CONFEDERATED SALISH & KOOTENAI TRIBES, MONT. v. Moe

RUSSELL E. SMITH, District Judge

(dissenting):

I agree that this court has jurisdiction and I agree, although for reasons different from those expressed in the per curiam opinion, that cigarette sales to non-Indians should be taxed.

*1318I dissent1 from so much of the per curiam opinion as denies the State the power to tax all cigarette sales on the Flathead Reservation.

I am aware that the decision in McClanahan v. Arizona State Tax Comm’n, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973), and the dictum in Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148, 93 S.Ct. 1267, 36 L.Ed.2d 114 (1973), cast grave doubt upon the position2 I take but, even conceding the validity of McClanahan, I think it would be wrong to apply that decision to the Flathead Reservation and I believe that there are considerations here involved never discussed by the Supreme Court which are sufficient to justify a refusal to apply the rule of a Navajo case to the completely different Flathead Reservation.

The Flathead Reservation was created by the Treaty of 1855,12 Stat. 975. The Act of April 23, 1904, 33 Stat. 302, provided for allotments in severalty to members of the tribe “under the provisions of the allotment laws of the United States” and for the sale of the surplus unalloted agricultural lands. President Taft on May 22, 1909, proclaimed that the surplus unallotted land should be opened for settlement under the Homestead Laws, and on May 24, 1909, the Secretary of the Interior promulgated regulations for the settlement of such lands. As a result of all of this lands were allotted to individual Indians in severalty and lands were sold to non-Indians under the Homestead Laws. Some of the lands allotted to individual Indians passed into non-Indian ownerships.

The reservation consists of approximately 1,250,000 acres, of which 615,618 acres is Indian trust land. Because the allotments in severalty were made of the agricultural land, the greater part of the trust land is in foothills and mountains. The total resident membership of the tribe is 19 percent of the population within the boundaries of the reservation. The racial mixture is as shown in note 4 of the supplemental per curiam.

Congress over the years provided for the establishment of the Flathead Irrigation Project. Acts of April 30, 1908, 35 Stat. 83; May 29, 1908, 35 Stat. 448; March 3, 1909, 35 Stat. 795; April 4, 1910, 36 Stat. 276; April 12, 1910, 36 Stat. 296; August 9, 1912, 37 Stat. 265; August 24, 1912, 37 Stat. 526; and May 18, 1916, 39 Stat. 138. The Act of May 10, 1926, 44 Stat. 464, provided that irrigation districts created and operated under the state law should be utilized for the collection of moneys needed for the operation and maintenance of the project and the repayment to the United States of funds advanced for the construction of the Flathead Irrigation Project. An elaborate irrigation system was built and extensive power projects established to provide power for pumping and for domestic and commercial use on Indian and non-Indian lands on the Flathead Reservation. The Flathead Reservation is now a well-developed agricultural area.

Indians and non-Indians are randomly scattered over the whole of the cultivated portion of the reservation. Towns and villages have developed, occupied by non-Indians and Indians alike. In the towns, banks, businesses, and professions provide services to the Indians and non-Indians. There are no licensed Indian traders on the Flathead Reservation.

As the non-Indian settlers moved in, school districts were created. From the beginning these districts, supported By state and local taxes with some federal help, operated integrated schools. Now a system of state highways and county roads, built and maintained by federal, state, and county moneys, serve the urban and rural residents of the reservation. Indians do vote and are eligible to and do participate fully in the state government at all levels. Until the decision of the Supreme Court in Kennerly v. Dis*1319trict Court, 400 U.S. 423, 91 S.Ct. 480, 27 L.Ed.2d 507 (1971), the civil law of Montana did (except in matters involving federal law) in fact form the basis of decision in cases arising on the reservation between Indians and Indians, Indians and whites, and whites and whites. Until recently Indians did pay state exise taxes and property taxes except on trust lands.

