Opinion
No. 46964.
May 5, 1947.
Huston Thompson, of Washington, D.C. (Oscar P. Mast, of Washington, D.C., on the brief), for plaintiff.
John W. Hussey, of Washington, D.C., and Douglas W. McGregor, Asst. Atty. Gen. (Robert N. Anderson and Fred K. Dyar, both of Washington, D.C., on the brief), for defendant.
Before WHALEY, Chief Justice, and LITTLETON, MADDEN, JONES, and WHITAKER, Judges.
Action by A.M. Landman, Superintendent of the five civilized tribes, for the estate of Punskee Field, deceased creek indian against the United States to recover an estate tax assessed and collected by defendant.
Judgment for plaintiff in accordance with opinion.
The Superintendent of the Five Civilized Tribes of Indians sues on behalf of the estate of Punskee Field, deceased, a restricted full-blood Creek Indian, to recover $6,847.18 estate tax assessed and collected by defendant. The estate of Field consisted, at the date of his death on June 5, 1940, of his allotment of 160 acres of land and the oil and gas royalty interest therein, and, also, certain cash and U.S. Treasury bonds and real estate which had been purchased in part with the decedent's direct income in the form of royalties from oil and gas produced from the 160 acres of allotted land. Plaintiff claims that the 160 acres of allotted land including the royalty interest therein, and the direct income in the form of oil and gas royalties which had been derived from such allotted land up to April 26, 1931, are exempt from the Federal estate tax.
Special Findings of Fact
1. Plaintiff is a citizen of the United States and a resident of Muskogee, Oklahoma, and is the duly appointed and acting Superintendent of the Five Civilized Tribes of Indians, and has under his supervision and jurisdiction the affairs of the estate of the decedent herein, including estate tax matters. As such Superintendent, he is the representative of the Secretary of the Interior, who, by law, is the trustee of the property of restricted Indians of the Five Civilized Tribes.
2. Decedent, who died on June 5, 1940, a citizen of the United States and a resident of Henryetta, Oklahoma, was a full-blood Creek Indian, being enrolled opposite Creek Roll No. 4564.
3. October 3, 1941, plaintiff filed an estate tax return for decedent's estate which disclosed a Federal estate tax liability of $7,005.57.
In arriving at said tax liability, there was included in the gross estate $1,424 representing the value of 160 acres of land allotted to decedent, plus $4,500 representing his oil and gas royalty interest therein, totaling $5,924; $3,158 representing the value of 80 acres of purchased land and $2,500 representing the value of a purchased house and lot, totaling $5,658; United States Treasury bonds of a value of $104,937.50 and accrued interest thereon of $638.89, totaling $105,576.39; cash of $7,172.46 and accrued interest thereon of $25.49, totaling $7,197.95; Travel Bureau checks in the amount of $250; and other miscellaneous property consisting of livestock and farm equipment in the amount of $315.
4. Said estate tax of $7,005.57, plus interest thereon of $13.76, totaling $7,019.33, was paid to the collector of internal revenue for the District of Oklahoma on November 24, 1941.
5. February 18, 1942, D.S. Bliss, Deputy Commissioner of Internal Revenue, advised plaintiff that an examination of the estate tax return and other data on file pertaining to decedent's estate disclosed no deficiency in the Federal estate tax.
6. November 15, 1944, plaintiff filed a claim for refund in the amount of $7,019.33. The claim for refund reads in part as follows:
"Deponent claims (1) that the decedent was a restricted Creek Indian, (2) that by virtue of sundry acts of Congress, more particularly the acts of May 27, 1908 ( 35 Stat. 312); May 10, 1928 ( 45 Stat. 495) and January 27, 1933 ( 47 Stat. 777), all of the restricted property, real and personal in which the deceased had any interest at the time of his death was held in trust or under the supervision of the United States; that upon his death all of such property continued to be held in trust or under the supervision of the United States for the benefit of his heirs or devisees, and that during the period of trust or supervision all such property is immune from taxation under the Federal revenue laws, (3) that decedent's restricted real estate, United States Treasury bonds purchased with restricted funds and deposited in the Treasury of the United States for safekeeping, restricted funds on deposit with the Treasurer of the United States to his credit on the books of the Five Tribes Agency, and personal property including automobile, household goods purchased on restricted form of bill of sale form no part of the gross estate within the meaning and purpose of the Federal revenue acts."
