Segal v. Rochelle

LOCATION:General Petroleum Corporation

DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 382 US 375 (1966)
ARGUED: Nov 17, 1965
DECIDED: Jan 18, 1966

Facts of the case


Audio Transcription for Oral Argument – November 17, 1965 in Segal v. Rochelle

Earl Warren:

Number 44, Gerald Segal, Individually and Segal Cotton Products, et al., Petitioners, versus William J. Rochelle, Jr.

Mr. Klepak.

Henry Klepak:

Thank you.

May it please the Court.

The facts are simple and not in dispute, nor have questions the law involved.

The facts are that one Gerald Segal and his father, Sam Segal, are engaged in a business in Dallas, Texas, known as Segal Cotton Products.

A petition of bankruptcy was filed by both father and son and also as a partner.

As a result of this bankruptcy, they received a discharge and that was in September of 1961 when the petition was filed.

In 1962, the auditor of the Segal Cotton Products filed an application for loss-carryback for refunds.

In 1963, the Internal Revenue Department did pay this refund by agreement between myself and Mr. Rochelle, the trustee and the counsel, the monies were held by him, were the outcome of this case.

We contended that the money belong to the bankruptcy.

Potter Stewart:

I just — may I get that chronology —

Henry Klepak:


Potter Stewart:

One more time.

Henry Klepak:


Potter Stewart:

The petition in bankruptcy was filed when?

Henry Klepak:

September of 1961

Potter Stewart:

And the claim for refund?

Henry Klepak:

The claim for it was filed in 1962 after the discharge and in 1963 the money was paid, and since then we’ve been litigating.

Potter Stewart:

And the refund was for what taxable year?

Henry Klepak:


Potter Stewart:

1961, the — the year of the —

Henry Klepak:

That’s right.

Now in — at that point then, we then — and in dispute, the referee in bankruptcy held that the funds belong to the trustee in bankruptcy as part of the — the estate of the bankrupt.

The District Court upheld a certificate of findings of the referee in bankruptcy.

It was then filled of course to the First Circuit Court of Appeals and that’s when trouble started because at that time, I was armed with two Circuit Courts of Appeals decisions both favorable to my clients, one of the First Circuit and the other, the Third Circuit.

In both of those decisions, they held that this tax refund was windfall to the taxpayer, to the bankrupt.

And there were the funds of the bankrupt and not to the estate that is to the bankruptcy.

And it became a very, very unpopular decision because every magazine and more especially the National Association of Referees in Bankruptcy journal, a number of law reviews such as Texas University, Stanford, Miami University and other law reviews all wrote rather harsh articles against both the First Circuit and the Third Circuit for their findings.

The First and Third Circuit simply held that the statute as written did not give or place a property right in the bankrupt at its time of bankruptcy whereby, he could, under the term of the statute, transfer that so-called property right.

Henry Klepak:

He didn’t have one.

Also, they brought out the fact that the provisions of the Code provide further that you could not assign a claim against the United States Government.

We bring to this Court’s special attention the language.

First I do want to bring the Court’s attention this least, that Section 17 which is in controversy — controversy here which is known 70a (5) of the Bankruptcy Act.

This Act was passed in 1898.

In 1942 is when they first brought the three-year loss-carryback to five-year forward.

And that period of time elapsed.

The language that it uses and in the hearing of the language, and this is under the Bankruptcy Act in which the whole issue evolves itself — a) the trustee of the estate of the bankrupt shall in turn be vested by operation of law where the title of the bankrupt as the date of filing a petition initiating a proceeding on this title to all of the following kinds of property whatsoever located, here we mean the whole thing.

The property including rights of action which prior to the filing of a petition, he could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded, or sequestered.

Now, our position is this that the statute reads very clearly.

It says that the refund only comes into being after the taxable year.

In other words, here we have a case where bankruptcy was taken in September of 1961.

In the Sussman case, which was a case I referred to a moment ago being in the Third Circuit, that was filed in July of the — of the taxable year.

In the Fournier case which is out of First Circuit that was filed in December of that taxable year.

The Court being that at the date of filing for a petition of bankruptcy being the 20th — 7th day of September of 1961, the bankrupt had no property right, and here’s why.

Because he had to conclude and complete all the year of 1961 before there could be any slight resemblance to any kind of a claim he might make.

He might anticipate.

He might dream of that he has one, but here’s what occurs.

