Appellees Brief — Washington v. Confederated Tribes of Colville Reservation

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No. 78-630 Litter

IN THE

SUPREME COURT

OF THE

UNITED STATES

OCTOBER TERM, 1978

STATE OF WASHINGTON, et al.,

Appellants,

Vs.

CONFEDERATED TRIBES OF THE COLVILLE

INDIAN RESERVATION, et al.,

Appellees.

STATE OF WASHINGTON,

Appellant,

VS.

UNITED STATES OF AMERICA,

and

CONFEDERATED TRIBES AND BANDS OF THE

YAKIMA INDIAN NATION,

Appellees.

ON APPEAL FROM THE DISTRICT COURT OF

THE EASTERN DISTRICT OF WASHINGTON

BRIEF OF APPELLEE, YAKIMA NATION

JAMES B. HOVIS

HOVIS, COCKRILL & ROY

Counsel for Appellee,

Yakima Nation

Office and Post Office Address:

316 North Third Street

Yakima, Washington 98907

Telephone: (509) 575-1500

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No. 78-630

IN THE

SUPREME COURT

OF THE

UNITED STATES

OCTOBER TERM, 1978

STATE OF WASHINGTON et al.,

Appellants,

VS.

CONFEDERATED TRIBES OF THE COLVILLE

INDIAN RESERVATION, et al.,

Appellees.

STATE OF WASHINGTON,

Appellant,

VS.

UNITED STATES OF AMERICA,

and

CONFEDERATED TRIBES AND BANDS OF THE

YAKIMA INDIAN NATION,

Appellees.

ON APPEAL FROM THE DISTRICT COURT OF

THE EASTERN DISTRICT OF WASHINGTON

BRIEF OF APPELLEE, YAKIMA NATION

JAMES B. HOVIS

HOVIS, COCKRILL & ROY

Counsel for Appellee,

Yakima Nation

Office and Post Office Address:

316 North Third Street

Yakima, Washington 98907

Telephone: (509) 575-1500

Page

EEE NER PR rea seal Vee CCR NENT. tere eer | 1

Danni asso pecan cwmignhnonornmesivodionnenephaastesabiicos 3

Mr PR TT nak sco oicn darks duenicusicchenetphiainsccenbvensysdavdbredens 6

UNIIITTE S ssin duced elects cha ketene Shae deen he iied dactdcscuechindeobpuhsons 11

1. Under “Worcester Doctrine” and “McClanahan Prin-

ciple”, Washington’s taxation scheme does not apply to

sales by tribal Indians on trust lands within the Yakima

REC IESRY ot Ce: anteater Stee Sie ae 11

2. District Court’s determination supported by “Williams

Test”. Moe v. Confederated Salish and Kootenai Tribes

OO NII sionchec tanec teach ela shige bcp teaadapcesmanteindensmeimene 30

3. Washington may neither seize cigarettes destined for

the Yakima Nation in interstate commerce as contra-

band or seize personal property on trust lands outside

Washington’s jurisdiction, This lack of state power of

judicial administration or constitutional non-judicial

administration disposes of the case.......................:.:.eseeeeeeee 42

4. Legal incidence of state taxing scheme falls on tribal

I earn a a eee ND scaled ier absieesbnensitabonaia 53

CRE boas scdnccecscnccinin ANE Oe TL CR He wnscosbovenbesten reson 58

TABLE OF AUTHORITIES

TABLE OF CASES

American Oil Co. v. Neill, 380 U.S. 451 (1965) ...00000.0 ee 9, 50

Angelica Co. v. Goodman, 52 Misc, 2d 844, 276 N.Y. Supp.

iP PE AE cs tadondsciempncbatatst tones cash eaontetandibihin thes pacinndeneoeanrcoomibaies 46

Antoine v. Washington, 420 U.S, 194 (1975) .20.0.2..cccceeceeeeeeeeeeeeeeees 22

Barta v. Oglala Sioux Tribe, 259 F. 2d 553 (8th Cir, 1958)... 37

Board of Regents of the University of Texas System v. New

Left Education Project, 404 U.S. 541, 544 (1971)... 3

Bryan v, Itasca County, 426 U.S. 373, (1976) -...0..00.0....... 16, 18, 20, 21

Buster v. Wright, 135 F. (8th Cir. 1905), appeal dismissed

PRR ESR NET ADA REPT or SES A EE Hee OE 34, 36

Canteen Service, Inc. v. State, 83 Wn. 2d 761, 522 P. 2d 847

| RETIREES tile RE IRR ier noes ete. ele emer Iees *... 54

Carter v. Commonwealth of Virginia, 321 U.S. 131 (1944)... 49

Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1830).......... 12, 25, 36

Chippewa Indian v. United States, 301 U.S. 358 (1937)..................-. 26

‘i

Colorado River Water Cors-cvation District v. United States,

IE Gs ns (icles biden seth ducpnnkn eis Lande te sao en 22

Commonwealth v. Flickinger, 165 Pa. Super. 95, 67 A. 2d 779

(1949), affirmed 364 Pa. 59, 73 A. Bd, 652 (1950), cert.

IE ras I CI or asiaaha bivicecpincecdnernonenevmetesicesan ton 46

Dandridge v. Williams, 397 U.S. 477 (1970) ..............ceccsseseseseeeseeevenee 30

Decoteau v. District County Court, 420 U.S. 25 (1975) 0.0.0 22

Delaware Business Council v. Weeks, 430 U.S. 73 (1977).................. 21

Dick v. United States, 208 U.S. 340 (1908) .............cccccccccccecceceeeecceceeee. 50

Federal Power Commission v. Tuscarora Indian Nation, 362

C8 gl Restarts EONS hae a Stir NOT A TOO Be ee 23

First Agricultural Bank v. Tax inidiiiabihi 392 U.S. 339,

FO eden etiie cles denietasetenearsericer Sesmscneadibaiincortsisionntnoeckeetet sien 55

Fisher v. District Court, 424 U.S, 482, (1976) oo... occcccceceeceeeeee 18, 22

Fletcher v. Peck, 10 U.S. (6 Cranch) 87, (1810) ....0.0......... 23, 24, 25, 26

Heublein v. South Carolina Tax Commission, 409 U.S. 273

SI pec tecasrcscliastnacia incase iehacagle ui tadare sg ee erie 50

Hostetler v. Idewild Liquor Corp., 377 U.S. 324 (1964)... 50

Iron Crow v. Oglala Sioux Tribe of the Pine Ridge Reserva-

lem, 200 FF. Bae (lth Cie, FSGS) 4.3 35, 36

Johnson v. Yellow Cab Transit Co., 321 U.S. 383 (1944)... 50

Kennerly v. District Court, 400 U.S, 423, (1971) ...000.00000 20, 22

Kern-Limerick, Inc. v. Scurlock, 347 U.S, 110, (1954)... 53, 55

Mahoney v. State Tax Commission, 96 Idaho 59, 524 P. 2d

| ERIN SOC ile FE SS Ce aI 28, 29, 37

Meatts v, Avecte, 412: 03S;401 (1973). 22

Maxey v. Wright, 13 Ind. T, 243, 54 S.W. 807, affirmed 105

| RA RAK easter Wa sea eS. ce) NANO ERR 34

McClanahan v. Arizona Tax Commission, 411 U.S. 164, (1975)

Ea ITA ESO WANS ee CELTS FANN Fm ve OCOD 7, 10, 16, 18, 22, 42, 46, 52

Menominee Tribe v. United States, 391 U.S. 404 (1968) 0... 23

Mescalareo Apache Tribe v. Jones, 411 U.S. 145 (1973).................. 22

Metletakla Indian Community v, Egan, 369 U.S. 45, (1961)............ .. 46

Miller Bros. Co. v. Maryland, 347 U.S. 340 (1954)... 48

Moe v. Confederated Salish and Kootenai Tribes of the Flat-

head Reservation, 425 U.S. 463, (1976)

RN Se Cas SA Sea) CBC alc a tae 2, 8, 9, 18, 21, 38, 39, 40, 42, 48, 52

Morris v. Hitchcock, 194 U.S, 384 (1904) ooo. ceecee ee cee 34, 37

Page

Morrow v. Henneferd, 182 Wn. 625, 47 P. 2d 1016 (1935).............. “47

Morton v. Mancari, 417 U.S. 435 (1974) .0.............eccceeeeeeeceeeeeteeeeeeeeees 21

Deeteen. o; Dien, BES Ou TO CGD an isis sci cnrcecscestnineciesesccirenmatines 22

Dee i SO Sr, a a esdiomeaegeniblinns 52

Neeld v. Giroux, 224 N.J. 224, 131 A, 2d 508 (1957) .......0...02....-.-- 45

New Jersey v. Wilson, 11 U.S. (7 Cranch) 164 (1812) ........................ 26

New York ex rel. Ray v. Martin, 326 U.S. 496 (1946) ...................... 20

Northern Cheyenne Tribe v. Hollowbreast, 425 U.S. (1974) .............. 21

North Sea Products v. Clipper Seafoods, 92 Wn. 2d 236, ......

| ae oo EER SEL Ae tn SSE RE ERE a 43

Oliphant v. Suquamish Indian Tribe, 435 U.S. 191 (1978)

MMB De ON RN I SLOG Cite EP CROC TEL! SN ee 23, 26, 27, 28

Oneida Indian Nation v. County of Oneida, 414 U.S. 661

BP sai icsheclae scat her leteas hich tana ssladansosngipcenidp nigmnanne dnlihinadibunstbgeimnestieesanphit 22

Organized Village of Kake v. Egan, 369 U.S. 60 (1962) .................... 46

People v. Asta, 337 Mich. 590 60 N.W. 2d 472 (1953) -....-.------------- 46

People v. Locriccho, 342 Mich. 210, 69 N.W. 723 (1955) .................- 46

Perrin v. United States, 232 U.S. 478 (1914) 00.02... cceceeeceeeeeeee sees 50

Pfeiffler v. State, 226 Ark. 825, 295 S.W. 2d 365 (1956) ..........0....... 45

Phillips v. Commission of Internal Revenue, 283 U.S. 598

(Mt RRS ORES te AIRC SSE SAREE ta ARLE. A Oe 49

Phillips v. United States, 312 U.S. 246, (1941) ........--.---.--ec-seseseeeeeees 2

Pierce County v. State, 66 Wn. 2d 728, 731, 404 P. 2d 1002

| SUBSEAEDE EE ESSE Ae uk PRE OST ES TERN Ee ves a oa 56

Polar Ice Cream and Creamery Co. v. Andrews, 375 U.S. 361

| RRESEIE EE Ti BSCR PNY SRT NI AY RANT Fe SO 56

Pringle v. State, 77 Wn. 2d 569, 464 P. 2d 425 (1970).................-.-.-.. 56

Puyallup Tribe v. Washington Game Dept., 433 U.S. 165

OR RL eee 21, 43

Rainier National Park Co. v. Martin, 18 F, Supp. 581, on

rehearing 23 F. Supp. 60 (W. D. Wash. 1937) affirmed

ad atlenncenapornid 47, 49

Rosebud Sioux v. Kneip, 430 U.S. 584 (1977) -.......--..-....cececeeccseseeeees 21

Santa Clara Pueblo v. Martinez, 436 U.S, 49 (1978)... 46

Scandinavian Airlines System, Inc. v. County of Los Angeles,

56 Cal. 2d 11, 363 P. 2d 25, cert. denied 368 U.S, 899.0000. 41

Seminole Nation v. United States, 316 U.S. 286 (1941)... 25, 26

Seymour v. Superintendent, 368 U.S, 351 (1962) -.....-.----.------.eeee- 23

Page

Sherman-Reynolds, Inc. v. Mahin, 47 Ill. 2d 323, 265 N.E, 2d

Pe FRR ORT SE eo ieee 47

State v. 483 Cases, 98 N.H. 180, 96 A.2d 568 (1953)... idesoasliiotntgeenibiiies 45

