F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
AUG 8 2003
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
In the Matter of the Estate of
ELLIOTT D. BRUNER, DIANA J.
BRUNER, as Representative of the
Estate of Elliott D. Bruner,
Plaintiff-Appellant,
v. No. 02-5084
ELLIOTT BIM BRUNER and LEDA
V. BRUNER,
Defendants-Appellees,
UNITED STATES OF AMERICA,
Movant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
(D.C. NO. 00-CV-386-H(J))
Submitted on the briefs:
Steven M. Harris and Michael D. Davis, of Doyle Harris Davis & Haughey, Tulsa,
Oklahoma, for Plaintiff-Appellant.
Geoffrey M. Standing Bear, Pawhuska, Oklahoma, for Defendants-Appellees.
David E. O’Meilia, United States Attorney, and Cathryn McClanahan, Assistant
United States Attorney, Tulsa, Oklahoma, for Movant-Appellee.
Before HENRY , BRISCOE , and HARTZ , Circuit Judges.
HARTZ , Circuit Judge.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f). The case is therefore ordered submitted
without oral argument.
Plaintiff Diana Bruner, as personal representative of the estate of her
deceased husband E. Daniel Bruner (the Estate), brought this suit against Daniel’s
parents, Leda V. Bruner and E. Bim Bruner, seeking a declaration that the Estate
is the equitable owner of certain tracts of land to which Leda and Bim hold legal
title. Plaintiff claims that Leda and Bim used Daniel’s assets to purchase the
properties as part of a scheme to defraud both the state and federal governments
into treating the properties as restricted Indian land (thereby avoiding certain
taxes and obtaining other advantages), and orally agreed to convey legal title to
Daniel at a later date. The district court entered summary judgment against
Plaintiff on the grounds that her claims were barred by the clean-hands and
estoppel doctrines, and were contrary to federal laws governing the sale and
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encumbrance of restricted Indian lands. Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm.
I. Background
We view the evidence in the light most favorable to the party opposing
summary judgment. See Scarberry v. ExxonMobil Oil Corp., 328 F.3d 1255, 1257
(10th Cir. 2003). Daniel Bruner, a mixed-blood Creek Indian, wanted to acquire
several properties that would be treated as restricted Indian land after acquisition.
Restricted Indian land is “land or any interest therein, the title to which is held by
an individual Indian, subject to Federal restrictions against alienation or
encumbrance.” 25 C.F.R. § 152.1(c). Such land is generally entitled to
advantageous tax treatment. See Okla. Tpk. Auth. v. Bruner, 259 F.3d 1236, 1239
n.2 (10th Cir. 2001) (“‘Income derived by individual Indians from restricted
allotted land, held in trust by the United States, is subject to numerous exemptions
from taxation based on statute or treaty.’” (quoting 1 Boris I. Bittker & Lawrence
Lokken, Federal Taxation of Income, Estates & Gifts ¶ 1.2.9 (3d ed. 1999)).
After discussing his plans with two attorneys, Daniel learned that if he
purchased the properties in his own name, they would not be restricted. On the
other hand, if his parents used their Individual Indian Money Accounts (IIMs) to
purchase the properties, the land likely would be restricted. (An IIM is “an
interest bearing account for trust funds held by the Secretary [of the Interior] that
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belong to a person who has an interest in trust assets.” 25 C.F.R. § 115.002.)
Leda and Bim agreed to help Daniel obtain the desired result. Although Leda and
Bim would formally own the parcels, they agreed that Daniel would have full use
of the land, and they promised to either transfer legal title to him at his request or
devise it to him in their wills. Several parcels were involved in this plan, but
Plaintiff has conceded that “[t]he tracts involved in this litigation are Tracts 6 and
7.” Aplt. Br. at 5.
