McBride v. Farrington

• Decision Date: 12 May 1904
• Docket Number: 22.
• Citation: 131 F. 797
• Parties: McBRIDE et al. v. FARRINGTON.
• Court: U.S. District Court — Western District of New York

131 F. 797

McBRIDE et al. v. FARRINGTON.

No. 22.

United States Circuit Court, W.D. New York.

May 12, 1904

Roberts Becker, Messer & Groat (Tracy C. Becker and Alfred F. Becker of counsel), for plaintiffs.

Brundage & Dudley (Frank Brundage, of counsel), for defendant.

HAZEL District Judge.

This is an action at law, brought by judgment creditors of the Western Oil & Mining Company, a corporation, against the defendant, to enforce his liability as a stockholder therein under chapter 86 of the Revised Statutes of the State of Wisconsin for 1878, and acts amendatory thereof and supplementary thereto, pursuant to which the company was incorporated. Such organization and incorporation were effected on September 26, 1896, with a capital of $1,500,000 divided into shares of the par value of $10 each. Its primary objects and purposes were to engage in mining for coal, iron ore, and other minerals, and drilling for petroleum, in the Indian Territory and elsewhere; to acquire lands and property by purchase; and to carry on mining, prospecting, refining and manufacturing the products developed by the corporation. It appears from the proofs that one Frank Burke, Jr., for himself and as trustee for the defendant and others interested in the formation of the company, assigned to the corporation at the time of its organization three certain leases or charters of oil and mineral lands situated in Indian Territory. The charters were apparently purchased by Burke from the Oil Springs Mining Company in October, 1890, the Gold Mining Company in June, 1896, respectively. These charters were concededly granted to the companies mentioned some time in the month of October, 1890, by the Chickasaw Nation. The original charters were not produced at the trial. The defendant claimed they were lost. The three assignments from Burke to the Western Oil & Mining Company purported to transfer and convey the exclusive right to prospect for and mine, coal, petroleum, and in general all minerals to be found upon the land described therein. According to the plaintiffs' theory, the capital stock was not issued for property sold to the company, as contemplated by the Wisconsin statute, for the reason that the leases in question were void, and therefore no actual fraud need be proven. The Wisconsin statute in terms provides that a stockholder shall be personally liable where stock has been issued by the corporation, except for money or property estimated at its true value actually received by it equal to the par value thereof. Were the leases and assignments to the corporation invalid? It cannot be denied that the different tribes of Indians from the earliest period have been under the control and protection of the government of the United States. The lands ceded to them have been guarded by the United States from encroachment and acquisition by others without their consent. The Cherokee Trust Funds, 117 U.S. 288, 6 Sup.Ct. 718, 29 L.Ed. 880. By the treaty of 1830 (7 Stat. 333) the United States granted to the Choctaw Nation the right in fee simple to occupy certain lands west of the Mississippi river during their existence as a nation. By the terms of the treaty this grant became liable to transfer and alienation only with the consent of the United States. The treaty of 1855 (10 Stat. 1116) provides for a renewal of the earlier treaty, and that the land therein described be held in common by the Choctaw and Chickasaw tribes or bands of Indians. A certain district within the territory conveyed was set off or assigned to each nation. It was further provided that none of the lands embraced within the limits specified could be sold unless both tribes or bands consented thereto. In the event of race extinction, or abandonment by the Indians of their tribal relations, the territory ceded to them as a nation was to revert to the United States. It is shown by the proofs that the lands set aside for the use of the Choctaw and Chickasaw Nations is still held by them in common, and is under the control of each tribal organization in the district of its own jurisdiction. As we have seen, it is contended by the plaintiffs that the leases or charters, together with the assignments which are the subject of this action, are invalid ab initio, and on account thereof the title to lands, privileges, and immunities purporting to be conveyed failed, and that, accordingly, no valid consideration whatever passed for the issue of stock to Burke and to the defendant. The specific grounds upon which the invalidity of the documents mentioned are claimed to be absolutely void are tersely set forth in plaintiff's brief, as follows:

'First. The three leases or charters had no legal validity at any time, because they were issued in part to noncitizens of the Chickasaw Nation, in violation of the United States statutes, the statute of that nation, and the treaties. Second. The rights acquired under such charters or leases, if any, were assigned to noncitizens of the tribe, in violation of said statutes and treaties. Third. The lease of these lands to noncitizens and the assignment of said leases to noncitizens constituted an abandonment of the land, forbidden by said treaties under penalty of forfeiture of the land by the Indians.'

