United States v. Forness

• Decision Date: 20 January 1942
• Docket Number: No. 113.,113.
• Citation: 125 F.2d 928
• Parties: UNITED STATES v. FORNESS et al. (SALAMANCA TRUST CO. et al., Interveners).
• Court: U.S. Court of Appeals — Second Circuit

125 F.2d 928 (1942)

UNITED STATES v. FORNESS et al. (SALAMANCA TRUST CO. et al., Interveners).

No. 113.

Circuit Court of Appeals, Second Circuit.

January 20, 1942.

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Norman M. Littell, Asst. Atty. Gen., and Roger P. Marquis, John F. Cotter, and Charles R. Denny, Jr., Attys., Department of Justice, all of Washington, D. C., for United States, plaintiff-appellant.

Charles E. Congdon, of Salamanca, N. Y., for Frank A. Forness and Jessie A. Forness, appellees.

George H. Ansley, of Salamanca, N. Y., for City of Salamanca, First Nat. Bank of Salamanca, and Salamanca Federal Savings & Loan Assn., intervenors-appellees.

G. Sydney Shane, of Salamanca, N. Y., for City of Salamanca, intervenor-appellee.

Richard B. Congdon, of Salamanca, N. Y., for Salamanca Trust Co., intervenor-appellee.

Thomas H. Dowd, of Salamanca, N. Y., for Home Owners' Loan Corporation, intervenor-appellee.

Before AUGUSTUS N. HAND, CLARK, and FRANK, Circuit Judges.

FRANK, Circuit Judge.

This appeal presents the issue of whether the Seneca Nation of Indians, as lessor to the appellees of lands located within the City of Salamanca, New York, may cancel a ninety-nine year lease because of default in the payment of rent. Although there is directly before us only one lease, on which the annual rent is but $4, the question is of greater importance because the Nation, by resolution, has cancelled hundreds of similar leases. The Salamanca Trust Company, which holds a $15,000 mortgage on the property here involved, and three other financial institutions intervened as parties defendant because of their interest as mortgagees of similar plots. The City of Salamanca, which has acquired by tax sales a number of properties under lease from the Seneca Nation, has also intervened. These lands are part of the Allegany Reservation, which, with several others, was set aside by the United States pursuant to treaties, for the Seneca Nation. See The New York Indians, 5 Wall. 761, 18 L. Ed. 708; Seneca Nation v. Tyler, 14 How. Prac., N.Y., 109; Seneca Nation v. Christie, 126 N.Y. 122, 27 N.E. 275; F. S. Cohen, Handbook of Federal Indian Law (1941) 416-424. During the railroad-building era beginning about 1850, railroad companies and settlers leased reservation lands from the Senecas, and these leases were purportedly ratified by the State of New York. When this ratification was invalidated by the New York Supreme Court,¹ Congress passed the Act of February 19, 1875, 18 Stat. 330, which ratified existing leases and authorized their renewal for terms of twelve years. This was enlarged to ninety-nine years by the Act of September 30, 1890, 26 Stat. 558.

Pursuant to this authority, the lease here involved was made on February 19, 1892 (as a renewal of an earlier lease), for ninety-nine years to Hector G. Forbes, who, in 1919, assigned it to Frank A. Forness and his wife, appellees here. The lease provided for the payment² of $4 rent annually in advance, on or before the nineteenth day of February, and stipulated that, if the rent was not paid as provided, the Nation "may re-enter the premises, or resort to any lawful remedy, to remove all persons therefrom." The appellees have erected upon the plot a building costing $63,000 and in 1934 the property was mortgaged to the Salamanca Trust Company for $15,000. Appellees last paid rent on April 11, 1930, and since then they have been in default. Between January 1, 1939, and February 19, 1939, they received notice in the usual form, showing rent due in the amount of $36 (i. e., overdue rent for eight previous years and rent for the ensuing year) plus interest of $8.64 on the overdue rent. On March 4, 1939, the Council of the Seneca Nation passed a resolution cancelling all leases then in arrears. On learning of this resolution, Forness promptly tendered by check to the Indian Agent the amount of $44.64, his obligation as indicated in the notice. The check was deposited by the Agent, with others, in a special account. No payment has been made by the Agent to the Senecas.

