Reply Brief — McClanahan v. Arizona Tax Comm'n

TABLE OF AUTHORITIES

CASES

Acosta v. San Diego County, 126 Cal.App.2d 455,

272 P.2d 92 (1954). ....... 10

* Agua Caliente Band of Mission Indians v. Riverside

County, 442 F.2d 1184 (9th Cir.), cert. denied,

404 U.S. 817 (1971). _ 12

Begay v. Sawtelle, 53 Ariz. 304, 88 P.2d 999 (1939)... 10

~ Creek County v. Seber, 318 U.S. 705 (1943). ............ 12, 15

_ Application of Denetclaw, 83 Ariz. 299, 320 P.2d 697

«Donahue v. Justice Court, 15 Cal.App.3d 557, 93 Cal.

ptr. 310, cert. denied 404 U.S. 990 (1971)... 18

Draper v. United States, 164 U.S. 240 (1896). ............ 17

- Grand Opera Co. v. Twentieth-Century Fox Film

Corp., 235 F.2d 303 (7th Cir. 1956). ................ 13

Graves v. New York ex rel. O’Keefe, 306 U.S. 466

19

12

NAY. 1955). ccocccccccccccsccecssecesessesssesssesessevesevevesene 13

ii

Kennerly v. District Court of Montana, 400 U.S. 423

hg £8 SSSI SRCAT NE Sie era 3, 5, 6, 7,8

Leahy v. State Treasurer of Oklahoma, 297 U.S. 420

(1936). iasleitadihetiepipdiihcailiamininticond shasibiiiicsmascian 20

Mason v. United States, F.2d —— (Ct.Cl. No.

Oe rN iain dec eceiedacctsensine 10n.3

McClanahan v. Arizona Tax Commission, 14 Ariz.

App. 452, 464 P.2d 221 (1971). o.oo. eee 7

Metlakatla Indian Community v. Egan, 369 U.S. 45

ce | EE ee 18

Mull v. United States, 402 F.2d 571 (9th Cir. 1968),

cert, denied, 393 U.S, 1107 (1969). 0... 18

New York ex rel. Ray v. Martin, 326 U.S. 496

IE caleba ackieetihinaciubiacispiesiisicdisBantbieeniicdicnen 17

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

ESS eae eee eae 10 n. 3, 12, 20

Organized Village of Kake v. == 369 U.S. 60

REE seeneniciocs duialbptiivdanccteonisnneGuhcsipaal a

Ruiz v. Morton, —— F.2d —— (9th Cir. No. 25568,

I ER iad nacsistsnnicliinicnctdinchiecabaninane 13

Sears, Roebuck & Co. v. Metropolitan Engravers, 245

Peet CN OT oa: 13

Sigana v. Bailey, 282 Minn. 367, 164 N.W.2d 866

laf BREE Bie SOG <a 18

Silas Mason Co. v. Tax Commission, 302 U.S. 186

ns BPO NORRIE SOLE SES Sa oe eee ny ee Oe 20

Simmons v. Eagle Seelatsee, 244 F.Supp. 808 (E.D.

Wash. 1965), aff'd per curiam, 384 U.S. 209

Oo ceceeg gE a ee eae UME EEE LRT 12

iii

Sims v. United States, 359 U.S. 108 2 | | nea 19

Smith v. Temple, 82 S.D. 560, 152 N.W.2d 547

a, CE 18

Squire v. Capoeman, 351 US. 1 (1956). 0... 10 n. 3,20

State Board of Public Welfare v. Board of Commission-

ers, 262 N.C. 475, 137 S.E.2d 801 (1964)... 10

State ex rel. Kennerly v. District Court, 154 Mont.

488, 466 P.2d 85 (1970). 6

Surplus Trading Co. v. Cook, 281 US. 647 (1930)... 20

Thomas v. Gay, 169 U.S. 264 2.) ORR ee 8, 13

United States v. Chavez, 290 U.S. 357 Gi: ) eee 2

United States v. Daney, 370 F.2d 791 (10th Cir.

epee eas 10n.3

United States v. McBratney, 104 U.S. 621 (1882). ...... 17

Valdez v. Johnson, 68 N.M. 476, 362 P.2d 1004

tel 18

Vermillion v. Spotted Elk, 85 N.W.2d 432 (N.D.

PT Pe cchiahassnsssensunssvesensasorerissanennsesvareeseneesse..... 18

Warren Trading Post Co. v. Arizona Tax Commission,

380 U.S. 685 (1965)... 2, 9, 11, 14, 16, 17, 21

Wesberry v. Sanders, 376 U.S. 1 (1964). oo. 11

In re Whiteshield, 124 N.W.2d 694 (N.D. 1963). ...... 18

Williams v. Lee, 358 U.S. 217

RIPIINIT siitiernasicicsstacstnsacseosas =. 3, 5, 7, 8, 9, 10, 15

Williams v. United States, 327 U.S. 711 (1946). . 2

Your Food Stores, Inc. y. Village of Espanola, 68

N.M. 327, 361 P.2d 950 cert. denied, 368 U.S.

915 (1961).

SWOCMOPOSH CSAS OHSSESECSTonsaseorecsesesoeeneeseeceseseios

STATUTES

Re Ae MS ehniesisgeceleitssnsmiatalrcaidansonas beck csesdsescesocseins 14

» Ee of ot. iy AD 1. NOTE 15n.5

RGR O ciiesntcdattvnirvreeeniniscrnansadcisintasnnitsnaceaenannsn 15n.5

D NTC. $1006) (2) nnn... eenc scene cccesneenesremneee 15n.5

UD an sis nsvencennnesewnnenncesncetseansersnscsnesensnce 15n.5

FNM ES nn nana even eecsecnenesnesnseeceensnwoane 15n.5

DU, OI Danian ccna cc ens ess neneensteteceeneceee 14

CA © OO | | KX © eee 14

I TR Ra as i vtcaanisdnwnenresownitspnsntsentisinns vanvcanni 14

13 N.T.C. Part 2

1 SC CD. As OA 151.5

Tit, 1S NoT.C. oe ccccccsececcscscccscccesesseeeceeseesessnseeeseeeee 151.5

Tit. 17N.T.C. |

Tit, 18 N.TiC. ooo cccccccccccepccssssseesceceeccsssssesceseecsse 15.5

12D. hy 0 15n.5-

5 Ah 5 2 Sa cn 151.5

5 2S Sv oa 151.5

1” 5 St ocr 15.5

Tit, 23 N.T.C. ooccccccccsesscssscccccceccsnsssseseseeceseseneceeceeeee 15.5

36 Stat. 569 §20 (1910)

67 Stat. 588-590 (1953)

*Citations to N.T.C. refer to the Navajo Tribal Code (1969).

82 Stat. 78-80 (1968) oo

4 US.C. §§105-110 cece cece. 16

4 USC. $109 cece 16,17

4 USC. §110(€) 16

8 U.S.C. §1401(a) Co ne ae ne 11

18 U.S.C. §§1151-53 3,4

18 U.S.C. $1153 ec ccccceceeccecceeeeeeee 14

18 U.S.C. §1162 1,2, 3,4

20 US.C. §§236-244 ooo 14

20 U.S.C. §§631-644 14

23 U.S.C. §§201-203 eee 14

25 U.S.C. §13 ooo ceeccccecceeeceeeeecteeeeeeeeeeec 13, 14

25 U.S.C. $231 eee ceecccccccseeseeetteeeeceeeeseec 1,7

25 U.S.C. §§232-33 occ occ cecesnnneeeeeeeeccceseeeesee, 20

25 U.S.C. §252-254 oo ccc 14

25 U.S.C. §309 ........ wrest ttcssesteteensssesecseeesecesettccesatsnsoeces 14

25 US.C. $3098 anne cecccccccccetteendnteeeeeeeeeee 14

25 US.C. §3188 ccc cccccccctessetttteeeeeeee 14

25 U.S.C. §398 ooo cecccccccsccsessseteeeeeeeeeeeeeecc 1,12

25 US.C. $3986 oo. ceccccsseesetnttceeeeeeeeeee 12

25 U.S.C. $639 oe ecseseeecccecnnsstettettteseeeeeeec 2, 13

25 U.S.C. §1321-26 occ ccccesceeeeeeceseeeeeee 2

lh aS OLS 7 2, 3,4

25 US.C. $1322 on ececccecccesseeeeeneeeeeeeeeeeec

yu ik Cade ks! ner eener ane en eee 3

y= GRE alk | ik ; AER none ee nn 3,4

ie eee 1,2, 3,4

Poe Cody Cy) Crs: lance 14

AD UTE RI sic te 14

Public Law 280 ................---- 1, 2, 3, 4, 5, 6, 7, 8, 15, 18, 20

OTHER AUTHORITIES

Chairman’s Quarterly Report to the Navajo Tribal

Council, Fall Session, Nov. 1971. ................-----++- 12

H.R. Rep. No. 848, 83d Cong., 1st Sess. (1953); 1953

U.S. Code Cong. & Admin. News 2409. ........ 7, 15 n.6

Hearings on H.R. 6687 Before a Subcomm. of the Sen-

ate Comm. on Finance, 76th Cong., 3d Sess.

