Crow Tribe of Indians v. Deernose, 11999

• Decision Date: 10 August 1971
• Docket Number: No. 11999,11999
• Citation: 28 St.Rep. 754,158 Mont. 25,487 P.2d 1133
• Parties: The CROW TRIBE OF INDIANS, Plaintiff and Respondent, v. Donald DEERNOSE and Agnes Deernose, husband and wife, Defendants and Appellants.
• Court: Montana Supreme Court

Page 1133

487 P.2d 1133

158 Mont. 25

The CROW TRIBE OF INDIANS, Plaintiff and Respondent, v. Donald DEERNOSE and Agnes Deernose, husband and wife,

Defendants and Appellants.

No. 11999.

Supreme Court of Montana.

Submitted June 10, 1971.

Decided Aug. 10, 1971.

Douglas Freeman, argued, Hardin, redle, Yonkee & Arney, Sheridan, Wyoming, for defendants and appellants. Rex O. Arney argued, Sheridan, Wyoming.

Stanton, Hovland & Torsek, Hardin, for plaintiff and respondent. James Torske argued, Hardin, Montana.

HASWELL, Justice.

The district court of Big Horn County entered a real estate mortgage foreclosure decree on Indian trust lands on the Crow Reservation in favor of the Crow Tribe as mortgagee and against Donald Deernose and his wife, as mortgagors. From an order denying their motion to vacate this judgment, the mortgagors appeal.

The sole issue upon appeal is whether the state district court possesses jurisdiction of the foreclosure action. We hold it does not, and accordingly set aside the foreclosure decree and dismiss the action.

The facts are uncontested. Donald Deernose and his wife, who are both members of the Crow Indian Tribe and live on the Crow Reservation situated in Big Horn County, Montana, executed and delivered three promissory notes between 1963 and 1965 in favor of the Crow Tribe of Indians. Payment of these notes was secured by a real estate mortgage on lands situate on the Crow Reservation held in trust by the United States for Deernose and his wife. This real estate mortgage was approved by the Assistant Area Director of the Bureau of Indian Affairs pursuant to the Act of March 29, 1956, 70 Stat. 62; 25 U.S.C.A. § 483a.

When the promissory notes were not paid on their due date, the mortgagee instituted an action to foreclose the real estate mortgage in the state district court of Big Horn County, the situs of the mortgaged land.

Deernose and his wife, the defendants and mortgagors, were personally served in the foreclosure action. Their answer, among other things, alleged that the state district court lacked jurisdiction over the subject matter of the suit.

The district court entered a judgment of default and a foreclosure decree. Thereafter, defendants and mortgagors moved to vacate the judgment on the basis the court lacked jurisdiction over the subject matter of the suit. On September 8, 1970 the district court entered an order denying the motion to vacate the judgment, from which defendants and mortgagors now appeal. We note that the parties have treated this as an appeal from a final judgment and we shall do likewise.

Appellant mortgagors Deernose contend the federal courts have exclusive jurisdiction of foreclosure suits involving allotted Indian lands held in trust by the United States for individual Indian owners. They point out that neither Montana nor the Crow Tribe has complied with specific statutory procedures enacted by Congress, whereby state court jurisdiction over such suits may be acquired. Absent specific Congressional authorization coupled with strict compliance with its terms, state courts acquire no jurisdiction, they assert.

Respondent mortgagee, on the other hand, argues that Congress in enacting 70 Stat. 62, 25 U.S.C.A. § 483a, relating to mortgages on allotted Indian trust lands with approval of the Secretary of the Interior, intended to terminate the trust status and emancipate such lands, thereby subjecting them to mortgage foreclosure actions in state courts.

A brief history of the Crow Indian Reservation and the allotment of lands therein to individual Indians will set the stage for determination of the jurisdictional issue.

The Crow Indian Reservation was created and defined by a series of treaties, agreements and acts of Congress. The general allotment of 1887 provided that allotments were to be made under regulations of the Secretary of the Interior and he was to issue a trust patent on all allotted lands providing for the United States to hold the land in trust for the sole use and benefit of the allottee.

In 1934 the trust status of the allotted lands was 'extended and continued until otherwise directed by Congress.' 25 U.S.C.A. § 462; Putnam v. United States, (CCA8) 248 F.2d 292.

Unless jurisdiction had been granted state courts by Act of Congress, the federal courts have exclusive jurisdiction over foreclosure actions involving Indian trust lands. The supremacy and exclusive character of federal law in Indian affairs is summarized in the following quotation from Federal Indian Law, complied by the United States Department of the Interior, Office of the Solicitor, and published by the Government Printing Office, 1958 Revision, p. 3:

'The fact that Indian tribes are largely exempt from the operations of local laws derives from the fact that the Constitution of the United States vests in the National Government rather than in the States the three powers upon which the law pertaining to Indian affairs is primarily based-the warmaking power, the treatymaking power, and the power to regulate commerce with Indian tribes. These, in our history, have furnished the basis for valid interposition of Federal law to the exclusion of State control of Indian affairs.'

The federal government's exclusive jurisdiction over Indian lands was recognized as early as 1864 in the Organic Act for the Territory of Montana, 13 Stat. 85. The Enabling Act of 1889, 25 Stat. 676, Sec. 4, enunciated the the principle of exclusive jurisdiction by Congress over Indian lands. Section 2 of Ordinance No. 1, Montana Constitution, contains the same provision.

Thus Montana courts do not have jurisdiction over the subject matter of the foreclosure suit unless Congress has granted such jurisdiction.

In 1953 Congress provided a way by which states could acquired both civil and criminal jurisdiction over Indian affairs. Sec. 7 of the Act of August 15, 1953, 67 Stat. 588, 590, provides in pertinent part:

'The consent of the United States is hereby given to any other State not having jurisdiction with respect to criminal offenses or civil causes of action, or with respect to both, as provided for in this Act, 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...