Brief of the Petitioner — British-American Oil Producing Co. v. Board of Equalization of Mont.

_THE BRYTISH-AMERICAN OWL: PRODUCING

EDs POMP ANY, A CORPORATION, pas

; “SOBs }

THE BOARD OF BQUALIZATION of the ‘State of:

_ Montana, and JAMES H. STEWART, JOHN Jj.

GREENE, and SAM: D. GOZA, members: of the State’

Board of. Equalization of the State of Montana, ; en

ae "Respondents.

é * asthe. % ,

-

SUBJECT INDEX

Page

a Reference to Official Report of Case Below... 1

II. Statement of Grounds on which jurisdiction invoked... Oy

Ty NS OE CORON sumcnanmmamamedcni 2

(b) Specific claims advanced and rulings made in State Su-

preme Court relied upon as basis for Court's jurisdiction... 2

(c) Statutory provisions under which jurisdiction of this Court

SP CAPTION annsssceerenssorscsensnamsniontiienianliaisamsiniscaincse ct 3

(d) Cases believed to sustain PUTIN viniccsttntactiisstaii es 3

See I OT OD GG ssc nencinnistaniniiouumiianiee 4

IV. Specifications of Error... peadeinbasneabindaintiandinbiabbcciis 6

V. Summary of Petitionee’s I: sescteticnidaicig ae 7

Fhe IOI accssencccersmnetssstreerentsnenommnticinnanmneennnn 8

a 1 nme 8

B. Ownership of the Oil and Gas... 1l

C. Without the consent of the United States neither the oil nor

the production thereof CY WO SN cteittieeeeeie 12

D. The United States has not consented to the imposition of

SOO SONS BO TIO a cincnsimeenemiaincdcter eo 15

1. The Blackfeet Indian Reservation is a treaty and not an

executive order reservation 200... 16

2. The provisions of the Act of May 29th, 1924, 43 Stat.

244, tion 398, Title 25, U. S.C. A. are not applicable

MOD sacnecctaracessncscseetetnsonnenipinienntinsisnatenneainiieg re 20°

(a) Specific provisions for the leasing of lands on the

Biackfeet reservation have been made by statute... 21

(b) The lease and minerals here involved are not wn-

allotted lands within the provisions of Section 398

OO SEs TD eesti eae Pieddindntainleaiiancasiuuns 24

(c) The Department of the Interior has not construed

Section 398 as being IED seitniintelsitieciinee ears 27

TABLE OF CASES

Adams v. Henderson, 168 U. S. 573, 42 L. Ed. 584 oo 23

Adams v. Reed, 11 Utah 480, 40 Pac. EE SR Sestblininiailataiiin ail .. 23

Barnsdal! Refineries y. Commission, 171 Okla. 145, 41 Pac. (2d) 918... 14

' British-American Oil Prod. Co. vy. Board, 54 Pac. (2d) 129... 1

Burnet v. Coronado O. & G. Co., 285 U. S. 393, 76 L. Ed. pe 13

Byrne v. Fulton Oil Co., 85 Mont. 329, 278 Pac. 514.0... 10

Carpenter v. Shaw, 280 U. S. 363, 74 L. Ed. 478 2. 3, 10, 13, 14, 15

Childers v. Beaver, 270 U. S. 555, 70 L. Ed. 730 sctinteisunetnsiesemineatietiatiibasiein . : Sn

Choate v. Trapp, 224 U. S. re Fed ot . t . _aMEEEReReRs: 15

Choctaw O. & G. R. Co. vy. Harrison, 235 U. S. 292, 59 L. Ed. 234 ....13, 14

City-of Great Falls y. Jeffries, 83 Mont. 111, 270 Pac. Peer, 14

Clairmont vy. United States, 225 U. S. 551, 56 L. Ed. re 19

Felix v. Yaksum, 77 Wash. et dh, , SRR aeoC 31

Ford v. City of Great Falls, 46 Mont. 292, 127 Pac. 1004... 14

Frazee v. Piper, 51 Wash. lg he Le, Reem nns 31

Frost y. Wenie, 157 U. S. + & £1: | RnR Re enANER 24

Gillespie v. Oklahoma, 257 U. S. 501, 66 L. Ed. 338 3, 13, 14

Gleason v. Wood, 224 U. S. eh Ie is tae aL oe 15

Group No. 1 Oil Corp. v. Bass, 283 U. S. 279, 75 L. Ed. 1032... 13

. Hawley v. Diller, 178 U.S i | Pee nee aon rE 28

' Hemmer vy. U. S., 204 Fed. TO ovcnstcecrcsansascinseaiiinicnithatbigassiiisies ion 24, 31

Homestake Exploration Co. v. Schoregge, 81 Mont. 604, 264 Pac. °

388

eed ite in to th a - Tat ae

a

Bee a ee

Page

Howard v. Gypsy Oil Co., 247 U. S. 503, 62 L. Ed. 1239 ...................... 13,14

Bedeca Of] Co. v. Board, 52 Pac. (3d) OBS ...............2....0:.22..2220....0000.0.0000-22 19

In re Crow Dog, 109 U. s. = gt enon 23

Indian Terr. Oil Co. v. Oklahoma, 240 U. S. 522, 60 L. Ed. 779 «........... 13

Jaybird Mining Co. v. Weir, 271 °U. S. 609, 70 L. Ed. 1112 ....0.0.......... 13, 14

eg OS en eT 25

Large Oil Co. v. Howard, 248 U.S. 549, 63 L. Ed. 416 2.000000... 13, 14

Larkin v. Paugh, 276 U. &. 431, 72 L. Ed. GOO .........2........22....20000000-.-nencceses 3

Longest v. Langford, 276 U. S. 69, 72 L. Ed. 470 .................ceeceeececcceseeeee 3

Longest v. Langford, 274 U.S. 499, 71 L. Ed. 1170 000...

3

Louisville & N. R. Co. v. United States, 282 U. S. 740, 75 L. Ed. 672....28, 30

Marlin v. Lewallen, 276 U. S. 58, 72 L. Ed. 467 2.000.000.0000 3

Metcalf & Eddy v. Mitchell, 268 U. &. 634, 96 LL. TA. SBS ...............-02-02.-. 13

Mid-Northern Oil Co. v. Walker, 65 Mont. 414, 211 Pac. 353 ll

Robinson v. Lundrigan, 227 U. S. 173, 57 L. Ed. 468 2000000000. poo 29

Santa Rita Oil & Gas Co. v. Board, 54 Pac. (2d) 117 ......................12, 17, 25

Spalding v. Chandler, 160 U. S. 394, 40 L. Ed. 469 220. 19

mens 0 Sip, SIO OI I lena eateeipieneeheemeimbtianeiions 23

RF SE RR ee 19

Strawberry Valley Cattle Co. v. Chapman, 13 Utah 454, 45 Pac. 348 25

Taber v. Indian Terr. Oi] Co. (Okla.) 57 Pac. (2d) 1167 000000... 14

Three Foretops v. Ross, 73 Mont. 6, 235 Pac. 334 22200000. 14

United States v. Finnel, 185 U. S. 236, 46 L. Ed. 890 20000. 29

United States v. Johnson, 124 U. S. 197, 31 L. Ed. 389 0 28

United States v. Newton, 36 Fed. | ASeNs RISA Bers Be 24

United States-y. Nix, 189 U. 3S. 199, 47 L. Ed. 775 20-2000 24

United States 4Rickert, 188 U. §. 432, 2," a 13

United States v. Saunders, 96 Fed. RRR eae 31

White Bear v. Barth, 61 Mont. 322, 203 Pac. 517 0.000000... meh 25

Texts

Corpus Juris ss 2 ee emaiuledea 27

5 > eee 24

Kappler’s Indian Affairs . 3g ews 18

. 5 9 eee ‘cniulaiad 18

Lewis, Statutory Construction (2d Ed.), 526 .2020000.0..00.0.0ccccccccccccessesseceseeeee 24

