Oklahoma Tax Commission v. United States 8212 625

Decision Date14 June 1943
Docket NumberNos. 623,s. 623
Citation63 S.Ct. 1284,319 U.S. 598,87 L.Ed. 1612
CourtU.S. Supreme Court

Messrs. Clifford W. King and A. L. Herr, both of Oklahoma City, Okl., for petitioner respondent.

Mr. Warner W. Gardner, of Washington, D.C., for respondent.

Mr. Justice BLACK delivered the opinion of the Court.

The United States brought these three actions to recover inheritance taxes imposed by the State of Oklahoma upon the transfer of the estates of three deceased members of the Five Civilized Tribes and paid under protest by the Secretary of the Interior from funds under his control belonging to those estates. The district court entered judgment on the merits for the state in each case. The Circuit Court of Appeals reversed. Unied States v. Oklahoma Tax Comm., 10 Cir., 131 F.2d 635. We granted certiorari because of the importance of the cases in the administration of Indian affairs and to the State of Oklahoma. Oklahoma Tax Comm. v. United States, 318 U.S. 748, 63 S.Ct. 663, 87 L.Ed. —-. The basic questions to be decided are whether, as a matter of state law, the state taxing statutes reach these estates, and whether Congress has taken from the State of Oklahoma the power to levy taxes upon the transfer of all or a part of property and funds of these deceased Indians.

The properties of which the estates are composed fall into four main categories: land exempt from direct taxation; land not exempt from direct taxation; restricted cash and securities held for the Indians by the Secretary of the Interior; and miscellaneous personal properties and insurance. The total value of the three estates was assessed at approximately $1,245,000, of which about 90% represents the value of the cash and securities.1

Initially we are met with the contention that Oklahoma did not intend to tax the estates of the members of the Five Civilized Tribes. We cannot agree with this view. The two controlling statutes broadly provide for a tax upon all transfers made in contemplation of death or intended to take effect after death as well as transfers 'by will or the intestate laws of this state.'2 The language of the statutes does not except either Indians or any other persons from their scope. Efforts of Oklahoma to apply this tax to the estate of a deceased Quapaw Indian were frustrated by this Court's opinion in Childers v. Beaver, 270 U.S. 555, 46 S.Ct. 387, 70 L.Ed. 730 decided in 1926. Shortly afterwards the Oklahoma Supreme Court refused to sustain the tax on an Osage estate under the impression that this result was required by the Beaver decision; but, significantly, the Oklahoma Court held that the scope of the state law should not be limited 'further than the rule therein established.' Childers v. Pope, 119 Okl. 300, 303, 249 P. 726, 729. About 1938, the Oklahoma taxing authorities apparently initiated new efforts to collect an estate tax from Indians. This state action followed our decision in Superintendent v. Commissioner, 295 U.S. 418, 55 S.Ct. 820, 79 L.Ed. 1517, in which we held that the restricted income of Indians was subject to the federal income tax, and our decision in Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907, which overruled previous decisions limiting the power of the state to impose certain types of taxes on incomes derived from tax exempt and restricted Indian property. The state tax authorities have with reasonable consistency interpreted their acts as covering estates such as these, and have attempted to enforce the statutes except when they considered enforcement precluded by decisions of this Court. The district court held that the state law does apply to these estates. This interpretation is consistent with that given by the state administrative authorities, with the language of the acts themselves and with the State Supreme Court's holding in Childers v. Pope, supra.

The respondent's second and major contention is that the state may not impose an estate tax upon the transfer of the restricted cash and securities because Congress by placing restrictions upon this property manifested a purpose to exempt it from Oklahoma estate taxes. Restricted property of an Indian is that which may not be freely alienated or used by the Indian without the approval of the Secretary of the Interior. We find, upon an examination of both the cases dealing generally with the taxation of Indian property and the statute which imposes the re- striction, that the restriction, without more, is not the equivalent of a congressional grant of estate tax immunity for the cash and securities.3