7. April 21, 1945, the Commissioner of Internal Revenue issued a Certificate of Overassessment allowing a refund of Federal estate taxes in the amount of $172.15 on account of credit for inheritance or estate tax paid to the State of Oklahoma.
The refund of $172.15 was arrived at by allowing the full credit claimed for inheritance or estate tax of $3,593.19. Due to said credit for inheritance or estate tax, the net tax liability of decedent's estate was reduced to $6,847.18.
The Certificate of Overassessment allowing the refund reads in part as follows:
"The estate's contentions as set forth in clauses 2 and 3 of the claim have been considered. However, it does not appear that the issues raised in the instant case differ materially from those in the case of Jeanetta Burgess, nee Tiger, Deceased Creek, Roll No. 5069 v. Commissioner, decided by the United States Board of Tax Appeals (now The Tax Court of the United States) on October 15, 1940, 42 B.T.A. 958, affirmed by the Circuit Court of Appeals for the Tenth Circuit, on November 11, 1941, certiorari denied, 123 F.2d 787.
"Accordingly, to the extent not herein allowed, the claim for refund is rejected."
8. June 4, 1945, the Commissioner of Internal Revenue advised plaintiff by letter of that date of the disallowance of plaintiff's claim for refund in the amount of $7,019.33 to the extent not previously allowed.
9. Decedent at the time of his death was possessed of the following properties:
"(a) One hundred sixty (160) acres of land in Okfuskee County, Oklahoma, which had been allotted to him under the provisions of the Act of Congress of March 1, 1901 ( 31 Stat. 861), as amended by the Act of Congress of June 30, 1902 ( 32 Stat. 500), ratified by the Creek Nation on May 25, 1901, which said lands are described as East Half (E½) of the Northeast Quarter (NE¼), and the Southwest Quarter (SW¼) of the Northeast Quarter (NE¼) of Section 24, Township 11 North, Range 11 East, containing 120 acres, the same being decedent's surplus lands, and Northwest Quarter (NW¼) of the Northeast Quarter (NE¼) of Section 24, Township 11 North, Range 11 East, containing 40 acres, the same being decedent's homestead.
"(b) House and lot in Henryetta, Oklahoma, purchased for $8,500.00 on January 9, 1924, out of restricted funds of decedent, described as Lot 1, Block 28, Keys 2nd Edition to Henryetta, Oklahoma;
"(c) United States Treasury bonds of a value of $104,937.50 purchased with restricted funds and deposited with the Treasury of the United States for safekeeping and accrued interest thereon of $638.89;
(d) Cash of $7,172.46 deposited with the Treasurer of the United States to the credit of the decedent on the books of the Five Tribes Agency and accrued interest thereon of $25.49;
"(e) Travel Bureau checks of a value of $250.00;
"(f) Other miscellaneous property consisting of livestock and farm equipment.
"Said cash and United States Treasury bonds were fully restricted and could not be used, pledged or disposed of without the approval of the Secretary of the Interior."
10. All of said allotted lands at the time of decedent's death were fully restricted and could not be sold, leased or otherwise encumbered, without approval of the Secretary of the Interior, under the Act of Congress of April 26, 1906, 34 Stat. 137, ratified and approved by the Creek Tribe on October 2 and 3, 1907, and by the President of the United States on September 17, 1907, the Act of May 27, 1908 ( 35 Stat. 312), and the Act of May 10, 1928 ( 45 Stat. 495). The certificate of exemption from taxation of said allotted lands, issued under the provisions of the Act of Congress of May 10, 1928 ( 45 Stat. 495), reads as follows:
"Title No. 46146 Filed April 16, 1930 at 10 A.M. Page 178 Book B-178 at page 178
Received Chief of Indian Affairs
Dec. 12, 1929 60086
CERTIFICATE 254 DESIGNATING LANDS EXEMPT FROM TAXATION Five Civilized Tribes
Okmulgee, Okla., June 3rd, 1929.
