United States v. Hughes

• Decision Date: 01 May 1934
• Docket Number: No. 488.,488.
• Citation: 6 F. Supp. 972
• Court: U.S. District Court — Northern District of Oklahoma
• Parties: UNITED STATES v. HUGHES, County Treasurer, et al.

6 F. Supp. 972

UNITED STATES v. HUGHES, County Treasurer, et al.

No. 488.

District Court, N. D. Oklahoma.

May 1, 1934.

John M. Goldesberry, U. S. Dist. Atty., of Tulsa, Okl., and Louis N. Stivers, Asst. U. S. Dist. Atty. and Osage Tribal Atty., T. J. Leahy, and Leahy, MacDonald & Files, all of Pawhuska, Okl., for complainant.

F. M. Dudley, Asst. Atty. Gen., of Oklahoma, and James P. Devine, Co. Atty., Frank T. McCoy, John R. Pearson, and L. A. Justus, Jr., all of Pawhuska, Okl., for defendants.

FRANKLIN E. KENNAMER, District Judge.

This action was instituted by the United States for and on behalf of certain designated restricted members of the Osage Indian Tribe and restricted Osage Indian heirs of specifically designated deceased members of the Osage Tribe of Indians against the county treasurer, county assessor, members of the board of county commissioners, and the tax ferret of Osage county, Okl. The object of the action is to enjoin the defendants from assessing personal property, choses in action, and money owned by the restricted members of the Osage Indian Tribe in their possession or in the possession of guardians and administrators, for taxation, and from placing the same upon the tax rolls of Osage county.

The action is limited to property of restricted Osage Indians, the members of the Osage Tribe who have not been granted certificates of competency and who are under the guardianship of the United States. The action is not directed to assessments levied upon real estate, but refers only to personal property, choses in action, and cash.

The case was referred, and the master reported his findings to the court. Upon exceptions being filed to the master's report, hearings have been had before the court and a decision announced. In order to aid counsel in the preparation of the proper decree herein, legal conclusions of the court will be set forth.

It is necessary to consider the various acts of Congress for a determination of the questions presented, and the effective dates of the pertinent acts make it necessary to classify the property. This was undertaken by counsel in the presentation of the case before the master, and a stipulation was entered into relative to the taxability of properties of the members of the Osage Tribe of Indians involved in this action, as follows:

"No. 1. Funds and property other than real property in the hands of such members of the Osage Tribe of Indians, or their guardians, or administrators, special and general, or the executors of their Last Will, on hand January 1st of each year preceding March 3rd, 1921.

"No. 2. The balance on hand January 1st of each year succeeding March 3rd, 1921, and up to and including January 1st, 1925, of the $1000.00 provided to be paid under the Act of March 3rd, 1921 to adult members of the Tribe, or to their guardians, or their administrators, special or general, of their estate, or their executors of their Last Will, and also money paid to such Indians out of their funds under said Act for the support and maintenance of their minor children and widows' allowance, if any, and all property, other than real estate, which may have been purchased by such Indians out of the $1000.00 paid them quarterly, or the money paid to them for the support of their minor children on hand, or in the hands of such Indians on January 1st of each of said years, or in the hands of their guardians, or administrators, special and general, of their estate, or the executors of their Last Will.

"No. 3. The money paid quarterly to members of the Osage Tribe of Indians under the Act of February 27th, 1925, or to their guardians, administrators, special and general, of their estates, or executors of their Last Will, including widow's allowance and money paid for the maintenance or minor children, same as provided in Classification No. 2 above.

"No. 4. All monies paid by the Secretary of the Interior after the passage of the Act of March 3rd, 1921, to guardians of such Indians in excess of $1000.00 quarterly, and $500.00 for the support of the minor children of such Indians, and property or securities, in which such excess money was invested by said guardians during the time such funds, or property in which the funds were invested, were in the hands of such guardians, including (A) excess funds actually returned to the Secretary of the Interior; and (B) properties, monies, securities and investments accounted for purchased with such excess funds and left under settlement with the Secretary of the Interior in the hands of guardians, administrators, special and general of their estate, and executors of their Last Will.

