An Indian allotment was by treaty stipulation and provisions of
a trust patent, issued under the General Allotment Act, exempt from
taxation so long as the United States should hold it in trust. Over
the Indian's objection, the Secretary of the Interior issued to the
Indian a patent in fee simple, which later, after long and
unexcused delay, he canceled, by authority of an Act of Congress.
In the meantime the fee patent had been registered in the county,
and the county authorities, in reliance upon it, had collected
taxes upon the land. Thereafter, the United States, in an action on
behalf of the Indian, recovered a judgment against the county for
the amount of the tax payments with interest.
Held:
Page 308 U. S. 344
1. The question whether interest should have been allowed is not
determined by a law of the State precluding recovery of interest
from a county upon taxes illegally collected. P.
308 U. S.
349.
2. Congress not having specifically defined the relief to be
granted for loss suffered through denial of the tax exemption,
remedial details are left to judicial implications; and, since the
origin of the right to be enforced is the treaty, whatever rule may
be fashioned as to interest is ultimately attributable to the
Constitution, treaties and statute of the United States. P.
308 U. S.
349.
3. In determining the question of interest here presented, the
Court is guided by considerations of equity and of public
convenience; and, conformably to those considerations, the state
law of interest can be respected without impinging upon the
exemption commanded by the treaty. Pp.
308 U. S. 350,
308 U. S.
352.
4. It is a general principle that, in the absence of explicit
congressional policy cutting across state interests, beneficiaries
of federal rights are not to have a preferred position over other
aggrieved taxpayers in their relation with the States or their
political subdivisions. P.
308 U. S. 352.
5. In governmental actions based upon
quasi-contractual
obligations interest (in the absence of statutory direction) is not
recovered according to rigid theory of compensation for money
withheld, but is given or denied in response to considerations of
fairness and equity. P.
308 U. S.
352.
6. In the circumstances of this case, whatever may be the duty
of the county to repay the taxes which there was every practical
justification for collecting at the time, the county can not in
fairness be called upon to pay interest for the use of the money.
P.
308 U. S.
353.
100 F.2d 929 reversed in part.
Certiorari, 306 U.S. 629, to review the affirmance of a recovery
of county taxes and interest.
Page 308 U. S. 347
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
This case is here to review an affirmance by the Circuit Court
of Appeals for the Tenth Circuit of a ruling by
Page 308 U. S. 348
the District Court for the District of Kansas allowing interest
in a suit for the recovery of taxes by the United States on behalf
of an Indian under circumstances presently to be stated. 100 F.2d
929. We granted certiorari because of conflicting views between the
Ninth and the Tenth Circuits, 306 U.S. 629.
See United States
v. Nez Perce County, Idaho, 95 F.2d 232.
*
M-Ko-Quah-Wah is a full-blooded Pottawatomie Indian. In her
behalf, the United States asserts whatever rights she may have
flowing from the Treaty of November 15, 1861, between the United
States and the Pottawatomie nation of Indians, 12 Stat. 1191, and
the legislation in aid of it. This Treaty made lands held by the
United States in trust for the Pottawatomie Indians "exempt from
levy, taxation, or sale . . ." "until otherwise provided by law. .
. ." Article 2. The land which gave rise to this controversy,
situated in Jackson County, Kansas, was patented under the General
Allotment Act of February 8, 1887, § 5, 24 Stat. 388, 25 U.S.C. §
348. In pursuance of this Act, the United States agreed to hold the
land for twenty-five years under the restrictions of the 1861
Treaty, subject to extension at the President's discretion. Two
ten-year extensions were made by Executive Order, one, in 1918 and
the other in 1928, and by the Act of June 18, 1934, the existing
trust periods were indefinitely extended by Congress. 48 Stat.
984.
