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376

DEPARTMENT OF THE INTERIOR

OCTOBER 16, 1933

taken the just compensation which the Constitution guarantees to the owner includes not only the value of the part taken but also the damages accruing to the residue from the improvements. United States v. Grissard (219 U. S. 180); Mohler v. University of Nebraska (165 N.W. 954). The actual damage resulting from the invasion of the owner's rights of property is the measure of damages. Selma Railroad Company v. Camp (45 Ga. 180). In other word, the owner is entitled to recover the difference between the market value of the entire tract before the taking and the market value of what is left after the taking. McDougal v. Southern Pacific Railroad Co. (120 Pac. 766). It is to be observed that the damages sustained by the owner are the unit although composed of integral parts; namely, the value of the land taken and the injury to the remaining portion.

    In actual practice the determination of damages for the taking of land for canal right of way should be reduced to an acreage basis. The appraisers will usually determine the market value of the land and and then determine the damages to the remaining acreage. Damage to the remaining acreage may not be computed on an acreage basis. The elements which make up the market value of the land must all be considered. In the instant case the type of soil, cultivation, fertility, water rights, topography, nearness to market, and many other elements must be taken into consideration by the appraisers. If water for irrigation is to be delivered free of operation and maintenance charge the land is more valuable than other similar land where an annual operation and maintenance charge must be paid by the owner to obtain water. If the lands are exempt from taxation, that should be considered and will certainly enhance the value of the land. If the appraisal made does not include these elements it should be disapproved and instructions given to the appraisers to reconsider the whole matter and make a new or an amended report to you.

                                                                                                                                              NATHAN R. MARGOLD,

Solicitor.
NAVAJO--TIMBER CONTRACT
October 23, 1933.
Memorandum to Mr. Collier
Re: Defiance Plateau Unit Timber Sale Contract

                        *                                *                                *                                *                                *

    At the last meeting of the Navajo Council, the Indians raised the question of their rights with regard to a timber contract, the details of which are set forth in this memorandum. They expressed impatience with the Purchaser's delays and a desire
to cancel the contract and conduct their own timber operations. Final decision was deferred until you could obtain the advice of the Solicitor of the Department. The following memorandum analyzes the legal questions involved. It is necessarily informal since it is offered in response to an informal request and especially since any final decision as to the course to be pursued depends upon an examination of the facts relative to the possible future market price of timber, facts which are not presently available to this office.

    The history of this contract that is pertinent to this opinion is as follows: The McGaffey Company, a New Mexico corporation of Albuquerque, New Mexico, entered into a contract with the Superintendent of the Southern Navajo Indian Agency, acting in behalf of the Navajo Tribe, the contract providing for the sale of specified timber in the Defiance Plateau Unit estimated to be 500,000,000 feet of western yellow pine. This contract, made October 22, 1928, and approved December 15, 1928, was assigned by the McGaffey Company to the Lutcher & Moore Lumber Company, a Texas corporation of Orange, Texas, on August 9, 1929, and the assignment was approved August 20, 1929. The Lutcher & Moore Lumber Company will hereinafter be referred to as the Purchaser.

    Under the contract the Purchaser agreed to deposit $20,000 with the Commissioner of Indian Affairs to cover the stumpage value of timber cut and to make additional deposits when necessitated by increased stumpage values. This deposit of $20,000 was made. The Purchaser further agreed to cut and remove all timber covered by the contract prior to March 31, 1950, and to pay for the timber cut on a basic price of $3 per thousand feet. The purchaser further agreed to cut and remove, unless relieved by the Commissioner of Indian Affairs, at least 25,000,000 feet prior to March 31, 1932, and not less than 25,000,000 feet each 12 months thereafter until the contract was completed.

    By a supplement agreement executed on May 8, 1931, and approved May 27, 1931, the Commissioner of Indian Affairs extended the time for removal of the first 25,000,000 feet of timber from March 31, 1932 to March 31, 1933, upon certain conditions to which the Purchaser agreed. One of these conditions was that the Purchaser should pay to the Superintendent of the Southern Navajo Indian Agency $62,500 in (three installments, namely $12,500 prior to March 31, 1931; $25,000 on or before March 31, 1932; and $25,000 on or before March 31, 1933. The first installment was paid on March 30, 1931.

    By the Commissioner's letter of February 18, 1932, approved February 20, 1932, the $25,000 in-
 


 

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stallment payable on or before March 31, 1932, was waived, with express exclusion from the waiver of the supplemental agreement requirement that a $25,000 installment be paid on or before March 31, 1933. By the same letter there was waived the requirement of a minimum cut of 25,000,000 feet annually, "to the extent of requiring an annual cut of only 10,000,000 feet during the five years beginning April 1, 1932."

    By the letter of May 23, 1933, approved May 25, 1933, the Commissioner stated to the Purchaser:

    "As you have been unable to cut any of the 10,000,000 feet which was required to be cut during the year ending March 31, 1933, you are hereby relieved of such requirement with the understanding that you will cut the necessary 50,000,000 feet prior to April 1, 1937. In view of the existing economic conditions you will also be relieved from making the payment of, $25,000 due on or before March 31, 1933."
    By a telegram of July 8, 1933, the Commissioner advised the Purchaser:
    "The department regards with favor the proposal to revoke the waiver extending time for your timber operations STOP It is very likely that such action will be taken immediately STOP This information is forwarded so that you may act accordingly."
    By letter of August 30, 1933, approved September 2, 1933, the Commissioner advised the Purchaser that "the relief granted you in Office letter 'Forestry 3260-28-12101-33,' dated May 23, 1933, is hereby revoked because the granting of this relief is deemed invalid by the Department of the Interior." This relief was deemed invalid by the Department of the Interior because not made in accordance with the provisions of Public Act No. 435 of the 72d Congress, approved March 4, 1933. This act provides that the Secretary of the Interior may modify the terms of then existing and uncompleted contracts of sale of Indian tribal timber, with the consent of the Indians involved. Consent to the relief granted in the May 23 letter was not obtained from the Indians involved.

    The Purchaser has done no cutting on the sale area. The Purchaser has taken no action in performance of the contract; has done little besides seek extensions of time limitations and reductions of cutting requirements.

    On April 1, 1933, the Purchaser had breached the working contract as then existing. It had failed to pay the $25,000 installment required, by the supplemental agreement, to be paid on or before March 31, 1933. (This requirement was expressly excluded from the waiver of February 18, 1932.) On April 1, 1933, the Purchaser had also failed to do any of the 10,000 feet of cutting that was required by stipulation in the waiver of February 18, 1932. At this point, certainly, the Purchaser had breached the contract.

    Although the letter of May 23, 1933, purported to waive the breaches set out in the preceding paragraph, that letter had no such legal effect. The purported waiver amounted to a modification of the terms of the contract, and so was within the purview of the act of Congress of March 4, 1933 (Public No. 435, 72d Congress), which act requires consent of the Indians involved for such a modification. This conclusion is supported by Solicitor's Opinion of August 8, 1933 (M. 27499). The breach of contract as of April 1, 1933, was, therefore, unaffected by the letter of May 23, 1933; the contract should be considered to have been breached on April 1, 1933.

    Assuming, however, for the purpose of complete analysis, that the purported waiver of May 23, 1933, was not within the purview of the act of March 4, 1933, and was, therefore, legally effective when granted, it was revoked by the Commissioner's letter of August 30, 1933. The relief granted in the May 23 letter was not the result of the exercise of any option for an extension that the plaintiff held under the contract; it was not granted for any consideration flowing from the plaintiff. Plaintiff has not taken any action in reliance upon it, has not altered his position so as to be injured by its revocation, and so can not claim any equitable estoppel in its favor. The situation on August 30 was, therefore, such that the Commissioner could properly revoke the relief granted on May 23.

    In many court decisions there is general language to the effect that a waiver of a breach of contract, once made, can not be revoked. Examination of these many decisions, however, reveals that in each of them the party favored by the waiver had acted in reliance upon it, had continued performance of the contract, so as to build an estoppel against revocation. That the Purchaser would have to act in reliance on the waiver before he could rely upon it is indicated in the case of Watkins v. Neff (1927; 288 Pa. 314, 136 Atl. 221), in which the court held that where a default is waived the one in default may tender performance and enforce the contract obligations; but that if he fails to tender performance or to perform he can not rely upon the waiver. Section 297 of the Restatement of the Law of Contracts states the rule applicable here, as follows:
 
 


 

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    "Such a waiver, unless it is a binding promise within the rules for the formation of contracts, can be retracted at any time before the other party, has materially changed his position in reliance thereon, but not afterwards."

and illustrates the rule thusly:
    "A contracts to buy and B contracts to sell goods to be delivered by September 1. The goods are not delivered by that day. On September 2 A writes B that he will accept the goods if delivered by September 15. On September 8 A writes B that he has changed his mind and will not accept the goods. A is bound to take the goods on September 15 if B materially changes his position after receiving the letter of September 2, and before receiving that of September 8. Otherwise A is not bound to take them."
    Assuming, again, for the purpose of complete analysis, both that the waiver was not illegal and that the waiver, once made, could not be revoked, the Purchaser, nevertheless, would probably be held to have breached the contract. The waiver of May 23 was granted upon the express understanding that the Purchaser would cut 50,000,000 feet prior to April 1, 1937, but thus far, as has already been stated, the Purchaser has done no cutting on the sale area. Failure to commence cutting operations within a reasonable time after the beginning of the period within which certain cutting operations were to be completed results in a breach of the contract by the Purchaser and a termination of its rights under the contract. A reasonable time within which the Purchaser should have commenced operations would be a matter for court determination; and that determination would establish the date of the breach. Whatever the exact date may be, there is little question that it has already transpired; however, this is a question which can not be definitely answered in advance of a judicial determination.

