Appendix — Mescalero Apache Tribe v. United States

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1975

No. 95-939 *

MESCALERO APACHE TRIBE, ET AL.,

SHOSHONE- BANNOCK TRIBES OF THE

Fort HALL RESERVATION, IDAHO, AND

Te-MOAK BANDS OF WESTERN SHOSHONE INDIANS

OF NEVADA, ET AL.,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

APPENDICES TO

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF CLAIMS

I. S. WEISSBRODT

RICHMOND F. ALLAN

Weissbrodt & Weissbrodt

1614 Twentieth Street, N.W.

Washington, D.C. 20009

FRANCES L. HORN

Of Counsel: PIERRE J. LAFORCE

HowARD L. SRIBNICK Wilkinson, Cragun & Barker

Rosin A. FRIEDMAN 1735 New York Ave., N.W.

Washington, D.C. 20006

Fenuary 2, 1976 Counsel for Petitioners.

Washington, O.C. + THIEL PRESS + (202) 638-4521

* —

(t)

Page

TABLE OF CONTENTS ——

A. Opinion and Judgment of Court of Claims ........... l

B. Order of Court of Claims 2enmying rehearing.......... 53

C. Opinion and orders of Indian Claims Commission

in Docket Nos. 326-A and 22-G............52005. 55

D. Order of Commission in Docket No. 326C .......... 186

E. Opinion and Order of Commission denying

rehearing in Docket No. 326-A ...... 2.6.2.0 050065 189

F. Statutes Involved

(1) Act of September 11, 1841 and 31 U.S.C. ~

ELSE FESO C CETTE ETT 208

(2) Section 28 of Act of May 25, 1918 and 25

Dee eee en ese eeneececccccccce 209

(3) Acts of March 3, 1883 and March 2, 1887

eh ee ee eeesecocecccecc cs 212

i ee heehee eeweeeeessceececces 213

(5) Clauses 1, 2, and 5 of section 2 of Indian

Claims Commission Act ..........22-eeeeee0: 214

(6) Constitution of the United States, Amend-

TTT ULE LULL LELELETTeeee 214

---> — o-

_—«§ <P.

l

APPENDIX A

CORRECTED COPY

Gn the Gnited States Court of Claims

(Decided July 11, 1975)

Appeal No. 2-74

Ind. Cl. Comm. Docket No. 22-G

THE UNITED STATES OF AMERICA, appetiant Vv.

MESCALERO APACHE TRIBE, ET AL., apre.ee

Appeal No. 10-74

Ind. Cl. Comm. Docket No. 326—C

THE UNITED STATES OF AMERICA, appe.ianrt v.

THE SHOSHONE-BANNOCK TRIBES OF THE

FORT HALL RESERVATION, IDAHO, apre.iee

Appeal No. 12-74

Ind. Cl. Comm. Docket No. 326—-A

THE UNITED STATES OF AMERICA, appetianrt v.

TE-MOAK BANDS OF WESTERN SHOSHONE

INDIANS OF NEVADA, ET AL., apre.iee-cross-

APPELLANT

A. Donald Mileur, with whom was Assistant Attorney

General Wallace H. Johnson, for appellant. Richard L. Beal.

attorney for appellant in No. 2-74. Craig A. Decker, attor-

ney for appellant in Nos. 10-74 and t2-74.

I. 8S. Weissbrodt, attorney of record for Appellee, Mesca-

lero Apache Tribe. Weissbrodt & Weissbirodt, Richmond F.

Allen and Howard L. Sribnick, of counsel.

2 2

Pierre J. LaForce for Appellees The Shoshone-Bannock

Tribes and Te-Moak Bands of Western Shoshone Indians.

Frances L. Horn, attorney of record. Wilkinson, Cragun &

Barker and Robin A. Friedman, of counsel.

Before Cowen, Chief Judge, Durrer, Senior Judge, Davis,

Sxerton, Nicnois, Kunzic, and Bennett, Judges.

ON APPEAL FROM THE INDIAN CLAIMS COMMISSION

Seton, Judge. delivered the opinion of the court:

This is an appeal by the Government from orders of the

Indian Claims Commission (Commission) in three Indian

accounting cases (consolidated for this appeal) in which the

Commission awarded simple and compound interest from

1883 to 1930 against the Government on trust funds it held

for the three appellee Indian Tribes, notwithstanding the

provisions of 28 U.S.C. § 2516(a) (1970) and the well estab-

lished rule set forth in many decisions of the Supreme Court

and of this court and other courts that in noneminent domain

cases interest on a claim against the United States can be

allowed only under a contract, treaty, or an Act of Congress

expressly providing for the payment of interest. The orders

of the Commission awarding interest cannot stand, and we

reverse.

One of the Indian Tribes, the Te-Moak Bands of Western

Shoshone Indians of Nevada (Te-Moaks), filed a cross-

appeal from an order of the Commission denying it interest

on shortages in the payments due it by the Government under

the Western Shoshone Treaty of October 1, 1863, 18 Stat. 689.

The Commission held that these shortages were never paid

and were never set up as trust funds and could not bear in-

terest as they never in fact existed. We think the order of the

Commission in this regard was correct and we affirm. A dis-

cussion of the law and the facts follows.

The Government appealed from the following orders of

the Commission: -

(1) The order of October 4, 1973, 31 Ind. Cl. Comm. 427.

557, and 559, Te-Moak Bands of Western Shoshone Indians

of Nevada, Docket No. 326-A (Appeal No. 12-74) and

Mescalero Apache Tribe (Mescalero Apaches), Docket No.

22-G (Appeal No. 2-74) holding that the United States is

liable for simple interest and compound interest on the fund

known as “Indian Moneys, Proceeds of Labor™ (1.M.P.L.

Funds)? from 1885 to 1950.

(2) Th order of January 16, 1974 (u»reported). hold-

ine that the above order of October 4, 1973. was the law of

the erse in Shoshone-Bannock Tribes of the Fort Hall

Reservation (Shoshone-iannocks). Doeket No, 526-C

(Appeal No, 10-74).

The Te-Moaks cross-appealed as to that part of the above

order of October 4, 1973, that denied them interest on the.

hearing on the decision of October 4, 1972. above.

By way of background, it should be pointed out thet prior

to 1883 the I.M.P.L. Funds were not extensive and were

held by local Government agents. These agents disbursed

these funds from time to time to meet the needs of the

Indians. Such expenditures were usvally made after con-

sultation with the Indians and with their approval. How-

ever, by 1883 the I.M.P.L. Funds had begun to increase

in amount and it was decided that they should be taken

from the local agents and deposited in the U.S. Treasury

for the benefit of the Indians. The Act of March 3, 1883,

ch. 141, 22 Stat. 590 was the result. It reads in pertinent

part as follows:

The proceeds of all pasturage and sales of timber, coal,

or other product of any Indian reservation, except those

of the five civilized tribes, and not the result of the labor

of any member of such tribe, shall be covered into the

Treasury for the benefit of such tribe under such regula-

tions as the Secretary of the Interior shall prescribe ; and

the Secretary shall report his action in detail to Con-

gress at its next session.

1 This fund was composed of miscellaneous receipts from Indian reservations

derived from such sources as sales of grazing leases, ol] and gas leases, timber,

coal and other natural resources. They were deposited in the Treasury pur-

suant to the Act of March 3, 1883, 22 Stat. 590, as amended, 25 U.S.C. § 155

(1970).

4 4

Significantly, the Act makes no mention of a duty to invest

such proceeds or to pay interest thereon. To the contrary, it

expressly provides that the proceeds “shall be covered [de-

posited] into the Treasury for the benefit of such tribe under

such regulations as the Secretary of Interior shall prescribe.”

Pursuant to the 1883 Act, the I.M.P.L. Funds were de-

posited in the Treasury for the first time in one common fund

for all of the Indians. But due to a technicality in the Act,

the Secretary of the Treasury would not allow the Secretary

of the Interior to withdraw any of these funds without an

appropriation by Congress. This proved to be a cumbersome

arrangement because the money was needed from time to

time to meet the needs of the Indians. As a consequence, the

Act was amended by the Act of March 2, 1887, ch. 320, 24

Stat. 463 which provided in pertinent part as follows:

That the Secretary of the Interior is hereby author-

ized to use the money which has been or may hereafter

be covered into the Treasury under the provisions of

the act approved March third, eighteen hundred and

eighty-three, and which is carried on the books of that

Department under the caption of “Indian moneys, pro-

ceeds of labor,” for the benefit of the several tribes on

whose account said money was covered in, in such way

and for such purposes as in his discretion he may think

best, and shall make annually a detailed report thereof

to Congress.

This 1887 amendment gave the Secretary of the Interior

the authority to use the I.M.P.L. Funds in his discretion for

the benefit of the Indians without an appropriation by Con-

gress. It is significant that the 1887 amendment, like the Act

of 1883, did not provide for the payment of interest on

I.M.P.L. Funds. Actually, these funds were transient in

character because they were paid out from time to time to

provide for the needs of the Indians. Obviously, funds of

this character did not lend themselves to investment purposes

to earn interest because they were not available for a sufficient

length of time to allow them to be used to purchase stocks

or bonds or other securities that would earn interest only

after a long period of time. It is clear that Congress

did not intend to pay interest on these funds nor to require

them to be invested in interest bearing stocks, bonds, or other

—_

5 5

securities. The existing facts mentioned above militate

against any such intention, and clearly the Acts of 1883 and

1887 did not require the Government to pay interest on these

funds nor that they be made productive otherwise.

The statute controlling I.M.P.L. Funds was amended again

by the Act of May 17, 1926, ch. 309, 44 Stat. 560 and pro-

vided in pertinent part as follows:

* * * That hereafter all miscellaneous revenues derived

from Indian reservations, agencies, and schools, which

are not required by existing law to be otherwise dis-

— of, shall be covered into the Treasury of the United

tates under the caption “Indian moneys, proceeds of

labor,” and are hereby made available for expenditure,

in the discretion of the Secretary of the Interior, for

the benefit of the Indian tribes, agencies, and schools on

whose behalf they are collected, subject, however, to the

limitations as to tribal funds, im by section 27 of

the act of May 18, 1916 (Thirty-ninth Statutes at Large,

page 159). :

This amendment, like the Acts of 1883 and 1887 did not

provide for the payment of interest on I.M.P.L. Funds. By

this time it was clear that Congress knew that no interest was

being paid on these funds and that they were not otherwise

productive, and that Congress approved of this manner of

handling I.M.P.L. Funds. This knowledge of Congress and

its approval of the administrative interpretation of the

I.M.P.L. statutes as not to require payment of interest by

the Government on I.M.P.L. Funds or make them otherwise

productive is forcefully shown in the records of this case by

the reports to Congress by the Commissioner of Indian Af-

fairs for 1904 and 1905 which stated that Indian funds were

divided into two categories, namely, (1) “Trust Funds and

Trust Lands” and (2) “Income of Indian Tribes.” Under

the trust funds classification were listed all the funds required

to be productive as a trust fund held by the Government by

an act, resolution or treaty. Such funds bore interest and the

principal amounts and the interest earned were shown to-

gether with the appropriate congressional authority for each

tribe for each year. The second classification “Incomes of

Indian Tribes” consisted of four sub-classifications, namely,

(1) “Interest on trust fund,” (2) “Treaty and agreement obli-

6 6

gations,” (3) “Gratuities,” and (4) “Indian moneys, pro-

ceeds of labor and miscellaneous (I.M.P.L. Funds).” It was

obviously clear to Congress that no interest was being paid

on I.M.P.L. Funds and that Congress approved of this

manner of handling these funds.

This brings us to 1929 when the Secretary of the Interior

recommended to Congress that the noninterest bearing

I.M.P.L. Funds held by the Government for Indians be made

interest bearing funds. It is significant that he stated in his

recommendation :

It is conceded that there is no legal obligation to pay

interest on these funds * * *.

The Congress responded by enacting the Act of Feb-

ruary 12, 1929, ch. 178, 45 Stat. 1164, which provided in per-

tinent part:

* * * That all money in excess of $500 held by the

United States in a trust fund account, and carried on the

books of the Treasury Department to the credit of an

Indian tribe, if the payment of interest thereon is not

otherwise authorized by law, shall bear simple interest

at the rate of 4 per centum per annum from the date of

the passage of this Act. * * *

Although it appears that the Secretary of Interior had in-

tended that I.M.P.L. Funds would be included in the 1929

legislation, the Comptroller General ruled on May 31, 1929,

that it did not because the I.M.P.L. Fund was not “carried

on the books of the Treasury Department to the credit of an

Indian Tribe.” Decision A-27308, 8 Comp. Gen. 6235.

Because of this technicality, the Secretary of the Interior

requested additional legislation that would make I.M.P.L.

Funds interest bearing. The Congress responded by enacting

the Act of June 13, 1930, ch. 483, § 2, 46 Stat. 584, that pro-

vided in pertinent part as follows:

Sec. 2. All tribal funds arising under the Act of

March 3, 1883 (22 Stat. 590), as amended by the Act of ,

May 17, 1926 (44 Stat. 560), now included in the fund

‘Indian Money, Proceeds of Labor,’ shall, on and after

July t, 1930, be carried on the books of the Treasury De-

partment in separate accounts for the respective tribes,

and all such funds with account balances exceeding $500

shall bear simple interest at the rate of 4 per centum per

annum from July 1, 1930.

7 ' 7

The record from 1883 to 1929-30 is unequivocal. The Ex-

ecutive Branch understood that it possessed no authority to

pay interest on I.M.P.L. Funds. Congress not only con-

curred in this construction, but, in each of its Acts directly

involving I.M.P.L. legislation (Acts of 1883, 1887, and 1926),

conspicuously omitted any provision for the payment of

interest. Under the well established rule against interest,

each of these omissions was an unequivocal declaration by

Congress that no interest thereon was intended.

With this background, the record shows in these account-

ing cases that in the 7'e-Moak case, Docket No. 326—A, the

Government filed its accounting report showing that

$314.241.19 was deposited in its I.M.P.L. account between

1899 and 1951, and that no interest was paid on the fund

until June 30, 1930, after which date interest was paid pur-

suant to the Act of June 13, 1930, at the rate of four percent

per annum.

In Shoshone-Bannock, Docket No. 326—-C the accounting

report of the Government showed that $380,628.76 was de-

posited in its I.M.P.L. account between 1887 and 1951, and

that no interest was paid on the account prior to June 30,

1950, after which date interest was paid pursuant to the Act

of June 13, 1930, at the rate of four percent per annum.

In Mescalero Apache, Docket No. 22-G, the accounting

report of the Government showed that $1,670,620.38 was

deposited in the I.M.P.L. account between 1887 and 1950,

and that no interest was paid on this account until June 30,

1930, after which interest was paid pursuant to the Act of

June 13, 1930, at the rate of four percent per annum.

In these accounting cases, which were filed under the In-

dian Claims Commission Act of August 13, 1946 (25 U.S.C.

§ 70a (1970), 60 Stat. 1050), the Indians claimed simple and

compound interest on the above I.M.P.L. Funds from 1883

when they were first deposited in the Treasury to 1930 when

the Congress directed for the first time in the Act of 1930

that interest be paid thenceforth at the rate of four percent

per annum. The Commission allowed the claim and awarded

the Indians simple and compound interest against the United

States for the period stated. The legality of this award is

before us for determination.

8 8

It is obvious that the award is in direct conflict with 28

U.S.C. §2516(a) (1970), which provides as follows:

§ 2516. Interest on claims and judgments. ;

(a) Interest on a claim against the United- States

ym nd napa = . jud — bd the Court“of ee

under a contract or Act of Con express 0-

viding for payment thereof. fihasiiele envied _

The awards of interest is also in conflict with many deci-

sions of the Supreme Court and of this court that interest

may not be allowed on a claim against the United States in

noncondemnation cases unless there is a contract or a statute

expressly providing for the payment of interest. These cases

will be discussed below.

It is fundamental that the Government has sovereign

immunity from suit except where Congress has by legislation

expressly waived such immunity. This principle applies to

claims for interest against the United States. See Ute In-

diana v. United States, 45 Ct. Cl. 440, 470 (1910); United

States v. North Carolina, 136 U.S. 211 (1890) ; United States

v. Sherman, 98 U.S. 565 (1878); United States ex rel.

Angarica v. Bayard, 127 U.S. 251, 260 (1888) ; United States

v. N.Y. Rayon Importing Co., 329 U.S. 654, 658-59 (1947) ;

and Smyth v. United States, 302 U.S. 329 (1937).

The rule of sovereign immunity from suit against the

Government without its consent is firmly established in our

judicial system. The following cases are of interest in this

regard :

In Nassau Smelting & Refining Works v. United States,

266 U.S. 101 (1924), the Supreme Court held:

* * * The objection to a suit against the United States

is fundamental, whether it be in the form of an original

action or a set-off or a counterclaim. Jurisdiction in

either case does not exist unless there is specific con-

gressional authority for it. * * * [/d. at 106.) [Em-

phasis supplied. ]

Again, in l’nited States v. Sherwood, 312 U.S. 584 (1941),

the Supreme Court said:

The United States, as sovereign, is immune from suit

save as it consents to be sued, United States v. Thomp-

son, 98 U.S. 486; United States v. Lee, 106 U.S. 196;

9 9

Kansas v. United States, 204 U.S. 331; Minnesota v.

United States, 305 U.S. 382, 387; Keifer & Keifer v.

Reconstruction Finance Corp., 306 U.S. 381, 388; United

States v. Shaw, 309 U.S. 495 (see cases cited in The

Pesaro, 277 F. 473, 474, et seqg.), and the terms of its

consent to be sued in any court define that court’s juris-

diction to entertain the suit. Minnesota v. United States,

supra, 388 and cases cited; cf. Stanley v. Schwalby,

162 U.S. 255,270. * * * [/d. at 586-87.]

Many cases have held that the waiver of sovereign im-

munity cannot be implied but must be unequivocally ex-

pressed. In General Mut. Ins. Co. v. United States, 119 F.