STATUTES AND CONSTITUTIONAL PROVISIONS

United States Statutes at large

I is i a aed 17

oR UN ge Fe Fb ero en ene 18

Ff & FF’ F SG SS .) eae Ene Sars 18

18 Stat. 402 {Act of March 3, 1875) ........... I ACES MD ak PAS. MAID, 31

ee 31

Se eis es ME GR a icisconeasinmnnasemmnnl 21, 23

» fF SS Fe’ ye § FS Pee bo RAE .

Fo OR Fg RRR nee 18

25 Stat. 642 (Act of Jan. 4, 1889) 000000. STN AS 2 . 24

FF XR awl 8 gS ee 13

Ff PF Se. & S| en panne 21

26 Stat. 796 (Act of Feb. 28, 1891) ....................2000.0000.....00....... 21, 23, 27

29 Stat. 350 (Act of Sept. 26, 1895) ASD Ewes SN A 0A 21

, & FF ey FS See 19

§ FF FF 6 RE lL Cee eee 23

34 Stat. 539 (Act of Jume 28, 1906) 22 eee e 24

34 Stat. 1015 (Act of March 1, 1907) 0.0000 21

34 Stat. 1035 (Act of Merch 1, 1907) rehet Ole 19

41 Stat. 3-17 (Act of June 30, 1919) 00 7,8

-

Page

41 Stat. 17 (Act of June Se tgp hs Me

qndnaneansecetansaeshintnsesesenniesensnes ass » 6, 11, 22, 23, 24, 25; 26, 27, 29, 30, 31 é

41 Stat. 31 (Act of OD ci

41 Stat. 1225-12321 (Act of March 8 TT, 29

41 Stat. 1355 (Act of TE iil in ce en 24 §

42 Stat. 857 (Act of September 20, I Wb as 8, 22, 24, 27 ‘

43 Stat. 111 (Act of Apr. 28, MNENED svitiabiansedseneslasiauininidtecieesanocierecc ie ;

43 Stat. 244 (Act of May 29, 2} aera 6, 15, 20, 25

43 Stat. 376 (Act of June 2, REE 24

44 Stat. 1347 (Act of ND at 8, 15, 17

United States Codes Annotated—

dy a 29

Section 349 Snenensnedeneetecanenentestsieastanesenitstensseccusssishesinntnmasase:®,

Secvion 396 ssuseatenesnievtcnenaiessdnasallemnensuonnshtenctsasusanninanivassnannsscsss.. 25

TT entities ey 23, 25, 26, 27, 29, 30

Section 398 _.. 3, 6, 15, 23, 24, 25, 26, 27, 28, 29, 30

Section 398 a, _ E Pearaaely ctaeieeneneneneatthnnatonmen’s 8, 15, 16

Ee SE erin 25, 26 f

EEE BE etatnntenincnsiinaccee 8, 30, 31

Title 28, Section i re ennenincteetetererne

Ee Be Brterencennnemrnc, 3

Montana Constitution and Statutes— |

Constitution, Ordinance No. Re UP icianaicnsctsindagae toast 13

Article XII, See. idl estethithntlscinetsininiianbacisiuee. 14

Revised Codes, 1921, Sections ,.,, Sey 4,8

' Secticns 2397-2406 —

Session Laws, 1923, Chap. Bie ON Dicteniisteee 10

ee SO BO 8, 10

ee ee ee 14

SEN OF irinieiiee 8, 9

eee °

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1936

No. 37

———____!

THE BRITISH-AMERICAN OIL PRODUCING

COMPANY, a Corporation,

4 Petitioner,

VS.

THE BOARD OF EQUALIZATION of the State of

Montana, and JAMES H. STEWART, JOHN J.

GREENE, and SAM D. GOZA, members of the Staie

Board of Equalization of the State of Montana, °

Respondents.

e

THE BLACKFEET INDIAN TRIBE,

Intervener.

BRIEF OF PETITIONER

a

Reference to Official Report of Case Below.

Tne case has not yet been officially reported. It will

be found reported in 54 Pac. (2d) 129.

-

II.

Statement of Grounds on Which Jurisdiction Invoked.

(a) Date of Judgment. |

The original judgment and decree of the Supreme Court

of Montana was entered on the 19th day of February,

1936 (R. 49) pursuant to the decision of said court en-

tered on the 22nd'day of January, 1936 (R. 25).

(b) Specific claims advanced and rulings made i

State Supreme Court relicd upon as basis ‘for Court's juris-

diction.

In the Supreme Court of Montana, petitioner claimed:

(1) The oil and gas in the land involved in the lease

here in question was and is the property. of the United

States (R. 1. 37).

(2) The taxes sought to be levied are taxes upon the

property of the United States and upon an instrumentality

of the United States (R. 3, 5, 40).

(3) No consent has been given by the United States

for the taxation of the oil and gas in or that is produced

from the lands embraced in the lease here involved (R.

3, 42).

(+) The assessment, levy and collection of the taxes

here inveilved is prohibited by the Federal Statutes, the

Montana Constitution and the Montana Statutes (R. 3,

37, 42).

With reference to the claims advanced by petitioner the

Supreme Court of Montana ruled:

(1). The oil and gas in the land involved in the leas*

was and is the property of the United States (R. 32, 35).

te le Vee NP teen I

= 3

(2) The taxes sought to be levied are taxes upon the

property of the United States and upon an instrumentality

of the United States (R. p. 31, 32).

(3) By the provisions of Sec. 398, Title 25 U. S. C. A.

(Act May 29, 1924) the United States consented to the

levying of the taxes here involved upon the oil and gas

produced from the lands embraced in the lease (R. 32, 33).

(4) The assessment, levy and collection of the taxes

here involved is not prohibited by Federal Statute, the

Montana Constitution or Montana Statute (R. 32, 33, 35,

36).

(c) Statutory provisions under which jurisdiction of

this Court is invoked.

The.decision of the Supreme Court of the State of Mon-

tana was rendered January 22, 1936 (R. 25) and its judg-

ment entered February 19, 1936 (R. 49). less than three

months prior to the date of the application for the writ of

certiorari herein (U. S. Code, Title 28, Sec. 350).

___ The jurisdiction of this Court is invoked under the pro-

vitions of Section 237 of the Judicial Code, as amended by

the Act of February 13, 1925 (U. S. Code, Title 28, Sec-

tion 344) in that petitioner claims a right, privilege and

‘immunity under the Constitution and Statutes of the

United States.

(d) Cases belicved to sustain jurisdiction.

Carpenter v. Shaw, 280 U.S. 363, 74 L. Ed. 478:

Gillespie v. State of Oklahoma, 257 U.S. 501. 66 L.

