CALIFORNIA v. TEXAS

Print this transcript Transcript: 

Argument of Jerome B. Falk

Chief Justice Warren E. Burger: We will hear arguments first this morning in State of California against the State of Texas and original jurisdiction case.

Mr. Falk, you may proceed whenever you are ready.

Mr. Jerome B. Falk: Thank you Mr. Chief Justice and may it please the Court.

I should like to begin by identifying four of the factors which prompted California to invoke this Court's jurisdiction.

For these same considerations in our judgment make the exercise of that jurisdiction appropriate and indeed imperative.

The first jurisdiction, first consideration was the technical basis for jurisdiction under Texas versus Florida, point of which of course I will be elaborating upon throughout this argument and namely that the tax claims which have been asserted by various taxing entities exceed the available assets of the State.

For the moment, suffice it to say that once we determined that this was a situation in which the tax claims did have that quality, we had a very practical and real concern that if California were successful in its own Courts, the judgment it came might not be as collectible.

Unknown Speaker: Do we know as a fact that the tax claims do exceed the assets in the State?

Mr. Jerome B. Falk: Yes we assert that at our pleading and I think have demonstrated --

Justice William J. Brennan: But I mean do, has happened to established at all, is it agreed to?

Mr. Jerome B. Falk: I think it is not agreed to Mr. Justice Brennan by Texas and I am prepared to discuss the reasons why we think that that it is demonstrably so that they do it just as an arithmetical matter, the tax rates total a 101% on all of the major portion of the state--

Unknown Speaker: But we know what the size of the State, does anyone know about it exactly?

Mr. Jerome B. Falk: Well that State has filed a return and based -- we have attached to our pleading an Appendix, Appendix A which sets forth the calculations of the taxes under the various Federal and State rates based on the return filed by the State on their own agreed value, the problem becomes exacerbated if the rates, if the amount of the State is greater but even on those rates there is a short fall of many millions of dollars.

Unknown Speaker: This is the Federal State Tax Returns --

Mr. Jerome B. Falk: The Federal State Tax Returns and also the California IT 22.

Justice Harry A. Blackmun: Are the California assets and you do have a real estate in the Los Angeles area, and the State does not?

Mr. Jerome B. Falk: No the State does not Mr. Justice Blackmun --

Unknown Speaker: I assume the corporation does.

Mr. Jerome B. Falk: I assume it does but unless it is an alter ego we cannot reach it.

Unknown Speaker: Are those assets sufficient to pay the California death taxes if it is determined that Mr. Hughes was not a California domiciliary?

Mr. Jerome B. Falk: No because we can't reach the assets of Summa unless it is proven to be an alter ego of Mr. Hughes.

Unknown Speaker: Well that is in litigation is it not in Delaware?

Mr. Jerome B. Falk: I do not believe it is a litigation in Delaware and --

Unknown Speaker: Could it be?

Mr. Jerome B. Falk: I do not believe it could be in Delaware, I suppose we certainly could contend and I think would if compelled to but it is far from clear that such a contention would be accepted.

Unknown Speaker: Has Texas intervened in the Delaware litigation?

Mr. Jerome B. Falk: Texas has been named as a party in the Delaware litigation and contends and I must say, I think rightly, that it cannot be made a party there provisions of Sovereign Immunity and I think for reasons of due process it is not voluntarily appeared as I understand that they made a motion that quash, if that motion is pending --

Unknown Speaker: California has made no appearance?

Mr. Jerome B. Falk: California has made no appearance and intends to make no appearance.

Unknown Speaker: Mr. Falk, do you not suppose that may be some controversy over the values submitted in the Federal State Tax Returns.

Mr. Jerome B. Falk: I fully expect that there will, I believe that all of the taxing authorities will contend that the values are greater.

Unknown Speaker: For example, Summa corporation.

Mr. Jerome B. Falk: Summa Corporation being the main asset and there is an Internal Revenue Service investigation and the States were doing likewise.

I think it is quite unlikely that the values will be less, the values that were reported to put it mildly work were conservative we think and we think that the values will be larger but it would take a dramatic cut which is I think unconceivable for the problem --

Unknown Speaker: Well I just wonder on the issue before us, how that bears on whether or not we ought to accept there is no jurisdiction?

Mr. Jerome B. Falk: I think it that there is really no realistic possibility and Texas does not contend that the values are less and there is really no realistic possibility that the values would be such that lower rates of tax would apply, so we are in a situation in which I think it is safe to say that the tax rates combine to a 101% and that problem is exacerbated by a couple of factors that are mentioned in our brief.

One, that some of the items which are expenditures by the estate, for example, for litigation expenses which are lawful figure are not deductible under California Law.

As a result although they are losing the money in the form of these expenses, it does not reduce their California taxes and that again only exacerbates the short fall.

The second problem is that has Summa has encountered really staggering law suits in the year since Mr. Hughes died.

It was $29million of operating losses in 1976, and I think the figure was a 169 million if I recall correctly of reduction of net book values in that same year.

1977 is not formalized, we have been advised informally that the figure would be somewhere in the neighborhood of $15million.

Unknown Speaker: Is there any controversy although whether all of the assets of Mr. Hughes have been marshaled?

Mr. Jerome B. Falk: I am not aware of any, I think they have pretty much been identified in our subject of administrations in several States --

Justice Thurgood Marshall: Amount of money is that book value or just actual money?

Mr. Jerome B. Falk: Well the State Tax Return was based on appraisal of the value not on book value, and that will be the basis on which tax will be concerned, there was a pending controversy as to whether that appraisal is an appropriate one.

That--

Chief Justice Warren E. Burger: For purposes of our evaluating whether this is or is not an appropriate case for original jurisdiction, in your view, would it make any difference whether the total of all the taxes would consume 95% of the entire assets or whether they would be a 105%?

Mr. Jerome B. Falk: Well, Mr. Chief Justice in my view it would not, but I think under Texas V. Florida the 100% mark has special significance.

I do not think I have to persuade you of my alternative view but I might in response to your question suggest you briefly what it is.

It starts with Massachusetts v. Missouri, 308 U.S. where the Court refused to entertain a suit to prevent Missouri from imposing a tax on a trust that had been established by Massachusetts domiciliary with Missouri trusties.

The Court distinguished Texas v. Florida in that case, but on grounds which to me suggest that the 100% figure is not the end of the case.

After noting that the trust assets of the Missouri Trust were sufficient to pay the taxes of both States, the Court went on to say and I am going to quote from it, “It was not shown that the tax claims of the two States are mutually exclusive” and that to the contrary again quoting, “The validity of each claim is wholly independent of that of the other” under which, there was not a central issue domicile.