Supp. 352 (N.D.N.Y. 1953), the court said:

It is beyond argument that the United States may

be sued only where its immunity has been specifically

waived by statute, and that such waiver may not be im-

plied in the construction of an ambiguous statute. [Em-

phasis supplied. ] [/d. at 354. ]

In Leyerly v. United States, 162 F. 2d 79 (10th Cir. 1947),

the court held:

The government does not consent to be sued by im-

lication, and consent to be sued should not be extended

yond the plain terms of the authorizing statute. Price

v. United States and Osage Indians, 174 U.S. 373, 19 S.

Ct. 765, 43 L. Ed. 1011; Eastern Transportation Co. v.

United States, 272 U.S. 675, 47 S. Ct. 289, 71 L. Ed. 472;

* * *_ [Emphasis supplied.] [/d. at 84.]

In the case of North Dakota-Montana Wheat Growers’

Ass'n v. United States, 66 F. 2d 573 (8th Cir. 1933), cert.

denied, 291 U.S. 672 (1934) the court said:

t is fundamental that the United States cannot be

sued without its permission, and that permission must

be specifically granted by Congress. /t will not be im-

plied. It is a deep-rooted principle in the fabric of all

English speaking countries that a sovereign is immune

from suits in its own courts. In Nassau Smelting & Refin-

ing Works. Ltd. v. United States, 266 U.S. 101, 106, 45

S. Ct. 25. 69 L. Ed. 190, the court said: “The objection

to a suit against the United States is fundamental,

whether it be in the form of an original action, or a set-

off. or a counterclaim. Jurisdiction in either case does not

exist, unless there is specific congressional authority for

it. * * *” | Emphasis supplied.] [/d. at 577.

10 10

In United States v. King, 395 U.S. 1 (1969), the Supreme

Court said:

* * * [JJurisdiction to grant relief depends wholly

upon the extent to which the United States has waived

its sovereign immunity to suit and that such a waiver

cannot be implied but must be unequivocally expressed.

United States v. Sherwood, 312 U.S. 584. [Emphasis sup-

plied.] [/d. at 4.]

These decisions are especially applicable to the case before

us, because here there was no contract nor statute expressly

providing for the payment of interest on the I.M.P.L. Funds

of the Indians. Furthermore, there was no Act of Congress

that specifically and unequivocally waived the sovereign im-

munity of the Government to suit for interest on I.M.P.L.

Funds by the Indians. It follows, therefore, that the Com-

mission was without jurisdiction or authority to award the

Indians interest against the United States in this case.

The allowance of interest by the Commission is directly

contrary to the many court decisions that hold that interest

cannot be awarded against the Government in the absence of

a contract or a statute expressly providing for interest. We

will now consider some of those cases.

In the early case of United States ex rel. Angarica v.

Bayard, supra, the Supreme Court announced the correct

rule as to the allowance of interest against the United States,

which is the law at the present time as follows:

The case, therefore, falls within the well-settled

principle, that the United States are not liable to pay

interest on claims against them, in the absence of express

statutory provision to that effect. It has been established.

as a general rule, in the practice of the government, that

interest is not allowed on claims against it, whether such

claims originate in contract or in tort, and whether they

arise in the ordinary business of administration or under

private acts of relief, passed by Congress on special ap-

plication. The only recognized exceptions are, where the

government stipulates to pay interest and where interest

is given expressly by an act of Congress, either by the

name of interest or by that of damages.

This appears from a succession of the opinions of the

Attorneys General of the United States, given by At-

torneyvs General Wirt, Crittenden, Legare, Nelson, John-

eth eee oe ne. ool oe

11 11

son comgee and Black, and appearing in the followin

volumes an pages of those opinions, as published:

1, 268; 1, 550; 1, 554; 3, 635; 4, 14; 4, 136; 4, 286; 5, 105;

7,523; 9,57; and 9, 449. a ie

Not only is this the general principle and settled rule

of the executive department of the government, but it

has been the rule of the legislative department, because

Congress, though well knowing the rule observed at the

Treasury, and frequently invited to change it, has re-

fused to pass any general law for the allowance and pay

ment of interest on claims against the government. Such

statutes for the payment of interest as have been passed,

apply to specific cases enumerated in the several statutes,

and do not cover the present case.

The principle above stated is recognized by this court.

In Tillson vy. United States, 100 U.S. 43, 47, this court,

speaking of the rule that interest is recoverable bet ween

citizens if a payment of money is unreasonably delayed,

says that with the government the rule is different, and

that the practice has long prevailed in the departments

of not dion interest on claims presented, except it is

in some way specially provided for. See also Gordon v.

United States, 7 Wall. 188, and Harvey v. United States,

113 U.S. 248, 248, 249. [/d. at 260.]

The rule against allowing interest was stated again by the

Supreme Court in United States. v. Thayer-West Point Hotel

Co., 329 U.S. 585 (1947) as follows:

The pertinent part of §177(a) of the Judicial Code

provides that “No interest shall be allowed on any claim

up to the time of the rendition of judgment by the Court

of Claims, unless upon a contract expressly stipulating

for the payment of interest, * * *” Section 177(a) thus

embodies the traditional rule that interest cannot be

recovered against the United States upon unpaid ac-

counts or claims in the absence of an express provision

to the contrary in a relevant statute or contract. Tilson

v. United States, 100 U.S. 43, 47; United States v. North

American Co., 253 U.S. 330, 336; United States v. Goltra,

312 U.S. 203,207. * * *

* * * The sole issue thus becomes whether there is

any express provision in the Act or in the lease per-

mitting the recovery of interest under the circumstances.

Only if there is such a provision can respondent avoid

the traditional rule set forth in § 177(a).

But in order to override the historical rule codified

in § 177(a), something more is necessary than an equivo-

12 12

cal use of the term “just compensation.” It is not enough

that the term might be construed to include the payment

of interest. As § 177(a) itself indicates, there must be a

provision in the contract “expressly stipulating for the

payment of interest.” That provision must be affirma-

tive, clear-cut, unambiguous; and an unexpressed in-

tention by the parties that the term “just compensation”

be construed to include interest is insufficient. Likewise,

where a statute is relied upon to overcome the force of

§177(a), the intention of Congress to permit the re-

covery of interest must be expressly and specifically set

forth in the statute. Tillson v. United States, supra, 46;

United States ex rel. Angarica v. Bayard, 127 U.S. 251,

260. Mere use of the term “just compensation,” without

more, is no substitute for an express provision for

interest.

Here neither the Act of March 30, 1920, nor the lease

under which respondent operated contains an express

provision for the payment of interest, either in addition

to or as a part of the “just compensation” to be paid to

respondent. If the United States had desired to provide

by statute or to contract in the lease for the payment

of interest, it would have been easy to have said so in

express terms. Because it did not say so, we are led irre-

sistibly to the conclusion that it did not intend to nega-

tive the effect of §177(a) in this instance. Til/son v.

United States, supra. [Footnote omitted.] [Emphasis

supplied. ] [/d. at 588-590. ]

Again in United States v. N.Y. Rayon Importing Co., 329

U.S. 654 (1947), the Supreme Court held :

In our opinion, §177(a) of the Judicial Code pro-

hibits the award of any interest under the circumstances

of this case. Section 177(a) provides that “No interest

shall be allowed on any claim up to the time of the

rendition of judgment by the Court of Claims, unless

upon a contract expressly stipulating for the payment

of interest. * * *” As we recently pointed out in (’nited

States v. Thayer-West Point Hotel Co., 329 U.S. 585,

this provision codifies the traditional rule regarding the

immunity of the United States from liability for interest

on unpaid accounts or claims. In other words, in the ab-

sence of constitutional requirements. interest can be

recovered against ¢he United States only if express con-

sent io such a recovery has been given by Congress. And

Congress has indicated in § 177(a) that its consent can

take only two forms: (1) @ specific provision for the

payment of interest in a statute; (2) an express stipula-

et ey A A 8 Fe eT

NR A AOE tt Oe me

a

13 13

tion for the payment of interest in a contract duly en-

tered into by agents of the United States. Thus there

can be no consent by implication or by use of ambiquous

language. Nor can an intent on the part of the framers

of a statute or contract to permit the recovery of inter-

est suffice where the intent 1s not trans'ated into affirma-

tive statutory or contractual terms. The consent neces-

sary to waive the traditional immunity must be caxpress,

and it must be strictly construed. Tillson v. United

States, 100 U.S. 43; United States v. Thayer-West Point

TTotel Co., supra.

Tested by those standards, the award of interest in

this case cannot be sustained. There is obviously no

contractual stipulation involved. And the appropriation

statutes which cover the refunds here in issue contain no

rovision whatever for the recovery of interest. Act of

May 14, 1937, 50 Stat. 137, 142; Act of June 25, 1938,

52 Stat. 1114, 1149. The traditional immunity of the

United States, as codified in § 177(a), accordingly

applies.

The Court of Claims, without making a reference to

$ 177(a), sought to justify its award of interest on what

it thought “would be right or just.” * * *

* * * * *

But assuming that the equities of the situation all

favor the owners of the refund claims, the Court of

Claims did not thereby acquire power to carve out an

implied exception to the plain words of § 177(a). Had

Congress desired to permit the recovery of interest in

situations where the Court of Claims felt it just or

equitable, it could have so provided. The absence of such

a provision is conclusive evidence that the court lacks

any power of that nature. Indeed, any other conclusion

would oa the Court of Claims to supply the con-

sent which only Congress can giv to the imposition

of interest against the United States.

* * * Only Congress can take the necessary steps to

waive the immunity of the United States from liability

for interest on unpaid claims. Cf. Smyth v. United

States, 302 U.S. 329, 353.

* * * Tt is enough to note that the traditional rule em-

bodied in § 177(a) is a complete one covering all ty

of claims, including those arising out of pre-existing

judgments. As we have seen, any exception to that rule

must be grounded upon an express provision ina statute

or contract. It follows that any exception relating to

pre-existing judgments must be traced to specific lan-

14

14

age in a contract or some other statute. Section 177 (a)

y itself warrants no such exception. * * *

* * * Courts lack the power to award interest against

the United States on the basis of what they think is or

is not sound policy. We reiterate that only express lan-

guage in a statute or contract can justify the imposition

of such interest. Such language is absent in this instance.

We accordingly reverse the judgment of the Court of

Claims in No. 94 to the extent that it includes an award

of interest. * * * [Emphasis supplied.] [/d. bridging

pages 658-63. ]

In the case of Albrecht v. United States, 329 U.S. 599

(1947) , the Supreme Court said:

Turning now to the right to interest under the con-

tracts, and from the contention regarding the

Fifth Amendment, we find that the contracts have no

provision for payment of interest. No statute authorizes

the payment of interest in cases like this. /n the absence

of specific contract or 8 provisions no interest

eB pam Be the Government even though the Govern-

ment’s pa t for the contract purchases be delayed.

See Smyth v. United States, 302 U.S. 329, 353; United

States v. Thayer-West Point Hotel Co., 329 U.S. 585,

588; United States v. N.Y. Rayon erent Co., 329

U.S. 654, 659-660. [Emphasis supplied.] [/d. at 605.]

The Supreme Court held in United States y. Alcea Band

of Tillamooks, 341 U.S. 48 (1951) :

* * * We granted certiorari limited to the question pre-

sented by the award of interest. 340 U.S. 873 (1950).

It is the “traditional rule” that interest on claims

inst ~ y United States cannot 4 recovered in -

sence of an express vision to the contrary in the

relevant statute or pl arenes 28 U.S.C. (Supp. TIT)

§ 2516(a). United States v. Thayer-West Point Hotel

Co., 329 U.S. 585, 588 (194 and cases cited

therein. * * * [Emphasis suppli } [Zd. at 49.]

In the case of Ramsey v. United States, 121 Ct. Cl. 426,

101 F. Supp. 353 (1951), cert. denied, 343 U.S. 977 (1952),

we held:

However, the common law rule that delay or default

in payment of money gives rise to a - + to recover

interest has been held not to be applicable to the sov-

ak aed ene aa

15 15

ereign government on grounds of public convenience,

unless the sovereign’s consent to pay interest has been

exhibited by an act of the Congress, or Y a lawful con-

tract of its executive officers. United States v. North

American T ation & Tradiig Co., 253 U.S. 330;

United States v. North Carol-na, 136 U.S. 211, 216:

United States ex rel. Angarica v. Bayard, 127 U.S. 251;

Richmond, Fredericksburg & Potomac Railroad Co. v.

United States, 95 C. Cls. 244: Hinds v. United States,

70 C. Cls. 288, 293. Congress has specifically provided

by an Act of June 25, 1948, ch. 646, sec. 1, 62 Stat. 978,

US. Code Title 28 (Supp. IV), § 2516(a), that:

Interest on a claim against the United States

shall be allowed in a judgment of the Court of

Claims only under a contract or Act of Congress

expressly providing for payment thereof.

A provision in a Government contract for the pay-

ment of interest must be affirmative, clear-cut, and un-

ambiguous. United States v. Thayer-West Point Hotel

Co., 329 U.S. 585. The Supreme Court has held that

although an award of interest on a claim against the

United States would be just or equitable, this fact alone

does not empower the Court of Claims to make such an

award on the basis of what they think is a sound policy.

The immunity of the United States from liability for

interest on unpaid claims is not to be waived by such

policy arguments. Unired States v. New York Rayon

Importing Co. 329 U.S. 654. * * * [/d. at 431-32, 101

F. Supp at 356. ]

We held in Confederated Salish & HNootenai Tribes v.

United States, 175 Ct. Cl. 451 (1966). cert. denied, 585 U.S.

921:

For many decades Congress has forbidden interest

on a plaintiff’s claim in this court unless a contract or

a statute has Nang A provided for interest. 28 U.S.C.

eu). This rule has won strict adherence in many

inds of cases, including Indian claims. Tillson v.

United States, 100 U.S. 43 (1879); United States v.

North American Transp. Co., 253 U.S. 330, 336 (1920) ;

United States v. Thayer-West Point Hotel Co., 329 U.S.

585 (1947); United States v. N.Y. Rayon Importing

Co., 329 U.S. 654 (1947); United States y. Alcea Band

of Tillamooks, 341 U.S. 48 (1951) ; Loyal Band of Creek

ndians v. United States, 118 Ct. Cl. 373, 382-83, 97 F.

Supp. 426, 431 fae cert. denied, 342 U.S. 813. * * *

[Emphasis supplied. ] [/d. at 454. ]

16 16

The Indians and the Commission rely heavily on the de-

cisions in United States v. Biackfeather, 155 U.S. 180 (1894)

and Peoria Tribe v. United States, 390 U.S. 468 (1968) as

authority for the allowance of interest here. Their reliance

on those cases is misplaced, because they are clearly dis-

tinguishable and are not apposite. The Supreme Court held

in those cases that treaties existed with the Indians that

required the payment of interest. Of course, under those

circumstances, it was proper for interest to be allowed and

paid, as a treaty requirement for interest is one of the excep-

tions to the no-interest ru’e. But we have no such treaty

here, and, accordingly, Blackfeather and Peoria are of no

help to the Indians or the Commission.

The Commission attempts to avoid the no-interest rule

by calling interest “damages.” Here again the cases are

squarely against this theory of the Commission. In Moran

Brothers Co. vy. United States, 61 Ct. Cl. 73 (1925), we held:

* * * Calling interest “ ” or loss does not de-

prive it of being interest, and the statute forbids the

allowance of interest. It is Hang ape | the case that inter-

est, where not stipulated for, is allowed by the courts

as damages for the detention of money or as compen-

sation to which a plaintiff is entitled, but this rule is

not applicable to the sovereign, “and, as has been settled

on grounds of public convenience, it is not to be awarded

against a sovereign government, unless its consent to

pay interest has been manifested by an act of its legis-

ature or by a lawful contract of its executive officers.”

United States v. North Carolina, 136 U.S. 211, 216. See

also Sherman case, 98 U.S. 565; Angarica v. Bayard, 127

U.S. 251, 260. [7d. at 106.]

In Ramsey v. United States, supra, we held:

* * * The payment of interest as such was neither ex-

pressly provided for by the corporation’s contract with

the War Department, nor by any Act of Congress.

Plaintiffs attempt to avoid the effect of this by desig-

nating their claim as one for damages, consisting of

interest on amounts paid out by the corporation to

third persons. But, as this court pointed out in Moran

Brothers Co. ¥. United States, 61 C. Cls. 73, 106, “Cal/-

ing interest ‘ es’ or loss does not deprive it of

being interest, and the statute forbids the allowance of

on] [Emphasis supplied.] [/d. at 432, 101 F. Supp.

at 356.

Ces AOTOTERE CES. | tea RN Senne 8

17 17

The Supreme Court said in Cherokee Nation vy. United

States, 270 U.S. 476 (1926) :

* * * The additional interest now claimed is sought

really as damages for the delay of Congress in appro-

priating the sum due in 1895 as the United States prom-

ised in the 1891 agreement. But the rule as to interest

against the United States does not allow us to adjudge

interest as damages at all. Congress must expressly ro-

vide for it or the contract must so provide. * * * [Em-

phasis supplied.] [/d. at 490.]

On occasion, courts have felt that certain special circum-

stances warranted an exception to the interest rule. In Goltra

v. United Ste 8, 91 Ct. Cl. 42 (1940), because the jurisdic-

tional act permitted judgments “for just compensation” the

court concluded that :

Judgment is entered for the plaintiffs in the sum of

$350,000, with interest at six percent per annum, not as

interest but as a part of just compensation, * * *. [/d.

at 75.]}

On appeal, the Supreme Court reversed, United States v.

Goltra, 312 U.S. 203 (1941), holding that the traditional

rule against allowing interest must be applied. [/d. at 207,

211.)

in Thayer-West Point Hotel Co. v. United States, 106 Ct.

C1. 60 (1946). this court concluded that :

Both statute and contract expressly provide for the

payment of “just compensation.” * * * [/d. at 81.]

The court allowed four percent interest on the principal sum.

On appeal, United States v. Thayer-West Point Hotel Co.,

529 U.S. 565 (1947), the Supreme Court reversed our allow-

ance of interest and after noting that the “just compensa-

tion” provisions “may or may not imply an obligation to

pay interest” went on to state:

But in order to override the historial rule [no interest

against the United States] * * * something more is

necessary than an equivocal use of the term “just com-

pensation.” It is not enough that the term might be con-

strued to include the payment of interest. * * * [T]here

must be a provision in the contract “expressly stipulat-

ing for the payment of interest.” That provision must

be affirmative, clear-cut, unambiguous; * * *. [/d. at

590. ]

18 18

See also United States ex rel. Angarica v. Bayard, 127 U.S.

