United States v. Lewiston Lime Company

In 1939, appellee Richardson and a government agent acting on behalf of the Nez Perce Indians made a lease agreement granting Richardson rights to quarry limestone from the Indians’ land. The agreement, which was re newed on several occasions, provided that Richardson and others operating under his authority (hereinafter collectively called the operators) would pay a royalty in return for the mining rights. The royalty was based upon a percentage of the net proceeds derived from selling the limestone. Specifically, the operators were to pay:

For over 17 years the operators paid royalties, without objection to the amounts by the Government. Then, in 1957, the Government claimed that the operators had consistently underpaid by deducting too many expenses in calculating “net value” under the lease. The operators had computed the royalties by deducting all the costs of operation and production from the gross receipts. The Government contended that the costs attributable to mining and marketing the limestone were not deductible. Consequently, it claimed in excess of $60,000 in additional royalties.

The operators protested and refused to pay. The Commissioner of the Bureau of Indian…