(dissenting).
I would reverse the trial court. This case involves the sale of' land held in trust by the United States for Indian beneficiaries and the subsequent purchase of new land with the proceeds of' that sale. The issue in this case is whether the newly purchased land is impressed with the same trust as the original allotment so as to render it exempt from taxation. The circuit court ruled that the trust status of land is terminated by issuance of a patent in fee simple. This holding was premised on 25 U.S.C.A. § 349, which provides:
“[T]he Secretary of the Interior may, in his discretion, and he is authorized, whenever he shall be satisfied that any Indian allottee is competent and capable of managing his or her affairs at any time to cause to be issued to such allottee a patent in fee simple, and thereafter all restrictions as to sale, incumbrance, or taxation of said land shall be removed.”
Recause title to the property in question was acquired by the Indian beneficiaries in fee simple, without nqtice of trust status or restrictions of any kind in the conveyance, • the circuit court ruled the property became taxable under the laws of South Dakota, and that Gregory County properly levied taxes thereon.
The proceeds of the sale of the original trust allotment were held in trust by the United States. I hold that the use of these impressed proceeds to purchase new land in Gregory County caused the land so purchased to likewise be trust impressed and immune from taxation by the state or its instrumentalities.
The facts and background of this dispute may be briefly *131stated. Petitioners, Nanette Leading Fighter and David Leading Fighter, are members of the Rosebud Sioux Indian Tribe. Nanette Leading Fighter was the original allottee of a certain parcel of trust land in Todd County, South Dakota, which was sold by the Rosebud Indian Agency on April 7, 1960. The proceeds of this sale were then held in trust. On or about June 28, 1960, $1,300 of these trust funds was used to purchase real property in the town of Herrick, Gregory County, South Dakota.
Petitioner’s original allotment of land in Todd County, South Dakota was received from the United States of America. The allotment was to be indefinitely held in trust for her by the United States acting as her trustee. Chap. 405, 25 Stat. 888, and Chap. 576, 48 Stat. 984, 25 U.S.C. § 462. It is a long established rule that lands held in trust by the United States are immune from local taxation. As stated by this Court:
“The state cannot tax Indian lands that are held in trust by the United States”. Lebo v. Griffith, 42 S.D. 198, 173 N.W. 840.
See also the decision of the United States Supreme Court in United States v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532.
On April 7, 1960 the trustee, United States, at Petitioner’s request, sold the realty contained in her original allotment realizing $4,400 on this sale. This amount was deposited in Petitioner’s individual Indian Money account at the Rosebud office of the Bureau of Indian Affairs. Such accounts are controlled by the Secretary of the Interior or his representative who acts as an agent of the trustee United States. 25 C.F.R. § 104.1. The trial court correctly recognized that the proceeds derived from the sale of Petitioner’s trust land on deposit in her Individual Indian Money account were impressed with the same trust as the original allotment. They were, therefore, likewise immune from taxation by the state or its instrumentalities. The trial court found as an undisputed fact that:
“Nanette Leading Fighter owned certain trust land which was sold by the Rosebud Indian Agency on April *1327, 1960, and the proceeds of the sale were then held in trust.”
A part of these trust funds was used to purchase the real property in Herrick, Gregory County, South Dakota. It is this purchase which gives rise to the issue in the instant appeal, to-wit, whether the newly obtained land purchased with funds held in trust is impressed with the same trust as those funds, so as to render it exempt from taxation. As previously stated, I would hold that the purchased land is so impressed and thus exempt from taxation. I base this holding on the well-settled trust principle enunciated in a long line of cases both in this state and in the federal system that the corpus of a trust does not lose its trust status by a change in form; instead, the corpus retains its status as long as it is traceable back to the original trust subject, i
In Pourier v. Board of County Commissioners of Shannon County, 83 S.D. 235, 157 N.W.2d 532, we held that proceeds of a sale of personal property owned by an Indian, and acquired through investment of allotted funds and land were federal instrumentalities and exempt from state taxation. The exemption extends to the proceeds of nontaxable property and to property purchased with such proceeds. We held, and correctly I believe.