251, 259-60 (1888), wherein the United States had assumed

a duty to invest certain trust moneys. Plaintiffs maintained

that they were entitled to incremental or income damaqes

on the principal amount. However, the Supreme Court

pointed out “but the claim in that respect is not different in

character from what it would have been if * * * it were

a claim for interest * * *” [Emphasis supplied] and went

on to hold that incremental damages based on the invest-

ment duty were barred by the general no-interest rule.

Angarica is cited with approval in United States v. Thayer-

West Point, supra at 590, and also in Ramsey v. United

States, supra at 452.

Recent Indian cases, applying the principles of Goltra,

Thayer-West Point Hotel, Angarica, and Ramsey above.

indicate that the same no-interest rule applies to any incre-

mental damages sought to be assessed against the United

States, whether it be designated interest, as such, or is desig-

nated by some other terminology which has the same effect.

See Pawnee Indian Tribe of Oklahoma v. United States.

157 Ct. Cl. 134, 137, 140, 301 F. 2d 667, 668-70, cert. denied,

370 U.S. 918 (1962), where the Commission was reversed

for permitting only the present worth of the defendant's

consideration payments because this would be tantamount

to charging the United States interest. See also United States

v. Delaware Tribe, 192 Ct. Cl. 385, 427 F. 2d 1218 (1970).

where the Commission had applied an annual reduction to

the Government’s offset claims, but this court reversed noting

that :

* * * We conclude that even if it could be said that the

$72,600.37 was not interest per se or interest in the strict

sense of the word, the act of the Commission in denying

this amount as offsets solely by reason of its five percent

rule had the effect of granting interest on the award.

We do not believe the Commission can do indirectly

what it is prohibited from doing directly. [/d. at 394,

497 F. 2d at 1223.)

Also see United States v. Nez Perce Tribe of Indians, 194

Ct. Cl. 490, 494-499, cert. denied, 404 U.S. 872 (1971).

where the court, fn reversing the Commission, pointed out

19 19

that Peoria Tribe v. United States. supra, did not change

the usual rule that absent a breach of a specific treaty obli-

gation, no interest, or its equivalent, can be allowed against

the United States.

It may be seen from the foregoing decisions that the

character or nature of “interest” cannot be changed by

calling it “damages,” “loss,” “earned increment,” “just com-

pensation,” “discount.” “offset.” or “peralty.” or any other

term, because it is still interest and the no-interest rule

applies to it.?

The Commission is not consistent ii its reasoning. It de-

voted much of its 123 page decision to a discussion of why

the Indians were entitled to an award of interest against the

Uniied States, including the following statement, among

others:

* * * We are not here awarding ifcres* on a judgment

for simple interest, but ineluding an addtional factor

in our judgment to make up for the income which should

have been, but was not, carned on reinvested interest.

The only practical way we can think of to assess

damages for failure to comply with the law requirin

investment and reinvestment of the income is by award-

ing compound interest. [Emphasis supplied.] [31 Ind.

Cl. Comm. 427, 529.]

This statement obviously meais the Commission awarded

both simple and compound interest against the Government.

The clear meaning of the decision considered as a whole

shows this to be true. In this regard, it is significant that

Commissioner Vance was not the slightest bit evasive and

minced no words as to his understanding of the award the

Commission was making when he stated in his concurring

opinion:

Equity and good conscience, dominant principles in

these accounting cases, as well as the plain language of

the 1841 act, compel us to award compound interest.

[Emphasis supplied.} [31 Ind. Cl. Comm. 427, 550.]

Yet the Commission says on the other hand it is not award-

1 Former Chief Judge Jones observed in Union Pacific RR Co. v. United

States, 117 Ct. Cl. 534, 91 F. Supp. 762 (1950) that calling a billy goat a

horse did not make him one.

20 20

ing interest but damages. See 31 Ind. Cl. Comm. 427, 527

where the Commission said:

In awarding damages equal to compound interest

* * * for the period between 1883 * * * and ending

June 30, 1930, * * *.

* * * [W]e have the authority, and duty, to award

damages for breach of the 1841 act, which damages are

measured by interest. * * * [Emphasis supplied. ]

Although the Commission speaks of awarding damages, it

is clear that it awarded interest, and that this was done prin-

cipally on the basis of an Act of Congress of 1841, which

will be discussed below. Yet we find the astonishing state-

ment of the Commission in its order overruling the motion

for rehearing of the Te-Moaks, 33 Ind. Cl. Comm. 417, 424:

The 1841 act does not authorize us to award interest

against the Government. * * * [Emphasis supplied. ]

Commissioner Vance signed this order as one of the three

who made up the majority of the Commission. This state-

ment is diametrically opposed to the statement in his con-

curring opinion quoted above.

This switching back and forth from an award of interest

to damages and back to interest by the Commission would

lead one to believe the Commission was well aware that under

the law and the facts of this case it had neither jurisdiction

nor authority to allow interest on the claim of the Indians

against the United States, but concluded that it would be

right or just for the Indians to receive the interest. This court

was reversed by the Supreme Court for awarding interest

against the Government on exactly the same basis in United

States v. N. ¥Y. Rayon Importing Co., 329 U.S. 654 (1947).

There the Supreme Court said:

The Court of Claims, * * * sought to justify its

award of interest on what it thought “ewou/d be right or

juat.” * * *

But assuming that the equities of the situation all

favor the owners of the refund claims, the Court of

Claims did not thereby acquire power to carve out an

implied exception to the plain words of $ 177(a). Had

Congress desired to permit the recovery of interest in

situations where the Court of Claims felt it just or

equitable, it could have so provided. The absence of

such a provision is conclusive evidence that the court

21 21

lacks any power of that nature. Indeed, any other con-

clusion would permit the Court of Claims to supply the

consent which only Congress can give to the imposition

of interest against the United States. [Emphasis sup-

plied.] [/d. at 659-60.]

Obviously, the same reasoning applies to the lack of power

of the Commission to award interest, unless the requirements

of the no-interest rule are met. See also United States v.

Omaha Tribe of Indians, 253 U.S. 275, 283 (1920). in which

the Supreme Court held that the rule of eguity would not

take the case out of the usual no-interest rule even though

the jurisdictional act called for a consideration of both

cquitable and legal claims. No matter how high the purpose

or how benevolent the motive, neither this court nor the

Commission can award interest against the Government

unless the requirements of the no-interest rule have been met.

See also Loyal Band of Creek Indians v. United States, 118

Ct. Cl. 373, 382-83, 97 F. Supp. 426, 431, cert. denied, 342

U.S. 813 (1951).

In any event, we hold that the order of the Commission

was an award of simple and compound interest on the claim

of the Indians against the United States. This award was

contrary to law,as shown by the egoing authorities, unless

there was a coutract, treacy, or agreement between the In-

dlians and the United States or an Act of Congress expressly

providing for the payment of interest. Neither the Indians

nor the Commission contend that a contract. treaty or

agreement existed that provided for the pzvinent of interest.

Therefore, the sole question is whether there was any statute

or other Act of Congress that expressly required the interest

payment.

The Indians and the Commission contend that there were

two statutes that required or at least authorized the award

of interest in this case. These statutes were: (1) The Act

of September 11, 1841, ch. 25, 5 Stat. 465, and (2) the In-

dian Claims Commission Act of August 13, 1946, 25 U.S.C.

$ 70a (1970). We will first consider the 1841 Act upon which

the Indians and the Commission principally rely, which

reads as follows:

Chap. XXV.—An Aci fo vepeal a part of the sixth see-

tion of the act. entitled “Aun act to provide for the

nN

to

22

support of the Military Academy of the United

States for the year cighteen hundred and thirty-

eight, and for other purposes,” passed July seventh,

eighteen hundred and thirty-eight.

Be it enacted by the Scnate and House of Representa-

tives of the United States of America in Congress as-

sembled, That so much of the sixth section of an act

entitled, “An act to provide for the support of the Mili-

tary Academy of the United States for the year eighteen

hundred and thirty-eight, and for other purposes,” as

requires the Secretary of the Treasury to invest the an-

ual interest accruing on the investment of the money

arising from the bequest of the late James Smithson, of

London, in the stocks of States, be, and the same is

hereby, repealed. And the Secretary of the Treasury

shall, until Congress shall appropriate said accruing

interest to the purposes prescribed by the testator for

the increase and diffusion of knowledge among men,

invest said accruing interest in any stock of the United.

States bearing a rate of interest not less than five per

centum per annum.

Sec. 2. And be it further enacted, That all other funds

held in trust by the United States, and the annual in-

terest accruing thereon, when not otherwise required

by treaty, shal} in like manner be invested in stocks of

the United States, bearing a like rate of interest.

Sec. 3. And be in further enacted, That the three

clerks, authorized by the act of June twenty-third,

eighteen hundred and thirty-six, “to regulate the de-

posits of the public money,” be, and hereby are, directed

to be retained and employed in the Treasury Depart-

ment, as provided in said act, until the state of the public

business becomes such that their services can con-

veniently be dispensed with.

The reliance by the Indians and the Commission on the

1841 Act as authority for the award of simple and compound

interest on I.M.P.L. Funds is misplaced. In the first place,

the Act did not expressly require the Government to pay

interest to Indian tribes or to anyone else. It was merely a

directive to the appropriate officers of the Government hold-

ing trust funds that were required by treaty, contract. or

statute to be invested, to invest them on/y in stocks of the

United States, bearing interest at not less than five percent

per annum. The primary purpose of the Act was to preven!

any future investment of trust funds in state stocks or bonds

23 23

Thus the Act did not create any obligation on the Govern-

ment to pay interest on trust funds, but only provided where

they must be invested if any statute or treaty required them

to be productive. The reason for the passage of the Act

and its purpose can be better understood by a brief consider-

ation of the economic and financial conditions that existed

in the country immediately prior to and at the time of its

enactment.

On January 9, 1837, Congress enacted a statute (5 Stat.

135) that provided that the proceeds from lands ceded by

Indians to the United States should be paid into the Treas-

ury and if the treaties required them to be invested, such

investments were to be made under the direction of the

President. By 1838 there were 13 Indian trust funds in this

category and all of them were invested in state bonds. How-

ever, soon after the 1837 Act was passed, a severe economic

depression occurred throughout the Nation (called a panic

in those days), and within a matter of weeks after the

passage of the Act most banks suspended specie payments.

Many states defaulted on their bonds including Tennessee,

Alabama, Mississippi, and Maryland. This depression was

still going on in 1841 and afterwards.

It was against this background that Congress considered

changing the law that would allow trust funds to be invested

in state bonds, because Congress was genuinely concerned

about the default of the states on their bonds. Congressman

John Quincey Adams (formerly President Adams) intro-

duced a resolution in the Congress providing :

That the further investment of any public funds of

the United States in stocks of the several states ought

forthwith to be prohibited by law.?

Because of the depression (panic), the default by various

states on their bonds, and the deep concern of Congress with

reference to Government trust funds that were invested in

state bonds, the Congress enacted the Act of 1841. The sole

purpose of the Act was to prohibit future investment of

trust funds, that were required to be invested, in state bonds,

and to zecomplish this purpose the Act required such funds

to be invested in bonds of the United States.

2 Cong. Globe, Sept. 1, 1841 (B-3).

24 24

At the time the Act was passed in 1841 there were very

few I.M.P.L. Funds in existence and those that did exist

were in the hands of local Government agents for use by

them for the benefit of Indians on a day to day basis. None of

these funds were on deposit in the Treasury at that time.

The Congress could not have intended that the 1841 Act

apply to I.M.P.L. Funds because they scarcely existed, were

not in the Treasury, and were not capable of being invested.

Furthermore, in 1841 there were 28 Indian funds held

in trust by the Government, all of which had been specifi-

cally designated as productive by Congress, or the President

had been given authority by Congress to invest them. These

were the funds which the Act required to be invested in

United States bonds and their investment in state bonds

was prohibited.

During the years from 1841 to 1930, no one in the Execu-

tive Department of the Government considered the 1841

statute as authority to invest Indian trust funds nor as a law

requiring the Government to pay interest on such funds.

Subsequent to 1841, the Government continued to make

treaties with Indians and enacted statutes in which Indian

funds created thereby were required to be invested. These

funds were invested according to the provisions of these later

treaties and statutes. Not once in 130 years was the 1841

statute cited as authority to invest Indian trust funds that

were required to be made productive by treaties or statutes

made or enacted after 1841. This long administrative prac-

tice by the Executive Department charged with handling

and investing Indian trust funds, which was concurred in

by Congress, is entitled to great weight in determining the

intent of Congress when it enacted the 1841 statute. In this

regard, the Supreme Court held in United States v. Jackson,

280 U.S. 183 (1930) :

It is a familiar rule of statutory construction that

great weight is properly to be given to the construction

consistently given to a statute by the Executive Depart-

ment charged with its administration. United S/utes vy.

Cerecedo Hermanos y Compania, 209 U.S. 337: Pobert-

son v. Downing, 127 U.S. 607; United States v. Healey.

160 U.S. 136; and such construction is not to be over-

turned unless clearly wrong, or unless a different con-

struction is plainly required. * * * [/d. at 193.]

25 25

During the more than 130 years the 1841 statute has been

in existence, no court that we know of has allowed interest

on a claim against the United States in a non-eminent do-

main case unless there was a contract, treaty, or statute

(other than the 1841 statute) that expressly provided fer

interest. Every case we have cited in this opinion denying

interest has been decided since the 1841 Act was passed. Dur-

ing this long period of time it has been the universally

accepted rule that the requirements of the no-interest rule

be met if interest is to be allowed. For instance, in the dis-

senting opinion of Judge Davis, concurred in by Judge

Durfee, of our court in Peoria Tribe of Indians v. United

States, 177 Ct. Cl. 762, 369 F. 2d 1001 (1966), rev’d, 390

U.S. 468 (1968), he stated :

I join in the court’s opinion on the first claim, but

dissent from the disposition of the demand for interest

on the $172,762.04 awarded by the Indian Claims

Commission.

The sole ground for this claim is Article 7 of the 1854

Treaty, 10 Stat. 1084, which provided :

And as the amount of the annual receipts from the

sales of their lands, cannot now be ascertained, it

is agreed that the President may, from time to time,

and upon consultation with said Indians, determine

how much of the net proceeds of said sales shall be

paid them, and how much shall be invested in safe

and profitable stocks, the interest to be annually

paid to them, or expended for their benefit and

improvement.

It is agreed that if this is read as containing an express

provision for interest appellants can recover, otherwise

not. See United States v. Alcea Band of Tillamooks,

341 U.S. 48, 49 (1951); Confederated Salish and

Kootenai Tribes v. United States, 175 Ct. Cl. 451, 454

(1966), cert. denied, 385 U.S. 921. * * * [Emphasis

supplied.] [/d. at 770-71, 369 F. 2d at 1006.]

At that time the 1841 statute had been in existence for over

125 years, but no attention was paid to it. The above state-

ment was a correct one, but it would not have been correct

if the 1841 Act required the payment of interest as the In-

dians contend in the instant case.

During the long period of time that the 1841 statute has

been on the books, no court that has considered it has held

26 26

that the Act required the Government to pay interest on any

trust fund unless there was a contract, treaty, or statute

(other than the 1841 Act) requiring the payment of interest.

The case of United States ex rel. Angarica v. Bayard,

4 Mackey 310 (D.C. Sup. Ct. 1885), affd, 127 U.S. 251

(1888), standing alone is sufficient authority to overturn

the decision of the Commission in the instant case. In that

case the Government collected a sum of money in arbitra-

tion proceedings from Spain for plaintiff Angarica for in-

juries and damages caused to her by Spain while in Cuba.

The Government paid all of the money to Angarica except

$41,129.74, which is retained and invested until such time as

Spain paid the expenses of arbitration. When Spain paid

these expenses, the Government paid the $41,129.74 to An-

garica but did not pay her the interest it had earned. She

sued for the interest, claiming that the 1841 statute (in-

volved in the instant suit) required the Government to pay.

her the interest. The Supreme Court of the District of

Columbia, after quoting the 1841 statute, stated :

* * * At the time of the enactment of 1841 there ex-

isted certain treaties with the Indians, containing stipu-

lations for the payment to them, annually, of interest

en the proceeds of lands ceded by them; and it had

already been provided by the act of January 9, 1837 (5

Stat., 135), which is now embodied in the Revised

Statutes as section 2096, that these funds should be

invested in securities at not less than five percent inter-

est. /t was clearly for trusts of this definite character,

established as we have said, by law, that the act of 1841

srapetee to establish a general system. This is espe-

cially indicated by the exception in that act of cases

regulated by treaty. The reference is to these Indian

treaty funds. We think, then, that the statute did not

apply to th transaction in question, and it is evident

that the executive did not propose to conform to its

requirements. [Emphasis supplied.] [/d. at 324.]

The court denied Angarica’s suit for interest and dismissed

her petition. It is clear from the above statement of the court

that the 1841 Act as regards Indian trust funds was limited

to “certain treaties with the Indians, containing stipulations

for the payment to them annually of interest upon the pro-

ceeds of lands ceded by them,” and that “it was clearly for

27 27

trusts of this definite character, established * * * by law”

that the Act of 1841 appiied, and not otherwise.

The Supreme Court affirmed the Angarica case in 127 U.S.

251 (1888). In its opinion the Court said:

* * * It has been established, as a general rule, in the

practice of the government, that interest is not allowed

on claims against it, whether * * * they arise in the

ordinary business of administration or under private

acts of relief, * * *. [/d. at 260.]

In support of this statement, the Court cited eleven opinions

of the Attorney General : 1, 268; 1,550; 1, 554; 3, 635; 4, 14;

4, 136; 4, 286; 5, 105; 7, 523; 9, 57; and 9, 449. The Court

went on to say:

Not only is this the general principle and settled rule

of the executive department of the government, but it

has been the rule of the legislative department, because

Congress though well knowing the rule observed at the

Treasury, and frequently invited to ~~ it, has re-

fused to pass any general law for the allowance and

payment of interest on claims against the govern-

ment. * * * [/d. at 260.]