Number one, he had the additional months of that year to complete.

Supposing he earned up money to offset his losses, then there would never have a claim.

Supposing, number two, that whatever clauses he thought he might have was denied by the Internal Revenue Department, supposing by some other windfall he makes profits in some other way, still his position as far as the date of his bankruptcy he had nothing —

Potter Stewart:

Well, your second — your second point —

Henry Klepak:


Potter Stewart:

— suppose that his claims were denied, it shouldn’t be as positive because of many claims are — are I would think he would concede property of the bankrupt which may or may not be good claims, isn’t that correct?

Henry Klepak:

Good point — well taken, that’s right, it is.

I was wrong in saying that because it would make no difference what the Internal Revenue office does.

Potter Stewart:

So long as it’s a good valid claim.

Henry Klepak:

That’s right, exactly.

Now the First and Third Circuit, Sussman case was the first case.

And the judge very reluctantly, the judges very reluctantly held with the bankrupt.

Henry Klepak:

And they say so, and they say it’s a windfall but they say the statute reads exactly the way it says and we’re not going to attempt to change the statute.

That is for Congress to do, not for the Court to do.

In the Third Circuit or rather the First Circuit, they adopted the findings of the First Circuit, took exactly the same position and use the same word of windfall and they too took the same position.

They also added to the position that he did not have a property right.

They provided both the provision of 31 U.S.C., that’s Section 3477, which says declaring all assignments of any claim upon the United States absolutely null and void unless made after the allowance of such a claim.

The ascertainment of the amount due and the issuing of a warrant for the payment thereof or provisions for the protection of the Government and not for the regulation of equities of claimants growing out of regular assignments when collection is complete and the Government’s liability ended.

Well, that is cited for purposes of showing that one, if you just think you have a claim against the Government, you’re in no position to make an assignment until the Government recognizes it and the amount of ascertained and the finding is made in your favor, then you may do it.

Now, there are a number, as I say, these decisions were not popular.

And when I appeared before the Circuit Court of Appeals in New Orleans, I was armed with the First Circuit’s opinion and the Third Circuit’s opinion.

And Mr. Rochelle came up with just some magazine articles and a few law journal reviews and I thought I was well armed.

But apparently, the Fifth Circuit didn’t take the same view because the Fifth Circuit “swam around” and said this and I do bring this to the Court’s attention because this is a test case.

This is one of the first impression for this Court because we now have our Circuit Courts in conflict and I would do want to recite — or cite rather from the Circuit Judge who ruled against me this language, “This appeal presents a question of prime importance in the administration of the Bankruptcy Act.

Now, the reason that you find so much noise about that in the journals is that the referees in bankruptcies have discovered that this might be a tremendous thing to make because they could then take all the loses the bankrupts may have had and check back and see if they have paid any income tax.

There might be a source of revenue or income to the bankruptcy courts.

On the other hand, here is something that we must just think about when we do this.

Number one, presuming I am wrong about the fact that there isn’t — that there was a property right, just presumingly.

Then, this comes to my mind.

The statute provides for a three-year loss-carryback and the five-year forward.

Now, what happens here?

Here in September, take my client’s position, in September 21st, 1961, they take bankruptcy.

Now, they had to do something to the remainder of that year.

What they did, none of us know.

There’s nothing in the record.

The referee in bankruptcy makes those findings as to how much additional loses may have been sustained by my clients between September and December the 31st of 1961.

Now, the Fifth Circuit, in order to justify its finding, it does this.

It says, one, that this one involved shouldn’t go to the bankrupt.

It should protect the creditors.

And that this refund should then go back to the bankruptcy court and made available for questions.

Now, if he’s trying to — if the Court is trying to protect the creditors, he is only protecting the creditors who are listed in the — in the schedule of bankruptcy in the bankruptcy court.

What about the creditors that were created between September the 21st and December the 31st?

Henry Klepak:

They are not in there.

Now, whatever loses they may lose to these people, they’re not protected.

So when you get the listing, you get another problem.

How far can you reach out if this law abuses the taxpayer right to go five years forward?Does this mean that a bankrupt for five years has his hands tied?

Does it mean that anytime in five years, that the referees or the trustee in bankruptcy, he comes and asks “I want to see your books.

I want to see what kind of year you had here” and determine when he wants to make this loss book of the former deal to be able to get some money into the estate.

Now, there’s got to be a closeout somewhere.

