DocketNumber: Civ. No. 4228
Citation Numbers: 90 F. Supp. 459
Judges: Chandler
Filed Date: 3/21/1950
Status: Precedential
Modified Date: 11/26/2022
Now, on this 28th day of February, 1950, the Court, after considering the stipulation of facts, admissions of the parties,
Findings of Fact
1. The Court has jurisdiction of the parties and of the subject matter.
2. The defendant, H. C. Jones, at all pertinent times herein was the duly commissioned, qualified and acting Collector of Internal Revenue of the United States for the State of Oklahoma.
3. Peawifeah (Flora Taunah), a plaintiff herein, is a fullblood restricted Comanche Indian, Allotment No. 1929, Individual Indian Account No. P-116. She owns certain restricted Indian land some of which was originally allotted to her and some of which she inherited. Title to this land is held in trust by the United States Government for the plaintiff, Peawifeah.
4. Bert Taunah (Wauk-We), the other plaintiff herein, and husband of Peawifeah, is a fullblood restricted Comanche Indian, Allotment No. 742, Individual Indian-Account No. B-47. He owns certain restricted Indian land some of which was originally allotted to him and some of which he inherited. Title to this land is held in tru-st by the United States Government for the plaintiff, Bert Taunah.
5. This land is restricted Indian land, the original trust patents for which were issued to -the allottees by the General Land Office under date of August 25, 1901. The trust period has been extended by Executive Order, as provided by law, and the extended trust period has not expired. The land was allotted to or inherited by the plaintiffs under the provisions of the General Allotment Act of 1887,
6. During the year 1946, Peawifeah received $195.56, agricultural and interest income, and the sum of $25,239.99, oil and gas rentals and royalties, all except $22.46 of which came from her original allotment. A deduction for depletion of 27%%, or $6,941.00 was taken on the royalty income, resulting in a determination of Peawifeah’s taxable income for 1946 as $18,494.55.
7. During the year 1946, Bert Taunah received $345.00, agricultural lease income, $360.00 oil and gas royalty income, $100.00 oil lease bonus, and 40.^ interest (not in controversy), making a total income of $805.40. A deduction of $99.00 for percentage depletion on the bonus and royalty income resulted in a determination that Bert Taunah’s taxable income was $706.40.
8. In 1946, Peawifeah and Bert Taunah received aggregate taxable income from all sources of $19,200.95, which amount was equally divided between them for income tax purposes. The resulting’ income tax collected totaled $3,950.42.
9. The Income Tax Return for the calendar year 1946 was prepared and filed for plaintiffs by a United States Government employee of the Southern Plains Agency, formerly the Western Oklahoma Consolidated Agency and the Kiowa Indian Agency, at Anadarko, Oklahoma. The tax payable under the return was deducted from plaintiffs’ individual Indian, accounts on deposit with the Treasurer of the United States and under the supervision and control of the Secretary of the Interior on January 31, 1947, and was credited to the account of defendant, United States Collector of Internal Revenue for the District of Oklahoma.
10., None of the income involved was paid, directly to these plaintiffs, but all was paid into- the Indian Agency at Anadarko, Oklahoma, and each disbursement therefrom was made under supervision and control of the Department of the Interior. All such restricted fund-s- are held by the United States Government for the sole use and benefit of the individual Indian owner, and •all receipts or expenditures for each Indian are credited or charged to his individual account.
11. All income involved in this controversy is derived directly from the land
Conclusions of Law
1. This Court has jurisdiction of this cause as it is one of the classes of cases provided for in 28 U.S.C.A. §§ 1340, 1353, 26 U.S.C.A. § 3772 having been complied with.
2. The land involved is held by the United States Government, in trust, for non-competent fullblood Indian plaintiffs under the provisions of the General Allotment Act of 1887, supra, which provides that at the expiration of the trust period the land will be delivered to the allottee, or his heirs, in fee, discharged of the trust, and “free of all charge or incumbrance whatsoever.”
The Supreme Court early held that freedom from incumbrance as used in the General Allotment Act of necessity meant freedom from taxation, because if the land “may be taxed, then the obligations which the government has assumed in reference to these Indians may be entirely defeated.” U. S. v. Rickert, 1902, 188 U.S. 432, 438, 23 S.Ct. 478, 480, 47 L.Ed. 532
In view of the terms of the above Acts and their judicial and legislative construction, there can be no question that a tax exemption was created as to the land in controversy.