In 1935 the Tribe incorporated under the provisions of the Indian Reorganization Act, 25 U.S.C. § 461 et seq., 48 Stat. 984 (1934), and in 1965 accepted the criminal jurisdiction of the state, pursuant to Pub.L. No. 280, 67 Stat. 588 (1953), and R.C.M.1947 § 83-801 et seq. See State ex rel. McDonald v. District Court, 159 Mont. 156, 496 P.2d 78 (1972). The jurisdiction of minor crimes is concurrently shared by the state and tribal courts. The case of Kennerly v. District Court, supra, does deprive the Indian of the right to the use of the state courts in civil disputes with other Indians, but the State of Montana and the Counties of Lake, Sanders, and Flathead, except as limited by the decision in Kennerly, offer to Indians and the Indians do use a full measure of state and local government services.

In 1887 Congress enacted the General Allotment Act. 25 U.S.C. § 349, 24 Stat. 390. Section 6 of that Act provided:

At the expiration of the trust period and when the lands have been conveyed to the Indians by patent in fee, as provided in section 348 of this title, then each and every allottee shall have the benefit of and be subject to the laws, both civil and criminal, of the State or Territory in which they may reside; and no Territory shall pass or enforce any law denying any such Indian within its jurisdiction the equal protection of the law ....

Had the provisions of the General Allotment Act continued to operate, the problems we face here would not have arisen. Patents would have issued and ultimately the state civil law would have been applicable to all.3

The Indian Reorganization Act, 25 U.S.C. § 461 et seq., 48 Stat. 984 (1934), although it did not repeal the General Allotment Act, did, by stopping the flow of patents under it, make its citizenship and state laws provisions inoperative.

In light of this history I turn to the problem of jurisdiction,4 and as a prelude to that I examine the relationship of the Indian to the State.

No case that I have seen considers the effect of the Act of June 2, 1924, 43 Stat. 253, conferring citizenship upon Indians regardless of the status of their land patents. When Congress made Indians citizens of the United States, it made them citizens of the states in which they reside.5 By virtue of the 15th Amendm*1320ent6 it made them eligible to vote. I believe that it also placed them under the jurisdiction of the states to the extent necessary to qualify them for 14th amendment protection. I am unwilling to conclude that when Congress expressly granted citizenship to Indians it withheld from them the equal protection of state laws.7

If Congress did, by making Indians citizens of the states, vest them with rights under state law, did it at the same time protect them from any of the burdens of state citizenship? Did it give them the right to vote taxes without having to pay them, the right to hold state office without bearing some part of the burden of paying the salary of that office ? 8 It has been the policy of Congress to equalize, without regard to race, the benefits and the burdens of government.

The Civil Rights Act of 1870, 42 U.S.C. § 1981, provides:

All persons within the jurisdiction of the United States shall have the the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.9

The policy of the Civil Rights Act of 1870 was expressly made applicable to some Indians by the General Allotment Act, 25 U.S.C. § 349, 24 Stat. 390 (1887), which has not been expressly repealed. That Act most unequivocally provided that when citizenship was achieved the Indian “shall have the benefit of and be subject to the laws, both civil and criminal, of the state.” See Goudy v. Meath, 203 U.S. 146, 27 S.Ct. 48, 51 L.Ed. 130 (1906). By specific congressional mandate equal protection followed citizenship.

The Montana Enabling Act specifically indicated as to Indians that political rights and burdens are related, in this language:

. . . The constitutions shall be republican in form, and make no distinction in civil or political rights on account of race or color, except as to Indians not taxed . ... Act of February 22, 1889, 25 Stat. 676

Only the taxed Indian was thought to have civil and political rights within the states.

I believe that we are faced with a choice of inferences. We may infer that Congress placed the Indians beyond the jurisdiction of the state to tax or that *1321it did not.10 But as I see it, the exercise of a federal power in such a way as to at the same time extend to Indians all state rights and withhold from them all state burdens poses some constitutional problems. Were non-Japanese residents of a state forced to pay taxes to provide state services for the Japanese residents, who were exempt from taxation solely because of their race, then the non-Japanese would be bearing an unequal burden. Were Congress by statute to direct a state to exempt all Japanese from state taxation I think that Congress would be requiring the state to violate the equal protection concept embraced in the fifth amendment.11 Although a taxing authority has an almost unlimited power to classify, I apprehend that race alone would never be a valid basis for classification.

