Apppellants Brief — West v. Oklahoma Tax Commission

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October Term 1987.

MARY MORTON.WEST, OSAGE ALLOTTEE No, 192,

e COMMISSION.

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3 ———iQꝰ

BRIEF of APPELLANT.

ma ‘Statutes involved

History of Osage treaties, laws and property

Material provisions of Osage laws

Specification of errors

Argument .

I. The . below is legally erroneous and in ir-

reconcilable conflict with prior decisions of this

Court and other federal courts

IL The imposition of the tax in controversy would

interfere with the Government’s duty to the

Osage Indians by diminishing the trust estate. .

III. As applied to the classes of Osage property in

controversy, the Oklahoma inheritance or estate

tax law results in a denial of due process of law

and of the equal protection of the laws

The immunity from State taxation of the classes

of property involved has never been withdrawn

Taste or CasEs.

Adams v. Osage Tribe of Indians, 50 F. (2d) 918

Adams v. Osage Tribe of Indians, 59 F. (2d) 653

Adams v. Osage Tribe of Indians, 287 U. S. 652, 77 L.

Barnsdall Refineries v. Oklahoma Tax Commission, 171

Okl. 145, 41 P. (2d) 918

Blackbird v. Commissioner of Internal Revenue, 38 F.

(2d) 976.

Brooke v. City of Norfolk, 277 U. S. 27, 72 L. ed. 767

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

Childers v. Pope, 119 Oki. 300, 249 Pac. 726

TABLE OF CASES—Contrmvzp.

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

Commissioner v. Irving Trust Co., 147 F. (2d) 946... 985 31

Commissioner v. Singer’s Estate, 161 F. (2d) 15.... 31

Globe Indemnity Co. v. Bruce, 81 F. (2d) 143, 148.... 31

Hassett v. Welch, 303 U. S. 303, 82 L. ed. 858

Helvering v. Mountain Producers Corp., 303 U. S. 376,

82 L. ed. 907.

Helvering v. Hallock, 309 U. S. 106, 84 L. ed. 604.

Helvering v. Proctor, 140 F. (2d) 87

Hoeper v. Tax Commission, 284 U. S. 206, 76 L. ed. 248. 27

In re Denison, 38 F. (2d) 662

In re Protest of Bass, 18 Oklahoma Bar Journal 1793. . 28, 29

Large Oil Co. v. Howard, 63 Okl. 143, 163 Pac. 537.... 33

Large Oil Co. v. Howard, 248 U. S. 549, 63 L. ed. 416. 33, 37

* United States, 246 U. S. 263, 62 L. ed.

706

McKnight v. Panther, 190 Okl. 127, 120 P. (2d) 973.

Mahnomen County v. United States, 319 U. S. 474, 87

May v. Heiner, 281 U. S. 238, 74 L. ed. 826

Mullikin v. Magruder, 149 F. (2d) 593, 597

New York v. United States, 326 U. S. 572, 577, 90 L. od.

326, 331...

Nichols v. Coolidge, 274 U. S. 531, 71 L. ed. 1184

Oklahoma Tax Commission v. United States, 319 U. S.

598, 87 L. ed. 1612

State of Oklahoma v. Barnsdall Refineries, 296 U. S.

Taylor v. Tayrien, 51 F. (2d) 884 11, 30, 32

Texas Company v. Oklahoma Tax Commission, 18 Okla.

United States v. Board of Comrs., 145 F. (2d) 329. 17

United States v. Board of Commissioners, 193 Fed. 485. 23

TABLE OF CASES—Continvep.

PAGE

United States v. Board of Comrs., 216 Fed. 883, 886.. 24

United States v. Ferry County, 24 F. Supp. 399...... 24

United States v. Mummert, 15 F. (2d) 926............ 18

United States v. Rickert, 188 U. S. 432, 47 L. ed. 532. 16

United States v. Thurston County, 143 Fed. 287 12-13

Van Brocklin v. Anderson, 117 U. S. 151, 29 L. ed. 845. 19

Work v. United States, ex rel. Mosier, 261 U. S. 352, 67

/ ]V²:ͥ ³˙wüä- 21

Feperat ConstiTuTiIon, TREATIES, AND STATUTES.

Act of Congress of June 16, 1880 (21 Stat. L. 291).... 12

Act of Congress of June 28, 1906 (34 Stat. L. 539)..... 5,12

Act of Congress of June 28, 1906, supra, Section 2. 7

Aet of Congress of June 28, 1906 (34 Stat. L. 539), Sec-

.. 4„ẽ 21

Act of Congress of June 28, 1906, supra, Section 5....7,15

Act of Congress of March 3, 1921 (41 Stat. L. 1249)..8, 22, 32

Act of Congress of March 2, 1929 (45 Stat. L. 1478)... 7

Act of Congress of June 24, 1938 (52 Stat. L. 1034),

% JT 7,22

Act of Congress of January 27, 1933 (47 Stat. L. 777). 15

Act of Congress of March 2, 1929 (45 Stat. L. 1478),

U 6‚Zd . ²˙ ww 30

Constitution of the United States, Fourteenth Amend... 29

Judicial Code, Sec. 237 (a) (28 U. S. C. A., Sees. 344 (a),

TT ß etree Te Te eure 2

Oklahoma Enabling Act (34 Stat. L., pp. 267-278) 26

Treaty of 1865 with Osage Tribe (14 Stat. L. 687).... 12

Treaty of 1866 with Cherokee Tribe (14 Stat. L. 799).. 8

State StTarTurtes.

Oklahoma Session Laws 1915, Chap. 162............. 28

Oklahoma Statutes 1941, Title 68, Section 989......... 4

Oklahoma Statutes 1941, Title 68, Section 989e........ 4

Oklahoma Statutes 1941, Title 68, Section 98911 5

Oklahoma Statutes 1941, Title 68, Section 989f........ 21

IN THE SUPREME COURT OF THE UNITED STATES.

October Term, 1847.

No. 489

MARY MORTON WEST; GE ALLOTTEE NO. 192,

Appellant;

vs.

OKLAHOMA TAX COMMISSION.

BRIEF for APPELLANT.

The Oklahoma Tax Commission, where the case origi-

ated, did not hand down an opinion, but entered an order

rom which an appeal was taken to the Supreme Court of

/klahoma (R. 15). The Supreme Court of Oklahoma handed

own two opinions, the first of which was superseded by the

econd. Neither of said opinions appears in the official Okla-

oma Reports, but both, together with a dissenting opin-

on, are printed in full in the transcript (R. 32, 39).

Jurisdicti

The opinion and decision of the Supreme Court of Okla-

oma was entered on October 28, 1947. Petition for allow-

nce of appeal was filed and order allowing appeal entered

n November 24, 1947. The decision below upheld the valid-

ity of the estate or inheritance tax law of the State of Okla-

homa as applied to restricted Osage Indian estates, against

the contention that as so applied the statute was repugnant .

to the Fourteenth Amendment to the Constitution of the

United States, to an Osage treaty, and to laws of the United

States relating to the Osage Tribe of Indians. The juris-

diction of this court rests upon Section 237(a) of the Ju-

dicial Code, as amended by the Act of February 13, 1925,

and the Act of January 31, 1928 (28 U. S. C., Secs. 344 (a)

861a).

Statement.