State v. Sedaeca, 252 Md. 207, 249 A. 2d 456 (1969) 0000. 46

Swift & Company v, Wickham, 382 U.S. 111, 192 (1965)... 2

The Kansas Indians, 72 U.S. (5 Wall.) 737 (1867) ..000.000--0-ccc0o.--- 13

Tinker v. Midland, 231 U.S, 681 (1914) ..........c.cccccccccccesesecesceeceeseeees 50

Tonasket v. State, 79 Wn. 2d 607, 488 P. 2d 281 (1971).............. 29, 55

Tonasket v. State, 84 Wn. 2d 164, 525 P. 2d 744 (1974)... 29, 55

Tonasket v. Washington, 411 U.S, 451 (1973), after remand

RRS I A RE ae 29

United States v. Antelope, 430 U.S. 641 (1977) ..0.000........ bhknaakeniaal 20, 21

United States v. Jim, 409 U.S. 80 (1972) o.oo... ccccccccccccccceccseececesececeees 22

United States v. Laiviere, 98 U.S, 188 (1976) ............0.-cccccccesesceeseceseeee 50

United States v. Mason, 412 U.S. 391 (1973) ooo. c.ccccccccccceccccseeeceneees 22

United States v. Mazurie, 419 U.S, 544 (1975). occ. 20, 21

United States v. Mississippi Tax Commission, 412 U.S. 363

Bakes SEG WER one RETR Be COTES eRe SU RUPE. 9, 50

United States v. McBratney, 104 U.S. 621 (1882) 2.000000 occ eee 20

United States v. Wheeler, 435 U.S. 313 (1978)... 14, 21

United States v. Winans, 198 U.S. 371 (1905) 000 27, 50

Utah v. Northern R. Co. v. Fisher, 116 U.S. 28 (1885) 00000000000... 17

Valandra v. Videt, S.D. 259 N.W. 2d (1977) .........cccccccccocecececceeececeseeee 28

Warren Trading Post v. Arizona Tax Commission, 380 U.S.

RR aR ER Ree ei Se tet ae eee, 23, 28, 46

Washington v. Yakima Indian Nation, ...... US. ......, 58 L. Ed

RAT RC Ce ck Re ca 11, 21, 29, 39, 41, 52, 56

Williams v. Lee, 358 U.S, 217 (1959) 200. 7, 14, 16, 17, 20, 32, 46

Worcester v. State of Georgia, 21 U.S. (6 Pet.) 515 (1832)

PORES ARETE bee SONI LE RE SED ae DEN BO OTD SET TO 7, 12, 13, 20, 21

UNITED STATES CONSTITUTION

Amendment XVI, §1 (Equal Protection Due Process

oO FOR EL SA SAA ERM TEND 9, 10, 44, 45, 50, 51, 52

Article I, §8, Cl. 3 (Commerce Clause) ...................0.c00--00ecceseeceeeeeee 3,45

Article I, $10, Cl. 1 (Contract Clause) .......................00.-ccccecceccceeeeseee 25, 26

Asticle VI, Cl, 2 (Supremacy Clause) ............:c0c-.s:ccs.ccc.ccscccceccescocceces 3

TREATIES

Page

Treaty with the Yakimas, 12 Stat. 951, 2 Kappler 524

scanosersinbelcsatedeivedlssinniedteibicnniediieh insti teisiiastdoeakisacnnnate 13, 14, 19, 25, 34, 51

UNITED STATES STATUTES

Buck Act of July 30, 1947 (61 Stat. 641) 4 USC §$§105-110............ 28, 29

Direct Appeals from Decisions of three-judge Court 28 USC

LO gE AGES LEY RT EAE A EATS ST ES OREM 2,3

Indian Civil Rights Act of April 11, 1968, P. L. 90-284

(88 Stat. 77), 25 USC §§1301-1341............... AO SEA Pe eee 20

Indian Financing Act of 1974, P. L. 93-262 (88 Stat. 77),

Be Cee, COU sn iccensettnserncpeesnsipiniek tiainicepsbesigutingseaptieniabene 20

Indian Reorganization Act of 1934 (48 Stat, 987), 25 USCA

0" Sain eRe TOE EAE RE MEY 20

Indian Self-Determination and Education Assistance Act of

January 4, 1974, P. L. 93-638 (88 Stat. 2203), 25 USC

IIIT: ‘sianchscpsatisliebialicadensbahleihienleliah LeatunGhedisbiaeasbeesecasnpictiens EO

Menominee Restoration Act of December 22, 1973, P. L.

93-178, (87 Stat. 770), 25 USC §§903-903b............ 2 ..cceceeseeeees 20

Three judge Courts for ee against state and federal

I Bae ie ich haectaetescinnscrncantelensensenksnesbeasnhineetionleaiiiniinipies 3

Washington Enabling Act, Ch. 180, Laws of 1889, 25 Stat. 676......15, 19

Repeated as codified: |

4 USC §105-110.................... ichinloapilsicings anippccebahasanniagetpialates 28

es ea itech lcovenrdnniptivancisinastidatsddesaidcanp -dctnietadabidapibantagiaiaes 28

a IEE Didi stvncenichennsachsebsaslinipiabiadhilanehteaabianatansdiguniiies 20

i A a 20

a cei inietcsiscscedipiapcicecbiniiitdsuiicitisanapdliclipagsindacasimetadas 20

Se OR icickscssctccnicnsvnstndenneversenienieonteeminabtagsiauniags 20

ee erty setetnhionsienisnuneiticinttinncannandnmedianieinusaniia 20

ee ee IE aieiiseetteevere steslhccnistesesepticcsesatacesnnthatadibatelieimnesibnpaeicneniie 2,3

By tate nhinlovanrerestatineaclntnasdetptedpnantapicadbeensdcianbomenants 3

WASHINGTON CONSTITUTION

fe USAR RRIL Tees RI nee Ie OEE MESES CY SRDS EY Uae ne ie 15

WASHINGTON STATUTES

ROGD Weraialeiams Twn Gi, GBB annie cscs csttcscsninsnnssnssnseescocnnconsneensccn 29

1972 Washington Laws, Extraordinary Session §§6, 7, C. 157.......... 29

WASHINGTON STATUTES (cont.)

Page

DedaeT » MEP eID suncidschinteicianisnien pti aciapniialpdaideisiensiehdsiibniaasalaigiiac las aaa 29

Re a ED sca eiibncoscnessuetinns viinlsignoneestuahibicapdicderenamalanas cuisaaiee 56, 57

ft RE RT Fa TE NTL Eni. setecnians 49

Sar 6: SII as corinsntiithiisihieenseteacnshiiendansandcniiaentinn ta aa oa 54, 56

ies MENTED ‘sncxinnsvp-sipescsdesisinepiabesnucurisdentiunihonsemniescnimaiunt/ teen 54

Sea Ue , SEMI cctancenpitcnsceininncennsientiisieihgs pasaicadaadtascan mate an 56

STATE ADMINISTRATIVE REGULATIONS AND BULLETIN

Administrative Regulation Rule 192 (WAC 458-20-192) 55, 56

Excise Tax Bulletin 504.08.192......... aeutbigasanieiebiacdieedieipiedei ital iunnal 55, 56

OTHER AUTHORITIES

Se Ce A Ga, ii ites civics nichts cid apencnincal de aedaleaeiaes 25

Felix S. Cohen, Handbook of Federal Indian Law (1942)........ 34, 36, 37

Decisions of Department of Interior:

BP , BaB cde Sindecsscsastentnsniersssichpncbenicnpeepsedhooniliadsbsaiaeiais cua enema cna a 37

RNY A Sipe te Pe TN GS” 28

No. 78-630

IN THE

SUPREME COURT

OF THE

UNITED STATES

OCTOBER TERM, 1978

STATE OF WASHINGTON, et al.,

Appellants,

VS.

CONFEDERATED TRIBES OF THE COLVILLE

INDIAN RESERVATION, et al.,

Appellees.

STATE OF WASHINGTON,

Appellant,

VS.

UNITED STATES OF AMERICA,

and

CONFEDERATED TRIBES AND BANDS OF THE

YAKIMA INDIAN NATION,

Appellees.

ON APPEAL FROM THE DISTRICT COURT OF

THE EASTERN DISTRICT OF WASHINGTON

BRIEF OF APPELLEE, YAKIMA NATION

JURISDICTION

This appeal is not within the jurisdiction of this

Court.

The Solicitor General submits that this Court does

not have jurisdiction under 28 USC 1253, because this

case was not one required to be heard by a three-judge

district court, and that consequently, this appeal is not

within this Court’s appellate jurisdiction. The Con-

federated Tribes and Bands of the Yakima Indian

Nation, hereinafter called “Yakima Nation” joins in

the Solicitor General’s submission and believes that the

cited cases Swift and Company v. Wickham, 382 U.S.

111, 129 (1965) ; Moe v. Confederated Salish and Koot-

enai Tribes of the Flathead Reservation, 425 U.S. 463,

481 n. 17 (1976), Phillips v. United States, 312 U.S.

246, 252 (1941), are apposite.

A distinction has been clearly drawn by this Court

between direct attacks on the constitutionality of a

state statute and attacks on the constitutionality of the

result obtained by the use of a state statute. Phillips

v. United States, supra. This case falls within the later

alternative. No state statute or order has been found

or claimed to be unconstitutional. It is the reset of the

use of a state statute in matters involving Indian Com-

merce or transactions within Indian Reservations that

form the basis of the Appellees contentions below. No

attempt was made to declare state statutes unconstitu-

tional. It was the result obtained by the use of a state

statute on Indian commerce or transactions within an

Indian Reservation that appellee’s sought to restrain.'

'This Appellant admits. See Appellant’s Opening Brief, p. 42-43.

The State of Washington has clearly recognized this

distinction. After the District Court’s preliminary in-

junction issued on September 6, 1974 and even after

the final injunction issued on May 10, 1978, the state

of Washington has continued to administer its tax laws

without legislative response to the District Court’s de-

termination. This appears to your writer to be the con-

trolling aspect of this case irregardless of whether this

result obtained from the use of a state statute was pro-

hibited by the Commerce Clause or the Supremacy

Clause.

The District Court’s determination was limited to

tribes and tribal licensees operating under an overall

tribal ordinance or law and did not have statewide

application. The District Court’s determination there-

fore did not call for a three judge District Court. See:

Board of Regents of the University of Texas System v.

New Left Education Project, 404 U.S, 541, 544 (1971).

The Yakima Nation did not seek to invoke 28 USC

§2881.

QUESTIONS PRESENTED

1. Whether a three-judge District Court was law-

fully convened under 28 U.S.C. §2281 such that this

Court has jurisdiction over this appeal pursuant to 28

U.S.C. §1253.

2. Whether a state may impose upon an Indian

tribe and/or its licensed retailers the obligation to col-

lect and remit state excise taxes on sales of personal

property to non-members on trust lands where the state

has no applicable criminal or civil jurisdiction over the

Indian seller.

The three-judge District Court determined that the

legal incidence of imposition of the tobacco excise tax

is on the seller and that the legal incidence of the state

cigarette and sales excise taxes are on the purchaser.

The three-judge District Court has determined that the

imposition of sales and cigarette excise taxes on the

non-Indian purchaser of cigarettes is an interference

with tribal self-government as it would be economically

destructive of the tribal enterprises. No such determi-

nation was made as to the sales excise tax on sales of

other personal property. The three-judge District Court

found that the sales of cigarettes by tribally licensed

Indian retailers has been pre-empted by tribal ordi-

nance. These determinations by the District Court give

rise to the following subordinate questions to (2)

above:

a) Whether tribally regulated Indian retailers

have an obligation to collect and remit state taxes

on sales of personal property (cigarettes) to non-

members when the sales transaction is already be-

ing regulated and taxed by an Indian tribe having

reserved this sovereign power when the Secretary

of Interior has approved such reguiation and taxa-

tion.

b) Whether the imposition of an obligation upon

an Indian tribe and/or its licensed retailers to col-

lect and remit state excise taxes on the tribally

taxed sales of personal property to non-members

thereby giving non-Indian retailers a price advan-

tage and thereby severely effecting an established

tribal enterprise, infringes on tribal self-govern-

ment and is therefore prohibited.

c) Whether the determination of the legal inci-

dence of the state cigarette and sales excise taxes

by the District Court was correct.

d) Whether the determination that the legal inci-

dence of a state excise tax falls upon a non-member

purchaser for purchases on land where the state has

no criminal or civil jurisdiction over the Indian

seller gives authority to the state to impose an obli-

gation on the Indian seller to collect state excise

taxes.

