337 F.3d 139 (2nd Cir. 2003), 01-7795, Oneida Indian Nation of New York v. City of Sherrill, New York

Docket Nº:01-7795
Citation:337 F.3d 139
Party Name:Oneida Indian Nation of New York v. City of Sherrill, New York
Case Date:July 21, 2003
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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337 F.3d 139 (2nd Cir. 2003)

ONEIDA INDIAN NATION OF NEW YORK, Plaintiff-Counter-Defendant-Appellee,

Ray Halbritter, Keller George, Chuck Fougnier, Marilyn John, Clint Hill, Dale Rood, Dick Lynch, Ken Phillips, Beulah Green, Ruth Burr, Brian Patterson, and Iva Rodgers, Consolidated-Defendants-Appellees,

v.

CITY OF SHERRILL, NEW YORK, Defendant-Counter-Claimant-Appellant,
Madison County, Amicus Curiae-Appellant,
Oneida County, Amicus Curiae,
State of New York, Amicus Curiae.

Nos. 01-7795, 01-7797.

United States Court of Appeals, Second Circuit

July 21, 2003

Argued: May 13, 2002.

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Ira S. Sacks, Fried, Frank Harris, Shriver & Jacobsen New York, NY, for Defendant-Counter-Claimant-Appellant.

Michael R. Smith, Zuckerman Spaeder, LLP, Washington, DC (William W. Taylor, III, David A. Reiser, of counsel), for Plaintiff-Counter-Defendant-Appellee and Consolidated-Defendants-Appellees.

G. Robert Witmer, Jr., Nixon Peabody LLP, Rochester, N.Y. (David M. Shraver, of counsel), for Amici Curiae-Appellants Madison County and Oneida County.

Andrew D. Bing, Assistant Solicitor General, Albany, N.Y. (Caitlin J. Halligan, Daniel Smirlock, Peter H. Schiff, of counsel, for Eliot Spitzer, Attorney General of the State of New York), for Amicus Curiae State of New York.

Before: VAN GRAAFEILAND, MESKILL, and B.D. PARKER, Jr., Circuit Judges.

Judge VAN GRAAFEILAND dissents in part in a separate opinion.

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B.D. PARKER, Jr., Circuit Judge.

This case, consisting of four actions, addresses whether properties reacquired by the Oneida Indian Nation of New York ("OIN" or "the Oneidas") are subject to taxation by the City of Sherrill, New York and Madison County, New York. The OIN is a federally recognized Indian tribe, governed by a Nation Representative and a Tribal Council. 1 The Oneidas lived on what became central New York State long before the founding of the United States. In the late eighteenth century most of the Oneidas' ancestral land was formally set aside by Congress as reservation land. During the nineteenth century much of it was sold to non-members of the tribe. But starting in the 1990s members of the tribe reacquired parcels in open-market transactions, and in 1997 and 1998 the purchases included several businesses and properties in Sherrill. 2 These properties include two upon which the Oneidas operate a gasoline station, a convenience store, and a textile manufacturing and distribution facility (the "Sherrill Properties" or the "properties"). Contending that these properties are within their reservation and are, consequently, not subject to taxation, the Oneidas refused to pay the property taxes or to collect sales taxes on merchandise sold at the businesses.

Following this refusal, Sherrill purchased three of the properties at tax sales and, two years later, recorded deeds. Sherrill also started formal eviction proceedings. In response, the Oneidas sued Sherrill in the United States District Court for the Northern District of New York (the "Lead case"), contending that the land, as part of their historic reservation recognized principally by the 1794 Treaty of Canandaigua, is exempt from state and municipal taxation. The suit sought declaratory and injunctive relief prohibiting the evictions and the imposition of property taxes. Although the Sherrill Properties were purchased from non-Oneidas, the Oneidas claim that their purchases reestablished the properties as reservation land because the federal government--which alone has the power to do so--has never changed the reservation status of the land. 3 Sherrill counterclaimed, seeking declaratory and injunctive relief and damages, asserting that, for a variety of reasons, the land had lost its reservation status and that the OIN has been unjustly enriched by municipal benefits received, but not paid for, after reacquisition.

Sherrill also petitioned the New York State Supreme Court, Oneida County, to order the eviction of the OIN from the properties (the "Eviction case"). The OIN, citing federal preemption, removed to federal court, contending that sovereign immunity barred Sherrill's claims. In response to this defense, Sherrill filed an action against the individual members of the Tribal Council (the "Members case"). Sherrill again sought eviction and also sought injunctive relief, forbidding council

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members from purchasing additional properties in the city.