I think this.

I think very seriously that it was or is windfall.

The amount of money that’s involved in this case is nothing because when we did make to recover of these refunds, the small business administration has the money come and it grab its money real quick and left us with some pennies.

But we had an issue and we have one which we felt was important.

And more especially, if you think we have our Circuit Courts who do not agree.

Now I’ll say this.

It’s true that the opinions of the First and the Third Circuit were not very popular but by the same token, my clients of bankrupt weren’t very popular to their creditors back home either.

But in any event, I think what you’re going to have to do — you’re going to have to construe the question.

And there’s only two questions.

One, does Section 7 (a) of the Bankruptcy Act does it if the language by introduces property including rights of action which prior to the filing of a petition, prior to the filing of a petition, he could by any means have transferred.

Now, could the bankrupts in this case on September the 21st, could they, when the statute meritoriously says, “You cannot make an application for a refund until your whole taxable year has been completed.”

Could they on September the 21st stop, put an application, right then and there or ascertain a claim that we got a refund coming right now.

No, the statute prohibited.

The statute where it specifically says, “If you have to complete your calendar year”, the calendar year of December 31st.

So the question is, did the bankrupt have the property right in the anticipated, if they could have been anticipated, and they anticipated lost or loss-carryback and refund.

The second part is that presuming you find that there was a property right, then the next question is, does — is it in conflict with the statute that prevents the assignment of a claim against the United States Government.

Now, there are other cases that are cited both sides and I think there’s was a quite conflict on it.

But I think there is no conflict on issues, strictly one of law, this question as to whether or not there was a property right at the time of bankruptcy and such a nature that it could have been transferred.

We say that it was not.

Abe Fortas:

Suppose there were, Mr. Klepak, suppose it was for a corporation, instead of individuals and partnership, would that make any difference in the practical consequences of the rule for what you’re contending?

Henry Klepak:

I don’t think it would.

I don’t see it in either — there are no special provisions for a corporate set up, it’s all the same.

The benefits are the same to each — to both whether it’s going to be a good partnership or —

Abe Fortas:

What happened then would be that the corporation would get — would get the benefit of the refund and as distinguished from the corporation in the hands of the trustee, is that what comes to (Voice Overlap) —

Henry Klepak:

Yes, that’s true enough.

Now, bearing this one I realize —

Abe Fortas:

And it sounds — sounds kind of peculiar, but —

Henry Klepak:

Yes, it does but how do you realize when you say, “Well, if you want to seek acquiesce, you might have say, well now, the first thing to do is to take the funds that the bankrupt did recover and give it to a creditor.”

And that would be alright, I mean, if you just want to be generous.

But that’s not the point.

What we have here is, does the statute give that forward.

Abe Fortas:

Now, I’m not saying — I’m interested in that kind of a judgment, I’m just interested in what practical consequences of this rule for which you’re contending would be as applied to a corporation?

Would it — would the trustee end up with the proceeds of the refunds in either event —

Henry Klepak:

I believe (Voice Overlap) –

Abe Fortas:

— whatever the theory might be, sir?

Henry Klepak:

I believe it was a corporation because he takes over, dealt with the brief with me over here but I — I think he takes over the stock of the corporation as well.

Anyhow, I’m not going to talk about that if it didn’t raise — answer that question.

What we — we realize and I do realize that it’s a question as to whether or not you’re going to just do what the Fifth Circuit Court — here, the Fifth Circuit Court says, “Well, I think I know what the legislature intended.”

It was not a question whether you almost guess what they intend, what does the statute really say and that’s what we have, and I think exactly directed by legislation.

Earl Warren:

Mr. Rochelle.

William J. Rochelle, Jr.:

Mr. Chief Justice, Honorable Associate Justices, it may be somewhat unusual to commence an argument with emphasis on what the case is not about.

However, in this particular case, I think it is essential to a proper understanding that we emphasize that this case does not involve the right to net operating loss carried forwards in the trustees like in no contention in that regard.

Also this case does not involve rights to refund in any taxable year after the date of bankruptcy.

And the trustee is making no contentions in that regard.

Neither does this case involved loses incurred after the date of bankruptcy and prior to the end of the taxable year.

Now, if it did involve such loses, I think no particular problem would be presented because as suggested by the Fifth Circuit in the opinion below, it would be a simple matter to prorate the refund, that portion of the refund attributable to the loses incurred prior to the date of bankruptcy, would go to the trustee and that portion of the refund determinable losses incurred after the date of bankruptcy and prior to the end of the taxable year would go to the bankrupts.