Pursuant to Section 4 of the Act of Congress of May 10, 1928 (Public No. 360, 70th Congress [ 45 Stat. 495]), the following described restricted Indian lands belonging to Punskee Field, Henryetta, Oklahoma, a full blood citizen of the Creek Nation, Roll No. 4564, are hereby selected and designated as tax exempt as long as the title thereto remains in the said Punskee Field, or in any full-blood Indian heir or devisee of said lands; such tax exemption, in no event, however, to extend beyond April 26, 1956. Subdivision:
Sec. Twp. Range Area County NE 4 24 11 N 11 E 160 Okfuskee PUNSKEE FIELD.
DEPARTMENT OF THE INTERIOR Washington, D.C.
Jan. 14, 1930.Approved: JOS. M. DIXON, First Assistant Secretary.
To be signed by the Indian, or by the Superintendent if the Indian is a minor, incompetent adult, or where the Indian fails to designate.
8WL-17 5-670
Filed for record on the 25th day of June 1931, at 9 o'clock A.M., and recorded in Book 19, page 254.
A.M. LANDMAN, Supt. for the Five Civilized Tribes. By GERTRUDE HOOTON.
11. The house and lot in Henryetta, Oklahoma, at the time of decedent's death were fully restricted and could not be sold, leased or otherwise encumbered without approval of the Secretary of the Interior.
12. January 24, 1919, an oil and gas mining lease was entered into by decedent, covering all of said 160 acres of land allotted to decedent, as aforesaid, which said lease was approved by the Secretary of the Interior on March 25, 1919. Production was first had under said lease in 1922, the lease is still producing in paying quantities, and the royalties therefrom, under the provisions of the lease, are paid to the Superintendent of the Five Civilized Tribes.
13. From the date of original production in 1922 under said oil and gas mining lease on decedent's allotment to June 5, 1940, the date of decedent's death, there were paid into the Five Tribes Agency for decedent's account oil and gas royalties in the total sum of $590,204.60, of which amount $566,339.11 accrued from the date of original production to April 26, 1931, and $23,865.49 from April 27, 1931 to June 5, 1940. During this period there was also credited to decedent's account interest in the total sum of $128,170.19, of which $83,010.56 accrued prior to April 26, 1931, and $45,159.63 from April 27, 1931 to June 5, 1940; rentals in the total sum of $1,660 and income from lease cancellation of $1.00, both of which latter amounts accrued prior to April 26, 1931. Adding these total sums together, there is an indicated income of $720,035.79.
Of the moneys received, amounting to $720,035.79, there was disbursed during this period to decedent, or for his benefit, a total of $712,613.23, of which amount $388,896.19 represent disbursements made for the period from date of original production to April 26, 1931, and $323,717.04 from April 27, 1931 to June 5, 1940. Included in the total disbursements of $323,717.04 for the period from April 27, 1931 to June 5, 1940, was $99,784.46 for United States Treasury bonds purchased on October 13, 1935, the value of said bonds being included in decedent's gross estate as aforesaid.
14. The income flowing from decedent's restricted, allotted lands was credited to his account with the Superintendent of the Five Civilized Tribes and disbursed under the supervision of the Secretary of the Interior. Such income was paid to the Superintendent and deposited with either the Treasurer of the United States or individual banks. The funds placed with the Treasurer of the United States did not bear interest. Funds deposited in banks did bear interest. No individual Indian's funds were directly placed with banks at interest. Funds from the general balance were placed with banks at interest, and when interest was received semiannually the amount received was equitably divided and credited to the accounts of all restricted Indians at the Agency in proportion to their cash balance on the interest bearing dates. With the decline in interest rates over the past decade, almost all of the funds have been withdrawn from banks and are either held by the Treasurer of the United States or used to purchase Government bonds, which, in turn, are held by the Treasurer. The bonds are ordinarily purchased in bulk and interest payments disbursed to the credit of the individual Indians in proportion to the amounts of their money used in the purchase. Decedent had the use of such funds from his account with the Superintendent of the Five Civilized Tribes as were authorized by the Secretary of the Interior to be paid to him, or were expended by the Superintendent of the Five Civilized Tribes, under departmental supervision, in the purchase of property for him. Title to personal property other than clothing, etc., was taken on a restricted bill of sale in the name of the United States for the use and benefit of the decedent. All investment problems concerning the decedent's restricted funds were handled by the Superintendent of the Five Civilized Tribes under departmental supervision, without approval by decedent.