This appeal presents the question of the right of the

State of Oklahoma to levy an estate or inheritance tax

against the estates of restricted Osage Indians, and more

specifically the right to include in the estate as the measure

of such tax property the title to which rests in the United

States in trust for the Osage Tribe of Indians, and in which

the restricted Osage Indian had no vested interest at the

time of death.

The Oklahoma Tax Commission entered an order levy-

ing the tax (R. 8), and to such order a protest was filed

raising the Federal question (R. 9). After hearing upon

the protest the Commission again entered an order assessing

the tax (R. 15), including in the net estate as the measure

of the tax all items of property making up the estate, ex-

cept the homestead,

By stipulation filed in the case (R. 12) it was agreed

that the estate consisted of the following items of property:

— Boe

1 and 919/2520ths Osage Indian mineral

. 33 $ 10,235.12

(Never subjected to state taxation.)

Trust funds in U. S. Treasury............ 4,745.52

Accrued interest thereon ................. 398.90

(Neither ever subjected to state taxa-

tion.)

Surplus funds in U. S. Treasury.......... 29,046.27

(Never subjected to state taxation.)

United States bonds, value at death........ 70,949.31

' (Purchased with restricted funds

and held by the United States in

its treasury from funds accumu-

lated from mineral headrights.

Never subjected to state taxation.)

Building and loan stock (purchased as bonds,

SUNOS i See ck a e 1,485.06

(Never subjected to state taxation.)

Real estate other than homestead in Osage

CON ne AA 12,226.10

3/28ths interest in Masonic mortgage. 1,071.43

(Purchased as bonds, supra. Never

subjected to state taxation.)

Purchased real estate in Osage County.... 5,000.00

(Taxed.)

Tax exempt homestead... ........ Wsaskes 1,833.33

Restricted household furniture .......... 736.00

(Purchased with funds accumulated

from headrights. Not taxed.)

It was further agreed by the stipulation that ‘‘Osage

funds are paid to the United States Treasury and held by

it undesignated as to members of tribe but simply as the

Osage Tribal Trust Fund.’’ (R. 13)

From the order of the Commission assessing the tax

— 4 —

an appeal was prosecuted to the Supreme Court of Okla-

homa, where a petition in error was filed, again raising the

Federal question (R. 1). That court, on October 28, 1947,

handed down an opinion upholding the validity of the Okla-

homa estate or inheritance tax statute as applied to all

items of property composing the estate, except the home-

stead. From that decision this appeal is prosecuted.

The material parts of the Oklahoma statute (Secs. 988

to 989t, inclusive, Title 68, Oklahoma Statutes 1941) are

as follows:

Section 989:

„A tax, at the rates prescribed in Section 2 of this

act, is hereby levied upon the transfer of the net estate

of every decedent, whether in trust or otherwise, to

persons, associations, corporations, or bodies politic,

of property, real, personal, or mixed, whether tangible

or intangible, or any interest therein or income there-

from, by will or the intestate laws of this state by any

order setting apart property and/or granting family

allowance pursuant to the probate code, by deed, grant,

bargain, sale, or gift made in contemplation of the death

of the grantor, vendor, or donor, or intended to take

effect in possession or enjoyment at or after such death,

whether made before or after the passage of this

act. * @ #99 d

Section 989e:

„(A) The value of the gross estate used as a basis

for the determination of the value of the net estate,

shall be determined by including:

(1) The value at the time of the death of the de-

cedert of all property, real, personal, or mixed, wheth-

er tangible or intangible, of which the decedent died

seized or possessed, within the jurisdiction of this

state, and any interest therein or income therefrom,

including the homestead in excess of Five Thousand

($5,000.00) Dollars, which shall pass to any person or

persons, associations or corporations, in trust or other-

wise, by testamentary disposition or by the laws of in-

heritance -or succession of this or any other state or

country,“

Section 989i:

‘*Taxes levied under this act shall be and remain a

lien upon all the property transferred until paid, ex-

cept that such part of the gross estate as is used for the

payment of charges against the estate and expenses of

administration, allowed by the court having jurisdic-

tion thereof, shall be divested of such lien.

History of Osage Treaties, Laws and Property.

By the Treaty of 1866 between the United States and

the Cherokee Nation of Indians, (14 Stat. L. 799) the Chero-

kees ceded to the United States approximately one and one-

half million acres of land lying north and east of the Ar-

kansas River in Oklahoma, comprising what is now known

as Osage County. Pursuant to that treaty, and in 1883, a

deed was made and executed, with the Cherokees as first

party and the United States as second party, by the grant-

ing clause of which it was provided that the first party,

„does by these presents grant, bargain, sell, remise, re-

lease, relinquish and confirm unto the said party of the

second part, forever, in trust nevertheless and for the

use and benefit of the said Osage and Kansas Indians,

the lands above referred to and other lands. This deed is

recorded in Book 6, page 482, Indian Deed Record, e

ment of the Interior, Washington, D. C. 5

By Act of Congress approved June 28, 1906 (34 Stat.

L. 539) the surface only of the Osage lands was alloted in

severalty, whereby each of the 2,229 enrolled Osages re-

ceived a homestead allotment of 160 acres and three allot-

ments of surplus lands totaling 497 acres. That act provided

for the issuance of certificates of competency, in the discre-

tion of the Secretary of the Interior, and that upon the is-

suance of such certificate the surplus allotted lands should

become subject to taxation, with the further proviso that

such surplus lands should remain non-taxable for a period

of three years except where a certificate of competency was

issued or the allottee died. The homestead allotment was

made non-taxable for a period of twenty-five years, or dur-

ing the life of the homestead allottee.

It was further provided by that act that the oil and

other minerals covered by the allotted lands were reserved

for the use of the tribe for a period of twenty-five years,

and that the same should become the property of the in-

dividual owner of the land at the expiration of the twenty-

five year period, unless otherwise provided for by Act

of Congress.“ ;

The act further. provided that all funds belonging to the

Osage Tribe, and all moneys due or that might become due,

should be held in trust by the United States for a period of

twenty-five years from the first day of January, 1907. Pro-

vision was also made in that act for quarterly payment to

the allottee of the interest on his pro rata share in the tribal

funds, but there was no provision for the payment of the

principal until the expiration of the trust period.

By successive acts of Congress referred to later in this

brief this trust period has been extended to April 8, 1983,

on the minerals, and to January 1, 1984, on lands, moneys,

and other properties.

5 — ...

7

By the seventh paragraph of Section 2 of the Allot-

nent Act (34 Stat. 539) it was provided:

That nothing herein shall authorize the sale

of the oil, gas, coal, or other minerals covered by said

lands, said minerals being reserved to the use of the

tribe for a period of twenty-five years, and the royalty

to be paid to said tribe as hereinafter provided; And

provided further, That the oil, gas, coal and other min-

erals upon said allotted lands shall become the property

of the individual owner of said land at the expiration

of said twenty-five years, unless otherwise provided

for by Act of Congress.“

Section 5 of said act provides:

„That at the expiration of the verted of twenty-

five years from and after the first day of J anuary, nine-

teen hundred and seven, the lands, mineral interests,

and moneys, herein provided for and held in trust by

the United States shall be the absolute property of the

individual members of the Osage Tribe, according to

the roll herein provided for, or their heirs, as herein

provided, and deeds to said lands shall be issued to

said members, or to their heirs, as herein provided,

and said moneys shall be distributed to said members,

or to their heirs, as herein provided, and said members

shall have full control of said lands, moneys, and min-

eral interest, except as hereinbefore provid

By Act of Congress approved March 3, 1921, (41 Stat.

