BOARD OF COUNTY COMMISSIONERS, ETC. v. Seber

• Decision Date: 22 August 1942
• Docket Number: No. 2488.,2488.
• Citation: 130 F.2d 663
• Parties: BOARD OF COUNTY COMMISSIONERS OF CREEK COUNTY, OKL., et al. v. SEBER et al.
• Court: U.S. Court of Appeals — Tenth Circuit

130 F.2d 663 (1942)

BOARD OF COUNTY COMMISSIONERS OF CREEK COUNTY, OKL., et al. v. SEBER et al.

No. 2488.

Circuit Court of Appeals, Tenth Circuit.

August 22, 1942.

COPYRIGHT MATERIAL OMITTED

Mac Q. Williamson, Atty. Gen., of State of Oklahoma, and Houston Bus Hill, Asst. Atty. Gen. (Everett S. Collins, Co. Atty., and Kenneth Hughes, Asst. Co. Atty., both of Sapulpa, Okl., on the brief), for appellants.

George H. Jennings, of Sapulpa, Okl., for appellees.

Before PHILLIPS, MURRAH, and WILLIAMS, Circuit Judges.

MURRAH, Circuit Judge.

The appellees, as un-enrolled full-blood Creek Indians, instituted this suit in their own behalf against the duly constituted officials of Creek County, Oklahoma, a municipal corporation, to recover ad valorem taxes and penalties theretofore paid, plus 6% interest from the date of payment; for cancellation of the assessed and unpaid taxes, and for a judgment declaring the nontaxable status of certain lands located in Creek County, Oklahoma, of which they were the grantees from their mother, Wosey John, now Deere (since deceased), a full-blood enrolled Creek Indian. The lands in question were purchased for and on behalf of Wosey John, now Deere, by the Secretary of the Interior from non-Indian owners¹, out of accumulated trust or restricted funds derived as proceeds from oil and gas produced from the restricted allotment of the said Wosey John, now Deere, pursuant to Section one of the Act of May 27, 1908, 35 Stat. 312.

One parcel of land purchased on December 11, 1915, consisted of property located within the city limits of Sapulpa, Oklahoma; one tract purchased March 24, 1920, consisted of 7½ acres of agricultural land; and another tract purchased December 8, 1927, consisted of 80 acres of agricultural land, all located in Creek County, Oklahoma. Each of the deeds to Wosey John, now Deere, contained a provision restricting the land against alienation or encumbrance unless approved by the Secretary of the Interior, or unless otherwise provided by law.

On March 4, 1931, the said Wosey John, now Deere, in consideration of "$1.00 and love and affection", and with the consent and approval of the Secretary of the Interior, conveyed all of the lands in question to her children and heirs (appellees here), reserving unto herself a life estate in the lands, together with the rents and profits therefrom. The deed of conveyance contained a provision against alienation or encumbrance unless approved by the Secretary of the Interior, with a further provision in the habendum clause as follows: "To have and to hold said described premises, unto said grantees, their heirs and assigns, forever, free, clear and discharged of all * * * taxes, judgments, * * * and other liens and encumbrances of whatsoever nature * * *".

Thereafter and on December 10, 1937, in consideration of "$1.00 and love and affection", the said Wosey John, now Deere, conveyed her life estate, heretofore reserved in all of the land, to the appellees. The conveyance was not approved by the Secretary of the Interior, but the Superintendent of the Five Civilized Tribes certified that the land in question was purchased for the appellees to be held in trust by the United States of America for their benefit by virtue of their being full-blood Creek Indians, not enrolled, and that the deed was executed and approved pursuant to the Act of May 27, 1908, supra. On December 16, 1937, the appellees executed a certificate designating the agricultural lands, consisting of 87½ acres, as their homestead. The said certificate was approved by the Secretary of the Interior on March 24, 1938, and duly filed in the office of the county clerk of Creek County, Oklahoma.

Prior to 1936, all the lands in question, whether held in the name of Wosey John, now Deere, or her children (appellees here), were subject to taxation by the State of Oklahoma and its political subdivisions, McCurdy v. United States, 246 U.S. 263, 38 S.Ct. 289, 62 L.Ed. 706; United States v. Gray, 8 Cir., 284 F. 103; United States v. Ransom, 8 Cir., 284 F. 108, Id., 263 U.S. 691, 44 S.Ct. 230, 68 L. Ed. 508; see, also, Shaw v. Gibson-Zahniser Oil Corporation, 276 U.S. 575, 48 S.Ct. 333, 72 L.Ed. 709, and apparently taxes were levied, assessed and collected on the said lands as unrestricted and nonexempt lands in Oklahoma.

