# Brief of the Petitioner — British-American Oil Producing Co. v. Board of Equalization of Mont. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0076%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief of the Petitioner - **Published:** January 1, 1936 - **Citation:** 299 U.S. 159 ## Text _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