Taylor v. Tayrien

• Decision Date: 03 August 1931
• Docket Number: No. 414.,414.
• Parties: TAYLOR v. TAYRIEN et al.
• Court: U.S. Court of Appeals — Tenth Circuit

51 F.2d 884 (1931)

TAYLOR v. TAYRIEN et al.

No. 414.

Circuit Court of Appeals, Tenth Circuit.

August 3, 1931.

L. M. Poe, E. J. Lundy, R. E. Morgan, and H. R. Duncan, all of Tulsa, Okl., for appellant.

T. J. Leahy, C. S. Macdonald, F. W. Files, H. C. Hargis, F. O. Yarbrough, and Louis N. Stivers, all of Pawhuska, Okl., and L. H. Taylor, of Skiatook, Okl., for appellees.

Before COTTERAL, PHILLIPS, and McDERMOTT, Circuit Judges.

McDERMOTT, Circuit Judge.

A single but important question is presented: Does the "headright" of an Osage Indian of less than half-blood, with a certificate of competency, pass to his trustee in bankruptcy? Judge Kennamer, in this case, held it did not; Judge Vaught, of the Western District of Oklahoma, held it did not. In re Denison, 38 F.(2d) 662.

By sections 1 and 2 of the underlying Osage Act (Act of June 28, 1906, 34 Stat. 539) the roll of the tribe was established, and each member was declared to be entitled to an equal share of "the tribal lands and tribal funds"; provision was made for the allotment to each member of a "homestead" of 160 acres, and a "surplus" allotment of about 500 acres. Section 2 (7) provides that the Secretary of the Interior, may, upon request, issue to any adult member of the tribe "a certificate of competency, authorizing him to sell and convey any of the lands deeded him by reason of this Act, except his homestead, * * * and provided further, that nothing herein shall authorize the sale of the oil, gas, coal, or other minerals covered by said lands, said minerals being reserved to the use of the tribe for a period of twenty-five years, and the royalty to be paid to said tribe as hereinafter provided; and provided further, that the oil, gas, coal, and other minerals upon said allotted lands shall become the property of the individual owner of said land at the expiration of said twenty-five years, unless otherwise provided for by Act of Congress." (This 25-year period has now been extended until April 8, 1958. Act of March 2, 1929, 45 Stat. 1478.)

Section 3 provides that the minerals are "reserved to the Osage tribe for a period of twenty-five years"; that mineral leases shall be made by the tribe through its tribal council and approved by the Secretary of the Interior, the royalties to be determined by the President of the United States. Section 4 of the act provides that the tribal funds, then existing or thereafter accruing, shall be held in trust by the United States for twenty-five years; that such funds should be promptly segregated and placed to the credit of the individual members of the tribe, or to their heirs, and that the interest on such tribal funds shall be paid quarterly to the members of the tribe. Mineral royalties were to be placed in the Treasury of the United States "to the credit of the members of the Osage tribe of Indians as other moneys of said tribe are to be deposited under the provisions of this Act," and after deducting sums fixed by the act for the support of certain schools and for agency purposes, were to be distributed in the same way as interest on other moneys held in trust. The right of Osage Indians in these funds and to participate in these distributions is called a "headright."

Section 6 provides that "the lands, moneys, and mineral interests" of any deceased member shall descend to his heirs, with the restriction that if he die without spouse or issue, his mother and father shall inherit equally.

The Referee in Bankruptcy made an order directing the bankrupt to turn over all moneys or checks or orders received from such headright both before and since the filing of the petition in bankruptcy; and that he execute such instruments as might be necessary to enable the trustee to collect from the Secretary of the Interior any such sums that might be payable to the bankrupt at any time in the future. It is stipulated however that there were no quarterly annuity payments to the credit of the bankrupt at the time of his adjudication, but that since the adjudication "there have accumulated and will accrue in the future from said Osage headrights quarterly annuity payments."

The single question presented here, then, is whether the trustee may appropriate and sell, as an asset of the estate, the right of this bankrupt Osage Indian to receive such payments as may be passed to his credit from now until 1959, or until such date as Congress may by future legislation fix for termination of the trust period.