Ed. 338;

Longest v. Langford, 276 U. S. 69, 72 1.. Ed. 471:

: Marlin v. Lewallen, 276 U.S. 58, 72 L. Ed. 467:

Larkin v. Paugh, 276 U.S. 431, 72 L. Ed. 640: :

Longest v. Langford, 274 U.S. 499, 71 L. Ed. 1170.

4

III,

Statement of the Case.

This proceeding was instituted originally in the Supreme

Court of Montana by petitioner (R. 1-6) to prevent the

assessinent, levy and collection of certain taxes by the

State of Montana based upon crude oil produced, under

an oil and gas lease (Rh. 6), from lands situated on the

Blackfeet Indian Reservation, allotted under trust patents

by the terms of. which the oil, gas and other minerals tn

and under such lands were reserved to the United States

for the benetit of the Blackfeet Indian Tribe, pursuant to

the provisions of the Act of June 30, 1919 (41 Stat. 17).

(R. 23). The oil and gas lease involved was executed by

che Superintendent of the Reservation on behalf of the

Tribe (RR. Me and was approved by the Secretary of the

Interior (R. 14). The Board of Equalization of Montana

seeks to assess, levy and collect certain taxes on crude oil

produced by petitioner under said lease during the years

1934 and 1935, as follows:

-(a) Gross Production Tax (a license or occupational

tax) provided for by Sees. 2397-2405, Revised Codes ot

Montana, 1921, as amended (R. 4, 5).

(b) Net Proceeds Tax on lessor’s and lessee’s inter-

est (a substitute for an ad valarem tax on the value of

the lease), provided for by Sees. 2088-2096, Revised

Codes of Montana, 1921, as amended (R. 4, 5).

The complaint alleges that on July 10, 1934, the United

States of America, for the benefit of the Blackfeet Tribe

Indians, was the owner of the oil, gas and other min-

erals in and under the land involved, and that on said

date such oil and gas were leased by the superintendent

5

of the Blackfeet Agency to petitioner's predecessor, (R.

1, 2); that during the years 1934 and 1935, petitioner

produced crude oil from wells drilled ‘on said premises

(R. 3); that the defendants are attempting to assess,

levy ang collect the above described taxes on such pro-

duction (R. 4, 5); that such taxes are based upon crude

oil produced by petitioner as an instrumentality and

agent of the United States not taxable by the State of

Montana (R. 5). Defendants’ demurrer admits the facts

alleged’ (R. 21). It was stipulated by counsel for both

parties that all of the lands embraced in the lease were

granted to individual Indians by trust patents under the

provisions of the Act of June 30, 1919 (41 Stat. 17)

19 form identical with the trust patent attached to such

stipulation (R. 23).

The complaint in intervention of the Blackfeet. Tribe

(R. 17-21) seeks to prevent. the levy, assessment and

collection of a net proceeds or royalty tax on the royalty

interest of the Tribe, as depriving the Tribe of prop-

crty without due process of law in violation of the pro-

visions of the Constitution of the United States, as im-

pairing the obligations of contracts, treaties, and agree

ments between the Tribe and the United States, and be-

tween the United States and the State of Montana, in

violation of the Constitution of the United States and

the State of Montana, and that such taxes would con-

stitute a direct burden upon property of the United

States.

The decision of the Supreme Court of Montana sus-

tained defendants’ demurrers to the complaint and com:

plaint in intervention and dismissed the complaint and

complaint in intervention on the merits (R. 25 and 30).

Motion for rehearing’ was denied (R. 49).

Oa

6

Judgment and decree is in accordance with the decision.

and sustained the defendants’ demurrers and dismissed

the complaint and complaint in intervention (R. 49-50).

IV.

Specifications of Errer.

1. The Supreme Court of Montana erred in sustaining

defendants’ demurrers to petitioner’s complaint and_ to

the complaint in intervention of the Blackfeet Tribe, and

dismissing said complaint and compiaint in intervention

in this, that its opinion and judgment disregarded the

leasing ‘provisions found in the ct of June 30, 1919

(41 Stat. 17), which specifically provide the manner in

which the minerals in the lands which were allotted pur-

suant to that Act shall be leased, that is, under such

terms and conditions as the Secretary of the Interior

-shall prescribe.

2: The Supreme Court of Montana erred in dismissing

petitioner's complaint and the complaint in intervention

of the Blackfeet Tribe in this, that by its opinion and

judgment said Court determined and held that the lands

embraced in the involved lease, so far as the oil, gas and

other minerals therein are concerned, are unallotted lands

in an Indian Reservation, and, therefore, that the lease

embracing the same was executed pursuant to the pro-

visions of the Act of May 29, 1924 (43 Stat. 244, Sec.

398, Title 25, U. S. C. A.), and accordingly that such oi!

and gas are taxable by the State of Montana by virtue

of the Congressional consent contained in that Act.

3. The Supreme Court of Montana erred in sustain-

ing respondents’ demurrers to petitioner's complaint and

the complaint in intervention of the Blackfeet Tribe, and

7

dismissing said complaints in this, that its opinion and

judgment permit taxation by the State of Montana of

property of the United States, and the taxing of an in-

strumentality of the United States.

V.

Summary of Petitioner’s Contentions.

1. The State of Montana, acting through respondents,

seeks to assess against, levy upon, and collect from peti-

tioner two separate taxes provided for by the laws of

Montana:

(a) A net proceeds, or ad valorem tax, based upon

the production -of oil and gas;

(b) A gross proceeds, or license tax, based upon

the production of oil and gas.

2. The oil and gas lease here involved embraces lands

situated within the Blackfeet Indian Reservation held

under an individual trust allotment, as to which the oil

and gas were reserved to the United ‘States for the bene-

fit of the Blackfeet Indian Tribe.

3. The oil and gas in and under the lands embraced

in the lease are the property of the United States and

the production thereof may not be taxed by the State of

Montana without the specitic consent of the United

States.

4..The oil and gas in and under the lands embraced

in the lease here involved was reserved to the United

States for the benefit of the Blackfeet Tribe under the

provisions of the Act of June 30, 1919, 41. Stat. 3-17,

which section, together with the Act of September 20,

“v eine

Pr et meyer

B PN yen err an ‘or

8

p .

1922, c. 347. 42 Stat. 857, provides for the leasing of

such lands for oil and gas production.

5. The Blackfeet Indian Reservation is a “tfeaty’’ and

not an “executive order’ reservation, and the consent to

taxation provided. for in +4 Stat. 1347, (U.S. GC. A.

Title 25, Sections 398 a, b, and ¢) does not apply to the

lands here involved.

6.- The land here involved is not unallotted land within

the provisions of the Act of May 29, 1924, 43 Stat. 244,

U. S. Cc. A. Title -25, Section 398, and the consent to

taxation therein contained does not apply to the lands

here involved.

.7. Neither the Act of June 30, 1919, (41 Stat. 3-17)

nor the Act of September 20, 1922, c. 347 (42 Stat. 857)

(U.S. C. A. Title 25, Section 400), which provide spe-

cifically for the leasing of allotted and unallotted lands,

on the Blackfeet Reservation contain any consent, to the

levy of taxes by the State., .

