Jaybird Mining Co. v. Weir

Mr. .Justice Butler

delivered the opinion of the Court.

The mining company sued in the District Court of Ottawa County to recover a tax of $2,319.80 paid under protest.- The County Treasurer demurred to the petition asserting that it failed to state a cause of action. The demurrer was overruled, and judgment was given for the plaintiff. Oil appeal to th^ highest court of the State the *612judgment was reversed. 104 Okla. 271. The case is here on writ of error. § 237, Judicial Code.

Briefly the facts are these. September 26, 1896, pursuant to the Act of March 2, 1895, c. 188, 28 Stat. 876, 907, there was issued to Hum-bah-wat-tah Quapaw, a Quapaw Indian, a patent for an allotment of 40 acres of land in Ottawa County. The patent contained restrictions against alienation for twenty-five years, and by the Act of March 3, 1921, c. 119, 41 Stat. 1225, 1248, that period was extended for an additional twenty-five years. The land is owned by the heirs of the allottee. The company has a mining lease on the restricted land on terms which provide for the payment of royalties or a percentage of the gross proceeds derived from the sale of ores mined. The amount sued for is an ad- valorem tax assessed by the county officials under § 9814, Compiled Statutes of 1921, on lead and zinc ores mined by the company in 1920, and which were in its bins on the land January 1, 1921. This tax is in addition to a gross production tax paid to the State Auditor. It was assessed on the ores in mass; and the royalties or equitable interests of the Indians had not been paid or segregated. Prior to the production of the ores taxed, the Secretary of the Interior determined the Indian owners to be incapable of managing their property and assumed control of it in their behalf. Act of June 7, 1897, c. 3, 30 Stat. 62, 72. Since that time, the royalties have been paid directly to the Secretary.

The Quapaw Indians are under the guardianship of the United States. The land and Indian owners are bound by restrictions specified in the patent and the Acts referred to. It is the duty and established policy of the government to protect these dependents in respect of their property. The restrictions imposed are in furtherance of that policy. United States v. Noble, 237 U. S. 74; Goodrum v. Buffalo, 162 Fed. 817. The lessee is an *613agency or instrumentality employed by the government for the development and use of the restricted land and to mine ores therefrom for the benefit of its Iridian wards. Choctaw & Gulf R. R. v. Harrison, 235 U. S. 292. It is elementary that the federal government in all its activities is independent of state control. This rule is broadly applied. And, without congressional consent, no federal agency or instrumentality can be taxed by state authority. “With regard to taxation, no matter how reasonable, or how universal and undiscriminating, the State’s inability to interfere has been regarded as established since McCulloch v. Maryland, 4 Wheat. 316.” Johnson v. Maryland, 254 U. S. 51, 55. And see Farmers Bank v. Minnesota, 232 U. S. 516; Choctaw & Gulf R. R. v. Harrison, supra; Gillespie v. Oklahoma, 257 U. S. 501, 505.

This court has considered a number of cases quite like' the one now before us. In Choctaw & Gulf R. R. v. Harrison, supra, there was an agreement by the United States that coal lands belonging in common to the members of the Choctaw and Chickasaw tribes should be mined, and that the royalties should be used for the Indians. The State imposed a tax equal to two per centum on the gross receipts from the total production of coal from the mine. It was held that rt was an occupation or privilege- tax, and that one having a mining lease made in furtherance of the governmental purpose could not be subjected to that burden. In Indian Oil Co. v. Oklahoma, 240 U. S. 522, it was held that oil leases of land made by the Osage tribe were under the protection of the federal government, and that the State could not tax such leases either directly or as represented by the capital stock of the corporation owning them. It was said (p. 530)-: “A tax upon the leases is a tax upon the power to make them, and could be used to destroy the power to make them. If they cannot be taxed as entities they cannot be taxed vicariously by taxing the stock, whose only value is their value, or *614by taking the stock as an evidence or measure of their value, . . .” In Howard v. The Oil Companies, 247 U. S. 503, this court affirmed, per curiam, the judgment of the United States District Court for the Western District of Oklahoma enjoining the enforcement of a tax imposed by the State on the gross value of the production of oil and gas, less the royalty interest, under leases upon Osage lands made for the benefit of the Indians. In Large Oil Co. v. Howard, 248 U. S. 549, this court reversed, per curiam, the judgment of the supreme court of Oklahoma (63 Okla. 143) sustaining a tax on gross value of production of petroleum and gas, less the royalty interest, where the owner of the property sought to be taxed was engaged under the authority of the Secretary of the Interior in the production of oil and gas in what formerly constituted the tribal lands of the Osage Nation. And in Gillespie v. Oklahoma, supra, it was held that the net income derived by a lessee from the sale of his share of the oil and gas received under leases of restricted Creek and Osage lands could not be taxed by the State. In each of these cases the tax was condemned as an attempt to tax an instrumentality used by the United States in fulfilling its duties to the.Indians.

In this case the lease was made to secure the development of the lands and obtain for the benefit of the restricted Indian owners a percentage of . the gross proceeds of the ores to be mined. The ad valorem tax here in controversy was assessed on the ores in mass at the mine before sale, .arid that was an attempt to tax an agency of the federal government within the principle of the cases cited.

From abundance of caution the company presented a petition for a writ of certiorari; but, as a writ of error lies, the petition will be denied. Gillespie v. Oklahoma, supra, 506.

Judgment reversed.

*615Mr. Justice McReynolds

is of opinion that the effect of the assailed tax upon the instrumentality of the United States is remote and tax is valid under the doctrine in Central Pac. R. R. v. California, 162 U. S. 91, 119.