3. Whether a state that cannot enforce or admin-

ister its taxing system without judicial intervention,

may constitutionally impose on persons not subject to

its jurisdiction the obligation to collect and remit state

excise taxes on sales of personal property.

4. Whether a state may unilaterally impose record

keeping and reporting requirements on an Indian tribe

and/or its licensed Indian retailers making sales of

personal property on trust lands within an Indian Res-

ervation when the state has no civil or criminal juris-

diction over the tribe or Indian seller.

5. Whether a state has the non-judicial power to

seize property of a sovereign Indian tribe in the pos-

session of a common carrier in interstate commerce

destined for an Indian reservation where the Indian

tribe sells cigarettes to its members in an admitted

state tax free transaction because its members have in

the past sold the majority of the cigarettes purchased

in such a tax free sale to non-members in sales the state

claims are taxable to the non-members.

6. Whether a state may, without congressional or

judicial authorization constitutionally enter a building

of an Indian seller located on trust land within an

established Indian Reservation, to enforce collection of

state taxes imposed upon a non-Indian purchaser for

sales occurring on lands where the state has no crimi-

nal or civil jurisdiction, and seize or levy on goods in

the possession of the Indian seller and owned by the

Indian seller.

SUMMARY OF ARGUMENT

The District Court’s determination that a state may

not impose upen an Indian Tribe and/or its licensed

retailers the obligation to collect state excise taxes from

non-member purchasers for sales on trust lands where

the state has no civil or criminal jurisdiction within an

established Indian reservation over which the state has

disclamed jurisdiction; rests comfortably on the ‘“Wor-

cester doctrine’”’, Worcester v. Georgia, 31 U.S. (6 Pet.)

515, the “McClanahan principle”, McClanahan v. Ari-

zona Tax Commission, 411 U.S. 164, and the ‘Williams

test.”” Williams v. Lee, 358 U.S. 217.

Absent permission by Congress, prohibition of such

state intrusion into transactions taking place where the

state has no criminal jurisdiction over an Indian seller

is absolute even if the state would have jurisdiction over

transactions in which only non-Indians are involved.

Such transactions are within the exclusive jurisdiction

of Congress and the tribal government whose right of

self-government was reserved by treaty.

Under the ‘““Worcester doctrine”, the “McClanahan

principle”, and the “Williams test”, any state intru-

sion into Indian-non-Indian transactions affecting In-

dians in areas where the state has no criminal or civil

jurisdiction over the Indian involved, is a prohibited

interference with the right of reservation Indians to

make their own laws and to be ruled by them. Affirm-

ance of the District Court’s determination on these

principles will establish the constitutional distinction

between unlawful state intrusion into an area where

the state has no criminal jurisdiction and lawful state

intrusion into an area where Congress has authorized

criminal jurisdiction over Indians. Cf. Moe v. Con-

federated Salish and Kootenai Tribes, 425 U.S. 468.

Such an announcement would beneficially clarify stand-

ards regarding state-Indian relationships.

Even if state intrusion is not prohibited on the

rationale of lack of jurisdiction over the Indians in-

volved in the Indian-non-Indian transaction, the Dis-

trict Court’s determination that Washington may im-

pose upon an Indian tribe and/or its licensed retailers

the obligation to collect state excise taxes from non-

member purchasers rests comfortably on the “Williams

test.” The “Williams test” provides, absent governing

Acts of Congress, that state action may not infringe on

the rights of reservation Indians to make their own

laws and be governed by them. In the instant case, the

District Court has correctly determined that the Indian

tribe had the power to tax and regulate the Indian-non-

member transaction by tribal ordinance and that the

“Williams test” pre-empted any state intrusion into

the same transaction. Further, the District Court hav-

ing determined that the imposition of an additional

state tax on the sale would destroy the tribal enter-

prise, correctly determined that such impairment was

prohibited by the “Williams test.” These determina-

tions.are correct and are not in conflict with Moe v. Con-

federated Salish and Kootenai Tribes, 425 U.S. 463.

In Moe, there was no tribal enterprise; there was also

no tribal ordinance taxing and regulating the trans-

action. Moe had many other factual differences and

does not control the instant case. In Moe, the state had

criminal jurisdiction over the retailers. Moe should be

limited in application to its facts.

Washington admits it does not have judicial power

to seize cigarettes belonging to Yakima Indians in

interstate commerce or from Indians as it lacks juris-

diction. However, Washington contends that it has non-

judicial power to make such seizures.

Washington does not have the non-judicial power

to seize property of a sovereign Indian tribe in the

possession of a common carrier in interstate commerce

destined for an established Indian reservation where

the Indian tribe sells cigarettes to its members in an

admitted state tax free transaction. Such a non-judicial

seizure authorized by Washington statutes violates the

Due Process Clause of the Fourteenth Amendment.

The non-judicial determination of a state that a portion

of the cigarettes previously sold to Indian retailers

were resold to non-Indian purchasers in areas of the

reservation over which Washington has no jurisdiction

does not bring this non-judicial seizure within constitu-

tional standards. United States v. Mississippi Tax

Commission, 412 U.S. 363; American Oil Co. v. Niell,

380 U.S. 451.

Washington does not have the non-judicial power

under its statutes to enter into a building owned by an

Indian on lands over which it has no civil or criminal!

jurisdiction for the purpose of seizing and selling prop-

erty belonging to said Indian to enforce collection of

state excise taxes previously imposed upon a non-Indian

purchaser. Such a seizure is clearly prohibited by the

Due Process Clause of the Fourteenth Amendment as

it is a seizure in violation of the Fourth Amendment.

Washington’s non-judicial tax collection scheme for

the collection of taxes imposed on a non-Indian pur-

chaser from Indians in areas without Washington’s

jurisdiction does not meet constitutional standards. As

Washington’s non-judicial collection scheme is uncon-

stitutional and Washington admits it may not use state

judicial power to collect these taxes; there is no obli-

gation for the Indian seller to collect and remit the

taxes imposed on a non-Indian purchaser. The absence

of a constitutional non-judicial power of collection dis-

poses of Washington’s contention that there is an obli-

gation on the Indians to collect and remit the tax.

McClanahan v. Arizona Tax Commission, 411 U.S. 164,

178-79.

Washington may not impose its reporting and

auditing requirements on persons over which it has no

criminal and civil jurisdiction or constitutional powers

of non-judicial collection. Washington has no criminal

or civil jurisdiction over the Yakima Nation. The

Yakima Nation has common law immunity from suit.

Washington does not have any applicable criminal or

civil jurisdiction over Yakima Indians for transactions

on trust lands within the Yakima Reservation. Wash-

ington v. Yakima Indian Nation, 58 L. Ed.2d 740.

Washington cannot impose its reporting and auditing

requirements on the Yakima Nation or its licensed re-

tailers.

The District Court’s determination that the legal

incidence of the tobacco tax was on the Indian seller is

correct. This Court should determine that the legal

incidence of the other state excise taxes are also on the

Indian seller. It is admitted that where the legal inci-

dence of the state excise tax is on the Indian, that

Washington may not collect its state excise taxes.

ARGUMENT

1. Under “Worcester Doctrine” and ‘“‘McClanahan

Principle”, Washington’s taxation scheme does

not apply to sales by tribal Indians on trust lands

within the Yakima Indian Reservation.

A discussion of the issues raised by Washington’s

appeal requires consideration of some basic concepts.

The District Court’s determination rests comfort-

ably on a conception of Indian tribes as self-governing

Indian communities which retain inherent powers of

self-government. The basic contours of this conception

of Indian tribes as “domestic dependent nations” under

the “protection” of the United States were first estab-

lished by Chief Justice Marshall writing for the Court

in Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1,

16-17 (1830). Chief Justice Marshall more fully de-

veloped this concept in Worcester v. State of Georgia,

31 U.S. (6 Pet.) 515, 559-562 (1832): “The Indian

Nations have always been considered as distinct, inde-

pendent political communities, retaining their original

natural rights, as the undisputed possessors of the soil.

The very term ‘nation’ so generally applied to them

means ‘a people distinct from others.’ The Constitu-

tion by declaring treaties already made, as well as those

to be made, to be the supreme law of the land, has

adopted and sanctioned the previous treaties with the

Indian Nations, and consequently admits their rank

among those powers who are capable of making treaties

. . . The whole intercourse between the United States

and this Nation, is, by our constitution and laws, vested —

in the government of the United States.”

At the time of European contact, Indian tribes and

their governments were functioning as independent

nations and were viewed and dealt with as such by

European powers. They were recognized as having

authority of their own (more commonly referred to as

sovereignty) to manage their affairs within their terri-

tory and with other nations. Though Chief Justice Mar-

shall’s opinions are often considered to be the corner-

stone of Indian sovereignty, these opinions had a limit-

ing effect on the inherent powers of an Indian tribe.

However, these limitations were on the external powers

of Indian tribes to deal with other nations and did not

effect tribal powers within Indian reservations. Chief

Justice Marshall stated that the Constitution ‘confers

on Congress the powers of war and peace; of making

treaties, and of regulating commerce . . . with the

Indian tribes.” “These powers,” Justice Marshall said,

“comprehend all that is required for the regulation of

our intercourse with the Indians .. .’”

This was the law of the land at the time the Con-

federated Tribes and Bands of the Yakima Nation

treated with the United States. The resulting Treaty

with the Yakimas’ clearly stated that the signatory

fourteen tribes and bands “for the purposes of this

treaty, are to be considered as one nation.” Exami-

nation of the minutes of the treaty council shows that

the executed treaty explicitly guaranteed that the Yak-

ima Indians were to have “their own government” and

were to have “their own laws.” See: Treaty Minutes

2 Emphasis supplied. Worcester v. Georgia, 31 U.S. (6 Pet. 515,

559 (1832).

Also see: The Kansas Indians, 72 U.S. (5 Wall.) 737, 755 (1867)

regarding state power to tax tribal Indians:

“Tf the tribal organization of the Shawnees is preserved in-

tact, and recognized by the political department of the govern-

ment as existing, then they are a ‘people distinct from others,’

capable of making treaties, separated from the jurisdiction of

Kansas governed exclusively by the government of the Union. If

under the control of Con s, from necessity, there can be no

divided authority.” (Emphasis supplied).

3 Executed on June 9, 1855. 12 Stat. 951, 2 Kappler 524.

accompanying Treaty with the Yakimas, filed in Docket

77-388.

Further, Article II, Treaty with the Yakimas‘ pro-

vided that the Yakima Indian Reservation was to be

set apart for the exclusive use and benefit of the Yak-

imas and that no one except United States government

personnel was to enter this reserved area without the

permission of the Yakima Nation. This Court has ex-

plained the effect of this article: “Jmplicit in these

treaty terms, . . . was the understanding that the in-

ternal affairs of the Indians remained exclusively with-

in the jurisdiction of whatever tribal government

exists.”

In 1978, Justice Stewart speaking for the Court,

restated this concept of Indian tribes as self-governing

political communities which retain inherent powers of

sovereignty. United States v. Wheeler, 435 U.S. 313,

323 (1978): “In sum, Indian tribes still possess those

aspects of sovereignty not withdrawn by treaty or

statute, or by implication as a necessary result of their

dependent status.”

Washington agrees that the Yakima Indian Nation

“is a soverign Indian Nation and Tribe established by

treaty with the United States (12 Stat. 951) with a

governing body duly recognized by the Secretary of the

412 Stat. 951, 2 Kappler 525. Appellant’s Brief, App. 5a.

> First emphasis is this Courts. Second emphasis is your writers.

Williams v. Lee, 358 U.S. 217, 221.

