United States v. George Anderson

625 F.2d 910 80-2 USTC P 9631 UNITED STATES of America, Plaintiff-Appellant, v. George ANDERSON, Defendant-Appellee. No. 78-1114. United States Court of Appeals, Ninth Circuit. Argued and Submitted May 22, 1980. Decided Aug. 21, 1980. Aaron Phillip Rosenfeld, Washington, D. C., for plaintiff-appellant. John Sheehy, Billings, Mont., Arthur Lazarus, Jr., Washington, D. C., on brief; Terry Grant, Fried, Frank, Harris, Shriver & Kampelman, Washington, D. C., for defendant-appellee. Appeal from the United States District Court for the District of Montana. Before CHOY and FERGUSON, Circuit Judges, and BARTELS, * District judge. CHOY, Circuit Judge: 1 The Government appeals from the district court's summary judgment holding that the income a noncompetent Indian derives from cattle ranching, under a tribal license, on land held in trust by the United States for other Indians and for the tribe is not subject to federal income taxation. We reverse. I. Background 2 Congress enacted the General Allotment Act of 1887, ch. 119, 24 Stat. 388 , 25 U.S.C. § 331 et seq., to conform Indian land ownership to the individual property ownership system existing in the United States. The United…

The Government appeals from the district court’s summary judgment holding that the income a noncompetent Indian derives from cattle ranching, under a tribal license, on land held in trust by the United States for other Indians and for the tribe is not subject to federal income taxation. We reverse.

I. Background

Congress enacted the General Allotment Act of 1887, ch. 119, 24 Stat. 388 , 25 U.S.C. § 331 et seq., to conform Indian land ownership to the individual property ownership system existing in the United States. The United States divided reservations into uniform parcels and held one such “allotment” in trust for each individual Indian and his heirs. The General Allotment Act failed to assimilate Indians by making them yeomen, as was originally intended. Allotments could not be pledged for credit, and when original allottees died each of their heirs received in trust a parcel so small that it could not be efficiently grazed or farmed.

The General Allotment Act provided that at the end of the statutory trust period (subject to extension), Indian allottees were to receive their lands “in fee, discharged of said trust and free of all charge or incum-brance whatsoever,” and…

dissenting:

The result reached here, as the majority admits, will hinder federal policy toward the Indians. I must therefore dissent.

By adopting statutes which attempt to assist Indians in becoming economically self-sufficient, Congress intended to exempt noncompetent Indians from federal income taxation when income is derived from lands held in trust for Indians. Judge Battin was therefore correct when he held that federal policies and statutes regarding Indians created an exemption for Anderson from federal income taxation for the income derived from grazing cattle on land held in trust for other noncompetent Indians and his tribe.

The majority fails to give effect to the reason and logic of the opinion of the Supreme Court in Squire v. Capoeman, 351 U.S. 1 , 76 S.Ct. 611 , 100 L.Ed. 883 (1956). The Court found in that case that the income which came directly from the land was tax-exempt. It specifically rejected the argument that the case should be viewed as an ordinary tax case without regard to relevant treaties and statutes, congressional policy concerning Indians, or the guardian-ward relationship existing between the United States and Indians. In determining that the…