Kaul, Application of, 74528

• Decision Date: 07 March 1997
• Docket Number: No. 74528,74528
• Citation: 261 Kan. 755,933 P.2d 717
• Parties: In the Matter of the Application of Nina KAUL for Exemption from Ad Valorem Taxes in Jackson County, Kansas.
• Court: Kansas Supreme Court

Page 717

933 P.2d 717

261 Kan. 755

In the Matter of the Application of Nina KAUL for Exemption from Ad Valorem Taxes in Jackson County, Kansas.

No. 74528.

Supreme Court of Kansas.

March 7, 1997.

Syllabus by the Court

1. Board of Tax Appeals orders are normally subject to judicial review under the Act for Judicial Review and Civil Enforcement of Agency Actions, K.S.A. 77-601 et seq.

2. The power to levy taxes is inherent in the power to govern, but the exercise of that power is dependent upon the existence of legislation designating the kinds of property to be taxed. Nothing is taxable unless clearly within the grant of the power to tax.

3. Tax statutes will not be extended by implication beyond the clear import of the language employed therein; their operation will not be enlarged so as to include matters not specifically embraced.

4. In ascertaining the meaning of § 1 of the 1861 Act for the Admission of Kansas into the Union, the primary duty of the courts is to look to the intention of the makers (the legislature) and the adopters (the voters) of that provision.

5. Section 1 of the 1861 Act for the Admission of Kansas into the Union is not to be narrowly or technically construed, but its language should be interpreted to mean what the words imply to persons of common understanding.

6. In construing a constitutional provision or legislative enactment, words in common usage are to be given their natural and ordinary meaning in arriving at a proper construction.

7. Under § 1 of the 1861 Act for the Admission of Kansas into the Union, no personal or property rights that the Indians possessed before the State of Kansas was admitted into the Union, or before the Territory of Kansas was organized, can be impaired unless such rights are extinguished by treaty between the United States and the Indians, or such Indians provide assent to the President of the United States that their lands be included within the boundaries of the state.

8. Kansas is precluded by § 1 of the 1861 Act for the Admission of Kansas into the Union from imposing ad valorem taxes on fee-patented lands of the Citizen Band Potawatomi Tribe until the Act's exclusion is extinguished by an agreement between Kansas and the Indians or by treaty between the United States and such Indians.

9. Alienability is not the only test for the imposition of ad valorem taxes upon Indian property. First, Congressional intent to allow the imposition of ad valorem taxes upon the property must be found. Second, a court must examine the treaties and laws under which the tribal lands at issue were allotted to determine if the federal restrictions on alienation and taxation have been removed.

John M. Cassidy, Assistant Attorney General, argued the cause, and Carla J. Stovall, Attorney General, was with him on the brief, for appellants Richard E. Batchellor, Jackson County Appraiser, and the Board of Jackson County Commissioners.

Michael C. Hayes, Oskaloosa, argued the cause and was on the brief, for appellee Nina Kaul.

LOCKETT, Justice:

The Jackson County Appraiser and the Board of Jackson County Commissioners appeal the Jackson County District Court's affirmance of a Board of Tax Appeals' (BOTA) determination that land within the formal boundaries of the Potawatomi Indian reservation and owned in fee patent by Nina Kaul, an enrolled member of the Citizen Band Potawatomi Tribe, is exempt from imposition of ad valorem property taxes pursuant to § 1 of the 1861 Act for Admission of Kansas into the Union.

Background

Prior to our analysis of the 1861 Act for the Admission of Kansas into the Union (Act for Admission), it is important to note that the parties, BOTA, and the district court agree that the United States Supreme Court in County of Yakima v. Confederated Tribes and Bands of Yakima Nation, 502 U.S. 251, 112 S.Ct. 683, 116 L.Ed.2d 687 (1992), determined that federal restrictions upon state or county taxation of Indian reservation land owned in fee patent may be removed. As background for our analysis, it is instructive to review the Yakima decision.

In Yakima, the county of Yakima, Washington, sought to impose an ad valorem tax on real property and an excise tax on the sale of such property, including "fee-patented" land owned by the Yakima Indian Nation and its members within reservation boundaries. "Patented in fee" refers to Indian land held in fee by the property owner which has no restrictions on alienation (sale), as opposed to Indian land held in trust by the federal government which is not freely alienable. See 502 U.S. at 254-55, 112 S.Ct. at 686. An ad valorem tax is a tax imposed on the basis of the value of the article or thing taxed. An excise tax is a tax imposed on the performance of an act, the engaging in an occupation, or the enjoyment of a privilege. See Callaway v. City of Overland Park, 211 Kan. 646, 651, 508 P.2d 902 (1973). An excise tax may also refer to a tax on the transfer of property. Black's Law Dictionary 563 (6th ed.1990).