Interior of the United States of America.’

Washington agrees that the transactions involved

are within the exterior boundaries of the Yakima

Indian Reservation and the sales to non-members of

the Yakima Nation takes place on allotted land held in

trust by the United States.’ Washington was admitted

to the Union in 1889. The Enabling Act (Ch. 180, Laws

of 1889, 25 Stat. 696) providing for the admission of

the State of Washington (among other states) to the

union, provided in Section 4 that Indian lands in the

state of Washington, and therefore the Yakima Indian

Reservation, should “remain under the absolute juris-

diction and control of the Congress of the United

States, ...” (Appellant’s Brief App. 5a). Under this

explicit mandate of the congressional Enabling Act, the

people of Washington, through constitutional conven-

tion, incorporated this disclaimer of jurisdiction and

control over Indian lands into Article XXVI of the

Washington State Constitution in acceptance and in

recognition of the exclusive federal nature of trans-

actions within Indian Reservations located in the newly

created State of Washington.

From the general concept of Indian tribes as self-

governing Indian communities subject only to the ex-

clusive control of Congress, this Court has evolved a

6, Pre-trial Order, hereafter “PTO”, 5.2, A. 171.

7 PTO 5.7, 5.8, A. 172-176.

principle regarding state taxation on Indian Reserva-

tions. Justice Brennan speaking for the Court has

designated this principle: “The McClanahan princi-

ple.”* This principle provides that state tax laws are

not applicable to tribal Indians on an Indian Reserva-

tion except where Congress has expressly provided that

State laws shall apply.’ The foundation of this principle

is the “plenary and exclusive power of the federal

government to deal with Indian tribes... , and ‘to

regulate and protect the Indians and their property

against interference even by a state. ’'°

When non-Indians are involved in reservation situ-

ations, this Court uses what Justice Thurgood Marshall

speaking for the Court has designated the ‘Williams

test.””"' This “test” was stated by Justice Black for this

Court in Williams v. Lee, 358 U.S. 217 (1959). Wil-

liams v. Lee, held that state courts have no jurisdiction

to hear a civil action brought by a non-Indian against

a tribal Indian arising from a transaction on a reser-

vation. The stated “test” was:

“Essentially, absent governing Act of Congress, the

question has always been whether the state action

infringed on the rights of reservation Indians to

make their own laws and to be ruled by them.’’”

8 Bryan v. Itasca County, 426 U.S. 373, 376 n. 1 (1976).

9Id. Emphasis supplied.

10 Td. Emphasis supplied.

carter v. Arizona Tax Commission, 441 U.S. 164, 179

( ).

2 Td.

For an understanding of the “test”, the Court asks

us to compare Utah v. Northern R. Co. v. Fisher, 116

U.S. 28 (1855). Utah v. Northern R. Co. v. Fisher

involves an action brought by a non-Indian corporation

which owned sixty-nine miles of railroad. A quarter

mile of this railroad ran through the area designated

by treaty as the Fort Hall Reservation. The non-Indian

owner sought relief from territorial tax for this quar-

ter mile of railroad. No Indian or tribal interests were

involved and the right of way for this quarter of a mile

had been ceded by the Indians to the United States.

Also, this railroad had been constructed in this federal

territory pursuant to an Act of Congress. The Court

determined that even if the railroad were within the

Fort Hall Reservation that there would be no relief

for the non-Indian plaintiff as no “‘rights of the Indians

can be impaired.” (Emphasis added).

Justice Black for the Williams v. Lee Court further

calls to our attention the principle that Congress has

“acted consistently upon the assumption that the States

have no power to regulate the affairs of Indians on a

reservation,” and clearly indicates that the Court be-

lieved that the extent of state intrusion into the affairs

of reservation Indians is a matter for Congress alone."*

In view of this direction by the Court, it is appropri-

ate tat we examine the present policy of Congress re-

~~ 13 Williams v. Lee, 358 U.S. 217, 221.

garding tribal self-government. This Court has noted

the present focus of Congress towards “strengthening

tribal self-government.” Bryan v. Itasca County, 426

U.S. 373, 388 n. 14 (1976) and the possible destruction

of thibal self-government “if tribal governments and

reservation Indians were subordinated to the full pano-

ply of civil regulatory power, including taxation, of

state and local governments.” Bryan v. Itasca County,

426 U.S. 373, 388 (1976).

This Court has also described the “Williams test”

as prohibiting the exercise of the state’s interest: (1)

Where “the tribal self-government would be affected.”

McClanahan v. Arizona Tax Commission, 411 U.S. 164,

179 (1973) (Emphasis supplied). (2) Where the bur-

den “frustrates” tribal self-government, Moe v. Salish

and Kootenai Tribes, 425 U.S. 468, 483 (1976). Justice

Black’s phrasing of the “Williams test” has also been

repeated in Fisher v. District Court, 424 U.S. 382,

386-87 (1976) (per curiam) (dictum); Kennerly v.

District Court, 400 U.S. 428, 426-27 (1971) (per

curiam) (dictum) ; McClanahan v. Arizona Tax Com-

mission, 411 U.S. 164, 179 (1972) (dictum).

We will hereafter discuss why the District Court’s

determinations are sustained by application of the

‘Williams test.”’* However, an initial inquiry into the

necessity for such a discussion is appropriate. Applica-

'4 This brief pp.

tion of the “Williams test’”’ is not necessary to uphold

the District Court’s judgment and restraint.

It is clear that in executing and ratifying the Treaty

with the Yakimas, the United States and the Yakima

Nation understood that the Yakima Reservation should

be under exclusive tribal control. Subsequently, the

state of Washington was created from a portion of

Washington Territory and the already established Yak-

ima Reservation *.’as within the exterior boundaries of

the newly created state. It was one of the requirements

for admission to the Union and the people of the newly

formed state expressly agreed, that the Yakima Reser-

vation. should be exclusively within the control of Con-

gress.

The State of Washington is pre-empted by the

Enabling Act (Ch. 180, Laws of 1889, 25 Stat. 696)

from taxing transactions on Indian lands in the State

of Washington in which Indians are in any way in-

volved until Congress gives its permission. We believe

that it would follow that all transactions are pre-

empted by the “absolute control of Congress” were it

not for the ‘““McBratney rule” involving transactions

totally between non-Indians."

If we return to the opinion in William v. Lee, we

will see that the Court clearly intended that Congress

should determine the area of state intrusion into Indian

reservations if Indians were in any way involved. (358

U.S. at 221). Actions of Congress subsequent to Wil-

liams v. Lee manifest continued adherence by this

Nation to the core of Worcester v. Georgia, 31 U.S.

(6 Pet) 515 (18382). (Menominee Restoration Act of

December 22, 1973, 87 Stat. 770; Indian Self-Deter-

mination and Education Assistance Act of January 4,

1974, 88 Stat. 2203. Indian Civil Rights Act of April

11, 1968, 82 Stat. 77, Indian Financing Act of 1974,

88 Stat. 77.) We further note that Williams v. Lee was

announced in 1959 during a period in which state intru-

sion would probably have met with tacit Congressional

approval. This Court has indicated that the federal

courts should not be strained to implement this policy

which Congress has now rejected. Bryan v. Itasca

County, 425 U.S. 378, 389 n. 14.

15 United States v. McBratney, 104 U.S. 621 (1882). The justifica-

tion for this state extra-territorial jurisdiction over a non-Indian de-

fendant (with a non-Indian victim) is often curiously stated. See:

Draper v. United States, 164 U.S. 240 (1896) and New York ez rel

Ray v. Martin, 326 U.S. 496 (1946). The ‘“McBratney rule” is hard

to harmonize with Worcester v. Georgia, supra; United States v.

Antelope, 430 U.S. 641 (1977) and Kennerly v. District Court, 400

U.S. 423 (1971).

United States v. Mazurie, 419 U.S. 544 (1975) forecloses the

application of the ‘““McBratney rule” to matters regarding commerce

on Indian Reservations.

This Court has by its decisions subsequent to Wil-

liams v. Lee, manifested continued adherence to the

core of Worcester v. Georgia and the plenary power of

Congress: Washington v. Yakima Indian Nation, ......

U.S. ......, 58 L.Ed. 2d 740 (1979) (plenary power

of Congress to determine reservation jurisdiction) ;

United States v. Wheeler, 435 U.S. 318 (1978) (inher-

ent tribal sovereignty), Puyallup Tribe v. Washington

Game Dept., 483 U.S. 165 (1977) (tribal sovereign

immunity), Delaware Business Council v. Weeks, 430

U.S. 73 (1977) (plenary power of Congress); Rose-

bud Sioux v. Kneip, 480 U.S. 584 (1977) (plenary

power of Congress to determine reservations) ; United

States v. Antelope, 480 U.S. 641 (1977) (plenary

power of Congress to determine jurisdiction) ; Moe v.

Salish and Kootenai Tribes, 425 U.S. 468 (1976)

(Supremacy Clause forbids state taxation of Indians) ;

Northern Cheyenne Tribe v. Hollowbreast, 425 U.S.

649 (1976) (plenary power of Congress to determine

distribution from Indian lands); .Bryan v. Itasca

County, 426 U.S. 373 (1976) (plenary power of Con-

gress to determine area of state jurisdiction on reser-

vations); United States v. Mazurie, 419 U.S. 544

(1975) (plenary power of Congress to regulate com-

merce on Indian reservations among non-Indians and

to delegate authority to tribes); Morton v. Mancar,

417 U.S. 485 (1974) (Congressional Indian employ-

ment preference permissible to improve tribal self-

government); Oneida Indian Nation v. County of

Oneida, 414 U.S. 661 (1974) (plenary power of Con-

gress to determine validity of transfer of Indian lands

to state) ; Morton v. Ruiz, 415 U.S. 199 (1974) (Fidu-

ciary responsibility of federal government to Indians) ;

Fisher v. District Court, 424 U.S. 482 (1976) (pre-

emption of tribal ordinances over state courts regard-

ing adoptions of reservation Indians) ; Colorado River

Water Conservation District v. United States, 424 U.S.

800 (1976) (plenary power of Congress to determine

jurisdiction for adjudication of reservation water

rights) ; Antoine v. Washington, 420 U.S. 194 (1975)

(Congressional ratification of an agreement with an

Indian Tribe binding on states) ; DeCoteau v. District

County Court, 420 U.S. 425 (1975) (plenary power of

Congress to determine area of reservation and relations

therein) ; United States v. Mason, 412 U.S. 391 (1973)

(federal fiduciary responsibility to Indians); Matiz

v. Arnett, 412 U.S. 481 (1973) (plenary power of Con-

gress to determine reservation) ; McClanahan v. Ari-

zona Tax Commission, 411 U.S. 164 (1973) (“McClan-

ahan principle”) ; Mescalareo Apache Tribe v. Jones,

411 U.S. 145 (1978) (“McClanahan principle” limited

to reservations); United States v. Jim, 409 U.S. 80

(1972) (plenary power of Congress to determine dis-

tribution of income from Indian iands) ; Kennerly v.

District Court, 400 U.S. 423 (1971) (plenary power of

Congress to control State-Indian relations); Meno-

minee Tribe v. United States, 391 U.S. 404 (1968)

(plenary power of Congress to abrogate treaty rights

not to be lightly imputed to Congress) ; Warren Trad-

ing Post v. Arizona Tax Commission, 380 U.S. 685

(1965) (federal regulation pre-empts state taxation of

a non-Indian reservation trader) ; Seymour v. Super-

intendent, 368 U.S. 351 (1962) (power of Congress to

determine extent of and jurisdiction on Indian reser-

vations); Federal Power Commission v. Tuscarora

Indian Nation, 362 U.S. 99 (1959) (plenary power of

Congress over Indian lands).

Oliphant v. Suquamish Indian Tribe, 435 U.S. 191

(1978) is saved from the above listing for separate

discussion. In discussing this case we must note this

Court’s reliance on a concurring opinion in Fletcher v.