  Berry v. Marion County (1924; 121 S.E. 79) is in point. The South Carolina Supreme Court affirmed judgment for the plaintiff in this case, which was an action to declare a certain timber contract forfeited and for an injunction against the purchaser restraining him from exercising any rights under the contract and for damages. The contract there involved set no time limit for commencing the cutting, but did set a time limit for finishing it. The court held that although there was no specified time for commencing cutting operations the Purchaser had to commence within a reasonable time, and that its failure to do so resulted in forfeiture of the Purchaser's rights and a reversion to the landowner.

    The Defiance Plateau Unit contract presents a strong case for application of the same rule. The General Timber Sale Regulations governed the negotiations leading to the formation of the contract and became a part of the contract itself. Regulation No. 47 provides:

  "Indian labor will be employed by the purchaser at the same wages as other labor and in preference to other labor not already in his employ whenever the Indian labor seeks employment and is competent."
    The Purchaser has acknowledged that one of the chief motivating forces in the formation of this contract was the purpose of giving the Indians concerned employment as well as a stumpage value accruing to their benefit. This acknowledgment is shown in a letter of October 8, 1931, from the Purchaser to the Superintendent of the Southern Navajo Indian Agency, in which the Purchaser stated:
    "We realize that the underlying thought in the sale of the Defiance Timber Unit was to give the Navajo Indians an equal chance in employment and with the stumpage accruing to their benefit. The Department will recall that at one time in our discussion permission was asked to double the maximum capacity when and if the market justified and we were advised that the Navajo Indians would be better off if employed and returns were extended over a long period of time. The plan outlined above provides just that."
    The regulation requiring Indian labor where practicable and the plaintiff's letter of October 8, 1931, clearly indicate that the employment of Indian labor by the Purchaser was one of the purposes for which the Government executed the contract. A sine qua non to accomplishment of that purpose was the commencement of cutting operations. This important purpose of the contract lends weight to a construction that requires the Purchaser to commence cutting at the earliest possible date. Notwithstanding, five years after the original contract was executed, two and one-half years after the supplemental agreement giving the Purchaser a one-year extension on the cutting requirement, almost two years after the waiver that reduced the cutting required, seven months after breach of the reduced and postponed cutting requirement-after all of these postponements of operations that were a vital consideration to the Indians involved-the
 


 

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purchaser has yet done no cutting. Certainly, there are good grounds for holding the Purchaser to be in default for failing to commence cutting operations within a reasonable time.

    The fact that the time when cutting was required to be done was financially inopportune or even most difficult is no legal excuse for the purchaser's failure. The Arkansas court, in 1916, said:

    "Inconvenience or the cost of compliance with the contract or other like thing can not excuse a party from the performance of an absolute and unqualified undertaking to do that which is possible and lawful." Polzin v. Beene (1916; 126 Ark. 46, 189 S.W. 654, 655).
    The Oregon court spoke similarly in 1930 in Coquille Mill & Tug Co. v. Robert Dollar Co. (1930; 132 Oreg. 453, 285 Pac. 244, 250):
    "The fact that the lumber market was ad verse to profitable operation did not justify the defendant's cessation of operation. Hawthorne v. Quinn, 42 Oreg. 1, 69 Pac. 817; Newton v. Warren, etc. Co., 116 Ark. 393, 173 S. W. 819."

  Rights and liabilities of the parties to the timber sale contract upon Purchaser's breach thereof.

    General Timber Sale Regulation No. 6 provides:

  "Titleto the forest products covered by any contract will not pass to the purchaser until such products are paid for."

    And Regulation No. 7 indicates that cash deposits required and made are not payments for timber, but that the deposits made shall remain such and payments shall be made each month upon a statement of all timber cut during the month being rendered to the Purchaser. The contract set a definite time period in which the cutting contemplated by the contract had to be made. The contract of sale, therefore, passed to the Purchaser title only to that timber which it cut and removed and paid for within the time period specified in the contract. Many States, California, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Montana, New York, Ohio, Texas, Virginia, West Virginia, and Wisconsin, have followed this theory of title in construing contracts for the sale of standing timber, where by the terms of the contracts the timber is to be removed within a specified time. The many cases are collected in a series of annotations in 15 A.L.R. 41, 31 A.L.R. 944, 42 A.L.R. 641, and 71 A.L.R. 143.

    Regulation No. 52 provides in part:

    "Persistent failure to comply with any one of the requirements of the contract or regulations after written notice addressed to the purchaser by the superintendent or the officer in charge will be ground for revocation by the officer approving the contract of all rights of the purchaser under this and other contracts."
In the light of this regulation and of the many cases in the States listed above, it is clear that, upon failure of the Purchaser to comply with the time limitation on cutting requirements, any right or title of the purchaser to the timber on the sale area was terminated. After written notice to the Purchaser and revocation of his contract rights by the officer approving the contract, in conformance with Regulation No. 52, the Superintendent of the Southern Navajo Indian Agency, acting for and in behalf of the Indians, would be free to make a new timber sale contract or to arrange for logging operations conducted by the Indians themselves.

    The Superintendent of the Southern Navajo Indian Agency, acting for and in behalf of the Indians, may retain all moneys paid by the Purchaser. Regulation No. 52 provides, in case of breach and formal revocation of the Purchaser's rights, that there is ground for forfeiture "of all moneys paid." Case law bolsters this forfeiture provision. In Hodges v. George D. Mickle Lumber Co. (1928-Oregon, 264 Pac. 850, 852), the court held:

    "The purchaser of standing timber for a cash consideration, under an agreement to remove it within a specified time, can not recover, or receive credit for, money paid, upon his title to the timber being defeated by his failure to remove the timber within the time specified therefor in the contract of purchase."
Maynardv.Farley(1923; 198 Ky. 420. 248 S. W. 1022) is in accord.

    In McNair and Wade Land Co. v. Parker (1912; 64 Fla. 371, 59 So. 959), an equity action to obtain a forfeiture for non-uses and abandonment, the court held that "no equitable reason seems to demand a return of the purchase money."

      Damages to which vendor is entitled because of the breach.

    Regulation No. 52 provides that upon breach of the contract "the purchaser will be liable for all
 


 

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damage resulting from his breach of contract." Regulation No. 56 provides that upon the contract being declared forfeited, the Purchaser and his bondsmen shall be "liable for the depreciation in the value of the remaining timber on an estimate of value and quantity to be made under the direction of the officer approving this contract." The damages referred to in Regulation No. 52 should be determined by the customary rules of damages. Regulation No. 56 should affect the determination of damages to the extent of making the estimates, provided for therein, if not arbitrarily arrived at, conclusive evidence of value and quantity. To avoid arbitrariness these estimates would have to be predicted on due consideration of all factors relevant to determination of value.

    The general rule of damages in a case of breach of contract is the award of damages sufficient to place the injured party in the same position he would have enjoyed had the contract been performed. The Arizona court in McFaddenv. Shanley (1914; 16 Ariz. 91, 141 Pac. 732, 733), upon reference to leading cases and to the leading treatises on damages, stated:

    "The contract having been broken, the person injured by the breach ought to be placed, so far as money can do it, in the same position as he would have been in if the contract had been filled."
    It is well settled that the future damages resulting from breach of a contract like that involved here are ascertainable. Lee v. Briggs(19 Mich. 487, 58 N.W. 477, 479). "These damages are not speculative, but are capable of ascertainment." Chief Justice Fuller stated in the leading case of Roehm v. Horst(178 U. S. 1, 20 Sup. Ct. 780, 44 L. Ed. 953), "although he may receive his money earlier in this way, and may gain or lose by the estimate of his damage in advance of the time for performance, still, as we have seen, he has the right to accept the situation tendered him, and the other party can not complain."

    Unquestioned as it is, upon reference to the governing regulations and to the general rules of damages, that the vendor is entitled to damages compensating the injury it has sustained, question does arise in determining the proper measure of those damages. In this Defiance Plateau Unit case the breached contract requires cutting and payment of stumpage values at the contract price not only previous to the date of the breach, but subsequent to that date as well. Had the time for performance expired by the date of the breach, the measure of damages would be the difference between the contract price of the timber and its market value at the date of breach. Pope v. Barnett (1932; 163 S. E. 517-Ga.); Furrow v. Bair (1919; 84 W. Va. 654,100 S. E. 506); Stillwell v. Paepcke-Leicht Lumber Co. (1904; 73 Ark. 482, 84 S.W. 483). The last case cited above is relied upon for authority in the Ruling Case Law Statement that, "The measure of damages for a failure to cut, remove and pay for all the timber on certain land within a specified time is the difference between the market value of the timber left standing on the land and the contract price at the time of the breach." 17 R.C.L. 1102. This rule would, of course, be applicable in measuring the damages resulting from the Purchaser's failure to do that cutting required by the contract to be done previous to the date of breach. Examination of the three cases cited above, however, shows that in each of them the time set for performance had expired by the date of the breach complained of; and it is questionable whether the rule of these cases could be used in measuring the damages predicated on the breached contract's provision for cutting and payment of stumpage values at times subsequent to the date of breach. In measuring these future damages, the breach should be treated as an anticipatory breach; and in measuring damages resulting from anticipatory breach of contract there is confusion as to whether the market value, which is to be deducted from the contract price, should be determined as of the time of the breach or as of the time set for performance.