From this, we think that there is jurisdiction of a suit between States in this area, where two things are shown.

First, that two or more States each seek to levy a tax on a mutually exclusive ground as there was in Texas v. Florida and as there is here, domicile; and secondly that the claim of the defendant State in some concrete way, in some real way, injures the plaintiff state.

Now in Texas v. Florida that second element of concrete injury was shown by the fact that the tax claims exceeded a 100% and so you had a classic in the nature of interpleader situation.

Even if that were not here, we believe that our pleading show another kind of concrete injury that satisfies the standing in case of controversy requirements and that is this.

We found ourselves with an inheritance tax claim which it, which we and the estate mutually desire to compromise and thereby avoid years of costly litigation.

Dependency of the Texas' claim was all that stood in the way of California and the estate, totally resolving the inheritance tax matter.

It was dependency of that claim which prevented the estate from unconditionally agreeing to settle this case for a very understandable reason, if they agreed to pay a large tax to California and they are liable to it, Texas for a 16% tax, the result would be devastating and if they were unwilling and understandably so to agree, this is the problem with any situation of an interpleader type, where you cannot get all of the parties under -- into one Court.

Unknown Speaker: There really was never a basis for classic interpleader, is it not?

Mr. Jerome B. Falk: No it is not, I do not contend that it is an interpleader, I say that it is, if you were forced to conclude,that they were not a 100% -- that the taxes did not exceed a 100%, there would still be a controversy between California and Texas, not in the classic interpleader mode but simply because Texas is asserting an inconsistent claim with California -- which is inconsistent with California, that would prevent California from resolving a major controversy with the estate.

Unknown Speaker: Well now that in -- you say Texas is asserting an inconsistent claim and then you say that the cause of the assertion of that claim are California is unable to settle with the estate, those are two separate assertions you make and both of them would have to be upheld in order to support your alternative theory --

Mr. Jerome B. Falk: You mean factually, it is factually up held --

Unknown Speaker: Well survive the pleading State?

Mr. Jerome B. Falk: Yes yes, now I do want to stress that this is not our primary submission, it arises and is necessary only if we are mistaken and the tax claims do not exceed a 100%.

I am absolutely satisfied that they do but in response to the Chief Justice's question I wanted to develop that point.

Justice Potter Stewart: Now what sort of cause of action would that be?

Or let me begin by asking you this, what if Texas asserted that the decedent had been a domiciliary of Texas at the time of his death and asserted a Class A tax claim successfully, based upon that fact that jurisdictional fact against all his intangible properties that amounted to say 40%, and let us say that California asserted an appropriate litigation that the decedent had been a domiciliary of California at the time of his death and based upon that jurisdictional finding asserted a tax claim that amounted another 40% of the decedent of State.

What possible federal question would be involved?

Mr. Jerome B. Falk: I do not think there is a federal question.

Justice Potter Stewart: None and no lawsuit between those two States?

Mr. Jerome B. Falk: Well, I do disagree with this --

Justice Potter Stewart: No controversy between those two States?

Mr. Jerome B. Falk: Well, the controversy that I perceive in that situation is not a federal question but it is a controversy.

Both States cannot be right although, --

Justice Potter Stewart: Certainly they can be.

Mr. Jerome B. Falk: No I think both States can successfully get judgments but as a conceptual matter one cannot have two domiciles that was the point of Texas v. Florida, then only one of the four States --

Justice Potter Stewart: And as the point of the Dorrance case was just the point implied in my question.

Mr. Jerome B. Falk: I think the point of Mr. Justice Stewart of the previous cases including the Dorrance Litigation is that although one can have but one domicile, that our federal system permits --

Justice Potter Stewart: Texas is entitled to determine where -- that he is domicile in Texas, California is entitled to determine he was domicile in California; and those two inconsistent determinations create no federal question at any time.

Mr. Jerome B. Falk: I agree they do not and that of course is why Texas v. Florida arises because there is no solution to the problem where the taxes exceed a 100% say, for an action in this Court.

There is no other way to get a unitary adjudication.

Justice Potter Stewart: What Court – what law does this Court apply in such cases then?

Mr. Jerome B. Falk: Well I think in Texas v. Florida and I think it would be true here that the Court find, that the Court will have no choice of problem because there is no difference in the law that --

Justice Potter Stewart: What if there were?

Mr. Jerome B. Falk: I do not know from any decision of this Court, I assume it would have to apply it's own principles of domicile.

Justice Potter Stewart: What if Texas had a one set of criteria for determining domicile and California had quite a different set?

Mr. Jerome B. Falk: If that were the law, Mr. Justice Stewart one aspect of Texas v. Florida would not be present and that was not emphasized in the Court's opinion here that the law was the same in all four States.

Justice Potter Stewart: What difference -- Why is that significant?

Mr. Jerome B. Falk: Well it -- as I understand an interpleader -- the interpleader concept, in the nature of interpleader concept it is that you have inconsistent claims and if the laws of the two States were substantially different so that it would be possible under the laws of both States for both States to be right, I am not sure in my own mind that the Court would then appropriately exercise jurisdiction to --

Justice Potter Stewart: But what law should the Court apply?

Mr. Jerome B. Falk: Well I say -- if it would entertain jurisdiction it would have no basis for choosing between the two other than to pick the law that made the most sense.

Justice Potter Stewart: Why as a matter, will we be free to do that, will we?

Mr. Jerome B. Falk: I think you are, as part of the original jurisdiction but I want to stress that I do not believe Texas contends that, that is the case here.

The law of the two States, really the law of the nation --

Justice Potter Stewart: Would it not sound some sort of federal not federal, common law because this is a federal equity.

Mr. Jerome B. Falk: Well I think that it is the law of the States here, of all fifty States I believe that defined domicile in the same way.

Unknown Speaker: On following through on Justice Stewart's question, it has always been assumed that inheritance of taxes follow domicile, do you think in our jurisprudence we have gone beyond that point or about to or not may be individual States can rest on something other than common law notions of domicile?

Mr. Jerome B. Falk: I think that there would be no due process objection to other basis for taxation and I think there are cases that support that statement; however the laws of Texas and California that have been invoked by our respective States do not assert taxes on any other basis.

The basis for taxation in Texas and the basis for taxation in California that brings us here is domicile.

So I do not think that we have to reach that question, that is what we are -- that is not what we are attempting to do.

Unknown Speaker: Mr. Falk, are not there cases and decisions in these original jurisdiction cases, where this Court has fashioned a rule of law

Mr. Jerome B. Falk: Yes I think – I think there are many.