The appellees paid the ad valorem taxes and penalties levied and assessed against all the lands in question for the taxable years 1936 and 1937, and the taxes and penalties levied and assessed against the agricultural land (which had been designated as a homestead on December 16, 1937), for the taxable year 1938, and a part of the taxable years 1939 and 1940. The Creek County officials levied and assessed taxes against all of the property, including the homestead, for the taxable years 1940 and 1941, and assert the power to continue to levy and assess taxes against all of the lands in question, and to collect the taxes by sale as provided by the laws of Oklahoma.

Effective June 20, 1936, Congress passed an Act (Public No. 716, 49 Stat. 1542), "To relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes, and for other purposes". By Section one of the Act, Congress appropriated $25,000.00 to be expended under rules and regulations prescribed by the Secretary of the Interior for the payment of taxes, penalties, and interest, assessed against individually owned Indian lands, the title to which is held subject to restrictions against alienation or encumbrance, except with the consent or approval of the Secretary of the Interior, and heretofore purchased out of trust or restricted funds of an Indian, where the Secretary finds that such land was purchased with the understanding and belief on the part of said Indian that after purchase it would be nontaxable, and for redemption or reacquisition of any such lands heretofore or hereafter sold for nonpayment of taxes.

Section two of the Act provides, "All lands the title to which is now held by an Indian subject to restrictions against alienation or encumbrance except with the consent or approval of the Secretary of the Interior, heretofore purchased out of trust or restricted funds of said Indian, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress". (See Senate Report No. 2168, 74th Congress, Second Session. House Report No. 2398, 74th Congress, Second Session).

After passage of the Act of June 20, 1936, supra, it was found that the provisions of Section two thereof would apply to lands and other property purchased by restricted Indian funds which would exempt from taxation vast quantities of property, such as business buildings and farm lands which were not homesteads, and would consequently place an unfair burden upon taxable lands included within the taxing jurisdiction. Accordingly, the Commissioner of Indian Affairs appeared before the Senate Committee on Indian Affairs and suggested an amendment to the Act of June 20, 1936, supra. (See Senate Report No. 332, 75th Congress, First Session). Accordingly, the Act of May 19, 1937, Public No. 96, 50 Stat. 188, 25 U.S.C.A. § 412a, amended Section two of the Act of June 20, 1936, supra, to read as follows: "All homesteads, heretofore purchased out of the trust or restricted funds of individual Indians, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress: Provided, That the title to such homesteads shall be held subject to restrictions against alienation or encumbrance except with the approval of the Secretary of the Interior: And provided further, That the Indian owner or owners shall select, with the approval of the Secretary of the Interior, either the agricultural and grazing lands, not exceeding a total of one hundred and sixty acres, or the village, town, or city property, not exceeding in cost $5,000, to be designated as a homestead".

Tax immunity as to all the lands involved is asserted for the years 1936 and 1937 under the provisions of Section two of the Act of June 20, 1936, supra, while immunity is claimed on the designated homestead only for the years 1938, 1939, 1940 and thereafter, under the provisions of the amendatory Act of May 19, 1937, supra. The principal question for decision is whether all the lands are exempt from ad valorem taxation under the Act of June 20, 1936, supra, for the period during which the said Act is applicable; and whether the designated homestead is exempt from taxation under the amendatory Act of May 19, 1937, supra, for the period during which it is applicable. Subsidiary to the principal question is the determination of the taxable period during which the original and the amendatory acts are applicable to the lands involved.

The trial court sustained the contentions of the appellees, gave judgment for the amount of the taxes and penalties paid, plus 6% interest from the date of payment; cancelled the assessed but unpaid taxes and penalties as illegal and void, and perpetually enjoined the taxing authorities (appellants here) from further levy or assessment of ad valorem taxes on the designated homestead. D.C., 38 F.Supp. 731.

On appeal, as below, the jurisdiction over the subject matter is challenged for lack of diversity of citizenship, but clearly, the controversy involves the validity, construction, or effect of a law of the United States, upon the determination of which the result depends. The right or immunity asserted here is such that it will be supported if the law is given one construction and effect, and defeated if it receives another. Shulthis v. McDougal, 225 U.S. 561, 32 S.Ct. 704, 56 L. Ed. 1205; Gully v. First National Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70. The requisite amount in controversy is present and the court had jurisdiction of the subject matter regardless of diversity of citizenship.

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