But this isn’t the case here.

We’re involved with —

Potter Stewart:

But what — what happened here between the dates of bankruptcy in the end of the taxable year with respect to —

William J. Rochelle, Jr.:

Your Honor, the individual —

Potter Stewart:

— property losses?

William J. Rochelle, Jr.:

— partners apparently continued to work — continued to earn money.

The individual partners had taxable income for the year 1961.

William J. Rochelle, Jr.:

It was their partnership, the Segal Cotton Products Company which had the big loss.

So the refund came about by reason of the excess of the lost over the taxable income of the individual partners.

And of course, the individual partners were entitled to their portion of share of the loss of partnership.

That’s how it came up.

This is a case —

Potter Stewart:

I thought the — I thought both the partners, both the — both the Segals as partners and also each one of them individually went into bankruptcy.

William J. Rochelle, Jr.:

Yes, Your Honor.

Potter Stewart:

Well, then how did they —

William J. Rochelle, Jr.:

In these cases, it has been administered in a consolidated proceeding.

But this case here involves the two individual bankrupts and of course, it was they, as individuals, were entitled to refund not for partnership.

Potter Stewart:

And this was just simple bankruptcies or any Chapter 11 or anything like that.

William J. Rochelle, Jr.:

No, Your Honors, straight bankruptcy.

I think the principle would be no difference, there were but, it’s straight bankruptcy nevertheless.

Potter Stewart:

And I don’t quite see how they continue to operate after bankruptcy.

William J. Rochelle, Jr.:

They didn’t.

The partnership business, Segal Cotton Products, did not continue to operate.

It seized on the date of bankruptcy.

But the two individual partners of course had some earnings during the remainder of that year from other employment.

William J. Brennan, Jr.:

They got other jobs?

William J. Rochelle, Jr.:

Yes, Your Honor.

And their earnings were deducted from the loss to make the net operating loss-carryback refunds.

This is the case of statutory interpretation and we, therefore, should construe the statute in the light of its purpose.

One of the primary purposes of Bankruptcy Act is to ensure the equitable distribution of the assets of the bankrupt to his creditors.

As Collier says, 70a (5) is bold in searching and has been drawn to comprise all properties that may be of use or benefit to the bankrupt.

Now, the Third Circuit in its opinion in Sussman said, “This is an unfortunate result.

We regret it, but Congress must make the change and the change is indicated.

We think this is not so.”

The Third Circuit would have Congress make a specific exception.

But the statute, we think, none is necessary.

The statute is necessarily counts in broad, general language.

William J. Rochelle, Jr.:

This must be so if Congress were to undertake to spell out and describe every particular and distinct type and kind of property right, I submit to the Court that there would be literally thousands of subsections to Section 70.

And then Congress could never catch up because new property rights are being created all the time.

Indeed, this one was created after the statute was enacted.

But this makes no difference.

The Third Circuit is, the same Circuit that handed down Sussman, held in Chandlers v. Nathans that the right to an ordinary tax refunds passed to the trustee in bankruptcy even though that right was not created until 1918 and the statute was passed in 1898.

Now, Mr. Justice Fortas asked my very distinguishing capable adversary.

What would be the case in the case of a corporation?

Now, I disagree with my adversary’s answer on that point.

In bankruptcy, the corporate shell does not pass to the trustee.

The corporation has and indeed continues to exist if for any reason they want to continue the existence of the corporation and there maybe a number of good reasons to continue it, for example, the net operating loss that are involved.

Therefore, that would be the distinctly involved to the old corporate share — or to the old stockholders, the creditors would take now.

Now, in order to be a right which —

Potter Stewart:

How about — your answer is that the rule is the same — with respect to a corporation —

William J. Rochelle, Jr.:


Potter Stewart:

— with respect to a natural person.

William J. Rochelle, Jr.:

Corporation, partnership, and individual, no difference.

Potter Stewart:


William J. Rochelle, Jr.:

To be proper — to be right which passes to a trustee in bankruptcy under Section 70, the right must pass two tests.

In the first place, it must be property.

And in the second place, it must be property which is transferal.

So if I may address myself to the first of these questions.

This right to a refund is a vested statutory right.