"No. 5. Property purchased by funds in the hands of guardians for such Indians after February 27, 1925, and monies in the hands of guardians, administrators, special and general, of their estates, and executors of their Last Will, after the passage of said Act of February 27th, 1925.

"No. 6. Monies borrowed by the guardians, administrators or executors as such on hand January 1st of each year, whether with or without the consent of the Secretary of the Interior.

"No. 7. Rentals from real estate, whether homestead, surplus, inherited or purchased real estate.

"No. 8. Interest received by such Indians, their guardians or administrators, special and general, of their estates, or executors of their Last Will, from the following sources, to-wit:

"A-Interest on trust funds allotted to such Indians under the Act of Congress of June 28th, 1906.

"B-Interest on notes secured by real estate mortgages where state mortgage tax not paid.

"C-Interest on United States Bonds.

"D-Interest on State, County or Municipal Bonds, including School District bonds.

"E-Interest on funding bonds.

"F-Interest on deposits in banks, including certificates of deposit, where chose in action tax not paid and not rendered for assessment.

"G-Interest on other investments, if any.

"No. 9. Funds and property in the hands of guardians, administrators, special and general, of their estate, and executors of their Last Will, prior to the distribution of the same.

"No. 10. Funds mentioned in Classification No. 9 after distribution to the heirs.

"No. 11. Monies received from the sale of unrestricted property.

"No. 12. Monies received from the sale of restricted property.

"No. 13. Inherited monies and property in the hands of guardians prior to 1925 and not distributed through administrators or executors.

"No. 14. Balance of funds at the close of guardianship returned to the Osage Indian Agency."

The propriety of the classification will become apparent upon a consideration of the acts of Congress and the other principles governing such matters.

The contention of complainant is that the property of restricted Osage Indians, purchased with restricted funds or funds over which the United States has complete control for and on behalf of its dependent wards, is not subject to taxation by the state of Oklahoma. It concedes that all property purchased with funds over which the government has no control, and which are designated as unrestricted funds, is subject to taxation. The taxing authorities, defendants herein, urge that, when funds are released by the United States to the members of the Osage Tribe of Indians, their guardians or administrators, such funds become unrestricted, and, if invested in property, such property is taxable by the state of Oklahoma. They further insist that property acquired with funds of deceased members of the Osage Tribe of Indians in the hands of administrators, is taxable, while complainant contends that such property, if held by the administrator for distribution to restricted heirs of the deceased members, is not taxable. Complainant further contends that guardians for members of the Osage Tribe of Indians are mere instrumentalities and agencies of the federal government for the administration of the affairs of the tribal members, and that funds or property in their hands, if for incompetent members of the tribe, is not taxable, just as such funds or property is not subject to taxation by the state of Oklahoma if held by the federal government for the dependent members of the tribe.

The Act of Congress of June 28, 1906 (34 Stat. 539), provided for the enrollment of members of the Osage Tribe of Indians; it further provided for the division of the funds, as well as about a million and a half acres of land which the federal government held in trust for the members of the tribe. Provision was made for an equal division among the members of the tribe of the trust fund and the lands, and it was divided by placing to the credit of each member of the tribe his pro rata share, which was to have been held for the benefit of himself and his heirs for the period of 25 years and then paid over to them respectively. The oil, gas, coal, and other mineral rights in and under the land were reserved to the tribe for the period of 25 years, and by subsequent acts of Congress the period has twice been extended beyond the 25 years specified in the act. Disposition was also made of other lands, and provision was made for the issuance of certificates of competency by the Secretary of the Interior for any adult member, subject to the act and rules and regulations to be promulgated thereunder. It is unnecessary to consider the details of the act for the determination of the questions involved herein. Upon the issuance of a certificate of competency to an adult member of the tribe, all his surplus lands, which were lands in addition to lands set apart for him as a homestead, became taxable.

By the Act of April 18, 1912 (37 Stat. 86, 87), Congress authorized the Secretary of the Interior to pay to any member of the tribe, under rules and regulations to be prescribed by him, all or part of the funds held for his benefit, provided the Secretary of the Interior was satisfied that the allottee was competent or that such payment would be to the manifest best interest...