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

Decision Date12 May 1971
Docket NumberNo. 25298.,25298.
Citation442 F.2d 1184
PartiesThe AGUA CALIENTE BAND OF MISSION INDIANS, by and through its Tribal Council, et al., Appellants, v. The COUNTY OF RIVERSIDE, a political Subdivision of the State of California, Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Raymond Simpson (argued) of Simpson & Rehkop, Long Beach, Cal., Lewis, Roca, Beauchamp & Linton, Phoenix, Ariz., for appellants.

Steven A. Broiles (argued), Deputy County Counsel, Ray T. Sullivan, Jr., County Counsel, Richard J. Lawrence, Deputy County Counsel, Riverside Cal., for appellee.

Evelle J. Younger, Cal. Atty. Gen., Ernest P. Goodman, Asst. Atty. Gen., Edward P. Hollingshead, Walter J. Wiesner, Deputy Attys. Gen., Sacramento, Cal., Robert S. Pelcyger, David H. Getches, Escondido, Cal., Minerva Jenkins, Chairman, Tribal Council, Needles, Cal., amicus curiae.

Before ELY and WRIGHT, Circuit Judges, and SMITH,* District Judge.

RUSSELL E. SMITH, District Judge:

The Agua Caliente Band of Mission Indians (hereafter The Band),1 together with individual members of The Band (hereafter the Allottees) appeal from a judgment of the District Court, 306 F. Supp. 279, refusing to enjoin the imposition of the California Possessory Interest Tax2 on the lessees of the Indian land.

The Secretary of the Interior, acting under Congressional authority,3 allotted to the individual members of The Band and to The Band itself a total of 26,646.28 acres in the area of Palm Springs, California. These lands are interspersed among non-Indian lands in a checkerboard pattern. The legal title to them is in the United States in trust. Of these lands 1250 acres, including eight acres owned by The Band, are under long term leases, made as authorized by 25 U.S.C. Section 415 by the Allottees and The Band with the approval of the Secretary of the Interior. At the time the leases were executed all parties contemplated that the lessees would not be required to pay any taxes by reason of their use and possession of the Indian property.

Jurisdiction as to the claims of the Allottees is found in 28 U.S.C. Section 1331, and as to The Band in 28 U.S.C. Section 1331 and Section 1362, unless, as defendants claim, the court is deprived of jurisdiction by 28 U.S.C., Section 1341, which reads: "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."

This section has been held to be inapplicable to cases involving taxation of instrumentalities of the United States, at least in cases where the United States is a party.4 Indian property uniformly is said to be an instrumentality of the United States.

"Perhaps the most frequent reason stressed by the courts for the exemption of Indian property from State taxation is the Federal Instrumentality doctrine. The doctrine in its application to Indians and Indian property is founded upon the premise that the power and duty of governing and protecting tribal Indians is primarily a Federal function, and that a State cannot impose a tax which will substantially impede or burden the functioning of the Federal Government." Federal Indian Law, Dept. of Int., 1958, page 846.5

At the instance of the United States, as trustee, State laws taxing Indian property may be contested in the Federal District Court. An Indian, as the beneficial owner of lands held by the United States in trust has a right acting independently of the United States to sue to protect his property interests.6 The reasons given in United States v. Livingston, supra, for exempting instrumentalities of the United States from the operation of 28 U.S.C. Section 1341 are no less cogent when the right to the exemption is asserted by one who properly could be a co-plaintiff with the United States. We conclude that the District Court did have jurisdiction.

The California tax on possessory interests does not purport to tax the land as such, but rather taxes the "full cash value" of the lessee's interest in it.7 Upon default in payment of the tax the Indian lessor is not liable for payment of it and the Indian's title to the land is not encumbered.8

A substantial amount of evidence was received bearing upon the economic effects of the tax upon the Indian. We conclude from it what we would conclude without it, that it, a lessee can afford to pay more rent if he is not required to pay a possessory interest tax. If an Indian's land is not subject to that tax he enjoys a better bargaining position than he otherwise would, and hence that the tax has an adverse economic effect upon him.