It is particularly significant that the Supreme Court stated

that Congress well knew the general rule of no-interest on

claims against the Government and had been invited fre-

quently to change it, but had refused to do so. At that time

(1888) the 1841 statute had been in existence for 47 years. The

law was definitely established by this decision of the Supreme

Court that the 1841 Act applied only to funds created by a

treaty or by a specific statute requiring the payment of in-

terest. The decision of the Commission in the instant case

is in direct conflict with the decisions of the Supreme Court

of the District of Columbia and of the Supreme Court in the

Angarica case.

But we do not have to stop here. Other courts have con-

sidered the 1841 statute and have handed down decisions

which directly conflict with the decision of the Commission

in this case. In Omaha Tribe of Indians v. United States,

53 Ct. Cl. 549 (1918), rev'd in part and aff'd in part, 253

U.S. 275. (1920), the court awarded judgment to the Indians

for $18,202.19 representing default by two Government

agents in disbursing treaty funds, but did not award inter-

28 28

est on the claim. On appeal to the Supreme Court the

Indians sought to recover the interest, quoting the 1841

statute and making essentially the same arguments made by

the Indians and the Commission in the instant case.’ How-

ever, the Supreme Court rejected the arguments of the

Omahas and refused to allow them interest. This decision

was handed down 30 years after the Angarica decision, but

to the same effect. The 1841 statute had been in existence

for 77 years at this time (1918).

In Cherokee Nation v. United States, 270 U.S. 476 (1926),

the Supreme Court refused to grant interest on interest

although the Cherokees urged that it do so on the basis

of the 1841 statute. In that case the Supreme Court said:

When we consider the rule requiring an express pro-

vision of contract or statute to justify the imposition

of interest in adjudicating any claim against the United

States, we can find nothing in the circumstances of this

case to increase the interest as adjudged. * * * The

only contractual obligation here is for simple five per-

cent. interest until payment.

cd es s * *

And by § 3659 of the Revised Statutes, re-enacting

Be the Act of Congress of September 11, 1841, 5 Stat.

, which provides:

“All funds held in trust by the United States, and

the annual interest accruing thereon, when not other-

wise required by treaty, shall be invested in stocks of

the United States, bearing a rate of interest not less

than five per centum per annum.”

It is urged that the largest item, of $1,111,284.70, was

taken out of a $5,000,000 trust fund held by the United

States for the benefit of the Cherokees, and therefore

that it should be treated as if it were always in the Treas-

ury of the United States, held in trust for the Indians,

and as if the United States had collected the interest

thereon out of the invested stocks and had refused to

pay it over as annuities to the Indians. 7'his claim proves

too much. It would require compound interest brought

about by annual or semi-annual rests for near a nr +

an amount that the Solicitor General suggests would be

equal to the National debt. The argument is shown to

be wholly without support in the circumstance that the

*Bee Omaha Brief, Record and Briefs in U.S. cases, U.S. Supreme Court,

October 1919 Term, Vol. 29, Dept. of Justice Library.

29 29

Cherokees and the United States, by the resolution ot

the Senate in 1850, agreed upon the interest for such

debts as that of five per cent. until paid. * * * [Em-

phasis supplied. ] [/d. at 490, 492.]

It is to be observed that the Supreme Court was well aware

of the provisions of the Act of 1841. Also, it should be pointed

out that the 1841 Act speaks of simple interest as well as

interest on interest (compound interest). Here we find the

Supreme Court holding in no uncertain terms that the 1841

Act does not require compound interest to be paid because

the treaty only required simple interest at five percent. At

the time of this decision (1926) the 1841 Act had been in

existence for 85 years. It cannot be said that the Supreme

Court was ignorant of its existence or of its provisions be-

cause it is quoted in the Court’s opinion. Under these cir-

cumstances, it is especially significant that the Court recog-

nizes and repeats the no-interest rule in its opinion when it

said “When we consider the rule requiring an express pro-

vision of contract or statute to justify the imposition of

interest in adjudicating any claim against the United

States * * *. The only contractual obligation here is for sim-

ple five per cent. interest * * *.° [Emphas‘: supplied.]

[270 U.S, at 499.] It must be concluded that the decision of

the Commission is in direct conflict with the Cherohve deci-

sion, because if the 1841 Act does not require the payment of

compound interest by the United States in the absence of a

treaty or statute so providing. as the Supreme Court holds,

by the same rule simple interest would not be required to be

paid under like circumstances, either. The Commission erred

in allowing simple interest, as well as compound interest,

under the 1841 statute in this case.

In United States v. Black feather, 155 U.S. 180, 192 (1894),

the 1841 statute is mentioned in passing. but the Court

allowed five percent interest because a treaty in that case

required it to be paid and not because of the 1841 statute.

A similar result occurred in Ottawa & Chippewa Indians v.

United States, 42 Ct. Cl. 240 (1907). In that case the court

noticed the 1841 Act but awarded simple interest at five per-

cent only because the treaty in that case expressly required

it. Thus, it ean be seen that Black feather and Ottawa & Chip-

30 30

pewa Indians are within an exception to the no-interest rule

and are of no help to the Indians or the Commission in the

instant case.

The only other case we have found that considers the 1841

Act is our own decision in Bonnar v. United States, 194 Ct.

Cl. 103, 438 F. 2d 540 (1971). In that case the alien property

custodian had seized and sold property under the Trading

with the Enemy Act, 50 U.S.C. App. §9(a) (1970) during

the second world war and held the proceeds in trust without

investing it. After the war the owners sued for and were

given a judgment for the proceeds of the sale of their prop-

erty. They also claimed interest on such proceeds under the

1841 Act, now codified as 31 U.S.C. § 547(a), but we denied

them a recovery of the interest. As to the interest, we held

in an opinion written by Judge Durfee of our court as

follows:

Plaintiffs’ final argument for interest requires us to

consider the 1962 amendment to § 9(a) of the Act which

directs that the proceeds of sale “shall be held in trust

by the Secretary of the Treasury”, * * * [Emphasis by

Judge Durfee] 50 U.S.C. App. §9(a) (1964), in con-

junction with 31 U.S.C. §$547(a) (1964). which

provides :

All funds held in trust by the United States. and

the annual interest accruing thereon, when not

otherwise uired by treaty, shall be invested in

stocks of the United States, bearing a rate of inter-

est not less than 5 per centum per annum. [ Empha-

sis by Judge Durfee. }

From these statutes and some familiar principles of

trust law regarding the obligation of a trustee to invest

trust funds (see Restatement, 2d, Trusts, § 181). plain-

tiffs’ counsel conclude that the Government has been

under a duty to invest the sales proceeds in question,

and that. if the Government has not done so, then it

has been enjoying “the economic benefits of an interest-

free loan.” To this arqument, we have two responses.

First. § 9(a) of the Act could have specifically referred

to 31 USC. 8 547(a), or required the Treasurer to

invest the proceeds of any sale or liquidation. Tlowever.

that section makes no such reference, and we regard

this as a strong indication that Congress intended to

limit recorery to the allocated sales proceeds. [Empha-

sis supplied.] Second. and most importantly, this ques-

31

tion was carefully considered in Gmo, Niehaus & Co. v.

United States, 179 Ct. Cl. 232, 373 F. 2d 944 (1967),

which was decided after the Act was amended in 1962,

and it was answered adversely to plaintiffs’ contentions.

Niehaus involved the recovery of damages by plaintiffs

on a claim for the value of money or property unlaw-

fully appropriated by vesting under the Trading With

the Enemy Act. Particularly pertinent is the court’s

discussion of defendant’s liability for any post-sale in-

crement. In that regard, the court stated :

In this connection, it should be noted that Section

7(c) of the re | With the Enemy Act, as

amended (50 U.S.C. App. $ 7(c) (1964) ), provides

that in a case involving the unlawful vesting and

the subsequent sale by the Alien Property Custodian

of the property of a person who was not an enemy

national, any recovery by the owner of the property

“shall be limited to and enforced against the net

roceeds received therefrom and held by the Alien

— Custodian or by the Treasurer of the

United States.” * * * Although this limitation of

the Trading With the Enemy Act may not be

strictly applicable in terms to plaintiffs’ case, we

should be governed by its indication of the Con-

gressional policy as to maximum recovery. Neither

the post-sale increment in value nor interest is re-

coverable under Section 7(c), and neither should be

recoverable here. [Emphasis by Judge Durfee.} Cf.

Sac & Fox Tribe of Indians of Okla v. United

States, decided this day, Part VI of that opinion,

ante, p. 24.

*

* * * *

* * ® Tn non-eminent domain cases, the normal rule

is that interest is not recoverable unless authorized

by statute or contract, 28 U.S.C. § 2516(a). In this

instance there is neither statutory nor contractual

authorization. [Emphasis supplied. | On the con-

trary, Section 7(c) of the Trading With the Enemy

Act looks the other way. [Emphasis by Judge

Durfee.] [179 Ct. Cl. at 262-63. 373 F. 2d 961-62. ]

Plaintiffs allude to certain factual differences between

Niehaus and the instant case, but none dilute the full

force and effect of the court’s general interpretation of

§ 7(c) of the Act.

In the absence of compelling evidence to the contrary,

we must always be guided by the Congressional intent

which, in this instance, is clearly that the Government

must specifically consent to be liable for interest in ex-

31

32 32

press terms, rather than by implication, except in the

most extreme cases, such as Henkels, in which an alter-

nate approach is desirable and necessary to avoid a seri-

ous inequity, #.e., unjust enrichment. Therefore plaintiffs

are not entitled to interest on the allocated sales pro-

ceeds of their shares of GDC stock. [Emphasis supplied. ]

[194 Ct. Cl. at 163-64, 438 F. 2d at 572-73.]

As applied to the instant case, the first reason we gave

in Bonnar for denying interest could be paraphrased with

reference to the 1883 Act, which placed the I.M.P.L. Funds

in the instant case in trust in the Treasury for the first time,

as follows:

The 1883 Act could have specifically referred to the

1841 Act, or required the Treasurer to invest the

I.M.P.L. Funds. However, the 1883 Act makes no such

reference, and we regard this as a strong indication

that Congress intended that the Indians would receive

only the amount of the I.M.P.L. Funds deposited in the

Treasury.

Our holding in that case that “the Government must

specifically consent to be liable for interest in express terms,

rather than by implication” is very significant. We were, of

course, saying that the efforts of the plaintiff to recover in-

terest on the theory that it was allowed by implication under

the 1841 statute would not be approved. The courts have held

over and over again, as shown by the decisions cited above,

that interest on a claim against the Government will not be

allowed by implication but must be expressly provided for

in a treaty or statute. The decision in Bonnar is squarely

against the Indians’ claim for interest in this case, and the

order of the Commission allowing interest is in direct coi-

flict with that decision.

In the foregoing paragraphs, we have reviewed every case

we have been able to find that has mentioned, noticed or

considered interest on claims against the Government under

the 1841 statute. All of them that have passed on the meaii-

ing of the Act have denied claims for interest such as tliose

asserted by the Indians on I.M.P.L. Funds in this ease.

One other case should be mentioned, although it doos not

involve the 1841 statute, it does contain a claim for interest

on I.M.P.L. Funds as in the instant case. We refer to the

33 33

case of Creek Nation v. United States, 78 Ct. Cl. 474 (1933).

In that case the Creeks recovered a judgment against the

Government for $144,106.01. They claimed interest in the

sum of $1,401,195.01. The facts showed that the Creeks

claimed interest on the funds that were carried on the books

of the Treasury as follows: (1) General Creek fund, (2)

Interest on General Creek fund, (3) LM.P.L. Funds, and

(4) Interest on Creek moneys on deposit in banks. There

was a treaty with the Creeks that required the payment of

interest on the “General Creek Fund,” but not on the other

funds. The Creeks contended that the I.M.P.L. Funds should

have been placed in the “General Creek Fund” and interest

paid thereon. The court rejected this theory and denied

interest on the I.M.P.L. Funds, saying:

* * * Moneys arising from the sources stated [IMPL

funds] clearly pom not be credited to the interest-

bearing “Creek general fund.” * * * There being no

treaty or statutory obligation on the part of the United

States to pay interest on Creek tribal funds, [includ-

ing IMPI. funds] other than those belonging to the

“Creek general fund”, interest can be allowed only on

such of the unauthorized disbursements as were made

from that fund. [/d. at 505.]

Based on the facts described above and the court decisions

we have cited, we hold that the purpose of the 1841 statute

was to prohibit investment of United States trust funds,

that were required by treaty or statute to be productive, in

state bonds and to require them to be invested in United

States securities, and that the Act did not require the pay-

ment. by the United States of interest on any fund that

was not expressly required to be productive by a contract,

treaty, or statute. Consequently, the Indians in the instant

case are not entitled to recover interest from the Govern-

ment on their I.M.P.L. Funds. The 1841 statute simply

does not apply to the I.M.P.L. Funds involved in the in-

stant case. The statute is a rather obscure one, having been

enacted over 133 years ago, and during that long period of

time no administrative officer of the Government has ever

allowed or paid interest beca'1:e of its provisions, nor has

any court ever allowed interest on a claim against the Gov-

ernment because of it. The statute was directory only as

34 34

to where trust funds that were otherwise required to be

made productive could be invested.

The Commission is clearly in error in awarding com-

pound interest in this case. Even when simple interest is

required to be paid by treaty or statute, all of the cases hold

that compound interest cannot be allowed against the Gov-

ernment. In Menominee Tribe of Indians v. United States,

97 Ct. Cl. 158, 162 (1942) we held:

It is well settled that the United States cannot be

charged with interest except where liability therefor is

clearly imposed by the statute or assumed by contract.

United States v. North Carolina, 136 U.S. 211; Cherokee

Nation v. United States, 270 U.S. 476; United States

v. Worley, Administratriz, et al., 281 U.S. 339: The

Ute Indians v. United States, 45 C. Cls. 440, 470. In

Cherokee Nation v. United States, supra, the court said,

at pp. 490, 491: |

In view of the care with which Congress and this

Court in interpretation of the legislative will, have

limited the collection of simple interest against the

Government, a fortiori must compound interest be

denied to appellant unless provision therefor is

made in the contract of 1891, or in the statute of

en authorizing this suit, and it is to be found in

neither.

The cases cited make it clear that a statute consenting

to Dg gy of interest refers to simple interest only,

and any obligation to pay compound interest cannot

be implied from general words, but must be based upon

clear and unequivocal language leaving no doubt as

to the intention of Congress to depart = the general

rule so announced as to the right to c e and collect

interest from the Government. The Act of February 12,

1929, expressly provided for only “simple interest” wpon

money held in trust fund accounts, and this language

may not be interpreted as intending to obligate the

United States to pay interest upon interest previously

credited upon other interest-bearing funds or accounts.

The term “simple interest” has a well-established mean-

ing. [Emphasis supplied. ]

In that case we held further:

We are of opinion that plaintiff is not entitled under

the provisions of the Act of February 12. 1929, to re-

cover interest on interest. * * * [/d. at 161.]

35 35

In Ute Indians v. United States, 45 Ct. Cl. 440, 470 (1910)

we held that compound interest could not be allowed against

the Government:

No interest, either simple or compound, can be col-

lected from a sovereign except by its consent. (United

States v. North Carolina, 136 U.S. 211.) In the case at

bar the soverign has agreed to pay interest, and that

means simple interest only. But the plaintiffs seek to

charge the defendants with compound interest in this

case on the ground that the money so received constituted

a trust fund, and that in such cases where the fund

has been improperly withheld, the trustee is penalized

with compound interest. It is elementary as a general

proposition, in the absence of a contract to that effect,

that interest upon interest is not recoverable for the

detention of money, and that is a general rule either at

law or equity. (Perley on Law of Interest, 159, 160; Jn

re Ward’s estate, 73 Mich., 220, 228.) It is only where

a trustee, guardian, or executor has acted in bad faith,

in abuse of his trust or has been guilty of such gross

negligence as to be evidence of a corrupt intention, that

compound interest will be charged against him (Barney

v. eaten 16 How., 535; Perrin v. Leper, 72 Mich.,

446; Vaughan v. Bibb, 46 Ala., 153; Smith v. Kennard,

38 Ala., 695).

The Government only acts through its officers and

agents and thus in law can never be guilty of fraud,

bad faith, or negligence; hence it can never be penalized

by bet charged compound interest. [Emphasis

eles}

In the case of Peoria Tribe v. United States, 390 U.S. 468

(1968), the Supreme Court held that compound interest

could not be allowed against the Government without its

consent, saying:

Because the United States is not liable for interest on

judgments in the absence of an express consent thereto,

it cannot be liable for interest on the annual income pay-

ments not made. Therefore, if an interest rate measure

is adopted by the Commission, it must be simple and not

compound interest. [/d. at 473 n. 6.]

The Supreme Court held in Cherokee Nation v. United

States, 270 U.S. 476 (1926) that compound interest against

the Government must be denied unless provision is made

therefor in a contract or statute, saying:

36 36

* * * The only contractual obligation here is for simple

five per cent. interest until payment.

at the appellant here secks is compound interest,

that is interest on interest from 1895 until now. The

general rule even as between private persons is that in

the absence of a contract therefor or some statute, com-

und interest is not allowed to be computed upon a

ebt. Whitcomb v. Harris, 90 Me. 206; Bradley v. Mer-

mill, 91 Me. 340; Ellis v. Sullivan, 241 Mass. 60, 64:

Tisbury v. Vineyard Haven Water Company, 193 Mass.

196; Lewin v. Folsom, 171 Mass. 188, 192; Wallace v.

Glaser, 82 Mich. 190; Blanchard vy. Dominion National

Bank, 130 Va. 653, 637; Finger v. McCaughcy, 114 Cal.

64, 66; Cullen v. Whitham, 33 Wash. 366, 368. In view of

the care with which Congress, and this Court in inter-

pretation of the legislative will, have limited the collec-

tion of simple interest against the Government, a fortio7/

must compound interest be denied to appellant unless

provision therefor is made in the contract of 1891, or in

the statute of 1919 authorizing this suit, and it is to be

found in neither. [/d. at 490-91.]

See also Creek Nation v. United States, supra, and United

States v. Blackfeather, supra. All of the cases hold that even

where a treaty or statute require the payment of interest, only

simple interest is intended and compound interest cannot be

awarded against the Government.