1. 1249), the trust period was extended to 1946, and by Act

f Congress approved March 2, 1929 (45 Stat. 1478), the

rust period was again extended to 1958. The last exten-

ion was by Act of Congress approved June 24, 1938, (52

tat. 1034), the material parts of Section 3 thereof being

s follows:

That all that part of the Act of June 28, 1906 (34

Stat. L. 539) * © © which reserves to the Osage Tribe

the oil, gas, coal, or other minerals, covered by the lands

for the selection and division of which provision is made

in that act is hereby amended so that the oil, gas, coal,

or other minerals covered by said lands are reserved to

the Osage Tribe, until the 8th day of April, 1983, un-

less otherwise provided by Act of Congress

‘‘The lands, moneys, and other properties now or

hereafter held in trust or under the supervision of the

United States for the Osage Tribe of Indians, the mem-

bers thereof, or their heirs and assigns, shall continue

subject to such trusts and supervision until January

1, 1984, unless otherwise provided by Act of Congress.

By Section 3 of the Act of Congress approved March

3, 1921 (41 Stat. L. 1249) it was provided:

‘“That all members of the Osage Tribe of Indians

are hereby declared to be citizens of the United States,

but this shall not affect their interest in tribal property

or the control of the United States over such property

as is now or may hereafter be provided by la,

Specification of Errors.

I. The Supreme Court of Oklahoma erred in af-

firming the order and judgment of the Oklahoma Tax

Commission, for the reason that in applying the Okla-

homa estate or inheritance tax law to the estate of a

restricted member of the Osage Tribe of Indians and

to property of such estate the title to which is in the

United States in trust for such restricted Osage Indi-

an the judgment of said court is in direct conflict with

former decisions of the Supreme Court of the United

States and of Federal District Courts and Circuit

Courts of Appeals in similar cases.

II. Said court erred in affirming the order and

judgment of the Oklahoma Tax Commission, for the

reason that the United States Government holds the

property involved under a trust established by treaty

and by Acts of Congress imposing upon the Govern-

ment the duty to deliver the corpus of the trust prop-

erty to the individual members of the Osage Tribe at

the end of the trust period. Application of the Okla-

homa estate or inheritance tax law to such property

and the exaction of the tax thereby provided for would

interfere with such governmental duty and diminish the

trust estate.

III. Said court erred in affirming the order and

judgment of the Oklahoma Tax Commission, for the

reason that the corpus of such trust property does not

become the property of the individual member of the

Osage Tribe until the termination of the trust period,

and the imposition of the Oklahoma inheritance or es-

tate tax which includes in its measure property which

was not the property of the decedent at the time of his

death constitutes a denial of due process of law and of

the equal protection of the laws, in violation of the

Fourteenth Amendment to the Constitution of the

United States.

IV. Said court erred in affirming the order and

judgment of the Oklahoma Tax Commission, for the

reason that the immunity from state taxation of prop-

erty held in trust by the United States for Osage In-

dians has never been withdrawn by Congress by any

act granting express permission to the State of Okla-

homa to levy the tax in controversy.

Inasmuch as our argument will follow closely the points

presented by the above assigned errors, we feel that any

effort at summarizing the argument to be made in this

brief would be of little assistance to the court, and that we

may best avoid unnecessary repetition by omitting a sum-

mary.

ARGUMENT.

i,

The decision below is legally erroneous and in irrecon-

cilable conflict with prior decisions of this Court and other

Federal courts.

In the opinion of the Supreme Court of Oklahoma it

is said that, We reject at once as untenable the assertion

that the title to this property remained in the Federal Gov-

ernment under the various laws applicable to the Osages.’’

This holding is contrary to the stipulation of the parties to

the case, to the deed from the Cherokee Indians to the Unit-

ed States, to the Acts of Congress relating to the Osages,

and to various decisions of the Federal Courts.

The stipulation provided (R. 13) that title to the min-

eral interest involved has been, is and will be held in trust

by the United States until 1984 or such further time as

Congress may provide.’’ As pointed out in the above state-

ment of facts, the deed from the Cherokees to the lands com-

prising the present Osage reservation was to the United

States as the party of the second part, in trust for the use

and benefit of the Osage and Kansas Indians. The Osage

Allotment Act, quoted from above, provided that the min-

erals underlying the Osage reservation were to be reserved

to the use of the tribe for a period of twenty-five years and

should become the property of the individual owner of the

land at the expiration of such period, ‘‘unless otherwise

provided by Act of Congress.’’ The reservation of the min-

erals to the Osage Tribe has been extended until the 8th

day of April, 1983 (52 Stat. 1034).

Under the 1906, or Allotment Act, there was a sever-

ance of the surface rights and the mineral interest, the

surface being allotted in severalty to members of the tribe

and title to the mineral interest remaining in the United

States in trust for the tribe. In Taylor v. Tayrien, 51 F.

(2d) 884, a bankruptey case, the Tenth Circuit Court of

Appeals pointed out that the 1906 Act made no allotment of

the mineral estate, but that it remained tribal property.

rupt did not pass to the trustee in bankruptcy, chat court

held that ‘‘an Osage Indian has no present property right

in the properties now owned by the tribe.“

In McCurdy v. United States, 264 U. 8. 484, 68 L. ed.

801, this court held that the title to Osage lands was in the

United States just prior to the time deeds were executed

and delivered to the individual Indians, and since there has

been no allotment of the mineral estate it necessarily fol-

lows that title thereto still remains in the United States.

States brought a similar suit against the plaintiffs in the

other cases, and on appeal to the Tenth Circuit Court of Ap-

peals (Adams v. Osage Tribe of Indians, 59 F. (2d) 653)

that court said in the opinion:

The court also pointed out that—

* * The bills in the three suits were dismissed,

and in the one brought by the United States decree was

entered adjudging the minerals to be the property of

the Osage Tribe, title to which is held in trust by the .

United States for the tribe’s use and benefit.“

The decrees of the District Court were affirmed, thus

approving the holding of the trial court that title to the

minerals is in the United States. (Certiorari denied, 287

U. S. 652, 77 L. ed. 563.)

As to the trust funds“ involved, it will be noted that

it is stipulated (R. 13) that ‘‘these funds have been held by

the United States since before the Act of 1906 (34 Stat.

539), and have never been subjected to taxation.“ The

trust under which these funds were held was provided for

by treaty between the United States and the Great and

Little Osage Indians entered into in 1865 (14 Stat. L. 687),

by the terms of which the proceeds of the sale of Osage

lands in Kansas were to be placed in the Treasury of the

United States to the credit of the tribe. Provisions for the

carrying into effect of the terms of this treaty were made

by Act of Congress approved June 16, 1880, (21 Stat. L.

