Manchester Band of Pomo Indians, Inc. v. United States, 50276-CBR.

• Decision Date: 26 June 1973
• Docket Number: No. 50276-CBR.,50276-CBR.
• Citation: 363 F. Supp. 1238
• Parties: MANCHESTER BAND OF POMO INDIANS, INC., Plaintiffs, v. UNITED STATES of America et al., Defendants.
• Court: U.S. District Court — Northern District of California

363 F. Supp. 1238

MANCHESTER BAND OF POMO INDIANS, INC., Plaintiffs, v. UNITED STATES of America et al., Defendants.

No. 50276-CBR.

United States District Court, N. D. California.

June 26, 1973.

COPYRIGHT MATERIAL OMITTED

Bruce R. Greene, William P. Lamb, California Indian Legal Services, Berkeley, Cal., for plaintiffs.

James L. Browning, Jr., David E. Golay, U. S. Atty., San Francisco, Cal., for defendants.

ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT INTRODUCTION

RENFREW, District Judge.

The Manchester Band of Pomo Indians ("the Band") brought this action on November 8, 1968, against the United States of America and certain officers of the Interior and Treasury Departments ("the Government") charging that they had failed to manage properly certain funds of the Band.

After unsuccessful efforts to convene a three-judge court on the grounds that certain federal statutes were unconstitutional on their face because they discriminated against Indians, the Band then sought to obtain discovery. However, for reasons not explained to the satisfaction of the Court, the Government failed to comply with these discovery efforts. This failure is amply demonstrated by the following chronology.

The Band submitted its first set of interrogatories in October, 1970. Defendants objected to the interrogatories on November 10, 1970. At that time representations were made by counsel for the Government to the effect that answers to the interrogatories were being prepared. In May, 1971, the case was called for a status conference pursuant to Rule 119 of the Local Rules of Practice of this Court. Shortly thereafter, the Band filed a motion to compel answers, which was heard before The Honorable Robert F. Peckham. On August 20, 1971, Judge Peckham issued an order granting in large part the Band's motion, requiring defendants to answer the interrogatories in dispute, from available information, to the extent that they had not already been answered prior to that date. In spite of this order compelling answers, the defendants inexplicably failed to respond.

This case was reassigned to the undersigned in early 1972. Shortly after the reassignment, a status conference was held in April, 1972 and the Government was given an additional ninety days to comply with the order of the Court compelling answers. Another status conference was then held in July, 1972 (after the expiration of the additional 90-day period), at which time it was learned that the Government had still not submitted answers. Finally, on August 11, 1972, this Court issued an Order to Show Cause why defendants should not be found in contempt of court for failure to respond to discovery. Defendants were unable to offer any explanation for their delay, and since more than two years had elapsed since the interrogatories were propounded, this Court issued a sanction order on January 18, 1973 (a copy of which is attached hereto as Exhibit A). That order found certain facts to be true, for the purposes of this litigation, and further, barred the introduction of certain evidence by defendants.

On February 5, 1973, the Band filed a motion for partial summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. In its motion the Band argued that it was entitled, as a matter of law, to a judgment that defendants were liable to the Band for failure to manage properly the funds held in trust for the Band in a manner consistent with the defendants' obligation as fiduciary and trustee for the Band. In addition, the Band moved for a declaration setting forth the statutory duties of defendants, principally of the defendant Secretary of the Interior, as to their basic obligations in the management of the Band's money. There are no material facts in controversy with respect to the Band's motion and the Court finds that the motion has merit and should be granted as hereinbelow set forth.

I. UNCONTROVERTED FACTS.

The Manchester Band is one of several different bands of Pomo Indians in California. The Band occupies a small rancheria of approximately 360 acres, near Manchester, California, known as the Manchester-Point Arena Rancheria. In 1938 the Band became organized under the Indian Reorganization Act, 25 U.S.C. § 479 et seq., and in that same year borrowed $5,000 from the Bureau of Indian Affairs ("the BIA") to be used to initiate a dairy enterprise on the Rancheria. The loan was fully repaid by February 5, 1943 (Exhibit A, p. 2, attached to Plaintiff's Memorandum of Points and Authorities in Support of Motion for Partial Summary Judgment, hereinafter referred to as "Plaintiff's Opening Memo"). The dairy was operated until approximately 1956. The last record of sale of butterfat was April 11, 1956, and in August, 1957, the dairy herd was sold (Exhibit C, p. 2, attached to Plaintiff's Opening Memo). Prior to 1963 the only source of income for the Band had been the dairy enterprise. The revenues generated from the dairy business were deposited in an Indian money account, which was maintained in the Sacramento Area Office of the BIA. According to BIA records, the Band had unobligated balances in their Indian money account ranging from a high of just under $10,000 in 1946 to a low of just under $100 in 1956. However, during that entire 10-year period only two payments of interest were made: $15.31 in June and $11.00 in July, 1947 (Exhibit C, p. 23, attached to Plaintiff's Opening Memo).