The Japanese is, of course, entitled to a full measure of state services by virtue of the 14th amendment The analogy to the Japanese fails if the Flathead Indian is not entitled to state services— if the State of Montana can refuse to admit Indian children to its schools, Indian young people to its colleges, and refuse to extend welfare benefits to the Indian poor and aged. In that event no unequal burden is placed upon the non-Indian and the equal protection problem disappears.

If, as I view it, the Flathead Indian is entitled to a full measure of Montana state and local government services, then I think the federal government may not, without invading the constitutional rights of non-Indian taxpayers, exempt Indians from the burdens of state taxation except to the extent that the people of the state accepted the congressional exemption stated in the Enabling Act. Stated differently, Congress has the power to require that Indians be not deprived of the equal protection of state laws, and it has the power to exempt the Indian from state taxation, but in my opinion the exercise of both of these powers at the same time would deprive non-Indians of equal protection.12 If that is so, then I cannot infer the exercise of both powers and, given a choice of inference, I would, for the reasons stated, infer that the Flathead Indians are sufficiently within the jurisdiction of the State of Montana to be entitled 'to state services and, except as to trust lands, subject to state taxation.

Other considerations tend, in my opinion, to confirm this view. Congress is aware of state taxation and has in specific instances found plain language to express various Indian exemptions *1322from various state taxes.13 Congress has been extremely careful to specifically exempt from state taxation Indian trust lands. The exemption appears in the Montana Enabling Act which speaks of lands and only lands in terms of both federal jurisdiction and federal control,14 and specifically in terms of taxation:

. . . But nothing herein, or in the ordinances herein provided for, shall preclude the said states from taxing as other lands are taxed any lands owned or held by any Indian who has severed his tribal relations, and has obtained from the United States or from any person a title thereto by patent or other grant, save and except such lands as have been or may be granted to any Indian or Indians under any act of congress, containing a provision exempting the lands thus granted from taxation; but said ordinances shall provide that all such lands shall be exempt from taxation by said states so long and to such extent as such acts of congress may prescribe. R.C.M.1947, Vol. 1, p. 69

The fact that Congress expressly prohibited the states from taxing lands exempt by federal law is pregnant with the thought that Congress did think that, absent federal restriction, Indian property might be taxed.

The Supreme Court in McClanahan v. Arizona State Tax Comm’n, supra, 411 U.S. at 176, 93 S.Ct. at 1264, has said that the language of the Buck Act (4 U.S.C. § 109, 54 Stat. 1059 (1971)): “‘[njothing in sections 105 and 106 of this title shall be deemed to authorize the levy or collection of any tax on or from any Indian not otherwise taxed . . (emphasis supplied) clearly expresses a congressional intent to maintain the tax-exempt status of Indians. With all deference I read Section 109 differently. Had the section ended with the word “Indian,” then I would find a purpose to exempt Indians or preserve an exempt status. But is seems to me that by adding the words “not otherwise taxed” Congress specifically recognized the possibility that Indians might be subject to state sales and income taxes. The Buck Act as respects taxation maintained the status quo as to reservation Indians and nothing more.

The Act of Congress (25 U.S.C. §§ 1321-1326) providing a method whereby the states may assume jurisdiction over Indian tribes is cited in McClanahan. However, the concern of Congress was, as is evident from the language of the Act, with state court assumption of and with the jurisdiction of state courts to try civil and criminal eases. Where the Act speaks of taxes it makes its purpose unmistakably clear:

Nothing in this section shall authorize the alienation, encumbrance, or taxation of any real or personal property, including water rights, belonging to any Indian or any Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States . . . 25 U.S.C. § 1321(b)

Identical language is repeated in 25 U.S. C. § 1322(b). This language confirms my thought that when Congress wanted to exempt something from state taxation it had no difficulty finding words to express that intention. I believe that these sections indicate that Congress intended to exempt from state taxation that which *1323it had carefully spelled out in so many other statutes and what it then believed to be exempt, i. e., trust property and trust property alone.