3. The tax exemption thus created by Congress runs equally against the State and Federal Governments. The exemption is not based upon the “federal instrumentality” doctrine, but simply upon the intent of Congress as expressed in its enactments pursuant to its plenary powers over the Indians. Cf., Oklahoma Tax Commission v. U. S., 1943, 319 U.S. 598, 63 S.Ct. 1284, 87 L.Ed. 1612; Superintendent of Five Civilized Tribes v. Commissioner, 1935, 295 U.S. 418, 55 S.Ct. 820, 79 L.Ed. 1517. The Congressional purpose was to relieve the Indian ward’s land from the burdens
4. Neither the fact that plaintiffs were restricted Indian wards, nor the fact that their income was entirely received and controlled by the Secretary of the Interior, is sufficient, standing alone, to grant the plaintiffs tax immunity. Superintendent of Five Civilized Tribes v. Commissioner, supra. If the income here in question is not subject to Federal taxation, it is because of the Congressional intent that this allotted land should be free from all burdens. Oklahoma Tax Commission v. U. S., supra ; Superintendent of Five Civilized Tribes v. Commissioner, supra; Choteau v. Burnet, 1931, 283 U.S. 691, 51 S.Ct. 598, 75 L.Ed. 1353. The Supreme Court has held that this kind of allotted land is exempt from ad valorem taxation, U. S. v. Rickert, supra; that the right to transfer similar allotted land at death is exempt from estate taxation, Oklahoma Tax Commission v. U. S., supra,
In the somewhat related case of People of State of New York ex rel. Cohn v. Graves, 1937, 300 U.S. 308, 57 S.Ct. 466, 468, 81 L.Ed. 666, 108 A.L.R. 721, it was held that the Fourteenth Amendment did not prevent one state from taxing the income of its citizens derived from land in another state because “income is not necessarily clothed with the tax immunity enjoyed by its source.”
It must not be forgotten that these Indians were not granted this tax exemption gratuitously. It was granted as a result of a somewhat coercive bargaining transaction whereby the Indians gave up their nomadic life and their vast communal lands and property in exchange for limited tracts of land to be held in trust for them by the United States. 7 Stat. 474, 14 Stat. 717, 15 Stat. 581, 31 Stat. 676. For this reason the Supreme Court has stated with respect to such agreements conferring tax exemptions that “doubtful expressions are to be resolved in favor of the weak and ■defenseless people who are the wards of the nation, dependent upon its protection and good faith.” Carpenter v. Shaw, supra [280 U. S. 363, 50 S.Ct. 122]. This is not a question of conferring a tax exemption by implication, but instead, a question of delimiting the proper scope of a tax exemption the existence of which has long been ■decisively determined. U. S. v. Rickert, supra.
It is concluded that, as a result of the above discussed Congressional enactments, the direct income from this allotted land is exempt from Federal income taxation.
5. This tax exempt on, once granted by Congress, is a vested property right which cannot constitutionally be impaired by subsequent legislation. Choate v. Trapp, 1912, 224 U.S. 665, 32 S.Ct. 565, 56 L.Ed. 941. Therefore, insofar as the broad statutory concept of income as used in the Internal Revenue Code, I.R.C. § 22(a), 26 U.S.C.A. § 22(a), is repugnant to this tax exemption, it is void.
6. The tax was erroneously, wrongfully, .and illegally collected and received by the defendant.
7. Plaintiffs are entitled to recover :$3,950.42 with interest at 6% from January .31, 1947, together with costs of this action.
. Act Feb. 8, 1887, 24 Stat. 388, amended, Act Feb. 28, 1891, 26 Stat. 794, May 8, 1906, 34 Stat. 182, 25 U.S.C.A. §§ 331-334. 339. 341. 342. 348. 349. 381.
. 31 Stat. 676. 678.
. (Emphasis supplied.)
. Though that part of the Rickert case which relies on the “federal instrumentality” doctrine has been repudiated, its construction of Congressional intent in the General Allotment Act is still valid.
. (Emphasis supplied.)
. See also, Landman v. U. S., supra. Contra, Landman v. Commissioner, 10 Cir., 1941, 123 F.2d 787, certiorari denied, 315 U.S. 810, 62 S.Ct. 799, 86 L.Ed. 1209.
. (Emphasis supplied.)^