Chouteau v. Commissioner of Internal Revenue

• Decision Date: 05 February 1930
• Docket Number: 14.,13,No. 12,12
• Citation: 38 F.2d 976
• Parties: CHOUTEAU v. COMMISSIONER OF INTERNAL REVENUE. BLACKBIRD v. SAME. PETTIT v. SAME.
• Court: U.S. Court of Appeals — Tenth Circuit

38 F.2d 976 (1930)

CHOUTEAU v. COMMISSIONER OF INTERNAL REVENUE.

BLACKBIRD v. SAME.

PETTIT v. SAME.^*†

Nos. 12, 13, 14.

Circuit Court of Appeals, Tenth Circuit.

February 5, 1930.

T. J. Leahy, of Pawhuska, Okl. (C. S. Macdonald, of Pawhuska, Okl., J. H. Maxey, of Tulsa, Okl., F. W. Files, of Pawhuska, Okl., and, in No. 13, J. M. Humphreys, Osage Indian Tribal Atty., of Pawhuska, Okl., on the briefs), for petitioners.

Preston C. Alexander, of Washington, D. C. (Sewall Key and Morton P. Fisher, Sp. Assts. to Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and Shelby S. Faulkner, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., on the brief), for respondent.

Before LEWIS, COTTERAL, and McDERMOTT, Circuit Judges.

LEWIS, Circuit Judge.

These are Federal Income Tax Cases. The Board of Tax Appeals affirmed a deficiency order made by the Commissioner against each of the petitioners. The cases were argued and submitted together, but are different in their facts.

1. Mary Blackbird is a restricted full-blood member of the Osage Tribe of Indians. As such member she received her allotments under the Osage Allotment Act of June 28, 1906 (34 Stat. 539), and she inherited a third interest in the allotment of another member. The claimed deficiencies against her are for the years 1920 and 1921. All the lands that were allotted under the Act were purchased by the United States from the Cherokee Nation in 1883 with funds that belonged to the Osage Tribe, and the title thereto taken in the name of the United States in trust for the use and benefit of the Osages. Each member of the tribe, appearing on the roll provided for in the Act, made three selections of 160 acres each, one of which was designated as a homestead; and the remainder of the lands was then equally divided between them. Section 2 of the Act made the homestead allotment inalienable and nontaxable for a period of 25 years, and the remainder of the lands so divided inalienable for 25 years, unless the allottee procured from the Secretary of the Interior a certificate of competency which would authorize him to sell and convey all of his allotted lands except his homestead. The certificate of competency would also immediately render the lands (except the homestead) subject to taxation, and in any event they were taxable on the expiration of three years from the approval of the Act. Mary Blackbird has never had a certificate of competency. The oil, gas, coal and other minerals covered by the allotted lands were reserved by the Act to the use of the tribe for a period of 25 years, — now extended to April 8, 1958, by the Act of March 2, 1929 (45 Stat. 1478), — thus segregating the mineral deposits from all of the allotted lands for a term of years. The mineral deposits, particularly of oil and gas, under much of the land has proved to be of great value. The Allotment Act authorized the tribe, through its tribal counsel, and with the approval of the Secretary of the Interior, to grant leases for extraction of these minerals and provided that the royalties received therefrom should be placed in the treasury of the United States to the credit of the members of the tribe and distributed to the individual members according to the tribal roll provided for in the Act, in the manner and at the same time that payments were made of interest on other moneys held in trust for the Osages by the United States, each member receiving his pro-rata share. There were other funds held then and now by the United States that belonged to the tribe, and they also were to be placed to the credit of the members on a basis of a pro-rata division among them, as shown by the tribal roll. By the Act all property interests of intestate deceased members descend to his or her legal representatives according to the laws of Oklahoma. The principal part of Mary Blackbird's gross income for the two years was her share of bonuses and royalties on tribal mineral leases. However, she received $480 each year as surface rental from the homestead allotted to her, $100 each year as interest on funds held in trust for her by the United States, and a few additional dollars from miscellaneous sources. She and the other petitioners contend that they are not only not liable for the amounts named under the deficiency orders but that they are not subject to the income tax statute. As to Mary Blackbird, we are disposed to yield our assent to the soundness of the contention. She is a restricted full-blood Osage. Her property is under the supervising control of the United States. She is its ward, and we cannot agree that because the income statute, Act of 1918 (40 Stat. 1057), and Act of 1921 (42 Stat. 227), subjects "the net income of every individual" to the tax, this is alone sufficient to make the Acts applicable to her. Such holding would be contrary to the almost unbroken policy of Congress in dealing with its Indian wards and their affairs. Whenever they and their interests have been the subject affected by legislation they have been named and their interests specifically dealt with. Elk v. Wilkins, 112 U. S. 94, 100, 5 S. Ct. 41, 44, 28 L. Ed. 643: "General acts of Congress did not apply to Indians, unless so expressed as to clearly manifest an intention to include them." In Choate v. Trapp, 224 U. S. 665, 32 S. Ct. 565, 56 L. Ed. 941, the court, after noting the general rule that exemptions from taxation are to be strictly construed, said at page 675 of 224 U. S., 32 S. Ct. 565, 569:

"But in the government's dealings with the Indians the rule is exactly the contrary. The construction, instead of being strict, is liberal; doubtful expressions, instead of being resolved in favor of the United States, are to be resolved in favor of a weak and defenseless people, who are wards of the nation, and dependent wholly upon its protection and good faith. This rule of construction has been recognized, without exception, for more than a hundred years, and has been applied in tax cases."

Cases are cited. This is the view taken of the matter by the Attorney General in several opinions. 34 Ops. Attys. Gen. 439; 35 Ops. Attys. Gen. 1,107. In the first opinion cited the Attorney General among other things said:

"This practice of safeguarding the Indian has been continuously adhered to. Treaties have been considered, not according to their technical meaning, but in the sense in which they would be naturally understood by the Indians. Choctaw Nation v. United States, 119 U. S. 1 7 S. Ct. 75, 30 L. Ed. 306; United States v. Choctaw Nation, 179 U. S. 494 21 S. Ct. 149, 45 L. Ed. 291; Seufert Brothers v. United States, 249 U. S. 194 39 S. Ct. 203, 63 L. Ed. 555; Starr v. Long Jim, 227 U. S. 613 33 S. Ct. 358, 57 L. Ed. 670; United States v. Payne, 264 U. S. 446 44 S. Ct. 352, 68 L. Ed. 782. This same rule of liberal construction has also been followed in the interpretation of statutes relative to the Indians. Cherokee Intermarriage Cases, 203 U. S. 76 27 S. Ct. 29, 51 L. Ed. 96; United States v. Celestine, 215 U. S. 278 30 S. Ct. 93, 54 L. Ed. 195; Choate v. Trapp, 224 U. S. 665 32 S. Ct. 565, 56 L. Ed. 941. It is well established that general Acts of Congress do not apply to Indians, unless so worded as clearly to manifest an intention to include Indians in their operation. Elk v. Wilkins, 112 U. S. 94 5 S. Ct. 41, 28 L. Ed. 643. The Indian has always been the object of special legislation. Never has it been the practice to legislate for him generally along with the rest of the people."

In the second opinion cited the Attorney General (35 Ops. Attys. Gen. 4) said this:

"The principle was emphasized that general acts of Congress do not apply to Indians unless so worded as to manifest a clear intention to include them; that Indians have always been the object of special legislation, and that general legislation, and especially revenue laws, which burden and restrict the use and enjoyment of property, should not be applied to Indians, unless Congress in clear and unambiguous language so directs. * * * Such a wide departure from the prior legislative policy should not be assumed from doubtful implication, but should be recognized as existing only upon the enactment of legislation expressly so providing."

A familiar instance of the restraint of general words and sweeping expressions in an Act is the case of Church of the Holy Trinity v. United States, 143 U. S. 457, 12 S. Ct. 511, 36 L. Ed. 226; and in United States v. Kirby, 7 Wall. 482, 486, 19 L. Ed. 278, we find this:

"All laws should...