The Indian Reorganization Act of 1934 (Wheeler-Howard Act, 25 U.S.C. § 461 et seq.) does not, as I see it, cast any light upon the problems of state taxation of the individual Indian except that it, too, shows that Congress knows how to express explicit exemptions when it wants to. It is probable that Congress did not realize that by halting the allotment of Indian lands and then making the provisions of the General Allotment Act ineffective, it was creating problems. It is likely that had Congress seen the problem (i. e., was there to be a difference between the Indians who in 1934 had received fee patents and were subject to state law, and a new generation of Indians who would not receive patents and who were, therefore, not automatically made subject to state law by the General Allotment Act?) it would have done something about it one way or the other. I doubt that any worthwhile inferences are to be drawn from the Wheeler-Howard Act.

It appears to me that there is something fundamental in the idea that the rights of citizenship carry the burdens of citizenship and that no inquiry into the duty of an individual to pay taxes is complete without an inquiry into the citizenship of that individual. (We are concerned with individuals, not tribes.) I would infer that citizenship carries with it the burden of citizenship and absent any clear language to the contrary I would find that to be the congressional intent. I do not, in the history and circumstances of the Flathead Indians, find that contrary language.

If the result in McClanahan were based on implication of tax exemption rather than on a lack of jurisdiction I would have no difficulty in distinguishing it from the case at bar and would find no tax exemptions on the Flathead Reservation except as to trust lands.

The rule that tax exemptions are not to be granted by implication applies to Indians. Oklahoma Tax Comm’n v. United States, 319 U.S. 598, 63 S.Ct. 1284, 87 L.Ed. 1612 (1943); Mescalero Apache Tribes v. Jones, supra.15

The Flathead Reservation and the Navajo Reservation are not now the same and do not have the same history. Different facts justify different results, even where the subject matter is Indians or Indian reservations.16 Allotments in *1324severalty were not made on the Navajo Reservation and the provisions of the General Allotment Act never applied to the Indians on that reservation. There are no non-Indian ownerships within the exterior boundaries of the Navajo Reservation. The Navajos live to themselves — -largely apart from the non-Indian community. The non-Indians on the reservation, such as Indian traders and government officials, are the invitees of the tribe or the federal government. What was said in Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U.S. 685, 690, 85 S.Ct. 1242, 1245, 14 L.Ed.2d 165 (1965):

Congress has, since the creation of the Navajo Reservation nearly a century ago, left the Indians on it largely free to run the reservation and its affairs without state control, a policy which has automatically relieved Arizona of all burdens for carrying on those same responsibilities. And in compliance with its treaty obligations the Federal Government has provided for roads, education and other services needed by the Indians . . .

and further at 691, 85 S.Ct. at 1246:

. . . And since federal legislation has left the State with no duties or responsibilities respecting the reservation Indians, we cannot believe that Congress intended to leave to the State the privilege of levying this tax

cannot be said of the Flathead Reservation.

The language in McClanahan v. Arizona Tax Comm’n, supra, 411 U.S. 173, 93 S.Ct. 1263:

. . . When the relevant treaty and statutes are read with this tradition of sovereignty in mind, we think it clear that Arizona has exceeded its lawful authority by attempting to tax appellant . . .

could not be applied to the Flathead Reservation. There was no tradition of sovereignty on that reservation until 1934. Major crimes were punished at the federal level and until at least 1935 minor crimes at the state level. There were no tribal courts until after the enactment of the Indian Reorganization Act in 1934. State courts did exercise jurisdiction over civil cases until the decision in Kennerly v. District Court, supra. The whole body of state civil law was thought to be applicable to non-Indians and Indians alike. Except as to trust lands Indians paid taxes as did others. The state irrigation district laws were specifically utilized in connection with the irrigation of reservation lands.