291)

Reference to the protest and to the stipulation filed in

the case will disclose that all other items of personal prop-

erty concerning which protest is made to the inclusion there-

of in the gross estate for purposes of inheritance or estate

tax consist either of funds accumulated from the headrights

or mineral interests, or securities or other personal prop-

erty purchased with such funds by the United States and

held in the United States Treasury. (R. 9-12) It likewise

will be seen that by the stipulation it is agreed\that each

of these items of personal property has never been sub-

jected to taxation. :

The case of United States v. Thurston County, 143

Fed. 287, was decided by the Eighth Circuit Court of Ap-

peals a little more than three months prior to the passage

of the Osage Allotment Act. In that case the United States

had filed a bill to prevent Thurston County, Nebraska, from

collecting taxes from certain Omaha and Winnebago In-

dians. In an opinion by Sanzorn, C. J., it was held that

not only was the land which had been held in trust by the

United States exempt from all state and county taxes, but

that the proceeds of the sales of such lands were -subject

to the same trust and therefore to the same rule of exemp-

tion. The court there said that, The substitutes partake

of the nature of the originals, and stand charged with the

same trust.“ It is, therefore, the contention of the appel-

lant in this case that the title to funds accumulating from

the Osage mineral interest is likewise in the United States

and charged with the same trast under which the minerals

are held.

Furthermore, Section 4 of the Allotment Act, supra,

provided that all such funds should be held in trust by the

United States for a period of twenty-five years, and that

period is now extended until January 1, 1984, unless other-

wise provided by Act of Congress. (52 Stat. 1034, Sec, 3.)

Even the Supreme Court of Oklahoma has held that

title to the income accruing to an Osage headright is in the

United States. In McKnight v. Panther, 190 Okl. 127, 120

P. (2d) 973, that court held that a check drawn on the

United States Treasury for a quarterly annuity payment to

a half-blood Osage Indian having a certificate of competency

was not subject to execution by a creditor of such Indian.

In the opinion the court said:

At the time of the issuance of said chéck, title

to the fund on which it was drawn was in the Federal

Government as trustee for the Osage Tribe of Indians.

The delivery of the check to the defendant did not

transfer to him title to any portion of said fund. * * °

The title to the fund still remained in the Government

until such time as the check was presented for pay-

ment and properly cleared.“

In view of the foregoing it is submitted that the hold-

ing of the court in the present case that title to the head-

rights, to the funds known as trust funds, to funds accu-

mulating in the United States Treasury from the Osage min-

eral interest, and to securities in which such funds have

been invested by the United States is not in the United

States is contrary to both fact and law. It is only these

classes of property involved in the estate about which any

contention is being made. It was agreed by the stipulation

(R. 13) that none of these classes of property had ever

been subjected to taxation. Those classes of property desig-

nated in the stipulation as ‘‘taxed’’ are conceded to be prop-

erly includable in the gross estate for purposes of estate

or inheritance taxes, and our argument is addressed only

to the other items.

We believe it is apparent from the opinion below that ;

the Supreme Court of Oklahoma found it necessary to dis-

pose of the question of title in the manner it did in order to

hold the above classes of property taxable. If title thereto

was and is in the United States, then decisions of this

court and other Federal Courts seem to be an insuperable

barrier to state taxation.

At this point attention should be called to certain defi-

nite and vital distinctions between the present case and the

case of Oklahoma Tax Commission v. United States, 319

U. S. 598, 87 L. ed. 1612, inasmuch as the latter case involved

the identical state statute here under consideration, but as

applied to property of members of the Five Civilized

Tribes. We suggest the following points of distinction:

1. Title to all classes of property in controversy in

this case is in the United States, while in the Five Tribes

case the Indians involved owned in fee not only the surface

of the land but the minerals as well.

2. By Act of Congress relating to the Indians involved

in the Five Tribes case the minerals, including oil and gas,

were made ‘‘subject to all state and federal taxes as pro-

vided in Sec. 3 of the Act approved May 10, 1928 (45 Stat.

495, o. 517).“ (47 Stat. 777.) No such permission has ever

been granted by Congress to the State of Oklahoma respect-

ing the mineral interest of the Osage Tribe or tribal funds

accumulating therefrom, and by stipulation in this case it

has been agreed that the various classes of property in-

volved have never been subjected to taxation. (R. 13)

3. The various classes of property involved in this case

are held in trust. No transfer of the corpus takes place

upon the death of a restricted Osage Indian. The sole and

absolute control of the corpus of the trust property and of

the duration of the trust period itself is in the trustee.

4. The classes of property involved herein are tribally

owned. They do not become the ‘‘absolute property of the

individual members of the Osage Tribe’’ until the termina-

tion of the trust period, as presently fixed or as may here-

after be further extended. (Section 5 of 1906 Act.) In con-

trast, the property involved in the Five Tribes case was

individually owned,

5. In the Five Tribes case the Government advanced

but two contentions, neither of which is being made in the

present case. It was urged in that case (1) that Oklahoma

did not intend to tax estates of members of the Five Tribes,

J

and (2) that restrictions placed by Congress on the aliena-

tion of Five Tribes property operated to exempt such prop-

erty from the Oklahoma estate tax. We submit that the con-

tentions made in the present case are far more serious and

more substantial.

6. The classes of property involved herein being held

in trust by the United States, the opinion in the Five Tribes

dase itself points to the distinction between that case and

this. Referciug to he lands of members of the Five Tribes

the court said in that case that, Their lands are held in

fee, not in trust, as in the Rickert case. The doctrine of

the Rickert case (United States v. Rickert, 188 U. S. 432,

47 L. ed. 532) clearly was not rep iated in the Five Tribes

case, and would seem to be decisive if applied in the present

case.

We therefore respectfully urge that the Five Tribes

case is in no wise determinative of the present case.

We do not understand from the opinion of this court

in the Five Tribes case that the court there treated or in-

tended to treat the case of H elvering v. Mountain Producers

Corp., 303 U. S. 376, 82 L. ed. 907, as having discarded for

all purposes the Federal instrumentality theory, nor do we

believe the opinion in the Mountain Producers Corp. case

may be so understood. In that case the court merely disap-

proved the prior expansion of the doctrine beyond its prop-

er limits, and held that a tax laid upon the profits made by

a lessee of Indian lands had only a remote, if any, ‘‘influence

upon the exercise of the functions of government.“ The

view we here express as to the scope of the holding in the

Mountain Producers Corp. ease finds ample support in the

case of United States v. Allegheny County, 322 U. 8. 174,

88 L. ed. 1209, decided some six years after the decision in

the Mountain Producers Corp. case. In the Allegheny Coun-

ty case the court held that, regardless of the fact that in

such cases as Mountain Producers Corporation the court

had sharply curtailed the doctrine of implied delegated

immunity, it had never departed from the basic doctrine that

the properties, functions, and instrumentalities of the Fed-

erated Government are immune from all forms of state taxa-

tion, nor had it wavered in its application.

The doctrine of the Rickert case, supra, that Indian

property held in trust by the United States is constitution-

ally exempt from state taxation, was applied to Osage prop-

erty in McCurdy v. United States, 264 U. S. 484, 68 L. ed.

801. In that case an effort was being made by the taxing

officials of Osage County, Oklahoma, to tax Osage lands

which had been allotted but deeds to which had not been

signed and approved until after the taxing date of the year

for which it was sought to levy the tax. Under these cir-

cumstances it was held:

Title was in the United States on the date as of

which the assessment was made, and did not pass until

the execution and delivery of the deeds (Sec. 8). The

lands were not taxable while held in trust by the United

States. (Citing the Rickert case.)