(Age. 23, 1940) q. saan tverneeonceresocinisioshiiciedeoneesase 19

Hearings on S.961-968 and S.J.Res. 40 Before the

Subcomm. on Constitutional Rights of the Senate

Comm. on the Judiciary, 89th Cong., Ist Sess.

CLOGS) aioe eiceeseserivecannsenivencinennanscsinnaniaaenenocneiees 15n.6

J. Sullivan, State Civil Power over Indians, 33 Mont.

L, Rev. 291 (1972). ....-2222--c-cececcceeeeeeeees ue oe

S. Rep. No. 841, 90th Cong., Ist Sess. (1967). ............ 5

ST LED. T98 CE DIG) weiner

IN THE

Supreme Court of the United States

October Term, 1972 ‘

No. 71-834

ROSALIND MCCLANAHAN, on behalf of her-

self and all others similarly situated,

Appellant,

Vs.

ARIZONA STATE TAX COMMISSION,

Appellee.

ON APPEAL FROM THE

SUPREME COURT OF ARIZONA

REPLY BRIEF FOR APPELLANT

ARGUMENT

THIS BRIEF IS INTENDED TO REPLY TO APPEL-

LEE’S BRIEF IN FIVE AREAS

1. Application of the Arizona Enabling Act and of Public

Law 280 and Amendments.

Appellant’s opening brief argues that certain federal stat-

utes constitute Congress’ continuing recognition of the sov-

ereign independence of reservation Indians from all forms

of state control, save those areas specifically ceded (such as

25 U.S.C. §§231, 398). These statutes are the Arizona En-

abling Act, 26 Stat. 569 §20 (1910); Public Law 280, 67

Stat. 587 (1953) (codified in part as 18 U.S.C. §1162 and

28 U.S.C. §1360) ; and the successor to Pub.L. 280, Subchap-

2

ter III of the Indian Civil Rights Act of 1968, 25 U.S.C.

§$§ 1321-1326, 82 Stat. 78-80. Open. Br. pp. 20-24.

Appellee argues that the Arizona Enabling Act is con-

fined merely to protection of Indian land title and has no re-

lation to jurisdiction over persons. Ariz. Br. pp. 15-20. Ap-

pellee then contends that Pub.L. 280 has only the “limited

purpose” of removing the impediment to state jurisdiction

(as to Indian land title) contained in the various Enabling

Acts and related state constitutional provisions. Id. pp. 20-

26. Both of these assertions are incorrect.

This Court has referred to the Enabling Acts as applica-

ble to the question of jurisdiction over persons on Indian res-

ervations. The matter was discussed in United States v.

Chavez, 290 U.S. 357, 359-60 (1933), involving federal

criminal jurisdiction over non-Indians for offenses in Indian

country. See also Warren Trading Post v. Arizona Tax

Commission, 380 U.S. 685, 687 n. 3 (1965) ; Williams v. Lee,

358 U.S. 217, 222 n. 10 (1959); Williams v. United States,

327 US. 711, 714 n. 10 (1946).

Public Law 280 makes clear that the Enabling Acts are

broader than appellee contends, and it is equally clear that

Pub.L. 280 is itself not confined to questions of Indian land

title. Sections 1-4 of Pub.L. 280 (18 U.S.C. §1162 and 28

U.S.C. §1360) confer on certain named states (not includ-

ing Arizona) criminal and civil jurisdiction in Indian coun-

try within those states. However, this grant expressly ex-

cludes any form of state authority over Indian trust prop-

erty, real or personal. 18 U.S.C. §1162(b); 28 U.S.C.

§1360(b). Sections 6 and 7 of Pub.L. 280, authorizing other

states to acquire such jurisdiction, refer back to these provi-

sions. 67 Stat. 590. The amended jaw as to other states is

now 25 U.S.C. §1321-26, with the proprietary exception at

25 U.S.C. §§1321(b), 1322(b).

3

This proprietary exception has the same scope that appel-

lee assigns to the entire Act. See Ariz. Br. pp. 15-26. If the

Enabling Acts have the narrow meaning suggested by appel-

lee, then section 6 of Pub.L. 280 (now 25 U.S.C. §1324)

would have nothing to operate on and be completely point-

less. And if Pub.L. 280 and its successor have the same nar-

row meaning, they also would have no purpose. Congress

cannot have intended such an empty undertaking. Thus

Pub.L. 280 is clearly broader than appellee contends, and

the 1953 and 1968 Congresses clearly thought the Enabling

Acts to be broader than appellee contends. See also Ken-

nerly -v. District Court of Montana, 400 U.S. 423 (1971);

Williams v. Lee, supra, 358 U.S, at 222.

As stated above, appellant’s position is that these federal

statutes recognized the absence of state jurisdiction over res-

ervation Indians and were enacted to provide a procedure

for the states to acquire it, which procedure Arizona has not

followed. As argued in the opening brief at p. 17, state juris-

diction on Indian reservations is confined to the affairs of

non-Indians unless such affairs infringe on the right of the

Indians to govern themselves. However, should this Court

disagree with appellant and rule that some measure of state

jurisdiction over reservation Indians existed as of 1953 (in-

cluding jurisidction to tax incomes), then the Court must

determine what effect the enactment of Pub.L. 280 had on

that jurisdiction.

As a practical matter, the problem is to reconcile Pub.L.

280 and this Court’s decisions in Williams vy. Lee, supra,

and Kennerly v. District Court of Montana, supra. The lat-

ter provides the only significant prior ruling of this Court on

the scope of Pub.L. 280.

Appellee argues that Kennerly is irrelevant because it

dealt “only” with the jurisdiction of state courts over Indi-

4

ans and not with the application of state laws on reserva-

tions. Ariz. Br. p. 25. Apparently the argument is that Pub.L.

280 and its successor are also so limited. However, the stat-

utes negate that interpretation. Pub.L. 280 provides for ces-

sion to the states of “jurisdiction over [criminal] offenses

committed by or against Indians” in Indian country, “and

the criminal laws of such State” shall apply in Indian coun-

try. 18 U.S.C. §1162(a); see also 25 U.S.C. §1321(a).

Cession of jurisdiction is also provided “over civil causes of

action between Indians or to which Indians are parties” in

Indian country, “and those civil laws of such State that are

of general application to private persons or private prop-

erty” shall apply in Indian country. 28 U.S.C. §1360(a);

see also 25 U.S.C. §1322(a). The statutes plainly refer

both to state court jurisdiction and to application of state

laws. Also, these statutes treat criminal and civil laws

identically, and in the criminal area it is clear that Pub.L. 280

would have to operate on laws as well as courts, to deal with

federal criminal statutes such as 18 U.S.C. §§1151-53. This

is the law in Arizona. Application of Denetclaw, 83 Ariz.

299, 320 P.2d 697 (1958).

‘The intent of Pub.L. 280 to deal with state civil laws as

well as court jurisdiction is’ further shown by its provision

saving as valid any tribal ordinance or custom not inconsis-

tent with state civil law after Pub.L. 280 takes effect. 28

U.S.C. §1360(c); 25 U.S.C. § 1322(c).

Finally, the legislative history of the Indian Civil Rights

Act amendments to Pub.L. 280 indicates that it deals with

laws as well as court jurisdiction. The principal amendment

was the addition of the requirement of Indian consent to as-

sumption of state jurisdiction. 25 U.S.C. §1326. This

amendment was in response to Indian complaints about uni-

lateral application of state laws to reservations against the

5

wishes of the Indians. S.Rep. No, 841, 90th Cong., 1st Sess.

p. 11 (1967).

Since Pub.L. 280 applies to state laws as well as state

court jurisdiction, so also does the reasoning of its interpre-

tation in Kennerly y. District Court of Montana, supra.

Thus if one accepts appellee’s position that the states

would, in the absente of Pub.L. 280, have some measure of

jurisdiction over reservation Indians (including jurisdiction

to tax incomes), then one must determine the effect of Pub.