These three cases were related to an additional action (the "Related case"), brought by the OIN against Madison County, concerning thirteen parcels of land also purchased by the OIN in the 1990s. As in the Lead case, the Oneidas sought declaratory relief that these properties are not subject to taxation, contending that, notwithstanding intervening non-Indian possession, these properties have remained reservation land.

Procedural strife followed. In the Lead case, Sherrill moved for summary judgment, for injunctive relief, and to amend its answer to add various affirmative defenses. The OIN opposed the motions and cross-moved for summary judgment in the Lead and Eviction cases, asserting principally that the parcels in question were non-taxable because they were located on reservation land in Indian country. See 18 U.S.C. § 1151. In the Members case, the OIN officers moved to stay or, in the alternative, to dismiss principally on grounds of sovereign immunity and the failure to name the OIN as a party. Madison moved to dismiss the Related case for failure to join two allegedly indispensable parties: the Wisconsin and Thames Oneidas. In November 2000, the State of New York, Madison and Oneida Counties, and a public company, Oneida Ltd., filed briefs as amici curiae in the Lead case in support of Sherrill's motion for summary judgment and in opposition to the OIN's cross-motion.

After the dust settled, the District Court issued a well-reasoned opinion resolving these various motions. Oneida v. City of Sherrill, 145 F.Supp.2d 226 (N.D.N.Y.2001) ("Oneida IV"). It considered a number of issues but devoted a good deal of attention to what the parties considered--and what we agree--to be the basic question posed: whether the properties are in Indian country. Oneida IV, 145 F.Supp.2d at 241. The court concluded that, for a number of reasons, they are. The properties are part of the Oneidas' aboriginal lands and federally recognized reservation. The reservation's status was guaranteed by treaty obligations--principally in the 1794 Treaty of Canandaigua--and Sherrill did not carry its burden of demonstrating congressional action disestablishing the reservation. Accordingly, the District Court concluded that, as they are in Indian country, neither the Sherrill nor Madison Properties are taxable by Sherrill and Madison County, and granted the OIN judgment on its claims in the Lead case. Id. at 254-259.

Determining that the OIN was entitled to sovereign immunity, the court also granted judgment on Sherrill's counterclaims in the Lead case and denied Sherrill leave to amend its complaint. Id. at 258-59. The court granted the OIN judgment in the Eviction case as well, concluding that it was entitled to sovereign immunity. It also granted the council members' motion to dismiss in the Members case, concluding that they too were entitled to sovereign immunity and that, in any event, Sherrill had failed to join the OIN, which the court found to be an indispensable party. Finally, the court sua sponte granted the OIN judgment on the pleadings in the Related case, concluding that its findings with respect to the Sherrill Properties applied also to those located in Madison. Separately, the court denied Madison County's motion to dismiss that case. Oneida Indian Nation of N.Y. v. Madison County, 145 F.Supp.2d 268, 270-71 (N.D.N.Y.2001). Sherrill and Madison appealed. 4 We agree with the District

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Court's principal conclusion that the OIN's Sherrill Properties are not taxable, and therefore affirm the judgment in the Lead, Eviction, and Members cases. Because we find, however, that the court's sua sponte grant of judgment on the pleadings in the Related case was procedurally improper, we vacate this judgment and remand for further proceedings.

BACKGROUND

I. Treaties Governing Rights to the OIN's Land

Since the land in question has been the subject of federal litigation off and on for more than one hundred and fifty years, before looking at the controlling legal issues, we briefly review how we reached this point in time. As previously noted, the parties contest whether land first occupied by the Oneidas in upstate New York before the founding of this country is, upon reacquisition by the Oneidas, subject to taxation by New York State and its municipalities.

The Oneidas are the direct descendants of members of the original Oneida Indian Nation, one of the six nations of the Iroquois Confederacy (the "Six Nations"), which were the most powerful Indian tribes in the northeastern United States at the time of the American Revolution. County of Oneida, N.Y. v. Oneida Indian Nation of N.Y., 470 U.S. 226, 230, 105 S.Ct. 1245, 84 L.Ed.2d 169 (1985) ("Oneida II") (citing B. Graymont, The Iroquois in the American Revolution (1972)). The Six Nations are the Cayugas, Mohawks, Oneidas, Onondagas, Senecas, and Tuscaroras. New York Indians, 170 U.S. 1, 36, 18 S.Ct. 531, 42 L.Ed. 927 (1898) ("New York Indians II"). From time immemorial through the Revolutionary period, the Oneidas inhabited what is now central New York State. Their aboriginal lands covered approximately six million acres, from the Pennsylvania border to the St. Lawrence River, and from the shores of Lake Ontario to the...

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