Jaybird Mining Co v. Weir

• Decision Date: 07 June 1926
• Docket Number: No. 293,293
• Parties: JAYBIRD MINING CO. v. WEIR, County Treasurer
• Court: U.S. Supreme Court

271 U.S. 609

46 S.Ct. 592

70 L.Ed. 1112

JAYBIRD MINING CO.

v WEIR, County Treasurer.

No. 293.

Argued April 29, 1926.

Decided June 7, 1926

Mr. A. Scott Thompson, of Miami, Okl., for plaintiff in error.

Mr. John H. Venable, of Miami, Okl., for defendant in error.

[Argument of Counsel from page 610 intentionally omitted] Mr. Justice BUTLER delivered the opinion of the Court.

The mining company sued in the district court of Ottawa county to recover a tax of $2,319.80 paid under protest. The county treasurer demurred to the petition asserting that if failed to state a cause of action. The demurrer was overruled, and judgment was given for the plaintiff. On appeal to the highest court of the state the judgment was reversed. 104 Okl. 271, 232 P. 425. The case is here on writ of error. Section 237, Judicial Code (Comp. St. § 1214).

Briefly the facts are these: September 26, 1896, pursuant to the Act of March 2, 1895, c. 188, 28 Stat. 876, 907, there was issued to Hum-bah-wat-tah Quapaw, a Quapaw Indian, a patent for an allotment of 40 acres of land in Ottawa county. The patent contained restrictions against alienation for 25 years, and by the Act of March 3, 1921, c. 119, 41 Stat. 1225, 1248, that period was extended for an additional 25 years. The land is owned by the heirs of the allottee. The company has a mining lease on the restricted land on terms which provide for the payment of royalties or a percentage of the gross proceeds derived from the sale of ores minded. The amount sued for is an ad valorem tax assessed by the county officials under section 9814, Compiled Statutes (Okl.) of 1921, on lead and zinc ores mined by the company in 1920, and which were in its bins on the land January 1, 1921. This tax is in addition to a gross production tax paid to the state auditor. It was assessed on the ores in mass, and the royalties or equitable interests of the Indians had not been paid or segregated. Prior to the production of the ores taxed, the Secretary of the Interior determined the Indian owners to be incapable of managing their property and assumed control of it in their behalf. Act of June 7, 1897, c. 3, 30 Stat. 62, 72. Since that time, the royalties have been paid directly to the secretary.

The Quapaw Indians are under the guardianship of the United States. The land and Indian owners are bound by restrictions specified in the patent and the acts referred to. It is the duty and established policy of the government to protect these dependents in respect of their property. The restrictions imposed are in furtherance of that policy. United States v. Noble, 237 U. S. 74. 35. S. Ct. 532, 59 L. Ed. 844; Goodrum v. Buffalo, 162 F. 817, 89 C. C. A. 525. The lessee is an agency or instrumentality employed by the government for the development and use of the restricted land and to mine ores therefrom for the benefit of its Indian wards. Choctaw, O. & G. R. R. v. Harrison, 235 U. S. 292, 35 S. Ct. 27, 59 L. Ed. 234. It is elementary that the federal government in all its activities is independent of state control. This rule is broadly applied; and, without congressional consent, no federal agency or instrumentality can be taxed by state authority. 'With regard to taxation, no matter how reasonable, or how universal and undiscriminating, the state's inability to interfere has been regarded as established since McCulloch v. Maryland, 4 Wheat. 316 (4 L. Ed. 579).' Johnson v. Maryland, 254 U. S. 51, 55, 41 S. Ct. 16, 65 L. Ed. 126. And see Farmers' Bank v. Minnesota, 232 U. S. 516, 34 S. Ct. 354, 58 L. Ed. 706; Choctaw, O. & G. R. R. v. Harison, supra; Gillespie v. Oklahoma, 257 U. S. 501, 505, 42 S. Ct. 171, 66 L. Ed. 338.

This court has considered a number of cases quite like the one now before us. In Choctaw, O. & G. R. R. v. Harrison, supra, there was an agreement by the United States that coal lands belonging in common to the members of the Choctaw and Chickasaw Tribes should be mined, and that the royalties should be used for the Indians. The state imposed a tax equal to 2 per centum on the gross receipts from the total production of coal from the mine. It was held that it was an occupation or privilege tax, and that one having a mining lease made in furtherance of the governmental purpose could not be subjected to that burden. In Indian Oil Co. v. Oklahoma, 240 U. S. 522, 36 S. Ct. 453, 60 L. Ed. 779, it was held that oil leases of land made by the Osage Tribe were under the protection of the federal government, and that the state could not tax such leases either directly or as represented by the capital stock of the corporation owning them. It was said (page 530 (36 S. Ct. 456)):