The point that the source of title is not derived from the owners in common is not pressed. That the charters or leases were granted to the companies heretofore named pursuant to an act of the Legislature of the Chickasaw Nation passed 1886 (Laws Chickasaw Nation, p. 188) is admitted. Such act in part reads as follows: 'That any resident citizens (not less than three) of the Chickasaw Nation who may wish to form a corporated company to engage in developing coal mines, and to transport, ship or sell all coal mined beyond the limits of this nation shall be authorized to do so,' etc.

This provision was subsequently, on September 24, 1887 (Laws Chickasaw Nation, p. 190), amended so as to include petroleum, natural gas, and asphaltum. The amendment also contained a provision for the payment of royalties amounting to 2 per cent. on all gross sales of said products. The stipulation of facts shows that the leases or charters in question were granted by the national secretary of the Chickasaw Nation to a company composed of three or more citizens of the Chickasaw Nation and others. From the phrasing of the introductory clause describing the lessees, it is through by counsel for plaintiffs that the grant and privileges specified are restricted to citizens of the Chickasaw Nation alone, and that, as such leases seem to run to citizens and non-citizens of the nation, they are in contravention of the Chickasaw statute and of the laws of the United States. No testimony is found in the record that the words 'and others' meant to preclude white persons from joining in the charters, and such a presumption is not warranted. But assuming the leases and grants were to citizens of the nation and to white persons, must such enactment providing 'that any resident citizens (not less than three), may form a corporate entity to engage in mining coal and other minerals in the Indian Territory,' be strictly construed to preclude white persons from participation in such companies? Upon this question, according to plaintiffs' view, depends the title of the leases in controversy and any rights secured thereunder. A careful examination of decisions by the Supreme Court of the United States interpreting analogous treaties discloses that lands ceded to Indian tribes by the government of the United States are held for their separate benefit. Within the boundary of the ceded territory, the Indians mentioned secured control of their tribal lands by treaty obligations. The cession of these lands with the inalienable right of control secured thereby during tribal existence could be defeated only by the reservation to the United States contained in the grant. My attention is called to no statute or decision prior to the passage of the Curtis Act of June 28, 1898, c. 517, 30 Stat. 495, holding that the Chickasaw Nation had no authority under the then existing laws to lease their possessions for a limited period to white persons for their tribal or individual benefits. On the contrary, many adjudications are found expressly recognizing such right, and enforcing contracts arising thereunder. It is not necessary, it is thought, to go into the numberless ramifications of Indian statutes and decisions of the courts construing them. Much time has been expended by the court in attempting to trace the multitudinous and correlative acts of Congress, inhibitive and permissive, all tending towards a faithful conservation of our treaty stipulations. Although the Chickasaw Nation, as has been said, was allowed by the government of the United States to make laws for the protection of its members and property, it is nevertheless quite well settled that Congress has the undoubted right to supersede a prior treaty, and to exercise such paramount authority over the nation as, in effect, may curtail and diminish their tribal prerogative. U.S. v. Kagama, 118 U.S. 375, 6 Sup.Ct. 1109, 30 L.Ed. 228;

Cherokee Nation v. Southern Kansas Ry. Co., 135 U.S. 641, 10 Sup.Ct. 965, 34 L.Ed. 295; Thomas v. Gay, 169 U.S. 264, 18 Sup.Ct. 340, 42 L.Ed. 740. It was decided very early in the history of our jurisprudence that white persons may, with its consent, reside in a nation holding lands under treaty stipulation. Commercial intercourse between citizens of the United States and bands of Indians has been common from the earliest period of our history. The Dawes Commission Report, commenting upon the subject, says:

'It must be assumed, in considering this question, that the Indians themselves have determined to abandon the policy of

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