The Commission asserts that aside from the 1841 statute,

the Indian Claims Commission Act authorizes it to award

simple interest and compound interest to the Indians against

the Government in this case. We do not agree. The Indian

Claims Commission Act nowhere authorizes the Commission

to award any kind of interest against the Government. Ali

of the cases that have considered the question have ruled the

other way. See Osage Nation of Indians v. United States,

119 Ct. Cl. 592, 671-72, 97 F. Supp. 381, 424-25, cert. denicd,

342 U.S. 896 (1951); Kiowa, Comanche & Apache Tribes v.

United States, 143 Ct. Cl. 534, 543-44, 163 F. Supp. 603,

609-10 (1958); Blackfeet & Gros Ventre Tribes v. United

States, @ Ind. Cl. Comm. 302, 314 (1952), aff'd, 127 Ct. C1.

807, 119 F. Supp. 161, cert. denied, 348 U.S. 835 (1954) ; Nez

Perce Tribe of Indians v. United States, 194 Ct. Cl. 490, 499.

cert. denied, 404 U.S. 872 (1971) ; and Zoyal Band of Creek

Indians v. United States, 118 Ct. Cl. 373, 382-83, 97 F. Supp.

426, 431, cert. denied, 542 U.S. 813 (1951).

37 37

We hold that the Indian Claims Commission Act does not

authorize the Commission to award simple interest or com-

pound interest on a claim against the Government in any

non-eminent domain case unless a contract, treaty, or statute

expressly provides for the payment of such interest ; and that

there is no such contract, treaty, or statute in the instant case.

The serious consequences of the decision of the Commission

in this case which 2 lows simple interest and compound in-

terest to the Indians against the Government on their claims

from 1883 to 1930 on the basis of the 1841 statute cannot be

overemphasized. The decision would open the doors to claims

for simple and compound interest of beneficiaries of every

trust fund, Indian and otherwise, held by the United States

from 1841 to 1975, or until payment, and the ultimate cost to

the Government could be an astronomical amount. The Gov-

ernment estimates it could amount to billions of dollars. We

have no way of determining whether or not this is correct,

but it stands to reason that the potential cost of the decision

would be tremendous. This possible enormous cost to the

Government is naturally of great concern to this court,

although it does not govern the outcome of this suit. Never-

theless, it has caused us to consider the decision of the Com-

mission with great care.

As stated in the beginning of this opinion, the Te-Moaks

claimed that they should be awarded interest on shortages

in fulfillment of the Government’s obligations under the

Treaty of October 1, 1863, 18 Stat. 689. The Commission

correctly treated these shortages in payments as breaches

of contractual obligations rather than as breaches of trust

and denied interest on the shortages. See United States v.

Omaha Indians, 253 U.S. 275 (1920), aff’g in part, rev’g in

part, 53 Ct. Cl. 549 (1918) ; Confederate Salish & Kootenai

Tribes v. United States, 175 Ct. Cl. 451, cert. denied, 385

U.S. 921 (1966); Rogue River Tribe of Indians v. United

States, 105 Ct. Cl. 495, 552-53, 64 F. Supp. 339, 344 (1946) ;

Choctaw Nation v. United States, 91 Ct. Cl. 320, 402 (1940),

cert. denied, 312 U.S. 695 (1941); Tilson v. United States,

100 U.S. 43, 47 (1879) ; Ramsey v. United States, 121 Ct. Cl.

426, 431-32, 101 F. Supp. 353, 356 (1951), cert. denied, 343

U.S. 977 (1952); Peoria Tribe of Indians, 177 Ct. Cl. 762,

38 38

369 F. 2d 1001 (1966), rev'd on other grounds, 390 U.S.

468 (1968); and decision of the Comptroller General,

A-27308 of May 31, 1929. In this connection, we held in

Confederated Salish & Kootenai Tribes v. United States,

supra:

* *-* The taking away of contractual rights, via a

rupture of the contract, is of course not equivalent to a

ta of property under the Fifth Amendment. it is

commonplace for the defendant to be held in this court

for having gone back on a promise and thus denied a

plaintiff his rights. /nterest is not paid on an award of

that kind for a breach of contract. Choctaw Nation v.

United States, 91 Ct. Cl. 320, 402-03 (1940), cert. denied,

312 U.S. 695 (1941). * * * [Footnote omitted.] [Em-

phasis supplied. ] [/d. at 455.]

Again in Peoria Tribe of Indians v. United States, supra,

we held:

Admittedly no interest is allowable for the breach of

an obligation to pay over money to the Indians. Con-

federated Salish and Kootenai Tribes v. United States,

175 Ct. Cl. 451 (1966), cert. denied, 385 U.S. 921 and

Ramsey v. United States, 121 Ct. Cl. 426, 431-32, 101 F.

Supp. 353 (1951), cert. denied, 343 U.S. 977 (1952). * * *

[7d. at 770 n. 9, 369 F. 2d. at 1006. ]

The Commission was correct in denying the Te-Moaks

interest on the treaty shortages, and its decision in that

regard should be affirmed.

Accordingly, the decision and order of the Commission

awarding simple interest and compound interest, whether

called interest or damages, to the appellee Indian tribes on

I.M.P.L. Funds from 1883 to 1930 is reversed.

The decision and order of the Commission denying the

claim of the Te-Moaks, cross-appellants, for interest on short-

ages in payment by the Government of its obligations under

the Treaty of October 1, 1863, is affirmed.

The case is remanded to the Indian Claims Commission for

further proceedings in accordance with this opinion.

Affirmed in part,

reversed in part,

and remanded.

39 39

Nicuois, Judge, concurring :

I concur in the result. The opinion accepts without question

the Government’s explanation of the 1841 Act. Though an

air of certainty in a judicial opinion is a desirable quality, in

this instance I deem it overdone. I believe reasonable persons

can diff@r, as they have. On the other hand, the dissent would

fasten on the Government the duties and obligations of a

testamentary trustee with respect to all Indian funds it col-

lected, managed, and disbursed prior to 1930. That role re-

sembles in some respects that of a trustee, but it also looks like

that of a banker. Unlike, e.g., United States v. Sioux Nation

of Indians, et al., 207 Ct. Cl. (App. No. 16-74, decided

June 25, 1975), it is not possible to point to any contem-

porary pronouncement, by Indians or whites, that the deal-

ings with these funds essentially as bank checking accounts

were unlawful or reflected a lack of fair and honorable deal-

ings. The then state of the authorities makes it unlikely any-

one would have so concluded had he studied the matter. The

dissent does not construe the 1841 statute literally, any more

than the majority does. If applicable, and taken literally,

the statute would have impounded all IMPL funds for in-

vestment in United States “stocks”, not just the excess over

that needed for Indian support.

I simply cannot believe the Indian Claims Commission Act,

25 U.S.C. § 70, was written to fix on the United States a

penalty liability of this speculative and dubious character.

Davis, Judge, dissenting in part:

The appeal is not from a simple accounting decision of

the Indian Claims Commission, in which the disagreement

of the parties revolves around technical accounting stand-

ards or factual differences. Rather, it is an appeal from

grant of an accounting request in the most traditional sense—

a claim that certain tribal rights (granted by statute) have

been ignored by the United States, that discovery is re-

quired to determine the extent of the breach, and a demand

that the defendant be held in damages for its actions. See

1 J. Story, ComMeENTARIES ON Equity JURISPRUDENCE

S$ 464-65 (1836).

40 40

At the heart of the matter, particularly for the

period before 1918 (see Cheyenne-Arapaho Tribes v.

United States, 206 Ct. Cl. ——, 512 F. 2d 1390 (1975))2

is the proper interpretation of the Act of September 11,

1841, ch. 25, 5 Stat. 465, now codified at 31 U.S.C. § 547a. I

agree with the majority that without a statutory duty to

make trust funds productive, coupled with a jurisdictional

act (here the Indian Claims Commission. Act, 25 U.S.C. $$ 70

et seq.) giving the appellants a forum in which to bring

their action, the United States may incur trust duties which

are unenforceable. See United States ex rel. Angarica v.

Bayard, 4 Mackey 310, 327-28 (D.C. Sup. Ct. 1885). aff'd,

127 U.S. 251 (1888). However, to me the plain words of the

1841 statute required defendant to invest plaintiffs’ “Indien

Money, Proceeds of Labor” (IMPL) funds and the interest

accruing, at a rate of not less than five percent per annum.

Having failed to do so, the defendant must be held for

damages.

The opinion of the Indian Claims Commission describes

in great detail the history of the 1841 law, both prior and

subsequent to its passage, and there is no reason to repeat

the bulk of what is said there. See Te-Moak Bands of West-

ern Shoshone Indians v. United States, 31 Ind. Cl. Comm.

427 (1973). The statute, as noted in the court’s opirion, is

extremely short and simple, and concerned largely with in-

vestments to be made with the money bequeathed to the

United States by James Smithson. In section 1, the act re-

pealed that part of an earlier statute which had provided

that interest accruing on the funds would be invested in

state “stocks,” ? and provided that the interest would be in-

2 In 1918, upon an appeal by the Secretary of the Interior that he be allowed

to invest idle Indian funds in Liberty Bonds, to help both the Indians and

the Treasury, Congress passed a law allowing the investment of “the trust

funds of any tribe or individual Indian in United States Government

bonds, * * *” Act of May 25, 1918, ch. 86, § 28, 40 Stat. 591: see 55 Cone.

Rec. 3438 (1917). Legislative history of this statute suggests strongly that

IMPL funds were meant to be included in the monies which were available

for such investment. See ibid; Hearings on 8. 8272 Before the Senate Comm.

on Indian Affaire, 64th Cong., 2d Sess. 46 (1917) (Testimony of Ass't Comm'’r

of Indiag Affairs) ; COMBINED STATEMENT OF THE RECEIPTS AND DISBURSE-

MUNTS, BALANCES, BTC. OF THE UNitTep States Durinc THe Fiscat YEAR

Enxpep Jone 30, 1917 at 140-42 (1918). It appears that the statute went

unused and the funds remained fallow in the Treasury. See S. Rep. No. 1396,

7uth Cong., 2d Sess. 1-2 (1929).

* During this period, “stock” included debt instruments.

41 41

vested “in any stock of the United States bearing a rate of

interest of not less than five per centum per annum.” Sec-

tion 2 of the act then provided : :

That all other funds held in trust by the United States,

and the annual interest accruing thereon, when not other-

wise required by treaty, shall in like manner be invested

in stocks of the United States, bearing a like rate of

interest.

While the primary purpose of the legislation was un-

doubtedly to protect the Smithson bequest from disappearing

as states defaulted on their bonds, the language of section 2

is broader in two respects. First, it applies to “all other

funds held in trust,” and second, it directs investment at a

specified rate of return, not simply, as the Government con-

tends, investment in United States securities. This point of

a set rate of return was not slipped into the legislation un-

wittingly—the original House bill did not contain such a

provision, which was added by the Senate Finance Commit-

tee. The “when not otherwise required by treaty” language

was also added in the Senate, in response to the specific objec-

tions of Senator Sevier that the act conflicted with the pro-

visions of earlier treaties. 10 conc. GLope 422 (1841). This

addition makes extremely questionable the Government's

current contention that the 1841 statute is applicable only

when a treaty or statute already required the investment of

funds, since this was precisely the case excluded (to the ex-

tent of any inconsistency) from the statute on Senator

Sevier’s request.

As the opinion of the Indian Claims Commission shows,

the history of administrative compliance with even the part

of the 1841 act requiring that trust funds be invested in

United States stocks was extremely spotty. There were

almost as many times after 1841 when new or matured trust

funds (from treaties not requiring investment in state

stocks) were invested in state rather than United States

securities as there were instances when such investment was

refused because of the 1841 mandate. 31 Ind. Cl. Comm, at

474-77. An inconsistent administrative interpretation of a

statute is entitled to little deference by this court. particu-

larly where the statute itself is simple and straight-forward.

Federal Maritime Commission v. Scatrain Lines, Ine. 411

42 42

U.S. 726, 745-46 (1973); see United Housing Foundation,

Ine. v. Milton Forman, — U.S. —, — n. 24 (1975). The

court stresses the failure of the authorities to apply the act

to the IPML funds but that seems to me because the statute

was neglected not that a conscious and reasoned decision was

made that it failed to govern. The administrative practice is

not helpful, one way or the other.

We do, however, have other sources to turn to for an

indication of what the statute meant to those closer to its

passage then we are. The major evidence of the legislative

reading of the 1841 statute is in the debates surrounding

passage of the Act of April 1, 1880, ch. 41, 21 Stat. 70, which

authorized the payment of interest by the Treasury in lieu

of investment for certain classes of Indian funds.’ By 1880,

a problem Senator Calhoun had foreseen in 1841 arose—there

were no available United States securities which paid interest

of 5% or more. The draft of the law which reached the

Senate floor provided that in lieu of investment, the Secretary

of Interior could deposit Indian funds in the Treasury at

4 percent interest. 10 Cone. Rec. 212 (1880). On the Senate

floor, Senator Allison objected that such a statute would

breach various treaties under which the United States had

agreed to invest Indian funds at 5% and also would be con-

trary to the obligation assumed in the 1841 act which was

held to be separate from and additional to obligations to in-

vest found in various treaties. /bid. at 213-15, 720. The bill

was amended to delete the 4% interest provision and to pro-

vide that “the United States shall pay interest semiannually,

from the date of deposit of any and all such sums in the

United States Treasury, at the rate per annum stipulated by

treaties or prescribed by law, . . .” Act of April 1, 1880, ch.

41, 21 Stat. 70 (emphasis added) ; see S. Rep. No. 186, 46th

Cong., 2d Sess. 1-2 (1880). While this history is of course not

definitive, I find that at least the Senate, only 39 vears after -

1841, thought that the earlier statute created an obligation to

invest al] Indian trust funds and the interest accruing

thereon, whether required by treaty or not, in United States

bonds not paying less than 5% interest.

* There is no question that the 1880 statute does not apply to IMPL funds

which are not within the delimited categories of funds covered by that act.

2.

43 43

Judicial construction of the 1841 statute has been almost

as sparse as legislative interpretation, but what little there

is supports this position. There are several cases in which

the statute is merely mentioned in passing, probably because

the parties in their briefs treated it as an alternative theory

on a minor point. In United States v. Blackfeather, 155

U.S. 180 (1894), the Supreme Court refused to consider the

Indians’ claim for interest under the 1880 statute (which

had been denied by the Court of Claims) because the Indians

failed to cross-appeal. 155 U.S. at 186. However, the Court

did cite the 1841 statute as that governing “the interest paid

upon funds held in trust” without any limitation. /bid. at

192. In United States v. Omaha Tribe of Indians, 253 U.S.

275 (1920), the Indians made a general equitable claim for

interest based largely on the grant of equity jurisdiction in

the special jurisdictional act, mentioning the 1841 Act only

once. Brief of the Omaha Tribe of Indians at 21-32. The

Government brief entirely ignored the 1841 statute. Gov-

ernment Brief at 9-12. The Supreme Court denied the in-

terest claim, not because the 1841 statute did not apply,

but because no trust fund had ever been created. 253 U.S.

at 282-83.

This same theory underlay the denial of interest in Chero-

kee Nation v. United States, 270 U.S. 476 (1926). This was

an extremely complex case in which the Cherokees claimed

about $2,000,000 in essentially compound interest on claims

which had earlier been decided in their favor, with interest.

United States v. Cherokee Nation, 202 U.S. 101 (1906).

Again, the 1841 statute was discussed only briefly, with most

of the parties’ energies devoted to determining what the

earlier decision had meant. In addition, the parties appear

to have been talking past each other. The Indians claimed

that the earlier decision retroactively returned funds to

admittedly interest-bearing accounts as of March 4, 1895,

and that the law of 1841 provided that the rate of return

on those funds should be 5%. Reply Brief of Appellant at

9-11. The Governinent. on the other hand, contended that

there had been no constructive return to interest-bearing

accounts in 1895, and therefore that if interest were to be

allowed on the claims, it should be from the time of the

original treaty breaches (which had occurred as early as

44 44

1819), which would amount to an extremely large sum (con-

tended to be “comparable in size to the national debt,” but

this was probably an exaggeration). Brief for the United

States at 32-36.

The Supreme Court decided the issue on two grounds.

First, it held that no funds had been held in trust for the

Indians because the United States had nof, either in 1819

or 1895, returned the moneys due the Indians to their trust

funds in the Treasury. Second, the Court found that by an

1850 agreement, the Cherokees had agreed that interest on

_ all debts owed them would be at 5% simple interest, and that

more than this had already been paid. 270 U.S. at 492. The

second theory is irrelevant to our case. Ilowever, the first

theory is what distinguishes the claim of the Te-Moaks on

cross-appeal from the major claim in this case. Like the Court

I am of the view that where there are no funds held in trust

for a tribe even though money is due and owing under a

treaty or because of defalcations, the laws requiring either

investment of trust funds or payment of interest on them

are not applicable. This is so because in the absence of a

trust fund, the Indians’ only claim to monies due is as a debt,

upon which no interest is available except where explicitly

provided by statue, contract or treaty. See Confederated

Salish & Kootenai Tribes v. United States, 175 Ct. Cl. 451,

cert. denied, 385 U.S. 921 (1966) (Davis, J.)* An analysis of

the two major Supreme Court cases holding that no interest

would be allowed on a Court of Claims judgment shows that

they turn on the theory that the amount due the plaintiff

is due as debt, and not as beneficial owner of a trust fund

such that the 1841 statute applies. See United States v.

Thayer-West Point Hotel Co., 329 U.S. 585, 588-89 (1947) ;

Goltra v. United States, 312 U.S. 203, 211 (1941).°

*For this same reason, I disagree with the Commission's damages account-

ing to the extent that it “returns” disallowed disbursements to the IMPL fund

before calculating damages. Te-Moak Bands of Weatern Shoshone Indiane vy.

United States, 33 Ind. Cl. Comm. 417, 428 (1974).

* United States v. N.Y. Rayon Importing Co., 329 U.S. 654 (1947), did involve

a trust fund. However, neither the parties nor the Court discussed the 1841

Act—the entire clam was based on equitable grounds that interest was “right

and just.” /bid. at 659. The trust fund there involved, moreover, was rather

unusual in that it was, by the terms of the statute under which it was

created, to be dissolved at the end of two years and the money to return to

the United States, not the beneficial owner. Act of June 26, 1934, ch. 756,

§ 21, 48 Stat. 1235.