Peck, 10 US (6 Cranch) 87, 147 (1810). Some dis-

cussion of the majority opinion in Fletcher v. Peck is in

order. Fletcher v. Peck grew out of a famous scandal

in Georgia politics: The Georgia legislators attempted

to cancel the original land grants on the ground that the

original Georgia legislators who had made the grants

had been bribed. The land Georgia originally conveyed

to defendant Peck’s predecessor in interest was (at the

time of the conveyance) held and occupied by several

Indian tribes. (10 U.S. (6 Cranch) at 88, 142-43).

Plaintiff Fletcher argued that a 1763 proclamation by

the King of England had confirmed full title to the sub-

ject lands in these tribes, thereby rendering Georgia

incapable of transferring any interest in it. (Id. at 102,

117, 141-42). The Court held for the defendant on this

issue (Id. at 142). However, that ruling did not deter-

mine the legal rights of Indians in land acquired after

the American Revolution by the United States from

Indians. Chief Justice John Marshall for the Court

clearly indicated that the legal effect of this pre-revo-

lutionary acquisition was “compromised” and that this

“compromise is not now to be disturbed.” (Id. at 142).

Even regarding pre-revolutionary acquisitions, Mar-

shall’s opinion for the Court enunciated a compromise

position: “The majority ... is of opinion that the

nature of the Indian title which is certainly to be re-

spected by all courts, until it is legitimately extin-

guished, is not such as to be absolutely repugnant to

seisen in fee on the part of the state.” (Id. at 142-43).

This compromise determination set the course of Mar-

shall’s later opinions more fully treating issues arising

from United States-Indian relations. These later opin-

ions have been considered the foundation of the ““Wor-

cester doctrine” that we have discussed and this doc-

trine forms the basis of United States-Indian relations

regarding treaties executed after the formation of the

Union and in particular the Treaty with the Yakimas."*

However, before we leave Fletcher v. Peck, 10 U.S.

(6 Cranch) 87 (1810), we note that the Court held

that the contract clause of the Constitution prevented

Georgia from annulling land titles that had previously

vested in good faith purchasers from the state’s origi-

nal grantees. We consider that an important holding

that should be discussed. We believe this holding is

apposite.

To show applicability, an initial inquiry must be

directed to the existence of a contract in the instant

case. No one denies that the State of Washington at the

time of its admission to the Union expressly disclaimed

jurisdiction over the Yakima Indian Reservation leav-

ing affairs within this reservation under the “absolute

jurisdiction and control of the Congress of the United

States.” Nor can it be denied that these promises were

obtained by the United States in fulfillment of its fidu-

ciary duty for the benefit of the Yakima Nation and

its members. All elements of a contract are present.

(17 Am. Jur 2d, Contracts §10).

We do not dispute that these promises may be more

than a contract. In Seminole Nation v. United States,

316 U.S. 286, 296-97 (1941), the Court so dete? mined:

“In carrying out its treaty promises with the Indian

16 Cherokee v. Georgia, 30 U.S. (5 Pet.) 1 (1830) and Worcester

v. Georgia, 31 U.S. (6 Pet.) 515 (1832) were the law of the land at

the time of the execution of the Treaty with the Yakimas.

tribes, the government is more than a contracting

party.”

Similarly, this Court has held the United States to the

most exacting fiduciary standards in carrying out its

treaty promises and imposes on the United States the

obligation to act at all times with the Indians’ best

interests uppermost in mind. Seminole Nation v. United

States, supra; Chippewa Indians v. United States, 301

U.S. 358, 375-76 (19387). The fact that the duty of the

United States is higher than a contracting party, should

not foreclose the United States from being considered a

contracting party. The greater duty would logically

include the lesser duty. While Congress possessing

plenary power can direct a change, the State of Wash-

ington is forbidden by the Contract Clause from im-

pairing this promise made for the benefit of the Yak-

ima Indians. Fletcher v. Peck, supra, and New Jersey

v. Wilson, 11 U.S. (7 Cranch) 164 (1812) support this

conclusion.

We return to this Court’s opinion in Oliphant v.

Suquamish Tribe, 485 U.S. 191 (1978). Oliphant de-

termined that the Suquamish Indian Tribe, by submit-

ting to the overriding sovereignty of the United States,

gave up their power to try non-Indians in their Courts,

except in a manner acceptable to Congress. We con-

tend that Washington by agreeing that “Indian lands

shall remain under the absolute jurisdiction and con-

——— eer

trol of Congress” at the time of its admission, gave up

their power to legislate regarding transactions on said

Indian lands, except in a manner acceptable to Con-

gress. Oliphant supports this contention.

An explicit Congressional grant of power to the

state should be required to substantiate any state in-

volvement on the Yakima Reservation. Oliphant recog-

nizes Indian sovereignty “not withdrawn by treaty or

statute, or by implication as a necessary result of their

dependent status.” Oliphant recognizes that Indian

sovereignty over both their members and their territory

was reserved by treaty. The tribal power is reserved

by treaty and an explicit grant of power is not re-

quired.'’ On the other hand, any power of the state

of Washington within the Yakima Reservation must be

granted by Congress. No inherent power of the State

of Washington was reserved as regards Indians or

their territory at the time of Washington’s admission

to the Union. Washington could not reserve what it

did not have. Its sovereign powers as a state were

created by its admission to the Union and by the gov-

ernment of that Union. Further, as a condition to that

admission, the people inhabiting the proposed state

agreed that “Indian lands shall remain under the abso-

17 United States v. Winans, 198 U.S. 371, 381 (1905) not only

points out that treaty rights were reserved not granted rights but

that these reserved rights survive the admission of a state (at 382).

— it shows that rights of the state are granted rights (at

an ).

lute control of Congress.” Until Congress grants Wash-

ington power over Indians and their territory, none

exists.

Unless this Court would adopt a “heads the state

wins — tails, the Indians lose” principle, the lack of

explicit federal grant of state power to Washington

should determine this case on the other side of the

Oliphant determination.

Congress has not only failed to grant the State of

Washington any power to regulate or tax transactions

between Indians and non-Indians on the Yakima Reser-

vation, but Congress has further shown its intent that

state taxing laws should not apply. In Warren Trad-

ing Post v. Arizona Tax Commission, 380 U.S. 685,

691 n. 18 (1965), the Court determined that the inten-

tion of Congress in passing and the Interior Depart-

ment in interpreting the Buck Act" is that state power

to levy sales or use taxes does not apply to Indian reser-

vations. This case involved a non-Indian taxpayer. The

Court however based its holding on the additional

ground of federal pre-emption by reason of federal

18 The Buck Act, codified by Act of July 30, 1947 (61 Stat. 641)

4 USC §§105-110. The Buck Act was originally passed by the Senate

on September 30, 1940 and by the House on October 1, 1940. As the

Supreme Court of Idaho points out in Mah v. State Tax Com-

mission, 96 Idaho 59, 524 P.2d 187, 192-93 (1974), Congress must

have known of the May 1940 (57 L.D. 129, 140-141) opinion of the

Solicitor of the Interior Department ruling against a state tax on the

selling of tobacco products by Indians on the Menominee Reservation

to “the general public’ when Congress excepted Indians from state

excise taxation in federal areas. (4 USC §109). See also: Valandra

v. Videt, S.D. 259 N.W. 2d (1977).

regulation pursuant to the Indian Traders Act.

We submit that under the foregoing reasoning and

authority, that the State of Washington has no power

to tax transactions involving tribal Indians on trust

land within the Yakima Reservation. We further sub-

mit that this determination can be made without the

additional ground of violation of the ‘Williams test”

by reason of state taxes being destructive of tribal

enterprise and pre-emption of the area by tribal ordi-

nance.’® Such a determination is within the jurisdiction

19 The Yakima case is an appeal involving jurisdiction not taxu-

tion and the “McClanahan principle”, not the “Williams test”. We

derive this distinction from this Court’s instructions in Tonasket v.

Washington, 411 U.S. 951 (1973) (per curiam) vacating a judgment

of the Washington Supreme Court in Tonasket v. State, 79 Wash. 2d

607, 488 P. 2d 281 (1971), herein called ‘‘Tonasket I.’’ In vacating

the Washington judgment, obligating an Indian retailer to collect the

Washington cigarette tax for the on-reservation sale of cigarettes to

non-Indians, this Court ordered the Supreme Court to reconsider its

decision in light of “§$6 and 7 of C. 157, 1972 Extraordinary Session

Laws of the State of Washington and this court’s decision in McClan-

ahan v. Arizona Tax Commission” decided twenty-eight days pre-

viously by this Court. On remand, the Washington State Supreme

Court held that $$6 and 7 of C. 157, 1972 Extraordinary Session

Laws of the State of Washington exempt Indian retailers from the

obligation to collect state cigarette excise tax on his sales to non-

Indians and that he was authorized to possess unstamped cigarettes.

Application of the McClanahan principle was therefore not required

to sustain the Indian retailers non-taxability. Tonasket v. State, 84

Wn. 2d 164 (1974) herein called ‘‘Tonasket II.”

In Tonasket II, the Colville tribe was described as a tribe that

had petitioned for full jurisdiction under Section 5, Chapter 36, 1963

Washington Laws (R.C.W. 37.12.021). Appeal of Tonasket II] to this

Court was denied for lack of federal question. 420 U.S. 915. The

Yakima jurisdiction status is different from the Colville tribe. The

Yakima Nation has not petitioned for state jurisdiction and Wash-

ington has no civil or criminal jurisdiction over the transactions in-

volved in this appeal. Washington v. Yakima Nation, 58 L. Ed. 2d

740, 753 N. 18.

If the state had jurisdiction then the “Williams test’ would

apply. Until then, the “McCianahan principle” should control. See

excellent discussion in Mahoney v. State Tax Commission, 96 Idaho

59, 524 P. 2d 187 (1974).

of this Court and the scope of this review. Dandridge

v. Williams, 397 U.S. 477 (1970).

2. District Court’s determination supported by

“Williams Test’. Moe v. Confederated Salish

and Kootenai Tribes not controlling.

The preference of your writer to hold to the ‘‘Wor-

cester doctrine” and the “McClanahan principle’, until

Congress explicitly and specifically speaks in state-

Indian relationships, is based on the desire for manage-

able standards in these matters. The Yakima Nation’s

commitment to the “McClanahan principle” is based

on the desire to clearly sustain their right of self-gov-

ernment without having to show economic loss or gain.

Profit is really not the point in my client’s eyes. The

powers of self-government within the exterior bound-

aries of the Yakima Reservation have been reserved

and have not been modified by Congress. Washington’s

claim that the Yakima Nation is merely marketing a

tax advantage, when they regulate their own retailers

by their own laws, is most offensive. With large cigar-

ette excise taxes, Washington could make this claim

against every other sovereign in the United States,

particularly Oregon. Industries and trade are attracted

thru tax advantages by our Nation’s separate sov-

ereigns every day. Washington itself advertises for

industry based on the attraction of low ad valorem

taxes and lack of income tax, but we do not suggest

that this has any effect on their sovereignty. That this

statement about marketing a tax advantage is made

and that Washington believes that this rhetoric will be

effective before this Court, speaks volumes. The prin-

ciples of reserved self-government — not rhetoric —

should determine this appeal.

However, this Court may prefer to determine this

appeal under the judicial “Williams test.” If so, we

suggest that the District Court’s determination that a

state’s intrusiun may be limited by tribal pre-emption

has considerable merit. Tribal pre-emption, as deter-

mined by the District Court, is limited to areas where

a tribe has retained inherent tribal powers.

At the very beginning of this discussion, your

writer wishes to make it clear that the Yakima Indian

nation does not propose any tribal pre-emption of state

application of any of its laws outside of the exterior

boundaries of the Yakima Indian Reservation. In this

case we specifically defer to the state taxation of any

personal property in the possession of non-Indians out-

side of the exterior boundaries of the Yakima Indian

Reservation. The fact that the sale is non-taxable

where it is made does not impair state taxation for the

use or possession of the property by the user in non-

reservation areas of the state of Washington. Just as

Washington taxes the use of goods brought from Ore-

gon or other states outside their jurisdiction by resi-

dents of non-reservation areas, so does the State have

power to tax the use by these same residents outside

the Yakima Reservation. It is where the State reaches

into areas where it has no jurisdiction to impress the

collection of the tax on those not within its jurisdiction,

that the law of this land prohibits such state intrusion.