L. 280 on such jurisdiction, Appellant suggests that there

are three possible interpretations,

One possible interpretation of Pub.L. 280 could have been

to provide a procedure for cession to the states of such juris-

diction over Indians as the States would not otherwise have.

In other words, a court would first decide if a certain matter

is within state jurisdiction pursuant to decisional law such

as Williams v, Lee, supra. Only if the court determines that

the matter is not thus within state jurisdiction would appli-

cation of Pub.L. 280 be considered. But this interpretation is

flatly inconsistent with Kennerly v. District Court of Mon-

tana, supra, The issue in Kennerly was state court jurisdic-

tion over reservation Indians, where the tribal council had

acted to confer such jurisdiction on the state. If the “in-

fringement” test of Williams v. Lee, supra, is applied to the

Kennerly situation, it would Plainly be a case where the

state jurisdiction does not “infringe on the right of the Indi-

ans to make their own laws and be governed by them”, Wil-

liams v. Lee, supra, 358 U.S. at 220, and the state would

have jurisdiction.’ This was the reasoning of the Montana

pa

*Appellant’s ition is, of course, that the “infringement” test is not

to be applied case by case to reservating 1eungement” However,

8 position requires that it be, and it is so applied here for the

¢ of argument only.

ie...

6

Supreme Court. State ex rel. Kennerly v. District Court,

154 Mont. 488, 497, 466 P.2d 85, 90 (1970). Thus if Pub.L.

280 were intended to define state jurisdiction only in situa-

tions where the state would not otherwise have jurisdiction

(pursuant to decisional law), then the statute would have

no application to the Kennerly facts. The state would al-

ready have jurisdiction pursuant to the tribe’s action. Yet

this Court reversed the Montana court, ruling Pub.L. 280 to

be a “governing act of Congress.” Kennerly v. District

Court of Montana, ‘supra, 400 U.S, at 247. Thus the inter-

pretation of Pub.L. 280 hypothesized at the beginning of this

paragraph is negated by Kennerly.

A second possible interpretation of Pub.L. 280 is that it

provides a procedure for cession to the states of such juris-

diction as the states did not have as of the date of its enact-

ment in 1953, leaving untouched such jurisdiction as they

did then have. This interpretation would often have the

same result as that in the paragraph above, but it does differ

when applied to the Kennerly facts. In Kennerly the tribal

council law conferring jurisdiction on the Montana courts

was passed in 1967, well after 1953. Thus under this second

interpretation of Pub.L. 280, the statute would govern, and

the state would acquire no jurisdiction absent compliance

with it. This is the only interpretation of Pub.L. 280 which

could support appellee’s position in the instant case and also

be consistent with Kennerly, supra.

’ This interpretation has two variants: (1) Pub.L. 280 must

be obeyed to acquire jurisdiction after 1953 unless the state

could have exercised such jurisdiction before that time, or

(2) Pub.L. 280 must be obeyed to acquire jurisdiction after

1953 unless the state actually exercised jurisdiction in a per-

missible area prior to 1953. The general tenor of Kennerly

favors the latter; Kennerly seems to say that Pub.L. 280 oc-

cupies the acquisition field after its enactment. This interpre-

7

tation, coupled with a ruling that Arizona could have exer-

cised its taxing jurisdiction prior to 1953 under the test of

Williams v. Lee, would tequire a remand to determine if Ar-

izona actually had done so.

For the state to prevail, either variant requires this Court

to decide if Arizona had jurisdiction to tax as of 1953. This

would be a most awkward and unworkable standard. In each

area of jurisdiction’ a determination would have to be made

as to the state of the law in 1953, Furthermore, the court

below stated that “the amount of tribal government in exis-

tence” is relevant to application of the Williams v. Lee in-

fringément test. Jurisd. Statement p. 4a; 14 Ariz. App. at

454; 484 P.2d at 223. If so, the Pub.L. 280 inquiry would

also require a determination of the extent of each particular

tribe’s government in existence in 1953.

A third possible interpretation of Pub.L. 280 is that it was

intended to occupy completely the field of state jurisdiction

over reservation Indian affairs (again save for specific ces-

sions like 25 U.S.C. §231). Whether or not the states had

any jurisdiction over Indians on reservations in 1953, they

can subsequently exercise jurisdiction of any sort only by

complying with Pub.L. 280. This interpretation is fully con-

sistent with Kennerly and also with the concern of Congress

in 1953 that states acquiring jurisdiction over Indians pro-

vide the services to Indians being provided by the federal

government. H.R. Rep. No. 848, 83d Cong., 1st Sess, pp.

6-8 (1953); 1953 U.S. Code Cong. & Admin. News. pp.

2412-14. This interpretation of Pub.L. 280 would, of course,

require reversal of the instant case, because Arizona has not

complied with Pub.L. 280. On that basis the interpretation is

advocated by the Brief of the Navajo Tribe of Indians, as

Amicus Curiae, in Support of Jurisdictional Statement

dated January 21, 1972. A recent law review article also

8

concludes that. this interpretation is correct. J. Sullivan,

State Civil Power over Indians, 33 Mont. L. Rev. 291, 302-

306 (1972). Appellant submits that, should this Court

reach this question, this interpretation should be adopted,

because it is the only interpretation providing a workable

rule that is consistent with Kennerly.?

Appellant further submits that the analysis above shows

appellant’s basic position on the proper interpretation of

Williams v. Lee, supra, to be correct. The version of the

Williams test advocated by Arizona is manifesthy unwork-

able. It leads to litigation in cases involving every area of the

legal affairs of reservation Indians, at least every area where

a state may see some advantage to the assertion. And as ex-

plained above, the problem is further compounded by the

need to reconcile the Williams test with Pub.L. 280 as inter-

preted in Kennerly. Such a mischievous state of affairs can-

not have been intended by this Court in formulating the

Williams test. This Court should now clear the air by restat-

ing Williams v. Lee as meaning that state laws have no ap-

plication to the on-reservation affairs of Indians (save the

area of specific cessions like 25 U.S.C. §231), and that the

“infringement” test is to be employed only to determine the

application of state laws to non-Indians on Indian reserva-

tions. Cf., Thomas v. Gay, 169 U.S. 264 (1898). This read-

*It may be objected that this interpretation would have been available

to the Court in Williams v. Lee, supra. However, the point was not

considered in that case (it did not have to be), and there is no reason

why the Kennerly rationale could not have been an alternate ground

of decision in Williams. The result would have been the same.

in effect elimina’

volving

non-Indians on Indian reservations still be decided by the

Williams would be subject to state j iction unless in-

beincne ae tov tight of the Indians to govern This is, of

course, appellant’s position on Williams anyway. Open. Br. p. 17.

9

ing of Williams would avoid the difficulties of all three inter-

pretations of Pub.L. 280 discussed above and assign to Pub.

L. 280 its natural meaning: providing a procedure for ces-

sion to the states of the otherwise exclusive federal/tribal

jurisdiction over reservation Indian affairs.

2. Provision of Government Services.

Appellee argues that Arizona’s provision of state services

to reservation Indians and their enjoyment of certain state

rights require that Arizona have jurisdiction to levy the tax

"here at issue. Two contentions are made: (A) Reservation

* Indians are entitled to state services and privileges, because

denial of these would violate the Equal Protection Clause;

thus their nonliability for taxes to pay for those services

would deny other citizens Equal Protection. Ariz. Br. 35-

38. (B) Navajo Indians are now actually receiving services

from and privileges in Arizona, and it would be inequitable

for them to enjoy benefits without bearing a share of the

burdens. Ariz. Br. 34-35.

As stated in the opening brief, appellant’s position is that

the furnishing of state services and the enjoyment of state

privileges is not relevant to the legal question of state juris-

diction over reservation Indian affairs. Open. Br. p. 24. The

issue is within the plenary power of Congress, and Congress

has by treaty and statute recognized and protected the sov-

ereign right of reservation Indians to self-government free

of state interference. Open. Br. pp. 8-24; see also Warren

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

686 (1965). In Pub.L. 280, Congress has provided a

method for state acquisition of jurisdiction over reservation

Indians, which method Arizona has declined to iP

“possibly because the people of the State anticipate that the

10

burdens accompanying such power might be considerable.”

Williams v. Lee, supra, 358 U.S. at 223.*

However, even if state benefits and privileges are deemed

relevant to the issue here, appellee’s argument will not with-

stand analysis.

