1. Tax exemptions secured to the Indians by agreement between
them and the national government are to be liberally construed in
favor of the Indians. P.
280 U. S.
366.
2. The provision in the "Atoka Agreement" with the Choctaw and
Chickasaw Tribes, ratified August 24, 1898, that "all lands
allotted shall be nontaxable while the title remains in the
original allottees but not to exceed twenty-one years from the date
of patent," is to be construed in the sense in which it would be
naturally
Page 280 U. S. 364
understood by the Indians, and its meaning at the time of its
adoption may not be narrowed by any subsequently declared intention
of Congress. P.
280 U. S.
37.
3. Section 9814, Comp.Stat. Okla., 1921, imposes a tax upon the
owner of any royalty interest in petroleum and natural gas to the
extent of 3% of the gross value of the royalty; it makes this tax a
lien on such royalty interest and declares that it shall be in lieu
of all other taxes "upon any property rights attached to or
inherent in the right" to the specified minerals and "upon the
mining rights and privileges for the minerals aforesaid belonging
to or appertaining to the land." The tax was applied to Indians who
had received allotments under the Atoka Agreement and had leased
them for the production of oil and gas reserving a royalty of
one-eighth of the value of the gross production.
Held that
the tax is not a tax on oil and gas severed from the realty, but is
a tax upon the right reserved in the Indians as lessors and owners
of the fee, and is forbidden by the tax exemption of the Agreement.
P.
280 U. S.
367.
4. Where a federal right is concerned, this Court is not bound
by the characterization given to a state tax by state courts or
legislatures, or relieved by it of the duty of considering the real
nature of the tax and its effect upon the federal right asserted.
Id.
5. A denial by a state court of a recovery of taxes exacted by a
state officer in violation of the laws or Constitution of the
United States by compulsion is itself in contravention of the
Fourteenth Amendment, and cannot be justified by a state statute
limiting suits to recover illegally assessed taxes to taxes paid
"at .the time and in the manner provided by law." P.
280 U. S. 369.
134 Okla. 35 reversed.
Certiorari, 279 U.S. 830, to review a judgment of the Supreme
Court of Oklahoma which affirmed a judgment dismissing a suit
brought by Indians against the State Auditor to recover money
exacted of them as taxes and paid under protest.
Page 280 U. S. 365
MR. JUSTICE STONE delivered the opinion of the Court.
This case comes here on writ of certiorari, 279 U.S. 830, to the
Supreme Court of Oklahoma to review its judgment upholding a tax
imposed under § 9814, Compiled Oklahoma Statutes of 1921, upon "the
owner of any royalty interest" in petroleum and natural gas, to the
extent of 3% of the gross value of the royalty.
The petitioners are enrolled Choctaw Indians of less than half
blood who, by virtue of their membership in the tribe, have
received allotments of lands within the State of Oklahoma under the
Atoka Agreement with the Choctaw and Chickasaw Tribes, embodied in
§ 29 of the Act of June 28, 1898, ratified August 24, 1898, 30
Stat. 495,. By this section, it is provided that "all the lands
allotted shall be notaxable while the title remains in the original
allottee, but not to exceed twenty-one years from date of patent, .
. . " which period had not expired with respect to the lands of
petitioners at any of the times material to the present case. All
restrictions on alienation affecting the allotments of these
petitioners were removed by Act of Congress of May 27, 1908, 35
Stat. 312.
The petitioners, who have leased their allotments for the
production of oil and gas, reserving a royalty of one-eighth of the
value of the gross production, have paid the tax assessed for 1926
and 1927 under protest, and brought the present suit to recover it
as exacted contrary to the exemption. The state court denied
recovery on the ground that the tax is imposed only on the oil and
gas when severed from the land, and so is a tax upon personalty not
embraced within the exemption. 134 Okl. 35.
In
Choate v. Trapp, 224 U. S. 665, the
history of the Atoka Agreement was reviewed by this Court. It was
there held that the provision for the exemption conferred upon the
allottees property rights which were within
Page 280 U. S. 366
the protection of the Fifth Amendment, and hence it was not
subject to repeal by later Congressional legislation; that the
restriction, being one imposed in the exercise of the plenary power
of Congress over the Indian tribes and tribal lands and in the
performance of its duty as the guardian of its Indian wards,
see Lone Wolf v. Hitchcock, 187 U.
S. 553,
187 U. S. 565,
and having been accepted by the State of Oklahoma in its
constitution upon admission to statehood, was a limitation upon the
taxing power of the state.
See also Ward v. Board of Comm'rs of
Love County, 253 U. S. 17.
Until the removal by the Act of May 27, 1908, of existing
restrictions on alienation of the allotted lands, state taxation
even more remotely affecting the interests of allottees than the
present tax would concededly have been forbidden as a tax upon an
instrumentality of the national government.
See Choctaw &
Gulf R. Co. v. Harrison, 235 U. S. 292;
Jaybird Mining Co. v. Weir, 271 U.
S. 609;
Gillespie v. Oklahoma, 257 U.
S. 501;
Howard v. Gipsy Oil Co., 247 U.S. 503;
Large Oil Co. v. Howard, 248 U.S. 549. But it is urged
that, as the restrictions have now been removed, Congress, by its
attempted repeal of the exemption and by later legislation of May
10, 1928, 45 Stat. 496, subjecting oil and gas produced from
restricted allotted lands of members of the five civilized tribes
to state and federal taxes has evidenced an intention to subject
the Indians to all taxes imposed upon citizens of Oklahoma. From
this it is concluded that the exemption in § 29 must be narrowly
construed to effect the Congressional purpose.