In this legislative setting, the Secretary of the Interior in
1918, over the objection of M-Ko-Quah-Wah, cancelled her
outstanding trust patent and in its place issued a fee simple
patent. This was duly recorded in the Registry of Deeds for Jackson
County. In consequence, Jackson County, in 1919, began to subject
the land to its regular property taxes. It continued to do so as
long as
Page 308 U. S. 349
this fee simple patent was left undisturbed by the United
States. In 1927, Congress authorized the Secretary of the Interior
to cancel fee simple patents theretofore issued over the objection
of allottees. In 1935, the patent for the land in controversy was
cancelled, and, in the next year, proceedings were begun by the
United States as guardian of M-Ko-Quah-Wah to recover the taxes
which Jackson County had collected, amounting to $1,966.13, with
interest from the respective dates of payment. The District Court
allowed interest at 6%, and a verdict for principal and interest,
amounting to $3,277.49, was returned by the jury. A judgment upon
this verdict was affirmed by the Circuit Court of Appeals. Jackson
County does not here contest its liability for the principal, but
challenges the Government's right to interest prior to
judgment.
The issue is uncontrolled by any formal expression of the will
of Congress. The United States urges that we must be indifferent to
the law of the state pertaining to the recovery of taxes improperly
levied on land within it. Jackson County, on the other hand, urges
that the law of Kansas controls. It is settled doctrine there that
a taxpayer may not recover from a county interest upon taxes
wrongfully collected.
Jackson County Comm'rs v. Kaul, 77
Kan. 715, 96 P. 45.
We deem neither the juristic theory urged by the Government nor
that of Jackson County entirely appropriate for the solution of our
problem. The starting point for relief in this case is the Treaty
of 1861, exempting M-Ko-Quah-Wah's property from taxation.
Effectuation of the exemption is, of course, entirely within
Congressional control. But Congress has not specifically provided
for the present contingency, that is, the nature and extent of
relief in case loss is suffered through denial of exemption. It has
left such remedial details to judicial implications. Since the
origin of the right to be enforced is the Treaty, plainly whatever
rule we fashion is ultimately
Page 308 U. S. 350
attributable to the Constitution, treaties or statutes of the
United States, and does not owe its authority to the lawmaking
agencies of Kansas.
Cf. Erie R. Co. v. Tompkins,
304 U. S. 64. And
so the concrete problem is to determine the materials out of which
the judicial rule regarding interest as an incident to the main
remedy should be formulated. In ordinary suits where the Government
seeks, as between itself and a private litigant, to enforce a money
claim ultimately derived from a federal law, thus implying a wish
of Congress to collect what it deemed fairly owing according to the
traditional notions of Anglo-American law, this Court has chosen
that rule as to interest which comports best with general notions
of equity.
United States v. Sanborn, 135 U.
S. 271,
135 U. S. 281;
Billings v. United States, 232 U.
S. 261. Instead of choosing a rigid rule, the Court has
drawn upon those flexible considerations of equity which are
established sources for judicial lawmaking.
But the present case introduces an important factor not present
in former decisions. The litigation is not between the United
States and a private litigant, but between the United States and
the political subdivision of a state. In effect, therefore, we have
another aspect of our task in adjusting the interests of two
governments within the same territory.
Nothing that the state can do will be allowed to destroy the
federal right which is to be vindicated; but, in defining the
extent of that right, its relation to the operation of state laws
is relevant. The state will not be allowed to invade the immunities
of Indians, no matter how skillful its legal manipulations.
United States v. Rickert, 188 U.
S. 432.
Cf. Bunch v. Cole, 263 U.
S. 250. Nor are the federal courts restricted to the
remedies available in state courts in enforcing such federal
rights.
United States v. Osage County, 251 U.
S. 128;
Ward v. Love County, 253 U. S.
17. Nor may the right to recover taxes
Page 308 U. S. 351
illegally collected from Indians be unduly circumscribed by
state law.
Carpenter v. Shaw, 280 U.
S. 363. Again, state notions of laches and state
statutes of limitations have no applicability to suits by the
Government, whether on behalf of Indians or otherwise.
United
States v. Minnesota, 270 U. S. 181.
Cf. Chesapeake & Delaware Canal Co. v. United States,
250 U. S. 123.
This is so because the immunity of the sovereign from these
defenses is historic. Unless expressly waived, it is implied in all
federal enactments.
