Airvator, Inc. v. Turtle Mountain Mfg. Co., 10207

Citation329 N.W.2d 596
Decision Date27 January 1983
Docket NumberNo. 10207,10207
PartiesAIRVATOR, INC., a North Dakota corporation, Plaintiff and Appellant, v. TURTLE MOUNTAIN MANUFACTURING COMPANY, a North Dakota corporation, Defendant and Appellee. Civ.
CourtUnited States State Supreme Court of North Dakota

R. Lee Hamilton, Grand Forks, for plaintiff and appellant.

Garcia & Garcia, Devils Lake, for defendant and appellee; argued by David Garcia, Devils Lake.

SAND, Justice.

Airvator, Inc. (Airvator), a North Dakota corporation, appealed from a district court judgment 1 dismissing its complaint against Turtle Mountain Manufacturing Co. (Turtle Mountain Manufacturing), a North Dakota corporation, for lack of subject matter jurisdiction.

Airvator brought an action in state district court against Turtle Mountain Manufacturing for alleged breach of contract and for general and special money damages. Turtle Mountain Manufacturing moved, pursuant to Rule 12(b)(1), North Dakota Rules of Civil Procedure, to dismiss the complaint, contending the state district court lacked subject matter jurisdiction. The court granted the motion dismissing the complaint and Airvator appealed.

There are four entities involved in the underlying factual situation from which the instant action arose. They are: (1) Airvator, (2) Turtle Mountain Manufacturing, (3) Turtle Mountain Investment Corporation (Turtle Mountain Investment), and (4) Turtle Mountain Band of Chippewa Indians.

Turtle Mountain Manufacturing is incorporated under the laws of North Dakota for the purpose of manufacturing motor vehicle trailers and engaging in other business ventures. Turtle Mountain Manufacturing is registered with the Secretary of State of North Dakota and has its office address at Belcourt, North Dakota, which is within the exterior boundaries of the Turtle Mountain Indian Reservation. Its registered agent is Wayne Keplin, Belcourt, North Dakota.

Fifty-one percent of the stock of Turtle Mountain Manufacturing is owned by Turtle Mountain Investment, a North Dakota corporation registered with the Secretary of State and formed for the purpose of manufacturing motor vehicle trailers and engaging in any other lawful business. Turtle Mountain Investment's registered office address is the Tribal Community Building, Belcourt, North Dakota, and its registered agent is also Wayne Keplin, of Belcourt, North Dakota. The remaining forty-nine percent of the stock of Turtle Mountain Manufacturing is owned by non-Indians.

Turtle Mountain Investment is wholly owned by the Turtle Mountain Band of Chippewa Indians, an unincorporated band of Chippewa Indians occupying the Turtle Mountain Indian Reservation located in the north central part of North Dakota. The Turtle Mountain Band of Chippewa Indians formed Turtle Mountain Investment to represent the tribe's interest in Turtle Mountain Manufacturing.

Turtle Mountain Manufacturing was formed with a loan and grant money obtained from the Bureau of Indian Affairs and the United States Department of Commerce Development Authority. The parties agreed during oral argument that, as a condition to qualify for the loan and grant money, the corporation had to be organized under the laws of the State of North Dakota and registered with the Secretary of State.

Airvator's counsel's affidavit in opposition to the motion to dismiss reflects that, to the best of his knowledge, two of the three original directors of Turtle Mountain Manufacturing (Harley Neshem and Donald Peterson) were not enrolled members of the Turtle Mountain Band of Chippewa Indians or of Indian descent. The affidavit further reflects that the affiant did not have any information, knowledge or belief concerning the descent of the third original director, Wayne Keplin. Turtle Mountain Manufacturing's counsel's affidavit in support of the motion to dismiss reflects that Turtle MountainManufacturing's board of trustees and directors is composed of seven members, four of whom were tribal members of the Turtle Mountain Band of Chippewa Indians and who exercised control over the company.

On 31 May 1980 Turtle Mountain Manufacturing, through its president, Donald Peterson, and its secretary, Harley Neshem, entered into a written manufacturing agreement with Airvator through its president, Keith Ballweg, whereby Turtle Mountain Manufacturing agreed to manufacture and assemble farm seeding equipment (Air-Seeders) for Airvator. Pursuant to statements in the affidavit of counsel for Airvator, the manufacturing agreement was primarily negotiated in Grand Forks and executed by Turtle Mountain Manufacturing's non-Indian officers at Berthold, and by Airvator at Langdon, all North Dakota locations which are not within the Turtle Mountain Indian Reservation. Turtle Mountain Manufacturing's counsel's affidavit in support of the motion to dismiss reflects that the "transaction ... occurred wholly within the exterior boundaries of the Turtle Mountain Indian Reservation."