“* * * this immunity extends to the increase of issue property, to property purchased from the proceeds of sale of the increase, or to property exchanged for similar use and increases therefrom so long as it can be traced and identified as such.” Pourier v. Board of County Commissioners, supra, at p. 534.
Underlying this ruling is the basic policy consideration which has come to be known as the instrumentality doctrine. This doctrine asserts that, consistent with the Supremacy Clause of the United States Constitution, a state through taxation may neither “substantially impede or burden the functioning of the Federal Government”. Federal Indian Law, 1958 Ed., p. 846. It is the policy of the federal government to cause to be exempt Indian trust property from state taxation to better enable Indians to, remain self-sufficient. The trust property in the instant case is an instrument of this policy and as the Pourier court correctly *133indicated, such instruments of the national government may not: be taxed by the states.
While the Pourier decision concerned trust personalty, the instant case involves trust realty. No valid distinction can be drawn between the two types of trust property. The effect of the holding in Pourier, supra, on our decision in this case is in no way vitiated by the fact that a different class of property is involved. If anything, the rationale of the holding in that case can be more readily applied to the factual setting of the instant case. We stated in Pourier that the new property has the tax exempt trust status of the original “so long as it can be traced and identified as such”. Stated otherwise, we held that as long as the new property is shown to be a derivative of the original trust allotment it is exempt. Because of the immobility of land and. the relative mobility of personal property it is substantially easier to trace realty, as in the instant case, than it is to trace personalty. The case at bar, therefore, falls within the ambit of the holding in Pourier.
Cases on this point decided in the federal system are consistent with our ruling in Pourier. In Dewey County, S. D. v. United States, 8 Cir., 26 F.2d 434, property issued by the federal government to Sioux Indians or derived from issue property was levied on by Dewey County. In language similar to that later used by this Court in Pourier, that court stated:
“There seems to be no doubt that the property taxed was an instrumentality of the Government in carrying out its policy in behalf of these Indian wards. It belonged to the United States, whether in the original form in which it was issued or its increase, or property for which the property originally issued had been exchanged.” at p. 435.
Perhaps the case which most clearly enunciates the doctrine of continuing trust status for proceeds derived from trust land is Ward v. United States, 10 Cir., 139 F.2d 79. There facts strikingly similar to those present in the instant case were examined. Funds attained from the sale of a restricted allotment were held by the Secretary of the Interior. These funds were *134subsequently used to purchase new land. On the status of this land the court stated:
“In substance, there was a mere conversion of trust property. The restricted allotment was converted into funds and the funds were converted into land. Such land was charged with the same trust as the original allotment, under the well-settled principle of the law of trusts that, whenever property in its original state and form has once been impressed with a trust, no change of that state and form can divest it of its trust character, so long as it remains capable of clear identification.” at p. 82.
The instant case clearly fits within the rule stated by the Ward court, to-wit, so long as the trust property remains capable of clear identification, no change in form can divest it of its trust character. Petitioner’s property has remained capable of identification because funds from the allotment proceeds were used to purchase the property.
Each Indian allottee, pursuant to § 11 of the Act of March 2, 1889 (Chap. 405, 25 Stat. 888), under which Petitioner received her allotment, received more than just land in trust. Each also received a vested right to a tax exemption for the land, the corpus of his trust. In Choate v. Trapp, 224 U.S. 665, 32 S.Ct. 565, 56 L.Ed. 941, the state of Oklahoma sought to tax the allotments of local Indians during their trust periods. The state argued, inter alia, that allottees’ tax exemption was a legislative gratuity and not a vested right, and could therefore be abrogated by an act of Congress. The United States Supreme Court disagreed and held that “[T]he provision that the land should be non-taxable was a property right, which Congress undoubtedly had the power to grant”. Choate, supra, 224 U.S. 665, 673, 32 S.Ct. 565, 568. The decision went on to state that:
“The patent issued in pursuance of those statutes gave the Indian as good a title to the exemption as it did to the land itself. Under the provisions of the 5th Amendment there was no more power to deprive him of the exemption than of any other right in the property. *135* * * It is conceded that no right which was actually conferred on the Indians can be arbitrarily abrogated by statute.” Choate, supra, at 673, 674, 32 S.Ct. at 569.