But the recovery of interest in intergovernmental litigation has
no such roots in history. Indeed, liability for interest is of
relatively recent origin, and the rationale of its recognition or
denial is not always clear. That it is not a congenital rule in our
law is indicated by its denial in
United States v. North
Carolina, 136 U. S. 211, on
grounds of "public convenience." Since Congress has, in the
legislation implementing the Indians' tax immunity, remained silent
as to recovery of interest, we need not presume that it has
impliedly fixed liability for interest in a suit like the
present.
Having left the matter at large for judicial determination
within the framework of familiar remedies equitable in their
nature,
see Stone v. White, 301 U.
S. 532,
301 U. S. 534,
Congress has left us free to take into account appropriate
considerations of "public convenience."
Cf. Virginian R. Co. v.
System Federation, 300 U. S. 515,
300 U. S. 552.
Nothing seems to us more appropriate than due regard for local
institutions and local interests. We are concerned with the
interplay between the rights of Indians under federal guardianship
and the local repercussion of those rights. Congress has not been
heedless of the interests of the states in which Indian lands were
situated, as reflected by their local laws.
See e.g., § 5
of the General Allotment Act of 1887, 24 Stat. 388, 389. With
reference to other federal rights, the state law has been absorbed,
as it were,
Page 308 U. S. 352
as the governing federal rule not because state law was the
source of the right, but because recognition of state interests was
not deemed inconsistent with federal policy.
See Brown v.
United States, 263 U. S. 78;
Seaboard Air Line R. Co. v. United States, 261 U.
S. 299. In the absence of explicit legislative policy
cutting across state interests, we draw upon a general principle
that the beneficiaries of federal rights are not to have a
privileged position over other aggrieved taxpayers in their
relation with the states or their political subdivisions. To
respect the law of interest prevailing in Kansas in no wise
impinges upon the exemption which the Treaty of 1861 has commanded
Kansas to respect and the federal courts to vindicate.
Assuming, however, that the law as to interest in governmental
actions based upon
quasi-contractual obligations be
applicable, the United States must fail here. The cases teach that
interest is not recovered according to a rigid theory of
compensation for money withheld, but is given in response to
considerations of fairness. It is denied when its exaction would be
inequitable.
United States v. Sanborn, 135 U.
S. 271,
135 U. S. 281;
Billings v. United States, 232 U.
S. 261.
Jackson County, in all innocence, acted in reliance on a fee
patent given under the hand of the President of the United States.
Even after Congress in 1927 authorized the Secretary of the
Interior to cancel such a patent, it was not until 1935 that such
cancellation was made. Here is a long, unexcused delay in the
assertion of a right for which Jackson County should not be
penalized. By virtue of the most authoritative semblance of
legitimacy under national law, the land of M-Ko-Quah-Wah and the
lands of other Indians had become part of the economy of Jackson
County. For eight years after Congress had directed attention to
the problem, those specially entrusted with the intricacies of
Indian law did not
Page 308 U. S. 353
call Jackson County's action into question. Whatever may be her
unfortunate duty to restore the taxes which she had every practical
justification for collecting at the time, no claim of fairness
calls upon her also to pay interest for the use of the money which
she could not have known was not properly hers.
Such is this Court's doctrine regarding the imposition of
interest in cases where this Court has fashioned its own doctrine.
If it be said that the default of the United States should not be
charged against its Indian wards, a choice has to be made between
equally innocent victims of official neglect from 1918 until 1936
in the administration of the Indian law. The loss of interest to
the United States because of the conduct of its officials in the
Sanborn and
Billings cases,
supra, had
to be borne by the innocent public. We think as to interest here,
the loss should remain where it has fallen. If thereby Indians are
out of pocket, they should not be made whole by putting Jackson
County unfairly out of pocket. The appeal for relief must be made
elsewhere.
The judgment below must accordingly be modified, and the case is
remanded for further proceedings in accordance with this
opinion.
Judgment modified.
MR. JUSTICE McREYNOLDS concurs in the result.
