CONFEDERATED SALISH & KOOTENAI TRIBES, MONT. v. Moe

• Decision Date: 04 February 1975
• Docket Number: Civ. No. 2145.
• Citation: 392 F. Supp. 1297
• Parties: The CONFEDERATED SALISH AND KOOTENAI TRIBES OF the FLATHEAD RESERVATION, MONTANA ("TRIBES"), et al., Plaintiffs, v. John C. MOE, Individually and in his official capacity as sheriff IN AND FOR the COUNTY OF MISSOULA, MONTANA, et al., Defendants.
• Court: U.S. District Court — District of Montana

392 F. Supp. 1297

The CONFEDERATED SALISH AND KOOTENAI TRIBES OF the FLATHEAD RESERVATION, MONTANA ("TRIBES"), et al., Plaintiffs, v. John C. MOE, Individually and in his official capacity as sheriff IN AND FOR the COUNTY OF MISSOULA, MONTANA, et al., Defendants.

Civ. No. 2145.

United States District Court, D. Montana, Missoula Division.

May 10, 1974.

Supplemental Order and Opinion February 4, 1975.

COPYRIGHT MATERIAL OMITTED

Wilkinson, Cragun & Barker and Richard A. Baenen, Washington, D. C. and Victor F. Valgenti, Missoula, Mont., for plaintiffs.

Robert L. Deschamps, III, County Atty., and Harold V. Dye, Asst. County Atty., Missoula, Mont., for John C. Moe.

Robert L. Woodahl, Atty. Gen., and Dennis E. Lind, Thomas J. Beers and William N. Jensen, Asst. Attys. Gen., for the State of Montana, Helena, Mont., who also represented the State of Montana.

Sam E. Haddon, Spec. Asst. Atty., for defendants.

Richard P. Heinz and Jean A. Turnage, Polson, Mont., for William A. Phillips.

Terry B. Cosgrove and R. Bruce McGinnis, Tax Counsel, Helena, Mont., for Dept. of Revenue.

Alex C. Morrison, Sanders County Atty., Thompson Falls, Mont., for defendant.

Before BROWNING, Circuit Judge, and SMITH and JAMESON, District Judges.

ORDER AND OPINION

PER CURIAM:

This is an action by the Confederated Salish and Kootenai Tribes of the Flathead Reservation and three enrolled members of the Tribes, suing on behalf of themselves and all other members of the Tribes, "seeking to declare unconstitutional the enforcement against plaintiffs of Title 84, Rev.Mont.Code §§ 5606 et seq., the Montana cigarette sales tax and dealer licensing statutes" and for an injunction restraining the enforcement of the statutes and any regulations promulgated pursuant thereto.¹ A three-judge court was convened pursuant to 28 U.S.C. § 2281.

The defendants named in the complaint, John C. Moe, Sherriff of Missoula County, and William A. Phillips, Sheriff of Lake County, filed motions to dismiss, Phillips including a motion to join the Department of Revenue of the State of Montana as a necessary party defendant. Plaintiffs filed a motion for summary judgment with supporting affidavits.²

In an opinion dated October 10, 1973³ we held that (1) this court has subject matter jurisdiction of plaintiffs' claims; and (2) under McClanahan v. Arizona State Tax Comm'n, 411 U.S. 164, 93 S. Ct. 1257, 36 L.Ed.2d 129 (1973), "Montana may not impose its cigarette tax upon sales of cigarettes on the Flathead Reservation between members of the Tribes; nor may Montana require a member of the Tribes who sells cigarettes on the Flathead Reservation to possess its cigarette dealer's license." The opinion noted that "the sole question on which there is any substantial dispute on the merits is whether the State of Montana may require an enrolled member of the Tribes who sells cigarettes on the Flathead Reservation to a non-Indian to `precollect'" the Montana cigarette tax, and that the procedural questions raised by defendants, i. e., the need for abstention and the propriety of a three-judge court, "might well be obviated by the addition of the Department of Revenue as a party defendant".

Plaintiffs filed a motion to add as defendants the Department of Revenue and its Director, and this motion was granted on November 2, 1973. Supplemental memoranda with respect to the application of the cigarette tax to a sale to a non-Indian have been filed by plaintiffs and by the Department of Revenue and the Attorney General of Montana for defendants. The defendant Moe filed a supplemental motion to dismiss, which has been denied in a separate order.

Factual Background

It appears from the allegations in the complaint and the affidavits filed in support of plaintiffs' motion for summary judgment that the plaintiff Wheeler,⁴ a member of the Tribes, leased from the Tribes small tracts of trust land within the Flathead Reservation. On these tracts, one of which is in Missoula County, the other in Lake County, Wheeler, who did not have a state license to sell cigarettes, established retail stores which sold cigarettes to which state tax stamps were not affixed.

