Spaeth v. U.S. Secretary of Interior

• Decision Date: 15 March 1985
• Docket Number: 84-5054,Nos. 84-5039,s. 84-5039
• Citation: 757 F.2d 937
• Parties: Sylvester H. SPAETH and Altha K. Spaeth, Appellants, v. The UNITED STATES SECRETARY OF the INTERIOR, The United States of America, Norman Danielson and Wallace Danielson, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 937

757 F.2d 937

Sylvester H. SPAETH and Altha K. Spaeth, Appellants, v. The UNITED STATES SECRETARY OF the INTERIOR, The United States of America, Norman Danielson and Wallace Danielson, Appellees.

Nos. 84-5039, 84-5054.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 11, 1984.

Decided March 15, 1985.

Nicholas J. Spaeth, Fargo, N.D., for appellants.

Kathleen P. Dewey, Washington, D.C., and James D. Sinclair, Detroit Lakes, Minn., for appellees.

Before HEANEY, Circuit Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

HEANEY, Circuit Judge.

Sylvester and Altha Spaeth brought this action against the United States and Norman and Wallace Danielson, seeking a declaratory judgment that the United States's claims of title to certain tracts of the Spaeths' farm, on behalf of unknown heirs of past Indian owners of the land, are without merit. Against the Danielsons, the Spaeths sought damages for raising an allegedly invalid defense of title defects as a bar to complying with a contract for purchase of the Spaeth farm. The district court granted the United States's motion to dismiss for lack of subject matter jurisdiction for the reason that the action is barred by sovereign immunity, and, alternatively, that the Spaeths had not pointed to a final reviewable agency action. The court then granted the Danielsons' motion to dismiss for lack of subject matter jurisdiction for the reason that the dismissal of the federal defendants eliminated pendent jurisdiction over the Danielsons. The Spaeths appeal, arguing that federal agencies have taken several final and reviewable actions which threaten their title to tracts of their farmland, and that review of these actions is not barred by sovereign immunity. They also allege that there is either pendent or independent federal question jurisdiction for their suit against the Danielsons. For the reasons set forth below, we agree with the Spaeths that there is subject matter jurisdiction for both suits, and reverse and remand for a trial on the merits.

I. FACTS.

In the early 1950's, the Spaeths purchased farmland within Mahnomen County, Minnesota, which is located within the boundaries of the White Earth Indian Reservation. Although the Spaeths purchased the land from non-Indians, portions of the land were at one time owned by Indian allottees, who, under the law which had been followed since at least 1915, legally alienated their allotments by sale or bequest. After farming the land for nearly thirty years, the Spaeths entered into a contract for its sale with appellees Norman and Wallace Danielson.

After a title investigation, the Danielsons claimed that, under recent reinterpretations of federal Indian law by the Department of Interior and the Minnesota Supreme Court, the Spaeths did not have clear title to twelve sections ¹ of the contract land which had at one time been allotted to Indians under the Nelson Act. The Spaeths then entered into an agreement with the Danielsons under which the sale price of the twelve sections would be reduced by fifty percent if the Spaeths could not provide clear title within seven years. No interest was to be paid on the twelve sections until the Spaeths obtained clear title. This amounted to an $8,000 loss per month. The Spaeths thereafter brought this court action.

An understanding of how the clouds on the Spaeths' title developed, whether the Indian claims to their land have merit, and whether there is subject matter jurisdiction for their suit requires a review of the federal government's varying policy over the years with respect to Indian lands on the White Earth Reservation.

The White Earth Reservation was created by the treaty of March 19, 1867, 16 Stat. 719, under which the Chippewas of the Mississippi ceded most of their remaining land in Minnesota in exchange for the approximately 800,000-acre White Earth Reservation. The treaty provided that the land within the Reservation was exempt from taxation and sale for debt, and could not be alienated without the approval of the Secretary of Interior, and then only to a Chippewa Indian.

In 1887, Congress passed the General Allotment Act, ch. 119, 24 Stat. 388 (1887), codified as amended, 25 U.S.C. Secs. 331-34, 339, 341, 342, 348, 349, 354, 381 (1982), authorizing the division of reservation land among individual Indians. To protect against immediate loss of the lands, the Act provided that each Indian would receive a "trust patent" with the United States holding fee title in trust for twenty-five years for the sole use and benefit of the Indian, or, in case of his or her death, for his or her heirs according to the laws of the state or territory where the land is located. Id., 24 Stat. at 389, Sec. 5. At the expiration of that time, the United States was required to convey the allotment in fee to the Indian or his or her heirs, discharged of the trust and free of encumbrances, provided that the President of the United States might at his discretion extend the period. The allotments were exempt from taxation during the trust period, United States v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532 (1903), and conveyances or contracts touching the lands before the expiration of the trust period were declared null and void. 24 Stat. at 389, Sec. 5.