* This case has since been followed by the same court in
United States v. Lewis County, Idaho, 95 F.2d 236 and
Glacier County, Mont. v. United States, 99 F.2d 733.
Opinion of MR. JUSTICE BLACK.
Congress has traditionally treated the Indian wards of the
Nation with particular solicitude, [
Footnote 1] but has also gradually evolved a policy
looking to their eventual absorption into the general body of
citizenry. [
Footnote 2] This
policy has
Page 308 U. S. 354
progressively subjected Indians to the laws under which all
other citizens must live in the Indians' States of residence, if
not in conflict with specific protective measures of Congress.
[
Footnote 3] Here, in the
exercise of its plenary authority, Congress by treaty exempted the
lands of the Pottawatomies from taxation. It could have by
stipulation granted the additional right to recover interest on any
taxes collected in violation of the exemption; but it did not. The
failure of Congress to stipulate that a State -- as here -- must
pay interest to an Indian when the State law permits interest to no
one [
Footnote 4] is entirely
consistent with the congressional policy of steadily extending the
operation of the States' laws over their resident Indians. Congress
-- with exclusive plenary power to legislate concerning the Indians
-- has not provided for recovery of interest from Kansas, and the
courts have no constitutional power to create the right.
That Congress contented itself with the creation of the right to
be free from taxation -- as distinguished from a right to interest
in a suit for refund -- is emphasized by the conclusion which would
be inescapable were this a suit against the United States for
violation of the exemption here conceded to be binding on it.
[
Footnote 5] Without more,
[
Footnote 6] Congress would
then -- even on the basis of this concession -- be deemed to have
refused to create the separate right to recover interest. [
Footnote 7]
Page 308 U. S. 355
Because the laws of Kansas deny interest on tax refunds, I
concur in the modification of the judgment below. [
Footnote 8]
MR. JUSTICE DOUGLAS concurs in this opinion.
[
Footnote 1]
Lone Wolf v. Hitchcock, 187 U.
S. 553,
187 U. S. 564,
187 U. S. 566,
187 U. S. 568;
United States v. Pelican, 232 U.
S. 442,
232 U. S.
450.
[
Footnote 2]
Chipewa Indians v. United States, 307 U. S.
1,
307 U. S. 4;
See Stuart v. United
States, 18 Wall. 84,
85 U. S. 87;
Matter of Heff, 197 U. S. 488,
197 U. S.
497-503;
Lane v. United States ex rel.
Mickadiet, 241 U. S. 201,
241 U. S. 210;
Dickson v. Luck Land Co., 242 U.
S. 371,
242 U. S. 375;
McCurdy v. United States, 246 U.
S. 263,
246 U. S.
269.
[
Footnote 3]
See Matter of Heff, supra; La Motte v. United States,
254 U. S. 570,
254 U. S.
579-580;
Sperry Oil & Gas Co. v. Chisholm,
264 U. S. 488,
264 U. S. 498;
Larkin v. Paugh, 276 U. S. 431,
276 U. S.
438-439;
United States v. McGowan, 302 U.
S. 535,
302 U. S.
539.
[
Footnote 4]
Jackson County Comm'rs v. Kaul, 77 Kan. 717, 96 P.
45.
[
Footnote 5]
The Government bases its concession on
Choate v. Trapp,
224 U. S. 665.
But see 78 U. S. 11
Wall. 616;
Ward v. Race Horse, 163 U.
S. 504,
163 U. S. 511;
Lone Wolf v. Hitchcock, supra, 187 U.S.
187 U. S.
566.
[
Footnote 6]
Cf. 26 U.S.C. § 1671(a).
[
Footnote 7]
Angarica v. Bayard, 127 U. S. 251,
127 U. S. 260;
United States v. North American Transportation & Trading
Co., 253 U. S. 330,
253 U. S. 336;
Smyth v. United States, 302 U. S. 329,
302 U. S. 353.
Cf. United States v. North Carolina, 136 U.
S. 211.
[
Footnote 8]
Cf. Erie R. Co. v. Tompkins, 304 U. S.
64.