    The proper ruling, in view of the general purpose of damages, placing the damaged party in the same position he would have enjoyed in event of performance, would be that the market value should be determined as of the date or dates set for performance. Roehm v. Horst, supra;Mo. Furnace Co. v. Cochran (8 Fed. 463); Cox & Sons Co. v. Crane Iron Works (1925; C.C.A. 3d, 5 Fed. (2d) 314); Windmuller v. Pope (107 N. Y. 674, 14 N. E. 436); and many other cases support this rule. It should be noted that the Federal courts favor this rule. The contra rule, that the market value should be determined as of the date of the breach, is supported by dicta in Masterton v. Mayor (7 Hill 61); James H. Rice Co. v. Penn P. G. Co, (88 Ill. App. 407); and several other cases including a few Federal court decisions. Variance in circumstances affects the selection of the rule to be applied, but it is accurate to say that the majority of the courts, including the majority of Federal courts, favor the determination of market value as of the time set for performance. The many cases are covered in annotations in 34 A.L.R. 114 and 44 A.L.R. 215.

    If in a suit on the Defiance Plateau Unit contract the majority rule were adopted, then, to establish the market value at the various future times
 


 

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set for performance, evidence of market values existing between the date of breach and the date of trial would be admissible. Roehm v. Horst, supra, supports this matter of evidence. This evidence could include that showing the effect of the N.I.R.A., Public No. 67, 73d Congress, and the Lumber Code on the market price and the contract requirements. Since the market was probably lower on April 1, 1933, than it is now or will be in the near future, it would be advantageous to the Indians concerned to have the damages measured by taking the market value as of the date of breach.

    Now to consider the damages recoverable in an action against the Purchaser in the Defiance Plateau Unit case for its breach of contract. The date of breach is April 1, 1933. (This, assuming that the waiver of May 23 was illegal and void or that the waiver was effectually revoked.) The damages due to the Purchaser's failure to cut 10,000,000 feet during the year ending March 31, 1933, would be measured by the difference between the contract price of 10,000,000 feet and that year's mean market value of 10,000,000 feet of the standing timber. The future damages would be measured by the difference between the contract price of the timber covered by the contract, less 10,000,000 feet, and the market value of that quantity of the timber as of the date of breach or, which would be more proper and more likely in the Federal courts, as of the dates set for performance.

    If the date of breach (on the assumption that the waiver was legally effective and could not be revoked) was set by the determination of a reasonable time within which the Purchaser should have commenced cutting operations, then the damages for which the Purchaser would be liable would be, first, damages occasioned by the breach which was waived. It is well settled that waiver of the right to treat a breach as repudiation of the contract, is not a waiver of the right to recover damages for the breach. "Acceptance of delayed performance of a contract which specifies the time of performance is not inconsistent with the retention of the right to recover damages for the delay." R. B. Boak & Co. v. United States Shipping Board E. R. Corp. (1926; 11 Fed. (2d) 523, 524). Purington Paving Brick Co. v. Metropolitan Paving Co. (U.S.C.C.A. Mo.-1925; 4 Fed. (2d) 676); and Peters v. Bow (45 Id. 303, 262 Pac. 149) are in accord. The damages occasioned by the delay would be interest on the contract price of 10,000,000 feet over the period between April 1, 1933, date of the waived breach, and the date of the subsequent breach resulting from failure to commence operations within a reasonable time. Secondly, damages for future nonperformance occasioned by the breach sued upon would be measured according to the rules discussed above with reference to April 1, 1933, as the date of breach.

                                                                                                                                              NATHAN R. MARGOLD,

Solicitor.
NIRA--PUBLIC WORKS PROJECT
November 17, 1933.
Memorandum for the Commissioner
of Indian Affairs:

    You have requested a memorandum relative to whether or not certain projects proposed by the Indian Service come within the scope of the National Recovery Act, approved June 16, 1933. The proposed projects are listed in your request of November 7, 1933, as: (1) building Indian homes, the costs to be repaid to the Government on a reimbursable plan: (2) the purchase of sufficient Indian heirship and other lands for sites for these homes and where necessary for subsistence farms for Indians for whom homes are erected: (3) the purchase of 18 portable sawmills for the manufacture of lumber from Indian forests to be used in building Indian homes, reservation schools and other buildings, for general sale: (4) the purchase of necessary household furniture, farm equipment and livestock, and the erection of farm and range fences; and (5) necessary land survey and classification to carry out this program systematically.

    First, it should be pointed out that the legitimacy of the proposed projects as Public Works is a matter for the determination of the Public Works Administration legal division; that this memorandum of necessity, therefore, is limited to advising you whether the probability of the said legitimacy is great enough to justify an application to the Public Works Administration.

    Second, it should be pointed out that, if application to the Public Works Administration be made, care should be taken that the application is complete in meeting the requirements set by the Board of Public Works for the form and substance of application.

    The proposed projects may well be held to be within the scope of Title II of the National Industrial Recovery act, particularly in view of the Departmental practice, evidenced by grants already approved. If title to the land purchased for these projects would be retained by the Federal Government, and the use of the land by Indians subjected to Federal supervision and control, then the projects would clearly be Federal in character, and as Federal projects they may well be held to be
 


 

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within section 202 (c) of Title II of the National Industrial Recovery Act which provides for inclusion in the program of Public Works, "any projects of the character heretofore constructed or carried on either directly by public authority or with public aid to serve the interests of the general public". Many enactments of Congress have authorized such projects as these now proposed and have appropriated funds with which to finance them. Some of the more pertinent and recent enactments are Public No. 666-71st Congress, Public No. 581-71st Congress, Public No. 450-71st Congress, Public No. 217-71st Congress, Public No. 143-71st Congress, Public No. 1033-70th Congress, Public No. 762-70th Congress, Public No. 444-70th Congress, Public No. 443-70th Congress, Public No. 731-69th Congress, Public No. 437-69th Congress, Public No. 236-69th Congress, and Public No. 207-69th Congress.

    It seems that the success of an application to the Public Works Administration is dependent largely upon a showing of the project as economically sound and as one which will effect substantial reemployment. It would, therefore, be desirable to make it clear in the application that the projects are economically sound and that they will effect substantial reemployment of permanent character. Justification of the projects would be strengthened by showing that as incidents to their administration there will be affected a conservation of forest resources, a prevention of soil erosion and removal and/or reservation from cultivation of marginal farm lands.

    The probability of the proposed projects being held by Public Works Administration to be legitimate subjects for Public Works grants is great enough to justify the Indian Service in applying to Public Works Administration for grants to finance the said projects.

                                                                                                                                              NATHAN R. MARGOLD,

Solicitor.
IRRIGATION CHARGES-EXTENDED
PAYMENTS

54 I.D. 335

M-27491                                                                                                                               December 1, 1933.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    The Commissioner of Indian Affairs has submitted for opinion two specific questions as follows:

    1. Is it permissible on Indian irrigation projects for suitable contracts to be entered into between the United States and the owners of irrigable land against which there are unpaid delinquent operation and maintenance assessments, such contracts definitely to provide for payment by the landowner of the current irrigation assessments as and when due, and to make annual payments of certain percentages of the total unpaid delinquency plus interest on the unpaid portion of the deferred amount, water to be delivered upon execution and compliance with such contract?

    2. Would it be permissible to include in such contracts unpaid delinquent construction assessments in the same manner as suggested for unpaid delinquent operation and maintenance assessments?

    On many of the Indian irrigation projects there are quite a number of landowners who are several years behind in the payment of the operation and maintenance charges, and on projects where public notices have been issued, fixing the construction charges, the land owners are also delinquent in payment of construction charges. On all Indian irrigation projects water can not be delivered until past due charges are paid. Inability to pay the charges puts the landowner in a position where he can not obtain irrigation water and therefore can not cultivate his land. Many suggestions have been made by landowners and business men of the vicinity of the various projects that some plan be devised whereby the landowners could secure an extension of time on the past due charges and make them payable in annual installments over a period of years, the deferred payments being due and payable each year with the current charges for that year. Interest would be charged at a rate to be fixed by the Secretary of the Interior and paid annually at the same time and place as the deferred charges.