Cancellation of these leases, although obviously unexpected by Forness and his neighbors, was not prompted by caprice. There is overwhelming evidence that lessees of these lands were customarily lax about paying their rent. In 1911, for example, 1,095 leases were in default; in 1915, 494; in 1931, 529. An attempt was made in 1911 by the Senecas to retain an attorney to collect the arrears, but the Department of the Interior ruled that the 1901 Act, which allocated the disposition of the rentals, prevented use of the funds for this purpose. In 1915, the Nation adopted a resolution cancelling defaulted leases; the cancellation, however, was not enforced. The present action by the Nation, then, represents the culmination of a long struggle by the Indians to enforce their economic rights. In spite of this undenied provocation, they coupled with their cancellation of the leases an offer³ to re-rent the affected plots on generous terms (at an annual rental of 2½% of the appraised value of the property, less the value of the improvements).⁴ Thus computed, the annual rent on appellees' plot will be $115. Any such lease was to be subjected to all encumbrances which had attached to the cancelled lease.

Appellees argue first that this suit, brought by the United States on behalf of the Seneca Nation to enforce the cancellation, is in effect an action of ejectment, and that the action is barred by Sections 997-999 of the New York Civil Practice Act, which provide that upon a tender of the arrears of rent before judgment, the court shall dismiss the complaint. But state law cannot be invoked to limit the rights in lands granted by the United States to the Indians, because, as the court below recognized, state law does not apply to the Indians except so far as the United States has given its consent. Worcester v. Georgia, 6 Pet. 515, 560, 8 L.Ed. 483; Patterson v. Seneca Nation, 245 N.Y. 433, 157 N.E. 734; Mulkins v. Snow, 232 N.Y. 47, 51, 133 N.E. 123; cf. The New York Indians, 5 Wall. 761, 18 L. Ed. 708. But, it is argued, such consent to the application of state law was granted by Congress, by the Act of February 19, 1875, which authorized this lease and permitted the laying out of villages on the Cattaraugus and Allegany reservations of the Seneca Nation. Section 8 of that Act provided: "That all laws of the State of New York now in force concerning the laying out, altering, discontinuing, and repairing highways and bridges shall be in force within said villages, and may, with the consent of said Seneca Nation in council, extend to, and be in force beyond, said villages in said reservations, or in either of them; and all municipal laws and regulations of said State may extend over and be in force within said villages: Provided, nevertheless, that nothing in this section shall be construed to authorize the taxation of any Indian, or the property of any Indian not a citizen of the United States."

Appellees assert, and correctly, that the words "municipal laws" often are used to refer to the laws of a country dealing with intra-mural matters as distinguished from "international laws" dealing with its extra-mural affairs. Appellees then go on to insist that the symbol "municipal laws" has only that single referent, regardless of context. Such an argument involves the "one-word-one-meaning" fallacy.⁵ Similar reasoning would compel the conclusion that a clotheshorse is an animal of the equine species, and make it impossible to speak of drinking a toast. When, as in the statute, the "laws" of a state of the Union are under discussion, there can be no intelligent reference to its international or extra-mural laws, for it has none under our federal Constitution. Appellees' construction would, in effect, read the word "municipal" out of the statute. "Municipal laws" of such a state can have but one referent, i. e., the laws of its municipalities. The meaning is the same as when we speak of the "Municipal Building" of the City of New York. When confronted, as we are here, with a word having two meanings, we should, of course, not select that meaning which gives it the least possible sense in the context in which it is used. In addition to the objection just indicated to appellees' construction, we can find no reason for the specific mention in the statute of state highway and bridge laws if, as appellees contend, all state laws were comprehended in the generic term "municipal laws." We conclude, then, that the statute did not make the "laws" — statutory or decisional — of the State of New York applicable to the reservation. The provisions of the New York Civil Practice Act, therefore, do not bar the result asked by the Indians. And Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, is inapplicable.

Appellees argue that if the tender does not prevent cancellation by virtue of the provisions of the Civil Practice Act, it nevertheless has resulted in a waiver of any right to a cancellation of the lease by the Indian Agent, as agent of the Seneca Nation, since he accepted appellees' check for the amount of rent due, deposited it to the credit of the Treasurer of the United States, and failed to return the proceeds to them. They point to the Act of February 28, 1901, which provides that all rents due on leases of lands within this reservation "shall be paid to and be recoverable to the United States Indian Agent for the New York Indian Agency for and in the name of the said Seneca Nation," section 1, as proof of his authority thus to bind the Senecas, and they urge that this agency has been recognized and ratified by subsequent conduct. We need not pass on the doubtful proposition that the Agent was the agent of the Senecas, for it is clear that his authority, at most, was only that of a collecting and disbursing agent. As such he had no implied power to make or break leases, nor to waive the Seneca's power to...