Land belonging to a non-Indian citizen of Oklahoma and subject
to state, county, and municipal taxation, was purchased October
24,
Page 276 U. S. 576
1915, under supervision of a county court and the Secretary of
the Interior for a minor, full-blood Creek Indian with moneys
derived as royalties from a departmental lease of his restricted
allotment. The deed, as required by the Secretary and the court,
provided that the land should not be alienated or leased during the
lifetime of the grantee, prior to April 26, 1931, without the
consent and approval of the Secretary. The land was let for oil and
gas exploitation under a departmental lease, and a tax was levied
upon the leaseholders, under the state law, measured by a
percentage of the gross value of oil and gas produced, less the
royalty interest of the Indian owner.
Held, in response to
questions from the circuit court of appeals:
1. That the Secretary of the Interior, when the land was
purchased, had no power to exempt it from such taxation. P.
276 U. S.
577.
2. The tax was not a forbidden tax upon a federal
instrumentality.
Id.
Response to questions certified by the circuit court of appeals,
concerning a judgment of the district court in favor of the
above-named corporation in an action to recover money paid under
protest as state taxes.
MR. JUSTICE STONE delivered the opinion of the Court.
Defendants in error brought this suit in the District Court for
Western Oklahoma against plaintiff in error to recover state taxes
paid under protest. Judgment was given for the plaintiff, and the
case is now pending on writ of error in the Circuit Court of
Appeals for the Eighth Circuit. That court has certified to this
questions of law concerning which it asks instructions for the
proper decision of the cause. Judicial Code, § 239.
Page 276 U. S. 577
The certificate discloses that defendants in error are the
assignees of a departmental oil and gas lease of land belonging to
Miller Tiger, a full blood Creek Indian. The leased land was
purchased for Tiger while a minor by his guardians, with the
permission of the County Court of Okmulgee County, Oklahoma. The
purchase price came from the accumulated royalties of a
departmental lease of his restricted allotted lands. The purchase
was made of a non-Indian citizen of Oklahoma, and the deed, in
compliance with conditions exacted by the Secretary of the Interior
and the county court, provided that the land "should not be
alienated or leased during the lifetime of the grantee prior to
April 26, 1931, without the consent of and approval by the
Secretary of the Interior." Before the purchase in 1915, the land
had been subject to state, county, and municipal taxation. Since
then, local
ad valorem taxes on the land have been paid
without objection by the United States Indian agency. The tax now
in question was levied and collected under Comp.Stat. Okl.1921, §
9814, which imposes on those engaged in the production of oil and
gas a tax equal to 3 percent of the gross value of the oil and gas
produced "less the royalty interest." The questions certified are
as follows:
(1) Had the Secretary of the Interior, on October 24, 1915, when
this land was purchased, power to exempt from such state taxation
land purchased under his supervision for a full-blood Creek Indian
with trust funds of that Indian, where the land so purchased was at
that time, subject to all state taxes?
(2) Is that tax a forbidden tax upon a federal
instrumentality?
In
Sunderland v. United States, 266 U.
S. 226, a restriction against alienation like that in
the present case imposed by the Secretary on lands purchased for a
Creek
Page 276 U. S. 578
Indian, as were Tiger's, under § 1, c.199, of the Act of May 27,
1908, 35 Stat. 312, was held to be a valid exercise of the power of
the Secretary to remove restrictions from the land of full-blood
Indians
"wholly or in part, . . . under such rules and regulations
concerning terms of sale and disposal of the proceeds for the
benefit of the respective Indians as he may prescribe."
In an earlier case,
McCurdy v. United States,
246 U. S. 263,
this Court had held that a similar restriction upon lands similarly
purchased for an Osage Indian could not have the effect contended
for there, and here, of exempting the land from state taxation for
the reason that, under the applicable provisions of a different
statute, § 5, c. 83, Act of April 18, 1912, 37 Stat. 86, the
Secretary was without authority to impose the restriction. And, in
United States v. Ransom, 263 U.S. 691,
aff'g 284
F. 108, it was held, on the authority of
McCurdy v. United
States, supra, that the state had power to tax lands purchased
for a Creek Indian citizen with restrictions against alienation
imposed by the Secretary under § 1 of the Act of May 27, 1908,
which was the statute later passed on in
Sunderland v. United
States, supra. The construction to be placed on these
decisions is that the lands now in question, and hence the interest
of the lessee in them, are not such instrumentalities of the
government as will be declared immune from taxation in the absence
of an express exemption by Congress, and that the mere act of the
Secretary in imposing the restriction is not the exercise of any
power which may reside in Congress to exempt them from
taxation.
What governmental instrumentalities will be held free from state
taxation, though Congress has not expressly so provided, cannot be
determined apart from the purpose and character of the legislation
creating them.
Metcalf & Eddy v. Mitchell,
269 U. S. 514. The
end sought and the mode of attaining it adopted by Congress in the
legislation providing for the welfare of the Indians by setting
Page 276 U. S. 579
apart, by allotment or otherwise, tribal lands or the public
domain, restricted for their benefit, led to the conclusion that
those lands and the uses of them were so intimately connected with
the performance of governmental functions as clearly to require
independence of all state control so complete that nothing short of
an express declaration by Congress would have subjected them to
state taxation.
Governmental agencies similarly held to be exempt are national
banks,
First National Bank of Hartford v. Hartford,
273 U. S. 548;
bonds of the national government,
Weston v.
City Council of Charleston, 2 Pet. 449. Such were
and still are the restricted allotted or tribal lands of the
Indians. Neither leases of those lands,
Indian Territory
Illuminating Oil Co. v. Oklahoma, 240 U.