A. Equal Protection Clause.

Two state courts have ruled that reservation Indians are

citizens of the state in which their reservation lies and as

such are entitled to state services. (Both decisions deal with

welfare payments.) State Board of Public Welfare v. Board

of Commissioners, 262 N.C. 475; 137 S.E.2d 801 (1964);

Acosta v. San Diego County, 126 Cal.App.2d 455, 272 P.2d

92 (1954). The Acosta case expressly held that denial of

services would violate the Equal Protection Clause of the

Fourteenth Amendment. The Arizona Supreme Court has

similarly decided that a Navajo Indian is entitled to a resi-

dent fishing license. Begay v. Sawtelle, 53 Ariz. 304, 88 P.2d

999 (1939). Arizona has also ruled that reservation Indi-

ans are entitled as citizens of the state to vote, serve on ju-

ries, and incorporate. See decisions cited at Ariz. Br. pp.

:

Appellant knows of no modern case to the contrary of

those above, nor of any authoritative federal decisions at all

on the issue. Whether reservation Indians would be entitled

to every state service as a matter of Equal Protection may

be questioned in light of this Court’s statement in Warren

8In Oklahoma Tax Com’n v. United States, 319 U.S. 598 (1943), this

Court referred to state benefits in an Indian tax case. But the Indians

ne oe oe 9 ere rg hg woes — was

expressly distinguished. at -3. Furthermore, con-

tinuing viability of a major part of that decision is questionable in

p alge f Capoeman, 351 U.S. 1 (1956). See Mason v. United

F.2d (Ct. Cl. No. 417-70, June 16, 1972); United

pene Daney, 370 F.2d 791 (10th Cir. 1966).

11

Trading Post Co. v. Arizona Tax Commission, supra, 380

U.S. at 690-691:

Congress has, since the creation of the Navajo Res-

ervation nearly a century ago, left the Indians on it

largely free to run the reservation and its affairs with-

Out state control, a policy which has automatically re-

lieved Arizona of all burdens for carrying on those

Same responsibilities. And in compliance with its

treaty obligations the Federal Government has pro-

vided for roads, education and other services needed

by the Indians.

. * * *

And since federal legislation has left the State with no

duties or responsibilities respecting the reservation In-

dians, we cannot believe that Congress intended to

leave to the State the privilege of levying this tax.

Despite this statement, appellant contends that the Cases

holding Indians entitled to state services and privileges as a

matter of Equal Protection are correct. Indians are citizens,

8 U.S.C. §1401(a) (2), and entitled to all rights of citizen-

ship. They are included in the State’s population for appor-

tionment of representation in Congress, 57 I.D. 195

(1940), so that denial of their right to vote would clearly be

unlawful. Cf. Wesberry v. Sanders, 376 U.S. 1 (1964). This

Court’s statement in Warren quoted above merely observed

However, appellee’s argument that Indian entitlement to

State services coupled with non-liability for taxes constitutes

a denial of Equal Protection to other Arizona citizens is not

@ correct statement of the law. This Court has ruled that In-

dian citizenship is not inconsistentwith continued federal

12

protection. Creek County v. Seber, 318 U.S. 705, 718

(1943). In that case this Court expressly ruled that an In-

dian tax exemption is Constitutional. Jd. at 715. That the

exemption might “possibly embarrass the finances of a state

Or one of its subdivisions is for the consideration of Con-

gress, not the courts.” Jd. p. 718. It should be noted that the

Indians involved. there did not live on a reservation and en-

joyed a full measure of state services. Oklahoma Tax Com-

mission v. United States, supra, 319 U.S. at 609. Thus appel-

lant’s nonliability for the tax here at issue does not deny

anyone Equal Protection. See also Simmons v. Eagle See-

latsee, 244 F.Supp. 808 (E.D. Wash., 1965), aff'd per

curiam, 384 U.S. 209 (1966); cf., Gray v. United States,

394 F.2d 96 (9th Cir.) cert. denied, 393 U.S. 985 (1968).

(B) Actual Provision of Services to Navajos.

The opinion of the Court below recites an alleged conces-

sion on oral argument by appellant’s counsel that Arizona

funds are expended for Navajo education and welfare on

the Navajo Reservation. See also Ariz. Br. p. 34. Appar-

ently the argument is that it would be inequitable for the In-

dians to receive services and not to pay taxes.

But of course Arizona is entitled to and does collect sub-

stantial tax revenues from Reservation sources. Congress

has authorized the state to tax the production of Indian-

owned minerals on reservations. 25 U.S.C.. §§398, 398c.

(There is considerable mineral production on the Navajo

Reservation. See, e.g., Chairman’s Quarterly Rpt. to~the

Navajo Tribal Council, Fall Session, Nov. 1971, pp. 61-63.)

Where non-Indians are using Indian reservation resources,

the state can tax the non-Indian interest in the Indian prop-

erty. Agua Caliente Band of Mission Indians v. County of

Riverside, 442 F.2d 1184 (9th Cir.) cert. denied, 404 U.S.

817 (1971); cases cited at Open. Br. pp. 14-15. And of

13

course non-Indians using the reservation are taxable on

their own property. Thomas y. Gay, 169 U.S. 264 (1898).

Also, the large Indian Service expenditures by the federal

government and those by the Navajo Tribe itself (see dis-

cussion below) indirectly contribute large sums to Arizona

tax authorities. The large numbers of non-Indians employed

by the Tribe and the federal government pay Arizona taxes.

The reservation is seriously underdeveloped, and thus both

the Tribe and individual Indians make large purchases off

the reservation in Arizona, from merchants who pay state

taxes. And Indians attract millions of tourist dollars to Ari-

zona; ° .

For the réasons just outlined, a determination that the ex-

isting limited enjoyment of state services by Navajos is

somehow “inequitable” would require a detailed factual in-

quiry as to just where the equities lie. This case is here on a

motion to dismiss. No pleading of record raises this issue. If

a factual inquiry of this sort were relevant, it would call for

a remand to allow development of the facts. Sears, Roebuck

& Co. v. Metropolitan Engravers, 245 F.2d 67 (9th Cir.

1957); Grand Opera Co. v. Twentieth Century Fox Film

Corp., 235 F.2d 303 (7th Cir. 1956): Holmberg v. William-

son, 21 Fed. Rules Serv. 63 (S.D.N.Y. 1955 ).

Appellant suggests that such a factual inquiry would

show that Arizona receives far more than she gives. In the

welfare field, 80% of the state’s share of categorical aid is

paid by the federal government. 25 U.S.C. §639. General

assistance is furnished by the Bureau of Indian Affairs pur-

suant to 25 U.S.C. §13, Ruiz v. Morton, F.2d ——

(9th Cir. No. 25568, May 31, 1972), and by the Tribe it-

self. 13 N.T.C. Part 2.‘ In the field of education, the BIA

Provides most of the support for its boarding schools and for

‘Citations to N.T.C. refer to the Navajo Tribal Code (1969).

14

vocational education pursuant to 25 U.S.C. §§13, 309,

309a. The majority of support for public schools on the

Navajo Reservation comes from federal sources. 25 U.S.C.

§§252-54; 20 U.S.C. §§236-244, 631-644. Other support

comes from local taxation of real property interests located

on the Reservation. (See discussion above at p. 12). The

Tribe itself supports education on the Reservation. Tit. 10

N.T.C. Arizona provides support only to public schools on

the Reservation and only a minority of that support. And, of

course, the Reservation schools educate many non-Indian

children whose families pay Arizona taxes.

Most government services on the Reservation are pro-

vided by either the federal government or the Tribal govern-

ment. Cf., Warren Trading Post Co. v. Arizona Tax Com-

mission, supra, 380 U.S. 691 n. 17. In addition to the areas

named in the last paragraph, the federal government pays

almost all health services costs. 42 U.S.C. §§2001-2005f.

The rest of the public support is Tribal. Tit. 13 N.T.C. All

roads are fully federally financed. 23 U.S.C. §§201-203; 25

U.S.C. §318a. Development of water supplies and sanitation

systems is federally financed. 42 U.S.C. §2004a. Felony

prosecutions are in federal district courts by the United

States Attorney. 18 U.S.C. §1153.