The Rickert case was also followed by the Eighth Cir-

cuit Court of Appeals in the Thurston County case, supra.

As late as 1943, in Mahnomen County v. United States,

319 U. S. 474, 87 L. ed. 1527, the doctrine of the Rickert case

was mentioned without criticism but on the other hand with

seeming approval.

On October 10, 1944, the Tenth Circuit Court of Ap-

peals handed down an opinion in the case of United States

v. Board of Com rs, 145 F. (2d) 329. Writ of certiorari was

denied by this court January 29, 1945. In chat case Fre-

mont County, Wyoming, was seeking to tax certain lands

which had been purchased with funds belonging to Indians.

Title to the lands had been taken in the United States in

trust for the Indians. It was held that where the legal title

is in the United States lands are not subject to state or

county taxes, even though the title is merely held in trust

for an Indian or a tribe. The Rickert case and the McCurdy

case, supra, were cited as authority. In distinguishing the

case from the Five Tribes case and other similar cases the

court said: en of these een fille to Sha: ld en

in the Indian, not the United Sta

Likewise, in United States v. Mummert, 15 F. (2d) 926,

the Rickert and Thurston County cases were distinguished

on the ground that in those cases the legal title to the prop-

erty sought to be taxed was in the United States, whereas,

4 In the case at bar the title is not in the United States, but

directly in the Indians.’’

The opinion in the Rickert case was handed down in

1903. As before pointed out, twenty years before that time

the lands comprising the Osage reservation, including the

minerals thereunder, had been conveyed to the United

States in trust for the Osage Tribe. The Allotment Act of .

1906 expressly declared the trust character of all funds

belonging to the Osage tribe, and all moneys due, and all

moneys that may become due.’’ The opinion in the Thurston

County case was handed down a few days prior to the ap-

proval of the Allotment Act, and the opinion in the McCurdy

case in 1924. It thus appears that since these three opin-

ions Congress has passed both the 1929 Act and the 1938

Act, each of which specifically declares that Osage prop-

erty of the kind here under consideration shall continue

subject to such trust.

Hence, in this case we are not dealing simply with con-

gressional silence after judicial construction of a statute

(Helvering v. Hallock, 309 U. 8. 106, 84 L. ed. 604), but with

the affirmative action of Congress in extending an active

trust alen, property after the courts had repeatedly

declared property so held in trust by the United States

for Indians is exempt from state taxation: And while we

would not be so presumptuous as to assert that this situa-

tion should ‘‘debar this court from reexamining. its own

doctrines” (Helvering v. Hallock, supra), we do submit

that repeated re-enactment of the statute under such cir-

cumstances should be most persuasive of the view that Con-

gress was satisfied with previous holdings of the courts that

property the title to which is held in trust by the United

States for Indians is not subject to state taxation.

The lower court appears to have been influenced large-

ly by the fact that the restricted Osage Indian enjoys the

income from the trust estate. However, in all of the Indian

cases above discussed the beneficial interest in the property

was in the Indian, but that fact was no obstacle to the ap-

plication of the rule that property held in trust for Indians

is not subject to state taxation. In the Allegheny County

case, supra, it was pointed out that the contention there

made, that the tax affected only private persons, was like-

wise made in Van Brocklin v. Anderson, 117 U. S. 151, 29

L. ed. 845, but that it was held that the immunity protected

the private owner. Again in the Allegheny County case

the court referred to the Rickert case as subsisting

authority.

—20—

II.

The imposition of the tax in controversy would inter-

fere with the Government’s duty to the Osage Indians by

diminishing the trust estate.

Section 4 of the Allotment Act (34 Stat. 539) provides

that all moneys of the Osage Tribe of Indians shall be held

in trust for a period of twenty-five years from January 1,

1907, and Section 5 provides that at the expiration of the

trust period the properties so held in trust shall be the

absolute property of the individual members of the tribe.

Thus the Federal Government owes a solemn duty to the

Osage Indians to deliver to them at the end of the trust

period the trust estate unimpaired and undiminished. This

it cannot do, if each successive time the corpus of the trust

property theoretically passes from one Osage Indian to his

heirs the State is permitted to dip into the corpus, or what

is left of it after prior like exactions, and thus frustrate the

fiat of Congress that the property ‘‘shall be the absolute

property’? of the individual Osage at the termination of

the trust period.

We say theoretically passes, because so far as the

corpus of the trust property is concerned, all the restricted

Osage Indian has, and all he passes on to his heirs, is the

right to certain income from the trust estate so long as

the property continues to be held in trust by the Federal

Government. This was pointed out in McCurdy v. United

States, 246 U. S. 263, 62 L. ed. 706, wherein Mr. Justice

Branpvets, speaking for the court, said:

4% If the Secretary refused to issue the cer-

tificate, the allottee would (unless the certificate were.

granted later) remain, until the end of the twenty-five

year period, in the enjoyment of the income merely;

and at the end of that period, he or his heirs, though

—2t— .

property, would get ab-

solute dominion at one time over the (a) homestead,

(5) surplus lands, (c) the trust fund ($3,928.50), and

(d) his share of the interest in the oil, gas, coal and

mineral rights. ;

Section 989f, Title 68, Oklahoma Statutes 1941, pro-

8 for the exemption from estate taxes of property

ing to the deceased by inheritance, legacy or gift from

‘evious estate within five years prior to the death of

deceased and upon which previous estate the full in-

tance and transfer taxes had been paid.“ With the

t period on the minerals presently extended until 1983

the trust period on all other classes of Osage property

held in trust extended until 1984, it would be possible

hese classes of property to pass through as many as

lifferent Osage estates, and each successive estate not

the benefit of the exemption provided for in the above

ioned statute. Yet the heirs to not one of those estates

cept the one at the end of the trust period at some whol-

definite time in the future—would inherit or obtain by

of the deceased any more than the right to receive the

ne from the property during their lifetime. The suc-

ve exactions of estate taxes under such circumstances

d result in diminishing the trust estate and thus defeat

bligation assumed by the Federal Government to de-

the trust property to the Osage Indian or his heirs at

nd of the trust period. We say the termination of

ust period is wholly indefinite for the reason that Con-

heretofore has three times extended the trust period,

nay further extend it.

the Osage Allotment Act provided that accrued in-

and oil royalties should be paid to the Osages quar-

(34 Stat. 539, Sec. 4; Work v. United States, ex rel.

2 ———— —-— .

3 Mosier, 261 U. S. 352, 67 L. ed. 693). By the 1921 Act, how-

ever (41 Stat. L. 1249), Congress provided that so long as

the income should be sufficient the adult Osage Indian with-

out a certificate of competency should be paid $1,000.00

quarterly. This provision continued until by the 1938 Act

(52 Stat. 1034) Congress provided that where the restricted

Osage had surplus funds in excess of $10,000.00 he is to be

paid $1,000.00 quarterly, but if he has surplus funds of

less than $10,000.00 he shall receive quarterly only his cur-

rent income, not to exceed $1,000.00 quarterly.

