Agua Caliente Band of Mission Ind. v. County of Riverside

Decision Date17 October 1969
Docket NumberCiv. No. 66-108-R.
Citation306 F. Supp. 279
CourtU.S. District Court — Central District of California
PartiesThe AGUA CALIENTE BAND OF MISSION INDIANS, by and through its Tribal Council, and Dora Joyce Prieto, Priscilla Gonzales, Gloria Gillette, Patrick Patencio and Lawrence Pierce, Allottees, Individually and in Class Action, on behalf of All Allottees of Allotted land on the Agua Caliente Band of Mission Indians Reservation, Plaintiffs, v. The COUNTY OF RIVERSIDE, a political subdivision of the State of California, Defendant.

Raymond C. Simpson, Long Beach, Cal., for plaintiffs.

Ray T. Sullivan, Jr., County Counsel, Richard J. Lawrence, Deputy County Counsel, Steven A. Broiles, Deputy County Counsel, Riverside, Cal., for defendant.

Fort Mojave Indian Tribe, Needles, Cal., amicus curiae.

REAL, District Judge.

Plaintiff THE AGUA CALIENTE BAND OF MISSION INDIANS, by and through its Tribal Council (hereinafter referred to as AGUA CALIENTE) and plaintiffs DORA JOYCE PRIETO, PRISCILLA GONZALES, GLORIA GILLETTE, PATRICK PATENCIO and LAWRENCE PIERCE on their own behalf and as representative of all allottees of allotted land on the Agua Caliente Indian Reservation (hereinafter referred to as ALLOTTEES) bring this action against defendant COUNTY OF RIVERSIDE (hereinafter referred to as COUNTY) to permanently enjoin the assessment, levy and collection of possessory interest taxes and to recover damages.

Plaintiff AGUA CALIENTE is an American Indian Tribe recognized by the United States of America in the Mission Indian Relief Act of 18911 with its amendments and Public Law 86-339.2 By the Mission Relief Act, as amended, ALLOTTEES were individually allotted certain of the lands of the Agua Caliente Indian Reservation. All other lands of the reservation are unallotted tribal lands held for the benefit of the plaintiff AGUA CALIENTE.3 Both allotted and unallotted tribal lands are held by the United States, in trust, for plaintiffs ALLOTTEES and AGUA CALIENTE.

Plaintiffs jointly, in the aggregate, own 26,646.28 acres of land laid out in a checkerboard pattern in the area of Palm Springs, California. Of this aggregate, 24,640.45 acres are allotted to 103 individual ALLOTTEES each having commercial, irrigable and desert lands appraised at $335,000.

Since the property is held in trust by the United States, the land cannot be sold or encumbered without the approval of the Bureau of Indian Affairs. Leases have been approved and cover 8 acres of allotted land. 59 Indians participate in long-term leases and 116 Indians participate in short-term leases. These leases generate practically all of the income available to plaintiffs' ALLOTTEES and AGUA CALIENTE.

Negotiations for the lease which precipitates this action began in 1957 and in 1958 a lease was executed for the land upon which is situated a major hotel, Palm Springs Spa. This lease is the sole lease upon tribal lands covering 8 acres. Negotiations for the lease were predicated upon an 8% return on capital to plaintiff. Both parties executed the lease under the impression that the land was tax exempt and that the property would be tax exempt as to the lessee.

Commencing with the tax year 1960-61, defendant COUNTY began assessing and collecting possessory interest taxes which have been steadily increasing since then.

Plaintiffs claim herein that imposition of a possessory interest taxes upon the interest of non-Indian lessees in Indian lands is unlawful because of:

1. Article I, Section 8, Clause 3 of the Constitution of the United States of America;
2. Section 1 of the Fourteenth Amendment to the Constitution of the United States of America;
3. P.L. 83-280, Aug. 15, 1953, 67 Stat. 589, 28 U.S.C. section 1360 and amendments thereto.

Defendant COUNTY supports its power to impose possessory interest taxes claiming authorization in 25 U.S.C. section 398c or 28 U.S.C. section 1360.

THE TAX INVOLVED AND ITS IMPACT

California Revenue and Taxation Code Section 107 provides in pertinent part:

"§ 107 Possessory interests; * * *

`Possessory interests' means the following:
(a) Possession of, claim to, or right to the possession of land or improvements, except where coupled with ownership of the land or improvements in the same person.
(b) Taxable improvements on tax-exempt land.
* * *"

The simple statement of the statutory provision for taxation of possessory interest describes two classes of property rights—(1) the aggregate of rights, duties, privileges and immunities accruing to an individual (or other legal entity) out of possession of an underlying fee interest in land or (2) improvements on an otherwise tax-exempt fee interest. We are not here concerned with the legal or beneficial ownership of the underlying fee interest in land. It is the possession of tax-exempt Indian lands owned by non-Indians. In other words, it is the property interest owned by the non-Indian that is the subject of this litigation and it is that property interest that defendant attempts to reach by its assessment, levy and collection of a possessory interest tax.