    Under the act of August 1, 1914 (38 Stat. 583), the Secretary is authorized to fix maintenance charges which may be paid as he may direct, such payments to be available for use in maintaining the project or system for which collected. He has also been authorized to fix operation and maintenance charges by a various acts of Congress, and to determine and announce the construction charges which shall be levied against the irrigable lands within Indian irrigation projects. As a general rule no administrative officer is vested with authority to extend without consideration the time of payment of a debt due the United States. The Secretary could amend any notice fixing the amount and date of payment of charges so as to
 


 

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DECEMBER 4, 1933

change the amount of the charge and could also defer the time when the payment fell due but when the charges thus fixed fall due he is given no authority to extend them. During the last few years business necessity has caused the Department to take promissory notes, secured by chattel mortgages, for operation and maintenance charges, thus making the charges due at the end of the irrigation season instead of compelling payment in advance, as required by public notice. The consideration for the extension is interest exacted, and this may be sufficient to make the transaction valid: a question not necessary here to decide. It seems probable that the theory on which annual operation and maintenance charges have been extended for a time before water is delivered in the spring to sometime in the fall after the irrigation season is past arises from the fact that the Secretary of the Interior is authorized by law to fix the annual operation and maintenance charges per acre and announce the date of payment. Hence, if he issued a notice prescribing that payment by the landowner of annual operation and maintenance shall be made in advance of the irrigation season he would be authorized to change the notice to provide for payment at the end of the irrigation season.

    It has evidently been the view of the Department that the Secretary of the Interior is without authority to extend payments, after they fall due, of the operation and maintenance or construction charges, because it has secured legislation from Congress in several instances where such authority has been required. The act of February 13, 1931 (46 Stat. 1093), is such as act. It authorized the Secretary of the Interior to adjust payment of charges due on the Blackfeet Indian Irrigation project, Montana. This act was the result of Senate Bill No. 1533, which, as originally written, was intended to give the Secretary of the Interior authority to extend past due water-right charges on any irrigation project, constructed or being constructed and operated under the direction of the Commissioner of Indian Affairs, the extension to be limited to the term of five years. Congress, however, changed the Bill to make it applicable only to the Blackfeet project, Montana, and prescribed that the extension should not exceed ten years. This action of Congress, together with other similar acts passed by it, indicate clearly that Congress considers that the Secretary of the Interior is without authority to extend the time of payment of operation and maintenance or construction charges on Indian irrigation projects except with the Congressional sanction previously given. Congress has not granted to the Secretary of the Interior general authority to extend the time of payment, after they fall due, of either the operation and maintenance charge or the construction charge, on Indian irrigation projects, and in my opinion, he can not extend such charges without specific authority of Congress.

                                                                                                                                            NATHAN R. MARGOLD,

Solicitor.
INMATE TRANSFER TO ANOTHER INSANE
ASYLUM--COURT'S
JURISDICTION OVER COMMISSIONER
December 4, 1933.
Memorandum to the Secretary:

    A memorandum to you dated August 21, 1933, expressed our opinion that a projected transfer of the inmates of the Canton Insane Asylum to Saint Elizabeth's Hospital was legal. Since that time a person acting as guardian ad litem for one of the inmates has obtained a temporary injunction against the superintendent of the asylum and the Commissioner of Indian Affairs restraining them from effecting the removal of the inmates. Although the court did not obtain jurisdiction over the Commissioner of Indian Affairs, it named him in the restraining order. The jurisdiction of the courts to issue such an order has been attacked by the United States attorney for the southern district of South Dakota, acting with an attorney assigned to the case by the Department of Justice. The matter has been pending in the District Court in South Dakota since October 23, the day upon which the issue of jurisdiction was argued. In the meantime the restraining order continues in force.

    Further delay can be avoided if the Secretary of the Interior, through an agent of his own appointment and not through the Commissioner of Indian Affairs, will proceed to transfer the Indians in question from Canton to Washington. Such procedure would be lawful as an exercise of the general supervisory power over Indian affairs vested in the Secretary of the Interior under Section 485 of Title 5 of the United States Code:

    "The Secretary of the Interior is charged with the supervision of public business relating to the following subjects; * * * Second, The Indians",
    The Secretary may exercise his authority under the above statute of his own motion without employing the agency of the Commissioner of Indian Affairs. In an analogous case involving a countermanding of an order of the Commissioner of the
 


 

384

DEPARTMENT OF THE INTERIOR

DECEMBER 4, 1933

General Land Office, and the issuance of a new order by the Secretary himself, the Supreme Court said:

    "It makes no difference whether the appeal is in regular form according to the established rules of the Department, or whether the Secretary of his own motion, knowing that injustice is about to be done by some action of the Commissioner, takes up the case and disposes of it in accordance with law and justice. The Secretary of the guardian of the people of the United States over public lands. The obligations of his oath of office oblige him to see that the law is carried out, and that none of the public domain is wasted".

  Knight v. United States Land Assn., 142 U.S. 181 (1891).

    There remains the question whether or not such direct action by the Secretary of the Interior would be contempt of the District Court for the district of South Dakota. The order issued by that court reads as follows:
    "IT IS FURTHER ORDERED that pending the final determination in this hearing, the defendants herein JOHN COLLIER, as Commissioner of Indian Affairs of the United States, Harry R. Hummer, as Superintendent of the Asylum for Insane Indians, at Canton, South Dakota, and SAMUEL A. SILK, their agents and employees and all persons acting for and in their behalf, are hereby restrained and enjoined from proceeding further with the removal of the said ALBERT BLAINE or any of said patients of the said asylum for Insane Indians, located at Canton, South Dakota, and are hereby restrained and enjoined from closing of abandoning the said asylum for Insane Indians, located at Canton, South Dakota."
    It is the decision of a number of State courts that injunctions of this type can affect only the parties, their agents and representatives, and persons aiding and abetting them, or conspiring with them.
  Exparte State ex rel Higdon, 162 Ala. 181, 50 So. 143 (1909).

  Boyd v. State, 19 Neb. 128, 26 N. W. 925 (1886).

  Rigas v. Livingston, 178 N. Y. 20, 70, N. E. 107 (1904).

    The rational of these decisions appears in the opinion of the Alabama Supreme Court, cited supra:
    "The writ did not undertake to create a status effecting to place the safe in gremio legis.The relator was a stranger to the writ. Its obligation was confined to the conduct of Ward and Bodeker. It was not framed and did not assume to protect the safe general. It did not attempt to maintain the status quo except by restraint of Ward and Bodeker".
    50 So. at 144.

    On the other hand a group of inferior Federal courts have evolved a theory that any independent act of a stranger to an injunction-if he has notice of the injunction-which has the effect of rendering the action of the court nugatory, is an act of disrespect for the court which is punishable as a criminal contempt.

    "It is entirely consonant with reason and necessary to maintain the dignity, usefulness and respect of the court, that any person, whether a party to a suit or not, having knowledge that a court of competent jurisdiction has ordered certain persons to do or abstain from doing certain acts, can not intentionally interfere to thwart the processes of the court in making such order * * *. Such an act is a flagrant disrespect to the court * * * and an unwarrantable interference with, and obstruction to the orderly and effective administration of justice, and, as such is and ought to be treated as a contempt of the court which issued the order".

  In re Reese 107 Fed. 942, 945 (C. C. A. 8th, 1901).

    Accord: Garrigan v. U. S., 163 Fed. 16 (C. C.A. 7th 1909).

  Chisholm v. Gaines, 121397 (C. C. D. S. C., 1903).

    Recently, the Supreme Court of California has been urged to adopt the above reasoning but it refused to do so. Its analysis seems more satisfactory than that of the Federal decisions cited above.
    "We are entirely at a loss to see how, there being no disobedience of the injunction charged, as we have shown, there can be any conviction of contempt based on the theory that the affidavit or complaint shows acts 'in contempt of the power and dignity of the

 

385

OPINIONS OF THE SOLICITOR

DECEMBER 8, 1933

court,' acts, as referred to in Garrigan v. United States, supra, in defiance of the 'command of the court', and constituting as 'interference with or obstruction of the administration of justice'. There was no 'command' of the court addressed to petitioner in any way, by name or as a member of any class, and it was not charged that he was acting in concert or connection with or in aid of any party to whom the command was addressed. How then can it be said that he was acting in defiance of the command of the court, or in any way interfering with the execution of that command against those to whom it was addressed?

  Berger v. Superior Court 175 Cal. 719, 167 Pac. 143, 145 (1917).

    In view of the questionable reasoning of the Federal cases it is doubtful whether the United States Supreme Court would have affirmed the decisions in question. Moreover, a new factor has been introduced in the situation by a section of the Clayton Act. That section, Section 383 of Title 28 of the United States Code, provides that an injunction or a restraining order,

"shall be binding only upon the parties to the suit, their officers, agents, servants, employees, and attorneys, or those in active concert or participating with them, and who shall by personal service or otherwise, have received actual notice of the same."
    Of course, the theory of the cited Federal decisions is that there may be independent contemptuous conduct which technically is not a violation of the injunction in question. But in view of the plain purpose of the above statute to restrict the influence of injunctions, it seems doubly difficult now to support these cases.

    One ambiguity in the statute should be pointed out. It is not clear whether the phrase, "those in active concert or participating with them", is a restraint upon those who had been in active concert or participating in the doing of the prohibitory acts before injunction issued, or whether the phrase refers to concert after injunction. This question was mooted in Day v. United States 19F (2d) 21 (C. C. A. 7th, 1927.)

    The first interpretation seems rather strained, and it is doubtful whether a court would adopt it. In either event, evidence seems lacking in this case which would bring any action of the Secretary of the Interior within that clause.