Thus it will be seen that not only the distribution of

the surplus but likewise distribution of the income from the

tribal property is subject to the will of Congress. The pres-

ent commuted value of an Osage headright, which includes

the mineral interest, trust funds and interest on trust funds,

and the right to participate in bonuses and royalties until

the end of the trust period, certainly is not a proper yard-

stick by which to measure the value of that which a par-

ticular deceased restricted Osage Indian passes on to his

heirs or the value of that which the heir receives, when

in truth and in fact neither ancestor nor heir has any con-

trol over the corpus of the property, and participation in

the income itself is subject to the will of Congress.

It would seem that the same rule that has been applied

in bankruptcy proceedings involving Osage Indians would

be applicable to taxation by the State of Oklahoma. The

case of In re Denison, 38 F. (2d) 662, involved the bank-

rupt estate of a member of the Osage Tribe of less than

half blood and having a certificate of competency. And even

as to an Osage Indian of that class, in speaking of the

effect of the issuance of a certificate of competency Vavueurt,

D. J., said:

—28—

This does not, even by implication, empower him

to sell his interest in a trust estate. Congress has pro-

vided that at the termination of the trust period, when-

ever it may be, that the interest of the individual Indian

shall be delivered to him intact. United States v. Thurs-

ton County, (C. C. A.) 143 F. 287. Could Congress do

this if taxes could attach or if liens could attach by

virtue of judgments and obligations of any character?’’

We have set out the provision of the Oklahoma statute

(Sec. 989i) providing for a lien of the taxes upon the prop-

erty transferred. In our judgment the effort of the State

to place a lien upon property in the hands of the general

government, the title to which is in the general government,

and which the general government holds in trust for an

Indian tribe is directly contrary to the federal instrumen-

tality theory. |

In United States v. Board of Com’rs of Osage County,

193 Fed. 485, in holding that by the 1906 Act, Congress had

removed the tax exemption from surplus Osage lands,

Correnat, D. J., said:

% By this holding, however, is not meant that

the interest in the minerals reserved to the tribe is

subject to taxation. Every sale of this interest is de-

clared unauthorized, and it must be immaterial whether

accomplished by the voluntary act of the allottee or by

the involuntary process of taxation. The reservation of

this interest for the use of the tribe is an instrumen-

tality, not only employed by the United States in carry-

ing out a governmental policy, but expressly reserved

from sale for the period of 25 years. And this title

and right of the tribe is not the subject of assessment,

tax levy, or sale, and will not pass or be vested in °

any grantee by an attempted sale or transfer.“

This holding of the District Court was approved by the

—24—

Eighth Circuit Court of Appeals in United States v. Board

of Com’rs, 216 Fed. 883, 886, in the following language:

„We agree with the views expressed by the trial

court that oil, gas, coal, and other minerals contained

in allotments to Osage Indians, do not pass by the allot-

ment or become subject to taxation. They are express-

ly reserved to the tribe. This restriction is imposed

by the nation. No act or omissivn of the Indians or of

state authorities can impair it.

By analogy the cases of Choate v. Trapp, 224 U. 8.

665, 56 L. ed. 941, and Carpenter v. Shaw, 280 U. S. 363,

74 L. ed. 478, are authority for the view that the under-

taking of the trustee, the United States, that the classes

of property in question shall be the absolute property“ of

the individual Indian at the end of the trust period became

a vested right in the Osage Indian which may not be im-

paired or taken away through the means of state taxation.

While in the cited cases the vested right was to an express

tax exemption, we urge the point that the result would be

the same whether the tax infringed directly upon the vested

right to tax exemption or upon the right to have the trust

estate become the absolute property of the Osage or his

heirs at the termination of the trust period—a period sub-

ject to continued extension by Congress.

Another analogous case is United States v. Ferry Coun-

ty, 24 F. Supp. 399. In that case the trust patent issued to

the Indian declared that the U ted States would hold the

land in trust for a period of twenty-five years, and at the

end of the trust period would convey the land to the Indian

by patent in fee ‘‘discharged of said trust and free from

all charge and incumbrance whatsoever.“ The court held

that The United States as trustee may not liquidate the

trust without the consent of the allottees.’’

No Act of Congress can be pointed to as giving to the

State of Oklahoma permission to levy the tax in contro-

versy, and under the doctrine of the above cases even Con-

gress itself could not grant such permission and thus de-

prive the Osage Indian of his vested right to have the cor-

pus of the trust property delivered to him or his heirs at

the termination of the trust period.

It will be seen that the Supreme Court of Oklahoma in

its opinion placed a great deal of emphasis upon what was

said to be the fact that the Federal Government collects an

estate tax upon Osage estates, and it is intimated in the

opinion that the record in the cases indicates that such is

the fact. There is nothing in the record to show that the

Federal Government collects such a tax, and no decision of

any court involving the question can be pointed to as hold-

ing that the United States has the right to collect such a tax

upon Osage estates. If officials of the Federal Government

are collecting such a tax on Osage estates and including in

the gross estate as a part of the measure of the tax prop-

erty of the classes under consideration in this case, that

fact alone is not conclusive of their legal right so to do. For

some years federal tax-collecting officials collected a federal

income tax from restricted Osage Indians, until the Tenth

Circuit Court of Appeals, in Blackbird v. Commissioner of

Internal Revenue, 38 F. (2d) 976, held that the income of

such Indians is not liable for federal income tax. Since that

decision the Treasury Department has reimbursed re-

stricted Osages for huge sums collected as income taxes

prior to the decision.

Nor would it necessarily follow, as concluded in the

opinion below, that if the Federal Government has the right

to collect such a tax, the State of Oklahoma has an equal

right. In New York v. United States, 326 U. S. 572, 577, 90

L. ed. 326, 331, it was pointed out that:

% © The considerations bearing upon taxation

by the states of activities or agencies of the Federal

Government are not correlative with the considerations

bearing upon Federal taxation of state agencies or ac-

tivities. The Federal Government is the government of

all the states, and all the states share in the legisla-

tive process by which a tax of general applicability is

laid. ‘The taxation by the state governments of the in-

struments employed by the general government, in the

exercise of its powers,’ said Mr. Justice Braptiay, ‘is

a very different thing. Such taxation involves an inter-

ference with the powers of a government in which oth-

er states and their citizens are equally interested with

the state which imposes the taxation“.

By the Oklahoma Enabling Act (34 Stat. L., pp. 267-

278) it was provided that in the Constitution of Oklahoma

thereafter to be adopted nothing therein contained should

be construed to limit or affect the authority of the Govern-

ment of the United States to make any law or regulation

respecting Oklahoma Indians, their lands, property or oth-.

er rights by treaties, agreement, law or otherwise. Hence

the State of Oxlahoma is in no position to question the au-

thority of the United States to continue to hold the re-

stricted Osage’s property in trust, to extend the trust period

from time to time, and to undertake to deliver such prop-

erty to the Osage Indian or his heirs at the end of the trust

period. .

—27T7—

As applied to the classes of Osage property in con-

troversy, the Oklahoma inheritance or estate tax law re-

sults in a denial of due process of law and of the equal pro-

tection of the laws. E+ iss

The classes of property which we contend are not prop-

erly includable in the gross estate for estate tax purposes,

as they appear in the stipulation (R. 13) may be stated

briefly as follows: 8 Be

1. Osage headrights.

3. Trust funds. a ,

8. Surplus funds, being accumulated income from head-

rights. .