Unknown Speaker: Well what -- when we do that, what are we doing?

Mr. Jerome B. Falk: Yes I think you are fashioning a federal rule, I assume that the --

Unknown Speaker: What is unique about our doing that in this situation?

Mr. Jerome B. Falk: Only that I do not have to because there is no conflict between (Inaudible)--

Justice Potter Stewart: Why do you suppose in that Mr. Justice Stone's opinion for the Court in Texas against Florida, he emphasized the fact that the laws of the four States there involved were basically identical with respect to domicile, why was that of any important at all--

Mr. Jerome B. Falk: I think it demonstrates that an appropriate in the nature of interpleader action because the claims are identical, you have two claims that cannot both be right as an independent matter and therefore it is an appropriate --

Unknown Speaker: We don't think it might also but read as making it easy to fashion that rule -- the federal rule -- resolution is dispute among --

Mr. Jerome B. Falk: I do think that if you were confronted with a situation in which the laws of the States were different and it conflict -- then you would have to.

Unknown Speaker: But may be Mr. Justice Stone's emphasis on the fact that the all four were the same.

Just made it easier -- that is federal rule.

Mr. Jerome B. Falk: I think that is the answer, I think the escheat case is following Western Union V. Pennsylvania are perfect example of case in which in the Court made a decision which has to be federal in its origin as to which rule of escheat would govern the resolution of those several State conflicts.

Unknown Speaker: And dividing inter state --?

Mr. Jerome B. Falk: I think that is the same, I think that the same.

Justice William H. Rehnquist: Do you contend here that there is a federal constitutional principle which says that a State may impose an inheritance tax or a State tax only on one particular set of criteria.

Mr. Jerome B. Falk: I have not contended that and I do not think it is necessary to do so because the laws of the two States base their tax on that ground.

We are not challenging the basis for the Texas tax other than its factual basis.

I mention Western Union --

Unknown Speaker: Mr. Falk, may I just question the proposition.

I am intrigued by my brother Stewart's question.

You say the law of the two States is identical, now may be the black letter law is the same but we all know that there are all sorts of gradations when you apply a rule, may be in Texas they attach greater weight to the place of birth in determining what element conclusion is and in the California that may attach greater weight to some other fact, their shadings which may produce inconsistent results which one could describe as differences in the laws of the two jurisdictions.

Mr. Jerome B. Falk: I think that is not so.

I am no expert on Texas law, but I have followed their domicile trial here and of course I have read Texas v. Florida and that case was initiated by Texas, and it found its law to be the same as the other three States and I read that the papers there and I understood it to be the Texas law then and I think now was in agreement really with the common law of the fifty States of the Union on domicile.

I am really aware of no difference.

Unknown Speaker: The law of the two States is really completely identical, cannot we be confident that the two States will reach the same result and the same set of facts?

Mr. Jerome B. Falk: I am confident that they -- well at least we know this, we know that a jury in Texas has rendered a verdict that is inconsistent with the position California asserts now we are here --

Unknown Speaker: California asserts as a litigant.

Mr. Jerome B. Falk: I cannot tell you what the Californian Courts will do anymore than Texas could in Texas v. Florida, that litigation of course came here before any litigation had occurred in any State and the Court rejected Justice Frankfurter's suggestion that it was premature I had mentioned the first of the considerations and the second one has to do with Western Union and I think Western Union is an important case here.

In our view, for reasons set forth in our papers in some detail, we think Western Union took Texas V. Florida one more step and made the exercise of this Court's jurisdiction mandatory and not simply optional.

In cases where, and they are rare, where two or more States seek to tax the State beyond the point of confiscation.

I have read and reread Texas's reply on that point and I do not understand that they seem to contend that Western Union is distinguishable because it involves the dispute over property, the location of which was in question whereas here in Texas v. Florida the property is located within the borders of Texas and thus it has exclusive interim jurisdiction over the property and for most part that is in this State consists of stock in a corporation which will be taxed in the place of domicile and so Texas's position assumes the answer to the question that has to be litigated.

That really is the same problem as there was in Western Union and the Court said in that case that Pennsylvania lacked jurisdiction.

As a matter of federal constitutional law lacked jurisdiction to proceed because it could not assure Western Union that it would not be liable inconsistently to the escheat demands of other States.

I think that one passage in the Court's opinion on that point is quite significant.

The Court said, the situation here in Western Union is in all material respects like that which caused us to take Jurisdiction in Texas versus Florida.

So, as we read Western Union and as we read it today, that decision obliged us and indeed obliged -- obliged Texas to come to this Court rather than to proceed in our own State Court's.

Once it became clear that tax claims were being asserted in excess of the amount of the State.

Finally, another factor, I want to mention just briefly that brought us here and I think it is important for this this Court's exercise of Jurisdiction was our own sense of fairness to have proceeded independently to litigate the tax claim in our own Court's as Texas sought to do, even if we could do so, Western Union not withstanding, simply did not comport with our notion of a fair and appropriate process.

It seemed to us that it would be incredibly inefficient to generate multiplicitous litigation which would only degenerate, into a -- but it really would be a three ring circus, without a ring master there would be litigation in California, Texas, and if it had a Delaware -- all proceeding without any ability to achieve --

Justice William H. Rehnquist: Mr. Falk, are you familiar with Lord Canning's statement, Save, oh Save me from the candid friend.

Mr. Jerome B. Falk: Well, Mr. Justice Rehnquist, I do not pretend to have been looking out for the welfare of the areas that -- we were here, and acted of course in interest of the tax payers of California but it does seem to us that it is appropriate for Governmental officials, Taxing officials to be concerned with the fairness of there conduct.

After all, we are accountable to that sort of standards as well and it seem to us that all of the decisions that are relevant in this Court and all of the literature in the last four years in Texas versus Florida condemned that a process by which, and a State can be wiped out by inconsistent domicile litigation in several States.

That strikes me as unfair.

It strikes -- I think it ought to strike, the court is unfair.

I think, it would strike the public as unfair and we chose not to do it for all of the reasons that I have suggested and I do not mean to be sanctimonious about it.

I think it was an appropriate factor for us to consider.

Unknown Speaker: (Inaudible) Texas, impact of any of the agreement you have made, the States may have made?

Mr. Jerome B. Falk: Yes, I am.

The position of Texas as I understand is that our agreement demonstrates, in some fashion, that we are here suing on behalf of private citizens and not on behalf of a State and that makes relevant, small number of cases New Hampshire versus Louisiana, Oklahoma Ex Rel. Johnson versus Cook, which disentitled a State to do so.