8. Petitioner, as lessee of the oil and gas reserved by

the United States for the benefit of the Blackfeet Indian

Tribe, is an instrumentality of the United States in pro

ducing such oil and gas, and, as such, is not subject to

the taxes here sought to be assessed, levied and collected.

VI.

ARGUMENT.

A.

Taxes Involved.@

1. Net Proceeds Tax. (Secs. 2088-2096 Revised Codes,

Montana 1921, as amended by Laws 1935, Chap. 188.

and Laws 1925, Chap. 143):

1 te 9 gon camamacant

Laws 1935, Chap. 188:

“Sec. 5. On or before the fifteenth day of June

in each year, the State Board of Equalization shall

transmit to the county clerk of each county in which

such mines and mining claims are situated, the valu-

ation of the net proceeds of such mines and mining

claims for the purpose of taxation. as the same have

been determined and fixed by such State Board of

Equalization, and the county clerk shall immediately

enter the same upon an assessment roll.

“Sec. 6. At the time of transmitting net proceeds

assessments the State Board of Equalization shall P

also transmit the royalty lists or schedules to the

county clerk of each county in which such mines and

mining claims are located’ and thereupon the county

clerk shall prepare from such net proceeds and_ roy-

alty assessments a tax roll which shall be by jim

furnished to the county treasurer on‘or before the

twentieth day of August following, upon which date

said taxes shall be due and payable. The county

clerk shall enter such assessments in the personal

property assessments book under the name of the

operator of such mine or mines, and such assess-

ments wien entered shall have all the force and e/-

fect as if made in the names of the owners: of such

royalty individually as well as against the operator.

The county treasurer shall proceed to give full no-

tice thereof to such operator and to collect the same

in manner provided by law. The operator or pro-

. ducer shall be liable for the payment of said taxes,

and the same shall be payable by, and shall be col-

lected from, such operators as provided for the col.

lection of taxes upon net proceeds of mines; pro-

vided, however, that after payment of such tax such

operator may recover or withhold ne any pro-

ceeds of royalty interest, either in kindvor in money,

coming into his hands, the amount of any tax. paid

by him upon such royalty or royalty interest.”

10

Laws 19235, Chap. 143:

“The taxes on such net proceeds must be levied

as the levy of other taxes are provided for, and

every such tax is a lien upon the mine or mining

claim from which the ore or mineral products or de-

posits are mined or extracted, aad is a prior, lien

upon all personal property and improvements used

in the process of extracting such ore or minerai

products or deposits.”

This tax is upon the lessee’s interest and ‘the lessor’s

royalty, and is a substitute for an ad valorem tax on

the lease.

Byrne v. Fulton Oi! Co., 85 Mont. 329, 278 Pac. 514;

Thus it is, in effect, a tax on the realty, as under the

Montana rule, the oil and gas in place does not pass by

the execution of an oil and gas lease. :

Homestake Exploration Co. v. Schoregge, 81 Mont.

604, 264 Pac. 388;

Carpenter v. Shaw, 280 U. 5. 363, 74+ L. Ed. 478;

2. Gross Proceeds Tax. (Sections 2397-2403, Revised

Codes, Montana, 1921, as aniended by Laws 1923, Chap.

67, Sec. 1): | |

“Every person engaging in or carrying on the

business of producing, within this state, petroleum,

or other mineral or crude oil, or engaving in or car-

rying on the business or owning, controlling, man

aging, leasing or operating within this state any weil

or wells from which any merchantable or market-

able petroleum or other mineral or crude oil 15 €X-

tracted or produced, sufficient in quantity to justify

the marketing of the same, must. for the year 1923,

and eath year thereafter, when engaged in or carty-

ing on any such business in this state, pay to tiie

4

1]

4

4

f.

4

»

.

SS aeee tise |

State treasurer, for the exclusive use and benefit of

the State of Montana, a license tax for engaging in

and carrying on such business in an amount eqilal

to two per centum of the total gross value of ali

petroleum and other mineral or crude oil produced

by such person within this state during such year.”

This is a license tax.

Mid-Northern Oil Co. v. Walker, 65 Mont. 414, 211

Pac. 353.

B.

Ownership of the Oil and Gas.

The trust allotment covering the lands here involved

contains the following provision, (R. 23):

“reserving, to the United States, in accordance witl:

the provisions of the Act of June 30, 1919, (41 Stat.

17), all minerals. including coal, oil and gas, for the

benefit of the Blackfeet Tribe of Indians until Con-

gress shall otherwise direct.”

The Act of June 30, 1919 (41 Stat. 17) provides:

“The Secretary of the Interior is authorized to

make allotments under existing laws within the said

Reservation to any Indians of said Blackfeet Tribe

not heretofore allotted * * * .

“Provided, That of the lands so allotted eighty

acres of each allotment shall be designated as a

homestead by the allottee and be evidenced by a

trust. patent and shall remain inalienable and = non-

taxable until Congress shall otherwise direct; * * *

“Provided, further, That any and all minerals, in-

cluding coal, oil and gas, are hereby reserved for

the benefits of the Blackfeet Tribe of Indians until

Congress shall otherwise direct, and patents here-

after issued shall contain a reservation accordingly,

: 12

Provided, That the land containing said minerals may

be leased under such rules and regulations and upon

such terms and conditions as the Secretary of the

Interior may prescribe.”

In connection with the mineral interest so reserved

the Supreme Court of Montana said in its decision (KR.

a2 k:

“As we view the situation, when the trust patents

were issued containing the reservation of the oil and

gas as well as other minerals. including ,coal, pur:

suant to 41 Stat. 17, a distinct estate was thereby

carved out or created consisting of the reserved min-

erals which the United States thereatter held in trust

for the benefit of the Blackfeet Tribe.”

At the time of the execution of the lease, therefore.

ownership of the oil and gas was in the United States

‘or the benefit of the Blackfeet Tribe. The execution

of the lease did not divest the title of the United States.

Homestake Exploration Co. v. Schoregge, 81 Mont.

604, 264 Pac. 388;

Cases based upon the Texas Rule that an oil and gas

lease constitutes a transfer of the oil in place are not,

in point.:

(.

Without the Consent of the United Siates Neither the

Oil Nor the Productien Thereof May Be Taxed.

This rule was recognized by the Supreme Court of

\ontana in its decision herein (R. 30, 31) and in its

decision in a companion Case.

Santa Rita Oil & Gas Co. v. Board, 54 Pac. (2d)

117 (not yet officially reported).

13

Tt is the rule adhered to by this Court.

Gillespie v. Oklahoma, 257 U. S. 501, 66 L. Ed. 338:

Burnet v. Coronado O. & G. Co., 285 U. S. 393, 76

L. Ed. 815;

Indian Terr. Oil Co. v. Oklahoma, 240 U. S. 522,

60 L. Ed. 779;

Choctaw O. & G. R. Co. v. Harrison, 235 U. S. 292,

59 L. Ed. 234:

Howard v. a ee Oil Co., 247 U. S. 503, 62 L. Ed.

1239;

Large Oil Co. v. Howard, 248 U. S. 549, 63 L. Ed.

416; |

Jaybird Mining Co. v. Weir, 271 U. S. 609, 70 L.

Ed. 1112;

Metcalf & Baily v. Mitchell, 269 U. S: 524, 70 L.