15. Decedent died intestate. He left surviving, his wife, Louisa Watson, and two daughters, Lucille and Juanita, all full-blooded Creek Indians, who inherited his estate in equal shares.
16. All of the restricted funds and bonds belonging to the decedent at the time of his death, except such amounts thereof as were disbursed under departmental supervision for the support and maintenance of the decedent, his wife and two daughters, were then and have been at all times since then retained by the Superintendent of the Five Civilized Tribes, under the supervision of the Secretary of the Interior, in trust for the heirs of said decedent. No actual disbursement direct to the heirs has been made, as the heirs are fully restricted Indians under acts of Congress, but their respective interests in the estate have been credited to their restricted accounts with the Five Civilized Tribes Agency, subject to supervision and disbursement by the Superintendent under the direction of the Secretary of the Interior for the use and benefit of the heirs.
17. There was erroneously included in decedent's gross estate the sum of $3,158, representing the value of 80 acres of purchased land in Okmulgee County, Oklahoma, described as the South Half (S½) of the Southwest Quarter (SW¼) of Section 25, Township 11 North, Range 12 East. Said land was not owned by decedent at the time of his death but was the property of his wife, Louisa Watson. The defendant, by stipulation signed on its behalf by the Assistant Attorney General, and forming a part of the Agreed Statement of Facts between the parties filed with this court, has agreed that the said sum of $3,158 should be excluded from decedent's gross estate and the tax based thereon refunded to plaintiff.
Conclusion of Law
Upon the foregoing special findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover.
Entry of judgment, however, will be suspended to await the filing by the parties of a stipulation showing the amount due in accordance with the foregoing findings of fact and the following opinion.
The Superintendent of the Five Civilized Tribes of Indians sues to recover Federal estate taxes in the amount of $6,847.18, paid on behalf of the estate of Punskee Field, a restricted full-blood Creek Indian, who died intestate June 5, 1940.
In determining the decedent's estate tax liability the Commissioner of Internal Revenue included in the gross estate all property held by the decedent at the time of his death, consisting of 160 acres of allotted land in Okfuskee County, Oklahoma, and his oil and gas royalty interest therein, a house and lot in Henryetta, Oklahoma, purchased out of restricted funds in 1924, United States Treasury bonds of a value of $104,937.50 purchased with restricted funds and accrued interest thereon of $638.89, restricted cash in the amount of $7,172.46 and accrued interest thereon of $25.49, and miscellaneous property consisting of Travel Bureau checks, livestock, and farm equipment. The bonds, the house and lot and the cash on deposit in the Treasury to the lessor's credit at the time of his death were derived in large part from royalties accruing prior to April 26, 1931, under an oil and gas mining lease entered into by the decedent and approved by the Secretary of the Interior in 1919, covering decedent's 160 acres of allotted land. Production was begun under the lease in 1922 and royalties realized from this lease were at all times collected and held for the lessor by the Superintendent of the Five Civilized Tribes.
In computing the tax now sought to be recovered there was also included 80 acres of purchased land not owned by the decedent at the time of his death but erroneously included in the decedent's gross estate, with reference to which the parties have stipulated (finding 17) that plaintiff is entitled to a refund of estate taxes.
Plaintiff filed a timely claim for refund which was rejected and now sues for the estate tax paid, on the ground that decedent's restricted real estate, United States Treasury bonds purchased with restricted funds (and deposited in the Treasury of the United States for safekeeping), restricted funds on deposit with the Treasurer of the United States to decedent's credit with the Five Tribes Agency, and personal property purchased on a restricted bill of sale, formed no part of and that the value thereof was wrongfully included in said gross estate for Federal estate tax purposes.