    The entire analysis has postulated the existence of jurisdiction to issue the injunction in question. Briefs filed in the cause on behalf of the Superintendent of the Canton Asylum attack the jurisdiction of the court and seem sound in their contention. The absence of a necessary party, the Secretary of the Interior, and failure to serve the Commissioner of Indian Affairs with process, are the principal grounds for the attack upon the court's jurisdiction. Therefore, even as to parties named, the injunction should be held void, and disobedience of its mandate-no contempt. If any further circumstances should be required to influence an appellate court to look with disfavor on the entire procedure, it may be observed that the District Court in issuing the injunction, ignored all formalities for such procedure provided in Section 381 and 383 of Title 78 of the United States Code. One of those requirements is that the injunction state the reasons for its issuance.

    It is my opinion that no breach of law or propriety is involved in the procedure suggested in this memorandum.

                                                                                                                                              NATHAN R. MARGOLD,

Solicitor.
HOME OWNER'S LOAN BONDS FOR OSAGES

54 I.D. 341

M-27636                                                                                                                               December 8, 1933.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    You have requested my opinion as to whether bonds issued by the Home Owners' Loan Corporation may be accepted on behalf of restricted Osage Indians in satisfaction of first mortgages held by such Indians on home properties, and if so, whether any action can be taken to provide additional security for the Indians where the amount of the loan obtained by the home owner is less than the amount of the note and mortgage outstanding.

    The Home Owners' Loan Corporation was created by the act of June 13, 1933 (48 Stat. 128), for the purpose of affording relief to distressed home owners by providing a method of refunding or re-financing pressing mortgage indebtedness against their homes. The Corporation has a capital stock of $200,000,000 fully subscribed by the United States and is authorized to issue bonds up to $2,000,000,000 to carry out the objects for which it was created. The plans of the Corporation provides for the exchange of its bonds in the acquisition of first mortgages on homes and also for the making
 


 

386

DEPARTMENT OF THE INTERIOR

DECEMBER 8, 1933

of loans in cash in certain cases but with the latter we are not here concerned. Where bonds are taken, the amount is limited to 80% of the appraised value of the property involved and the rate of interest paid by the home owner will not exceed 5 per cent. The consent of the owner of the existing mortgage to take bonds of the Corporation in consideration of the release of all his claims against the property is, of course, required. The bonds draw interest at the rate of 4% payable semi-annually and mature in 18 years but are callable at par by lot on any interest date. The bonds are guaranteed fully and unconditionally as to interest only by the Government of the United States. They are acceptable at face value in payment of indebtedness due to the Home Owners' Loan Corporation and are exempt as to both principal and interest from all Federal, State, municipal, and local taxation (except surtaxes, estate, inheritance, and gift taxes). The bonds are the direct obligation of the Home Owners' Loan Corporation, and the fixed assets supporting the bonds will consist of the first mortgages acquired by the Corporation including those acquired in consideration of loans made in cash provided by the issuance of capital stock and those acquired through the exchange of bonds. The Corporation plans to retire bonds as payments of principal on loans are made and the loans satisfied.

    The question presented by the present inquiry has arisen, it appears, in connection with an application made by one O. L. Barlow for a loan from the Home Owners' Loan Corporation of a sufficient amount to satisfy a mortgage now held by the Superintendent of the Osage Indian Agency for the benefit of the estate of Wiley (Wally) Whitewing, deceased Osage allottee No. 686. The mortgage was given to secure the payment of a note in the amount of $6,000 dated October 23, 1924, due October 23, 1929, with interest at 7%payable semi-annually. The loan was made from funds in the hands of the legal guardian of Wiley Whitewing and the funds were apparently unrestricted at that time. However, the restrictions upon such funds in the hands of legal guardians, or the property into which such funds may have been invested, appear to have been reimposed by certain provisions contained in the act of February 27, 1925 (43 Stat. 1008). See Hickey v. United States (64Fed. 2d. 628). Accordingly, the United States District Court for the Northern District of Oklahoma in the case of United States v. Bennett, No. 1721 Law, handed down a judgment on May 18, 1933, holding that the note and mortgage under consideration, together with certain other securities, were subject to the jurisdiction of the Secretary of the Interior. The Court found, among other things,

    "That the said judgment property and notes and mortgages are hereby declared subject to the jurisdiction and control of the Secretary of the Interior for the use and benefit of the said heirs of Wally Whitewing, deceased, to be administered by him in accordance with law."
    The existing mortgage covers improved property owned by Mr. Barlow in the town of Hominy, Oklahoma, and there is now due thereon the sum of $7,890, including interest to October 11, 1933. The record does not disclose the present appraised value of the property, but the Superintendent of the Osage Indian Agency reports that he does not believe that the "Indians will ever realize a sufficient sum from the security to enable them to come out whole on this loan." The Indian heirs of Wiley Whitewing have given their written consent to take the bonds of the Home Owners' Loan Corporation and in consideration therefor to release all their claims against Mr. Barlow's property.

    Regarding the question generally of the authority of the Secretary of the Interior to invest the restricted funds of members of the Osage Tribe of Indians in bonds of the Home Owners' Loan Corporation, it may be pointed out that the moneys belonging to these Indians are derived from leases of the minerals, chiefly of oil and gas, underlying their reservation which were reserved to the tribe in common by the act of June 28, 1906 (34 Stat. 539). That act directed, among other things, that the income from the mineral and other tribal sources should be paid quarterly pro rata to the members of the tribe as shown by a final roll made and approved under the provisions of the act. By the act of March 3, 1921 (41 Stat. 1249), however, Congress placed the members on quarterly allowances ($1000 for adults and $500 for minors) and directed that the remainder of the share of each member, commonly called the "surplus" be invested and conserved for his future benefit. Section 1 of the act of February 27, 1925 (43 Stat. 1008), increased the quarterly allowances for minors between the ages of 18 and 21 and broadened the scope of the authority of the Secretary of the Interior with respect to the expenditure and investment of the surplus. The latter provision being of most importance here, it is quoted in full below:

    "The Secretary of the Interior shall invest the remainder, after paying the taxes of such members, in United States bonds, Oklahoma State bonds, real estate, first mortgage real estate loans not to exceed 50 per centum of the appraised value of such real estate, and where the member is a resident of Oklahoma such investment shall be in loans on Oklahoma real estate, stock in Oklahoma building and loan

 

387

OPINIONS OF THE SOLICITOR

DECEMBER 22, 1933

associations, livestock, or deposit the same in banks in Oklahoma, or expend the same for the benefit of such member, such expenditures, investments, and deposits to be made under such restrictions, rules, and regulations as he may prescribe: Provided, That the Secretary of the Interior shall not make any investment for an adult member without first securing the approval of such member of such investment."

    It will be observed that the foregoing provision specifically enumerates the forms of investment which the Secretary of the Interior is authorized to make from the funds of these Indians. The bonds issued by the Home Owners' Loan Corporation are not mentioned, nor can they be regarded as included within any of the forms of investment enumerated. They are not United States bonds, but are direct obligations of the Corporation, the liability of the United States extending only to a guarantee of the interest with no responsibility whatever towards the principal. They can not be brought within the authority of the statute by regarding them as a form of first mortgage real estate investment. It is true that the Corporation takes first mortgages from the home owners which are in a sense security for the bond issue. But the amount advanced by the Corporation exceeds by 30% the limit fixed by Congress for loans from Indian funds. Furthermore, the act of 1925 contemplates direct investments of the Indians' funds in first mortgage real estate loans. The loans made by the Corporation represent investments by it rather than by the bondholders and the notes and mortgages, taken by the Corporation are the media through which it expects to raise the funds necessary to retire the bonds. Obviously, therefore, the act of 1925 contains no authority for the investment of the funds belonging to restricted Osage Indians in the bonds of the Home Owners' Loan Corporation.

    Regarding the exchange of the Corporation's bonds for an existing first mortgage investment, it may be said that the substitution of an unauthorized investment for an authorized one can not be justified where the existing authorized investment is safely secured, but where the security is impaired to the extent that the Indians face a certain loss, their manifest interests would appear to demand that such measures as may be available be taken to avoid or mitigate the loss. As the guardian of the Indian wards in the administration of their affairs, the Secretary of the Interior is charged with the duty of protecting their interests and promoting their welfare, and this duty would appear to draw to it the power and authority necessary to take appropriate action in such perilous cases. The facts in connection with the Barlow mortgage are not sufficiently stated to enable me to determine with certainty whether the case is one in which the acceptance of the bonds of the Home Owners' Loan Corporation is justified as a measure essential to the protection of the interests of the Indians. If upon further investigation it develops that such is the situation, the bonds of the Corporation may be accepted, otherwise not. It is difficult to see, however, how the proposed exchange could improve the position of the Indians, since not more than 80% of the value of the property could be acquired in such bonds. We are here dealing with trust funds, and we are not permitted to release any portion thereof without an adequate return. The existing mortgage is security for 100% of the loan if the property has that value. If it is good for only a portion of the debt, the Indians are entitled to its full value rather than 80% of the value as proposed in the exchange.

    The further question as to whether any action can be taken to provide additional security for the Indians where the amount of the loan obtained by the home owner is less than the amount of the outstanding note and mortgage can not well be answered without having before me a concrete case with a statement of the facts showing the amounts involved, the appraised value of the property, the status of the borrower as a moral risk and his earning power, and the kind of security he is able to furnish. I shall be pleased to consider this question further upon presentation of such a concrete case.

