Jones v. Taunah, No. 4109.

• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)
• Writing for the Court: PHILLIPS, , and BRATTON and HUXMAN, Circuit
• Citation: 186 F.2d 445
• Parties: JONES, Collector of Internal Revenue v. TAUNAH et al.
• Docket Number: No. 4109.
• Decision Date: 02 January 1951

186 F.2d 445 (1951)

JONES, Collector of Internal Revenue
v.
TAUNAH et al.

No. 4109.

United States Court of Appeals Tenth Circuit.

January 2, 1951.

Helen Goodner, Washington, D. C. (Theron Lamar Caudle, Asst. Atty. Gen., Ellis N. Slack, Robert N. Anderson, J. W. Hussey, Special Assts. to the Atty. Gen. and Robert E. Shelton, U. S. Atty., Oklahoma City, Okl., on the brief), for appellant.

Houston Bus Hill, Oklahoma City, Okl. (Richard H. Godfrey, Oklahoma City, Okl., on the brief), for appellees.

Before PHILLIPS, Chief Judge, and BRATTON and HUXMAN, Circuit Judges.

BRATTON, Circuit Judge.

This case presents for determination the question whether income derived from restricted allotted lands in Oklahoma belonging to full-blood restricted Comanche Indians is subject to federal income tax.

Bert Taunah and Peawifeah Taunah, hereinafter referred to as the taxpayers, are full-blood restricted Comanche Indians. Bert owned certain restricted land in Oklahoma, some of which was originally allotted to him and some of which he inherited. In like manner, Peawifeah owned other restricted land in that state, some of which was originally allotted to her and some of which she inherited. The lands were allotted to or inherited by the taxpayers under the provisions of the General Allotment Act of 1887, 24 Stat. 388, 25 U.S. C.A. § 331 et seq., and the so-called Jerome Agreement of 1892 which was ratified by Congress, effective June 6, 1900, 31 Stat. 676. During the year 1946, the taxpayers received income, some from oil lease bonus, some from oil and gas rentals and royalties, and some from agricultural leases or agricultural activities, on such lands. All of the

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income was paid into the Indian Agency at Anadarko, Oklahoma. An employee of the government at the Agency prepared an income tax return for the taxpayers. The income derived from the restricted lands was included in the return. The tax payable under the return was deducted from the accounts of the taxpayers with the Treasurer of the United States and credited to the account of the Collector for the District of Oklahoma. The taxpayers filed a claim for the refund of the tax paid in that manner. No action was taken on the claim within six months after its filing, and the taxpayers then instituted this suit against the Collector to recover the amount of the tax, with interest from the date of payment. Judgment was entered for the taxpayers, and the Collector appealed

Section 11 of the Internal Revenue Code in effect in 1946, 26 U.S.C.A. § 11, provides for the exaction of a normal income tax upon the net income of every individual. Section 21 defines net income as gross income computed under section 22, less the deductions allowed by section 23. Section 22(a) defines gross income to include gains, profits, and income derived from any source. And section 23 authorizes deductions from gross income in arriving at net income. Standing alone and without more, these general statutory provisions are broad enough to include income derived from lands allotted to Indians and restricted against alienation. Choteau v. Burnet, 283 U.S. 691, 51 S.Ct. 598, 75 L.Ed. 1353; Superintendent of Five Civilized Tribes v. Commissioner, 295 U.S. 418, 55 S.Ct. 820, 79 L.Ed. 1517. And it has been held without deviation that exemptions from federal taxation do not rest upon implication. Unless expressly granted in plain terms, they do not exist. The Cherokee Tobacco, 11 Wall. 616, 620, 20 L.Ed. 227; United States Trust Co. v. Helvering, 307 U.S. 57, 59 S.Ct. 692, 83 L.Ed. 1104; Oklahoma Tax Commission v. United States, 319 U.S. 598, 63 S.Ct. 1284, 87 L.Ed. 1612.

It was the view of the trial court — and the taxpayers advance the contention in support of the judgment — that under section 5 of the General Allotment Act, supra, and article V of the duly ratified Jerome Agreement, supra, the lands allotted to the taxpayers and those inherited by them, as well as the income derived from such lands, were exempt from all taxes. Section 5 of the General Allotment Act provides in presently pertinent part that when allotments have been made and approved patents therefor shall issue which shall be of the legal effect and declare that the United States does and will hold the land for the period of twenty-five years, in trust for the sole use and benefit of the Indian to whom the allotment shall have been made, or in case of his death, of his heirs; and that at the expiration of such period the title in fee shall be conveyed, discharged of the trust and free of all charge or incumbrance whatsoever. It further provides that the President may in any case in his discretion extend the period of restrictions. And by executive orders the restrictions upon the lands of the taxpayers were extended and were still in effect in 1946. Article V of the ratified Jerome Agreement provides that when allotments have been made, the titles thereto shall be held in trust for the allottees, respectively for the period of twenty-five years, in the time and manner and to the extent provided in the General Allotment Act; and that at the expiration of the period of twenty-five years, the titles shall be conveyed in fee simple to the allottees or their heirs, free of all incumbrances. Restrictions upon alienation of allotted lands were thus provided in clear language. But the statute and the agreement will be searched in vain for a provision expressly exempting such lands from taxation by the United States. And it is settled law that restrictions upon alienation and non-taxability under federal law are not necessarily synonymous. They are separate and distinct things. Superintendent of Five Civilized Tribes v. Commissioner, supra; Oklahoma Tax Commissioner v. United States, supra.

In addition to providing in effect that the allotted lands shall be inalienable during the trust period, the General Allotment Act and the ratified Jerome Agreement provide in substance that at the end of the trust period the fee title shall be conveyed to the allottee, or in the event of his

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death to his heirs, free of all incumbrances. During the trust period, lands allotted under these provisions of law cannot be burdened with ad valorem taxes imposed under state law. United States v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532; Morrow v. United States, 8 Cir., 243 F. 854; United States v. Nez Perce County, Idaho, 9 Cir., 95 F.2d 232; Glacier County, Mont. v. United States, 9 Cir., 99 F.2d 733;...