4. United States Bonds, other securities and other per-

sonal property purchased and held by the United States

from surplus funds,

It is our contention that owing to the trust under which

these classes of property are held, the corpus thereof is not

owned by the restricted Osage Indian in such sense that it

is properly includable as a part of his gross estate for es-

tate tax purposes. Under the trust period as now extended

the Osage mineral estate does not become the property of

the individual Osage until the 8th day of April, 1983, and

other properties and moneys now held in trust until Janu-

ary 1, 1984. In Hoeper v. Tax Commission, 284 U. S. 206,

76 L. ed, 248, this court said, That which is not in fact the

taxpayer’s income cannot be made such by calling it in-

come. So it likewise may be said that the corpus of prop-

erty which is not in fact the taxpayer’s cannot be made such

by giving-to the taxpayer or the taxpayer’s ancestor the

right to make a will, when in fact all that passes by the will

of the deceased person, or all that descends from him under

the law of succession, is che rit ut, not to the corpus, but

merely to certain income therefrom dependent upon the

will of Congress.

The first Oklahoma inheritance tax statute was enacted

in 1915 (Session Laws of 1915, chapt. 162). Thus, before

Oklahoma became a state, and long before the State had an

inheritance tax law of any kind, Congress had provided that

the classes of property under discussion should become the

absolute property ‘‘of the individual members of the Osage

Tribe * or their heirs’’ at the expiration of the trust

period. The decedent in the present case did not create the

trust. No transfer of the corpus of the trust property was

effected by his death. As said by Mr. Justice Houmss, speak-

ing for this court in Brooke v. City of Norfolk, 277 U. S.

27, 72 L. ed. 767,

4% The assessment is a bare proposition to

make the petitioner pay upon an interest to which she

is a stranger. This cannot be done.’’

We are not here dealing with a transfer in trust with

reservation of a life income to the settlor. In a recent deci-

sion by the Supreme Court of Oklahoma (In re Protest of

Bass, 18 Oklahoma Bar Journal, 1793; not officially report-

ed) it was held that the corpus of trust property is includ-

able for inheritance tax purposes where the decedent, in -

setting up the trust, had retained for himself the income

from the property during his lifetime. But the Oklahoma

statute is directed at such transfers only where the deced-

ent created the trust and reserved to himself a life income

from the property, or in other words, at inter vivos trans-

fers resorted to as substitutes for wills. The Oklahoma

statute does not, and we know of no statute anywhere that

does, undertake to require the inclusion in the gross estate

for inheritance tax purposes of the corpus of trust property

E

where the trust was created by the United States Govern-

ment and where the ultimate transfer of the corpus is post-

poned until the indefinite termination of the trust period

indefinite because wholly dependent upon the will of Con-

gress. Nevertheless, the statute has been so applied, and we

think the application is in direct violation of the Fourteenth —

Amendment to the Constitution of the United States.

In the case In re Protest of Bass, supra, the ee

Court of Oklahoma stated that:

In 1933, soon after the decision in May v. Heiner

was rendered, the Oklahoma Legislature amended the

law so as to levy the inheritance or succession tax upon

transfers ‘where the decedent reserved to himself, dur-

ing his life, the income from property included in any

such transfer’.’’

As pointed out above, the decedent in the present case

did not make a reservation of income to himself, and the

statute therefore does not purport to cover the estate in-

volved herein.

There seems to be divergence of opinion as to whether

May v. Heiner, 281 U. S. 238, 74 L. ed. 826, was overruled

or departed from in Helvering v. Hallock, 309 U. S. 106,

84 L. ed. 604 (see Helvering v. Proctor, 140 F. (2d) 87), but

as we understand Helvering v. Hallock, the only departure

from the doctrine of May v. Heimer was because of the ef-

fect of the Joint Resolution of Congress of March 3, 1931,

chap. 454, 46 Stat. at L. 1516. The basic doctrine of that

case still would apply in the present case, since the statute

under consideration does not purport to cover a situation

such as ‘hat here involved; nor, in our judgment, would it

be within the constitutional power of a state to enact an

inheritance tax law which would require the inclusion in the

estate of a decedent for estate tax purposes of property not

that of the decedent.

The proposition being urged under this point of our

brief, it will be observed, is not an Indian question. The

tenure of Osage property of the classes being discussed is

comparable to a situation where successive life estates might

be left to successive life tenants, with no power in the life

tenant to sell, appropriate to his own use, or control in an

manner the ultimate disposition of, the corpus of the prop-

erty itself. Under such circumstances, upon the death of

a particular life tenant, whether Indian or white, his in-

terest in the property, as said in May v. Heiner, would be

‘obliterated by that event.“ Regarding Osage property

the court pointed out in Taylor v. Tayrien, supra, that,

The right to control descent, either with or without a will,

has been exercised by Congress, and may be further ex-

ercised.’’

In Commissioner v. Irving Trust Co., 147 F. (2d) 946,

the Circuit Court of Appeals, Second Circuit, said:

„We have found no decision in which a settlor has

parted with power to control the application of any

part of the corpus and the disposition of it is left to

the judgment of the trustee, independent of any pre-

scribed standards, and yet the corpus has been in-

cluded in the estate because the settlor might receive

a part of the corpus through the exercise of an uncon-

trolled discretion by the trustee.“

Under Section 3 of the Act of Congress approved March

2, 1929 (45 Stat. 1478) the Secretary of the Interior may, in

his discretion, pay all or any part of the funds of a re-

stricted Osage to him upon his application therefor, but the

Indian has absolutely no control of this discretion, and the

right given the Secretary by Congress but serves to empha-

ee e

size the fact that the funds are still subject to the trust and

that the Indian has no independent control over them.

In the Irving Trust Co. case, supra, it was further held

this court had stated that by well settled rules of statutory

construction, “ law is presumed, in the absence ‘of clear

expression to the contrary, to operate prospectively; that,

if doubt exists as to the construction of a taxing statute,

ö the doubt should be resolved in favor of the taxpayer.” Has-

sett v. Welch, 303 U. S. 303, 82 L. ed. 858. The Second Cir-

cuit Court of Appeals again applied the rule in the more

_ Tecent case of Commissioner v. Singer’s Estate, 161 F. (ad)

15, holding that the 1931 joint resolution of Congress and

the amendment of 1932 to Sec. 811(c) specifially reaching

transfers where the grantor has reserved a lite estate have

only prospective application.“

In Globe Indemnity Co. v. Bruce, 81 F. (zd) 143, 148,

the Circuit Court of Appeals, Tenth Circuit defined an

Osage headright as follows: 2

“** * * The right to receive the trust finds and the

mineral interests at the end of the trust Period, and

during that period to participate in the distribution of

the bonuses and royalties arising from the mineral es-

tates and the interest on the trust funds, is an Osage

headright,’’: .