                                                                                                                                             NATHAN R. MARGOLD,

Solicitor.
Approved: Dec. 8, 1933.
OSCAR L. CHAPMAN, Assistant Secretary.

ROSEBUD FEE PATENT ISSUANCE

M-27645.                                                                                                                             December 22, 1933.

The Honorable,
The Secretary of the Interior.

DEAR MR. SECRETARY:

    You have requested my opinion in the matter of the issuance of a patent in fee for 160 acres of land allotted to William John Grant, deceased Rosebud allottee, No. 5033.

    Under authority of the act of June 25, 1910 (36 Stat. 855), the Department on March 5, 1930, approved a sale of the above land on the deferred payment plan, the contract of purchase being signed by Ross L. Massingale. All payments on the sale have now been completed and request is made that the patent issue to Bertha L. Massingale, mother
 


 

388

DEPARTMENT OF THE INTERIOR

DECEMBER 22, 1933

of Ross. A formal assignment to Bertha is submitted signed by Ross and his parents, John L. and Bertha L. Massingale. It develops that the real purchaser of the land was the father, John L. Massingale, and payment of the entire consideration has been made by him. The son, Ross, whose name was signed to the contract of purchase was, at the time of sale, a minor 9 years of age. The Superintendent of the Rosebud Indian Agency states:

    "This family, the same as a great many others in this vicinity, has suffered, financial losses and is now in straightened circumstances. For this reason they wish the patent in fee covering the above lands in the name of the mother in order that she may be able to convey them if necessary and save court fees required in conveying property belonging to a minor."
    The question presented is whether the patent in fee should issue to Ross L. Massingale, the son, or to Bertha L. Massingale, the mother. The obvious duty of the Department, of course, is to issue the patent to the purchaser or to such person as he may direct. Here the matter is largely one of family interest concerning only white people, all of whom have joined in the request that the patent issue to the mother. I am aware of no sufficient reason for denying that request. The contract of purchase signed by the 9-year old boy, plainly was not enforceable against him. The father as the actual purchaser was the responsible party and his action in having the minor sign the sale papers can be regarded at the most as indicating an intention to make, not a present gift, but a gift in the future when the title was earned by completion of the payments due on the land. As stated in 28 C. J. Sec. 20, p. 629, a mere intention to make a gift, however clearly expressed, which has not been carried into effect amounts to nothing, and confers no rights in the subject matter of the proposed gift upon the intended donee. It is further stated in the same work that a gift to be effective must be completely executed for the reason that, there being no consideration therefor no action will lie to enforce it; that if anything remains to be done, the transaction is a mere executory agreement to give and the title does not pass; and that until the gift is thus made perfect, a locus posnitentiae remains, and the owner may make any other disposition of the property that he may think proper.

    Inasmuch as the transaction under consideration, if intended as a gift from father to son, was not completely executed, it is my opinion that the patent should issue to Bertha L. Massingale, in accordance with the request of John L. Massingale the purchaser and equitable owner of the land.

                                                                                                                                                NATHAN R. MARGOLD,

Solicitor.
Approved: December 22, 1933.
OSCAR L. CHAPMAN, Assistant Secretary.

PROPOSED TRUST FOR ALASKAN NATIVES AS
NONPROFIT CORPORATION, UNDER DELAWARE
LAW-LEGISLATIVE REQUIREMENTS-
ADMINISTRATIVE AUTHORITY

January 11, 1934.
Memorandum for the Secretary.

Re Proposed Trust for Natives of Alaska.

I.

    The proposal made by Mr. Baldwin first presents this legal question: Can the Government officials named in the proposal act as trustees, and if so, by what means?

    After careful consideration it is my conclusion that the Government officials can accept and administer the proposed trust by means of an Act of Congress authorizing them so to act, and that such an Act of Congress is the surest and safest means of effectuating Mr. Baldwin's proposal.

    Although there are other means by which the proposed trust might be accepted and administered by the three officials named, these other means have attendant risks and uncertainties which make them relatively undesirable.

    1. There is a means of the three officials' indirectly accepting and administering the trust, which would not require an Act of Congress. And be cause of the delay and uncertainty which probably would confront an attempt to obtain an act of authorization from this busy session of Congress, this means, a corporation, might be expedient.

    A nonprofit membership corporation could be organized under the laws of Delaware naming as the members the persons now occupying the positions of the Secretary of the Interior, the Secretary of Agriculture, and the Governor of Alaska. The form of organization could be similar to that utilized in the formation of the Federal Subsistence Finance Corporation, with the objects and powers of the corporation expressed to be those of administering trusts for the benefit of the natives of Alaska. Mr. Baldwin could then create the trust, naming the corporation as trustee. (If preferable, the trust might be created before the corporation.) By having the trustees incorporated there would be,
 


 

389

OPINIONS OF THE SOLICITOR

JANUARY 11, 1934

if ever needed in future years, simplification of court enforcement of the beneficiaries' rights-the simplicity of proceeding against a corporation instead of Government officials. By providing in the corporation charter for limitation of membership to those persons occupying the three named governmental positions, administration of the trust would be placed where Mr. Baldwin wants it; but this corporate means would be private rather than governmental, and because of its private character would present a risk. The official character of the three named officials would merely make them eligible for membership in the corporation, and if in the future an individual holding one of the three Government offices should refuse membership, he could not be forced to accept it. In such an event a court might appoint another trustee in place of the corporation; but, nevertheless, Mr. Baldwin's purpose would have been defeated. Too, Mr. Baldiwn's proposal may reasonably be construed to contemplate the three officials' accepting and administering the trust in their official rather than their private capacities; so that the corporate means suggested, although perhaps expedient from one point of view, probably would not conform to Mr. Baldwin's wishes and would lack the permanency of trusteeship which an Act of Congress would provide.

    2. Before discussing an Act of Congress as a means of providing for acceptance and administration of the trust, there should be considered the question of whether legislative enactment is a prerequisite to legitimate activity of the three officials as trustees of the proposed trust. Examination of relevant statutes, case law, and the opinions of the Attorney General does not reveal any general authorization or sanction for a Department head to act as trustee in such a trust as that proposed. It is equally important, however, to note that neither does such examination reveal any prohibition against such executive activity. There seems to be neither authoritative sanction nor disapproval; but since the official duties of the heads of Departments are ordinarily determined by the laws for the execution of which their respective departments are responsible, the conventional means for carrying out the Baldwin proposal would be an Act of Congress. Acceptance and administration of the trust by the three officials without legislative authorization would be of uncertain legal authority.

    3. The three officials could, by virtue of an Act of Congress giving them authority in the premises, accept and administer the trust. The United States and those acting in its behalf have the capacity to act as trustees. And while they can administer a trust only for such purposes as are embraced within the powers conferred by the Constitution, the purposes of the proposed trust are within the granted powers over property belonging to the United States and over the natives of Alaska, so as to bring the proposed trust within the category of those which can be administered by the United States and those acting in its behalf.

    It is true that Title 48, Section 50b, Supplement VI, United States Code, provides:

"Donations for school, medical, and reindeer service; acceptance by Secretary of Interior.-The Secretary of the Interior, in his administration of the Alaska school service, the Alaska medical service, and the Alaska reindeer service, is authorized in his discretion to accept lands, buildings, or other property and moneys which may be donated for the purposes of those services. (Mar. 7, 1928, c. 137. Sec. 1, 45 Stat. 239.) "
But this section, quoted from the only statute pertinent to the matter herein involved, while authorizing the Secretary of the Interior's accepting donations for the purposes expressed in the proposed trust, cannot be construed to authorize the acceptance and administration of a trust for those purposes. Nor does it give any authority to the other two officials named in the proposal. For statutory authority to accept and administer the trust, therefore, a new Act must be obtained.

    As indicated at the beginning of this memorandum the surest way of obtaining the services of. the three officials as trustees is to make such services a part of their official duties by Act of Congress; and the safest basis of authority for their activity, in their official capacity, as trustees, is an Act of Congress.

II.

    A second question presented by the Baldwin proposal is the advisability, as a matter of policy, of accepting the trust. In this connection, the record of the hearings of the Reindeer Committee in Washington, D. C., February and March, 1931, the Department of the Interior files on the reindeer industry in Alaska, the records of the Reconstruction Finance Corporation relative to its negotiations with the corporations involved in the proposition, and the files of the Division of Investigations of the Department of the Interior contain much pertinent information. Since the question of policy is not one for initial consideration by my office, it has not been gone into and no recommendation is made here with reference thereto. If you desire me to inquire into this phase of the subject and submit a recommendation, I shall be glad to do so.

                                                                                                                                             NATHAN R. MARGOLD,

Solicitor.

 

390

DEPARTMENT OF THE INTERIOR

MARCH 1, 1934

YANKTON SIOUX SCHOOL LANDS

M-27671.                                                                                                                                             March 1, 1934

SUMMARY.

    Under the provisions of the act of February 13, 1929 (45 Stat. 1167), the buildings located on lands within the Yankton Sioux Indian Reservation reserved for school, agency and other purposes, passed to and became the property of the Yankton Sioux Tribe along with the lands. Such buildings may be sold under the provisions of the act of February 14, 1920 (41 Stat. 408-415), or they may be razed, if in the judgment of the Commissioner of Indian Affairs and the Secretary of the Interior, such action will better serve the interests of the Indians, any funds realized from such action to accrue to the benefit of the Indians.