All other courts serving Indians are supported directly by

the Navajo Tribe. Tit. 7 N.T.C. The Tribe maintains its

own police force. 17 N.T.C. ch. 9. Both courts and police

also serve some off-reservation Navajos (concurrently with

the state) who do pay state taxes. 7 N.T.C. §§ 133-134. The

Tribe pays its own governmental costs. Tit. 2 N.T.C. It

maintains a public housing program and engages in zoning

and land planning. 6 N.T.C. ch. 5, 9. It also provides a long

is

list of regulatory services normally provided by state and

local governments.®

The discussion in this section shows the great complexity

of the economic relationship between self-governing Indian

reservations and the states in which they lie. For the Nava-

jos, the complexity is tripled, because the Reservation is in

three different states. This complexity is one of the reasons

courts have always left adjustment of the relationship to the

plenary control of Congress. See Creek County v. Seber,

supra, as quoted above at p. 12. In Pub.L. 280, Con-

gress ‘has offered the states the Opportunity to take over

most governmental supervision of Indian reservations, but

only by also assuming the obligation of support now borne

by the federal government. Williams v, Lee, supra, 358 US.

at 223. As already stated, this obligation was one concern

of Congress in enacting Pub.L. 280.° Arizona is attempting

an end run around this obligation. It is Arizona, and not the

Navajos, which seeks something for nothing.

reg. of signs, billboards and advertising devices, 5 N.T.C. ch. 15; reg.

of slaughterhouses, restaurants, trading posts, trailer courts, dogs,

ials, contagious diseases, day care centers, nursing homes, and

midwives, 13 N.T.C. Part 1; highway and traffic reg., Tit. 14 N.T.C.;

*H.R.Rep. No. 848, 83d Cong., Ist Sess. ged (1953); 1953 U.S.

states wanted federal

momsptins governmental responsibilities in Indian

S.J. Res. 40 Before the Subcomm. on Constitutional Rights

“i wae Senate Comm. on the Judiciary, 89th Cong., Ist Sess. p. 4

1965).

16

Finally, appellee labels the Navajos a “privileged class.”

Ariz. Br. p. 40. This remark displays a woeful ignorance of

the economic and social situation of most reservation Indi-

ans. The tax base of the Reservation is a meager enough re-

source for the Tribe as it is, without Arizona invading it.

See Warren Trading Post Co. v. Arizona Tax Commission,

supra, 380 U.S. at 691.

3. The Buck Act.

Appellee argues that the Buck Act, 4 U.S.C. §§105-110,

“was never intended” to apply to Indian reservations. Ariz.

Br. p. 26. Later on that page this Court’s decision in Warren

Trading Post Co. v. Arizona Tax Commission, supra, is cited

in support of the argument. The reference is presumably to

380 US. at 691 n. 18. This footnote supports the assertion,

but it does so only in the alternative. See last sentence of the

footnote. The footnote in turn refers to a dictum in Your

Food Stores, Inc. v. Village of Espanola, 68 N.M. 327, 361

P.2d 950 cert. denied, 368 U.S. 915 (1961)". However, as

pointed out in appellant’s opening brief at p. 27, both War-

ren Trading Post and the New Mexico case dealt with taxa-

tion of non-Indians on Indian reservations, and neither in-

terpreted 4 U.S.C. §109. The New Mexico court interpreted

4 U.S.C. §110(e), defining the areas of application of the

Buck Act, as excluding Indian reservations. 68 N.M. at

334, 361 P.2d at 955-56. But if this were correct, why did

Congress bother to include the express Indian exemption in

4 U.S.C. §109? If reservations were to be exempted rather

than Indians, Congress would in all probability have placed

the express exemption as an exception to 4 U.S.C. §110(e).

TThe Buck Act tax ruling in that case is dictum—or at best an alter-

row ann ee ya naa nhaearpuner PBaomypene fr mena

Court’s principal ruling, that Espanola could not annex Indian reserva-

tion land, was sufficient to deny the Village any jurisdiction to levy

a tax.

17

The legislative history makes clear what happened. As

appellee points out, the Interior Department sought to have

Indian reservations excepted from the Act. Ariz. Br. p. 26.

But vigorous objection to that proposal, on the ground that

it would make Indian reservations tax havens for non-In-

dian businesses, led to adoption by Congress of 4 U.S.C.

§109 rather than the Interior proposal cited by appellee. See

discussion and queted material at Open. Br. p. 26. Thus the

Buck Act did intend to deal with taxing jurisdiction on In-

dian reservations, and it specifically exempted Indians from

state income tax.

This discussion points up the fallacy in another of appel-

lee’s arguments. At pp. 40-41, appellee suggests that Indian

reservations could become bases for a massive tax avoid-

ance scheme and for “ruinous competition” to off-reserva-

tion businesses. Not only does the argument ignore the use

tax, which is aimed at just such situations interstate, but it

implies that Indian tax exemptions can be claimed by non-

Indians using Inidan reservations. That very concern led to

the precise language of 4 U.S.C. $109 exempting Indians

only. See also Warren Trading Post Co. v. Arizona Tax

Commission, supra, 380 U.S. at.691-692:

Insofar as they are applied to this federally licensed In-

dian trader with respect to sales made to reservation

Indians on the reservation, these state laws imposing

taxes cannot stand. (emphasis added).

4. Jurisdiction Cases Relied on by A ppellee.

Appellee relies on New York ex rel. Ray v. Martin, 326

U.S. 496 (1946); Draper v. United States, 164 U.S. 240

(1896); and United States y. McBratney, 104 U.S. 621

(1882). Ariz. Br. pp. 12, 17. The inapplicability of those

decisions, which did not involve Indians, is adequately dealt

18

with at opening brief pp. 12-14. However, appellant wishes

to add to the authorities there Mull v. United States, 402

F.2d 571, 573 (9th Cir. 1968), cert. denied, 393 U.S.

1107 (1969), where the Ninth Circuit recognized the pecu-

liarity of those decisions.

Appellee also relies on Vermillion v. Spotted Elk, 85

N.W.2d 432 (N.D. 1957), where North Dakota upheld

state court jurisidction over a reservation tort involving In-

dians. However, that decision pre-dated Williams v. Lee,

supra, and it has been distinguished or repudiated by subse-

quent state court decisions. Sigana v. Bailey, 282 Minn.

367, 164 N.W.2d 866 (1969); Smith v. Temple, 82 S.D.

560, 152 N.W.2d 547 (1967); Valdez v. Johnson, 68 N.M.

476, 362 P.2d 1004 (1961). It is no longer the law in

North Dakota, having been legislatively overruled. In re

Whiteshield, 124 N.W. 2d 694 (N.D. 1963).

Appellee relies on Organized Village of Kake v. Egan,

369 U.S. 60 (1962). Because it dealt with Indians not on a

federal reservation, the decision has no application to reser-

vation issues. Donahue v. Justice Court, 15 Cal.App.3d

557, 563, 93 Cal. Rptr. 310, 314 (1971), cert. denied, 404

U.S. 990 (1971). The importance of the difference is shown

by its companion case, Metlakatla Indian Community v.

Egan, 369 U.S. 45 (1962), where reservation Indian fishing

rights were held to be under federal/ tribal authority even in

a state where Pub.L. 280 is applicable.*

» t disagrees with the statement in the Brief for Amicus Curiae,

Congress had delegated its plenary authority to the Seeretary of the

Interior. 369 U.S. at 53.)

19

5. Taxation Cases Relied on by Appellee.

Appellee relies on Graves v. New York ex rel. O'Keefe,

306 U.S. 466 (1939) and Sims v. United States, 359 U.S.

108 (1959). The former upheld state income taxes on fed-

eral employees and the latter upheld a federal levy on a

state government to enforce the federal income tax against

state employees. As pointed out in opening brief pp. 18-19,

Graves denied an attempt to claim a tax exemption based

on the source of the income. There was no question that the

state had jurisdiction over the taxpayer. Appellant here does

not claim an exemption based on the source of her income

but on the lack of state jurisdiction over her.

It should be noted that the Graves decision pre-dated the

enactment of the Buck Act. Thus even though Graves al-

lowed states to tax the incomes of federal employees, it was

still necessary for Congress to enact the Buck Act to allow

states to tax the income of anyone (federal. employee or

not) residing and working within a federal enclave. In fact,

one of the motives for the Buck Act was the inequality be-

tween two federal employees with identical jobs, one living

off a federal reservation and paying state taxes, the other

living on and exempt. (The example used was two Annapo-

lis professors.) Hearings on H.R. 6687 Before a Subcomm.

of the Senate Comm. on Finance, 76th Cong., 3d Sess.

(Apr. 23, 1940) at p. 15.

Sims v. United States, supra, is a further indication of the

error of the court below in its attempt to separate the tax

here as “personal” from the affaits of the Navajo Tribe. See

discussion at Open. Br. p. 19. As appellee apparently ad-

mits (at Ariz. Br. pp. 28-29), jurisdiction to tax appellant

would lead to attempts to sue the Navajo Tribe (where its

employees are concerned) to collect the tax.