What was further said in McClanahan at 175, 93 S.Ct. at 1264:

Moreover, since the signing of the Navajo treaty, Congress has consistently acted upon the assumption that the States lacked jurisdiction over Navajos living on the reservation

cannot be said of the Flathead Reservation because at least until 1934 Indians were specifically made subject to state jurisdiction when they received fee patents, as many of them did, and if Congress assumed that state laws did not apply, its undisclosed assumption was not shared by the Indians or whites living on the reservation who never questioned the matter until the decision in Kennerly v. District Court, supra.

To paraphrase Mr. Justice Black in Oklahoma Tax Comm’n v. United States, supra, 319 U.S. at 603, 63 S.Ct. 1284, the underlying principles on which the Navajo decisions are based do not fit the situation of the Flathead Indians.

. The dissenting opinion filed May 10, 1974, is withdrawn and this opinion substituted.

. See Mahoney v. State Tax Comm’n, 96 Idaho 59, 524 P.2d 187 (1974) cert. denied, 419 U.S. 1089, 95 S.Ct. 679, 42 L.Ed.2d 681.

. I do not agree with the position taken in the majority opinion as to the status of the Indians who received fee patents. They were, as individuals, eyen though within the exterior boundaries of the reservation, made subject to state law by the language of the General Allotment Act. Nothing has ever changed that. No doubt, as said in Mattz v. Arnett, 412 U.S. 481, 496 n. 18, 93 S.Ct. 2245, 2254, 37 L.Ed.2d 92 (1973), “[t]he policy of allotment and sale of surplus reservation land was repudiated in 1934 by the Indian Reorganization Act, 48 Stat. 984 . . . .” but that Act did not purport to affect the status of the individual Indians.

. If the term “jurisdiction” denotes the power of a sovereign to impose its laws upon persons and relationships and a lack of jurisdiction denotes the incapacity of that sovereign to affect persons and their relationships by its laws, then I assume that a lack of jurisdiction extends not only to taxes but to other relationships as well. If this is so, then this case and others may well be placing in limbo all sorts of legal relationships. The reservation Indian employed in a sawmill may well have cause to be concerned about his status under the Workman’s Compensation Laws of Montana. Is he covered if employed on the reservation by a reservation Indian? — a non-reservation Indian? — a white? If he is not covered, then where does he find his common law remedies?

. “An Indian, becoming a citizen of the United States and residing in a state, is held to be a citizen of that state. Boyd v. Nebraska, 143 U.S. 135-162, 12 S.Ct. 375, 36 L.Ed. 103. Matter of Heff, 197 U.S. 448 *1320(sic), 25 S.Ct. 506, 49 L.Ed. 848. The latter case was overruled by United States v. Nice, 241 U.S. 591, 36 S.Ct. 696, 60 L.Ed. 1192, but on another point.” Deere v. New York, 22 F.2d 851, 852 (N.D.N.Y.1927). See also F. Cohen, Handbook of Federal Indian Law 156 (University of New Mexico Press, 1942).

. “Amendment XV. — Universal Male Suffrage “Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.

“Section 2. The Congress shall have power to enforce this article by appropriate legislation.”

. We do not deal here with equal protection as it might affect the relationship between the individual Indian and the tribe, nor as between the individual Indian and the United States. See note 12.

. I recognize that it did do this in part by exempting Indian trust lands from taxation, but when we deal with the taxation of trust lands we deal not with implications but with exemptions repeatedly and expressly stated whenever Congress has acted and, at least in the case of the State of Montana, with exemptions stated in the Enabling Act.

. It has been held that this section does not apply to Indians in their relationship to the tribe. Spotted Eagle v. Blackfeet Tribe, 301 F.Supp. 85 (D.Mont.1969). The effect of 42 U.S.C. § 1981 has not been considered as to the Indians in relationship to the state.

. Again we are not here concerned with the power of Congress to tax and spend in the discharge of what Congress deems to he the federal obligation to Indians.