The decedent had acquired the 160 acres of land referred to above by deeds dated August 28, 1903, as his allotment in severalty of the tribal lands of the Creek Tribe of Indians under the provisions of the Original Creek Agreement between the United States and the Creek Tribe, dated March 8, 1900, ratified by act of Congress on March 1, 1901, 31 Stat. 861, and by the Creek Nation on May 25, 1901, as amended by the Supplemental Creek Agreement ratified by act of Congress on June 30, 1902, 32 Stat. 500. The allotment of the 160 acres to Field was a part of the plan first initiated by the Government by section 16 of the Act of Congress of March 3, 1893, 27 Stat. 612, 645, looking toward the extinguishment of separate national or tribal governments and the fee simple title held by the several Tribes to lands within the limits of the country occupied by the Cherokee, Creek, Choctaw, Chickasaw, and Seminole Nations, either by cession of such lands or some part thereof to the United States, or by the allotment and division of the same in severalty among the Indians.
Under the provisions of the Original and Supplemental Creek Agreements and the acts of Congress ratifying the same, the lands to be allotted in severalty were not to be alienable by the allottee or his heirs for five years, except with the approval of the Secretary of the Interior, and 40 acres of such land, selected by him as his homestead were to be nontaxable and inalienable for 21 years. The deeds to Punskee Field for his 160 acres, one covering 40 acres selected as his homestead, the other covering the remainder of his allotment, contained appropriate reference to such provisions. The Act of April 26, 1906, 34 Stat. 137, extended the period of time during which no full-blood Creek should have the power to alienate, sell, dispose of, or encumber in any manner any of the lands allotted to him for twenty-five years after passage and approval of the Act, or to April 26, 1931, unless sooner removed by act of Congress. This extension of the restriction upon allotted Indian lands was coupled with a proviso that "all lands upon which restrictions are removed shall be subject to taxation, and the other lands shall be exempt from taxation as long as the title remains in the original allottee."
Plaintiff says that decedent's 160 acres of allotted land, and the direct income therefrom in the form of cash, Government bonds and the house and lot purchased from restricted funds, are in the same category so far as taxation is concerned; that the land and the direct income therefrom are exempt from the Federal estate tax within the meaning and intent of the early treaties between the United States and the Creek Tribe, and within the meaning and intent of the subsequent agreements and acts of Congress. Plaintiff says, further, that the Act of May 10, 1928, 45 Stat. 495, 496, by necessary implication confirmed the right to exemption from taxation of decedent's allotment until April 26, 1956, and exemption of the direct income therefrom accruing prior to April 26, 1931, to the extent owned by decedent at the time of death in the form of cash, Government bonds and real estate.
This Act extended for an additional period of twenty-five years commencing on April 26, 1931, the restrictions against alienation or encumbrance of the lands allotted to members of the Five Civilized Tribes enrolled as of one-half or more Indian blood, and provided that all minerals, including oil and gas, produced on or after April 26, 1931, from restricted allotted lands should be subject to all State and Federal taxes of every kind and character. Section 4 of the Act of May 10, 1928, provides in part: "That on and after April 26, 1931, the allotted, inherited, and devised restricted lands of each Indian of the Five Civilized Tribes in excess of one hundred and sixty acres shall be subject to taxation by the State of Oklahoma under and in accordance with the laws of that State, and in all respects as unrestricted and other lands: Provided, That the Indian owner of restricted land, if an adult and not legally incompetent, shall select from his restricted land a tract or tracts, not exceeding in the aggregate one hundred and sixty acres, to remain exempt from taxation and shall file with the superintendent for the Five Civilized Tribes a certificate designating and describing the tract or tracts so selected: * * *"
The section further provides for the recording of this certificate with the Superintendent of the Five Civilized Tribes and in the records of the county in which the land is situated, and then further provides: "And said lands, designated and described in the approved certificates so recorded, shall remain exempt from taxation while the title remains in the Indian designated in such approved and recorded certificate, or in any full-blooded Indian heir of devisee of the land: Provided, That the tax exemption shall not extend beyond the period of restrictions provided for in this Act: And provided further, That the tax-exempt land of any such Indian allottee, heir, or devisee shall not at any time exceed one hundred and sixty acres."
