 1961.

_ * The Commissioner lost, in the court below, on an issue

discrete from those which Milwaukee & Suburban seeks t

raise. Upon timely application by the Commissioner, the

time within which to petition for a writ of certiorari was

extended, by’ order of Mr. Justice Clark, to and’ including

March 24, 1961. The Commissioner’s ‘petition, which is now

pending (No. 843, this Term),. was filed on March 23, 1961.

vu. 8. Covenneant paimtine orrice, 1961 ses713 «(1287

° 2 -

ot A te"

Supreme Court of the United States

No. 928

TIONER

?

REPLY MEMORANDUM CF MILWAUKEE « SVUBUR

BAN TRANSEORT CORPORATION CHOSS PET!

IN THE

- Supreme Court of the United States

Octrosper T: xm, 1960. .

No. 928.

MILW AUKEE & SUBURBAN TRANSPORT

CORP aT;

Petetioner.

ws. fl

—

COMMISSIONER OF INTERNAL BEVENUE,

REPLY MEMORANDUM OF MILWAUKEE & SUBUR-

BéN TRANSPORT CORPORATION, CROSS -PETI-

TION.

There is no dispute that this cross-petition was not filed

within the time allowed for filing an original petition for

certiorari. The question is whether this is necessary. If

so, the filing ‘of a cross-petition would be impossible in

moést cases, including this one. :

The point raised by the government’s memorandum ini-

volves a question of practice and not of jurisdiction. This

court not’ only: has-the power to accept this cross-peti-

tion, but even in the absence of u cross-petition, has the

right in its discretion to conSider points not raised by the

petition for ‘certiorari. Langnes v. Green, 282 U. S. 531,

388,75 L. Ed..520, 525.

_ The cross-petition and cross-appeal are highly benefi-

cial in reducing the number of appeals. With such proce-

2

dure available, the partially successful party in the a

court 10 many cases will not hazard hix partia! vietery

by initiating review. If the government ’ & position is sus-

tained, such partially successful party snust -anticipate

the appeal of his adversary and to protect himself must

utinécessarily burden the court by filing an or _ peti.

tion for certiorari. 7

The rules of this court reeognize wee sanction & cros-

agree Paragraph 5 of Rule 21 provides for the record

to be filed on a cross-petition and Paragraph 6 of the

same rule states :

‘6. Any respondent, including a mca ore r, may,

’ within the time allowed for filing his brief im oppo-

sition or his cross-petition, file duly certified portion:

of the record additional to ‘those filed by the peti.

- tioner.’’ (Italics ours.)

3

The ‘government’ & contention would ofaatively destroy

the cross-petition: Counsel for this petitioner in October of

1960 advised the Attorney General's office that if a_ peti

tien for certiorari were filed in this court, this petitioner

would file a ¢ross-petition. The ninety-day period for a

petition for certiorari in this case expired on January 23,

1961. On Januaryal8, 1961, without notice to petitioner,

an extension of time was granted to the Solicitor Gen.

eral to file the government’s petition for certiorari to and

itticluding March 24, 1961; however, this petitioner had

.no knowledge of this. action until receipt of a letter of

January 24, 1961, from the office of the Solicitor General

dated January 1961. No bad faith jis claimed by peti.

’ tioner but the above facts demonstrate that a cross-peti.

‘tion could not have beer filed on the facts in this case’

' if the government’s contention is sustained.

Under the government’s contention, cross-petition for

certiorari is a complete misnomer. If cross-petition

must be filed within the original time allowed for filing a

3

petition ‘for certiorari, it would, be as much ab original

petition as the opponent's petition. The words CrONs- pe

tition or cross-appeal presume that a petition ot ay ap-

peal has been filed. Further, the conditional cross-petition

which was filed. by this petitioner and vhich was. ap

proved in McC'omb y. Farmers Reservoir and Irregation

(o,, 3385 U.S. 809, would’ be abrogated except where the

original petition is filed well in advance of the ninety-day

period allowed for. certiorari. ore

Both Wisconsin, where the trial was held, and IHinois.

where the 7th Cireuit reviewed this decision, allow a rea

sonable time for a cross-appeal.’

-Petitioner submits that Paragraph 6 of Rule 21 should

be read as granting a respondent time to file a ergs-

jetition within the time allowed for filing the respond

ent’s brief. Otherwise, this heneficial procedural device

specifically provided for by the rules of this court would

be destroyed by the simple maneuver of: filing a peti

tien for certiorari so near the end of the ninety-day perio:

that it ix impossible to file a cross-petition.. .

This is not a case where petitioner has been negligent

or derelict such as in Grigsby v. Purcell, 99 U.S. 505: 25

L. Ed. 354, or Winslow vy. Wilcox, 105°U. S. 447; 26 1. Bd.

W065, where vears elapsed after the time had expired ‘he

fore the cross-appellant attempted fo perfect their ap-

peals. Here, petitioner filed its cross-petition at the firs!

opportunity to do so and within the time allowed for its

brief. . s

Petitioner is unable to find any authority denving the

right to file such cross-petition on the facts in. this case

where the petitioner has diligently prosecuted its cross

petition. 28 U. S. (.°2101 (e) cited by the Solicitor Gen

eral does not sustain the government's porition because

a

l. Wiseonsin Statutes 1959, See 274,12; Iilinois Revised Stat.

utes 1959, Chapter 110. Sec. 101.45 (Supreme Court Rule *%5)

*

it does not refer to cross-petitions for certiorari and be

cd@use the ‘‘judgment or decree in a civil action" is aj

ready in the process of being brought before this court

. by the government’s petition for certiorari.

The necessary copies of the cross-petition were shipped

by Gunthorp-Warren Printing Company from Chicago on

April 19, 1961, but, through inadvertence, the docket fee

was not included. Upon discovering this oversight, a check

_was forwarded in payment of the docket fee. The condi-

tional cross-petition was. received by the Clerk well within

the time allowed by the rules to file ‘& response to the

petition for certiorari.

. As shown above, the rules seem to contemplate that.a

respondent to a petition for certiorari ‘shall have time

(i.e.,30 days) to respond: to the petition by a brief in

opposition or a cross-petition, or bot. Unless the re

spondent has the same timé’in which to file a cross-petition

as it has for filing a brief in opposition, the rule provisions

granting the right to file a cross-petition are meaningless.

It is respectfully submitted that the conditional cross

petition was filed in apt time in aeeerdance with the rules

of this Court.

Respectfully submitted,

Ricuarp R. Tescuver,

Ropert THorsen,

—W. W. Brownrnc,

Dane L. Sorvex,

. Attorneys for Petitioner

May, 1961. r