45 45

The case in which there is the most complete discussion

of the 1841 statute is United States ex re] Angarica v.

Bayard, 127 U.S. 251 (1888), the facts of which are set out

in the majority opinion. The Supreme Court never reached

the issue of the applicability of the 1841 Act because it

found that the money collected from the Spanish govern-

ment, on which Angarica demanded interest, had been col-

lected by the United States in its own right and not in

trust for Angarica. 127 U.S. at 259. As in the Omaha case,

supra, the necessary predicate for application of the 1841

law—a trust fund—was missing.

The District of Columbia Supreme Court (where the case

had been brought originally) did, however, comment exten-

sively on the 1841 statute although it too found the law in-

applicable. United States ex rel. Angarica v. Bayard, supra,

4 Mackey at 322. The court found that the 1841 statute ap-

plied only to trusts which had three characteristics missing

in Angarica’s case :

(1) That the funds were deposited in the Treasury

rather than retained by a department.

(2) That the funds were to be invested by the Secre-

tary of the Treasury rather than by the head of any other

department, and

3) That the funds could not be disbursed without

congressional authorization. /bid. at 324.

All these characteristics are present in the case of the IMPL

funds.

When Congress, by a rider to the Deficiency Appropria-

tions Act of 1883, ch. 141, 22 Stat. 590, required that

miscellaneous revenues from Indian reservations be “covered

into the Treasury for the benefit of such tribe * * *,” the

Secretary of the Interior and the Commissioner of Indian

Affairs intended to treat the fund as the Secretary of State

had treated Angarica’s money—as essentially a checking ac-

count, totally under the control of the Secretary of Interior.

See Letter from the Secretary of the Interior to the Commis-

sioner of Indian Affairs, dated April 19, 1883; Letter from

Commissioner of Indian Affairs to the Secretary of the In-

terior, dated November 14, 1883. The Acting Secretary of

the Treasury, however, determined that the act created a fund

46 46

with the characteristics described in Angarica. The money

was to be taken out of direct control of the department and

deposited in the Treasury (this was agreed by all as the pur-

pose of the act) ; investments were to be handled by the Secre-

tary of the Treasury (under the Act of June 10, 1876, ch. 122.

19 Stat. 58, now codified at 25 U.S.C. § 160) ; and, most tell-

ingly, the funds could not be touched by the Department of

the Interior or the Indians until Congress specifically au-

thorized such actions (see Letter from Acting Secretary of

the Treasury to the Secretary of the Interior, dated Novem-

ber 26, 1883). In 1887 Congress, at the urging of the Secre-

tary of the Interior, did make the authorization demanded

by the Treasury Department, but in doing so emphasized the

trust nature of the funds by declaring that the money must

be used for the benefit of the tribes which had produced the

revenue. Act of March 2, 1887, ch. 320, 24 Stat. 463.

This court has considered the scope of the 1841 Act twice,

both times very briefly, and has reached contrary conclusions

about the act’s applicability to non-treaty trust funds.* In

Bonnar v. United States, 194 Ct. Cl. 103, 438 F. 2d 540

(1971). as the majority opinion notes, we rejected

the act’s application to funds held under the Trading

with the Enemy Act. 50 U.S.C. App. §9(a) (1970), on

two grounds, the most important of which, we said, was

that the Act, by its own terms, explicitly limited recovery

to the net proceeds of sale. 194 Ct. Cl. at 163-64. We

also stated that the Trading with the Enemy Act should have

referenced the 1841 Act if that statute was meant to apply.

/bid. at 163. It isa maxim of construction that general

statutes apply to later specific acts unless the later act is

clearly inconsistent with the former. See Regional Rail Re-

organization Act Cases, 419 U.S, 102, 133-34 (1974). It may

well be that section 7(c) of the Trading with the Enemy Act,

which limits recovery to net proceeds, 7s inconsistent with the

1841 law and that therefore the earlier statute did not apply.

However, we do nec have such a case here, and the failure of

*In Creek Nation v. United States, 78 Ct. Cl. 474 (1933), which the ma-

jority cites for the proposition that no interest is payable on IMPL funds,

Maiority Op. at 32-32. the Creeks arcued strongly that their money should

never have been put in an IMPL fund, since the Five Civilized Tribes were

excluded from the 18823 Act, and never requested interest on such a fund.

Plaintiffs Request for Findings of Fact and Brief at 49-51. This is another

case, furthermore, in which neither party ever mentioned the 1841 Act.

47 47

the 1883 statute to make reference to the 1841 act should not

bar the application of the first-passed statute.

The second case in which we have considered the 1841

Act is more on point. In Confederated Salish & Kootenai

Tribes v. United States, we were asked, among other things,

to decide whether interest on plaintiff's trust fund “Pro-

ceeds of Flathead Reservation, Montana” should be granted

pursuant to the 1880 Statute, 25 U.S.C. § 161. It will be

remembered that that statute provides that certain funds

might be kept in the Treasury in lieu of investment, with

interest paid “at the rate per annum stipulated by treaties

or prescribed by law.” No treaty or particular act of Con-

gress required that the proceeds of the Flathead Reserva-

tion be invested or that interest be paid, although the Act

of April 23, 1904, ch. 1495, § 14, 33 Stat. 305, did pro-

vide that the funds received were to be paid into the Treas-

ury and expended “for the benefit of said Indians.” The

plaintiffs argued that their funds vere clearly proceeds of

“Indian trust lands” and therefore entitled to interest under

the 1880 statute, at the rate of 5% as provided by the law of

1841. Motion for Instructions to the Commissioner, etc. at

1 (filed Aug. 15, 1960). The government responded that the

1841 statute was inapplicable in construing the 1880 law.

Response to Motion for Instructions, ete. at 8-9 (filed Oct. 23,

1968). This court found for the plaintiff, and in doing so

necessarily concluded, contrary to defendant’s present asser-

tions, that the 1841 law in applicable to funds for which

no special investment provision in a law or treaty exists.

Order, Confederated Salish & Kootenai Tribes v. United

States (Dec. 9, 1968), reported at 186 Ct. Cl. 947.

That the IMPL fund created by these statutes is a trust

fund is conceded by the government. Brief of United States

at 47;7 see Cheyenne-Arapaho Tribes vy. United States,

7In 19234, Congress <pecifically declared the IMPL fund to be a “trust

fund.” Act of June 26, 1934, ch. 756. § 20(20). 48 Stat. 1233, now codified at

31 U.S.C. § 725s (20) (1970). While this action came after the statute pro-

viding Uiot interest be paid on such funds, Act of June 13. 1930, ch. 483,

§ 2. 46 Stat. 584, neither that statute nor any other after 1887 altered the

terms of the original statute which had provided that the funds were to be

held “for the benefit” of the Indians. This later Congressional action, there-

fore. may be seen as a ratification of its earlier intent to treat IMPL funds as

a trust fund.

4¢ 48

supra, 206 Ct. Cl. at —, 512 F. 2d at 1392. The infirmity

which prevented recovery by the Omahas and Angarica,

supra, is therefore not present here. Rather, the government

relies on two other propositions to deny application to the

plain letter of the 1841 statute. First, the point is made the

act applies only to “trusts of a definite character,” upon

which a treaty or another act of Congress provided that

interest should be paid or the fund invested. There are three

answers to this. First, the “trusts of a definite character”

language comes from the District of Columbia Supreme

Court decision in Angarica. As we have shown, the IMPL

fund falls within the class as to which that court found the

1841 Act to apply. Second, we have already rejected the argu-

ment that another treaty or act is required as a predicate for

application of the 1841 Act in the Confederated Salish case,

and that decision should govern here. Third, the terms of the

statute are not so restricted and there is insufficient reason

in its history to read it so narrowly.

The defendant’s second ground for rejecting application

of the 1841 Act is simply that it would cost too much now to

penalize the government for failure to comply with the

statute from 1883 to 1930.8 Damages for failure to comply

from 1883 to 1930 are the lost profits which would have re-

sulted from the investments. Since the 1841 Act provides a

minimum return on investment of 5% compounded, and the

Indians have not cross-appealed on the Commission's failure

to use a higher rate, I agree with the Commission that dam-

ages should be figured at 5% interest compounded annually,

on the actual annual surplus in the IMPL fund. Gee note 4,

supra.) My own, admittedly rough, calculations lead me to

believe that the damages payable to all Indian tribes for lost

profits on the IMPL account from 1883 to 1930 will not ex-

ceed $15,000,000. Even if I am mistaken in that, I remain

convinced that the law is as I have previously stated in re-

sponse toa similar governmental claim:

* Since no 4aim is made for damages after 1920. I leave to another day the

issue whether the Act of June 13, 1930, ch. 483, § 2, 46 Stat. 584, providing

simple interest at 4% on IMPL funds held in the Treasury, superseded the

1541 statute.

* As stated above, supra, note 4, these damages are eniculated on the basis

of actual surplus funds in the Treasury, and do not include damages on illegal

disbursements.

49 49

It is irrelevant that an award of interest, pursuant to

the [1841 statute], could increase the award to plaintiff

by five or six times. If > hoa so provides, we can-

not refuse interest because the amount is relatively la

Peoria Tribe v. United States, 177 Ct. Cl. 762, 770, 775

n. 6 (1966) (Davis, J., dissenting), rev’d, 390 U.S. 468

(1968).

The 1841 statute provides the Indians with a right to re-

cover within the jurisdiction created by paragraph (1) of the

Indian Claims Commission Act—“claims in law or equity

arising under the Constitution, laws, treaties of the United

States, and Executive orders of the President,” 25 U.S.C.

§ 70a(1) (1970). This language tracks that of the early spe-

cial jurisdictional statutes, and as such does not create any

equitable right to enforce general trust duties undertaken

by the United States where, for some reason, the 1841 statute

is inapplicable. See United States v. Omaha Tribe of In-

dians, supra, 253 U.S. at 283.

However, in establishing the Indian Claims Commission

Congress did not, as we have noted many times before,

merely consolidate all the old special jurisdictional acta. It

went further, providing a new cause of action for “claims

based upon fair and honorable dealings that are not recog-

nized by any existing rule of law or equity.” 25 U.S.C.

§ 70a(5). See Otoe and Missouria Tribe of Indians v. United

States, 181 Ct. Cl. 593, 602, 131 F. Supp. 265, 271, cert.

denied, 350 U.S. 848 (1955). This does not mean that the

United States has agreed to pay the Indians for all pre-

1946 wrongs. Gila River Pima-Maricopa Indian Commumity

v. United States, 190 Ct. Cl. 790, 797, 427 F. 2d 1194, 1197-98,

cert. denied, 400 U.S. 819 (1970). We have, how-

ever, determined that such a clause does extend government

liability when three conditions are met; first, that

there be an express undertaking by the United States,

by treaty, agreement, executive order, or statute, of

a duty of trustee toward the Indians; second, that the United

States has failed to meet its obligations; and third that the

tribe has suffered damages as a result. Aleut Commumity of

St. Paul Island y. United Stat:s, 202 Ct. Cl. 182, 196, 480

F. 2d 831, 838-39 (1973). These three conditions are met

here, and should result in recovery by the Indians of profits

50 50

lost by breach of fiduciary duty by the United States, al-

though the measure of damages under traditional trust law.

lost profits at simple interest, differs from that mandated by

the 1841 Act. See Ute Tribe of Indians v. United States, 45

Ct. Cl. 440, 470 (1910).

In 1883, by statute, Congress declared that money admit-

tedly belonging to the Indians would, instead of being given

to the Indians, be “covered into the Treasury for the benefit

of such tribe.” Act of March 3, 1883, ch. 141, 22 Stat. 590. In

1887, the Secretary of the Interior was, again by statute,

explicitly given the power to use these funds, but only for

the benefit of the tribes on whose account the funds had origi-

nally been added to the fund. Act of March 2. 1887. ch.

320, 24 Stat. 463. These two statutes, in the most traditional

sense, created a trust for the benefit of the Indians, a fact

belatedly recognized by the Treasury in 1908. 2 J. Story,

COMMENTARIES ON Equity JURISPRUDENCE §$ 980 (1836); sce

RESTATEMENT OF TrUsTs 2p, § 24, comm. b, illus. 1 (1959) ;

Te-Moak Bands of Western Shoshone Indians v. United

States, supra, 31 Ind. Cl. Comm. at 506-508.

Under standard trust law, which has remained largely con-

stant through the last century, a trustee’s duties include (un-

less explicitly negated by the terms of the trust, not a problem

here) the obligation to make trust funds productive by invest-

ing whatever money is not required by the terms of the trust

to be distributed. See RestaTEMENT oF Trusts 2p, Introduc-

tory Note at 1, § 181 (1959). From 1883 to 1887, the terms of

the statute pern.itted no disbursal at all, so the duty arose

to make the entire amount in the fund productive. The 1887

Act amended the terms of the trust to allow the Secretary

of the Interior to spend the funds in the IMPL fund for

the benefit of the tribe on whose account the money was

covered into the Treasury. From 1887 on, then, the duty to

make funds productive was limited to surpluses remaining

in the account, after charges, which would not be needed in

the reasonably foreseeable future. When the annual surplus

in the total IMPL fund for all Indians which, according to

Treasury Department reports, fell below $1,000,000 for only

one year (fiscal 1925) between 1902 and 1930 and reached to

51 51

over $9,000,000 in fiscal 1923,’° was left to lie fallow earning

absolutely no interest, the tribes to whom portions of the fund

belonged suffered sufficient damage to allow recovery under

the fair and honorable dealings clause for the breach of trust.

This is wholly apart from the 1841 Act and furnishes an

alternative and supplementary ground for recovery by the

appellees.

10 See STATEMENT OF BALANCES, APPROPRIATIONS, AND EXPENDITURES OF THE

GOVERNMENT FOR THE FISCAL YEAR ENDED JuNe 30, 1902 at 98-99 (no date) ;

Ibid. for the Fiscal Year Ended June 30, 1903 at 116-17 (no date) ; Ibid. for

the Fiscal Year Ended June 30, 1904 at 114-15 (no date); Ibid. for the

Fiscal Year Ended June 30, 1905 at 118-19 (no date) ; /bid. for the Fiscal

Year Ended June 30, 1906 at 108-09 (1907) ; [bid. for the Fiscal Year Ended

June 30, 1907 at 144-45 (1908) ; STATEMENT OF BALANCES, APPROPRIATIONS,

AND DISBURSEMENTS OF THE GOVERNMENT FOR THE Fiscal YEAR ENDED JUNE 30,

1908 at 124—25 (1908) ; Jbid. for the Fiscal Year Ended June 30, 1909 at 138—

39 (1909); Jbid. for the Fiscal Year Ended June 30, 1910 at 128-

29 (1911) ; Ibid. for the Fiscal Year Ended June 30, 1911 at 146-47 (1912) ;

COMBINED STATEMENT OF THE RECEIPTS AND DISBURSEMENTS, BALANCES, ETC.,

oF THE UNITED STATES FoR THE Fiscat Year ENpep June 30, 1912 at 105

(1912) ; Ibid. for the Fiscal Year Ended June 30, 1913 at 121 (1913); Ibid.

for the Fiscal Year Ended June 30, 1914 at 124 (1914) ; Ibid. for the Fiscal

Year Ended June 30, 1915 at 142 (1915); Ibid. for the Fiscal Year Ended

June 30, 1916 at 128 (1916); Ibid. for the Fiscal Year Ended June 30, 1917

at 142 (1918) ; /did. for the Fiscal Year Ended June 30, 1918 at 142 (1919) ;

Ibid. for the Fiscal Year Ended June 30, 1919 at 154 (1920) ; Ibid. for the

Fiscal Year Ended June 30, 1920 at 162 (1921); Jbid. for the Fiscal Year

Ended June 30, 1921 at 173 (1921); Ibid. for the Fiscal Year Ended

June 30, 1922 at 176 (1923) ; Ibid. for the Fiscal Year Ended June 30, 1923

at 101 (1924) ; Ibid. for the Fiscal Year Ended June 30, 1924 at 103 (1925) ;

Ibid. for the Fiscal Year Ended June 30, 1925 at 107 (1926) ; Ibid. for the Fis-

cal Year Ended June 30, 1926 at 106 (1927) ; Ibid. for the Fiscal Year Ended

June 30, 1927 at 157 (1928) ; /bid. for the Fiscal Year Ended June 30, 1928 at

157 (1929) ; Ibid. for the Fiscal Year Ended June 30, 1929 at 155 (1930) ; Ibid.

for the Fiscal Year Ended June 30, 1930 at 332 (1931).

53

APPENDIX B

IN THE UNITED STATES COURT OF CLAIMS

App. No. 2-74

THE UNITED STATES OF AMERICA

v.

MESCALERO APACHE TRIBE, ET AL.

App. No. 10-74

THE UNITED STATES OF AMERICA,

V.

THE SHOSHONE-BANNOCK TRIBES OF THE

FORT HALL RESERVATION, IDAHO

App. No. 12-74

THE UNITED STATES OF AMERICA,

v.

TE-MOAK BANDS OF WESTERN SHOSHONE

INDIANS OF NEVADA, ETC.

Before COWEN, Chief Judge, DURFEE, Senior Judge,

DAVIS, SKELTON, NICHOLS, KUNZIG and BENNETT,

Judges.

ORDER

This case comes before the court on motion for rehear-

ing, filed August 25, 1975, by the appellee, Mescalero

Apache Tribe, and on motion for rehearing, filed August

25, 1975, by the appellees, Shoshone-Bannock Tribes

54

and Te-Moak Bands of Western Shoshone Indians. Upon

consideration thereof, together with the response in oppo-

sition thereto, without oral argument,

IT IS ORDERED that the said motions, filed August

25, 1975, for rehearing be and the same are denied.

BY THE COURT

/s/ Wilson Cowen

[Oct. 3, 1975] Chief Judge

DAVIS, Judge, Dissenting:

My usual practice, when I have been in dissent, is not

to vote for rehearing (even though I continue to believe

the decision of the majority to be wrong) unless there are

extraordinary circumstances calling for reconsideration —

other than the error (in my view) of the initial decision.