20

Appellee points out that reservation Indians are subject

to the federal income tax. Ariz. Br. p. 29. However, federal

authority over reservation Indians is unquestioned. To rea-

son from that to state authority flies in the face of numerous

decisions of this Court. Such reasoning is attempted at ap-

pellee’s brief p. 30, but the citation following the argument

shows that it traces to the many cases in this Court ruling on

the taxability or not of inheritance of, or income from, In-

dian trust allotments and other trust property derived from

allotments. In the case of such property, tax exemption has

been claimed on the basis of the federal allotment statutes,

not on reservation situs, because many of the lucrative, min-

eral-rich allotments are located off Indian reservations in

Oklahoma. Two such decisions are relied on by appellee:

Oklahoma Tax Commission v. United States, 319 U.S. 598

(1943) and Leahy v. State Treasurer of Oklahoma, 297 U.S.

420 (1936). The history of these cases and the possibility

that the two cases just cited have been implicitly limited or

overruled by Squire v. Capoeman, 351 U.S. 1 (1956), are

discussed at length in the Jurisdictional Statement, pp. 14-

15, the Briefs for Amici Curiae, National Congress of Amer-

ican Indians and Estate of Rose Mason, Deceased. It is ap-

pellant’s position that these cases, depending solely on con-

struction of the specific allotment statutes, have no relevance

to the instant case. (Many of these same allotment statutes

are cited by appellee’s brief at p. 11 n. 1.)

Appellee cites two New York state cases allowing state

income taxation of reservation Indians. Ariz. Br. p. 32.

However, New York was ceded jurisdiction over reservation

Indians by 25 U.S.C. §§232-33, statutes similar in effect to

Pub.L. 280 discussed above.

Appellee cites Silas Mason Co. v. Tax Commission, 302

U.S. 186 (1937) and Surplus Trading Co. v. Cook, 281

U.S. 647 (1930). Both cases dealt only with state taxation

21

of non-Indians doing business on Indian reservations. No

issue of that sort is present here. Appellee also argues that

this Court’s pre-emption ground of decision in Warren Trad-

ing Post Co. v. Arizona Tax Commission, supra, by implica-

tion constitutes a recognition by the Court that Arizona would

otherwise have jurisdiction to tax. Not only is that fallacious

reasoning, but Warren again dealt with taxation of a non-In-

dian company ‘doing business on an Indian reservation.

Also, this Court expressly reserved the Constitutional ques-

tion. 380 U.S. at 686.

Respectfully submitted,

DONALD JUNEAU

RICHARD B. CoL ins, Jr.

ROBERT C. ERICSON

MICHAEL R. SERWATKA

Post Office Box 306

Window Rock, Arizona 86515

THEODORE R. MITCHELL

Post Office Box 826

Saipan, Mariana Islands 96950

Dated: September 14, 1972

.

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McCLANAHAN v. ARIZONA STATE TAX

COMMISSION

APPEAL FROM THE COURT OF APPEALS OF ARIZONA,

. DIVISION ONE

No. 71-834. Argued December 12, 1972—Decided March 27, 1973

clear from the relevant treaty with the Navajos and federal

statutes. Pp. 4-18.

14 Ariz. App. 452,484 P. 2d 221, reversed.

MaksHauu, J., delivered the opinion for a unanimous Court.

2 McCLANAHAN »v. ARIZONA STATE TAX COMM’N

14 Ariz. App. 452, 484 P. 2d 222 (1971). We noted

able jurisdiction, 406 U. 8. 916 (1972), and now

reverse. We hold that by imposing the tax in ques-

_ tion on this appellant, the State has interfeted with mat-

ters which the relevant treaty and statutes leave to the

exclusive province of the Federal Government and the

Indians themselves. The tax is therefore unlawful as

applied to reservation Indians with income derived wholly

. from reservation sources.

I

Appellant is an enrolled member of the Navajo tribe

who lives on that portion of the Navajo reservation lo-

cated within the State of Arizona. Her complaint al-

leges that all her income earned during 1967 was derived

from within the Navajo reservation. Pursuant to Ariz.

Rev. Stat. § 43-188 (f), $16.20 were withheld from her

wages for that year to cover her state income tax lia-

bility.2. At the conclusion of the tax year, appellant filed

a protest against the collection of any taxes on her in-

come and a claim for a refund of the entire amount

withheld from her wages. When no action was taken

on her claim, she instituted this action in Arizona Su-

perior Court on behalf .of herself and those similarly

situated, demanding a réturn of the money withheld and

a declaration that the state tax was unlawful as applied

to reservation Indians,

® The liability was created by Ariz. Rev. Stat. § 43-102 (a) which,

in relevant part, provides: “There shall be levied, collected, and paid

for each taxable year upon the entire net income of every estate or

trust taxable upon this title and of every resident of this state and

upon the entire net income of every nonresident which is derived

from sources within this state, taxes in the following amounts and

at the following rates upon the amount of net income in excess of

credits against net income provided in §§ 43-127 and 43-128.” Ap-

pellant conceded below that she was a “resident” within the meaning

of the statute, and that question, which in any event poses an issue

of state law, is not now before us.

McCLANAHAN v. ARIZONA STATE TAX COMM’N 3

The trial court dismissed the action for failure to

state ‘a claim, and the Arizona Court of Appeals affirmed.

Citing this Court’s decision in Williams v. Lee, 358 U. S.

217 (1959), the Court of Appeals held that the test “is

not whether the Arizona state income tax infringes on

plaintiff's rights as an individual Navajo Indian, but

whether such a tax infringes on the rights of the Navajo

tribe of Indians to be self-governing.” 14 Ariz. App., at

454, 484 P. 2d,-at 223. The Court thus distinguished

cases dealing with state taxes on Indian real property on

the ground that these taxes, unlike the personal income

tax, infringed tribal autonomy,

The Court then pointed to cases holding that state

employees. could be required to pay federal income tax

and that the State had a concomitant right to tax fed-

eral employees. See Helvering v. Gerhardt, 304 U. S.

405 (1938); Graves v. New York ex rel. O’Keefe, 306

U. S. 466 (1939). Reasoning by analogy from these

cases, the Court argued that Arizona’s income tax on in-

dividual Navajo Indians did not “[cause] an impairment

_ Of the right of the Navajo tribe to be self-governing.”

_ 14 Ariz. App., at 455, 484 P. 2d, at 224.

Nor did the Court find anything in the Arizona En-

- abling Act, 36 Stat. 557, to prevent the State from

_ taxing reservation Indians. That Act, the relevant lan-

_ guage of which is duplicated in the Arizona Constitution,

_ disclaims state title over Indian lands and requires that

such lands shall remain “under the absolute jurisdiction

_ and control of the Congress of the United States.” 36

Stat. 569. But the Arizona court, relying on this Court’s

decision in Organized Village of Kake v. Egan, 369 U. S.

60 (1962), held that the Enabling Act nonetheless per-

- mitted concurrent state jurisdictién so long as tribal self-

_ government remained intact. Since an individual income

‘tax did not interfere with tribal self-government, it fol-

Towed that appellant had failed to state a claim. The

Bie, bar

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4 McCLANAHAN v, ARIZONA STATE TAX COMM’N

Arizona Supreme Court denied a petition for review of

this decision, and the case came here on appeal. See 28

U. 8; C. § 1257 (2),

45 II

It may be helpful to begin our discussion of the law

applicable to this complex area with a brief statement of

what this case does not involve. We are not here deal-

ing with Indians who have left or never inhabited reser-

vations set aside for their exclusive. use or who do not

possess the usual accoutrements of tribal self-govern-

ment. See, e. g., Organized Village of Kake v. Egan,

369 U. 8. 60 (1962); Metlakatla Indian Community v.

Egan, 369 U.S. 45 (1962); Oklahoma Tax Commission v.

United States, 319 U.S. 598 (1943). Nor are we con-

cerned with exertions of state sovereignty over non-

Indians who undertake activity on Indian reservations.

See, é. g., Thomas v. Gay, 169 U.S. 264 (1898); Utah

Northern R. Co. v. Fisher, 116 U. S. 28 (1885). Cf.

Surplus Trading Co. v. Cook, 281 U. 8. 647, 651 (1930).

Nor, finally, is this a case where the State seeks to reach

activity undertaken by reservation Indians on nonreser-

vation lands. See, e. g., The Mescalaro Apache Tribe v.

Jones, post. Rather, this case involves the narrow ques-

tion whether the State may tax a reservation Indian for

income earned exclusively on the. reservation.