The many cases dealing generally with the problem of Indian tax exemptions provide no basis for the government's argument that Congress, in view of the existing legal framework, must have assumed that it would immunize the securities and cash from estate taxes by restricting their alienation. Worcester v. Georgia, 6 Pet. 515, 8 L.Ed. 483, held that a state might not regulate the conduct of persons in Indian territory on the theory that the Indian tribes were separate political entities with all the rights of independent status—a condition which has not existed for many years in the State of Oklahoma. The same principle was carried into the tax filed in The Kansas Indians, 5 Wall. 737, 18 L.Ed. 667, and for the same reasons. That case also emphasized that the Indians could 'not look to Kansas for protection', 759 of 5 Wall., and that Kansas was not 'obliged to confer any rights on them', 758 of 5 Wall. The tax exemption, said the Court, must last until the Indians were 'clothed with the rights and bound to all the duties of citizens', 756 of 5 Wall. A similar result was reached in The New York Indians, 5 Wall. 761, 18 L.Ed. 70, decided the same day, where the State sought to raise money by taxes to build roads in Indian reservations and where existing treaties forbade the state's building such roads. Later, for a period of time, Indian lands held in trust by the United States were found to be constitutionally tax exempt on the theory that they were federal instrumentalities, i.e., that the lands were held by the United States for the Indians, and were therefore non-taxable. United States v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532. In time, this constitutional concept was expanded to grant tax exemption to the income derived from Indian lands, whether tribally or individually owned, even when the privilege of exploitation had been granted to non-Indian lessees.4 The instrumentality concept ultimately resulted in a decision exempting Indian estates from taxation. Childers v. Beaver, supra. None of these cases held, nor has this Court ever decided, that congressional restriction of an Indian's income carried an implication of estate tax exemption.

The underlying principles on which these decisions are based do not fit the situation of the Oklahoma Indians. Although there are remnants of the form of tribal sovereignty, these Indians have no effective tribal autonomy as in Worcester v. Georgia, supra; and, unlike the Indians involved in The Kansas Indians case, supra, they are actually citizens of the State with little to distinguish them from all other citizens except for their limited property restrictions and their tax exemptions.5 Their lands are held in fee, not in trust, as in the Rickert case, and the doctrine of constitutional immunity from taxation for the income of their holdings on the federal instrumentality theory has been renounced. Helvering v. Mountain Pro- ducers Corporation, supra. Chil ers v. Beavers, supra, was in effect overruled by the Mountain Producers decision. The immunity formerly said to rest on constitutional implication cannot now be resurrected in the form of statutory implication.

The cash and securities of which these estates are almost entirely composed were restricted by the Act of January 27, 1933.6 Unless the tax immunity is granted by the restriction clause itself, there is not a word in the Act which even remotely suggests that Congress meant to exempt Indians' cash and securities from Oklahoma's estate taxes. We conclude that this Act does not exempt the restricted property from taxation for two reasons: (1) the legislative history of the Act refutes the contention that an exemption was intended; and (2) application of the normal rule against tax exemption by statutory implication prevents our reading such an implication into the Act.

The 1933 Act was intended to serve two purposes relevant to this case. One was to continue the restrictions on Indian property for the purpose of protecting the Indians from loss to individuals who might take advantage of them; and the other was to preserve the status of certain Indian land as non-taxable until 1956. See the concurring opinion of Mr. Justice Rutledge in Board of Commissioners v. Seber, 318 U.S. 705, 63 S.Ct. 920, 87 L.Ed. —-, decided this term. This Act was before two Congresses, the 71st and the 72nd. It was the subject of exhaustive debate, as well as of several committee reports, and there is no indication whatever in all that discussion of an intention to exempt Indians from estate taxes.7

The bill was sponsored by Oklahoma Congressmen who said nothing which supports the imputation that they intended to deprive their state of this income. It was decribed by its sponsor, Congressman Hastings, as follows:

'You ask me what the bill does. If the Members of Congress understood the bill there would not be a vote against it. Oil has been struck underneath some of the lands allotted to the members of thes tribes. Some of these full-blood allottees without business experience, now have to their credit $100,000, $200,000, and it is estimated, up to $1,000,000. Suppose one of these Indian allottees died after April 26, 1931. Then this money must be turned over to these heirs without supervision. Do you want to do that? Is there a man on the floor of...

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