The position of appellant is that these headrights are transferable by Indians of the class of the bankrupt, and therefore pass to the trustee in bankruptcy under section 70a (5) of the Bankruptcy Act, 11 USCA § 110 (a) (5); that, if this be not so, it is nevertheless property which may be levied upon under judicial process, as provided by the same section. We are cited to authorities holding that equitable or beneficial interests of a bankrupt pass to the trustee, which is a field we find it unnecessary to explore. It is contended that, as to half-bloods with certificates of competency, the trust is a "dry" one, in that the trustee has no active duties of management or control. This is not true as to the "tribal trust"; the act places upon the trustee the very important and active duties of fixing the royalties for the mineral leases, and approving of their terms, and of collecting the royalties and distributing them, partly to the maintenance of schools, partly for agency and emergency purposes, and partly to the credit of the members of the tribe. In the reply brief, appellant states that "this proceeding involves only the status of the fund after it is divided and placed to the credit of the bankrupts ready for delivery to them, or after it has been delivered to them." But it is stipulated that at the time of the adjudication there was no money due the bankrupt; and if the bankrupt's right attached after the adjudication, then it does not pass to the trustee under the Bankruptcy Act. What the appellant is undertaking to reach is the bankrupt's inchoate right hereafter to share in the proceeds of oil now in the ground, and which is now the property of the tribe. To put it concretely: In 1945 the tribal council executes a mineral lease, approved by the Secretary of the Interior, for a royalty determined by the President; in 1946 royalties therefrom are placed in the United States Treasury; out of them are paid certain fixed charges; the balance is divided, and a share credited to the bankrupt or his heirs. Must the United States in 1946, pay this to appellant or his assignee?

The answer to the question must be found in the acts of Congress. If, in the process of emancipation, Congress has not made these headrights transferable, they do not pass to the trustee in bankruptcy, for it would thwart the purpose of Congress to permit them to be indirectly transferred by the expedient of a debt followed by judicial sale. Mr. Justice Brewer, in Goudy v. Meath, 203 U. S. 146, 149, 27 S. Ct. 48, 50, 51 L. Ed. 130, held that "the purpose of the restriction upon voluntary alienation is protection of the Indian from the cunning and rapacity of his white neighbors," and that while Congress had the power to permit voluntary alienation and withhold the land from involuntary alienation, such a purpose must be clearly manifest. If, for the protection of the Indian, Congress has withheld the power of alienating his headright, then there is no power to alienate it by judicial process; for that would be to permit the "white neighbor" to accomplish indirectly what the law forbade him to do directly — to acquire the headright which Congress proposed to preserve for the care and support of its Indian wards. We proceed to the underlying question — Are Osage headrights transferable?

In dealing with Indian questions, it must be remembered that the powers of Congress are plenary. Stephens v. Cherokee Nation, 174 U. S. 445, 19 S. Ct. 722, 43 L. Ed. 1041; Cherokee Nation v. Hitchcock, 187 U. S. 294, 23 S. Ct. 115, 47 L. Ed. 183; Lone Wolf v. Hitchcock, 187 U. S. 553, 23 S. Ct. 216, 47 L. Ed. 299; Gritts v. Fisher, 224 U. S. 640, 32 S. Ct. 580, 56 L. Ed. 928; Cully v. Mitchell (C. C. A. 10) 37 F.(2d) 493, certiorari denied 281 U. S. 740, 50 S. Ct. 347, 74 L. Ed. 1154. Congress has the power to reimpose restrictions on property once freed. McCurdy v. United States, 246 U. S. 263, 38 S. Ct. 289, 291, 62 L. Ed. 706. The breadth of the powers exercised under this plenary authority is well illustrated by the various amendments to the original Osage Act. The termination of the trust has been postponed from 1931 to 1959. The original act did not limit the amount of quarterly payments unless they were being dissipated (Work v. Mosier, 261 U. S. 352, 360, 43 S. Ct. 389, 67 L. Ed. 693); later acts imposed a limit. Act of March 3, 1921, 41 Stat. 1249. The statute now provides for revocation of certificates of competency as to certain Indians (section 4, Act of February 27, 1925, 43 Stat. 1008 25 USCA § 331 note); the power exists to revoke as to all. Congress regulates the transfer of land by inheritance or will. It grants or denies to the states the right of taxation. If Congress has withheld the power to alienate headrights, it is an end of the matter.

Prior to the original act of 1906 the title to the lands and funds of the Osages was in the tribe. The 1906 act was passed because of the belief of Congress "that in order to prepare the Indian for complete independence, he must be educated in self-control, and that this could best be done by committing to him gradually the care of his property." McCurdy v. United States, supra.

The 1906 act made no allotment of the mineral estate in the land; it remained tribal property. The individual Indian had only an inchoate right to receive his share of the net returns therefrom, subject to the will of Congress. It is entirely clear that under the 1906 act no Indian had any right to dispose of any mineral...