RESPONDENT: Allen-Bradley Company
LOCATION: Military Stockade
DOCKET NO.: 78
DECIDED BY: Warren Court (1956-1957)
CITATION: 352 US 306 (1957)
ARGUED: Dec 13, 1956
DECIDED: Jan 22, 1957
Hilbert P. Zarky - for the petitioner
Facts of the case
Media for United States v. Allen-Bradley CompanyAudio Transcription for Oral Argument - December 13, 1956 (Part 2) in United States v. Allen-Bradley Company
Audio Transcription for Oral Argument - December 13, 1956 (Part 1) in United States v. Allen-Bradley Company
The next case is Number 78, the United States versus The Allen-Bradley Company.
Hilbert P. Zarky:
Mr. Chief Justice, if the Court please.
This case and the next succeeding case are both tax cases and they both involve a common ultimate question.
And that question is simply this, whether this taxpayers who receive so called certificates of necessity with respect to certain property, and whether the certifying officials in issuing the certificate limited it to a percentage less than 100% of the cost of the property.
Whether under those circumstances, the taxpayers are entitled to a tax deduction based on 100% of the cost of the property as the Court of Claims held in this case or whether as the Government contends, the taxpayer's deduction must be limited to the percentage of cost which these certifying officials in the certificate found were necessary in the interest of the national defense.
Our position is to hold our first contention, our first argument is that the statutory authority which Congress granted, the discretion did entrust to -- to these officials was sufficiently broad.
So that they could, as they did in this case and then the other cases, issue certificates of necessity limited to some percentage, some portion of the cost less than 100%.
Now, of course, if the Court agrees with that contention of ours, that ends the case.
We have, moreover, a -- an alternative argument, that is, if the Court should disagree, if it should hold that the statute was not sufficiently broad to permit these partial certificates.
In other words if Congress didn't require the administrative officials in determining what was in the interest of the national defense to answer that question yes or no, and nowhere in between, we say that nonetheless, the taxpayers are not entitled to prevail for this reason.
That, having accepted these certificates, some 10 years ago, without any challenge, without any attempt to litigate in the courts the question whether the certificates were authorized by the statute or not, having in fact treated in their tax returns.
The certificate's as valid because they took the tax deductions just as we say they should.
That under those circumstances, the taxpayers cannot, in a tax proceeding before the Court of Claims in this case or in the Tax Court in the next case, obtain deductions on 100% of the property for these reasons.
Namely, their right to a deduction of 100%, even if the administrative officials had answered these 100% or 0% were dependent upon having certificates that 100% of the cost of property was necessary indeed because of the national defense.
This, of course, the administrative officials did not do.
And we may obtain in our second proposition that neither the Court of Claims nor the Tax Court, in this tax proceeding, could substitute its judgment for that of the administrative officials.
It could not -- it could itself determine that these facilities were in their entirety for 100% of their cause necessary in the interest of the national defense and grant deduction just as though certificates of that kind had been issued.
Could I ask you a question on that point?
In the next case, which is the Second Circuit case, the Second Circuit as I understand it didn't reach the underlying question as to the interpretation of section 124 (f).
Hilbert P. Zarky:
It went under procedural ground, namely, that mandamus would not rely and that the determination could not be collaterally attacked in the -- in the tax proceeding, right?
Hilbert P. Zarky:
Well, I think, Mr. Justice Harlan, they answered the question which I was just now describing, namely, that they were saying as I understand the opinion below that the Tax Court couldn't itself exercise the discretion entrusted to the administrators.
The Tax Court could not decide that these facilities were necessary in the interest of the national defense for 100% of the cause.
Let me expostulate and I'll get back to that my second point later.
For example, if the taxpayers immediately upon being issued the certificates had gone into a district court of the United States and said, "This is wrong.Congress hasn't authorized you to do this."
We believe, a district court properly could have done no more, had it agreed that that was an erroneous interpretation of statute.
Then to send the matter back to the certifying officials and say, use your discretion within the limit set -- set forth by Congress.
But it would not itself have said, Mr. Taxpayer, you are entitled to 100% certificate, and we of the District Court, I will decide that that's a certificate you are entitled to and I will mandamus the official to issue it.
And as I read the Second Circuit's opinion, what it said was -- which is our position namely, you don't have 100% certificate, the Tax Court couldn't issue you one, the Tax Court couldn't exercise that discretion and therefore, the Tax Court is wrong in granting you relief as though you had 100% certificate.