431 F.2d 1337 (10th Cir. 1970), 40-69, Reyos v. United States

Docket Nº:40-69, 41-69, 42-69, 43-69, 44-69.
Citation:431 F.2d 1337
Party Name:Anita REYOS et al., Plaintiffs, Appellees and Cross-Appellants, v. UNITED STATES of America et al., Defendants, Appellants, and Cross-Appellees. Anita REYOS et al., Plaintiffs, Appellees and Cross-Appellants, v. Fred BURSON et al., Plaintiffs-Appellants. Anita REYOS et al., Plaintiffs, Appellees and Cross-Appellants, v. John B. GALE et al., Defenda
Case Date:June 19, 1970
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1337

431 F.2d 1337 (10th Cir. 1970)

Anita REYOS et al., Plaintiffs, Appellees and Cross-Appellants,

v.

UNITED STATES of America et al., Defendants, Appellants, and Cross-Appellees.

Anita REYOS et al., Plaintiffs, Appellees and Cross-Appellants,

v.

Fred BURSON et al., Plaintiffs-Appellants.

Anita REYOS et al., Plaintiffs, Appellees and Cross-Appellants,

v.

John B. GALE et al., Defendants-Appellants.

Anita REYOS et al., Plaintiffs, Appellees, and Cross-Appellants,

v.

Verl HASLEM et al., Defendants-Appellants.

Anita REYOS et al., Plaintiffs, Appellees, and Cross-Appellants,

v.

FIRST SECURITY BANK OF UTAH, N.A., a banking corporation of the State of Utah, et al., Defendants-Appellants.

Nos. 40-69, 41-69, 42-69, 43-69, 44-69.

United States Court of Appeals, Tenth Circuit.

June 19, 1970

Rehearing Denied Nov. 12, 1970.

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Edmund B. Clark, Atty., Department of Justice, Washington, D.C. (Shiro Kashiwa, Asst. Atty. Gen., Washington, D.C., William T. Thurman, U.S. Atty., and H. Ralph Klemm, Asst. U.S. Atty., Salt Lake City, Utah, and Roger P. Marquis, Atty., Department of Justice, Washington, D.C., on the brief), for appellant United States of America.

Richard C. Cahoon, Salt Lake City, Utah (Thomas R. Blonquist, of Burton, Blonquist, Cahoon, Matheson & Shaffer, Salt Lake City, Utah, on the brief), for appellant John B. Gale.

Hardin A. Whitney, Jr., Salt Lake City, Utah (O. Wood Moyle, III, Salt

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Lake City, Utah, on the brief), for appellant Verl Haslem.

Marvin J. Bertoch, Salt Lake City, Utah (Merlin O. Baker, of Ray, Quinney & Nebeker, Salt Lake City, Utah, on the brief), for appellant First Security Bank of Utah, N.A.

Parker M. Nielson, Salt Lake City, Utah (Adam M. Duncan, Salt Lake City, Utah, on the brief), for appellees Anita Reyos et al.

Before LEWIS, Chief Judge, SETH, Circuit Judge, and BRATTON, District judge.

SETH, Circuit Judge.

These suits were commenced by eighty-five individuals with whom the United States originally had full trust relationship as Indians of the Tribe of the Uintah and Ouray Reservation in Utah. Of this group of plaintiffs twelve individuals were selected by the parties as the ones whose cases would be tried first as test cases. These are referred to as the 'designated' plaintiffs and are the appellees herein.

An Act of Congress directed that the federal trust relationship with the mixed-bloods of the Tribe be terminated, and the tribal property be divided between the mixed-blood and the full-blood groups. This is referred to as 'termination.' All plaintiffs belonged to the group of some 490 individuals designated by statute as the mixed-bloods of the Tribe.

The termination statute (68 Stat. 868, 25 U.S.C. §§ 677-677aa) permitted the mixed-blood group to form associations or corporations to handle some of the property difficult or impossible to distribute to individuals which was allocated to the mixed-blood group, and for matters of general concern to this group. One such corporation so formed was the Ute Distribution Corporation, the stock of which and the stockholders are concerned in these suits.

One type of property which the termination statute stated was not to be distributed to individuals was the gas, oil, and mineral interests. Upon division of the tribal property, a portion thereof in undivided interests was allocated to the mixed-blood group. The Ute Distribution Corporation was organized to 'handle' this interest of the mixed-bloods jointly with the Tribal Committee which had authority over the full-bloods' share. It was also organized to distribute the group's portion of unliquidated claims against the United States.