S. 522, nor the exploitation of the land by the lessee,
Howard v. Gipsy Oil Co., 247 U.S. 503;
Large Oil Co.
v. Howard, 248 U.S. 549;
Choctaw, O. & Gulf R. Co. v.
Harrison, 235 U. S. 292;
Jaybird Mining Co. v. Weir, 271 U.
S. 609, nor his income from the lease,
Gillespie v.
Oklahoma, 257 U. S. 501, may
be taxed by the state.
The early legislation affecting the Indians has as its immediate
object the closest control by the government of their lives and
property. The first and principal need then was that they should be
shielded alike from their own improvidence and the spoliation of
others, but the ultimate purpose was to give them the more
independent and responsible status of citizens and property owners.
The present statute, which enabled Miller Tiger to become the owner
of the lands leased to the plaintiff, is typical of the latter
course of Indian legislation, which discloses a purpose to
accomplish that end not only by the gradual relinquishment of
restrictions upon the lands originally allotted to the Indians, but
by encouraging their acquisition of other property and gradually
enlarging their control over it until independence should be
achieved.
See McCurdy v. United States, supra.
Page 276 U. S. 580
The act under which Tiger's allotted and was leased is entitled
"An act for the removal of restrictions from part of the lands of
allottees of the Five Civilized Tribes, and for other purposes." It
frees from all restriction the lands of all allottees of less than
three-quarters Indian blood. Section 1 empowers the Secretary of
the Interior to remove the restrictions from the lands of
full-blood Indians
"wholly or in part, under such rules and regulations concerning
terms of sale and disposal of the proceeds for the benefit of the
respective Indians as he may prescribe."
Section 2 permits the allottees of lands from which restrictions
have not been removed to lease them for a period of five years,
"Provided, that leases of restricted lands for oil, gas or other
mining purposes . . . may be made, with the approval of the
Secretary of the Interior, under rules and regulations provided by
the Secretary of the Interior, and not otherwise."
Under § 4,
"all land from which restrictions have been or shall be removed
shall be subject to taxation and all other civil burdens as though
it were the property of other persons than allottees of the Five
Civilized Tribes."
In this, as in other Indian legislation, opportunity is afforded
for their emancipation by imposing upon them duties as well as
giving them the privileges of citizens and property owners,
including the duty to pay taxes.
In a broad sense, all lands which the Indians are permitted to
purchase out of the taxable lands of the state in this process of
their emancipation and assumption of the responsibility of
citizenship, whether restricted or not, may be said to be
instrumentalities in that process. But they are far less intimately
connected with the performance of an essential governmental
function than were the restricted allotted lands, and the
accomplishment of their purpose obviously does not require entire
independence of state control in matters of taxation. To hold them
immune would be inconsistent with one of the very
Page 276 U. S. 581
purposes of their creation, to educate the indians in
responsibility, and would present the curious paradox that the
Secretary, by a mere conveyancer's restriction, permitted by
Congress, had rendered the land free from taxation, and thus
actually relieved the Indians of all responsibility. There are some
instrumentalities which, though Congress may protect them from
state taxation, will nevertheless be subject to that taxation
unless Congress speaks.
See Goudy v. Meath, 203 U.
S. 146,
203 U. S. 149;
Gromer v. Standard Dredging Co., 224 U.
S. 362,
224 U. S. 371;
Fidelity & Deposit Co. v. Pennsylvania, 240 U.
S. 319,
240 U. S. 323;
Union P. R. Co. v.
Peniston, 18 Wall. 5;
Choctaw, O. & G. R.
Co. v. Mackey, 256 U. S. 531,
256 U. S. 537;
Central Pac. R. Co. v. California, 162 U. S.
91,
162 U. S. 126.
These lands we take to be of that character.
Little need be said as to the power of the Secretary of the
Interior to exempt the land and its uses from taxation. The power,
if it exists, is one conferred by Congress, but neither it nor the
Secretary has in terms purported to make or authorize such an
exemption.
The Act of May 27, 1908, contains no express exemption from
taxation of the proceeds of restricted lands, but § 4 expressly
subjects lands from which restrictions have been removed to state
taxation. This section was adopted in response to representations
that the revenue of the State of Oklahoma was insufficient for
state purpose, that large areas of lands within the state allotted
to Indians were exempt from taxation as agencies of the federal
government, and that Indian citizens were enjoying the benefit of
local government without taxation. Report of the Senate Committee
on Indian Affairs, S.Rep. No. 575, 60th Cong. 1st Sess.; Report of
the House Committee on Indian Affairs, H.Rep. No. 1454, 60th Cong.
1st Sess.
At the time of this legislation, restrictions on some allotted
lands had been removed by reason of the expiration
Page 276 U. S. 582
of the restricted period. There were also allotments on behalf
of allottees dying before allotment which in the hands of their
heirs were unrestricted.
See Tiger v. Western Investment
Co., 221 U. S. 286. It
cannot be assumed that Congress, at a time when it was withdrawing
allotted lands from their former exemption in order that Indian
citizens might assume the just burdens of state taxation, intended
to extend a tax exemption by implication. In any case, the
Secretary of the Interior has never, by rule or regulation or other
action, purported to exempt such lands from state taxation. No such
action is to be implied from his authorized action in restricting
the power of the Indian grantee to alienate the land.
See
United States v. Ransom, supra; United States v. Brown, 8 F.2d
564;
United States v. Gray, 284 F. 103;
United States
v. Mummert, 15 F.2d 926.
Question 1: Answered No.
Question 2: Answered No.