Ed. 384;

Group No. 1 Oil Corp. v. Bass, 283 U. S. 279, 75

:L. Ed. 1032;

United States v. Rickert, 188 U. S. 432, 47 L. Ed.

532:

Childers v. Beaver, 270 U. S. 555, 70 L. Ed. 730:

Carpenter v. Shaw, 280 U. S. 363, 74 L. Ed. 478.

The exemption is provided for in the Enabling Act

of the State of Montana (25 Stat. 677):

“And said Indian lands shall remain under the

' absolute jurisdiction and control of the Congress of

the United States.”

It is recognized by various Constitutional provisions

and Statutes of Montana:

Ordinance No. 1, Sec. 2:

“That no taxes shall be imposed by the State of

Montana on lands or property therein belonging to,

14

or which may jhereafter be purchased by the United

States or reserved for its use.” |

Constitution, Art. XII, Sec. 2:

“The property of the United States shall be ex-

empt from taxation.”

Laws of Montana. 1931, Chap. 98:

“The property of the United States (is) exempi

from taxation.”

See also:

Ford v. The City of Great Valls, 46.Mont. 292, 127

Pac. 1004; “Sy

City of Great Falls 7. Jeffries, 83 Mont. 111, 270

Pac. 638;

Three loretops v. Ross, 73 Mont. 6, 235 Pac. 334;

Barnsdall. Refineries 7. Cominission, 171 Okla. 145,

41 Pac. (2d) 918:

Taber v. Indian Terr. Oil Co., (Okla.) 357 Pac. (2d)

1167.

The exemption has been sustained as to income taxes,

(Gillespie v. Oklahoma, 237 U. >. 501): gross produc-

tion taxes. (Howard v. Gypsy Oil Co., 247 U.S. 303;

Large Oil Co. v. Howard, 248 U.S. 549; Choctaw O. & l

G. Ry. Co. v. Harrison, 233 U. S. 292); ad valorem

taxes, (Jaybird Mining Co. v. Weir, 271 U. 8. 609);

occupation or license taxes, (Choctaw O. & G. Ry. Co.

wv. Harrison, 235 U. S. 292); royalty tax, (Carpenter @.

Shaw, 280 U. S. 363, 74 L. Ed. 478).

Neither the state legislature nor the state court, by

giving a tax a particular name, or by the use of some

form of words. can take away the duty of this Court to

consider the real nature and effect of the tax.

Choctaw O. & G. Ry. Co. v. Harrison, 235 U. S.

292, 59 L. Ed. 234.

Ss

—"

a |

The United States Has Not Consented to the Imposi-

tion of the Taxes Here Involved.

In what has been said before, the Supreme Court of

Montana agreed with petitioney’s contentions. Unless,

therefore, there is statutory authority and consent for

the imposition of these taxeg, the decision of the State

Court was erroneous.

In the State Court counsel for respondents fook two

positions: (1) That the Blackfoot Reservation is an “ex-

ccutive order” reservation and that consent to the jm.

position of the taxes is found in Section 398, a. b, and ¢,

Title 25, U. S.C. A. (44 Stat. 1347): (2) That the

lands were unallotted lands within the provisions of Sec-

tion 398, Title 25, U. S.C. A., (43 Stat. 244), and that

the consent contained in that statute applied. \We shall

here take up these contentions seriatim.

At the outset it must be borne in mind that the ‘net

‘proceeds tax here sought to be levied affects not only

the lessee’s interest but also the rovalty interest of the

Blackfeet Indians. Thus. not only is an instrumental; ty

of the United States: sought to be taxed, but the inter-

est of the Indians is directly affected. In such case two

rules of construction must be applied: (1) the statutes

involved must receive a liberal construction in favor of

the Indians; and, (2) the presumption is against any

consent to taxation.

Carpenter v. Shaw, 280 U. S. 363, 74 L. Ed. 4/8;

Gleason v. Wood, 224 U.S. 679, 56 L. Fd. O47 ;

Choate v. Trapp, 224 U.S. 665, 56 L. Ed. 941.

16

1. The Blackfeet Indian Reservation ts a “treaty” and

not an “executive order” reservation.

Sections 398, a, b and ¢. Title 25, U. S.7C. A, (4+

Stat. 1347), which counsel for respondents sought to

have applied in the State Court are as follows:

398 (a):

“Unallotted lands within the limits of any reser

vation or withdrawal created by executive order for

Indian purposes or for the use or occupancy of any

Indians or tribes may be leased for oil and gas min

ing purposes in accordance with the provisions con

‘ tained in Section 398 of this Title.”

3Y8 (b):

“The proceeds from rentals, royalties, or bonuses

of oil and gas leasesSupon lands. within executive

order Indian reservations or withdrawals shall be

deposited in the treasury of the United States to

the credit of the Tribe of Indians for whose bene

fit the reservation or withdrawal was created, or

who are using and occupying the land, and- shall

draw interest at the rate of + per centum per an

num and be available for appropriation by Congress

for expenses in connection with the supervision of

the development and operation of the oil and gas

industry and for the use and benefit of such In

dians: Provided, that such Indians, or their triba!

council, shall be consulted in regard to the expendi

ture of such money, but no per capita payment shall

be made except by Act of Coneress.”

398 (c):

“Taxes may be levied and collected by the State

or local authority, upon improvements, output of

mines or oil and gas wells or other rights, property

or assets of any lessee upon lands within executive

order .Indian reservations in the same manner as

such taxes are otherwise levied and collected, and

a

17 :

a

such taxes may be levied against the share obtained

tor the Indians as bonusys, rentals and royalties, and

the Secretary of the Interior is hereby authorized

and directed to cause such taxes to be paid out of

the tribal funds in the treasury; provided, that such

taxes shall not become a lien or charge of any kind

against the land or other property of such Indians.”

The Supreme Court of Montana, in its decision, held

that the Blackfeet Reservation Was a “treaty” and not an

“executive order” reservation, and that the above see

tions. had no application herein (R. 30). In reaching

this conclusion, it followed its decision in the companion

cause of Santa Rita Oil & Gas Company v. Board, 54

Pac. (2d) 117. The chronological history of the Black-

feet Reservation is substantially as follows:

On October 17th, 1855, 4 treaty was made and con-

cluded within what is now the State of Montana, then

in the Territory of Nebraska, between the conmmissioners

on the part of the United States and the Blackfeet Tribe

and other Tribes of Indians (11 Stat. 657). by Article

IV a tract of country was described which “shall be the

territory of the Blackfoot Nation, over which said Nation

shall exercise exclusive control, excepting as may be

otherwise provided in this treaty.” By Article VII it was

agreed that the citizens of the United States nught live

and pass unmolested through the countries occupied and

claimed by the Indian Tribe. By Article VIII consent

-Was given to the United States to constrtict roads, - lines

of telegraph and military posts, to build houses for

agencies, missions, schools, etc., and to occupy perma.

nently as mucli land as might be necessary for the Vvari-

OuS purposes enumerated, including the use of wood for

fuel and land for grazing; the navigation of all lakes and

streams was declared to be forever free to the citizens

Exatenenernentn

18

of the United States. This treaty was ratified by the

Senate of the United States on April 15, 1856, (11 Stat.