Ten shares of stock in the UDC were issued to each person in the mixed-blood group, and distributions or dividends were paid to the stockholders from time to time. The defendant bank entered into a contract with this corporation to act as transfer agent and to provide to it some record keeping and related services. In addition, the bank, under the termination statute, was authorized to act as trustee of express trusts for mixed-bloods who, in the opinion of the Secretary of the Interior, needed such help.

The individual defendants Gale and Haslem were assistant managers of a facility of the bank located in an area where a number of the mixed-bloods lived, and who dealt directly with some of the plaintiffs in the sale or transfer of their stock.

The plaintiffs were stockholders of the UDC who sold shares of their stock to non-Indians. The bank facilities and services were used in connection with these sales or some of them. The causes of action against the bank alleged a breach of the bank's duty arising from the agreement with the UDC and from its participation in the sales of stock. The action against the bank is also based on Regulation 10b-5 of the Securities and Exchange Commission. The causes alleged against the individual defendants Gale and Haslem are based solely on this Regulation.

Some time after these suits were filed the complaints were amended to include a cause of action against the United States under the Tort Claims Act. This cause alleged a breach of duty by the Secretary of the Interior and the local

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officials of the Bureau of Indian Affairs in connection with the transfer of the shares of stock.

The trial court, in some one hundred pages of findings and conclusions, found the defendant bank and defendants Gale and Haslem liable for damages to each of the twelve plaintiffs whose cases were selected as test cases for all sales made by them. The United States was found liable only as to some of the plaintiffs. The trial court used the figure of $1500 per share as a value for computing damages.

All defendants have appealed from the judgment of the trial court, and the twelve designated plaintiffs, whose cases were tried, have cross-appealed on the ground that the damages were inadequate.

Liability of the United States Under the Tort Claims Act:

The position or status of the plaintiffs as related to the provisions and the execution of the termination statute has become one of the fundamental issues on this appeal. The statute, Public Law No. 83-671 (25 U.S.C. §§ 677-677aa), provides solely and expressly for the termination of the federal trust relationship to the mixed-blood members of the Ute Indian Tribe of the Uintah and Ouray Reservation in Utah, and for termination of federal supervision over the trust and restricted property of the mixed-blood members of the Tribe. It directs that there be made a division of the tribal property between the mixed-blood and the full-blood members, and provides the procedure for termination of the mixed-bloods.

An examination of the significant portions of the statute is necessary for a proper consideration of the issues. The statute provides for the preparation of membership rolls for each group and the partition and distribution of the tribal assets between the two groups. It also states that upon distribution of the divisible property to the mixed-blood members, federal supervision of such member and his property shall thereby be terminated except as to property not susceptible of practical distribution such as oil, gas, and mineral rights which shall remain subject to the provisions of the Termination Act. Upon termination the mixed-blood individuals shall not be entitled to the services performed by the Government for Indians; that statutes of the United States which affect Indians because of their status shall no longer be applicable to such persons, and that the laws of the several States shall apply to the said members in the same manner as to other citizens within the State. The statute further states that the Secretary shall '* * * protect the rights of members of the tribe who are minors, non compos mentis, or, in the opinion of the Secretary, in the need of assistance in conducting their affairs, by such means as he may deem adequate, * * *.' Provision is made for the mixed-blood members of the Tribe to organize for common purposes and adopt a constitution and bylaws. The Act specifically recites that corporations may be formed by the mixed-bloods for grazing of livestock, for the 'handling' of water and water rights, and that distribution of property may be made to such corporations.

As to gas, oil, and mineral rights in the Ute lands, provision is made that these interests be held in undivided shares by the full-blood members on the one hand, and by the mixed-blood group on the other hand. The Act contemplates that an organization be formed by the mixed-blood group for the purpose of empowering individuals to act as 'the authorized representatives of said mixed-blood group in the joint management with the tribe and in the distribution and (of) unadjudicated claims against the United States, all gas, oil, and mineral rights of every kind. * * *' As indicated in the foregoing sentence provision is made in the Act for the joint management of the gas, oil, and other mineral rights by the Tribal Business Committee and the 'authorized representatives' of the Mixed-blood group. The Act directs that the net

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proceeds therefrom after deducting the cost chargeable to such management shall be divided between the full-blood and the mixed-blood groups in proportion to their respective numbers on the final membership...

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