On really, on the ground of the Eleventh Amendment and it is a limitation on the Court's Jurisdiction.

That position of Texas is both factually and legally unsound here.

There are two cases on that point that I want to call to the Court's attention.

One is cited in our reply brief.

South Dakota versus North Carolina, where the Court distinguished those earlier cases in a situation in which a small number of bonds of the State had been assigned to South Dakota and they have been assigned unconditionally.

The motive of the donor was perfectly apparent from writings that are cited in the Court's opinion.

He brought that suit for reasons of his, or he made that donation for reasons of his own.

The Court said motive of the donor is irrelevant, South Carolina -- South Dakota is suing for interests, however small of its own and the action can be maintained.

Another case not cited in our brief but I do want to call of the Court's attention is North Dakota versus Minnesota in 263 US at 365 and then another opinion at 584.

There a suit was brought by one State complaining of flooding caused by the acts of the neighboring state.

The loss caused by the flooding did millions of dollars of damage to private lands in the plaintiff State and something like $5000 of damages to the States on bridges and highways as I recall.

The Court allowed the Act even though the interest of the State was rather small and even though it noted in the Second of the two opinions that the land owners of the plaintiff state who had been affected by the flooding and I quote “raised a fund to conduct a litigation” I think it is apparent that in that case the State was induced to Act by the private citizens who stood to benefit.

Thus, as I read the case, as the State may sue in this Court, not withstanding that private citizens are benefited and even though, private citizens induce the lawsuit.

Now, having said all that I want to say, that that is not what happened here.

The record before this Court, I refer to an affidavit that I have filed at the time of the Application for a preliminary injunction shows that the decision to file the suit was made several weeks before we had had any conversation whatever with the State on the subject of settlement and in fact General Hill, I am sure will acknowledge, I personally told him in a meeting that I had with him in Austin, Texas on October 21, three weeks before this settlement and before we had any conversation with the State whatsoever that we had intended to initiate suit in this Court that we were drafting papers and so forth.

So, I think that the suggestion that we here carrying the bag for the state acting for its benefit is just plainly false as a factual matter.

I have just a few moments left and I would like to save that time for rebuttal, if the Court has no further questions to meet this time.

Chief Justice Warren E. Burger: Very well Mr. Falk.

Mr. Attorney General.

Argument of John L. Hill

Mr. John L. Hill: Mr. Chief Justice and may it please the Court.

Let me first quickly address the few questions that were raised by the Court before I get into my prepared remark.

First, it is not agreed that the taxes will exceed the estate to combine taxes.

There has been no agreement as to the value of the estate.

There has been one appraisal from Maryland which is highly in dispute.

We think it ridiculously low.

California can collect if it pierces the corporate veil and that is been done every time it is been tried.

Were then the TWA litigation, Archaeo litigation, or that Mr. Hughes that you can not pierce the Summa (Inaudible) and if they do that they can get out a $ 112 million in land wrapped by the airport and on running along the beach highly valuable even if they do not establish domicile.

Unknown Speaker: That is California.

Mr. John L. Hill: Yes sir, the Satis (ph) rule would allow them regardless of domicile.

Unknown Speaker: Right.

Mr. John L. Hill: And there is a controversy, as to whatever asset has been Marshalled.

The State compro is working on that diligently now and Summa's inability to make money and prosper is we think highly exaggerated and certainly not kind of speculation, this Court can indulge in to determine whether there's actually going to be more taxes than the state can stand and then finally Texas versus Illinois, does require clearly, that our inconsistent claim be such that it would impair California's right to collect on its own client, and if it has a meritorious claim and that case obviously does not require or contemplate that our inconsistent claim be such that it would simply impair California's ability to get this estate to settle with them, on some basis that they would consider favorable.

That is not a right, that this Court's Jurisdiction is available to protect and they say Texas was all, it was in their way.

All, that was in their way, to get it settled.

That is what he forgot to add, and not in their way to try their case, not in their way to assert their claim or the merits of their claim, not in a way to impair their ability to collect on taxes but in their way to get a favorable settlement of a claim that they are very reluctant to try on its merits.

That is what Texas is in the way of.

Justice Stevens question is correct in suggesting that we should be confident that the Courts in both States would reach the same results on the same facts and certainly out of respect for the State Court's and their proceedings, we should at least not indulge in the opposite presumption.

In order to try to sustain original jurisdiction here.

He speaks of our own sense of fairness being the only thing that brought us here.

Then, why did they wait nineteen months after we began our litigation to suddenly emerge in to an atmosphere of sweetness and light in fairness and why did not they try then early to come here and why when they come, do they not come on the strength of their own claim.

If fairness is the standard, why do they come here tendering the limited issue and the only issue to this Court and that is Texas domicile.

Now, it is Texas position that the agreement that was entered in to on November the 10th 1977, the day before this motion for leave was filed entered into between the state's administrator, certain here and there and California.

Amounts relate to the estate and the heirs agreeing to pay California in money and services to bring this case and that therefore this court is prohibited both by the letter and the spirit of the United States Constitution from entertaining any suit arising any original Jurisdiction concept under these kind of circumstances.

We say your holding here must be, that in no case, in no case involving and invoking or undertaking to invoke the original Jurisdiction based on article 3 section 2 in 28 USC section 1251 A1 suits between states.

In no case, will that Jurisdiction be extended or an agreement had been executed prior there to providing that the petitioning state is granted the right to recover State death taxes regardless of the merits of its own case and where the petitioning state.

Unknown Speaker: May I understand this Mr. Attorney General, is this an argument that in fact California's funding for the heirs --

Mr. John L. Hill: No question that is what taxes --

Unknown Speaker: Is that is what it is.

Well I thought this agreement guarantees California the sum of 2 million dollars, doesn't it?

Mr. John L. Hill: Two percent -- even if Texas wins.

Unknown Speaker: That is what it is two percent --

Mr. John L. Hill: We will, we are not afraid to litigate the matter before --

Unknown Speaker: So I gather your argument is we ought not take this case in original Jurisdiction because if California is merely funding for heirs, that creates a kind of Eleventh Amendment problem that Mr. Falk referred to.

Mr. John L. Hill: Absolutely, you see they can recover pursuant to this agreement solely if the Court takes Jurisdiction and takes action regardless of the quality of their claim.

It is a border for the Jurisdiction of this Court here in Tampa. In short we think the --

Unknown Speaker: And is it that the heirs come out better at least inheritance tax wise under this California agreement and perhaps they are going to come out if Taxes can claim.

Mr. John L. Hill: You see Annette Loomis is a co-administrator with Will Loomis in the administration in Texas.