A. Acquisition of Tract 6
A straw man, Charles Hudson, using funds provided by Daniel, purchased
Tract 6 for $47,000, holding the property without restrictions. A few months
later, Mr. Hudson sold Tract 6 to Bim for $18,000. To make the purchase, Bim
used IIM funds derived from an earlier condemnation of one of his restricted
properties. Bim requested that restrictions be placed on Tract 6 because he was
purchasing it as a replacement for the property that had been condemned. See 25
U.S.C. § 409a (authorizing restriction of land purchased with funds derived from
condemnation of restricted land). Before Bim’s request could be honored, the
Secretary of the Interior had to approve the transaction. See id. Under authority
delegated by the Secretary, the Superintendent of the Okmulgee Agency of the
Department of the Interior’s Bureau of Indian Affairs approved the restricted
deed, which provided that the tract
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shall be free from taxation, as provided by acts of
Congress exempting from taxation restricted and allotted
inherited lands of Indians of the Five Civilized Tribes,
and shall not be leased, sold, or encumbered in any
manner, except by and with the approval of the Secretary
of the Interior or his authorized representative, as
provided by the laws applicable to such lands.
Aplt. App. at 120. In other words, the tract was held as restricted Indian land.
After the purchase by Bim, Daniel began operating a smokeshop on Tract 6,
enjoying the benefits occasioned by the land’s restricted status. Cf. State ex rel.
Okla. Tax. Comm’n v. Bruner, 815 P.2d 667, 670 (Okla. 1991) (“[T]he [Oklahoma
Tax] Commission does not have a lawful right to impose or enforce its license
and permit requirements upon . . . Indian cigarette retailers [licenced by the
Muscogee (Creek) Nation Indian Tribe] doing business in Indian Country on
behalf of the Tribe.”). A short time later Daniel and Bim entered into a lease for
Tract 6. The purpose of the lease was to replace the funds in Bim’s IIM account
that had been used to purchase the smokeshop property. Eventually, Bim was
paid more than $18,000 under the Tract-6 lease.
B. Acquisition of Tract 7
Leda agreed to purchase Tract 7 but initially had insufficient IIM funds to
do so. Daniel could not simply add the necessary funds to Leda’s IIM account,
however, because only funds from certain sources are eligible for deposit in an
IIM. See 25 C.F.R. § 115.702-115.703. Among the eligible funds are proceeds
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from leases of trust property. See id. § 115.702. In preparation for the purchase,
two of Daniel’s companies leased Leda’s trust property to increase the balance in
her IIM. DJB Enterprises, Inc., leased one acre of Leda’s restricted land for
$1,000 per month, producing approximately $21,000 over the life of the lease;
and Native American Trading Co., Inc., leased approximately one unimproved
acre of Leda’s restricted land, immediately tendering payment of $159,000 for the
full lease term. The proceeds of both leases were deposited in Leda’s IIM
account and were later used, at least in part, to purchase Tract 7.
Because the seller of Tract 7 held it as inherited restricted Indian land, its
conveyance had to be approved by the Oklahoma state court. See Act of August
4, 1947, Pub. L. No. 336, § 1, 61 Stat. 731, 731 (the 1947 Act). The Tulsa
County district court approved the sale and the deed, which provided that
no lease, deed, mortgage, power of attorney, contract to
sell, or other instrument affecting the land herein
described or the title thereto shall be of any force and
effect, unless approved by the Secretary of the Interior
or the restrictions from said land are otherwise removed
by operation of law.
Aplt. App. at 158.
C. Course of Proceedings
Initially, Plaintiff brought her Tract-6 and Tract-7 claims in connection
with a condemnation action involving other properties owned by Leda and Bim.
See Okla. Tpk. Auth, 259 F.3d at 1239. In that case the district court dismissed
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the Tract-6 and Tract-7 claims for lack of jurisdiction. Id. at 1240. Following the
dismissal, Plaintiff filed this quiet-title action in state court, seeking
determination of the issues left unresolved in the earlier proceeding. Id. Under
the authority of the Act of April 12, 1926, Pub. L. No. 98, § 3, 44 Stat. 239, 240
(the 1926 Act), the United States joined and removed the case to the United States
District Court for the Northern District of Oklahoma. That court entered
summary judgment against Plaintiff, ruling that her claims were barred by the
doctrines of unclean hands and estoppel, and that recognition of her claims would
be contrary to federal laws regulating the conveyance of restricted Indian lands.
