United States v. Gray

• Decision Date: 11 September 1922
• Docket Number: 5972.
• Citation: 284 F. 103
• Parties: UNITED STATES v. GRAY et al.
• Court: U.S. Court of Appeals — Eighth Circuit

284 F. 103

UNITED STATES v. GRAY et al.

No. 5972.

United States Court of Appeals, Eighth Circuit.

September 11, 1922

O. H Graves, Sp. Asst. U.S. Atty., of Muskogee, Okl. (Frank Lee U.S. Atty., of Muskogee, Okl., on the brief), for the United States.

N. A Gibson, of Muskogee, Okl. (J. L. Hull and T. L. Gibson, both of Muskogee, Okl., Ben D. Gross, of Eufaula, Okl., and George F. Short and William H. Zwick, both of Oklahoma City, Okl on the brief), for appellees.

Before LEWIS and KENYON, Circuit Judges, and JOHNSON, District Judge.

LEWIS Circuit Judge.

It appears from the record in this case that W. C. showman and wife executed and delivered a warranty deed of date December 1, 1913, by which they conveyed two lots in the Town of Eufaula, Okl., to Lizzie Lewis, an enrolled Creek Indian, for $475.00, which, as recited in the consideration clause, was 'from the proceeds of the sale of restricted lands allotted to the said Lizzie Lewis. * * * The same being funds held by the United States in trust subject to disbursement under the supervision of the Secretary of the Interior'; and the habendum clause contains this:

'Subject to the condition that no lease, deed, mortgage, power of attorney, contract to sell, or other instrument affecting the land herein described or the title thereto, executed during the lifetime of said grantee at any time prior to April 26, 1931, shall be of any force and effect or capable of confirmation or ratification, unless made with the consent of and approved by the Secretary of the Interior.'

There appears to have been attached to the deed a notice which went to record with it, signed by the Indian Superintendent, wherein it is recited that the funds with which the lots were purchased were derived from the sale of restricted lands allotted to the grantee, and that the purchase was made and the deed executed and approved pursuant to the Act of Congress of May 27, 1908.

On October 1, 1919, appellant brought this suit and stated in its complaint the facts that have been recited, and attached to the complaint, as a part thereof, a copy of said deed and notice, and then alleged that the lots were non-taxable during the life of the grantee prior to April 26, 1931, that defendants, McIntosh county and its officials, had caused them to be assessed for taxes for 1914 to 1918, both inclusive, that they were threatening to sell the lots for the unpaid taxes, that they constituted a cloud on the title, that a sale would further cloud the title, that Lizzie Lewis was in possession of the lots, and prayed for injunctive relief against the threatened sale and against future assessments, and for the protection of Lizzie Lewis as appellant's ward in the full possession and use of the lots. After answer the cause was submitted on a written agreement as to the facts, including with those which have been stated the additional fact that the lots, at the date of the purchase and theretofore, had been a part of the taxable real property in McIntosh County, and were at that time subject to assessment and levy free from any restrictions in that regard. Other facts agreed to are hereinafter set forth.

The sole controversy presented here is, whether the lots, on being purchased by Lizzie Lewis, became exempt from taxation. We first observe that the deed is a contract between Showman and her only, and they could not, by any agreement that they made, exempt the property. It was within their power to embody in that contract restrictions against voluntary alienation by the grantee; and a recitation of the source from which the consideration came as a part of the contract added nothing, perforce of the deed itself, to accomplish the end sought by appellant. So that, if there be exemption, it is brought about by the facts of the transaction and not by virtue of any inherent force in the terms of the contract of purchase and conveyance between the parties as shown by the deed. We are brought, then, to consider the effect of the facts admitted in the pleadings, plus those that are stipulated. The grantee sold her homestead allotment with the consent and under the supervision of the Secretary of the Interior, which was inalienable at the time without his consent (Act May 27, 1908, Sec. 1, 35 Stat. 312); the proceeds therefor were paid to the Superintendent for the Five Civilized Tribes and held by him as a trust fund for Lizzie Lewis; with a portion of those funds there were purchased for Lizzie Lewis the lots conveyed by Showman's deed, and the purchase price therefor was disbursed by the Superintendent under the orders, rules and regulations of the Secretary of the Interior for the benefit of Lizzie Lewis. The record does not disclose the amount for which the homestead was sold, nor whether she had other lands or property nor the value thereof, nor whether the two lots were purchased for her for residence purposes by her, nor whether they are rented and occupied for commercial or other purposes, or are vacant and unimproved, nor her necessities.

While there is no express provision in the Constitution prohibiting the States from taxing the means and instrumentalities of the general Government, yet it is established beyond question that exemption from such taxation rests upon necessary implication. McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579, and cases which follow it establishing that principle need not be further noticed. It would follow that if these two lots were purchased as necessary or...