On April 13, 1972 Wheeler was arrested by deputies of the Missoula County Sheriff's Office for selling cigarettes on the Missoula County tract without a state license and for not having a state cigarette tax stamp affixed to each package sold. Subsequently, sheriff's deputies confiscated approximately 1,350 cartons of Wheeler's cigarettes. At the time of both the arrest and confiscation the deputies tore down signs on the door of Wheeler's store advertising cigarettes for sale. Also on April 13, 1972 officers from the Lake County Sheriff's Office arrested the plaintiff Clinkenbeard, the keeper of Wheeler's store located on the Lake County tract, for the same offenses. No cigarettes were confiscated from this store.

Contentions of Parties

Plaintiffs contend that the application of Montana's cigarette tax and dealer licensing statutes to sales of cigarettes on the Flathead Reservation by enrolled members of the Tribes is unconstitutional and a violation of tribal sovereignty under Article I, § 8, cl. 3 of the United States Constitution; the Treaty of Hellgate, 12 Stat. 975, July 16, 1855; the Organic Act for the Territory of Montana, 13 Stat. 85, May 26, 1864; and the Enabling Act of the State of Montana, 25 Stat. 676, February 22, 1889. Plaintiffs admit that Montana may, under P.L. 280 (67 Stat. 588, August 15, 1953), have assumed some jurisdiction over the Tribes, but contend that the assumed jurisdiction does not include the power to apply Montana's cigarette tax and dealer licensing statutes to cigarette sales on the Reservation by members of the Tribes.

Defendants in urging dismissal upon jurisdictional grounds contend that 28 U.S.C. § 1341 prohibits this court from enjoining application of Montana's cigarette tax statutes. On the merits defendants contend that Montana has the power to require a member of the plaintiff Tribes "to precollect, for the state, its cigarette excise tax when such member sells cigarettes to a non-Indian within the exterior boundaries of the Flathead Reservation".⁵

Subject Matter Jurisdiction

The defendants first argue that 28 U. S.C. § 1341 prohibits this court from enjoining enforcement of Montana's cigarette tax and dealer licensing statutes. Section 1341 provides: "The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State."

§ 1341 was enacted in 1937 (Act of August 21, 1937, 50 Stat. 738) as an amendment to § 24 of the Judicial Code. From its legislative history it is clear that Congress was concerned with correcting "the disparity between the rights of a citizen of a state, whose only means of litigating his disputed tax liabilities was a state court suit for refund for prepaid taxes, and those of foreign corporations and nonresidents, doing business within the state and incurring tax obligations, who could because of diversity jurisdiction obtain in the federal courts equitable relief⁶ denied to citizens of the state."⁷ United States v. Livingston, 179 F.Supp. 9, 11 (E.D.S.C.1959), aff'd, 364 U.S. 281, 80 S.Ct. 1611, 4 L.Ed.2d 1719 (1960).

In spite of the seemingly unequivocal language of § 1341, the courts have recognized many exceptions in its application. Thus, in Dept. of Employment v. United States, 385 U.S. 355, 358, 87 S.Ct. 464, 467, 17 L.Ed.2d 414 (1966) the Court held that "§ 1341 does not act as a restriction upon suits by the United States to protect itself and its instrumentalities from unconstitutional state exactions." This exception is based upon the well established rule that legislative restrictions upon the exercise of remedial rights are not binding upon the sovereign unless clearly and expressly stated and upon the fact that a suit by the United States to assert its constitutional immunity from state taxation does not involve the evils that § 1341 was designed to correct or the interpretation or application of state laws. Livingston, supra at 11-12. See also, for example, United States v. Woodworth, 170 F.2d 1019, 1020 (2 Cir. 1948) ("Congress did not intend § 1341 * * * to apply to the United States which was not specifically named therein.") and Board of Com'rs of Pawnee County, Okl. v. United States, 139 F.2d 248, 250 (10 Cir. 1943), cert. denied, 321 U.S. 795, 64 S.Ct. 846, 88 L.Ed. 1084 (1944) ("§ 1341 does not * * * specifically mention the United States, and it is seriously questioned whether the restrictive provisions of § 1341 were intended to apply to suits brought by the United States.")

The exception stated in Dept. of Employment has been held to apply where the asserted tax immunity is based upon Congressional legislation, as well as the United States Constitution, and does not necessarily depend upon the existence of a proprietary interest in the Government. Thus, in United States v. Arlington County, Commonwealth of Virginia, 326 F.2d 929, 931 (4 Cir. 1964) it was held that § 1341 does not bar a federal court action brought by the United States on behalf of its servicemen to protect and enforce the Government's statutory policies against state taxation of members of the Armed Forces. See also Sullivan v. United States, 395 U.S. 169, 170, n. 2, 89 S.Ct. 1648, 23 L.Ed.2d 182 (1969). Moreover, the exception applies even where, as here, the United States is not a party plaintiff, if the suit could have been brought by the United States and is in fact brought by parties who could properly be co-plaintiffs with the United States. Agua Caliente Bank of Mission Ind. v. County of Riverside, 442 F.2d 1184, 1186 (9 Cir. 1971), cert. denied, 405 U.S. 933, 92 S.Ct. 930, 30 L.Ed.2d 809 (1972).⁸

While the exceptions to § 1341 have been expressed most often in terms of the Federal instrumentality doctrine, we do not...