The holding in Choate v. Trapp, supra, was clarified and reemphasized in Mahnomen County, Minnesota v. United States, 319 U.S. 474, 63 S.Ct. 1254, 87 L.Ed. 1527. The Supreme Court there recognized that even though the trustee United States might give its consent to taxation, the consent of the Indian allottee was necessary before his vested right to a tax exemption would be lost because “* * * under Choate v. Trapp the Indian, who has gained a ‘vested right’ not to be taxed, must also consent.”
For purposes of this holding, it must be noted that the fact title to the land was not taken in a way to make its trust status known is not controlling because Indian beneficiaries should not be bound by the negligence of the Bureau of Indian Affairs. See Cramer v. United States, 261 U.S. 219, 234, 43 S.Ct. 342, 346, 67 L.Ed. 622, 628; United States v. Forness, 125 F.2d 928, 932— 933 (2nd Cir., 1942, per Jerome Frank); and Sessions, Inc. v. Morton, 491 F.2d 854, 857 (n. 5).
I would hold that in the absence of clear evidence that Petitioner gave a knowing consent to the loss of her vested right to a tax exemption we should '■ assume that she gave no such consent. She should not, therefore, lose her exemption because the Bureau of Indian Affairs failed to make the continuing trust character of the land known in the conveyance. This result flows from the application of several rules. Congress has placed the burden of proof upon non-Indians in all trials concerning ownership of property. This was codified at 25 U.S.C. § 194 which provides:
“In all trials about the right of property in which an Indian may be a party on one side, and a white person on the other, the burden of proof shall rest upon the white person, whenever the Indian shall make out a presumption of title in himself from the fact of previous possession or ownership.”
*136Note 1, appended to this statute, clearly states the purpose of this section:
“This section is evidence of the policy of .the Government to give Indians the benefit of the doubt on questions of fact or construction of treaties or statutes relating to their welfare.”
Certainly the issue of consent in this case is a question of fact which is ambiguous at best. Pursuant to the burden of proof enunciated in 25 U.S.C. § 194, this Court must give Petitioner the benefit of the doubt as to this issue. That tax exemptions are to be strictly construed is a general rule of construction. The contrary rule, however, applies to Indians.
The majority opinion quotes from Trotter v. Tennessee, 1933, 290 U.S. 354, 54 S.Ct. 138, 78 L.Ed. 358, an opinion by Justice Cardozo. The quotation omits an important thought by that noted jurist. The part pertinent to this case is as follows:
“Exemptions from taxation are not to be enlarged by implication if doubts are nicely balanced. Chicago Theological Seminary v. Illinois, 188 U.S. 662, 674, 23 S.Ct. 386, 47 L.Ed. 641 [649]. On the other hand, they are not to be read so grudgingly as to thwart the purpose of the lawmakers. ” (emphasis supplied)
Sale of their allotted parcel and subsequent purchase of different land would mean loss of their tax exemption with the attendant risk of loss of their new land. Such a risk would clearly discourage those Indians who wish to live in the larger society outside the confines of the reservation. This, I believe, was not the intention of Congress in its Indian policy. Nor do I believe this holding to be unfair to the larger society or that it poses any threat to our system of taxation. *
It is interesting to observe one effect of my holding as applied to this particular case. Upon sale by Petitioner, I would assume her original allotment of land worth $4,400 became taxable. Of that amount only $1,300 was reinvested. It can, therefore, be assumed that due to this transaction $3,100 worth of additional land was added to South Dakota’s tax base.