Beginning in April, 1963, the Band began leasing certain portions of their trust land. Generally, the BIA deposited money from the leases in the U. S. Treasury, and the deposits, to the extent they exceeded $500, earned 4 per cent simple interest per annum. However, on two occasions, lease payments were not timely credited to the Band's account. First, a $500 payment was deposited ten months late, with no payment of interest for the 10-month period.¹ Second, a lease payment for $850 was not deposited to the credit of the Band for more than 2½ years due to a bookkeeping mistake. Upon discovery, the Band received interest at 4 per cent for the 2½ year period plus the principal credited to their account.

Beginning in 1966, some but not all of the interest earned upon deposits in the U. S. Treasury was withdrawn and deposited in commercial banks at rates of interest ranging from 5 to 5.75 per cent per annum.

In summary, defendants' management of the Band's money since 1938 has been deficient. During the entire time the dairy enterprise was operative, a period of some eighteen years, only two payments of interest were made to the Band, totalling slightly more than $26. After 1966, lease payments were deposited in the U. S. Treasury, though not always on a timely basis, and earned 4 per cent simple interest. Some, but not all, of the interest generated from the Treasury deposits were deposited in commercial banks at prevailing rates of interest, all of which were higher than 4 per cent simple interest.

II. JURISDICTION OF THE COURT

The Government has raised a threshold question whether this Court has jurisdiction. The Court finds the contention that it lacks jurisdiction to be totally without merit and has heretofore ruled that it has jurisdiction over the United States with respect to the Band's claim for money damages by virtue of 28 U.S.C. § 1346(a)(2). The Government's contention that 28 U.S.C. § 1505 gives exclusive jurisdiction to the Court of Claims is contrary to the legislative history of that section and flies in the face of the clear language of 28 U. S.C. § 1346(a)(2). House Report No. 1466 (79th Cong., 2d Sess.) in U.S.Code Congressional Service, 79th Cong., 2d Sess., 1946, at 1347, 1348.

That jurisdiction lies in this Court is also clearly established by virtue of other federal statutes including 25 U.S.C. §§ 161a and 162a which establish the financial-managerial duties in question; 5 U.S.C. §§ 701-706 which provide for judicial review of the manner in which those obligations are carried out; and 28 U.S.C. § 1361 which provides for jurisdiction over actions to compel the responsible officers of the United States to perform those duties in the event they have not done so.

In addition, it is clearly provided by 28 U.S.C. § 1362 that the district courts shall have original jurisdiction of all civil actions brought by any Indian tribe or band with a governing body duly recognized by the Secretary of the Interior, wherein the matter in controversy arises under the Constitution, laws, or treaties of the United States.²

Accordingly, this Court finds that it clearly does have jurisdiction over this matter.

III. DEFENDANTS' FIDUCIARY OBLIGATIONS

The basic question presented by the Band's motion is whether the investment decisions made by defendants complied with the statutory and judicially created trust obligations owed to the Band. Initially, this requires a determination of precisely what obligations defendants had to the Band. It is unquestioned that the United States has a solemn trust obligation to the Indian people. In Seminole Nation v. United States, 316 U.S. 286, 296-297, 62 S.Ct. 1049, 1054, 86 L.Ed. 1480, 1777 (1942), the Supreme Court discussed the scope of the fiduciary obligation of the United States in its management of Indian trust funds as follows:

"Under a humane and self imposed policy which has found expression in many acts of Congress and numerous decisions of this Court, it has charged itself with moral obligations of the highest responsibility and trust. Its conduct, as disclosed in the acts of those who represent it in dealings with the Indians should therefore be judged by the most exacting fiduciary standards."

Accordingly, in Pyramid Lake Paiute Tribe of Indians v. Morton, 354 F.Supp. 252 (D.D.C.1972), Judge Gesell held, in reviewing the action of the Department of the Interior with respect to a diversion of the waters of the Truckee and Carson Rivers, that the Department had failed to maintain the exacting standards required of a...