(In the meantime, in the condemnation case the district court had reversed its
prior jurisdictional dismissal of the claims regarding Tracts 6 and 7. Okla. Tpk.
Auth, 259 F.3d at 1240.) Plaintiff appeals, challenging the district court’s entry
of summary judgment on both jurisdictional and substantive grounds.
II. Discussion
A. Jurisdiction
Plaintiff asserts that the district court lacked jurisdiction over the Tract-7
dispute. “Whether the district court had jurisdiction is a legal question that we
review de novo.” Olcott v. Del. Flood Co., 327 F.3d 1115, 1121 (10th Cir. 2003).
Under § 1 of the 1947 Act, the Oklahoma state court had exclusive jurisdiction to
approve the conveyance of Tract 7. Plaintiff argues that by implication the state
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court also had exclusive jurisdiction to determine whether its earlier approval of
Leda’s restricted deed should be set aside.
But a second act of Congress governs here. The 1926 Act states:
Any one or more of the parties to a suit in . . . the State
courts of Oklahoma to which a restricted member of the
Five Civilized Tribes in Oklahoma, or the restricted
heirs or grantees of such Indian are parties, as plaintiff,
defendant, or intervenor, and claiming or entitled to
claim title to or an interest in lands allotted to a citizen
of the Five Civilized Tribes, . . . may serve written
notice of the pendency of such suit upon the
Superintendent for the Five Civilized Tribes, and the
United States may appear in said cause . . . [and] within
twenty days after the service of such notice on the
Superintendent for the Five Civilized Tribes or within
such extended time as the trial court in its discretion
may permit the United States may be, and hereby is,
given the right to remove any such suit pending in a
State court to the United States district court by filing in
such suit in the State court a petition for the removal of
such suit into the said United States district court . . . .
It shall then be the duty of the State court to accept such
petition and proceed no further in said suit . . . . [The
federal district] court is hereby given jurisdiction to
hear and determine said suit, and its judgment may be
reviewed by certiorari, appeal, or writ of error in like
manner as if the suit had been originally brought in said
district court.
1926 Act, § 3, 44 Stat. 239, 240-41 (emphasis added). In this suit Plaintiff seeks
to quiet title in favor of the Estate and against Leda, the record owner of Tract 7.
Leda “claim[s] title to” restricted Indian lands. Accordingly, the 1926 Act
entitled the United States to join the suit and remove it to federal district court.
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Once the case was properly removed, the district court had “jurisdiction to hear
and determine [Plaintiff’s] suit . . . as if the suit had been originally brought in
[that] court.” Id.
B. Summary Judgment
We review de novo the district court’s grant of summary judgment.
Scarberry, 328 F.3d at 1256. Summary judgment is appropriate when “the
pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law.” Fed. R. Civ. P. 56(c).
The district court granted summary judgment for Leda and Bim on three
grounds. Because we affirm under the clean-hands doctrine, however, we need
not address Plaintiff’s challenges to affirmance on the other two grounds.
Plaintiff argues that the clean-hands doctrine does not preclude her claims
because (1) Bim and Leda, as participants in the fraud, are not entitled to invoke
the doctrine against the Estate; (2) Daniel’s wrongful conduct should not be
attributed to his innocent heirs; and (3) under Oklahoma law, “a husband cannot
make a disposition of property acquired during coverture in such a fashion as to
defeat the wife’s interest in such property and to leave his estate so depleted that
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he cannot support his wife as required by statute or where the transfer is a fraud
on his wife’s marital estate.” Aplt. Br. at 23. We disagree.
Plaintiff seeks to establish that the Estate, as Daniel’s successor, has an
equitable interest in Tracts 6 and 7. She contends that Daniel was able to acquire
an equitable interest in each tract despite the restriction on the title, because
either (1) the restriction, having been obtained by fraud, is invalid or (2) Daniel’s
interest was acquired before the restriction was placed on the tract. In either
event, Plaintiff’s claim depends on Daniel’s having acquired an equitable interest
in unrestricted property, so we must follow Oklahoma law governing the
acquisition of equitable title. See Sperry Oil & Gas Co. v. Chisholm, 264 U.S.