It may be easier and politically more attractive for

Washington to impose its unilateral will on a discrete

and insular, politically impotent minority, than to en-

force its laws by seizure and penalty directed towards

members of a dominant politically active group. How-

ever, we suggest that this should not effect this Court’s

decision. If Indians not subject to state jurisdiction

are to be made tax collectors to assist the State in its

political tax collection problems, we suggest that Con-

gress—rather than this Court—should make this deci-

sion. Indeed, the Court in Williams v. Lee, 358 U.S. 217,

223 (1958) has suggested that this is the state’s only

solution. We suggest that there is another, i.e., a state-

tribal negotiated reservation wide joint taxing and

sharing system. Tribal efforts in this regard have

been rejected and are not a part of this determination.

As later discussed, the Yakima Nation has the clear

power to tax transactions of non-Indians within the

exterior boundaries of the Yakima Indian Nation. The

Yakima Nation, as a policy matter, has limited this sov-

ereign power to basic transactions between Indians and

non-Indians, such as the tribal tax on sales of cigarettes

and tobacco to non-Indians and taxes on the lease of

Indian land. The Yakima Nation fully realizes that

governmental entities must receive income to provide

services and has therefore severely limited the exercise

of its sovereign power of taxation to transactions in-

volving Indian retailers. Both sales to Indians and

non-Indians are taxed. However, this policy determi-

nation should not be interpreted as a lack of power to

tax all transactions within the reservation unless pro-

hibited by an authorized Act of Congress.

The Yakima Nation has a governmental function

within the exterior boundaries of the Yakima Reserva-

tion and must have income to provide basic govern-

mental services to both Indians and non-Indians. This

governmental duty and burden is a substantial one and

requires the expenditure of millions of dollars of tribal

funds. In the main, the cost of these governmental

services to Indians and non-Indians is supported direct-

ly by funds derived from tribal operations such as its

cigarette enterprise. Where the Yakima Nation estab-

lishes a business off the Yakima Reservation, such as

its aircraft enterprise, it pays all taxes to the State of

Washington. This is true even though the funds used

to pay taxes would assist tribal self-government. The

converse, however, is not true. When the State of Wash-

ington runs a business such as its state liquor stores on

the reservation, it makes no provision for any of the

income to flow to the Yakima Nation. This is true in

spite of the obvious burden the sale of liquor places on

the sovereign law and order function of the Yakima

Nation.

Let us now discuss the sovereign power of the

Yakima Nation to tax Indians and non-Indians on the

Yakima Reservation. The Yakima Nation was feder-

ally established by Treaty With the Yakimas (12 Stat.

951). In Article II of the Treaty With the Yakimas,

the Yakima Reservation was reserved for the exclusive

use of the Yakima Nation and no one was to reside

thereon without the permission of the Yakima Nation.

This sovereign right to exclude non-members is still

retained. The Yakima Nation and its governing bodies

are recognized by the United States of America. An

important attribute of that sovereignty is the power to

levy taxes on both tribal members and non-tribal mem-

bers.

Felix S. Cohen in Handbook of Federal Indian Law,

(1942) has written:

“One of the powers essential to the maintenance >*

any government is the power to levy taxes. © jis

power is an inherent attribute of tribal sovere

which continues unless withdrawn or limite. s»

treaty or by act of Congress is a proposition Whiscii

has never been successfully disputed.” (F. S. Cohen,

Handbook of Indian Law (1942) eee Buster v.

Wright, 135 F. (8th Cir. 1905), Appeal dismissed

203 U.S. 599; and Morris v. Hite cock, 194 U.S.

384, (1904).

That is to say, the tribal power to levy taxes does

not find its source in the sovereign power of the United

States, and is derived from the inherent sovereignty of

the Indian tribe. Also, the Yakima Nation as previous-

ly discussed, was promised the right to be governed by

its own laws. Tax laws are a part of such laws.

Thus, in Maxey v. Wright (8 Ind.T. 248, 54 S.W.

807, affirmed 105 F. 1003) decided in 1900, the Court

of Appeals of Indian Territory held that under the

Creek Indian Treaty of 1856, guaranteeing the Creeks

the right of self-government and the power to exclude

non-members, a non-Indian attorney was required to

pay an annual occupation tax of twenty-five dollars

levied by the Creek Nation.

The principles identified in these early cases were

discussed by the Eighth Circuit Court of Appeals in

Iron Crow v. Oglala Sioux Tribe of the Pine Ridge Res-

ervation, 281 F. 2d 89 (8th Cir. 1956). Attention is

invited to the Court of Appeal’s reasoning. In Jron

Crow, the plaintiff, an enrolled member of the Oglala

Sioux Tribe and possessing allotted trust lands on the

Pine Ridge Reservation, leased to non-members of the

tribe, sought to enjoin the tribe from levying a tax

against his non-member lessee for the privilege of graz-

ing stock upon land located within the reservation.

After finding inherent tribal sovereignty, the Iron

Crow Court then addressed the question of whether this

36 37

Indian tribe had power and authority to levy taxes on ‘One of the powers essential to the maintenance of

non-Indian citizens of the United States and the State any government is the power to levy taxes. That

this power is an inherent attribute of tribal sov-

of South Dakota, (pages 98-99) : ereignty which continues unless withtdrawn or

“A similar question was presented to this court in

Buster v. Wright, 8 Cir. 1905, 1385 F. 947, appeal

dismissed 208 U.S. 599, 27 S. Ct., 777, 51 L. Ed.

334. That case involved the validity of a permit

tax on the Creek Nation for the privilege which it

offered to those who were not citizens of its nation

or trading within its borders. In upholding the

right of the Creek Nation to enforce the tax, Judge

Walter H. Sanborn, speaking for the court, said,

134 F. at page 950:

‘The authority of the Creek Nation to prescribe the

terms upon which non-citizens may transact busi-

ness within its borders did not have its origin in act

of Congress, treaty or agreement of the United

States. It was one of the inherent and essential

attributes of its original sovereignty. It was a

natural right of that people, indispensible to its

autonomy as a distinct tribe or nation, and it must

remain an attribute of its government until by the

agreement of the nation itself or by the superior

power of the republic it is taken from it.

‘Originally an independent tribe, the superior power

of the republic early reduced this Indian people to

a ‘domestic, dependent nation’ (Cherokee Nation v.

State of Georgia, 5 Pet. 1-20, 8 L.Ed. 25), yet left

it a distinct political yeas ( clothed with ample

authority to govern its inhabitants and to manage

its domestic affairs through officers of its own selec-

tion, who under a Constitution modeled after that

of the United States, exercised legislative, execu-

tive, and judicial functions within its territorial

jurisdiction for more than half a century.’

“We approve of the statement in Cohen’s Handbook

of Federal Indian Law, page 142, as follows:

limited by treaty or by act of Congress is a proposi-

tion which has never been successfully disputed.’

(Citing Buster v. Wright, supra, and Morris v.

Hitchcock, 1903, 21 App. D.C. 565 affirmed 194

U.S. 384, 24 S. Ct., 712, 48 L. Ed., 1080).

“Tnasmuch as it has never been taken from it, the

defendant Oglala Sioux Tribe possesses the power

of taxation which is an inherent incident of its sov-

ereignty. The tribe has seen fit to give orderly

implementation to that power through the adoption

of a constitution which, among other things, has

specifically provided for the levy of taxes. Such

action was taken in accordance with the provisions

of the Indian Reorganization Act, 1934, 48 Stat.

987, 25 U.S.C.A. §476.”

“We conclude from the original precept of tribal

sovereignty and the fact that the power of the Ogla-

la Sioux Tribe to impose the tax or license in ques-

tion has not been pretermitted by any federal sta-

tute or agency ruling thereunder, but to the con-

trary, has been implemented by the Indian Reorgan-

ization Act, supra, that such power still exists.”

See also the reasoning in Barta v. Oglala Sioux

Tribe, 259 F.2d 5538. (Eighth Circuit 1958). Idaho

State Tax Commission v. Mahoney, 524 P. 2d 187

(Idaho, 1974), and 55 I.D. at pp. 46-48.

The reasoning in these cases supports the power

of the Yakima Nation to tax sales to non-Indians by

the Yakima Nation’s licensees operating on Indian

trust lands within the exterior boundaries of the Yak-

ima Indian Nation.

Since Moe v. Confederated Salish and Kootenai

Tribes, 425 U.S. 463 (1976) deals with state taxation

of sales of cigarettes by Indians to non-Indians, it is

appropriate that we discuss the difference between the

facts in Moe and the instant case. A table would appear

to be the best way to illustrate the differences:

Elements in Moe

State scheme required pre-

collection of tax at time of

sale by distributor (pre-

sumably non-Indian, off-

reservation). 425 U.S.

145 at 467 n 6.

State scheme required reg-

istration for fee which

court held improper.

Id. at 480.

State’s enforcement

limited to criminal prose-

cution of seller for selling

unstamped cigarettes.

Id. at 482.

No finding that cigarettes

are distributed by tribal

distributor and purchased

by retailers with income to

tribe. Id.

No finding of tribal regu-

lation of cigarette sales.

Elements on

Yakima Reservation

State scheme requires

collection only upon sale

to non-Indian on trust

land, on reservation.

Imposes duty to place

stamps on retailer.

A. 214.

State scheme requires

registretion without fee

and extensive record keep-

ing and verification of

sales that are not taxable

to members or within

state power. A. 214, 217.

State claims entire civil

and criminal enforcement

powers as provided in

state statutes. A. 195.

Cigarettes purchased

from tribal enterprise

bringing employment and

income to tribe. A. 177.

Extensive tribal

regulation providing for

Elements in Moe

The cigarettes are sold by

private business ventures

who lease land from tribe

and pay a small admini-

strative fee but there is

no tribal regulation or

— based on volume.

+4 showing of tribal tax.

Id.

The State had criminal

jurisdiction over re-

tailers. Id. 467.

No showing of tribal

benefit from sales. Id.

There was no dispute that

tax on non-Indians was

lawful. Parties agreed

to this. Id. at 483.

Elements on

Yakima Reservation

location, total employment

of tribal members and

pricing. A, 201-211.

Tribal tax. For six years

tribe has taxed all retail

sales by licensed retailers

and from fees and

mark-up generates

approximately $225,000

a year for tribal purposes.

A. 177.

The State has no applic-

able civil or criminal

jurisdiction over tribe, or

retailers on trust property

on reservation where sales

are made.

Washington v. Yakima

Nation, supra.

Tribal benefit in employ-

ment of members, income

from mark-up, and tax

income above set forth.

A. 177-182.

Tribe disputes that there

is any tax due from non-

Indians until they are at

a situs where the states

power may attach. No

state power at sales situs

where state attempts to

impose tax. A. 190-194.

Elements in Moe Elements on

Yakima Reservation

First incidence of taxon First incidence on any

distributor who had duty _ possession, etc., and on

to place stamps. Direct retailer to collect at time

tax on consumer. Retailer of sale. A. 215. See dis-

rg —— pre-collect tax. cussion this Brief, infra.

. at 482.

No finding that tax would Determination that tax

hurt retailers. Id. will destroy retailers and

severely limit tribal

income and employment.

J.S. App. 35.

State had scheme of State scheme entails

enforcement that did not unconstitutional seizure

entail seizure of Indian on reservation. Discussion

yey! on reservation. this Brief, infra.

d. at 482.

No showing that tribe Treaty promises that

promised to be able tolive Yakimas would live under

under own laws. Id. own laws and would be

free from outside inter-

ference. This Brief supra.

We believe that a comparison of the above factors

will show the Moe, supra, is supportive of the Yakima

Nation’s position.