Unknown Speaker: I am sorry I do not know this.

Mr. John L. Hill: Annette Loomis is Will Loomis' mother and under Nevada law and California Law, in case of intestacy, she would be the sole under Texas Law.

If Texas is the domicile State, it opens up the possibility of heirship to some four hundred people that all have filed in that court.

In short, the rule must be, we believe that if a state comes here under Article 3, Section 2, it must come clearly and unequivocally under its own statute or law on which its claim is based and unfettered by an agreement to come here for benefit to be bestowed regardless of the merits of the unclaimed claim.

Unknown Speaker: Mr. Attorney General, if the agreement had not been made do you think the state of Nevada would be in here?

Mr. John L. Hill: They are not a taxing State.

Unknown Speaker: I know, but would they be in here?

Mr. John L. Hill: Well, I do not think so.

I have no reason to believe that the Attorney General of Nevada would have been entered in to this agreement.

I have no interest at all, if shown no entries anymore than California did until the eve of our trial.

That is when they kept this agreement and started showing an interest.

They were really interested why did not they come here why did they permit us to spend hundreds of thousands of dollars, put in thousands of man hours, out in the wide open.

Most of it and a lot of it, carried out, in California.

With California counsel assisting us, travel all over the world and take 50 odd deposition and discover hundreds of thousands of documents out of three or four million documents that we were actually, both sides working with pre trial.

Case set for trial, January of 1977 it was set for trial in September of 1977.

All of which they knew about and let us go ahead and proceed and go to all that trouble and work in our own court and have a fair and square trial with overwhelming evidence and I cannot obviously retry it here but it is the case, that will be one wherever it is heard, and then from here and ask on behalf of the estate really, you re-litigate the Taxes domicile issue and that is all we are going to tend to tell you that very limited issue --

Unknown Speaker: Is that as you see is what the issue would be if this complaint is filed.

Whether or not the decedent lived in Texas.

Is that going to be the question or else the question is going to be where did he live?

Mr. John L. Hill: All they tenders, they would not tender anything else.

Their motion tenders only to this Court, the question of Texas domicile.

You see they just simply want this court to take it, give to a master, hope that they can gang up on us and get the mastered offense.

Unknown Speaker: Well, what will be the issue be before the --

Mr. John L. Hill: Texas domicile.

Where the Texas was not the domicile.

Unknown Speaker: Whether or not, Texas was the domicile of decedent at the time of his death or where was the domicile of the decedent at that time?

Mr. John L. Hill: They win when you cut us off.

Unknown Speaker: Quite different therefore from Texas and Florida.

Mr. John L. Hill: Or you cannot take it with radar to try to fix up Taxes versus Illinois, in this case.

It's using this court undertaking to for an inequitable and unjust purpose, clearly violates the provisions of the Eleventh Amendment, as a suit, which in reality is for the benefit of private litigant.

It would also bring this Court, equitable Jurisdiction in to play without due regard to first, the necessity of the Court's participation.

It would invoke it without due concern for the possible abuse of the Court's Jurisdiction in other cases, without first requiring California to utilize its own Court's to determine the underling merits of its claim, without due regard for the fact that Texas has already obtained a domicile verdict in its own Court.

Justice Thurgood Marshall: Alright, he could not ignore that Texas proceeding, could he? He would have to go into it.

Mr. John L. Hill: We would certainly claim that he could not but I will tell you the Jurisdiction once taken here and a masters report is so often that I have found that in some cases, it does seems to wipe up a lot of things that have happened before.

One thing you say we just want a little Jurisdiction for little purpose but once you appoint that master --

Justice Thurgood Marshall: What did the master to do to that?

Mr. John L. Hill: Well, he could conceivably find the Texas was not the domicile State.

Justice Thurgood Marshall: Then we would have a real conflict.

Mr. John L. Hill: We would have a you have a honey (ph) of a situation.

Unknown Speaker: As a matter of fact, if perhaps or in any event if it is a matter not at all of Law, it is a matter of State laws, was it not?

Mr. John L. Hill: Clearly and they are asking you to come in here without regard or requiring California to really come and present a hard and concrete case to --

Justice William H. Rehnquist: Well, General Hill, if there is a Federal Statute on the books, I purport of my brother Marshall's question, that says Federal Court's must give full faith and credit to the decrease of State Court's.

Do you think that binds this Court as a Federal Court in a case under its original Jurisdiction.

Mr. John L. Hill: We will certainly take that position, but I do not --

Justice William H. Rehnquist: Do you have any reason to take it other than that you think it helps your case.

Justice Thurgood Marshall: Well, you do not need to --

Mr. John L. Hill: I would settle for that reason until another --

Justice Thurgood Marshall: You do not need to take that position the way the case is lined up --

Mr. John L. Hill: Really not because we just have considerations here that have not been fought out, they do not even get in to all commit forums and this Court and I know I need not unduly cite your own opinion but this is so relevant to what I am trying to convey from Texas's standpoint is your statement recently made in Arizona versus New Mexico and may I please quote it, “we recently reaffirm that our original Jurisdiction should be invoked sparingly in Illinois versus city of Milwaukee, where we additionally stated, we construe 28 USC section 1251 A1 as we do Article 3 section 2 to honor our original Jurisdiction but to make it obligatory only in appropriate cases and the question of what is appropriate concerns a Court the seriousness and dignity of the client.

Yet beyond that it necessarily involves the availability of another forum where there is Jurisdiction over the main parties, where the issues tendered may be litigated and where appropriately relief may be had.

We incline to sparing use of our original Jurisdiction so that our increasing duties with the appellate docket will not suffer” Nearly forty years ago in Massachusetts versus Missouri to which counsel Falk alluded, this Court said, in the exercise of our original Jurisdiction, so as to truly fulfill, the constitutional purpose we not only must look to the nature of the interest of the complaining State, the essential quality of the right asserted, but we must also inquire whether recourse to that jurisdiction is necessary for the State's protection.

Now then, with that in mind the narrowness of the issue tendered by California, that is a negative finding against Texas, is proof enough that the quality of interest attempted to be provided to California that is an 18% interest by settlement that she may not be entitled to under any merits.

Is not of a kind to be entertained here by this Court and invoking that solemn jurisdiction.

If California really wants to litigate its entitlement that issue of domicile can and should be under the circumstances here presented, litigated in California.

If California is successful there on that issue it can repetition here if in fact, facts and information show that there is a more tax that they can not get there, their taxation and then you could decide whether take case or let it be heard in Delaware Forum where the question of similar corporation exists and where any problem that do in fact ever occur, are not pursuant to some settlement agreement but pursuant to on its claim being --

Unknown Speaker: Mr. Attorney General you want – are you willing to litigate in Delaware?