488, 498 (1924) (After restrictions were removed under an act governing Five
Civilized Tribes land, the land “bec[a]me in all respects subject to [the owner’s]
control, under the laws of [Oklahoma], just as the property of other citizens. All
questions pertaining to [the land’s] disposal fell under the scope and operation of
[Oklahoma] law[].” (internal citation omitted)); Felix S. Cohen, Handbook of
Federal Indian Law 619 (Rennard Strickland et al. eds., 1982) (“When . . . the
federal restriction against alienation is removed from a ‘restricted fee’ allotment,
the allottee owns the land in fee simple absolute and can alienate it in any way
allowed by local law.”). Because we determine, as set forth in the following
discussion, that Daniel acquired no equitable interest under Oklahoma law, we
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need not examine Plaintiff’s contentions regarding whether such an interest could
be recognized with respect to land that has a restricted title.
Oklahoma law declares that “to receive equity, [a person] must do equity.”
Krumme v. Moody, 910 P.2d 993, 996 (Okla. 1995). “Equity provides no relief
when its aid becomes necessary through the party’s own fault.” McDonald v.
Humphries, 810 P.2d 1262, 1269 (Okla. 1990). In particular, Oklahoma
recognizes the clean-hands doctrine:
Under the maxim, [h]e who comes into equity must
come with clean hands, a court of equity will not lend its
aid in any manner to one who has been guilty of
unlawful or inequitable conduct in a transaction from
which he seeks relief, nor to one who has been a
participant in a transaction the purpose of which was to
defraud a third person, to defraud creditors, or to
defraud the government . . . .
Camp v. Camp, 163 P.2d 970, 972 (Okla. 1945) (internal quotation marks
omitted). A related doctrine states, “Equity will not relieve one party against
another when both are in pari delicto.” Id. at 972 (internal quotation marks
omitted); see Black’s Law Dictionary 794 (7th ed. 1999) (defining “in pari delicto
doctrine” as “[t]he principle that a plaintiff who has participated in wrongdoing
may not recover damages resulting from the wrongdoing”). See generally 3 Dan
B. Dobbs, Law of Remedies § 13.6 at 574-75 (2d ed. 1993) (noting relationship
between unclean-hands and pari delicto doctrines)).
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Here, Plaintiff attempts to establish the Estate’s equitable interest by
alleging a fraudulent arrangement for acquiring the two tracts. Plaintiff is not
entitled to rely on that inequitable action, however, because Daniel, her
predecessor in interest, was a party to the fraud. In other words, the desired relief
is unavailable to Plaintiff because of Daniel’s unclean hands.
Plaintiff argues that she is nevertheless entitled to recover because (1) the
participation of Leda and Bim in the scheme precludes their use of the clean-
hands doctrine or (2) Daniel’s inequitable conduct should not bar the claims of
those, like herself, who are simply innocent heirs. We discuss each argument in
turn.
To support her first argument, Plaintiff cites McDonald, 810 P.2d at 1269,
for the proposition that “a party who participates in a fraud may not invoke the
equitable doctrine of unclean hands against another who participated in the
fraud.” Aplt. Br. at 22. This would be a remarkable proposition, because it
would eviscerate the pari delicto doctrine. A wrongdoing plaintiff whose claim
would otherwise be barred because he was in pari delicto with the defendant
would nevertheless be able to recover; the defendant’s wrongdoing would prevent
him from claiming that the plaintiff had unclean hands (i.e., was in pari delicto).
In any event, we do not read McDonald to support Plaintiff’s proposition.
McDonald does nothing more than apply the precept that a party may not obtain
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equitable relief by proving inequitable conduct in which he participated. In
McDonald a vendor of oil and gas leases sued his broker for fraudulently
concealing the terms of a sale and retaining a secret profit. To recover on his
cause of action, the vendor relied on evidence of the broker’s misconduct—
misconduct which the vendor did not join in any way. The broker argued,
however, that the vendor should be denied relief because the vendor had himself
acted inequitably: he had made misrepresentations to prospective purchasers.