States may not without the consent of Congress tax the property of the United States,9 nor may they tax instrumentalities of the United States.10

If the Indian as a beneficial owner of the land, the legal title to which is in the United States, is entitled to no more protection than the United States itself would enjoy, absent a congressional action forbidding the tax, then it is clear that the tax here imposed is valid. In United States v. City of Detroit, supra, (fn. 9) it was held that a tax similar to the California Possessory Interest tax could be levied upon a lessee holding land under a lease from the federal government even though the burden of the tax fell directly upon the United States. If it was not clear before, it is clear since United States v. City of Detroit, supra, that "the imposition of an increased financial burden on the Government does not, by itself, vitiate a state tax" and that the tax imposed upon the use of property is something distinct from a tax imposed upon the property itself. We conclude from this that the tax here is properly imposed unless it can be said that the legislation dealing with Indians and Indian lands demonstrates a congressional purpose to forbid the imposition of it.

Here, as in United States v. City of Detroit, supra, there is no statute which expressly forbids the imposition of a state use tax. The statutory law mentioning the taxation of these lands is found in an equalization act11 and in a statute granting some measure of regulatory power to local governments.12 If, as was said in United States v. City of Detroit, supra, a tax upon the use of property is not a tax upon the property itself, then there is nothing in these statutes which expressly forbids the tax here imposed.

It remains however to determine whether from other legislation dealing with Indians and Indian land a purpose to exempt these allotments from the kind of a tax herein imposed may be found. The law initially authorizing the allotments13 provides that the land shall be held in trust for the "sole use and benefit" of The Band or Allottees and that at the expiration of the trust period the land shall be transferred "free of all charge and encumbrance whatsoever." This language is identical with the language used in the general allotment Act14 and in Oklahoma Tax Commission v. Texas Company, 336 U.S. 342, 69 S.Ct. 561, 93 L.Ed. 721 (1949) the Supreme Court refused to imply a tax exemption on the basis of that language. The general rule that tax exemptions are not granted by implication is applicable to taxing acts affecting Indians as it is to all others.15

The position urged by the Indians here was fully supported by Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L. Ed. 338 (1922) wherein Mr. Justice Holmes said "A tax on the leases was a tax upon the power to make them and could be used to destroy the power to make them" and "the same considerations that invalidate a tax upon the the leases invalidate a tax upon the profit of the leases, and stopping short of theoretical possibilities, a tax upon such profits is a direct hamper upon the effort of the United States to make the best terms that it can for its wards." That position however was specifically rejected in Oklahoma v. Texas Company, supra, and it is now untenable.

Appellants and amicus curiae press upon us the economic plight of the Indians and persuasively attack the concept that a tax upon the use of a thing is not a tax upon the thing itself, but as we see it these arguments are foreclosed by the decisions cited.16

The judgment appealed from is affirmed.

ELY, Circuit Judge (dissenting):

I respectfully dissent. The obligation of the federal government to its Indian wards, probably born of a collective national guilt, runs deep. It is federal policy, undeniable, if belated, that the Indian has a special status in our Country and that he is justly entitled to very special protection. I cannot join in stripping such a protection from the Agua Caliente Band in the face of the overwhelming evidence that the tax in question amounts, in its effect, to taxation of the full value of Indian trust lands.

It is conceded by all concerned that were Riverside County's possessory interest tax imposed directly on the Indian lands, it would be unlawful. My Brothers, however, feel constrained by United States v. Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424 (1958), to hold that "the tax imposed upon the use of property is something distinct from a tax imposed upon the property itself." They conclude the tax to have been validly imposed absent legislative immunization. They further rely upon Oklahoma Tax Comm'n v. Texas Co., 336 U.S. 342, 69 S.Ct. 561, 93 L.Ed. 721 (1949), to conclude that no such legislative immunization may be implied. I strongly disagree with both conclusions.

Detroit simply expressed the view, with which I have no disagreement, that the doctrine of intergovernmental immunity does not preclude state taxation of an entity solely because the burden of such taxation eventually falls on the federal government. If, however, an important federal policy conflicts with the goal of effective implementation of the state taxing power, I should think that the Supremacy Clause demands that the extent to which a state tax burdens the federal policy be an...

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