Mr. John L. Hill: When we get to the position--

Unknown Speaker: The answer is no right now.

Mr. John L. Hill: No, not now.

We are clearly are not and we not anticipate it, if California does try the case.

Unknown Speaker: Of course it might be a forum if both of you agreed to solve the entire problem?

Mr. John L. Hill: Solve the problem it is-- that is true.

Unknown Speaker: Would the Delaware Forum as you call it have jurisdiction over a lawsuitbetween the State of Texas and the State of California?

Mr. John L. Hill: It could only come up and I do not want to be bound by this because, I do not think it is necessary for us to get into it in this proceeding.

But as I see it the only way that it could possibly and underscore possibly come up would be if California in fact secured a favorable finding in its Court, on the merits and then the proof showed that it was impossible for us to get the matter disposed off or that harm of 120% and these sort of figures that I think are ridiculous and never will come to pay.

So at most I think you are looking at a 101.

If that, with a growing concern able to pay it out over ten years but in any event if all of those speculated problems finally came to rest then you would have the one piece of intangible property to which all would be looking and that is the Summa stock which you just – as you know only there is only one stockholder with 75,000 shares of stock but only one stockholder is presently being held and voted by Mr. Will Loomis under there argument.

I think they would have the that would then be a forum where you could determine all rights between us, how do we tax the intangible?

Unknown Speaker: And that forum would have jurisdiction, would it?

Mr. John L. Hill: I think.

Justice Potter Stewart: Because this is my question over a lawsuit between the sovereign State of Texas and sovereign State of California?

Mr. John L. Hill: If we are asserting if we come in there and assert that we want to get out the intangible stock asset which is cited in Delaware that being the corporate basis there.

Justice Potter Stewart: Whatever the lawsuitwas about, I am talking about any kind of a lawsuitbetween those two parties and I am talking about jurisdiction.

Mr. John L. Hill: I think what I am saying is Mr. Justice Stewart if that would be an election, I think for these States to make.

Unknown Speaker: Well, it will have to be volunteered?

Mr. John L. Hill: I think so.

Unknown Speaker: Neither can compel the other to appear in Delaware Court, could it?

Mr. John L. Hill: No.

I suppose you -- it would be a matter of two States-- two or more States filing competing claims to the same properties.

Unknown Speaker: Right.

Mr. John L. Hill: And then let me just close by--

Unknown Speaker: To a Delaware asset that is clearly within the jurisdiction of Delaware Court?

Mr. John L. Hill: I think all these question about Delaware if I might say so that I do not go further here then it is obviously necessary, to cite what we are here about, is simply to say that that question can be addressed if it ever becomes proper to be addressed and this Court will have an opportunity to look at that if it ever become your --.

Unknown Speaker: General Hill, a little while ago you said that California should go about its business and proceed in its own Courts and so forth and then come here when certain things were established, would you be opposing original jurisdiction at that time also?

Mr. John L. Hill: I do not know.

It would just depend on -- if they have a case at that time stated without reference to agreement under Texas v. Illinois and I thought Texas v. Illinois applied, I then have to make a determination, it would ask you to the deal -- we do not have to deal with it here, I might want you to ask you to deal with it if it ever came to that I make it-- and this Court might want to reconsider it.

Unknown Speaker: General Hill at least the agreement accomplished the elimination of Nevada as a possible party, this is one thing it had accomplished.

After all you are in a position here representing a State which itself brought the Texas against Florida litigation.

Now you are representing the State which denies the original jurisdiction of this Court, you are hung with it, but there it is.

Mr. John L. Hill: Well I am not, General McGraw, 45 years ago came into this Court with a lot of other Attorney Generals, pretty much by agreement.

And once the Court would not let him in until I could go out and resolve the fact of what the tactic were going to be so that the master would not have all that foolish work to do and then when they came back in practically in agreed situation, the Court took it.

Justice Frankfurter did not think much of it, but that neither here and there, they did take it and they heard it and they resolved it and Texas who brought it, lost and I think that General McCraw were he here today would be applauding what I am doing and believe that it is totally consistent with what I should be doing and it is an entirely different situation, this is not in any sense a Texas v. Florida case.

Unknown Speaker: I take it, at a later time your first claim would be that the matter of domicile would not be open for any kind of reconsideration because it is clearly determined in the Texas Court and that would be true later if you all thought that you should go to Delaware to try to --

Mr. John L. Hill: Exactly.

Unknown Speaker: Then you would say that, the everything might be opening but not that domicile.

Mr. John L. Hill: Those are--

Unknown Speaker: That can be reviewable by this Court or any other Federal Court it is not a question of Federal Law is it?

Mr. John L. Hill: And so I just conclude by reminding that if there is a slightest doubt about why we are here and that I say we are here out of the State's worry over the Texas domicile finding not only for State tax purposes but for other purposes that it ought to be perfectly clear when you look at this agreement that is why we are here because in addition to giving them the 2% guarantee they come back and say we will give you all of the lawyers you need, some of them here today in Court we will work with you hand and glove and we will give you all of our deposition, we will give you all of our work product and maybe together we can do Texas--

Chief Justice Warren E. Burger: Mr. Attorney General, a while ago you said that the figure of 120%, that is referring to the aggregate amount of taxes was absurd, ridiculous something like that and that in any event it was not more that a 101%.

Now for the purposes of this, case what is the difference whether it a 100-- the taxes are 101% of all the assets or 98% of all the assets.

Mr. John L. Hill: I think for today at least, for the purpose of this hearing, the answer would be that if it is a 101 and we do not know but let us assume for purpose of your question it is.

Then California is petitioning here to get you to vitalize an agreement which would cut there, would harm them 68 % of what they say, they are entitled to under their figures and yet they want you to do it under the authority of the case that would say we are going to protect you from 1% of harm.

So under this agreement, it is just simply immaterial inquiry, now as to whether it is a 101% ends up being 98%.

It is not the inquiry, the basic inquiry before this court because the fundamental lies in their case is this agreement.

You can not get away from it, Will Loomis and it is in our brief used the words, I have them written down somewhere where he said in affect that we are here pursuant to this agreement, that is his sworn testimony given in December.

Now there cannot be any doubt about that we are here pursuant to that agreement and that is the full answer, a complete answer, a total answer to the denial of this motion for leave to file and invoke this Court's to original jurisdiction.

