Carpenter v. Shaw

Decision Date06 January 1930
Docket NumberNo. 50,50
PartiesCARPENTER et al. v. SHAW, State Auditor of Oklahoma
CourtU.S. Supreme Court

Messrs. Stephen A. George and J. B. Moore, both of Ardmore, Okl., for petitioners.

Messrs. J. Berry King, of Oklahoma City, Okl., and V. P. Crowe, of Enid, Okl., for respondent.

[Argument of Counsel from page 364 intentionally omitted] Mr. Justice STONE delivered the opinion of the Court.

This case comes here on writ of certiorari, 279 U. S. 830, 49 S. Ct. 349, 73 L. Ed. 980, to the Supreme Court of Oklahoma to review its judgment upholding a tax imposed under section 9814, Compiled Oklahoma Statutes of 1921, upon 'the owner of any royalty interest' in petroleum and natural gas, to the extent of 3 per cent. of the gross value of the royalty.

The petitioners are enrolled Choctaw Indians of less than half blood who, by virtue of their membership in the tribe, have received allotments of lands within the state of Oklahoma, under the Atoka Agreement with the Choctaw and Chickasaw Tribes, embodied in section 29 of the Act of June 28, 1898, ratified August 24, 1898 (30 Stat. 495). By this section it is provided that 'all the lands allotted shall be notaxable while the title remains in the original allottee, but not to exceed twenty-one years from date of patent, * * *' which period had not expired with respect to the lands of petitioners at any of the times material to the present case. All restrictions on alienation affecting the allotments of these petitioners were removed by Act of Congress of May 27, 1908 (35 Stat. 312).

The petitioners, who have leased their allotments for the production of oil and gas, reserving a royalty of one-eighth of the value of the gross production, have paid the tax assessed for 1926 and 1927 under protest, and brought the present suit to recover it as exacted contrary to the exemption. The state court denied recovery on the ground that the tax is imposed only on the oil and gas when severed from the land, and so is a tax upon personalty not embraced within the exemption. 134 Okl. 35, 272 P. 393.

In Choate v. Trapp, 224 U. S. 665, 32 S. Ct. 565, 56 L. Ed. 941, the history of the Atoka Agreement was reviewed by this court. It was there held that the provision for the exemption conferred, upon the allottees, property rights which were within the protection of the Fifth Amendment, and hence it was not subject to repeal by later Congressional legislation; that the restriction, being one imposed in the exercise of the plenary power of Congress over the Indian tribes and tribal lands and in the performance of its duty as the guardian of its Indian wards, see Lone Wolf v. Hitchcock, 187 U. S. 553, 565, 23 S. Ct. 216, 47 L. Ed. 299, and having been accepted by the state of Oklahoma in its constitution upon admission to statehood, was a limitation upon the taxing power of the state. See, also, Ward v. Board of Com'rs of Love County, 253 U. S. 17, 40 S. Ct. 419, 64 L. Ed. 751.

Until the removal by the act of May 27, 1908, of existing restrictions on alienation of the allotted lands, state taxation even more remotely affecting the interests of allottees than the present tax would concededly have been forbidden as a tax upon an instrumentality of the national government. See Choctaw, O. & Gulf R. R. v. Harrison, 235 U. S. 292, 35 S. Ct. 27, 59 L. Ed. 234; Jaybird Mining Co. v. Weir, 271 U. S. 609, 46 S. Ct. 592, 70 L. Ed. 1112; Gillespie v. Oklahoma, 257 U. S. 501, 42 S. Ct. 171, 66 L. Ed. 338; Howard v. Gipsy Oil Company, 247 U. S. 503, 38 S. Ct. 426, 62 L. Ed. 1239; Large Oil Company v. Howard, 248 U. S. 549, 39 S. Ct. 183, 63 L. Ed. 416. But it is urged that, as the restrictions have now been removed, Congress, by its attempted repeal of the exemption and by later legislation of May 10, 1928 (45 Stat. 496), subjecting oil and gas, produced from restricted allotted lands of members of the five civilized tribes, to state and federal taxes, has evidenced an intention to subject the Indians to all taxes imposed upon citizens of Oklahoma. From this it is concluded that the exemption in section 29 must be narrowly construed to effect the Congressional purpose. See Shaw v. Gibson-Zahniser Oil Corp., 276 U. S. 575, 46 S. Ct. 333, 72 L. Ed. 709.

While in general tax exemptions are not to be presumed and statutes conferring them are to be strictly construed, Heiner v. Colonial Tr. Co., 275 U. S. 232, 48 S. Ct. 65, 72 L. Ed. 256, the contrary is the rule to be applied to tax exemptions secured to the Indians by agreement between them and the national government. Choate v. Trapp, supra, page 675 of 224 U. S., 32 S. Ct. 565, 56 L. Ed. 941. Such provisions are to be liberally construed. Doubtful expressions are to be resolved in favor of the weak and defenseless people who are the wards of the nation, dependent upon its protection and good faith. Hence, in the words of Chief Justice Marshall: 'The language used in treaties with the Indians should never be construed to their prejudice. If words be made use of, which are susceptible of a more extended meaning than their plain import, as connected with the tenor of the treaty, they should be considered as used only in the latter sense.' Worcester v. The State of Georgia, 6 Pet. 515, 582, 8 L. Ed. 483. See the Kansas Indians, 5 Wall. 737, 18 L. Ed. 667. And they must be construed, not according to their technical meaning, but 'in the sense in which they would naturally be understood by the Indians.' Jones v. Meehan, 175 U. S. 1, 11 20 S. Ct. 1, 44 L. Ed. 49.

Whatever was the meaning of the present exemption clause at the time of its adoption must be taken to be its effect now, since it may not be narrowed by any subsequently declared intention of Congress. Choate v. Trapp, supra. Having in mind the obvious purpose of the Atoka Agreement to protect the Indians from the burden of taxation with respect to their allotments and this applicable principle of construction, we think the provision that 'the lands allotted shall be non-taxable while the title remains in the allottees' cannot be taken to be restricted only to those taxes commonly known as land or real estate taxes, but must be deemed at least to embrace a tax assessed against the allottees with respect to a legal interest in their allotment less than the whole, acquired or retained by them by virtue of their ownership.

Where a federal right is concerned we are not bound by the characterization given to a state tax by state courts or Legislatures, or relieved by it from the duty of considering the real nature of the tax and its effect upon the...

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