662), and on April 25, President Franklin Pierce ac

cepted, ratified and confirmed the treaty. On July 5,

1873, President Grant, by executive order, on the recom-

mendation of the Department of the Interior, withheld

from entry and settlement as public lands all o1 tliat

portion of the State of (then Territory of} Montana

lying west of the Territory of Dakota, north of the Mis-

souri River and the Sun River. and east of the Con-

tinental Divide, and ordered that the same be set apart,

as a reservation for the Blackfeet Tribe and other Tribes,

therein enumerated. Aappler’s Indian -Iffairs, Vol. 1,

P. 854. :

Congress, by the \ct of April 15, 1874 (18 Stat. 28)

provided that a described tract of country in tue Terri-

tory of Montana “be, and the same is hereby, set apar:

for the use and occupation of the” Blackfeet Tribe, and

other Tribes therein enumerated. This tract was some-

what less than, but within the area described by President

Grant, in his executive order of July 3, 1873. President

Grant, by executive order on August 19, 1874, directed

that the tract included in his. executive order of July 5,

1873, and not embraced within the tract set-apart by the

Act of Congress of April 15, 1874, be set apart for the

use and occupation of the Blackfeet Tribe and other

Tribes. President Hayes, by executive order on July 13,

1880, added certain additional territory to the Blackfeet

Reservation. Aappler’s Indian <lffairs, Vol. 1, P. 8506.

Congress, by the Act of May 1, 1888, approved an Agrce-

ment theretofore made between the commissioners on

che part of the United States and the Blackfeet, whereby

the Blackfeet Reservation was distinctly described (25

Stat. 129), and in consideration of which they relin-

19

quished their claim to much of the land theretofore in-

cluded within their reservation. Another and later Agree-

ment with the Blackfeet, approved by Act of Congress

on June 10, 1896 (29 Stat. 353), still further reduced

the reservation. By Article V of the Agreement it was

expressly provided that there should be no allotment in

severalty of the land, but that the whole reservation

should continue to be held by these Indians as a com-

munal grazing tract. By the Act of. March 1st, 1907

(34 Stat. 1035) it was provided: “That as soon as all

the lands embraced within the said Blackfeet Indian Res-

ervation shall have been surveyed, the Commissioner of

Indian Affairs shall cause allotments of the same to be

made under the provisions of the allotment laws of the

United States to all persons having tribal rights or hold.

ing tribal relations and who may rightfully belong ou

Said reservation. That there shall be allotted to each

member forty acres of irrigable land and two hundred

and eighty acres of additional land valuable - only for

grazing purposes; or, at the option of the allottee, the

entire three hundred and twenty acres may be taken jn

land valuable only for grazing purposes.

The Blackfeet Reservation was created by treaty, and

this Court will take judicial notice of that fact.

Hudson Oil Co. v. Board, Wyo.

(2d) 683 (Shoshone Reservation).

, 92 Pac.

See also:

Clairmont v. United States, 225 U. S. 551, 56 L.

Ed. 1201 (Flathead Reservation) ;

Spalding v. Chandler, 160 U. S. $94, 40 L. Ed. 460:

State v. Big Sheep, 75 Mont. 219 (Crow Reserva-

tion).

C; 20

The decision of the State Court with respect to the

inapplicability of Sections 398 a, b, and ¢ was correct.

2. The provisions of the Act of May 29, 1924, 43 Stat.

244, (Section 398, Title 25, U. S.C. el.) are not app”

cable here.

The Act of May 29, 1924, (43 Stat. 244) is as fol-

Jows:

“An Act to authorize the leasing for oil and gas

mining purposes “of unallotted lands on Indian Kes-

eryations affected by the proviso to Section 3 ot

the Act of February 28, 1891.

“That unallotted land on Indian reservations other

than lands of the five civilized tribes and the Osage

Reservation, subject to lease Jor mining purposes

for a period of ten years under the proviso to Sec:

tion 3 of the Act of February ’28, 1891 (Twenty-

sixth Statutes at Large, Page 795), may be leased

at public auction by the Secretary of the Interior,

with the consent of the council speaking for such

Indians, for oil and gas mining purposes for a period

of not to exceed ten years, and as mucia_ longer

thereafter as oif or gas shall be found in paying

quantities. and the terms of any existing oil and gas

mining lease may in like manner be amended by ex-

tending the term thereo# for as long as oil or gas

shall be found in paving quantities: Provided, That

the production of oil and gas and other minerals

on such lands may be taxed by the State in which

said lands are located in all respects the same as

production on unrestricted lands, and the Secretary

of the Interior is hereby authorized and directed to

cause to be paid the tax so assessed against the roy-

alty interests on said lands? Provided, however, that

such tax shall not become a lien or charge of any

kind or character against the land or the property

of the Indian owner.” '

The proviso to Section 3 of the Act of February 28,

LL

21

1891, (26 Stat. 795) to which Section 398 refers, ap-

pears as Section 397, Title 25, U. S. C. A. It provides:

“Where lands are occupied by Indians who have

bought and paid for the same, and which lands are

not needed for farming or agricultural purposes,

and are not desired for individual allotments, the

same may be leased by authority of the Council

speaking for such Indians, for a period not to ex-

ceed * * * ten vears for. mining purpose * * *,”

Petitioner contends that the above sections do not ap-

ply for the following reasons:

(a) Specific provisions for the leasing of lands on

the Blackfeet Reservation have been made by statute.

A review of the legislation of the Congress discloses

a clear intention to deal specifically and individually with

the Blackfeet Indian Reservation with respect to allot-

nients and leases.

The general allotment. Act (24 Stat. 388) became ef-

fective February 8th, 1887. Such Act purports to pro-

vide fot the allotment of lands upon all reservations.

Yet on February 11, 1887, a treaty was entered into

with the Blackfeet covering, among other things, the

allotment of lands on that reservation. This treaty was

ratified by the Congress on Ray 1, 1888 (25 Stat. 113).

The general allotment Act (24+ Stat. 388) was amended

February 28, 1891, (26 Stat. 794). On September 26,

1895 (29 Stat. 350), however, a treaty with the Black-

feet was ratified providing, among other things, that

no allotments in severalty should be made upon the Black-

feet Reservation until requested in writing by a majority

of the adult male members of the Tribe.

This was followed by the Act of March 1, 1907 (34

Stat, 1015-1035) specifically providing for the allotment

22

of lands on the Blackfeet Reservation. This latter .\ct

was amended by the Act of June 30, 1919 (41) Sta’.

17), which again deals specifically with the Blacktect

Reservation, both with respect to the allotment of lanc

and with respect to the leasing of lands containing min-

@als. 5 .

On September 20, 1922, (42 Stat. 837) the Conzress

again specifically provided for the leasing of land on the

Blackfeet Reservation for mining purposes.

The oil and gas here under consideration were reserved

to the United States under the provisions of the Act o:

June 30, 1919 (41 Stat. 17) which provides:

“The Secretary of the Iierior is authorized to

make allotments under existing laws within the said

Reservation to any Indians. of said blackieet Tribe

‘not theretofore allotted. * * *

“Provided, that of the lands so allotted eighty

acres of each allotment shall be designated as a

homestead by the allottee and be evidenced by a trusc

patent and shall remain inalienable and non-taxable

until Congress shall otherwise direct; * * *

“Provided, further, That any and all minerals, in-

cluding coal, oil and gas are hereby reserved for tne

benefit of the Blackfeet Tribe of Indians until Con-

gress shall otherwise direct, and patents hereaiter

‘ssued shall contain a reservation accordingly; Pro-

vided, that the land containing said minerals may be

leased under such rules and regulations and upen

such terms and conditions as the Secretary of the

Interior may prescribe.”