Indeed, the first words in 26 U.S.C.A. Section 172 are, “There shall be allowed.”

Now, admittedly, the realization of this right is postponed until after the end of the taxable year.

Admittedly the amount is uncertain until the end of the taxable year.

But postponement of right to realization certainly could not affect the status of this right as property.

Otherwise, a note receivable payable to the bankrupt but not yet to due would not pass to the trustee, nor there is uncertainty of time and amount or contingency in other words affect the status of this right as property.

Now, in our State of Texas, we deal and trade in everyday the most contingent possible kinds of rights, those in oil and gas for example.

When there is a transfer of rights under an oil and gas lease, sometimes the transferor will reserve an overridding royalty interest to take effect after payoff.

If conceive of anything more contingent than this, in the first place, there’s got to be discovery of oil and gas in paying quantities.

William J. Rochelle, Jr.:

The second place, there’s got to be payout of the person who drill the well, this may never happen.

But this doesn’t affect the status of that overriding royalty interest as property.

And indeed these interests are transferred in substantial amounts of money everyday, nor has there ever been a question that such a highly contingent and speculative right would pass to a trustee in bankruptcy.

There are many cases cited in the opinion of the Fifth Circuit in the trial court below and in our brief, where contingent rights have been held to pass.

This Court in Williams against Heard held that the right passed to the trustee in spite of the fact that at the time of bankruptcy in 1875.

There wasn’t even a right which existed.

There was only a loss, the right may become into being and if Congress made provision for an award under the treaty in 1886 some 11 years later.

And now, in (Inaudible), a contingent remainder was held to pass in spite of the fact the remainder stood to be entirely defeated if the beneficiary pre-decision is (Inaudible).

Horton against Moore was another case for the Sixth — Fifth Circuit involving the same type of situation.

And then the Ninth Circuit, Kleinsmith — Kleinschmidt against Schroeter, a man had forfeited every right he had in a mining venture except the possibility that it his erstwhile partners later sold the venture and got enough money for it to pay them back for their advances, then he might back in for some sort of contribution.

This contingent interest was held passed by the Ninth Circuit.

There are other cases which are applicable and important.

Now, as to the transferability of the right, this Court held in Spindle v. Shreve that what is transferrable is a question of state law.

There has never been any doubt that under Texas law where this case arose, contingent interest are transferable, in cases recited in the brief for that fact.

I think there’s been no doubt that it’s — that common law contingent claims as far as I know.

Now, I would not presume to advise this Court whether or not contingent claims are assignable in Pennsylvania or whether they are assignable in New Hampshire.

There are cases cited in record incidently, at page 22, the whole of that contingent remainders in Pennsylvania are not assignable.

But Sussman did not bottom its decision on any contention that contingent claims are not assignable in Pennsylvania, nor did Fournier bottom its decision on New Hampshire law.

Sussman’s result came about because the Court said, “You can’t assign under the Assignment of Claims Act.

Now, as long ago as 1828, in Comegys against Vasse, this Court held or this Court inquired, is it a possibility coupled with an interest?

If it is, therefore it said, then it passes through the trustee then called the assignee in bankrupts.

Now, as to these two cases with which my adversary is on —

I don’t quite get your answer to the — in the assigned party?

William J. Rochelle, Jr.:

I’m coming to that now, Your Honor.

The Third Circuit in Sussman said and I quote, “Perhaps this expectation can be described as a contingent claim against the United States.

Thereby, I think admitting that this is a contingent claim, then they said, “But.”

It is contrary to the Assignment of Claims Act and therefore is not transferable.

Now it’s unfortunate I think but I think it’s also true that with the pressure of the dockets, that our good judges on our Circuit Courts are forced to rely more and more on the help they get from counsel and have less and less time for independent research, nobody apparently called the attention of the Third Circuit to Erwin against the United States or the United States against Gillis.

Both decisions by this Court which established the rule which has been enforced for many, many years that the assignments of — assignment of Claims Act has no applicability to assignments by operation of law or transfers by operation of law.

They said it has no applicability to the enforceability of the assignment as between the parties.

William J. Rochelle, Jr.:

It is designed, yet the statute is designed for the protection of the Government.

Now, a trustee takes under Section 70 by the very wording of the statute “by operation of law.”

And therefore, it is unfortunate that the Third Circuit did bottom their decision on this, which so plainly has gone through Erwin against United States and United States against Gillis.