'A tax upon the leases is a tax upon the power to make them, and could be used to destroy the power to make them. If they cannot be taxes as entities they cannot be taxed vicariously by taxing the stock, whose only value is their value, or by taking the stock as an evidence or measure of their value. * * *'

In Howard v. Oil Companies, 247 U. S. 503, 38 S. Ct. 426, 62 L. Ed. 1239, this court affirmed per curiam, the judgment of the United States District Court for the Western District of Oklahoma enjoining the enforcement of a tax imposed by the state on the gross value of the production of oil and gas, less the royalty interest, under leases upon Osage lands made for the benefit of the Indians. In Large Oil Co. v. Howard, 248 U. S. 549, 39 S. Ct. 183, 63 L. Ed. 461, this court reversed, per curiam, the judgment of the Supreme Court of Oklahoma (63 Okl. 143, 163 P. 537) sustaining a tax on gross value of production of petroleum and gas, less the royalty interest, where the owner of the property sought to be taxed was engaged under the authority of the Secretary of the Interior in the production of oil and gas in what formerly constituted the tribal lands of the Osage Nation. And in Gillespie v. Oklahoma, supra, it was held that the net income derived by a lessee from the sale of his share of the oil and gas received under leases of restricted Creek and Osage lands could not be taxed by the state. In each of these cases the tax was condemned as an attempt to tax an instrumentality used by the United States in fulfilling its duties to the Indians.

In this case the lease was made to secure the development of the lands and obtain for the benefit of the restricted Indian owners a percentage of the gross proceeds of the ores to be mined. The ad valorem tax here in controversy was assessed on the ores in mass at the mine before sale, and that was an attempt to tax an agency of the federal government within the principle of the cases cited.

From abundance of caution the company presented a petition for a writ of certiorari; but, as a writ of error lies, the petition will be denied. Gillespie v. Oklahoma, supra, 506 (42 S. Ct. 171).

Judgment reversed.

Mr. Justice McREYNOLDS is of opinion that the effect of the assailed tax upon the instrumentality of the United States is remote and tax is valid under the doctrine approved in Central Pac. R. R. v. California, 162 U. S. 91, 119, 16 S. Ct. 766, 40 L. Ed. 903.

Mr. Justice BRANDEIS (dissenting).

The property taxed is lead and zinc ore in bins. The land from which the ore was extracted belongs to a Quapaw allottee under the Act of March 2, 1895, c. 188, 28 Stat. 876, 907. Restrictions on alienation of the land will not expire until 1946. Act of March 3, 1921, c. 119, § 26, 41 Stat. 1225, 1248. But the allottee may lease the land for mining and business purposes for ten years unless he is incompetent, in which case the power to lease is vested in the Secretary of the Interior. Act of June 7, 1897, c. 3, 30 Stat. 62, 72. The ore in question had been detached from the soil and is personal property. It is owned wholly by the Mining Company, a private Oklahoma corporation organized for profit. The ore is assessed under the general laws of the state which lays an ad valorem property tax on all property, real or personal, not exempt by law from taxation. Payment of the tax will not affect the financial return to the Indian under the lease. No state legislation exempts this property. There is no specific or general provision in any act of Congress which purports to do so. If an exemption exists, it arises directly from the federal Constitution. Does ownership by an incompetent Indian of the land from which the ore was taken or ownership of the ore by an instrumentality of the government create an exemption?

Is the ore exempt because it has been extracted out of restricted lands? The Quapaw might have conducted the mining operations himself. If he had been competent he might, without the approval of the Secretary of the Inte- rior have leased the land to others for mining purposes for a period of 10 years. If he had operated the mine himself, I see no ground on which it could be held that his ore in the bins would not have been taxable to him, like any other unrestricted property to which he had absolute title.¹ The fact that he was incompetent does not render such property exempt from taxation.² Such incompetency results simply in the imposition of restrictions upon the alienation of his realty, exempting that from taxation. The Kansas Indians, 5 Wall. 737, 18 L. Ed. 667. But such restrictions cannot by implication be deemed to extend to personalty, even though the product of the realty, so as to exempt them from taxation. Compare McCurdy v. United States, 246 U. S. 263, 38 S. Ct. 289, 62 L. Ed. 706; United States v. Gray (C. C. A.) 284 F. 103; United States v. Ransom (C. C. A.) 284 F. 108. Any exemption that attached to the land is limited thereto and does not extend to the ore extracted therefrom. Forbes v. Gracey, 94 U. S. 762, 765, 766, 24 L. Ed. 313. Compare South Utah Mines v. Beaver County, 262 U. S. 325, 43 S. Ct. 577, 67 L. Ed. 1004.

Is the ore exempt because it is the property of an agency employed by the government for the benefit of the Indian, its ward? We are not dealing...