Here I find such circumstances in the failure of the court’s

opinion to deal explicitly and adequately with the appel-

lant’s claim under the “fair and honorable dealings”

clause (apart from the 1841 statute). I therefore vote to

rehear the case on that issue alone.

55

APPENDIX C

[427] BEFORE THE INDIAN CLAIMS COMMISSION

Docket No. 326-A

TE-MOAK BANDS OF WESTERN SHOSHONE INDI-

ANS OF NEVADA, suing on behalf of the Western

Shoshone Nation of Indians,

Plaintiff,

v.

THE UNITED STATES OF AMERICA,

Defendant.

Docket No. 22-G

MESCALERO APACHE TRIBE, et al.,

Plaintiffs,

v.

THE UNITED STATES OF AMERICA,

Defendant.

Decided: October 4, 1973

Appearances:

Pierre J. LaForce, Charles A. Hobbs, and Frances L.

Horn, Attorneys for Plaintiff in Docket No. 326-A. Wil-

kinson, Cragun and Barker were on the Briefs.

Richmond F. Allan and Ruth H. Duhl, Attorneys for

Plaintiffs in Docket No. 22-G. Weissbrodt and Weissbrodt

were on the Briefs.

[428]

56

Gordon W. Daiger, with whom was Mr. Assistant Attorney

General Kent Frizzell, Attorneys for Defendant.

OPINION

Blue, Commissioner, delivered the opinion of the

Commission.

INTRODUCTORY STATEMENT

The accounting reports filed in these cases show that

the defendant has kept substantial amounts of each

plaintiff’s money in a non-interest-bearing account in the

Treasury of the United States during the period between

1883 and 1930. The account is known as Indian Moneys,

Proceeds of Labor. We describe it in detail later in this

opinion. |

The plaintiffs contend that the defendant was required

to invest this fund, and its accumulated interest, at the

best interest rate attainable or to pay the highest

statutory rate for treasury deposits, whichever would

provide the greater return, and that it is liable to them for

its failure to do so.

We reserved ruling on this contention in our 1970

opinions in these dockets, directing the parties to fully

research the pertinent statutes and historical materials.

Te-Moak Bands of Western Shoshone Indians v. United

States, Docket 326, 23 Ind. Cl. Comm. 70, 79 (1970);

Mescalero Apache Tribe, Docket No. 22-G, 23 Ind. Cl.

Comm. 181, 186 (1970).

Pooling their resources, attorneys for the plaintiffs, on

June 1, 1971, filed an elaborate brief on the defendant’s

obligations to make all Indian trust funds productive,

accompanying it with two volumes of legal and historical

records. The defendant answered on September 13, 1972,

[429]

[430]

57

with an equally elaborate brief, accompanied by similarly

voluminous records. A short reply was filed by the

plaintiffs. Oral argument was held before the Commission

on December 4, 1972. The briefs and argument in

Dockets 326 and 22-G have been adopted by reference in

nine other accounting cases.! The latter cases involve

several other unproductive funds in addition to Indian

Moneys, Proceeds of Labor.

The Commission is now ready to decide. The extraor-

dinarily thorough work of the lawyers on both sides has

greatly helped us to reach our present decision.

The purpose of this opinion is to decide the questions

now before us. While we hope the history of the

development of Indian trust law herein may prove useful

elsewhere, our rulings in the case of each plaintiff who

adopted the Te-Moak-Mescalero briefing will be made by

separate order, accompanied wherever necessary by a

separate opinion.

We start with the proposition that the duties of the

United States with respect to the Indian tribes’ moneys

must be based on written law: the Constitution, treaties,

and acts of Congress. We look, of course, to the legal

tradition in which the draftsmen of our written law were

ISan Carlos Apache Tribe of Arizona, the White Mountain

Apache Tribe of the Fort Apache Reservation, et al., Docket 22-H;

Northern Paiute Nation, et al., Docket 87-A; Klamath and Modoc

Tribes and Yahooskin Band of Snake Indians, Docket 100-B; Fort

Peck Indians of the Fort Peck Reservation, Montana, Docket 184;

Blackfeet and Gros Ventre Tribes of the Blackfeet Reservation,

Gros Ventre and Assiniboine Tribes of the Fort Belknap Reserva-

tion, Dockets 279-C and 250-A; Confederated Tribes of the

Goshute Reservation, Docket 326-B; Shoshone-Bannock Tribes of

the Fort Hall Reservation, Docket 326-C; Three Affiliated Tribes

of the Fort Berthold Reservation, Docket 350-G.

[431]

58

trained, the common law and equity jurisprudence, for

the implications of their words.* But the search for rules

governing the administration of Indian trust funds begins

as a search of the Statutes at Large.

The ensuing discussion is in chronological order, since

Indian trust law developed as a by-product of history

rather than according to plan.

I. 1797 TO 1837: THE BEGINNING OF THE IN-

DIAN TRUST FUNDS

The earliest Indian trust fund of the United States

appears to be the one set up in 1797 by Robert Morris

for the Seneca Nation. In consideration of the Senecas’

grant of four million acres in western New York, Morris

agreed to invest $100,000 in stock of the Bank of the

United States to be “held in the name of the President of

the United States, for the use and behoof of the said

nation of Indians.’”’ The Government approved Morris’s

contract with the Senecas and assumed administration of

the trust.?

In numerous treaties of the late eighteenth and early

nineteenth centuries, the United States agreed to pay

annuities to the Indians, either perpetually or for a

2Smith v. Alabama, 124 U.S. 465, 478-479 (1888); Rice v.

Minnesota & Northwestern Railroad Co., 60 U.S. (1 Black) 358,

374-375 (1862). See also United States v. Wong Kim Ark, 169 US.

649, 654 (1898). For the application of equity to the interpreta-

tion of the Government’s treaty and statutory obligations, see

Seminole Nation v. United States, 316 U.S. 286, 295-297 (1942);

City of Lincoln v. Ricketts, 84 F.2d 795, 797 (7th Cir. 1936);

Indian Claims Commission Act, §2(1), 25 U.S.C. §70a(1) (1970).

Scontract of September 15, 1797, 7 Stat. 601. See also

Seneca Nation v. United States, 173 Ct. Cl. 917 (1965), rev

Docket 324-A et al., 12 Ind. Cl. Comm. 755 (1963); subsequent

proceedings, 28 Ind. Cl. Comm. 12 (1972).

[432]

59

term.* But these were direct payments out of the

treasury in fixed dollar amounts and did not represent

interest on any principal fund set aside for the Indians.°

Another early Indian trust fund was established by the

treaty of February 27, 1819, between the United States

and the Cherokee Nation, 7 Stat. 195. Here, the Govern-

ment agreed to sell certain ceded lands and invest the

proceeds to provide income for the support of education

among the Cherokees. A similar educational fund, fi-

nanced from ceded lands, was established for the Kansas

Indians under the Treaty of June 3, 1825, 7 Stat. 244.

The Cherokee fund was to be invested, under the

direction of the President, in “‘stock of the United States,

or such other stock as he may deem most advantageous

to the Cherokee nation.’ The Kansas treaty does not

#4 list of the annuities due from the United States to various

tribes, with reference to the treaties and statutes authorizing them,

appears in the report of the Commissioner of Indian Affairs of

November 25, 1852, at 308-313 (item D-80 in the Appendix to the

Defendant’s Memorandum on the Status of Indian Trust Funds and

the Tribes’ Rights to Interest on Particular Funds, filed September

13, 1972).

Hereinafter exhibits reproduced in said appendix will be

cited as “D-1,” “D-2,” etc. The plaintiffs designated their

compilation of historical exhibits as Appendix B; and items

reproduced therein will be cited hereinafter as ““B-1,”’ ““B-2,”’ etc.

5The distinction between trust funds and annuities is well

illustrated in the Senate debate of 1831 on a bill to provide for the

payment of $6,000 annually to the Seneca Indians in lieu of the

actual yield on their $100,000 trust fund, which varied with

prevailing interest rates. See 7 Register of Debates in Congress

29-30, 78-85 (1831). The bill was approved, and the Seneca trust

fund was commuted to an annuity. Act of February 19, 183i, c.

26, 4 Stat. 442.

SThe word “stock” frequently meant bonds in the nineteenth

century, and appears to have been construed exclusively in this

sense where used in the treaties and statutes reviewed in this

opinion. Cf. Peoria Tribe v. United States, 390 U.S. 468, 470

(1968).

[433]

60

even mention investment of the educational fund; but in

fact it was invested, in state bonds.’

Three treaties made in 1831 appear to be the earliest in

which the United States agreed to pay interest itself on

the proceeds of ceded Indian lands, rather than to invest

them.® Five percent was the stipulated rate. This appears

to be the first mention in an Indian treaty of 5 percent,

which later became the prevailing interest rate on Indian

trust funds.

Despite the treaty language requiring the United States

itself to pay the interest on the 1831 funds, Congress

decided that these funds should be invested. The fourth

section of the Act of June 14, 1836, c. 88, 5 Stat. 36, 47,

directed the Secretary of War to invest “in a manner

which shall be, in his judgment, most safe and beneficial

for the fund,” with a proviso that he should make no

investment at a lower rate than five percent.

Investment meant actie’* buying bonds, usually

through a stockbroker, stonng the certificates in an iron

safe in the office of the Commissioner of Indian Affairs,

and clipping and presenting the coupons for payment

when interest became due.? Depositing the funds in the

7§. Doc. 426, 25th Cong., 2d Sess. 6 (1838—D-17).

STreaties of February 28, 1831, with Senecas of Sandusky, 7

Stat. 348; of July 30, 1831, with Senecas and Shawnees residing at

and around Lewistown, 7 Stat. 351; and of August 8, 1831, with

Shawnees residing at Wapaghkonnetta and Hog Creek, 7 Stat. 355.

9See Select Committee to Inquire into And Report the Facts

in Relation to the Fraudulent Abstraction of Certain Bonds, Held

by the Government in Trust for the Indian Tribes, from the

Department of the Interior, Abstracted Indian Trust Bonds, H.R.

Rep. No. 78, 36th Cong., 2d Sess. (Serial 1107, 1861), especially

testimony of Secretary of the Interior Jacob Thompson at 27-45,

former Commissioner of Indian Affairs Luke Lea at 46, and Mr.

J. A. Williamson at 237. See also ‘“‘General Remarks” at pages 6-7

of S. Doc. 426, 25th Cong., 2d Sess. (1828—D-17).

[434]

, 61

U.S. Treasury, with the Government paying interest on

them, was not considered investment, but as something

done in lieu of investment.!®

It is therefore inaccurate to state that the Act of June

14, 1836, or similar legislation, required the Government

to “pay” interest to the Indians. The Government as

trustee was required to buy securities bearing 5 percent

or higher interest; but the issuers of the securities were to

provide the interest.

The 1836 legislation was doubtless influenced by the

contemporary happy position of the treasury. The public

debt had been extinguished in 1835, except for

$328,582.10 which remained outstanding solely because

the creditors had not come forward to receive payment.

A surplus of at least $14,000,000 was anticipated in the

treasury at the end of 1836. By the Act of June 23,

1836, c. 115, sec. 13, 5 Stat. 55, Congress provided that

any such surplus over $5,000,000 should be distributed

to the States of the Union. The estimate proved low, and

$28,101,644.94 were actually distributed. See R. Bayley,

The National Loans of the United States, 67 (2d ed.,

1882) (D-5).

Under such circumstances it would have made little

sense for the United States to pay interest to the Indians

in order to keep funds it did not need.

10Sc¢ Reports of Commissioner of Indian Affairs, for 1840 at

278 (D-41), for 1842 at 396 (D-48), for 1852 at 306 (D-80), for

1874 at 465 (D-83), for 1875 at 151 (D-84), for 1876 at 263

(D-85), for 1879 at 310 (D-86), for 1905 at 483-84 (D-87), for

1906 at 448-49 (D-90), and for 1909 at 150 (D-91).

62

II. 1837 TO 1841: THE DEBACLE OF THE STATE

BONDS

By the fourth section of the Act of January 9, 1837, c.

1, 5 Stat. 135, Congress extended the investment

[435] provisions of the Act of June 14, 1836, so as to apply to

“all moneys that may hereafter be received under the

treaties therein named, or under any others containing

similar stipulations for the payment to the Indians

annually, of interest upon the proceeds of the lands

ceded by them.”

The 1837 act was entitled, “An Act to regulate, in

certain cases, the disposition of the proceeds of lands

ceded by Indian tribes to the United States.” It applied

only to trust funds established from the proceeds of sales

of ceded lands.

The first section provided that the net proceeds of

such sales should be paid into the U.S. Treasury in the

same manner as moneys received from sales of public

lands. The second section was a permanent appropriation

authorizing the withdrawal of such Indian moneys in

conformity with treaties requiring their payment or

investment. The third section read as follows:

And be it further enacted, That all investments of

stock, that are or may be required by said treaties,

shall be made under the direction of the President;

and special accounts of the funds under said treaties

shall be kept at the Treasury, and statements thereof

be annually laid before Congress.

By 1838 there were some 13 Indian trust funds in the

custody of the Secretary of War (as head of the

department where the Bureau of Indian Affairs was then

located) and one in the custody of the Secretary of the

Treasury. They arose under various provisions of ten or

more but offered to continue paying interest in coin.

63

[436] more treaties. All were invested in state bonds, which had

a total face value of $3,674,462.79. !!

State bonds were probably chosen as investments for

the Indian trust funds because Federal bonds were un-

available (the national debt having been extinguished in

1835) and private securities were deemed inappropriate. !

As it turned out, January 9, 1837, was a highly inop-

portune time to establish a policy of investing the Indian

trust funds in preference to depositing them in the Fed-

eral treasury and paying out interest. A financial crash

occurred within a matter of weeks, and in May most

banks were forced to suspend specie payments. State

bonds were severely affected. Tennessee paid interest

only in the form of an unwithdrawable credit to the

Treasurer of the United States on the books of the Union

Bank at Nashville. Alabama and Mississippi defaulted

outright on the interest payments. Maryland was unable

to redeem its matured bonds, but offered to continue

'l Figures for the cost of the bonds given in Senate Document

426 (D-17) add up to $3,849,441.70; but H.R. Rept. 892, 25

Cong., 2d Sess. (1838) (seeD-18), states the cost was

$3,851,056.21.

12R. Bayley, The National Loans of the United States 67

(1882) (see D-5). In 1835 and 1836, before making the initial

investment of the largest Indian trust fund of the period, the

Chickasaw fund, Secretary of the Treasury Levi Woodbury did

consider bank stock, but rejected this form of investment in favor

of state stock. See contemporary correspondence in defendant’s

exhibits D-9 and D-43. The Secretary may have been influenced by

contemporary English law, which prohibited trustees from invest-

ing in stock of any private company, without express authorization

in the trust instrument. The only “legal’’ investments were

Government and Bank of England Annuities. T. Lewin, A Practical

Treatise on the Law of Trusts and Trustees, 308, 311 (1837); J.

Willis, Duties and Responsibilities of Trustees, 126 (1827); see also

G. Bogert, Trusts and Trustees, §613 (2d ed., 1960).

64 65

[437] paying interest in coin. Finally it defaulted on interest [438] investing nine trust funds totaling $2,580,100.'* These

too. | [439] were in addition to the invested trust funds. which in

By the fall of 1837, the United States itself had to go

back in debt, borrowing $10,000,000 on treasury notes.

See Act of October 12, 1837, c. 2, 5 Stat. 201; and D-5,

p. 67.

Until 1833 the United States appears to have created

trust funds only when it got the money from purchasers

of Indian lands. Where it did not get the money from

third parties, but wished to secure the Indians a perma-

nent income, the Government used annuities.

This policy was changed during the Jacksonian pros-

perity. An educational trust fund of $70,000 was set up

by direct disbursement from the Federal Treasury under

Article 3d of theChippewa, Ottowa and Potawatamie

treaty of September 26, 1833, 7 Stat. 432. Trust funds

were also established by direct disbursement from the

treasury for the Cherokees under the Treaty of December

29, 1835, 7 Stat. 478; for the Menominies under the

Treaty of September 3, 1836 (by Senate amendment), 7

Stat. 509, and for the Ottawas and Chippewas under the

Supplemental Article to the Treaty of March 28, 1836, 7

Stat. 496.

During the ensuing depression, the Government did

not quit promising to set up Indian trust funds by direct

disbursement of its own money, but it quit making the

disbursements. The Commissioner of Indian Affairs re-

ported on November 28, 1840, that Congress was

annually appropriating $131,005 interest in lieu of

13 See contemporary correspondence to and from the Secretary

of the Treasury in exhibits D-13 and D-14, and S. Doc. 52, 27th

Cong., Ist Sess. (1841—D-32).

I4These funds are listed as follows on page 278 of the

Commissioner’s Report (D-41). We have corrected a number of

erroneous citations in the original.

Names of Tribes Principal Interest Authority of Trust

Ottawa and $ 200,000 12,000 Senate amendment

Chippewa to Treaty of March

28, 1836, 7 Stat

497.

Osage 69,120 3,456 Treaty June 2, 1825,

7 Stat. 242, as modi-

fied by Sen. Res.

Jan. 19, 1838, Sen.

Jour. 25th Cong., 2d

Sess., 155.

Delaware 46,080 2,304 Supplementary

Article Sept. 24,

1829, 7 Stat. 327,

as modified by Sen.

Res. of Jan. 19,

1838, supra.

Sioux of the 300,000 15,000 Treaty Sept. 29,

Mississippi 1837, 7 Stat. 538.

Sac and Fox of 200,000 10,000 Treaty Oct. 21,

the Mississippi 1837, 7 Stat. 540

Sacand Foxof §——‘157,400 7,870 Treaty Oct. 21,

the Missouri 1837, 7 Stat. 543.

Winnebago 1,100,000 55,000 Treaty Nov. 1,

1837, 7 Stat. 544.

Creek 350,000 17,500 Treaty Nov. 23,

1838, 7 Stat. 574.

lowa 157,500 7,875 Treaty Oct. 19,

1838, 7 Stat. 568

$2,580,000 $131,005

[440]

66

1840 had a face value of $3,998,462.73.'5 Since the

uninvested trust funds were all to be established by direct -

payment from the treasury rather than from the proceeds

of land sales, the Act of January 9, 1837, was inapplica-

ble. But in all cases except the Ottawa and Chippewa

fund, the treaty or Senate resolution creating the trust

required it to be invested rather than deposited at

interest.

