Lewellyn v. Colonial Trust Co., 3478

• Decision Date: 11 January 1927
• Docket Number: No. 3478,3479.,3478
• Citation: 17 F.2d 36
• Parties: LEWELLYN, Former Collector of Internal Revenue, v. COLONIAL TRUST CO. HEINER, Collector of Internal Revenue, v. SAME.
• Court: U.S. Court of Appeals — Third Circuit

17 F.2d 36 (1927)

LEWELLYN, Former Collector of Internal Revenue, v. COLONIAL TRUST CO.^*

HEINER, Collector of Internal Revenue, v. SAME.

Nos. 3478, 3479.

Circuit Court of Appeals, Third Circuit.

January 11, 1927.

John D. Meyer, U. S. Atty., of Pittsburgh, Pa., A. J. Ward, of Washington, D. C., W. J. Aiken, Asst. U. S. Atty., of Pittsburgh, Pa., and A. W. Gregg, of Washington, D. C., for plaintiffs in error.

M. W. Acheson, Jr., of Pittsburgh, Pa., R. C. Allen and Allen, Underwood & Smith, all of Tulsa, Okl., and Sterrett & Acheson, of Pittsburgh, Pa., for defendant in error.

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

BUFFINGTON, Circuit Judge.

These cases involve the question, not whether Congress has the power to tax income arising from lands of the Osage Indians, but whether it has exercised that power in the passage of the income tax law. These cases arise under the following facts: By due and joint action of the Tribal Council and the United States authorities, an oil lease on royalty was granted to Glenn T. Braden, the decedent, on certain Osage Indian tribal lands. In pursuance thereof he drilled wells and produced large quantities of oil. Upon his income, so accruing, the government assessed the tax, which his executor paid under protest and thereafter sued the government to recover back. Such recovery was had, whereupon the collector and the former collector took these appeals.

After due consideration had, we find no error in the lower court's action, and its judgments are affirmed. The question involved is one of such far-reaching importance as to warrant this court in preparing the full opinion it had intended doing, but a restudy of the opinion delivered by the judge below satisfied us that it is so comprehensive, convincing, and illustrative of our view that we adopt it as the opinion of this court, and restrict ourselves to summarizing the conclusion reached by ourselves and on which we had purposed to vindicate our action.

First. The oil in place was land. Marshall v. Mellon, 179 Pa. 371, 36 A. 201, 35 L. R. A. 816, 57 Am. St. Rep. 601. A tax on the income of that oil was a tax on land, and pro tanto a burden on the tribe in leasing its land for oil purposes. Gillespie v. Oklahoma, 257 U. S. 501, 42 S. Ct. 171, 66 L. Ed. 338, where it is said: "A tax upon such profits is a direct hamper upon the effort of the United States to make the best terms that it can for its wards."

Second. That at the date of the passage of the Income Tax Act the Osage Indians did not stand in the same relation to the United States as its citizens, but were by the United States regarded as wards under its guardianship, and their property under its control and management. Elk v. Wilkins, 112 U. S. 94, 5 S. Ct. 41, 28 L. Ed. 643, where it is said, "They were in a dependent condition, a state of pupilage, resembling that of a ward to his guardian;" Winton v. Amos, 255 U. S. 373, 41 S. Ct. 342, 65 L. Ed. 684, where it is said: "It is thoroughly established that Congress had plenary authority over the Indians and all their tribal relations, and full power to legislate concerning their tribal...