We would next like to discuss the problem of double

taxation and the tribe’s pre-emption even if the State

had power to tax the transaction between Indian and

non-Indian. The Yakima Nation is already taxing

each sale of cigarettes by its licensees in the amount of

two and one-half cents per pack. This is true regard-

less of whether the purchaser is Indian or non-Indian.

As discussed above, this power clearly exists in the

Yakima Nation. The Yakima Nation was established

by treaty as a distinct independent political community

on a reservation reserved for its exclusive use with the

power to tax transactions on its reservation. The

supremacy principle will control a conflict between

state law and a treaty right. The supremacy principle

applies to state taxation. Scandinavian Airlines Sys-

tem, Inc. v .County of Los Angeles, 56 Cal. 2d., 11, 368,

P.2d 25. Cert denied. 368 U.S. 899. Based on this

supremacy principle, the Yakima Nation’s sovereign

right to tax these transactions between Indian and non-

Indian on trust property within its reservation where

the State has no jurisdiction, must prevail.

In summary, this appeal does not concern itself

with the taxation of transactions among non-Indians,

or transactions outside the reservation, or even trans-

actions with non-Indians on non-trust lands within the

reservation. What this appeal does involve is the im-

pression of the obligation on tribal Indians to collect

and remit state taxes levied on non-Indian — Indian

on-reservation transactions on lands not within Wash-

ington’s jurisdiction. The impression of this obligation

will in the uncontested determination of the District

Court destroy both the tribal regulatory scheme and

the tribal enterprise. It is noted that the ordinance and

the tribal enterprise have been approved by the applic-

able federal authority. It would be hard to find a better

set of circumstances that calls for the restraint of state

action under the “Williams test”. Moe v. Salish and

Kootenai Tribes, 425 U.S. 463, should be limited to its

facts. This is an appropriate place for the words of

Justice Holmes:

“The power to tax is not the power to destroy while

this Court sits.” (227 U.S. at 223).

3. Washington may neither seize cigarettes destined

for the Yakima Nation in interstate commerce as

contraband or seize personal property on trust

lands outside Washington’s jurisdiction. This lack

of state power of judicial administration or con-

stitutional non-judicial administration disposes of

the case.

As part of the “McClanahan principle” this Court

has announced in McClanahan v. Arizona Tax Com-

mission, 411 U.S. 164, 178-79 (1973) that:

“Unless the State is willing to defend the position

that it may constitutionally administer its tax sys-

tem without judicial intervention, ... the admitted

absence of either civil or criminal jurisdiction would

seem to dispose of the case.”

Washington does not have criminal or civil jurisdiction

over the Yakima Nation or its members for the con-

cerned transactions on trust or restricted lands. Wash-

ington v. Yakima Indian Nation, ...... US. ......, &

L.Ed. 740 (1979). It is admitted that the retailers

are all enrolled members of the Yakima Nation and

that these retailers transact business on allotted land

held in trust by the United States for individual Indians

or by restricted deed to individual Indians. (Appe!-

lant’s Brief, p. 16).

Washington contends that it may constitutionally

administer its tax system without judicial interven-

tion.” While Washington agrees that it may not law-

fully assess a tax against the Yakima Nation derived

from its wholesale distribution of cigarettes to its

licensed members and cannot therefore attempt to col-

lect these taxes by its past method of summary distraint

procedure (Appellant’s Brief, p. 18 n. 8), Washington

contends that it may seize and sell unstamped cigar-

ettes being delivered to the Yakima Nation in interstate

commerce without any judicial proceedings or even an

administrative warrant. The basis for this summary

action is a unilateral ex parte administrative deter-

mination that a portion of these cigarettes — admitted-

ly lawfully sold as exempt from cigarette or other state

excise taxes to tribal members — may or will be resold

to non-Indian purchasers on trust lands in the Yakima

Indian Reservation by tribal retailers. Washington

20 Appellant’s Brief p. 103.. Washington recognizes that it has no

jurisdiction over the Yakima Nation or its members. Even if it had

jurisdiction over the Yakima Nation, the Yakima Nation is immune

from legal action. Puyallup Tribe v. Washington Game Department,

443 U.S. 165, 172-173 (1977); Santa Clara Puebio v. Martinez, 436

U.S. 49, 58 (1978); North Sea Products v. Clipper Seafoods, 92 Wn.

2d 236, ... P. 2d ..., (1979).

Technically, the enforcement issue is not in controversy as the

District Court held that there was no taxes due. The District Court’s

restraint prohibiting Washington from seizing or confiscating cigar-

ettes belonging to the Yakima Nation or its members was based on

that determination. However, the enforcement issue has relevancy

as to whether the tax is due as we herein discuss and the question

of jurisdiction is not raised by this appellee.

contends that this procedure meets the requirements

of the Due Process Clause of the Fourteenth Amend-

ment. The State’s position is untenable.*' The State

claims that it can lawfully require stamps to be affixed

to cigarettes prior to shipment to the Yakima Nation

and if stamps are not affixed, those cigarettes are sub-

ject to being seized as contraband. By maintaining that

position, Washington substantiates our contention —

that the first legal incidence of the tax falls upon the

Yakima Nation or its licensed retailers. However, the

state recognizes that if the first legal incidence of the

tax is on the Yakima Nation or its licensed retailers, it

is invalid under McClanahan. Washington attempts to

avoid such a result by asserting that the first legal inci-

dence of the tax falls on the non-Indian purchaser of

the cigarettes and that the tax is not due until the sale

is made to the non-Indian purchaser. If this assertion

is assumed to be correct, then it is clear that no tax has

become due while the cigarettes are in transit. To seize

unstamped cigarettes before any tax is due and owing

would be a clear violation of the Due Process Clause of

the Fourteenth Amendment. Therefore, it is clear that

regardless of whom is to bear the first legal incidence of

the tax, the Yakima Tribe or its licensed retailers, or

the non-Indian purchaser, Washington cannot seize un-

stamped cigarettes being shipped to or by the Yakima

21 The State’s enforcement scheme is without “process” let alone

“due process.”

Nation without violating the Due Process Clause of the

Fourteenth Amendment and without impermissibly in-

terfering with interstate commerce. Contrary to

Washington’s statement” we most certainly do claim

that the procedures used by the State in seizing and

selling unstamped cigarettes violates the Due Process

Clause of the Fourteenth Amendment. While the State

may burden an interstate shipment by regulations re-

quiring adequate information to determine where the

cigarettes are going, the cases are clear that under the

Commerce Clause and the Due Process Clause, that the

state may not use its regulatory or police powers to

seize or sell cigarettes where the consignee is located

in an area where the state does not have jurisdiction.

In the following cases, state courts have held that where

the unstamped cigarettes were in transit to areas where

the state lacked jurisdiction, they were not subject to

tax by the state and further, were not subject to penal-

ties, forfeitures, seizure or other regulatory powers

even though the cigarettes were unstamped. Pfeiffler

v. State, 226 Ark. 825, 295 S.W. 2d 365 (1956); Neeld

v. Giroux, 224 N. J. 224, 131 A. 2d 508 (1957) ; State

v. 483 Cases, 98 N.H. 180, 96 A. 2d 568 (1953).

The state cases cited by Washington are inappo-

site.” In each of those cases the cigarettes were destined

to areas where the state had jurisdiction and the cigar-

22 Appellant’s Brief p. 104.

23 Appellant’s Brief p. 105.

ettes were to become part of the state’s goods. State v.

Sedacca, 252 Md. 207, 249 A.2d 456 (1969) ; Angelica

Co. v. Goodman, 52 Misc. 2d 844, 276 N.Y. Supp. 2d 766

(1966) ; People v. Asta, 337 Mich. 590, 60 N.W. 2d 472

(1953) ; Commonwealth v. Flickinger, 165 Pa. Super.

95, 67 A.2d 779 (1949) aff'd 364 Pa. 59, 73 A.2d 652

(1950), cert. denied 340 U.S. 843 (1950); People v.

Locriccho, 342 Mich. 210, 69 N.W. 2d 723 (1955).

Likewise, Washington incorrectly cites Organized

Village of Kake v. Egan, 339 U.S. 60 (1962) as author-

ity for the proposition that Indian reservations are

within the territorial jurisdiction of the state in which

they are located. This is clearly incorrect. See: Warren

Trading Post v. Arizona Tax Commission, 380 U.S. 685

(1965); Williams v. Lee, 358 U.S. 217 (1959); Mc-

Clanahan v. Arizona Tax Commission, 411 U.S. 164

(1973). Organized Village of Kake v. Egan, supra,

was clearly distinguished by the Court within the corn-

ers of the Court’s opinion. Organized Village of Kake,

did not have a reservation or treaty. This Court

pointed out the difference between the Kake situation

and a situation where a recognized reservation had

been established. After citing the case of Metletakla

Indian Community v .Egan, 369 U.S. 45, 62 (1961),

the Court said:

“The situation here differs from that of the Metle-

takla Indian Community in that neither Kake or

Angoon has been provided with a reservation .. .”

Further, we would argue that the Washington cited

cases of Morrow v. Henneferd, 182 Wn. 625, 47 P.2d

1016 (1935), Rainier National Park Co. v. Martin, 18

F, Supp. 581, on rehearing 23 F. Supp. 60 (W.D. Wash.

(1987), affirmed 302 U.S. 661 (1938), and Sherman-

Reynolds, Inc. v. Mahin, 47 Ill. 2d 328, 265 N.E. 2d

640 (1970), stand for the proposition that state power

to require sellers to collect excise taxes from purchasers

is based on state police or regulatory power and not

upon the power to tax. The Supreme Court of Wash-

ington clearly says that in Morrow, at page 633:

“Power to require collection rests on power of regu-

lation.”

In Sherman-Reynolds, the Supreme Court of Illinois

similarly said at page 642:

“(T]he legislative authority to enact Article 7,

rests, not with its “ae? to tax as intimated by de-

fendants, but on the police power.”

These cases support our position, not Washing-

ton’s. It is agreed by everyone that the state does not

have the power to tax the Yakima Nation or its mem-

bers on the reservation. Likewise, since there is no

power to tax the Yakima Nation or Yakima Indians as

regards transactions that take place on trust property,

the State has no police power or regulatory power

or jurisdiction over transactions that take place upon

that property.** As a general rule, a requirement that a

24 Both the power to tax and the power to regulate should exist

together to satisfy constitutional standards. In the instant case,

Washington does not have jurisdiction to sustain either the power to

regulate or the power to tax tribal Indians.

seller of goods collect a sales or use tax from a pur-

cl user, where it is clear that the taxing state has power

over both purchaser and seller and the transaction in

volved, there is no violation of due process. However,

the other side of the proposition is just as well estab-

lished. Miller Brothers Co. v. Maryland, 347 U.S. 340,

rehearing denied 347 U.S. 964 (1954).

In Miller, the Supreme Court clearly held that the

Due Process Clause of the 14th Amendment requires

some definite link and connection between a state and

the person, property or transaction that it seeks to regu-

late and the state’s power is limited to areas within its

jurisdiction. No such connection or jurisdiction existed

in Miller and such a connection is non-existent in the

present case.

Moe v. Confederated Salish and Kootenai Tribes,

425 U.S. 468 (1976) is likewise distinguished. Since

the state had jurisdiction over criminal offenses over

the area involved in Moe, the state had power to arrest

Indian retailers who violated the state criminal statute

prohibiting the sale of non-stamped cigarettes. Accord-

ingly, the Supreme Court held that an injunction pro-

hibiting the arrest of Indian retailers would not lie.

That is all Moe has said and it is clearly distinguishable

from the present case because Washington has no crim-

inal or civil jurisdiction over the Indian person, prop-

erty or transaction it seeks to regulate.

Because Rainier National Park v. Martin, 18 .F.

Supp. 481, on rehearing 23 Fed. Supp. (W.D. WWash.

1937), affirmed 302 U.S. 661 (1968), involved a federal

area in our state, it might be well to point out that the

material facts therein are different from those in the

present case. In' Rainier, the state expressly reserved

the right to tax and to collect and enforce the tax in the

conveyance to the United States. In the instant case,

Washington could not reserve any such rights insomuch

as it was not a state when the Yakima Reservation was

reserved. There was no grant to Washington, and

Washington absolutely waived jurisdiction over the

Yakima Reservation when it became a state.