Never should this Court tolerate that kind of a situation and you would rule to death (ph) if you did and open the gates for this kind of trading around between higher State tax cases, the States with weak claims, to try to get negative finding against 16% States with good claims.

Unknown Speaker: General Hill, what is the present status of the Texas litigation?

Mr. John L. Hill: We are trying the jury verdict and we will have an a judgment entered on April 4th.

Unknown Speaker: I suppose that motion is to set the verdict aside then, are they?

Mr. John L. Hill: The motion for judgment which we have filed, I am frank, I will have to ask my associates whether they have filed.

I have not seen the pleading recently, I would not want to miss state if they have filed a motion to set it aside, I would be most surprised.

They argued the case about thirty minutes although they had several hours to argue because when all the evidence was there, they did not have much to talk about and they have plenty of evidence to support the verdict.

The case is cleanly tried.

It is going to stand us without any question.

Unknown Speaker: But there -- whatever the accuracy of your prediction there is, there will be an opportunity of an appeal in the National State Court system?

Mr. John L. Hill: Absolutely, through our appellate process which is, I am sure under circumstances like we are faced with that is something we can contemplate.

Thank you very much.

Chief Justice Warren E. Burger: Mr Falk, you have anything further?

Rebuttal of Jerome B. Falk

Mr. Jerome B. Falk: Yes I do Mr Chief Justice.

First of all let me say that there is no doubt, I agree with some of the implications, some of the question, there is no other forum.

If California and Texas each secure a judgment then we find ourselves in that situation that General Hill contemplates.

There is no possibility absent consent of both States of litigating that in the Delaware Courts.

They have no jurisdiction to decide controversies between States, only this Court does and as to everybody else those two State judgments are entitled to full faith in credit as Texas v. Florida, as the previous cases, make clear.

Justice Potter Stewart: Mr Falk if your complaint is filed and an answer is filed and the matter is referred to a master what will the issue be? Issue over issues?

Mr. Jerome B. Falk: Justice Stewart I suppose the Court could go beyond the pleadings and resolve the question of where he was domiciled.

It is true that the pleading only asks the Court to determine whether or not the Texas claim is a valid one and the reason for that is as someone in the Court commented a moment ago that we have settled with your State the controversy vis-a-vis Nevada, the Bahamas, Mexico--

Justice Potter Stewart: So they won't be very--?

So Nevada certainly is not now and presumably will not be a party?

Mr. Jerome B. Falk: That is correct.

Unknown Speaker: And yet as I understand the facts from reading these papers and from reading newspapers that the decedent spent in, as far as he lived in the United States from where he resided was physically in the United States of America and his last years of his life, most of those years were in Nevada, were they not?

Mr. Jerome B. Falk: No,-- he spent about 38 years in California.

Unknown Speaker: No I am talking about final years of his life.

Mr. Jerome B. Falk: Then the last, I am sorry.

The last three or four years were in Nevada.

Unknown Speaker: The final years of his life were in as far as he was in the United States, he was in Nevada most of the time.

Mr. Jerome B. Falk: Suffice it to say that the parties recognized a very complex controversy close question on that issue--

Unknown Speaker: If there is a, generally in an adversarial system of justice, you have parties litigating and theory is from that litigation emerges the truth but if Nevada is not even going to be in this lawsuit, how can a very accurate assessment of the facts be made?

Mr. Jerome B. Falk: I do not think the Court has to do it to adjudicate this to finally resolve --

Unknown Speaker: Generally a lawsuit is not destined to determine a negative, that somebody did not live in a certain State.

Mr. Jerome B. Falk: But the problem here was that we were facing a very complex litigation with many alternatives.

We undertook to settle that litigation.

We could have settled all of it but Texas was not party to it, did not choose to be.

We settled all that we could and we have this remaining part of the problem that has to be adjudicated--

Unknown Speaker: Well, do you not think that to answer the question you have put in your prayer, are you not going to have to decide whether, where he was domiciled?

Mr. Jerome B. Falk: I think we are going to put on evidence that will make it possible for the master to make that--

Unknown Speaker: Is it possible, how can you say -- Are not you have to conclude that he was domiciled somewhere else and therefore he was not domiciled in Texas--

Mr. Jerome B. Falk: Well, I think we are going to show that he was domiciled in California for at least 30 or 40 years of his life, whether it is necessary to go on and disprove the contention, that in 1966 when he moved to Las Vegas.

He then changed his domicile to Nevada.

I do not know that we have to do that. Once we have disproved the Texas domicile I think we will have done enough but we will be prepared to do the other as well.

Unknown Speaker: Do you think it is sufficient to show that he was domiciled in California uptil 1966 and then left California and never returned and spent the rest of his life in Nevada?

Mr. Jerome B. Falk: It would not be sufficient but for the fact that the State has agreed to pay us a tax if we can make that showing.

Justice Thurgood Marshall: Mr Falk, the truth in that is that Nevada and the Bahamas there by came in and California would not come in, which they have a privy right not to come in and that is why he filed this lawsuit.

Mr. Jerome B. Falk: I am sorry I did not follow your question Mr Justice.

Justice Thurgood Marshall: You said a minute ago before my brother White asked you a question that Nevada, Bahamas, and there by all came into California and joined in this agreement but Texas did not.

Mr. Jerome B. Falk: Well not as taxing authorities, the State.

No, the State agreed to pay us a tax and in an affect to abandon this it is defense to the State of California.

Justice Potter Stewart: Unfortunately it was not to you personally.

Mr. Jerome B. Falk: I am sorry that it was not Mr Justice Stewart.

To pay California a tax if we can establish that they are also not liable to Texas and in so doing abandoned the defense that they otherwise had available that he was a Bahamian or a Mexican or a citizen of the world or a citizen of Nevada.

The domiciliary actions.

Justice Thurgood Marshall: Did you ask Texas to do same thing?

Mr. Jerome B. Falk: We in fact did that is why I went to Texas--

Justice Thurgood Marshall: And Texas said no?

Mr. Jerome B. Falk: Texas said no.

Justice Thurgood Marshall: Which they had a right to?

Mr. Jerome B. Falk: Certainly did.

Justice Thurgood Marshall: And so then you file this lawsuit?

Mr. Jerome B. Falk: That is correct.

Justice Thurgood Marshall: So Texas has right to treat this lawsuit is to (Inaudible) of them to joining this agreement?

Mr. Jerome B. Falk: No, no they are not right Mr Justice. We had decided to bring this lawsuit, had the papers prepared before this settlement was even discussed.

Justice Thurgood Marshall: Once you have got lawsuit in California, I mean in Texas (Inaudible)

Mr. Jerome B. Falk: Well then we would have a settlement.