California Revenue and Taxation Code Section 107 provides only for the assessment, levy and collection of a tax from the owner of a possessory interest defined therein. Its impact—at least directly—in terms of the various interests considered here is upon the non-Indian lessee of tax-exempt Indian lands.

Plaintiffs claim—through testimony of experts—that the defendant's tax must be paid by the Indian owners directly by rent adjustments or at least indirectly in considering negotiations for future leases by adjustment of their return upon valuation of their tax-exempt land. Assuming that the economic burden of this possessory interest tax falls eventually upon plaintiffs, it is not—for that reason—invalid. United States v. City of Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424; Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3; Graves v. New York, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927; James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155.

CLAIMS OF IMMUNITY
IMMUNITY UNDER THE COMMERCE CLAUSE

Article I, Section 8, Clause 3 of the Constitution of the United States provides in its pertinent part:

"Section 8. The Congress shall have Power * * *;
* * * * * *
To regulate Commerce * * * with the Indian Tribes;"

The nature of Congressional power in Indian matters is paramount and plenary. Williams v. Lee, 358 U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d 251; United States v. Kagama, 118 U.S. 375, 6 S.Ct. 1109, 30 L.Ed. 228; Worcester v. Georgia, 6 Pet. 515, 8 L.Ed. 483. But statement of the power does not end the inquiry. It must be ascertained that the activity or subject matter of the inquiry is "commerce."

Defendant herein asserts its taxing power against the property right of a non-Indian. It does not claim nor assert any right to tax the underlying fee interest of the Indian. "Commerce" is a broad term given broad meaning by the Supreme Court. United States v. South-Eastern Underwriter's Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440; Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160. No decision has given to a property right created out of contractual relations the status of commerce.

Plaintiffs claim that Congress has pre-empted Indian affairs by its comprehensive provisions of Title 25 United States Code and its regulations comprising a full volume of 25 Code of Federal Regulations. Pre-emption can be no broader than the power—the power to regulate commerce. The subject matter of the tax herein is the property right of a non-Indian which—though it may have resulted from Indian commerce—is neither "commerce" nor a contemplation of commerce. The relationship is one of lessor-lessee providing for no more "trade" than the payment of rent for use of Indian lands.

IMMUNITY PURSUANT TO P.L. 83-280, AUG. 15, 1953, 67 STAT. 589, 28 U.S.C. SECTION 1360 AND AMENDMENTS THERETO

Plaintiffs claim that defendant is precluded from taxing the possessory interest of non-Indian lessees on tax-exempt Indian lands because of 28 U.S.C. § 1360 P.L. 83-280, Aug. 15, 1953, 67 Stat. 589.

Title 28 U.S.C. § 1360 provides in its pertinent part:

"(a) * * *
(b) Nothing in this section shall authorize the alienation, encumbrance, or taxation of any real or personal property * * * belonging to any Indian or any Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States; * * *."

This statute concedes tax immunity to real or personal property belonging to an Indian imposing the further condition that the property be held in trust by the United States or subject to some Federal restraint on alienation. The property right attempted to be taxed herein does not belong to an Indian but to a non-Indian.

Defendants conversely ground their jurisdiction over this property right in this very same section. Subsection (a) of § 1360 provides in pertinent part:

"(a) * * * those civil laws of such State or Territory that are of general application to private persons or private property shall have the same force and effect within such Indian country as they have elsewhere within the State or Territory."

California Revenue and Taxation Code Section 107 is a civil law of general application to private persons and private property and pursuant to 28 U.S.C. § 1360(a) has the same force and effect upon non-Indians within the Indian country as it has elsewhere within the State of California.

IMMUNITY BY REASON OF THE TRUST STATUS OF INDIAN LANDS

The plight of the Indian in American History needs no articulation here. If despair has any meaning, its application to Indians in the late 19th century is an understatement. Somewhat out of a sense of guilt—but more hopefully out of a sense of justice—the Congress passed the Mission Indian Relief Act of January 12, 1891 (26 Stat. 712) providing that the United States was to hold "in trust...

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  • Agua Caliente Band of Mission Ind. v. County of Riverside
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