. Bolling v. Sharpe, 347 U.S. 497, 74 S.Ct. 693, 98 L.Ed. 884 (1954) ; Frontiero v. Richardson, 411 U.S. 677, 93 S.Ct. 1764, 36 L.Ed.2d 583 (1973).

. I do not regard Morton v. Mancari, 417 U.S. 535, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974), as contrary. That case involved the Indian in relationship to the federal government and not the Indian in relationship to the state. Even with respect to the federal government the opinion is carefuUy limited to the problem of preferential employment in the Bureau of Indian Affairs, which was related to “Indian self-government.” Perhaps it can be said that granting Indians an exemp-

tion from cigarette taxation “is reasonable and rationally designed to further Indian self-government,” but I don’t think so.

Where unequal rights are enjoyed by the Indian because “the unique legal status of Indian tribes under federal law and upon the plenary power of Congress, based on a history of treaties and the assumption of a ‘guardian-ward’ status, to legislate on behalf of federally-recognized Indian tribes,” (at 551, 94 S.Ct. at 2483) then it would seem that the inequality could be justified only in terms of that relationship. If the guardian requires that the ward be the beneficiary of the state’s services and the ward accepts those services, then the new relationship of the ward is out of the orbit of federal management and the inequality should not persist as to the new relationship.

. See 25 U.S.C. §§: 564, 749, 798, 853, 898, 937, 955, and 963, and 25 U.S.C.A. (pocket part) §§: 565f, 589, 594, 609b-l, 610b, 645, 648, 662, 676b-l, 690, 788b, 881, 883c, 967c, 1013, 1036, 1073, 1087, 1104, 1120, 1134, 1146, 1154, 1165, 1171, 1185, 1194, 1204, 1211, 1225, 1234, 1246, 1252 (Flathead), 1264, 1273, 1282, 1296, 1300a-3, 1300b-4, 1300c-4, 1300d-8, and 1300e-6.

. In Organized Village of Kake v. Egan, 369 U.S. 60, 69, 82 S.Ct. 562, 567, 7 L.Ed.2d 573 (1962), the Court said of this language: “The disclaimer of right and title by the State was a disclaimer of proprietary rather than governmental interest.”

. “This Court has repeatedly said that tax exemptions are not granted by implication. United States Trust Co. v. Helvering, 307 U.S. 57, 60, 59 S.Ct. 692, 693, 83 L.Ed. 1104. It has applied that rule to taxing acts affecting Indians as to all others. As was said of an excise tax on tobacco produced by the Cherokee Indians in 1870, ‘If the exemption had been intended, it would doubtless have been expressed.’ Cherokee Tobacco, 11 Wall. 616, 620, 20 L.Ed. 227. In holding the income tax applicable to Indians, the Court said, ‘The terms of the 1928 Revenue Act are very broad, and nothing there indicates that Indians are to be excepted. . If exemption exists it must derive plainly from agreements with the Creeks or some Act of Congress dealing with their affairs.’ Superintendent v. Commissioner, supra, 295 U.S. 420, 55 S.Ct. 821, 79 L.Ed. 1517. If Congress intends to prevent the State of Oklahoma from levying a general nondiscriminatory estate tax applying alike to all its citizens, it should say so in plain words. Such a conclusion cannot rest on dubious inferences.” Oklahoma Tax Comm’n v. United States, supra, 606-607, 63 S.Ct. at 1288. Squire v. Capoeman, 351 U.S. 1, 76 S.Ct 611, 100 L.Ed. 883 (1956), may point to, although it does not express, a different rule where the taxing power of Congress comes into conflict with the interest of a ward of the United States.

. “The underlying principles on which these decisions are based do not fit the situation of the Oklahoma Indians. Although there are remnants of the form of tribal sovereignty, these Indians have no effective tribal autonomy as in Worcester v. Georgia, supra; and, unlike the Indians involved in The Kansas Indians case, supra, they are actually citizens of the State with little to distinguish them from all other citizens except for their limited property restrictions and their tax exemptions.” Oklahoma Tax Comm’n v. United States, supra, 319 U.S. at 603, 63 S.Ct. at 1286.