Pursuant to the provisions of the Act of May 10, 1928, as amended, the United States in 1929 selected for Punskee Field the identical lands which had been allotted to him in 1903, and a certificate approved by the Secretary of the Interior, reciting that such lands were designated "as tax exempt as long as the title thereto remains in the said Punskee Field, or in any full-blood Indian heir or devisee of said lands; such tax exemption, in no event, however, to extend beyond April 26, 1956" was recorded in the office of the Superintendent of the Five Civilized Tribes and in the county records of the county in which the land is situated.
The two questions presented are, first, whether the 160 acres of restricted allotted land selected and designated by Punskee Field to remain exempt from taxation and owned by him at the time of his death should have been excluded from his estate for federal tax purposes; and second, whether the oil and gas royalties from such land accruing prior to April 26, 1931, comprised of cash and of bonds and real estate into which most of such royalties were converted, should have been accorded similar treatment.
In Landman v. United States, 103 Ct.Cl.199, we had the same questions before us with reference to the estate of Jacob Pierce, a deceased full-blood Creek Indian. In that case the plaintiff limited his claim at the time of trial to the alleged erroneous inclusion within the decedent's gross estate of the value of the 160 acres of allotted land. We were not called upon to decide, therefore, the second question now presented for determination, whether the royalties from an oil and gas lease on the allotted lands could be properly included in the decedent's estate for federal estate tax purposes. We held that the 160-acre allotment of land including the value of the oil and gas in place, of Jacob Pierce, deceased, was not properly includible in the decedent's gross estate, and that the plaintiff was entitled to recover so much of the estate tax assessed as resulted from the inclusion of the value of said land. In reaching that conclusion we interpreted the decision in Oklahoma Tax Commission v. United States, 319 U.S. 598, 63 S.Ct. 1284, 87 L.Ed. 1612, to be that the exemption afforded by the Act of May 10, 1928 (and we might have added, the Act of April 26, 1906), was intended not only to cover direct taxes on the lands, but as well an excise tax on the transfer of the lands by death. It was true in the Pierce estate as it is here, that the tax under consideration was a Federal tax, whereas the tax involved in Oklahoma Tax Commission v. United States, supra, was a State tax, but as we stated in our previous decision, this seems to us immaterial as regards the point under discussion. The taxes are identical in character; both are estate taxes levied upon transfers of property by death. The same principle should be applicable to both. In Carpenter v. Shaw, 280 U.S. 363, 366, 367, 50 S.Ct. 121, 74 L. Ed. 478, the court pointed out that while in general tax exemptions are not to be presumed and the statutes conferring them are to be strictly construed (cf. United States Trust Co. v. Helvering, 307 U.S. 57, 59 S.Ct. 692, 83 L.Ed. 1104), tax exemptions secured to the Indians by agreement between them and the Government are to be liberally construed. Defendant, however, would have us confine this rule of liberal interpretation to cases where a State tax is sought to be imposed. This would not carry out the thought expressed by the Court in Carpenter v. Shaw, supra [ 280 U.S. 363, 50 S.Ct. 122], as follows:
"* * * Doubtful expressions are to be resolved in favor of the weak and defenseless people who are the wards of the nation, dependent upon its protection and good faith. Hence, in the words of Chief Justice Marshall, `The language used in treaties with the Indians should never be construed to their prejudice. If words be made use of, which are susceptible of a more extended meaning than their plain import, as connected with the tenor of the treaty, they should be considered as used only in the latter sense.' Worcester v. The State of Georgia, 6 Pet. 515, 582, 8 L. Ed. 483. See The Kansas Indians, 5 Wall. 737, 760, 18 L.Ed. 667. And they must be construed not according to their technical meaning but `in the sense in which they would naturally be understood by the Indians.' Jones v. Meehan, 175 U.S. 1, 11, 20 S.Ct. 1, 5, 44 L.Ed. 49."
The application of the rule of liberal construction in the instant case involves no denial of power in Congress to lay taxes upon Indian estates. The question is what Congress has in fact directed. We recognize the limitation of what was in fact determined in Oklahoma Tax Commission v. United States, supra. The majority of the Court refused to accept the proposition that immunity from the Oklahoma estate tax could be rested upon an implication to be drawn from Congress' restriction of the Indian lands. It follows, we think, that the Court's judgment in that case, that the transfers of certain lands in the estates of the three deceased members of the Five Civilized Tribes were exempt from Oklahoma tax, necessarily rested upon the Court's construction of the Acts of April 26, 1906, and May 10, 1928, supra.