Now, the First Circuit — the First Circuit in Fournier, which followed Sussman, avoided that anti-assignment statute was proper.

They based it from the idea that the right was followed.

Byron R. White:

It was not proper.

William J. Rochelle, Jr.:

I beg your pardon.

Byron R. White:

It was not proper.

William J. Rochelle, Jr.:

Yes, it was not proper.

Byron R. White:


William J. Rochelle, Jr.:

Now, as to Sussman —

Wasn’t that argument on the anti-assignment statute rather vaguer question?

Because the — by definition, whether this is a — well by — by a definition the question is whether this is a property that would pass to the bankrupt by operation of law, the statute defines the question in terms of whether the bankrupt themselves would have transferred the property right.

William J. Rochelle, Jr.:

That is correct, Mr. Justice Harlan.

You have —

William J. Rochelle, Jr.:

It must have been transferrable on the date of bankruptcy by the bankrupt itself.

So, it is to say that the Anti-assignment Act doesn’t apply to assignments by operation of law.

It would just get you very far in the problem that you got here, wouldn’t you?

William J. Rochelle, Jr.:

I think it does, Mr. Justice Harlan, because the — because the Third Circuit said, “Perhaps it is brought but it is rendered nonassignable by virtue of the statute.”

And these decisions of this Court has said, the statute does not render a claim against the Government, nontransferable by operation of law.

It has no application from that situation.

Now, Fournier, by the First Circuit cited one case and that was the Sussman case.

There was no mention on Williams against Heard, or Comegys against Vasse or Horton versus Moore, or Kleinschmidt against Schroeter, or the many, many other cases.

Now there again, we must presume that the First Circuit was not made aware of the decisions of this Court on contingent claims passing to address the bankruptcy.

Certainly, had it been made aware of such decisions, these decisions at least would have justified some comment or some effort to distinguish, but they were not mentioned.

The only case cited by Fournier was Sussman.

Now, before I close and in order that this Court perhaps maybe read of me and Mr. Klepak today, I would like to emphasize that the practical effects of a holding which would sustain the rule of Sussman, the Court there admitted that this is a windfall to the bankrupt that the — the expense on his creditors, the refunds coming about by reason of the losses incurred with these credited money.

But now I would point out also through the Court that the Sussman rule would act as the greatest possible encouragement to prospective bankrupts to run up their losses prior to filing a voluntary petition, doing anything which might result in an increase loss at the expense of their creditors who increase the refund with which — with which they might go south.

Last — last month, before the National Association of Referees in Bankruptcy, representatives of the Department of Justice and of the Securities and Exchange Commission appeared and gave papers on how racketeers are moving in to the bankruptcy area.

They pointed out that they will go into a community acquire control surreptitiously of an ongoing concern with a good credit ready, build up huge inventory, sell it off, perhaps it is sacrifice in order to convert it to cash either put the organization in the bankruptcy or permit it to go in with the trustee getting an entirely inadequate set of records and no way to trace, and the racketeers going south with the merchandiser, the proceeds.

William J. Rochelle, Jr.:

Now, what a greater attraction to these gentleman would it be if they could also go south with the mid-operating loss-carryback refund.

I will close but I would urge upon — that the court of bankruptcy is essentially a court of equity.

And in the exercise of the jurisdiction conferred upon it by the Bankruptcy Act, if the bankruptcy court applies principles and rules of equity jurisprudence, the powers of the Court have been invoked through the end that fraud will not prevail, that substance will not give way to form, that technical considerations will not prevent substantial justice from being done.

Those are the words of this Court in Pepper versus Litton in 1937.

They are applicable today even more so than they were then.

And I think and submit that they have special applicabilities to the case involved.

Earl Warren:

Mr. Klepak.

Henry Klepak:

Just really I want to conclude, just one remark.Both courts did hold that it was something for Congress to correct.

I do want to reemphasize above the five-year statute and that is the loss of carried forward five years, going for the purpose of freeing your mind, what happens to the bankrupt if he chooses not to go for the three-year loss-carryback but goes forward.

Does he carry the bell around his neck for five years so the referee or trustee in bankruptcy can stand for him?

And the third thing I want to share this Court is that these are my clients who are people reputable and that nothing that they have done is involved in any fraudulent schemes or devices.

I know (Voice Overlap) that I make no such a (Inaudible).

Thank you very much.

Earl Warren:

We’ll adjourn.