McDonald, 810 P.2d at 1265, 1268. The argument failed, however, because the
broker was a party to the deception of the prospective purchasers. Id. at 1269. In
essence, the broker was not permitted to establish his position by offering
evidence of inequitable conduct in which he had participated. Id. Refusing to
consider evidence of the joint misconduct of the vendor and broker, the court
ruled for the vendor.
In this case it is Plaintiff, not Leda and Bim, whose position resembles that
of the broker in McDonald. To prevail on her claim that Daniel had an equitable
interest in the tracts, she must prove inequitable conduct (deceiving the
government) in which Daniel participated. In contrast, the claims of Leda and
Bim do not depend upon proving any inequitable conduct, by anyone; they can
simply rely on the face of the deeds at issue.
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Camp, a decision approved by McDonald, 810 P.2d at 1268, supports our
conclusion. In Camp the plaintiff conveyed land to his brother on the pretense of
satisfying a valid debt. 163 P.2d at 971. The purpose of the conveyance was to
deprive the plaintiff’s wife (from whom he was obtaining a divorce) of her
interest in the transferred property. Id. at 972. The plaintiff alleged that his
brother had orally agreed that he would reconvey the land at a later date. Id.
When the land was not reconveyed, the plaintiff sought enforcement of the oral
promise. Id. The court found the plaintiff’s claims barred by the clean-hands
doctrine even though application of the doctrine would benefit the brother, also a
participant in the scheme. The court explained:
[T]hough it be conceded that [the brother] was a moving
factor in a scheme to deprive plaintiff’s former wife
from obtaining a just judgment by a division in value of
the partnership property jointly acquired, if plaintiff
served his interest in those proceedings by his wrong,
the parties are held in pari delicto and [e]quity will not
relieve one party against another when both are in pari
delicto; where both are equally in the wrong, defendant
holds the stronger ground.
Id. (internal quotation marks omitted). Similarly, the clean-hands doctrine bars
Plaintiff’s claims notwithstanding the fact that those who stand to benefit from
the doctrine’s use, Leda and Bim, also participated in the alleged fraud.
As for Plaintiff’s contention that she is an innocent heir who should not be
held responsible for Daniel’s inequitable conduct, she asserts claims solely as the
representative of the Estate. She is claiming through Daniel, and the clean-hands
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doctrine “applie[s] not only to the participants in the transaction, but to their
heirs, and to all parties claiming under or through either of them.” Rust v.
Gillespie, 216 P. 480, 484 (Okla. 1923); accord Wickham v. Simpler, 180 P.2d
171, 175 (Okla. 1946). Although there is an exception to this rule for heirs who
did not participate in the fraudulent conduct and can prove their claims without
establishing the underlying fraud, see Becker v. State, 312 P.2d 935, 942 (Okla.
1957), that exception does not apply. Here, proof of the fraudulent scheme is
essential to Plaintiff’s claims. Thus, her claims are barred by the clean-hands
doctrine.
Finally, we address Plaintiff’s argument that if the transactions are
approved, Daniel will have wrongfully depleted or committed a fraud upon the
marital estate. The sole authority she cites for this proposition is Sanditen v.
Sanditen, 496 P.2d 365 (Okla. 1972). The opinion in that case, however, states
that “the principle [sic] criteria [sic] [for determining whether a transfer by the
husband can be set aside] is the fraudulent intent of the husband to deprive the
wife of her marital rights as provided by statute.” Id. at 368. Here, although
Plaintiff alleges fraud, she fails to suggest in any way that the purpose of the
alleged scheme with respect to Tracts 6 or 7 was to deprive her of anything. On
the contrary, Daniel’s alleged intent was to enrich himself (which could only help
her) by obtaining the advantages of having the tracts be restricted land. We reject
Plaintiff’s argument.
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We AFFIRM the district court’s entry of summary judgment.
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