The Honorable,
The Secretary of the Interior.

DEAR MR. SECRETARY:

    At the suggestion of the Assistant Commissioner of Indian Affairs my opinion has been requested as to whether certain buildings located on lands originally a part of the Yankton Sioux Indian Reservation in South Dakota belong to the Indians or to the United States.

    The question of title to the buildings, as between the Government and the Indians, turns primarily on the provisions of the act of February 13, 1929 (45 Stat. 1167), but before discussing the provisions of that act it may be well to refer briefly to the ownership of the lands and buildings under the prior laws.

    The Yankton Sioux Indian Reservation was established by the treaty of April 19, 1858 (11 Stat. 744). The right of the Indians to the reservation thereby created was that of use and occupancy, the United States having the title in fee. Spalding v. Chandler (160 U.S. 394). By an agreement entered into December 31, 1892, and ratified by the act of August 15, 1894 (28 Stat. 286, 314), the Yankton Sioux Indians ceded and sold to the United States for a consideration of $600,000 a part of the reservation including the lands here involved which were reserved from sale to settlers and set aside for agency, school and other purposes by article 8 of the agreement. Complete title to the lands so reserved thus passed to the United States free and clear of all claims of the Indians. The buildings in question have been used in connection with school and administrative activities. They were erected and maintained by the Government on the reserved lands, not with moneys belonging to the Indians, but with moneys appropriated by Congress from the Federal Treasury. The buildings likewise belonged absolutely to the Government.

    Such was the condition of title to the lands and buildings at the time of the passage of the act of February 13, 1929, by which the reserved lands were reconveyed to the Indians. The act reads:

    "That all claim, right, title, and interest in and to certain lands on the Yankton Sioux Indian Reservation in the State of South Dakota, now reserved for agency, schools, and other purposes (embracing one thousand acres, more or less) pursuant to the Act of Congress dated August 15, 1894 (Twenty-eighth Statute, page 286), be, and is hereby, reinvested in the Yankton Sioux Tribe of Indians when they are no longer required for agency, school, and other purposes: Provided, however, That this Act shall not be construed to make any such land available for allotment purposes."
    It will be observed that the foregoing provision declares that the title to the reserved lands "is hereby reinvested in the Yankton Sioux Tribe of Indians". The use of the term "reinvested" implies that the purpose of Congress was to restore to the Indians the title which they held prior to the cession of 1892, that is, the Indian title of occupancy and use, the United States still retaining the title in fee. But the Indian title of use and occupancy is as sacred as the fee title of the sovereign, United States v. Cook (19 Wall. 591), and the Indians have the full beneficial ownership with all the rights incident thereto. See 34 Op. Atty. Gen. 171. Whether the ownership of the Indians extends to the buildings upon the lands is essentially a question of what was intended and where that intention is not otherwise shown, it has been held that the Government will be deemed to have assented that its conveyance be construed according to the law of the State in which the land lies. See in this connection Oklahomav. Texas (258 U.S. 574, 595). The act of 1929 contains nothing to indicate any intention upon the part of the Government to retain ownership of the buildings. They are neither excepted nor reserved. In the absence of such an exception or reservation, the rule is universal that the buildings are part of and pass with the land. Isham v. Morgan (9 Conn. 374; 23 Am. Dec. 361); Oesting v. New Bedford (210 Mass. 396; 96 N.E. 1095); Blake McFall Co. v. Wilson (98 Ore. 626; 193 Pac. 902); Holmes v. Neill (222 Pac. 670); Schultz v. Ferguson (231 N.W. 358). Under this rule, the grant to the Indians carried with it the buildings upon the lands.

    Nothing in the legislative history of the enactment is to the contrary. In reports to the Senate
 


 

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and House Committees on Indian Affairs recommending that the bill which became the act of 1929 be not enacted, the Secretary of the Interior called specific attention to the fact that "there are forty buildings on the land used in connection with school and administrative activities". See House Report No. 1852 and Senate Report No. 1130 on S-2792, 70th Congress 1st session. The debates before the House and Senate also show that Congress was advised of the existence of the buildings upon the premises. See Congressional Record Volume 69 Part 8, 70th Congress 1st Session, page 8837, and Volume 70 Part 3, 70th Congress 2nd Session, page 2489-2490. In the debate before the House, Congressman Leavitt in urging enactment of the bill stated among other things that a delegation of Indians had appeared before the Committee and presented their desire that whenever the lands ceased to be needed for the purposes they are used for they should be passed back to the custody of the tribe for a community center. And in the Senate, Senator McMaster of South Dakota made the following statement:

    "Mr. President, the statements made by the Senator from Utah are correct in regard to certain Indian lands; but this particular bill does not apply to that class of lands. This bill applies to a certain 1,000-acre tract the title to which is now in the Government of the United States. When this land was ordered placed on the homestead file the Indians were supposed to receive $3.75 an acre, which they did receive; but the Government made $165,000 profit, and retained these 1,000 acres for Government buildings. This is simply to reinvest this land, to give the title back to the Indians, not for allotment but for reservation purposes, buildings, and so forth."
    Aside from the fact that the failure of Congress, with knowledge of the existence of the buildings, to reserve them, reasonably warrants the assumption that no such reservation was intended, the statements of Congressman Leavitt and Senator McMaster strongly indicate that it was the understanding of Congress that enactment of the measure would confer upon the Indians ownership of the buildings along with the lands, such ownership, under the terms of the statute, to take effect when the property was no longer required for agency, school and other purposes.

    It is understood from the information submitted by the Assistant Commissioner of Indian Affairs that the use of the reserved lands for the purposes for which they were reserved has been permanently discontinued and that the lands are no longer needed for any of such purposes. Upon that understanding, I hold, for reasons stated above, that the lands and buildings located thereon are now tribal property belonging to the Yankton Sioux Tribe of Indians. As such, the buildings appear to be subject to sale for the benefit of the Indians either with or without the lands upon which they stand, in accordance with and subject to the conditions set forth in the act of February 14, 1920 (41 Stat. 408-415), which reads:

    "That the Secretary of the Interior is hereby authorized to sell and convey at public sale, to the highest bidder, under such regulations and under such terms and conditions as he may prescribe, at not less than the appraised value thereof, any abandoned day or boarding school plant, or any abandoned agency buildings, situated on lands belonging to any Indian tribe and not longer needed for Indian or administrative purposes, and to sell therewith not to exceed one hundred and sixty acres of land on which such plant or buildings may stand. Title to all lands disposed of under the provisions of this Act shall pass to the purchaser by deed or by patent in fee, with such reservations or conditions as the said Secretary may deem just and proper, no purchaser to acquire more than one hundred and sixty acres in any one tract: Provided, That the proceeds of all such sales shall be deposited in the Treasury of the United States to the credit of the Indians to whom said lands belong, to be disposed of in accordance with existing law."
    The record shows that instructions were issued on January 18 directing that two of the buildings be offered for sale to the highest bidder and that the remaining buildings be razed. Express authority for the sale is found in the act of February 14, 1920,
supra. If, however, it is the judgment of the Commissioner of Indians Affairs and the Secretary of the Interior that the interests of the Indians will better be served by razing the remaining buildings, the power so to do, in the absence of an express statute, is, I think, included among those broad supervisory powers conferred upon the Commissioner and the Secretary by Sec. 463 of the Revised Statutesof the United States. See Rainbowv. Young (161 Fed. 837); United States v. MacDaniel (7 Pet. 1); Williams v. United States (138 U. S. 514). In the latter case, the court, speaking of the broad powers of the Secretary of the Interior, said:
    "It is obvious, it is common knowledge, that in the administration of such large and varied interests as are intrusted to the Land Department, matters not foreseen, equities not anticipated, and which are therefore not provided

 

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for by express statute, may sometimes arise, and, therefore, that the Secretary of the Interior is given that superintending and supervising power which will enable him, in the face of these unexpected. contingencies, to do justice."

    The court in the Williams case was dealing with the powers of the Secretary of the Interior in public land matters, but that the same remarks apply in the administration by the Secretary of the property and affairs of the Indians is established by the decision of the Supreme Court in Knight v. U.S. Land Association (142 U.S. 161, 182).

    The materials salvaged, or the proceeds arising from any sale thereof, in the event the buildings are razed, belong, of course, to the Indians and not to the Government.

    The question of whether the consent of the Indians should be obtained before the buildings are disposed of in the manner contemplated by the instructions of January 18, is one of policy upon which I express no opinion other than to suggest that, as the owners of the property, their wishes should be ascertained, and if possible, respected.

                                                                                                                                             NATHAN R. MARGOLD,

Solicitor.
Approved: March 1, 1934.
OSCAR L. CHAPMAN, Assistant Secretary.

PAPAGO--MINERAL DEPOSITS

M-27656                                                                                                                              March 7, 1934.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    At the suggestion of the Commissioner of Indian Affairs there has been referred to me for opinion the question of the validity of certain claims of surface and mineral rights asserted by the Indians of Papago Tribe. These claims embrace an existing Indian reservation of more than two and one-half million acres, and a large amount of adjacent land in southern Arizona. The area is bounded, in a general way, by the Gila River, the Santa Cruz River, the Mexican boundary and the Growler Mountains. For centuries it has been, and it still is the home of the Papago Indians.