The Act of September 20, 1922 (42 Stat. 857), See-

tion 400, Title 25, U. S. C. A., also specifically reters

to the Blackfeet Reservation as follows:

*“T ands reserved for school and azency purposes.

and all other unailotted lands on the Fort Peck and

23

Blackfeet Indian Reservations, in the State of Mon-

tana, reserved from allotments or other disposition

May be leased for mining purposes under regula-

tions prescribed by the Secretary of the Interior.”

We find, then, a clear intention on the part of the

Congress to deal with the Blackfeet Reservation outside

of the general allotment and leasing statutes applicable

to Indian Tribes and reservations in general. Thus,

clearly, the general allotment statutes do not apply, for

if they do the provisions therein contained, (24 Stat

389, 31 Stat. 1085), that the land shall be held in trust

“for the sole use and benefit of the Indian to whom such

allotment shall have been made,” and that at the expira-

tion of the trust period the land shall be conveyed to the

Indian “free and clear of all charge or incumbraitce what-

soever,’ are violated by the reservation of the oil and

gas to the United States.

Adams v. Henderson, 168 U. S. 573, 42 L. Ed. 584:

Adams v. Reed, 11 Utah 480, 40 Pac. 720;

Stambaugh v. Smith, 23 Ohio St. 584.

Their place is taken by 41 Stat. 17, under which the

oil here involved was reserved. In an equal degree, Sec-

tions 397 (26 Stat. 795) and 398 (43 Stat. 244) are gen-

eral in their nature and do not change or repeal the spe-

cific statutes relating to the Blackfeet Reservation. [1:

neither 397 nor 398 does there appear any intent, either

expressed or’ implied, that the course pursued by the

Congress in dealing specifically with the Blackfeet is to

be altered in any respect. The intent, clearly, is ofher-

wise. In neither 397 nor 398 do we find any express

words repealing or amending 41 Stat. 17. The presump-

tion is that no implied repeal was intended.

In re Crow Dog, 109 U. S. 556, 27 L. Ed. 1030:

ere |

4

24

United States v. Newton, 36 Fed. (2d) 425.

It is a rule of universal application that, under such

circumstances, the statute dealing specifically with the

subject matter must be applied.

Frost v. Wenie, 157 U. S. 46, 39 L. Ed. 614;

United States v. Nix, 189 U. S. 199;

Henmer v. United States, 204 Fed. 898;

Lewis Statutory Construction (2nd Ed.) 526;

59 C. J. 1056.

Applying the above rules of construction. and having

in mind the intention of the Congress as expressed over

a long period of years, it is clear that the provisions of

41 Stat. 17 must govern with respect to the leasing of

the lands here involved. Neither 41 Stat. 17 nor 42 Stat.

$57 contains a consent to the levying of taxes by the

State. Without such consent the conclusion of ihe State

Court was erroneous. ~

In closing this portion of our argument we may poini

out that the action of the Congress in dealing specifically

with the Blackfeet is not unusual.

See:

43 Stat. 111 (Kaw Reservation—specifically con-

senting to taxation) ;

34 Stat..539 (Osage Allotment Act) ;

43 Stat. 376 (Eastern Cherokees) ;

41 Stat. 1355 (Gros. Ventre) ; °

25 Stat. 642 (Chippewa).

(b) The lease and minerals here involved are not “un- -

alotted” lands within the provisions of Section 398 (43

Stat. 244).

25

The land from which the oil has been produced was

allotted August 11, 1922, to an individual Indian (R. 23,

24) under the provisions of 4] Stat. 17 (R. 28). By its

plain provisions and title, Section 398 (43 Stat. 244)

refers only to “unallotted” lands on Indian reservations

ruary 28, 1891. This Proviso, which, as we have seen,

appears as Section 397,. Title 25, relates only éo0 lands

“not desired for individual allotments.” In other words,

both 397 and 398 relate to unallotted tribal lands and

not to lands allotted to individual Indians as is the situa-

tion here. rie

Strawberry Valley Cattle Co. v. Chapman, 13 Utah

454, 45 Pac. 348 -

Kirby v. United States, 273 Fed. 391;

White Bear v. Barth, 61 Mont. 322, 203 Pac. 517.

We are confirmed in our conclusion that Sections 397

and 398 do not apply by an analysis of the various Stat-

utes dealing with lands on the reservation.

On the Blackfeet Reservation there are four classes of

land ownership, viz.: (1) Tribal lands; (2) lands al-

lotted in trust without reservation of minerals; (3) lands

allotted in trust with reservation of minerals; and (4) .

lands patented in fee. Lands patented in fee and the

production of oil therefrom are taxable (Section 349),

Lands allotted in trust without reservation are not tax-

able (Section 396) because. no consent to such taxation

is given.

_ Santa Rita Oil & Gas Co. v. Board, 54 Pac. (2d)

117.

Tyibal lands and oil produced therefrom are taxable

under Sections 397, 398 and 399.

affected by the Proviso to Section 3 of the Act of Feb- - —

26

But tands allotted in trust with respect ta which the

4ninerals have been reserved under 41 Stat. 17 are not

taxable for the reason that there is no statutory provi-

sion allowing such taxation.

This classification of lands and the statutes applicable

thereto is proper and logical. If such classification is not

made, and respondents’ contention that Section 398 ap-

plies, accepted, this Court is compelled to assume con- .

trary to the plain intent of the Congress and contrary

to the general rules of construction, that (1) the gen-

eral provisions of Section 398 impliedly repeal or amend

the specific provisions of 41 Stat. 17; (2) that lands

allotted to individual Indians with minerals reserved to

the United States are unallotted lands within. the meaning

of Section 398; and (3) that lands allotted to individual

Indians with minerals reserved to the United States under

the provisions of 41 Stat. 17 are lands “not desired for

individual allotments” under the provisions of Section

397. |

To merely state the necessary results of respondents’

contentions would seem to demonstrate the fallacies -

therein.

Sections 397 and 398 provide for the leasing of “‘un-

allotted lands’—of lands ‘‘not desired for individual al-

lotments.” On the other hand, 41 Stat. 17 specifically

' provides for an allotment of lands on the Blackfeet Res-

ervation, and further provides ‘that the land containing

~ said minerals may be leased under such rules and regula-

tions and upon such terms and conditions as the Secre-

tary of the Interior may prescribe.” In other words, 41

Stat. 17 while providing eXpressly for an allotment, al-

lows a mineral lease by the Secretary. Sections 397, 393

and 399 assume that‘no allotment has been made, and

that the land is not desired for individual allotments.

