UNITED STATES OF AMERICA, PETITIONER V. RALPH D. HARRIS AND JOAN F.
HARRIS

   No. 85-1011

   In the Supreme Court of the United States

   October Term, 1985

   The Solicitor General, on behalf of the United States, petitions
for a writ of certiorari to review the judgment of the United States
Court of Appeals for the Eleventh Circuit in this case.

   Petition for a Writ of Certiorari to the United States Court of
Appeals for the Eleventh Circuit

            TABLE OF CONTENTS
   Question presented
   Opinions below
   Jurisdiction
   Treaty and executive agreement involved
   Statement
   Reasons for granting the petition
   Conclusion
   Appendix A
   Appendix B
   Appendix C
   Appendix D

                            OPINIONS BELOW

   The opinion of the court of appeals (App., infra, 1a-18a) is
reported at 768 F.2d 1240.  The opinion of the district court (App.,
infra, 21a-24a) is reported at 585 F.Supp. 862.

                             JURISDICTION

   The judgment of the court of appeals was entered on August 14, 1985
(App., infra, 19a-20a).  On November 5, 1985, Justice Powell extended
the time for filing a petition for a writ of certiorari to and
including December 12, 1985.  The jurisdiction of this Court is
invoked under 28 U.S.C. 1254(1).

                TREATY AND EXECUTIVE AGREEMENT INVOLVED

   Article III, paragraph 9 of the Panama Canal Treaty, Sept. 7, 1977,
United States-Panama, T.I.A.S. No. 10030, and Article XV of the
Agreement in Implementation of Article III of the Panama Canal Treaty,
Sept. 7, 1977, United States-Panama T.I.A.S. No. 10031, are set forth
in App., infra, 25a-26a.

                          QUESTIONS PRESENTED

   1. Whether the courts below erred in determining that Article XV of
the Agreement in Implementation of Article III of the Panama Canal
Treaty, Sept. 7, 1977, United States-Panama, T.I.A.S. No. 10031,
exempts the respondents from United States taxation on the salaries
they received from the Panama Canal Commission.

   2. Whether the court of appeals erred in refusing to consider a
diplomatic note the Republic of Panama delivered subsequent to entry
of the trial court's judgment, setting forth the Panamanian
government's interpretation of the Implementation Agreement.

                               STATEMENT

   During 1979, respondents resided in the portion of the Republic of
Panama that had formerly constituted the Canal Zone.  They were both
employed by the Panama Canal Commission (Commission).  For tax year
1979, they filed a federal income tax return and reported as income
the salaries received from the Commission (App., infra, 1a-2a, 21a).

   In 1980, they filed a claim for refund, in which they contended
that salaries received from the Commission between October 1, 1979,
and December 31, 1979, were exempt from United States taxation under
Article XV of the Agreement in Implementation of Article III of the
Panama Canal Treaty (App., infra, 1a-2a, 21a-22a).  The district court
agreed, concluding that paragraph 2 of Article XV was "needful of no
interpretation," although, as the court acknowledged, the President
and the Senate had a contrary view of the relevant provision (App.,
infra, 21a, 23a).

   The court of appeals affirmed.  It held that the "clear language of
Article XV(2) of the (Implementing) Agreement creates a bi-national
tax exemption" (App., infra, 1a, 18a).  The court reasoned that the
testimony of the Legal Adviser of the State Department and the
analysis of the treaty and its implementing executive agreements that
the State Department presented to the Senate Committee on Foreign
Relations, both of which indicated that no domestic exemption was
intended, provided an insufficient basis upon which to conclude that
the treaty partners "intended to agree on something different from
that appearing on the face of" the Agreement (App., infra, 13a-17a,
18a).  The court of appeals also refused to consider a diplomatic note
the Government of Panama had delivered to the United States subsequent
to the trial court's decision (App., infra, 8a).  Even though the
Government of Panama endorsed the United States' interpretation of the
Implementation Agreement as having no effect upon the right of the
United States to tax its own citizens, the court of appeals held that
it would not consider diplomatic correspondence that had not been
submitted to the trial court.

                   REASONS FOR GRANTING THE PETITION

   This case involves the same provision of the Implementation
Agreement that is involved in O'Connor v. United States, petition for
cert. pending, No. 85-558 (filed Sept. 30, 1985).  /1/ The questions
presented in both cases are identical, i.e., whether the Agreement
creates an exemption from United States income tax and whether the
formal views of the Panamanian government should have been considered
by the court of appeals.  Here, the court decided each question in a
manner that conflicts with the decision of the Federal Circuit in
O'Connor.  We demonstrated in our brief acquiescing in certiorari in
O'Connor that the decision reached by the Federal Circuit is correct
and consistent with the decisions of this Court.

                              CONCLUSION

   The petition for a writ of certiorari should be held and disposed
of as appropriate in light of this Court's disposition in O'Connor v.
United States, No. 85-558, and its companion cases.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   DECEMBER 1985

   /1/ We are sending to counsel a copy of our consolidated response
in O'Connor v. United States, No. 85-558;  Coplin v. United States,
No. 85-559;  and Mattox v. United States, No. 85-560.

   APPENDIX