The principles governing the resolution of this ques-

tion are not new. On the contrary, “[t]he policy of

leaving Indians free from state jurisdiction and control

pan 2 prenge groan ug basset Rice v. Olson,

this Court 140. years ago when Chief Justice

Marshall held that Indian nations were “distinct po-

litical communities, having territorial boundaries, within

which their au authority is exclusive, and having a right to

all-the lands within thoee boundaries, which is not only

McCLANAHAN v. ARIZONA STATE TAX COMM'N 5

acknowledged but guarantied by the United States.”

Worcester v. Georgi, » 31 U.S. (6 Pet.) 515, 557 (1832).

It followed from this concept of Indian reservations as

separate, although dependent nations, that state law could

have no role to play within the reservation boundaries.

“The Cherokee nation . . . is

cupying its own territory,

described, in which the laws

and which the citizens of G

but with the assent of the

the political department of the government as existing

then they are a ‘people distinct

U. 8. 711 (1946); United

United States y. ’

6 McCLANAHAN v. ARIZONA. STATE TAX COMM’N

It is true, as the State asserts, that some of the later

Indian tax cases turn not on the Indian sovereignty doc-

trine; but on whether or not the State can be said to

have imposed a forbidden tax on a federal instrumen-

tality. See, eg., Leahy v. State Treasurer of Oklahoma,

297 U. 8. 420 (1936); United States v.. Rickert, 188 U.S.

432 (1903). To the extent that the tax exemption rests

on federal immunity from state taxation, it may well be

inapplicable in a case such as this involving an individual

income tax.’ But it would vastly oversimplify the prob-

lem to say that nothing remains of the notion that reser-

vation Indians are a separate people to whom state ju-

risdiction, and therefore state tax legislation, may not

extend. ‘Thus, only a few years ago, this Court struck

down ‘Arizona's attempt to tax the proceeds of a trading

company doing business within the confines of the very

reservation involved in this case. See Warren Trading

Post Co. v. Arizona Taz Commission, 380 U. S. 685

(1965). The tax in- no. way interfered with federal

land or with the National Government’s proprietary in-

terests. But it was invalidated nonetheless because “from

the very first days of our Government, the Federal Gov-

ernment had been permitting the Indians largely to

govern themselves, free from state interference.” 380

U. S., at 686-687... As & leading text on Indian problems

s'The federal instrumentality doctrine does not prohibit state

taxation of individuals deriving their income from federal sources.

See Graves v. New York ex rel. O’Keefe, 306 U. 8. 466 (1939). Cf.

Leahy v: State Treasurer of Oklahoma, 297 U. 8. 420 (1936). The

doctrine~has;:im any event, been sharply limited with respect to

Indians. See Oklahoma Taz Commission v. United States, 319 U.S.

508 (1943),

* The Court below distinguished Warren Trading Post as limited to

eases where the Federal Government has preempted state law by

regulating Indian traders in a manner inconsistent with state taxa-

tion, See 14 Aris. App., at 455, 484 P. 2d, at.224. But although

the Court was, no doubt, influenced by the federal licensing require-

wor a gineidldce Ua eons Lay SOP Eee

McCLANAHAN ». ARIZONA STATE TAX COMMN 7

summarizes the relevant law “State laws generally are

not applicable to tribal Indians on an Indian reservation

except where Congress has expressly provided that State

laws shall apply. It follows that Indians and Indian

property on an Indian reservation are not subject to State

taxation except by virtue of express authority conferred

upon the State by act of Congress.” United States De-

partment of Interior, Federal Indian Law 845 (1958)

{hereinafter citéd as Federal Indian Law].

This is not to say that the Indian sovereignty doctrine,

with its concomitant jurisdictional limit on the reach of

state law, has remained static during the 140 years since

Worcester was decided. Not surprisingly, the doctrine

has undergone considerable evolution in response to

changed circumstances. As noted above, the doctrine

has not been rigidly applied in cases where Indians have

left the reseryation and become assimilated into the

general community. See, e. g., Oklahoma Tar Commis-

“sion v. United States, 319 U. S. 598 (1943). Similarly,

notions of Indian sovereignty have been adjusted to take

account of the State’s legitimate interests in regulating

the affairs of non-Indians. See, e. g., New York ex rel.

Ray v. Martin, 326 U.S. 496 (1946) ; Draper v. United

States, 164 U. S. 240 (1896); Utah & Northern R. v.

Fisher, 116 U. 8. 28 (1885). This line of cases was

summarized in this Court’s landmark decision in Williams

v. Lee, 358 U. S. 217 (1959): “Over the years this Court

has modified [the Worcester principle] in cases where

ments, the reasoning of Warren Trading Post cannot be so restricted.

The Court invalidated Arizona’s tax in part because “Congress

has, since the creation of the Navajo Reservation nearly a century

ago, left the Indians on it largely free to run the reservation and

its affairs without state control, a: policy which has automatically

Telieved Arizona of all burdens for carrying on those same respon-

sibilities.” Warren Trading Post Co. v. Arizona Taz Commission,

supra, at 690.

8 MéCLANAHAN ». ARIZONA STATE TAX COMM'N

the right of Indians would not be jeopardized :... Thus,

suits by Indians against’ outsiders in state courts have

been. sanctioned... }.And-state courts have been al-

lowed to: try non-Indians who committed crimes against

each other: on:4: reservation. ..... But. if the erime was

by or: againat ani Indian; tribal juriediction or that ex-

pressly conferred on‘ other courts by Congress has re-

mained exclusive....:. + ‘Essentially; absent governing

Acts: of Congress,: the: question: has always been whether

the’ state.,action : infringes’ onthe right«of reservation

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

260 Tiia th IRS Ciectats omitted)...

>: Finally; the: trend: has: been away: from the idea of in-

iennent Sladen sovereignty asa bar to state jurisdiction

and: toward! reliance-on federal preemption.’ See The

power.:. Compare,.¢.: gs) United States'v: Kagama, 118

T S95-(1880), Qake RMR HR on ctateaely 400

Ue 8.428 A9TI)A ee

TT ity

"7 The. aporer, of fodersk wotharty-over Indian matter: has been

te sr pe. etn, but it is now generally recognized

that the power det for com-

merce with and for See U. 8. Const.

Sk put AE eee ‘See also Williams v. Lee, 358

U. 8. 217, 210 n. 4 (1950); Perrin v. ee

482. (1914) ;. Federal Indian Law 3.

"The extent of federal preemption and residual Indian sovereignty

McCLANAHAN v. ARIZONA STATE TAX COMM’N

, a8 it was in the last cen-

“{t]he relation of the Indian tribes living

of the United States [is] an anoma-

rs lous one and of a complex character.

RE PIM RRNA iether

Of the Union or of the State with

ee

<

4

x

“se

er

:

PZ

=)

=

+

>

full attributes of sovereignty,

people, with the power of

social relations, and thus far not brought under the laws

in whose limits they

_ "See 8 U.S.C. § 1401 (a) (2).

1 See, e. 9. H 7 “

10 MéCLANAHAN v: ARIZONA STATE 'TAX COMM’N

reside. PASS AP Spc sai nie moe 8.375; 381-

882:( 1886). i weiiinite!

Ota GONbeiece te els odds sagaltct

Ea heel Whe 6 sete te vind! with

this ‘tradition ‘of ‘sdvereignty in mind; we’ think it clear

that “Arizona has éxeseded’ ite lawful ‘authority by at-

tempting to tak appellant. ° ‘The beginning of our analysis

must be with’ the’ treaty which the ‘United States Gov-

ernment ‘entered’ with the Navajo nation in 1868. The

agreement provided; in relevant part, that a prescribed

reservation! would be set aside “for the use and oecupa-

tion ofthe Navajo) tribe of Indians” and that..“no per-

sons, except; those: herein. authorized todo, and except

a0 soldiers, agents, and employes. of the gov-

scligag vi hua frsbenaipaatenega

jons_in discharge of duties imposed by

he order President, shall ever be per-

as: over, ‘set upon, or reside in, the terri-

J in this article.” 15 Stat. 667, 668 (1868).

ere xp! citly states that the Navajo

“free fro | state law or exempt fr state

‘the dotument ‘is not to be read ‘as an ordi-

masy onteade wioed upon by paxtis,desling, of arms

length | with 9g cs ees Positions. We have had

document was signed the. Navajos ‘were an exiled people,

forced:by the United States'to live ‘etowded! together on

Se Eee a eee 8 feigern Now

8 Sepa Pe. Beorseen Gey, bad ce

pied before the coming of the white man. In return for

‘promise.to keep peace, this: treaty ‘set. apart’ for

‘their permanent home’s portion of what had been their

(950)20 Moe pte en ay a Rae

y,

pon its protection and

good faith.” Carpenter vy. Shaw, 280 U. §. 363, 367

(1930). When this canon of construction is taken to-

gether with the tradition of Indian independence de-

scribed above, it cannot be doubted that the reservation

federal ‘supervision. It is thus unsurprising that this

Court has interpreted the Navajo treaty to preclude ex-

(1965); Williams y. Lee, supra, at 221-222 (1959).