27

It is the theory of petitioner that the lease here under

consideration is a lease upon allotted lands specifically

provided for by 41 Stat. 17. If, however, we assume that

the lands, so far as concern the minerals thereunder, are

unallotted, as contended for by respondents and deter-

mined by the State Court (R. 32),. then Clearly the Act

of September 20, 1922 (42 Stat. 857) applies, for therein —

we find specific provision for the leasing of unallotted -

lands on the Blackfeet Indian Reservation “reserved from

allotment or other disposition.” Respondents contended

and the State Court held that the minerals were “unal-

lotted lands’ because they were reserved from allotment,

a decision bringing the situation exactly within the pro-

visions of 42 Stat. 857, and eliminating Section 398 from

further consideration. |

In the State Court it was suggested by caunsel ‘for

respondents that from the last Proviso contained in Sec-

tion 398 it might be concluded that the land or property

of an individual allottee was intended, But there can be

no individual owner of unallotted land (31 C. J. 491);

the proviso simply protects the Tribal land against any

lien provided for in the State Statute.

(c). The Department of the Interior has not construed

Section 398 as being applicable:

The lease here involved states that it is made “under

and in” pursuance of Section 3 of the Act provided

February 28, 1891 (26 Stat. L. 795), as amended by the

Act approved May 29, 1924 (Public No. 158, 68th Con-

gress) (R. 7).

Section 3 of the Act of February 28, 1891 (26 Stat.

795) is Section 397 and the Act of May 29, 1924,” is

Section 398, both discussed in the next preceding section

of this: Brief, . _

28

:

From the above reference in the lease counsel for re-

spondent argued and the Supreme Court of Montana

concluded that Section 398 had been construed by tlie °

parties and the Department of the Interior to be ap-

plicable (R. 32).

The lease is upon a printed form, furnished by the In-

terior Department (Regulations, Department of Interior,

July 23, 1924). As to its provisions the lessee had no

choice. Upon its face it purports to be a lease of “Tribal

Indian Land” (P. 6). It contains no provision protecting

the Indian allottee or his property, save a general pro-

vision requiring that the lessee commit no waste. It-ap-

parently contemplates the erection-of buildings and per-

manent-improvements upon the surfate (R. 9). It pro-

vides that if “usable watef’’ is developed, it shall be

turned over to the “reservation” (R. 9), and not the

owner of the surfaee, as would naturally follow with

respect to the condition here presented. Under such cir-

cumstances, it is not clear whether the mere use of: a

printed form containing inapplicable and erroneous ref-

erences and provifions may be considered as a construc-

tion by the Department of the Interior. While it is doubt-

less true that a construction by the executive depart-

ment is entitled to consideration,

Hawley v. Diller, 178 U. S. 476, 44 L. Ed. 1157;

United States v. Johnson, 124 U. S. 197, 31 L.

Ed. 389, _

yet the application of such rule to a given case assumes

(1) -a uniform construction for an appreciable length of |

time,

Louisville & N. R. Co. v. United States 282 U. S.

740, 75 L. Ed. 672,

and (2) a construction that is not clearly erroneous,

do

United States v. Finnei, 185 U. S. 236, 46 L. Ed.

890, | |

and (3) a construction that ‘is reasonable,

Robinson v. Lundrigan, 227 U. S. 173, 57 L. Ed.

468.

The supposed construction here contended for’ satisfies

none of these requirements.

The lease form, which is -a part of the government's

regulations, was prepared with-“tinaflotted tribal lands

not needed for farming or agricultural purposes” in mind.

~~ (Regulations approved July 23, 1924.) Such regulations

and lease form relate only to leases given under the pro-

viso to Section 3 of the Act of February 28, 1891 (26

Stat. 795); the Act of May 29, 1924 (Sec. 398); and

Section 26 of Act of June 30, 1919 (41 Stat. 31) as

amended by 41 Stat. 1225-1231.

Since an allotment to an individual Indian presupposes

that the land may be utilized for agricultural. purposes

(Sec. 331, Title 25), it can hardly be urged that the

regulations here are a construction that leases of lands

under 41 Stat. 17 are within the provisions of Sections

397 and 398.

Doubtless, the true situation is expressed in a state-

ment by the First Assistant Secretary in a letter to the

Attorney General: '

“Before any oil and gas mining leases were con-

summated on Blackfeet lands allotted under the Act -

of June 30, 1919, consideration was given to the

matter of drafting regulations and a lease form. The

conclusion was reached that the tribal regulations.

promulgated under the provisions of Section 3 of the

Act of February 28, 1891, and the. lease form pre-

scribed thereunder would be satisfactory for use in

30

“

leasing these Jands. It was merely an oversight in

this case not to strike out tlie reference in the lease

form to Section 3 of the Act of February 28, 1891,

as amended by the Act approved May 29, 1924, and

insert in- lieu a reference to the Act of June 30,

1919.” ;

See also the construction by the Commissioner of In

dian Affairs (R: 43, 44).

Under such circumstances: it ¢an not be contended

that we have a uniform construction that Section 398

applies. If anything, the reverse is true.

In other words, the lease form here used is a part of

the regulations promulgated by the Secretary expressly

under ro provisions of Sections 397 and 398, and wi :

have Mothing whatever to do with leases specifically p¥0-

vided for under 41 Stat. 17 and Section 400.

But assuming that there is such a uniform construc-

tion as is contended for by the .respondents, such con-

struction is clearly erroneous and unreasgnable.

Long continued practice and the approval of adminis-

trative authorities may be persuasive in the interpreta-

tion of doubtful provisions of a Statute, but“*annot alter

- provisions that are clear and explicit when related tc the

facts disclosed. .

Louisville & N. R. Co. v. United States, 282 U. S.

740, 75 L. Ed. 672.

9

Situations somewhat similar, with respect’ to executive

construction concerning the applicability of certain Stat-

utes have heretofore arisen. In’ this connection the

‘Court’s .attention is directed to a line of cases involving

the issuance of patents to Indians who made homestead

31

entries on public lands under the Act of March 3, 1875

(18 Stat. L. 402) which provides that title to the lands

should be inalienable for a period of five years from the

date of issuance of the patent. In many of: the cases

where entries were :made by Indians under the above

cited Act, the patent was issued under the provisions of

. the Act of January 18, i188] (21 Stat. L. 315) which

‘declared that the land should be inalienable for a: period

of twenty years. It was an error on the part of the

General Land Office to issue such patents, as the provi-

sions of the Act of January 18, 1881, supra, concerning

the issuance of patents, apply only to Winnebago Indians

in Wisconsin. It has been uniformly held that such pat-

ents. were erroneously issued and that there should be

read into these patentts the provisions of the Act under

which the homestead was taken.

See:

Hemmer v. United States, 204 Fed. 898 (affirmed

241 U. S. 380) ; ™

United States v. Saunders, 96 Fed. 268 ;

Frazee v. Piper, 5:1 Wash. 278, 98 Pac. 760;

Feliz v. Yaksum, 77 Wash 919, 137 Pac. 1037.

From what has beem said in the previous Sections of

this Brief, it clearly appears that the lease was not, and

could not have been giwen under the provisions of Section

398. Just as clear is it that the lease must have been

executed under either 41 Stat. 17, or Section 400. In

either case there was, and is no consent to taxation, and

4 supposed erroneous construction by the Interior De-

partment cannot create such a consent and so divest

either the Blackfeet Tribe or petitioner of their right to -

‘immunity from taxation. |

32

It is respectfully submitted that the decree of the

Supreme Court of Montana should be reversed.

Respectfully submitted,

E. K. CHEADLE, JR.,

E. J. McCase, .

H. C. HALL,

Counsel for Petitioners.