The Annual Report of the Commissioner of Indian

Affairs for 1879 (D-86), at 310, shows four of the nine

funds (Osage, Winnebago, and both Sac and Fox) as still

uninvested. It also shows 24 subsequently established

funds as uninvested, with Congress appropriating the

annual interest. Most of the treaties and statutes creating

the latter funds expressly authorized their deposit in the

treasury at interest. In the earlier cases, however, this

alternative to investment appears to have been authorized

only by the annual appropriation acts which provided the

interest.

The depression which started in 1837 was still going on

in 1841. See Message from the President of the United

States, H.R. Ex. Doc. 1, 27th Cong., Ist Sess.

(1841—D-12). Some of the state bonds remained in

default two years !ater (D-14), and one state was still in

default 35 years later. See Annual Report of the

Commissioner of Indian Affairs for 1876 (D-85, p. 275).

'5invested trusts administered by ;

Secretary of War (D-41, p. 276): $1,897,321.76

Chickasaw fund, administered by

Secretary of the Treasury (H.R. Doc.

145, 26th Cong., Ist Sess., 3 (1840)

(D-19): 2,101,141.03

Total invested Indian trust

funds in 1840: $3,998,462.79

67

III. 1841 to 1880: INDIAN TRUST FUNDS RE-

QUIRED TO BE INVESTED IN FEDERAL

BONDS ONLY.

Against such a background Congress enacted the Act

of September 11, 1841, requiring all “funds held in trust

by the United States, and the annual interest accruing

thereon, when not otherwise required by treaty

[to] ...be invested in stocks of the United States

bearing a. . . rate of interest not less than five per centum

per annum.”

The following is the complete text of the act, which

appears at 5 Stat. 465:

CHAP. XXV.—An Act to repeal a part of the sixth

section of the act, entitled “‘An act to provide for

the support of the Military Academy of the

United States for the year eighteen hundred and

thirty-eight, and for other purposes,” passed July

seventh, eighteen hundred and thirty-eight.

Be it enacted by the Senate and House of

Representatives of the United States of America in

Congress assembled, That so much of the sixth

section of an act entitled, “An act to provide for the

support of the Military Academy of the United

States for the year eighteen hundred and thirty-

eight, and for other purposes,” as requires the

Secretary of the Treasury to invest the annual

interest accruing on the investment of the money

arising from the bequest of the late James Smithson,

of London, in the stocks of States, be, and the same

is hereby, repealed. And the Secretary of the

Treasury shall, until Congress shall appropriate said

accruing interest to the purposes prescribed by the

testator for the increase and diffusion of knowledge

among men, invest said accruing interest in any

stock of the United States bearing a rate of interest

not less than five per centum per annum.

[441]

68

Sec. 2. And be it further enacted, That all other

funds held in trust by the United States, and the

annual interest accruing thereon, when not other-

wise required by treaty, shall in like manner be

invested in stocks of the United States, bearing a

like rate of interest.

Sec. 3. And be it further enacted, That the three

clerks, authorized by the act of June twenty-third,

eighteen hundred and thirty-six, “to regulate the

deposits of the public money,” be, and hereby are,

directed to be retained and employed in the

Treasury Department, as provided in said act, until

the state of the public business becomes such that

their service can conveniently be dispensed with.

This act clearly superseded the third and fourth

sections of the 1837 act, and the fourth section of the

1836 act, discussed above, which had given the President

and Secretary of War discretion to invest the Indian trust

funds in any kind of securities deemed safe and bene-

ficial, so long as they bore at least 5 percent interest. It

did not, however, change the general policy of these

earlier acts, that the trust funds were to be invested, by

purchasing certificates of outstanding issues, rather than

deposited at interest in the U.S. Treasury as in a savings

bank.. Now, however, only Federal bonds could be

purchased as trust investments.

A. The 1841 act is a direction to invest trust funds as

well as a limitation on the kind of securities in which

investment may be made.

The defendant contends the 1841 act created no duty

to invest. It was a housekeeping statute, the defendant

states, dealing only with the kind of securities in which

trust investments were to be made; the duty to invest,

where it existed, was imposed by treaty or some other

law.

[442]

69

The plain language of the 1841 act, in our opinion, is

enough to refute this contention. Congress knew how to

phrase a statute so as to make it applicable to funds

required to be invested by treaty. Thus, it wrote in

section 3 of the 1837 act, 5 Stat. 135, “... all invest-

ments of stock that are or may be required by said

treaties shall be made under the direction of the

President . . .” If it had intended the meaning claimed for

the 1841 act by the defendant, it could have written:

Sec. 2...all other funds held in trust by the

United States, and the annual interest accruing

thereon, where investment is required by treaty,

shall in like manner be invested in stocks of the

United States, bearing a like rate of interest.

Congress did not use the underlined phrase. Instead, it

used the phrase, “when not otherwise required by

treaty”. The natural meaning of the words actually used

is almost diametrically opposed to the defendant’s

present interpretation.

By 1841, the duty of private trustees to make the

beneficiaries’ funds productive as well established ‘in

contemporary law.'® It appears entirely probable that

Congress would extend the rule of productivity to the

public trust funds, if such rule did nut already apply to

them. This is what the words actually used in the act of

September 11 imply. It appears in the same degree

improbable that Congress, using the words it did, could

intend to perpetuate the anomaly of indefinitely idle

public trust funds, if such previously existed.

16, J. Kent, Commentaries on American Law *230-232 (3d

ed., 1836); T. Lewin, A Practical Treatise on the Law of Trusts and

Trustees 305 (lst ed., 1837); J. Willis, Practical Treatise on the

Duties and Responsibilities of Trustees 181 (1827).

[443]

[444]

70

The defendant’s position that the 1841 act applies

only to trust funds required to be invested by some other

law becomes even less tenable when one examines the

Indian trust funds existing in that year which actually

were invested. The defendant admits that these were

within the purview of the act; yet a number of them were

not, in fact, required to be invested by any prior law.

The invested Indian trust funds in existence in 1841

consisted of:!7

(1) The Chickasaw National Fund, established

under Article XI of the treaty of October 20,

1832, 7 Stat. 385, and Article XI of the Treaty

of May 24, 1834, 7 Stat. 454. This trust fund

was administered by the Secretary of the

Treasury, by delegation of the President. See

Presidential Message of December 23, 1835,

and Senate Resolution of January 20, 1836, in

Exhibits D-9 and D-43; cf. act of April 20,

1836, c. 53, 5 Stat. 10.

(2) The following funds administered by the De-

par*ment of War, in which the Bureau of

Inaian Affairs was then located:

Authontty for Establish-

ment of Trust

Art. 4, Treaty Feb. 27,

1819, 7 Stat. 197

Beneficiary

1. Cherokee Schools

17 See Commissioner of Indian Affairs’ Report of Novernber 16,

1842 (D-48); Report from the Secretary of the Treasury, Septem-

ber 8, 1841, S. Doc. 116, 27th Cong., Ist Sess. (D-20); Commis-

sioner of Indian Affairs’ Report of November 28, 1840 (D-41); and

Secretary of the Treasury’s Rer ort of March 17, 1840, H.R. Doc.

145, 26th Cong., Ist Sess. (D-.9). The funds listed on this and the

following page are in addition to the funds on deposit in the

treasury at interest, listed above in footnote 14.

—

ee

10.

11.

12.

71

Beneficiary

Cherokee Tribe

Chickasaw Incompetents

Chickasaw Orphans

Chippewa, Ottawa, and

Potawatomie, Education

Chippewa, Ottawa, and

Potawatomie, Mills, etc.

. Choctaw Orphans

Choctaw Tribe

Creek Orphans

Delaware Tribe

Kansas Schools

Menominie Tribe

Authonty for Establish-

ment of Trust

Art. 10, Treaty Dec. 29,

1835, 7 Stat. 483

Art. IV, Treaty May 24,

1834, 7 Stat 451

Art. VIII, Treaty May 24,

1834, 7 Stat. 453

Art. 3d, Treaty Sep. 26,

1833, 7 Stat. 432

Administrative action

Art. XIX, Fifth, Treaty

Sep. 27, 1830, 7 Stat.

337

Art. III, Convention be-

tween Choctaw and

Chickasaw Tribes, Jan.

17, 1837, 11 Stat. 574

Art. 2, Treaty March 24,

1832, 7 Stat. 366

Supplementary Treaty,

Sep. 24, 1829, 7 Stat.

$27, as modified by

Senate Res. Jan. 19,

1838, Sen. Journal, 25th

Cong., 2d Sess. 155 (1838)

Art. 5, Treaty June 3,

1825, 7 Stat. 245

Senate amendment to

Treaty Sep. 3, 1836, 7

Stat. 509

[445]

72

Authority for Establish-

Beneficiary ment of Trust

13. Osage Tribe Art. 6, Treaty June 2,

1825, 7 Stat. 242, as

modified by Sen. Res.

Jan. 19, 1838, supra

Articles Fourth and

Fifth, Treaty March 28,

1836, 7 Stat. 492

Art. 8, Treaty Feb. 28,

1831, 7 Stat. 350, as

14. Ottawa and Chippewa

Nations

15. Senecas of Sandusky

modified by Act June 14,

1836, c. 88, 5 Stat. 47

16. Senecas and Shawnees

of Lewistown 1831, 7 Stat. 353, as

modified by Act June 14,

1836, supra

Art. VII, Treaty Aug. 8,

1831, 7 Stat. 357, as

modified by Act June

14, 1836, supra

Art. 4, Treaty Sep. 3,

1859, 7 Stat. 581

17. Shawnees of

Wapaghkonetta and

Hog Creek

18. Stockbridge and

Munsee Schools

Investment provisions are wholly lacking in the treaties

numbered 10, 11, and 13 in the above list.

The Menominie trust fund (No. 12 in above list) was

created by a Senate amendment, the original treaty

providing for neither a trust nor a fund.

The Choctaw fund (No. 8 above) was established by a

treaty between two Indian tribes, to which the United

States was not a party, although the President and the

Art. VIII, Treaty July 20,

~~ -—~——— OOOO

rey

[446]

73

Senate gave their approval. The intertribal treaty pro-

vided for a sale by the Choctaws of an interest in their

land to the Chickasaws, in return for the latters’ setting

over to them a portion of the Chickasaw trust fund.

The Chippewa, Ottawa, and Potawatomie United

Nation “mill fund” (No.6 above) was created by

administrative action. The circumstances of its creation

are revealed thus in the Commissioner of Indian Affairs’

report of November 28, 1840 (D-41, at page 279):

Beneficial objects for Chippewas, Ottawas, and

Pottawatomies.

By the 3d article of the treaty of 26th September,

1833, the United States contracted to apply

$150,000 “to the creation of mills, farm houses,

Indian houses, and blacksmiths’ shops; to agricul-

tural improvements, to the purchase of agricultural

implements and stock, and for the support of such

physicians, millers, farmers, blacksmiths, and other

mechanics, as the President of the United States

shall think proper to appoint.” The above sum was

applied, on the lst January, 1837, to the purchase

of $130,850.43 of Maryland six per cent. stock,

which has yielded, up to Ist July last, of interest,

$19,627.52, and cost $150,000.

There is no direct authority in the treaty for

investing the above money; but it appears that a

letter was, on the 14th December, 1836, addressed

by my predecessor to the Secretary of War ad

interim, proposing to invest the said sum in some

safe and productive stock. This letter was subse-

quently withdrawn, and for it appears to have been

substituted, on lst January, 1837, a general author-

ity from the Secretary to the then Commissioner of

Indian Affairs to direct investments, &c.; under

which, it is believed the above investment was made.

[447]

74

The sum was very large for the purposes pointed out

in the treaty; and the investment was judicious, in

my opinion, as furnishing a permanent fund, the

annual yield of which will be probably equal to all

the Indian wants. The interest, however, ought to be

reinvested until its expenditure is deemed advisable,

so as to enlarge the fund.

The Commissioner of Indian Affairs points out in the

same report the dubious legal basis for holding in trust

the funds appropriated under the fifth article of the

Ottawa and Chippewa treaty of March 28, 1836 (No. 14

in the above list). This article provided for setting

$300,000 aside for payment of the Indians’ debts. As

originally written, it stated that if the debts did not

amount to that sum, the balamce was to be “paid over to

the Indians, in the same manner, that annuities are

required by law to be paid”. A supplemental article,

signed March 31, 1836, provided that the balance was to

be retained “and vested by the Government in stock”.

See 7 Stat. 497.

In ratifying the treaty, however, the Senate further

amended the fifth article to provide that the balance was

“to apply to such other use as they [the Indians] may

think proper”. Sen. Res., May 16, 1836, 4 Sen. Ex. Jour.

542.

In his 1840 report, cited above, the Commissioner

stated that he found no request by the Ottawas and

Chippewas for the application of the balance of their

debt fund, but that $75,460 of it had nevertheless been

invested in Kentucky bonds. The Commissioner con-

tinued (at page 281):

It will thus be seen that there was no direct

authority for the investment in Kentucky stock; but

yet I cannot but regard the course adopted as the

—_

[448]

75

most judicious and beneficial for the Indians, who

should be paid the interest punctually and annually,

which has not been done heretofore.

The Commissioner of Indian Affairs’ Report was

appended to the President’s Message to the Two Houses

of Congress at the Commencement of the Second Session

of the 26th Congress and published in House Executive

Document No. 2, 26th Congress, 2d Session. Thus

Congress was not only aware of the lack of express

requirements for investment in several of the treaties

under which trust funds had been established, but also

knew that two of them had been established extralegally.

There is no evidence that Congress disapproved of what

had been done. On the contrary, the plain language of the

1841 act, which states, “all funds held in trust by the

United States... shall...be invested... ,’’ implies an

intent to legalize and adopt the Indian Commissioner’s

actions.

In support of its position that the 1841 act applied

only to funds elsewhere required to be invested, the

defendant points out, however, that the Government had

certain trust funds which were not invested before 1841

and remained uninvested thereafter.

Expenditures only from several funds alleged to fall in

this category are shown in H. R. Ex. Doc. 31, 27th Cong.,

Ist Sess. (July 9, 1841—D-39). They bear such captions

as “‘Awards under convention with the King of the Two

Sicilies,”” “‘Awards under the first article of the treaty of

Ghent,” and “Payment of demands for unclaimed mer-

chandize”. Most of these appear to have been passive

trusts, where the Government’s only duty was to pay

over the beneficiaries as soon as they came forward and

identified themselves. Such funds being subject to imme-

diate withdrawal, investment may often have been

infeasible.

[449]

76

None of these funds appears to have been invested, or

borne interest, before 1841. It seems, however, that the

State Department trust funds, like the two award funds

named above, were invested after 1841. See “Trust

Funds, State Department,” H. R. Ex. Doc. 362, 49th

Cong., Ist Sess. (1886—D-95); United States ex rel.

Angarica v. Bayard, 127 U. S. 251 (1888); cf. Henkels v.

Sutherland, 271 U. S. 298 (1926); Great Western

Insurance Co. v. United States, 19 Ct. Cl. 206, aff'd 112

U. S. 193 (1884). The history of the trust funds which

were unproductive in 1841 thus gives poor support to the

defendant’s interpretation of the act of that year.

Many cases of idle trust money in the Government’s

custody can probably be explained on the practical

ground that ready cash was needed for early disburse-

ment, or that there had not been sufficient time to invest

incoming funds. Congress knew cash must be available in

the trust accounts a reasonable time in advance of

anticipated expenses and distributions, and that it took

time to collect and invest trust moneys from the field,

such as the proceeds of sales of Indian land. See, e.g.,

remarks of Senator Wright concerning the Chickasaw

fund at 9 Cong. Globe 32 (Dec. 17, 1840).

Private trust law in 1841, and today, allows the trustee

to hold cash a reasonable time before investment and

prior to disbursement. J. Willis, Duties and Responsibilt-

ties of Trustees, 181 (1827); cf. Barney v. Saunders, 58

U. S. (16 How.) 535 (1853); in re Thorp, 23 F. Cas. 1153

(No. 14,002, D.C.D. Me. 1846); and compare G. Bogert,

Trusts and Trustees, § §611, 702 note 36 (2d ed., 1960).

Clearly, Congress did not intend every last penny of the

Government’s trust funds to be invested every moment;

but it did intend all such funds to be invested if they

were on hand long enough to make investment practica-

[450]

77

ble. Cf. Menominee Tribe v. United States, 107 Ct. Cl. 23

(1946).

B. Legislative history of 1841 act—Part 1: Section

2 had its source in Senate Amendment.

The legislative history of the Act of September 11,

1841, in the first session of the 27th Congress serves only

to confirm the statute’s plain language.

On September !, 1841, Congressman John Quincy

Adams asked the House of Representatives to act upon a

series of resolutions condemning the investment of

Federal funds—the Government’s own and those it held

in trust—in state securities. The following one of them

was passed:

Resolved, That the further investment of any

public funds of the United States in stocks of the

several States ought forthwith to be prohibited by

law; and that the Committee of Ways and Means be

instructed to report a bill for that purpose.'®

The former President was particularly concerned with

the safety of the James Smithson bequest, which, by a

rider on the Military Academy Appropriation Act of

1838,'9 had been ordered invested, together with its

accruing interest, in state stocks. He had just managed to

secure payment of some of the defaulted state bonds in

the Government’s trust portfolios by getting an amend-

ment into the act which granted Federal public land

revenues to the states. The Adams amendment required

each state’s share to be first applied on its debt to the

United States.2? Mr. Adams feared also that investment

18cong. Globe September 1, 1841, 419 (B-3).

19sec. 6, Act of July 7, 1838, c. 169, 5 Stat. 267.

20sec. 4, Act of September 4, 1841, c. 16, 5 Stat. 454.

[451]

78

of Federal money in state stocks would lead to favoritism

by Federal officials as between states. See H. R. Ex. Doc.

No. 11, 25th Cong., 3d Sess. (1838) (D-29).

On September 2, 1841, Millard Fillmore, the Chairman

of the Ways and Means Committee, responded to Mr.

Adams’ resolution by reporting out H. R. 34.

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