Chief Justice Warren E. Burger: If the theory Mr. Falk is that a neutral forum was the only place for a controversy of this kind to be settled why should not your prayer have been to determine what you say now is the defactoral issue.

Where was the domicile of Mr. Hughes at the time of his death instead of just attacking it on in terms of Texas?

Mr. Jerome B. Falk: Mr. Chief Justice, if jurisdiction turns on that question we are quite prepared to amend our pleading to ask the Court to do just that.

And we were originally planing on doing just that papers were drafted that asked the Court to do that, papers had even been sent to the printer asking the Court to do that without discussion of a settlement because none had been discussed and we then entered into negotiations with your State and narrowed the issue that is what happened and I fail to see how that can alter the need to have a unitary adjudication.

This is the only place to go for that adjudication.

Unknown Speaker: If a master were appointed to determine this and he were to determine that domicile was Nevada at the time of Mr. Hughes death.

Do I understand there is no inheritance this tax in Nevada?

Mr. Jerome B. Falk: That is correct Mr. Justice.

Unknown Speaker: What then would be the effect of that determination that he was domiciled in Nevada upon the State's claims to inherit this taxes.

Mr. Jerome B. Falk: But for the settlement we would be entitled to collect no domicile based tax.

Unknown Speaker: But under the agreement California would still have at least 2 million, is it?

Mr. Jerome B. Falk: No under the agreement if Nevada were found to be the domicile the State has in effect settled that controversy where they have agreed to pay us an 18% tax not withstanding that.

So that would be --

Unknown Speaker: So California would not lose if the Master were to conclude that Nevada was the domicile --

Mr. Jerome B. Falk: No, we compromised, our rate is 24%.

Unknown Speaker: No, but am I right?

Mr. Jerome B. Falk: Yes you are right.

And--

Unknown Speaker: California would not but Texas would.

Mr. Jerome B. Falk: Texas, if they found Nevada, Texas will of course not recover either if and that reflects a compromise from 24% to 18%.

Unknown Speaker: The only one who would lose would be the United States because then the credit against the Federal State tax would apply.

Unknown Speaker: Without the agreement there would be no credit for State taxes pays.

Mr. Jerome B. Falk: That is true, of course that is always true if in a domicile kind of regime falls in Nevada and the other.

Certainly we are here with a very complex--

Unknown Speaker: Is it true with respect to Nevada domiciliaries ?

Mr. Jerome B. Falk: If they are found to be Nevada domiciliaries.

Unknown Speaker: Well if Nevada was determined to be the domicile and the State nevertheless paid you $16 million or what is it 18%.

Mr. Jerome B. Falk: 18%.

Unknown Speaker: 18%, which is how many million dollar?

Mr. Jerome B. Falk: We do not know the value of the estate.

It is a substantial sum.

Unknown Speaker: Would the payment from the state of that 18% be in a State taxes paid deduction?

Mr. Jerome B. Falk: I am not really qualified to say.

I suppose the IRS has the final say on that, I think the answer is yes.

The state and we have agreed to resolve that part of the controversy and we have compromised our tax.

Unknown Speaker: Oh yes but then one party that controversy files a lawsuit as a part of which it is essential to determine domicile and it is determined contrary the claims and the party filling the suit.

Mr. Jerome B. Falk: Well, I think that kind of situation can happen in settlements, for example if you settle a lawsuit with several parties involved and some settle out, that settlement is valid even though other parties do not settle the litigation proceeds and there is a adverse determination to-- .

Unknown Speaker: Now what do you state Mr. Falk in the same position of the executives of the Dorrance state where they volunteered the payment to Pennsylvania and then New Jersey interposed the claim and established domicile and collected $18 million against Pennsylvania's $16 million and then the when the executives tried to get back to $16 million from Pennsylvania they were told no that was a voluntary thing.

Mr. Jerome B. Falk: I think they would have no remedy, I think that is correct and I think they have no remedy and they would be in that position because they made a decision to opt for a lower tax rate and to abandon defenses that were otherwise available.

I think that was a choice that they made knowingly and they will have to pay the consequences if that is what it turns out, I do not.

Unknown Speaker: Well of course you will call Dorrance executive were surcharged for that.

Mr. Jerome B. Falk: I did not know that Mr. Justice.

Unknown Speaker: And I just wonder here if it would determine that Nevada after all where there is no inheritance tax was the domicile.

What about the State paying California?

Mr. Jerome B. Falk: Well I think.

Unknown Speaker: This plus inheritance taxes.

I think that would be entirely baseless assuming that you can pierce these Summa Corporation veil because you have some substantial taxes --.

Mr. Jerome B. Falk: It is not the bulk of the estate but there are substantial assets in California.

Unknown Speaker: Mr. Falk, are you a full time Attorney General for the state of California?

Mr. Jerome B. Falk: No, Mr. Justice I am in private practice, I am special Counsel for the State of California in this matter.

Chief Justice Warren E. Burger: Have you ever represented any other party to this case other than the State of California?

Mr. Jerome B. Falk: Absolutely not and I have filed a sworn affidavit with this Court which was presented to Justice Powell and I think referred to the entire court which I set forth under penalty of perjury that this decision was made and I will go further and say that the papers were prepared and ready to be filed, they were almost ready to go, they were at the printer before we had any discussion whatever with the estate on the subject of settlement so the charge is just false.

Unknown Speaker: Well, except this complaint does not to ask the Court to determine that the decedent -- where the decedent was domiciled whether Nevada or the Bahamas or Mexico or where, simply that he was on the date of his death not a domiciliary of Texas.

Mr. Jerome B. Falk: That is correct.

Now as I say we would be -- if we thought it were necessary, if the Court finds it necessary, we were prepared it to amend in and to take our chances with the broader question.

I see no purpose to be served by that, the State has made its decision and we have agreed to accept the lower rate of tax in settlement of that aspect of the case and it seems to us that it serves the benefit of everyone to narrow the issue.

We have really only one problem left, I thought that was a constructive thing to do.

Unknown Speaker: It may well be I guess.

Mr. Jerome B. Falk: If that is, your statement is absolutely correct Mr. Justice.

Unknown Speaker: But we have to reach our decision on the basis of the pleadings as they are now before us.

Mr. Jerome B. Falk: Yes I think that correct.

Chief Justice Warren E. Burger: Not on the basis of some possible amendment that you may have in mind.

Mr. Jerome B. Falk: I think that is a fair statement Mr. Chief Justice.

Chief Justice Warren E. Burger: Very well.

Thank you gentleme.

The case is submitted.