Washington’s cited case of Carter v. Commonwealth

of Virginia, 321 U.S. 131 (1944) is likewise inapposite.

This case does lead us to cases that are apposite. Before

discussing these cases, it would be appropriate to point

out that we are not discussing the rule of this Court

that the federal and state governments may resort to

summary procedures to minimize a taxpayer’s oppor-

tunity to waste assets in anticipation of a collection

attempt. Phillips v. Commissioner of Internal Revenue,

283 U.S. 598 (1931). First, there is admittedly no tax

due from the Yakima Nation, consignee of the trans-

ported cigarettes. Secondly, R.C.W. 82.24.130 directs

itself to the seizure of goods unilaterally deemed “con-

traband” by the terms of the state statute and has no

direct relation to the collection of revenue.» Thirdly,

the sales by the Yakima Nation to tribal members are

admittedly non-taxable and Washington statutes pro-

vide no exceptions for such lawful non-taxable sales

from the imposition of its contraband statute and

clearly violate the Due Process Clause of the Four-

teenth Amendment.

With those preliminary remarks, we now discuss

this Court’s rulings that we consider controlling. Seiz-

ure or taxation of liquor, generally prohibited or taxed

by a state within its borders, is not constitutionally per-

mitted where the liquor is consigned to a consignee

federally authorized to possess and sell said liquor with-

in an exclusive federal area. United States v. Mississip-

pi Tax Commission, 412 U.S. 363 (1973) ; Johnson v.

Yellow Cab Transit Co., 8321 U.S. 383 (1944). See also:

Hostetler v. Idewild Liquor Corp., 377 U.S. 324 (1964) ;

Heublein v. South Carolina Tax Commission, 409 U.S.

275 (1972). This rule applies even if the liquor sold

in the federal area is consumed outside of the federal

area. United States v. Mississippi, supra.

Furthermore, the seizure is contrary to the Due

Process Clause of the Fourteenth Amendment. Ameri-

can Oil Co. v. Neill, 380 U.S. 451 (1965). In American

25 As long as Indian organizations are recognized as tribes by the

United States, Congress is the one to determine what articles of

“commerce” are “contraband.” Perrin v. United States, 232 U.S. 478

(1914); Tinker v. Midland, 231 U.S. 681 (1914); Dick v. United

ranean 208 U.S. 340 (1908); United States v. Laiviere, 98 U.S. 188

( ).

Oil Co. v. Neill, plaintiff, a licensed Idaho gasoline

dealer, sold gasoline under a contract executed outside

of the State of Idaho. He delivered the gasoline from

a point outside of Idaho to the purchaser in Idaho by

means of a common carrier. The purchaser thereafter

used the gasoline in Idaho. Idaho statutes provided that

a tax of six cents per gallon was due from the plaintiff

dealer in such circumstances. The Court, speaking

through Chief Justice Warren held that the purported

imposition of the tax on the plaintiff was a violation of

the Due Process Clause of the Fourteenth Amendment.

That the gasoline imported was clearly intended to be

used in the State of Idaho and the seller was a licensed

Idaho dealer, was held to be insufficient considerations

to uphold the tax.

Washington further contends that it may enter the

Yakima Indian Reservation, go onto trust lands where

they have no jurisdiction, enter buildings owned by the

tribal retailers and seize unstamped cigarettes and sell

them as contraband. All of this without judicial au-

thorization. This contention is so far from the guaran-

tees of exclusion from the Yakima Reservation con-

tained in the Treaty with the Yakimas and the guaran-

tees against illegal search and seizure contained in the

Fourteenth Amendment, that it is predictable that no

authority can be found in this regard. The Fourth

Amendment binds the State of Washington under the

Se a ee

Due Process Clause of the Fourteenth Amendment.

Moss v. Ohio, 367 U.S. 643 (1961).

Washington’s further contention that it may crim-

inally prosecute tribal retailers for a state defined

crime on a portion of the Yakima Reservation where

they have no criminal jurisdiction is likewise not sus-

tained. Moe v. Confederated Salish and Kootenai

Tribes, 425 U.S. 463 (1976), does not sustain Wash-

ington’s contention. In Moe, Montana had crimine’

jurisdiction over the retailers and this sustained Mon-

tanas only remedy, i.e. arrest of sellers not collecting

the tax. Here Washington has no criminal jurisdiction

that would sustain such an arrest. Washington v. Yak-

ima Indian Nation, ...... , US. ......, 58 L. Ed. 2d 740

(1979).

Failing to sustain Washington’s power to constitu-

tionally administer its tax system without judicial in-

tervention, the system of administration is void against

the Yakima Indians.”° Further, the failure to sustain

constitutional administration, will likewise dispose of

the applicability of Washington’s taxes. McClanahan

v. Arizona Tax Commission, 411 U.S. 164, 178-79

(1973).

26 Lack of jurisdiction over the Yakima Nation and its members

in the operation of their businesses, and the sovereign immunity of

the Yakima Nation, should clearly dispose of any state reporting and

auditing requirements.

4. Legal incidence of state taxing scheme falls on

tribal Indians.

The Yakima Nation does not agree with the District

Court’s determination that legal incidence of the State

of Washington excise taxes falls on a non-tribal pur-

chaser.

Under the District Court’s determination, the ques-

tion of legal incidence of the tax under Washington’s

cigarette taxing scheme was immaterial as the District

Court held the cigarette taxing scheme had been pre-

empted by tribal ordinance and constituted an unrea-

sonable interference with tribal self-government. It is

agreed that if the legal incidence of a tax is on the

Indian or a tribe, the “McClanahan principle” would

make the tax void, and it would not be necessary to

consider the District Court’s determination of the ap-

plicability of the “Williams test” and tribal pre-emp-

tion. A discussion of the question of whether a legal

incidence of the various tax excise taxes fall on the

tribe or tribal Indian is therefore appropriate.

The legal incidence of the state cigarette taxing

scheme does fall on the Indian or Indian tribe. The de-

termination of where the legal incidence falls is a fed-

eral question.”” Washington imposes a cigarette excise

tax on the amount of $1.60 per carton. The tax is im-

27 “The duty rests on this Court to decide for itself facts or con-

structions upon which federal constitutional issues rest.’’ Kern-

Limerick, Inc. v. Scurlock, 347 U.S. 110, 121 (1954).

posed pursuant to RCW 82.24.020 upon the “sale, use,

consumption, handling, possession or distribution” of

cigarettes. The tax is collected by means of tax stamps

affixed to individual packages of cigarettes. Retailers

are required to either purchase pre-stamped cigarettes

from wholesalers or purchase a supply of stamps from

the State which are to be affixed to the cigarettes by the

retailer prior to sale.* R.C.W. 82.24.020 provides that

it is the intent and purpose of the state’s cigarette tax-

ing scheme to “collect the tax from the person who

first sells, uses, consumes, handles, possesses, . . . or

distributes them in the state.” R.C.W. 82.24.080 fur-

ther declares the intent and purpose of the state cigar-

ette taxing scheme to first impose the tax ‘“‘at the time

and place of the first taxable event occurring in” the

State of Washington. There is no tax on the “pur-

chase”’ of cigarettes. The plain words of the statutes

impose the tax on the seller rather than the purchaser.

While this Court has the duty to decide the legal inci-

dence of the tax,” it is noteworthy that the Washington

Supreme Court has determined that the legal incidence

of the cigarette tax falls upon the first person who

brings cigarettes into the State and sells, uses, con-

sumes or distributes them. Canteen Service, Inc. v.

State, 83 Wn. 2d 761, 522 P.2d 847 (1974). The State

28 This description in the state cigarette taxing scheme is taken

from Appellant’s Brief p. 17. The emphasis is supplied.

29 See note 27.

candidly admits that in all other situations rather than

sale by Indians and non-Indians alike that the first in-

cidence of the tax falls on the retailer or distributor.

However, the State and the District Court rely on T’on-

asket v. State, 84 Wn.2d 164, 525 P. 2d 744 (1974)

and the later adopted Department of Revenue Rule 192

and Excise Tax Bulletin 504.80.192. Tonasket would

settle the question if the question of legal incidence in

this case rested with the state. It does not. It is for

the federal courts to determine the legal incidence of

the tax from the plain reading of the statute. First

Agricultural Bank v. Tax Commission, 392 U.S. 339,

347 (1968) ; Kern-Limerick, Inc. v. Scurlock, 347 U.S.

110, 121 (1954). The plain reading of the statute

shows that the legal incidence of the cigarette tax is on

the first person who brings the cigarettes into the state

and sells, uses, consumes or distributes them. Washing-

ton’s actions show this to be their interpretation. They

argue for first incidence on the purchaser to establish

an exception from the “McClanahan principle,” but

then contend that they have the right to seize as contra-

band cigarettes destined to a distributor for these re-

tailers prior to a sale to non-Indian purchasers. An

inconsistent position. They cannot sustain their con-

tention in both areas. While the state may not bind

this court as to the interpretation of the language of the

statute, state determination as to the necessary pro-

cedure regarding enactment of law and regulation is

controlling. Washington v. Yakima Indian Nation,

ike USS. ......, 58 L.Ed 2d 740, 763 n. 39 (1979). De-

partment of Revenue Rule 192 and Excise Tax Bulletin

504.80.192 cannot amend or modify the statutes in

question. The Washington Supreme Court has deter-

mined that statutes cannot be amended or modified by

administrative rule or bulletin. Pierce County v. State,

66 Wn.2d 728, 731, 404 P.2d 1002 (1965); Pringle

v. State, 77 Wn.2d 569, 464 P.2d 425, 573 (1970).

. Under applicable law announced by this Court, such

facts require a determination that the legal incidence

is on the seller. Polar Ice Cream and Creamery Co. v.

Andrews, 375 U.S. 361 (1964).

Likewise, the combined state-local® sales tax of plus

five percent is imposed on the sale of tangible personal

property and services at retail pursuant to R.C.W.

82.02.020. While the Department of Revenue by the

promulgation of Administrative Regulation Rule 192

(WAC 458-20-192) on November 12, 1976 and publica-

tion of Excise Tax Bulletin 504-08-192 on November

24, 1976 purport to make certain exceptions for sales

to tribal Indians, R.C.W. 82.32.020 still provides for a

sales tax on all sales of tangible personal property and

retail services in the State of Washington. R.C.W. 82.-

30 Appellant’s Brief p. 19. Certainly a misnomer. Local tribal

governments with their governmental duties get no funds from this

tax.

eet cia ie ens en Fa oe “7

08.050 imposes the legal incidence of that excise tax on

the seller in every sales transaction where payment is

not made to the Department of Revenue. This personal

liability of the seller results regardless of whether the

non-payment is willful or beyond the sellers control.

The facts of this case are that payment has not been

made. The legal incidence of the tax is on the seller.

Finding the incidence of Washington’s taxation

scheme on the Indian, the “McClanahan principle”

would exclude application of Washington’s taxation

scheme to Yakima retailers without reliance on the

“Williams test” or tribal pre-emption.

CONCLUSION

From the reasoning and authority contained herein,

we would submit that this is an appeal involving juris-

diction not taxation and the “McClanahan principle”

not the “Williams test.” It is this lack of jurisdiction

over the Yakima Nation and its licensed retailers, that

should determine that Washington’s excise taxing, col-

lection and reporting scheme can have no effect on these

same Indians. |

As an additional ground, Washington’s excise tax-

ing, collection and reporting scheme fails to meet the

“Williams test’”’ as determined by the District Court.

We would therefore conclude that this Court deter-

mine that Washington’s excise taxing, reporting and

collection scheme is void as it effects the Yakima Nation

and its licensed retailers, and affirm the judgment and

restraints imposed by the District Court below.

DATED: July 3, 1979.

Respectfully submitted,

JAMES B. HOVIS

HOVIS, COCKRILL & ROY

Counsel for Appellee,

Yakima Nation

so Bn Oe ee eee —

“we

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