See Shaw v.
Gibson-Zahniser Oil Corp., 276 U. S. 575.
While in general tax exemptions are not to be presumed and
statutes conferring them are to be strictly construed,
Heiner
v. Colonial Trust Co., 275 U. S. 232, the
contrary is the rule to be applied to tax exemptions secured to the
Indians by agreement between them and the national government.
Choate v. Trapp, supra, p.
224 U. S.
675.
Page 280 U. S. 367
Such provisions are to be liberally construed. Doubtful
expressions are to be resolved in favor of the weak and defenseless
people who are the wards of the nation, dependent upon its
protection and good faith. Hence, in the words of Chief Justice
Marshall:
"The language used in treaties with the Indians should never be
construed to their prejudice. If words be made use of which are
susceptible of a more extended meaning than their plain import, as
connected with the tenor of the treaty, they should be considered
as used only in the latter sense."
Worcester v. The State of
Georgia, 6 Pet. 515,
31 U. S. 582.
See the 72 U. S. 5
Wall. 737. And they must be construed not according to their
technical meaning, but "in the sense in which they would naturally
be understood by the Indians."
Jones v. Meehan,
175 U. S. 1,
175 U. S. 11.
Whatever was the meaning of the present exemption clause at the
time of its adoption must be taken to be its effect now, since it
may not be narrowed by any subsequently declared intention of
Congress.
Choate v. Trapp, supra. Having in mind the
obvious purpose of the Atoka Agreement to protect the Indians from
the burden of taxation with respect to their allotments and this
applicable principle of construction, we think the provision that
"the lands allotted shall be nontaxable while the title remains in
the allottees" cannot be taken to be restricted only to those taxes
commonly known as land or real estate taxes, but must be deemed at
least to embrace a tax assessed against the allottees with respect
to a legal interest in their allotment less than the whole,
acquired or retained by them by virtue of their ownership.
Where a federal right is concerned, we are not bound by the
characterization given to a state tax by state courts or
legislatures, or relieved by it from the duty of considering the
real nature of the tax and its effect upon
Page 280 U. S. 368
the federal right asserted.
Choctaw, O. & Gulf R. Co. v.
Harrison, supra; Galveston, H. & S.A. R. Co. v. Texas,
210 U. S. 217,
210 U. S. 227.
We think it plain that the tax imposed on the royalty interest of
the present petitioners is not a tax on oil and gas severed from
the realty, but is, by its very terms, a tax upon the right
reserved in them as lessors and owners of the fee. The tax is
imposed on the "royalty interest . . . except such interests of the
Oklahoma or such royalty interests as are exempted from taxation
under the laws of the United States," and is made "a lien on such
interest." It is in lieu of all other taxes "upon any property
rights attached to or inherent in the right" to the specified
minerals and "upon the mining rights and privileges for the
minerals aforesaid belonging to or appertaining to the land."
It sufficiently appears, were that controlling, that numerous
decisions of the Oklahoma courts since the Atoka Agreement have
treated the royalty interest of the lessor as a right attached and
incident to his ownership or reversionary interest in the land.
Barnes v. Keyes, 36 Okl. 6;
Strawn v. Brady, 84
Okl. 66;
Harris v. Brady, 136 Okl. 275;
compare Rich
v. Doneghey, 71 Okl. 204,
and see Parker v. Riley,
250 U. S. 66. But
even if this did not appear to be the case, an interest commonly so
regarded and practically so associated with the use and enjoyment
of the allotted lands cold not, under the rule of liberal
construction rightly invoked by the petitioners, be deemed excluded
from the benefits of the exemption granted by § 29.
See Lake
Superior Consol. Iron Mines v. Lord, 271 U.
S. 577,
271 U. S. 582;
Waggoner EState v. Wichita County, 273 U.
S. 113;
Butt v.
Ellett, 19 Wall. 544;
State v. Snyder, 29
Wyo. 163;
Hearne v. Lewis, 78 Tex. 276, 14 S.W. 572;
Condit v. Neighbor, 13 N.J.Law, 83;
York v.
Jones, 2 N.H. 454;
Burden v. Thayer, 3 Metc. (Mass.)
76, 78;
Nelson v. Joshel, 305 Ill. 420, 428;
Frerich
v. Abrams, 97 Wash.
Page 280 U. S. 369
460, 462;
Macdonough v. Starbird, 104 Cal. 15, 19, 38
P. 510.
Compare Pollock v. Farmers Loan & Tr. Co.,
157 U. S. 429.
The Supreme Court of Oklahoma also rested its denial to
petitioners of the right to recover the 1926 tax upon the ground
that, having failed to pay the tax for the year when due, they were
barred by the provisions of §§ 9971 and 9973 of the Compiled
Oklahoma Statutes for 1921. Under these sections, relief by
injunction against the collection of any tax is forbidden and a
suit to recover a tax alleged to be illegally assessed is allowed
only if paid "at the time and in the manner provided by law." But
the petitioners' allegations, admitted on demurrer, are that the
tax was paid under duress and compulsion to prevent the issue of
respondent's warrant for its collection, to prevent the stopping by
respondent of further royalty payments to them, and to prevent the
accumulation of statutory penalties. These allegations are
sufficient to bring the case within the ruling of this Court in
Ward v. Board of Comm'rs of Love County, supra, that a
denial by a state court of a recovery of taxes exacted in violation
of the laws or Constitution of the United States by compulsion is
itself in contravention of the Fourteenth Amendment.
The judgment below will be reversed, and the cause remanded for
further proceedings not inconsistent with this opinion.
Reversed.