When Yakima County threatened foreclosure on certain parcels of land for which ad valorem taxes had not been paid, the Yakima Tribe brought suit for declaratory and injunctive relief, contending that federal law prohibited imposition of taxes on such land. The injunction was granted by the federal district court. On appeal, the district court was reversed in part by the Ninth Circuit, which remanded the case to the district court for a determination of whether the state's ad valorem tax had a demonstrably serious impact on the Tribe's political integrity, economic security, or health and welfare. See Confederated Tribes v. County of Yakima, 903 F.2d 1207 (9th Cir.1990). The United States Supreme Court granted certiorari and rejected the Ninth Circuit's determination that the ad valorem tax on real property only would be acceptable absent a serious impact. The Supreme Court concluded that, under the right circumstances, the imposition of ad valorem property taxes was proper while imposition of the excise sales tax was not.

In Yakima, 80% of the reservation land was held in trust by the government and 20% was owned in fee by Indians (some by individual Tribe members and some by the Tribe as a whole) and non-Indians due to patents distributed during the late 1880's. The specific property at issue in Yakima was fee patented pursuant to the General Allotment Act of 1887 (GAA), also known as the Dawes Act, 24 Stat. 388, codified as amended, 25 U.S.C. § 331 et seq. (1994), which empowered the President to allot most tribal lands nationwide to individual Indians without the consent of the Indian nations involved. The GAA restricted immediate alienation (sale) by providing that each parcel of land would be held in trust for a period of 25 years or longer. 502 U.S. at 254, 112 S.Ct. at 686. At that time, a fee patent would issue to the Indian allottee. Section 6 of the Act provided that all Indians who would receive allotments would " 'have the benefit of and be subject to the laws, both civil and criminal of the State or Territory in which they may reside.' " 502 U.S. at 254, 112 S.Ct. at 686 (quoting 24 Stat. 390).

Subsequently, the Burke Act of 1906, 34 Stat. 182, decreed that state civil and criminal jurisdiction would only lie " 'at the expiration of the trust period ... when the lands have been conveyed to the Indians by patent in fee.' " 502 U.S. at 255, 112 S.Ct. at 686. A proviso in the Burke Act gave the President authority to issue a patent in fee simple prior to the expiration of the trust period if he found an Indian allottee " 'competent and capable of managing his or her affairs.' " As to a premature fee patenting, the Burke Act proviso did not specify that the patentee would be subject to state criminal or civil jurisdiction, but stated that all restrictions as to sale, incumbrance, or taxation of the land would be removed. 502 U.S. at 255, 112 S.Ct. at 686.

In 1934, Congress enacted the Indian Reorganization Act, 48 Stat. 984 (1934), codified in 25 U.S.C. § 461 et seq. (1994). This Act halted further allotments and extended indefinitely the existing periods of trust applicable to allotted but not yet fee-patented land. However, Congress did not cancel the prior allotments under the GAA and imposed no restraints upon the ability of Indian allottees to alienate or encumber their allotments.

In reviewing prior cases addressing the issue of "attempts by States to exercise dominion over reservation lands of Indians," the Supreme Court observed that the general principle flowing from the early cases was that state jurisdiction would generally not lie within Indian reservations--including the state's taxing jurisdiction. 502 U.S. at 257, 112 S.Ct. at 687. The Supreme Court noted that prior cases had counseled that a state was without jurisdiction to tax Indians without express Congressional authorization. 502 U.S. at 258, 112 S.Ct. at 688.

The Supreme Court found two sources for the authority for the imposition of ad valorem taxes on the Yakima fee-patented property. The first of these was § 6 of the GAA which, as stated previously, provided that when the lands had been conveyed to the Indians in fee patent, each Indian would be subject to the laws of the state or territory, and if the fee patent was granted, all earlier restrictions as to taxation would be removed. 502 U.S. at 258 n. 1, 112 S.Ct. at 688 n. 1.

The Supreme Court then reviewed its prior cases which had declined to impose taxes upon Indian property. The Supreme Court distinguished these prior cases, such as Moe v. Salish & Kootenai Tribes, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976) (holding it improper for Montana to impose taxes on cigarette sales and on personal property, as well as to impose vendor licensing fees), on the grounds that these cases involved an imposition of a state's extension of in personam jurisdiction while Yakima involved in rem jurisdiction. 502 U.S. at 261-65, 112 S.Ct. at 689-92. The...