Moreover, since the signing of the Navajo treaty, Con-

gress has consistently acted upon the assumption that

the States lacked jurisdiction over Navajos living on the

* “Congress has acted consistently upon the assumption that

vncesnntee have no power to regulate the affairs of Indians go

12 MoCLANAHAN v. ARIZONA STATE TAX COMM’N

the title of.such Indian or Indian tribes shall have been

extinguished. the same shall be and remain subject to

the disposition and under the absolute jurisdiction and

control of the United States.” Arizona Enabling Act, 36

Stat. 557, 569 (1910). . .

held by any Indian.” Jd., at 570 (emphasis added). It

is true, of course, that exemptions from tax laws should,

as & general rule, be clearly expressed. But we have in

restrictive meaning.“

Indeed, Congress’ intent to maintain the tax exempt

status of reservation Indians is clear in light

** This language is duplicated in Arizona’s own constitution. See

McCLANAHAN ». ARIZONA STATE TAX COMM’N 13

provides. that “Nothing in sections 105 and 106 of this

title shall be deemed to authorize the levy or collection of

any tax on or from any Indian not otherwise taxed.” To

be sure, the language of the statute itself does not make

clear whether the reference to “any Indian not other-

wise taxed” was intended to apply to reservation Indians

14 MoCLANAHAN v. ARIZONA STATE TAX COMM’N

Indians, and 25 U. 8. C. § 1824 confers upon the States

the right to disregard enabling acts which limit their

authority over such Indians. But the Act expressly

provides ‘that the State must act “with the consent of

the tribe oceupying the particular Indian country,” 25

U. 8. C. $1822 (a), and must “appropriately amend

[its} constitution or statutes.” 25 U.S.C. § 1324. Once

again, the Act cannot be read as expressly conferring tax

immunity upon Indians. But we cannot believe that

Congress ‘would have required the consent of the Indians

affected and the amendment of those state constitutions

which prohibit the assumption of jurisdiction if the States

were: free to accomplish the same goal unilaterally by

simple legislative enactment. See Kennerly v. District

Court, 400 U. S. 423 (1971). ;

Arizona, of course, has neither amended its constitu-

tion to permit taxation of the Navajos nor secured the

* As passed in 1953, Pub. L. 280, 67 Stat. 588, delegated civil

assume jurisdiction over Indian reservations without the consent of

the tribe affected. See 67 Stat. 590. However, in 1968, Congress

to impose this tax had it followed the procedures outlined in 25

U. S.C, $1822 et-eeg. Cf. 25. Us 8. C. § 1822 (b). That question

is not presently before us, and we express no views on it.

McCLANAHAN v. ARIZONA STATE TAX COMM 15

consent of the Indians affected. Indeed, a startling

aspect of this case is that appellee apparently concedes

that, in the absence of compliance with 25 U. S. C.

§ 1322 (a), the Arizona courts can exercise neither civil

nor criminal jurisdiction over reservation Indians. See

appellee’s brief, at 24-26." But the appellee nowhere

explains how, without such jurisdiction, the State’s tax

may either be imposed or collected. Cf. Transcript of

oral argument, at 38-39. Unless the State is willing to

defend the position that it may constitutionally admin-

ister its tax system altogther without judicial interven-

tiop, cf. Ward v. Board of County Commissioners, 253

U. S. 17 (1920), the admitted absence of either civil or

criminal jurisdiction would seem to dispose of the case.

IV

When Arizona’s contentions are measured against these

statutory imperatives, they are simply untenable. The

State relies primarily upon language in Williams v. Lee

stating that the test for determining the validity of state

action is “whether [it] infringed on the*right of reserva-

tion Indians to make their own laws and be ruled by

them.” 358 U.S., at 220. Since Arizona has attempted

to tax individual Indians and not the tribe or reserva-

tion as such, it argues that it has not infringed on Indian

rights of self-government.

In fact, we are far from convinced that when a State

imposes taxes upon reservation members without their

consent, its action can be reconciled with tribal self-

determination. But even if the State’s premise is ac-

cepted, we reject the suggestion that the Williams test

was meant to apply in this situation. It must be remem-

%#In light of our prior cases, appellee has no choice but to make

this concession. See, e. g., Kennerly v. District Court, supra; United

States v. Kasama, 118 U. 8. 375 (1886).

—_

16 McCLANAHAN ». ARIZONA STATE TAX COMM’N

bered that cases applying the Williams test have dealt

principally with situations involving non-Indians. See

also Organized ‘Village: of Kake' v. Egan; 369 U. S. 60,

7576 (1962).°In'‘these situations, both the Tribe and

the State could fairly claim an interest in asserting their

respective jurisdictions. “The Williams test was designed

to resolve this conflict by providing that the State could

protect its interest up to the point where tribal self-

government would be affected.

The problem pdsed by this case is completely different.

Since appellant is ‘an Indian and since her income is

derived wholly “from reservation sources, her activity is

totally within the sphere which the relevant treaties and

statutes leave for the Federal Government and for the

Indians themselves. Appell¢e cites us to no cases hold-

ing that this legislation may be ignored simply because

tribal self-government has not been infringed.” On the

contrary, this Court expressly rejected such a position

only two years ago." In Kennerly v. District Court,

400 U. 8. 423 (1971), the Blackfeet Indian Tribe had

voted to make state jurisdiction concurrent within the

reservation. Although the State had not complied with

the procedural prerequisites for the assumption of juris-

diction, it argued that it was nonetheless entitled to extend

its laws to the reservation since such action was obviously

consistent with the wishes of the Tribe and, therefore,

with tribal self-government. But we held that the Wil-

%° Organized Village of Kake v. Egan, 369 U. 8. 60 (1962), is not

such a case. See n. 15, supra.

“4 Indeed, the position was expressly rejected in Williams, iteelf,

upon which appellee so heavily relies. Williams held that “absent

the right of reservation Indians to _

on

pekdak ot ee eae hei ke 358 U..8., at 220

McCLANAHAN »v. ARIZONA STATE TAX COMM'N 17

liams rule was inapplicable and that “(t]he unilateral ac-

tion of the Tribal Council was insufficient to vest Montana

with jurisdiction.” 400 U.S., at 427. If Montana may

not assume jurisdiction over the Blackfeet by simple

legislation even when the Tribe itself agrees to be bound

by state law, it surely follows that Arizona may not

assume such jurisdiction in the absence of tribal

agreement. .

Nor is the State’s attempted distinction between taxes

on land and on income availing. Indeed, it is somewhat

surprising that the State adheres to this distinction in

light of our decision in Warren Trading Post Co. v. Ari-

zona Tax Commission, supra, wherein we invalidated an

income tax which Arizona had attempted to impose

within the Navajo Reservation. However relevant the

land-income distinction may be in other contexts, it is

plainly irrelevant when, as here, the tax is resisted be-

cause the State is totally lacking in jurisdiction over both

the people and the lands it seeks to tax. In such a situ-

ation, the State has no more jurisdiction to reach income

generated on reservation lands than to tax the land itself.

Finally, we cannot accept the notion that it is irrelevant

“whether the . . . state income i infringes on [appel-

lant’s] rights as an individual avajo Indian,” as the

State Court of Appeals maintained. McClanahan v.

State Tax Commission, 14 Ariz. App. 452, 454, 484

P. 2d 221, 223 (1970). To be sure, when Congress

has legislated on Indian matters, it has, most often, dealt

_ With the tribes as collective entities. But those entities

are, after all, composed of individual Indians, and the leg-

islation confers individual rights. This Court has there-

fore held that “the question has always been whether

the state action infringed on the right of reservation

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

_ Williams v. Lee, supra, at 220 (emphasis added). In

18 MeCLANAHAN v. ARIZONA STATE TAX COMM’N

this case, appellant’s rights as.a reservation Indian were

violated when the state collected a tax from her which it

had no jurisdiction to impose. Accordingly, the judg-

ment of the-court below must be

aC oe a Tem

EE AHENIIR A eS ira he