We are not unmindful of the argument advanced on behalf of the defendant that the Supreme Court carefully limited its decision to the question of immunity from State estate taxation, nor do we overlook the fact that immunity from Federal estate taxation was denied by the Circuit Court of Appeals in Landman v. Commissioner, 10. Cir., 123 F.2d 787 (certiorari denied 315 U.S. 810, 62 S.Ct. 799, 86 L. Ed. 1209). The rationale of this latter case seems to us to be in conflict with what we conclude, as above shown, to be the rationale of the decision in Oklahoma Tax Commission v. United States, supra, holding that the allotted lands there involved were immune from the Oklahoma estate tax. If immunity from the imposition of a State excise tax on the right to inherit or succeed the nontaxable property is to be found in the early treaties, agreements and acts of Congress culminating in the Act of May 10, 1928, under the rule of liberal construction employed by the Court, notwithstanding it may be argued that the tax falls upon the transfer of the economic benefits rather than upon the property of which the estate is composed, no valid reason appears for withholding such immunity from similar land sought to be burdened with a Federal tax identical in character.
Since it seems clear that the decision in the Oklahoma Tax Commission case was rested upon the express exemption from taxation of the allotted lands, in repudiation of the argument advanced by the State "that congressional exemption of the land from direct state taxation does not exempt the land from an estate tax," [ 319 U.S. 598, 63 S.Ct. 1290] we cannot give effect to defendant's contention that the exemptions from taxation contained in the various acts of Congress, to which reference was had in that case, were never intended to apply to federal taxation in any form. We find no suggestion of such a doctrine in Superintendent v. Commissioner, 295 U.S. 418, 55 S.Ct. 820, 79 L.Ed. 1517, or in Choteau v. Burnet, 283 U.S. 691, 51 S.Ct. 598, 75 L.Ed. 1353, where the federal income tax was challenged on the basis of a statute exempting Indian land from taxation.
There remains the further question regarding the treatment for estate tax purpose to be accorded the property of the decedent comprising the oil royalties derived prior to April 26, 1931, directly from the 160 acres of allotted lands.
Plaintiff contends that since it was intended by the Government and the Indians that the land itself should not be subject to taxation and, therefore, not includible in the decedent's estate for tax purposes, the direct income from such land accruing prior to April 26, 1931, in the form of oil royalties (and hence the securities and other property into which they were converted), likewise should be excluded under a proper interpretation of the early treaties, agreements and acts of Congress to and including the Act of May 10, 1928, 45 Stat. 495, as amended by the Act of May 24, 1928, 45 Stat. 733. Plaintiff does not here rely upon any implication to be drawn from the Act of January 27, 1933, 47 Stat. 777, such as was discussed in the majority opinion in Oklahoma Tax Commission v. United States, supra, for the reason that all minerals, including oil and gas royalties, produced after April 26, 1931, had been made subject to State and Federal taxes of every kind and character by section 3 of the Act of May 10, 1928, supra. It is argued that by the provisions of section 3 of the 1928 Act making oil and gas royalties subject to tax after April 26, 1931, and by section 4 of that Act which continued the allotted land free of tax to the extent of 160 acres, Congress confirmed by necessary implication the previously intended exemption from all taxation of the direct income from the allotment as well as the exemption of the land itself.
A study of the majority and minority opinions of the Court in the case of the Oklahoma Tax Commission v. United States, supra, discloses that the provisions of the treaties, agreements and statutes upon which plaintiff relies in support of its claim for exemption from estate tax of the oil and gas royalties were considered by the Court. On the authority of the decision and judgment in that case that the funds and securities there involved were not exempt from the Oklahoma estate tax, we hold that plaintiff is not entitled to recover the estate tax involved in the second item of the claim in this case.
Judgment will be entered in favor of plaintiff upon the filing of a stipulation by the parties showing the amount due plaintiff under the findings and the foregoing opinion. It is so ordered.
MADDEN, JONES, and WHITAKER, Judges, concur.
WHALEY, Chief Justice, took no part in the decision of this case.