The manufacturing agreement did not state where the manufacturing was to take place; however, the machines were to be shipped f.o.b. Belcourt, North Dakota. Although the air seeders were shipped f.o.b. Belcourt, title did not pass from Turtle Mountain Manufacturing until it received payment. The agreement also provided that Turtle Mountain Manufacturing was obligated to repair, at its own expense and at the place of discovery, all breaches of warranty of workmanship and production.

Airvator's complaint alleged, in substance, that Turtle Mountain Manufacturing did not complete a written purchase order for 100 Air Seeders; that Turtle Mountain Manufacturing did not manufacture some of the air-seeders in a workmanlike manner nor were they prepared for delivery; that Turtle Mountain Manufacturing wrongfully refused to deliver completed air-seeders to Airvator; and that Turtle Mountain Manufacturing delivered air-seeders to persons not authorized by Airvator to receive them.

From the foregoing an issue of fact has been joined. However, the trial court's decision to dismiss the complaint was based on the grounds that it did not have subject matter jurisdiction because Turtle Mountain Manufacturing's majority stockholder was the Turtle Mountain Band of Chippewa Indians (Turtle Mountain Investment) and, further, that the major part of the contract was to be performed on the Turtle Mountain Indian Reservation.

The primary issue raised on appeal is whether or not the state court has subject matter jurisdiction over Airvator's cause of action against Turtle Mountain Manufacturing. A brief discussion of the history of Indian jurisdiction will help narrow the issue presented by this case.

Relations between the United States and Indian Nations have been historically viewed to be vested in the government of the United States. Washington v. Confederated Bands and Tribes of the Yakima Indian Nation, 439 U.S. 463, 99 S.Ct. 740, 58 L.Ed.2d 740 (1979), rehearing denied, 440 U.S. 940, 99 S.Ct. 1290, 59 L.Ed.2d 500 (1979); McClanahan v. State Tax Commission of Arizona, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973); Williams v. Lee, 358 U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d 251 (1959); Worcestor v. Georgia, 31 U.S. 515, 6 Pet. 515, 8 L.Ed. 483 (1832).

In Worcester v. Georgia, 31 U.S. at 561, 6 Pet. at 561, 8 L.Ed. at 501, the United States Supreme Court stated:

"The Cherokee nation ... is a distinct community, occupying its own territory ... in which the laws of Georgia can have no force, and which the citizens of Georgia have no right to enter, but with the assent of the Cherokees themselves, or in conformity with treaties, and with the acts of Congress. The whole intercourse between the United States and this nation, is, by our constitution and laws, vested in the government of the United States."

A major step toward the transfer of federal jurisdictional responsibility over Indian affairs to the States was the passage of Public Law 280 2 in 1953. It transferred criminal and civil jurisdiction over Indian lands from the federal to state governments in five states 3 and allowed for future assumptions of jurisdiction by the remaining states.

Public Law 280 extended to the remaining states the option of assuming jurisdiction on their own initiative at some future time. The statute divided these states into two categories. Section 6 of Public Law 280 permitted states whose constitutions or enabling acts contained provisions limiting the jurisdiction they could assert over Indians and Indian lands to amend their constitutions or enabling acts, thereby removing any legal impediment to the assumption of jurisdiction. 4 Section 7 of Public Law 280 permitted states not included in the mandatory transfer and not prevented from assuming jurisdiction by their constitutions or enabling acts to assume jurisdiction "at such time and in such manner as the people of the State shall, by affirmative legislative action, obligate and bind the State to assumption thereof." 5 In 1968 Congress passed Public Law 90-284 requiring Indian consent to subsequent transfers of jurisdiction. 6

The Congressional Enabling Act passed 22 February 1889 provided for the establishment of the states of Montana, North Dakota, South Dakota, and Washington. Section 4, subdivision 2, of that Act provided that "Indian lands shall remain under the absolute jurisdiction and control of the Congress of the United States." That section was incorporated into the original North Dakota Constitution as a "Compact with the United States." Article XVI, Sec. 203, N.D. Const. (1889).

Pursuant to the option given to North Dakota by the United States in Public Law 280, the people of North Dakota, in 1958, approved an amendment to Sec. 203 of the North Dakota Constitution which provides, in part, as follows:

"The people inhabiting this state do agree and declare that they forever disclaim all right and title to the unappropriated public lands lying within the boundaries thereof, and to all lands lying within said limits owned or...

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    ...governments in five states and allowed for future assumptions of jurisdiction by the remaining states." Airvator, Inc. v. Turtle Mountain Mfg. Co., 329 N.W.2d 596, 599 (N.D. 1983) (footnotes omitted). "In 1968 Congress passed Public Law 90-284 [codified at 25 U.S.C. § 1322] requiring Indian......
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