The General Allotment Act was effectuated in Minnesota by the Nelson Act of January 14, 1889, ch. 24, 25 Stat. 642 (1889). That Act provided for the appointment of a commission to obtain from the Chippewa Indians in Minnesota a relinquishment of all their remaining lands except for parts of the White Earth and Red Lake Reservations and for allotment of lands in these reservations to individual Indians in conformity with the General Allotment Act.

In 1906-07, Congress attempted to rescind the trust provisions of the allotment acts with respect to the White Earth Reservation by enacting what is commonly referred to as the Clapp Amendment. Appropriations Act of June 21, 1906, ch. 3504, 34 Stat. 325, 353, amended by Appropriations Act of Mar. 1, 1907, ch. 2285, 34 Stat. 1015, 1034. The Clapp Amendment, in relevant part, provided that:

All restrictions as to the sale, incumbrance, or taxation for allotments within the White Earth Reservation in the State of Minnesota, heretofore or hereafter held by adult mixed-blood Indians, are hereby removed, and the trust deeds heretofore or hereafter executed by the Department for such allotments are hereby declared to pass the title in fee simple[.] ²

Id., 34 Stat. at 1034.

Subsequently, the courts held the Clapp Amendment invalid to the extent it purported to subject allotment lands to state and local taxes before expiration of the twenty-five year trust period, Morrow v. United States, 243 F. 854 (8th Cir.1917), cf. Choate v. Trapp, 224 U.S. 665, 32 S.Ct. 565, 56 L.Ed. 941 (1912); United States v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532 (1903), but valid to the extent it removed the restrictions on the alienability of the land. United States v. Waller, 243 U.S. 452, 459-62, 37 S.Ct. 430, 432-33, 61 L.Ed. 843 (1917); United States v. First National Bank, 234 U.S. 245, 258, 34 S.Ct. 846, 849, 58 L.Ed. 1298 (1914); Choate v. Trapp, 224 U.S. at 672-73, 32 S.Ct. at 568-69.

Prior to the Clapp Amendment of 1906-07, the Department of Interior exercised jurisdiction to determine the heirs of allotment interests. McKay v. Kalyton, 204 U.S. 458, 27 S.Ct. 346, 51 L.Ed. 566 (1907). ³ After the Clapp Amendment, the Department stopped probating the estates of adult mixed-blood Indians on the White Earth Reservation, determining that all such estates should be probated in the courts of the State of Minnesota because of the Clapp Amendment. ⁴ A 1915 opinion by the Solicitor for the Department of Interior confirmed this practice by ruling that the Department no longer had probate or other jurisdiction over adult mixed-blood Indian allottees on the White Earth Reservation. Solicitor's Opinion No. D-29636, Department of the Interior, Office of the Solicitor (Aug. 2, 1915). Thereafter, the courts of the State of Minnesota undertook responsibility for probating the estates of adult mixed-blood Indian allottees on the White Earth Reservation, and this practice was upheld by the Minnesota Supreme Court, Baker v. McCarthy, 145 Minn. 167, 176 N.W. 643 (1920), and the federal district court for the District of Minnesota. Bisek v. Bellanger, 5 F.2d 994 (D.Minn.1925).

An additional consequence of the Clapp Amendment and the Solicitor's 1915 Opinion was that subsequent land transactions on the White Earth Reservation between adult mixed-blood Indian allottees and other individuals proceeded in accordance with Minnesota law rather than federal law. ⁵ For over sixty years, this practice continued with the approval of the federal government. As a result, it was determined that mixed-blood females over eighteen, but under the federal age of adulthood of twenty-one, were legally competent to sell their White Earth allotments because the law of the State of Minnesota set their age of adulthood at eighteen. ⁶ Additionally, the State of Minnesota began to levy taxes on some allotments held by adult mixed-blood Indians on the White Earth Reservation. After the Indians failed to pay these taxes, the allotments were sold in tax forfeiture proceedings to other individuals, and some allotments were taken over directly by the State of Minnesota. Subsequently, the Spaeths purchased lands from non-Indians within the boundaries of the White Earth Reservation, and acquired good title under the law and federal policy as it existed at that time.

This law and policy changed beginning in 1977 with the Minnesota Supreme Court's decision in State v. Zay Zah, 259 N.W.2d 580 (Minn.1977), cert. denied, 436 U.S. 917, 98 S.Ct. 2263, 56 L.Ed.2d 758 (1978). In that case, Eugene and Laurie Stevens brought an action to quiet their title to real estate which they had purchased from the...