The surplus funds, accumulated from income from the

Osage tribal mineral interest, and securities purchased and

held by the United States from such surplus funds partake

of the same character as the mineral interest itself and the

original trust funds. All continue to be held in trust until

the termination of the trust period, and no provision of any

law or regulation can be pointed to as giving to the re-

stricted Osage Indian the absolute control of such property,

or the right to pass to his devisee by will or his heir by de-

scent the ultimate, absolute control and ownership of such

property. As well said by the Circuit Court of Appeals,

Fourth Circuit, in Mullikin v. Magruder, 149 F. (2d)

593, 597:

% The true test is whether under the terms

of the conveyance full and complete dominion over the

property by the transferee in a practical ‘sense is

established by the transferor’s death.“

Before leaving this point we call attention to the fact

that by Section 3 of the Act of Congress of March 3, 1921

(41 Stat. L. 1249), hereinbefore quoted, Congress was care-

ful to provide that the conferring of citizenship upon the

Osages should not affect their interest in tribal property

or the control of the United States over such property as

is now or may hereafter be provided by law.’’ In other

words, tribal property was to remain tribal property, sub-

ject to present and future Federal control. Certainly this

renders unassailable the holding of the court in Taylor v.

Tayrien, supra, that ‘‘an Osage Indian has no present prop-

erty right in the properties now owned by the tribe.“

instrumentality theory, However, this decision was re-

versed by this court by memorandum opinion on January

27, 1919 (Large Oil Co, v. Howard, 248 U. S. 549, 63 L. ed.

416). Rather promptly thereafter—on March 3, 1921—by

Section 5 of the Act of Congress approved on that date,

Congress provided That the State of Oklahoma is author-

Thereafter the Oklahoma Legislature enacted a law

providing for the levying of an excise tax of one-eighth of

one cent per barrel on oil produced in Oklahoma, and the

question of the validity of this law, as applied to oil pro-

duced in Osage County, came before both the Oklahoma Su-

preme Court (Barnsdall Refineries v. Oklahoma Tam Com-

mission, 171 Okl. 145, 41 P. (2d) 918) and this court (State

of Oklahoma v. Barnsdall Refineries, 296 U. S. 521, 80 L. ed.

366). Both courts held that the later Oklahoma statute was

not within the Congressional consent to the levying of a

gross production tax, and the opinion of this court definite-

ly treated the 1921 Act of Congress as removing the tax

immunity,“ and as being a waiver of tax immunity,“ to

the extent and only to the extent provided by the act.

Just five weeks before the opinion below in this case

the Supreme Court of Oklahoma handed down an opinion

in Texas Co. v. Oklahoma Tam Commission, (18 Oklahoma

Bar Journal, p. 1339; not yet officially reported) and by

syllabus held:

„A lessee producing oil from lands of restricted

Kiowa and Apache Indians under departmental lease

approved by and subject to supervision of the Secre-

tary of the Interior of the United States, is engaged

in the operation of a governmental instrumentality or

agency and in the absence of permissive legislation by

Congress, or appropriate Federal consent or waiver

or withdrawal of immunity, the oil production or the oil

as produced is not subject to the state excise tax of one-

eighth of one cent per barrel, nor the state gross pro-

duction tax of five per cent of the value of thie oil pro-

duced.’’

The court in that case clearly adhered to the same view

we are here presenting, as in the body of the opiinion it is

said:

‘¢ And the United States Congress has actted on the

theory that such immunity exists in the case: of leases

of this character unless waived. The Congress has

adopted acts expressly waiving such immunity and

granting to this state the authority to apply the gross

production tax as to certain designated Indian lands,

the Osage Indian lands by Act in 1921 (41 Stat. at 1.

1250) the Kaw Indian lands by Act in 1924 (43 Stat. at

L. 176-177), and as to lands of the Five Civilized Tribes

by Act in 1928 (43 Stat. at L. 496).

At this point we again emphasize the distinction he.

tween the present case and the Five Tribes case (Oklahoma

Regarding this provision this court, in the ease just

cited, said:

that the proceeds of their sale, even further removed

from the land itself, should be immune.“

There is no such Act of Congress making the Osage

mineral interest subject to any taxes whatever, other than

that Congress would engage in the wholly useless pastime

of enacting a law giving the State permission to tax if

there were no tax immunity to be waived. Furthermore,

section 5 of the 1921 Act of Congress itself limited the

scope of the permission granted to Oklahoma to tax by

roviding that the tax there authorized should be ‘‘in lien

of all other State and county taxes levied upon the pro-

duction of oil,’’ etc.

It is clear from the opinion in Mahnomen County v.

United States, 319 U. S. 474, 87 L. ed. 1527, that, wanting

congressional consent, property held in trust by the United

States for Indians is immune from state taxation. In that

case the court said:

4% © © The Clapp Amendment gives the consent

of the United States to state taxation, thus removing

the barrier to taxation found to exist in United State:

v. Rickert, 188 U. S. 432, 47 L. ed. 532, 23 S. Ct. 478

supra; but under Choate v. Trapp, the Indian who has

gained a ‘vested right’ not to be taxed, must also con

sent.“

In that case the court held the withdrawal of immunity

effective solely because the Indian had consented thereto

and there is no intimation in the opinion that the court dis

approved the rule in the Rickert case.

We therefore respectfully urge that before the Stat

is entitled to levy and collect an inheritance or estate ta:

in this case it must be able to point to express congressiona

consent thereto, and to this time no such consent has bee:

given. | )

If we may be pardoned for repeating, we wish briefl.

again to emphasize the importance of the fact that, with th

law apparently well settled by the Rickert, Thurston Coun

ty, and McCurdy cases, supra, in all of which it was hel

that property held in trust by the United States for Indian

is exempt from state taxation, Congress has upon thre

separate occasions—in 1921, 1929, and 1938—declared tha

the classes of Osage property here under consideratio:

continue to be held in trust by the United States. We subm

that if there remains any life in the rule that re-enactment

of a statute after judical construction thereof carries with

it congressional approval of such construction, this would

seem to be an entirely proper occasion for the application

of the rule. Ch ss N

In this connection it is also significant that shortly after

the decision of this court in Large Oil Co. v. Howard, supra,

Congress withdrew existing immunity by passage of the :

1921 Act permitting Oklahoma to levy and collect a gross

production tax on oil and gas produced in Osage County,

while on the other hand the Supreme Court of Oklahoma, in

Childers v. Pope, 119 Okl. 300, 249 Pac. 726, (decided in

1926) held that property of 8 restricted Osage Indian held

in trust by the United States was not includable in his estate

for inheritance tax purposes, and Congress has never since

that decision acted to withdraw the immunity there found to

exist, but twice since that time has extended the trust period

as to all classes of property in controversy in this case.

It does seem that in the twenty-one years that have elapsed

eines Childers v. Pope, if Congress had been willing that

Oklahoma collect an inheritance tax upon restricted Osage

estates it would have said so, as it did with reference to the

collection of a gross production tax. :

Conclusion.

We urge that each of the reasons given above is suffi-

cient to require a reversal of the judgment below. We are

not confronted in this case with the question of the extent

of congressional power to permit the State of Oklahoma to

levy the tax in controversy, though as we have before inti- - ”

mated, we would seriously question such power to liquidate

pro tanto the trust estate. The indisputable fact remains

that Congress has never at any time given its consent to

the levying of the tax ncw sought to be exacted, and at least

until such consent is given we believe it must be held that

all of the classes of Osage property above discussed are in-

mune from all forms of state taxation as long as United

States v. Rickert and similar cases remain the law. 4

Respectfully submitted,

Fnaxx T. McCoy,

Jouw T. Crate,

Jouw R. Pransox,

Faaxx Manan, ;

Counsel for Appellant. —