    The Papagos claim that both surface and minerals belong to them in fee by virtue of a title vested in them before the area in question came under the sovereignty of the United States. Therefore, they allege, the land never became part of the public domain of the United States.

    In 1853, this territory, then a part of Mexico, was acquired by the United States as a part of the Gadsden Purchase. 10 Stat. 1031 (1854). By Act of July 22, 1854, Congress established the office of Surveyor General of the Territory of New Mexico and placed under the jurisdiction of the Surveyor General the examination of all claims to land asserted under the laws, usages, and customs of Spain and Mexico. Ultimate confirmation and rejection of such claims was made a function of Congress acting upon such report and recommendation as the Surveyor General might make. 10 Stat. 308 (1854). After Arizona became a separate territory, similar legislation was enacted creating the office of Surveyor General of Arizona and defining the duties of that office. 16 Stat. 291 (1870). In 1891 Congress created the Court of Private Land Claims and conferred upon it jurisdiction to hear and adjudicate claims asserted under the Spanish and Mexican law. 26 Stat. 854 (1891). As early as 1874 the President of the United States, by Executive order, set apart a small tract of land within the Papago country, immediately around the old Jesuit Mission and Indian village of San Xavier del Bac, as an Indian reservation. Other comparatively unimportant reservations followed until Executive Order No. 2524, dated February 1, 1917, effected the reservation of more than two million acres in the Papago country for Indian inhabitants, but excepted mineral deposits and provided that the reservation area be open to entry and location under the mining laws of the United States. Congress recently has added to this reservation a contiguous strip of some three hundred thousand acres with the same exception and provision concerning minerals. 46 Stat. 1202 (1931). From time to time the United States has issued patents to white settlers and miners within the Papago country. It is to be remarked that during all these years of Indian occupancy and of Federal action presupposing the inclusion of the land in question within the public domain, only one instance of formal assertion of Indian title is recorded. In that case the Supreme Court of the United States considered an Indian claim to a particular small area within the Papago country. The litigation was indecisive. Lane v. Pueblo of Santa Rosa, 249 U. S. 110 (1919); Pueblo of Santa Rosa v. Fall, 273 U. S. 315 (1927). Under these circumstances and at this late date, those who assert that the Indians hold fee simple title to this land must bear a substantial burden of persuasion.

    A number of surveys and studies have been made of the Papago Indians and the territory they occupy. From such sources it is possible to draw a
 


 

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significant picture of the factual relation between these Indians and the land in controversy. The Geological Survey has published a monograph embodying the results of a recent survey. Bryan, The Papago Country, Arizona (1925). Ten years earlier The United States Indian Service, through the agency of H. V. Clotts, assistant engineer, completed a comprehensive survey of the Papago country. Also valuable is an unofficial study by Carl Lumholtz, published in 1912, in his book "New Trails in Mexico." Studies by the Bureau of American Ethnology, official Census reports, and reports of the Secretary of the Interior, the Commissioner of Indian Affairs, the Surveyors General of New Mexico and Arizona and subordinate officials in the Indian Service complete the picture.

    Lumholtz writes the following description:

    "The Papago Indians of today, the principal natives of the desert, live in Arizona to the west and southwest of Tucson, as far as the Growler Mountains in the west, the Gila River in the north, and the range of Baboquivari in the east. * * * Until recent (times they were found as far as the Colorado River. They occupy much the same land as they did when first discovered in the seventeenth century by the Spaniards. The region was early named Papagueria, or, in its greater extension, Primeria Alta. It is part of the great arid region called the Sonora Desert. * * *

    "The greater part of the tribe never could be induced to live in pueblos, or villages, which was always the policy of the Spanish missionary. In spite of the efforts of the Jesuits and Franciscans, the Papagoes are still living in their rancherias as of old, half nomadic in habit, resorting in the winter to the sierras where water is more plentiful and where their cattle, horses, mules, and donkeys find good grazing ground. In the summer they move to the broad, flat valleys to devote themselves to agriculture which is made possible by the aid of the showers that fall in July and August. (At pp. 16, 25)

    See also Bryan at p. 1; Indians Taxed and Indians not Taxed in the United States at the 11th Census, 1890 (Dept. of Interior, Census Office, 1894) 142 ff.

    The character and location of the Indian communities in the so-called Papagueria have been the subject of census. Clotts, Bryan and Lumholtz report the Indian communities in some detail. Clotts describes 62 inhabited villages aggregating 1,013 houses with a total population of 5,560 persons and with 9,200 acres under cultivation. Lumholtz, similarly, lists 88 rancherias. Bryan devotes more than 150 pages to a description of all traveled routes through the Papagueria, and names and describes the scores of inhabited places to be observed along these routes. Earlier reports, apparently not predicated upon any detailed survey, show a much smaller number of communities. Soon after the Gadsden Purchase, Gov. Meriwether, Superintendent exofficio of Indian Affairs in New Mexico, reported, "from the most reliable information in my possession," that the Indians within the area of the Gadsden Purchase were concentrated in "six Pueblos, or villages," near Tucson. 2 Sen. ex. dot., 34 Cong. 3d Sess. (1856-57) 734. The Surveyor General of New Mexico appended to his annual report for the year 1861 a table in which he attempted to include "all the pueblos whether in New Mexico proper or in Arizona." He .listed therein 11 "Papago pueblos" located in Arizona, all of them, however, unsurveyed and of unknown area. 1 Sen. ex. doc., 37 Cong., 2d Sess. (1861-62) 574, 578, 580, 581. In 1963, Charles D. Poston, the first Superintendent of Indian Affairs in the Territory of Arizona, listed 18 Papago villages within his jurisdiction. 3. H. R. ex. doc., 38 Cong. 1st Sess. (1863-64) 503, 504.

    The discrepancy between the earlier and later report seems to reflect both incompleteness of the earlier data and some recent migrations of the Indians.

    "The primitive conditions of Papago society is giving way to the new. * *

    "Formerly they lived in large rancherias, but in the last twenty years the tendency has been to scatter. They have been touched by Americanism and are now showing energy in acquiring cattle and other properties. * * * During the last twenty years the tribe has acquired a considerable number of live stock, often 20 cows, and from 10 to 12 horses to a family," Lumholtz at 363, 364.

    Comparison of the recent reports with the older ones confirms the quoted statement. Most of the communities named in the earlier reports appear in the recent one, but with decreased population. This much seems clear: the life of the Papagos, conditioned, by the aridity of the Papagueria, has not been sedentary. It is their habit to make seasonal migrations of some regularity between winter rancherias and summer rancherias. The search for pasturage and water for herds and flocks has necessitated even more extended wanderings than the exigencies of human life in an arid country alone would require. Yet, certain villages have existed for centuries. No survey of any of them seems to have
 


 

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been made at any time during the Spanish or Mexican dominion. Grazing lands throughout the Papagueria seem to have been common to the entire tribe regardless of village affiliations. From so much as already has been said by way of description, it must be apparent that, at the outset, the proponents of Indian title must face serious difficulties of proof in defining the area claimed and identifying the claimants to that area. Ownership in severalty is not asserted. Ownership by village communities can be established only if such communities can be defined. Moreover, a great part of the Papago country seems not to be part of any village community. A claim of tribal ownership of the entire Papagueria cannot be established without a fixing of boundaries. Certainly, the present arbitrary reservation is less extensive than the area over which the Papagos formerly roamed. The evidence at hand is insufficient for decision upon questions of boundary, but these difficulties of proof deserve mention, at least, before the general law of Indian tenure, and of mines, is considered.

    The question of Indian tenure to be decided is this: must the interest of the Papagos in the land they claim be subordinate to a superior proprietorship in the United States, or can these Indians have a perfected title in fee which precludes the United States from exercising any proprietorship over the land? That the Papagos have long occupied the Papagueria and should be protected in that occupancy, is not disputed. Indeed, the Executive order of February 1, 1917, is a recognition of an obligation which officials in the Indian Service have pointed out repeatedly ever since the annexation of the territory in question. That order, however, confirms and confers surface rights only. The contention now is that at the time of cession the Papagos had a perfected communal title in fee, no more subject to interference by the Federal Government-whether by creation of a reservation for the occupants, or by alienation of their land or its mineral wealth-than the fee simple title of any individual owner.

    Had the land been part of the original territory of the United States it is clear that the contention advanced on behalf of the Indians would fail. Spalding v. Chandler, 160 U. S. 394 (1896); Cherokee Nation v. Georgia, 5 Pet. 1 (U. S. 1831). However, Spanish and Mexican law are decisive of the question here presented.

    It was the accepted legal theory of the European nations which colonized America that upon discovery of .any new lands complete jurisdiction and ownership, both imperium and dominion became vested in the sovereign to whom the discoverer owed allegiance. For a convenient compendium, see Indian Land Cessions in the United States (Ethnology Bureau 1897), H. R. doc. 118, 56 Cong. 1st Sess. (1899-1900) 527 ff. The King of Spain asserted a twofold claim to the vast area of New Spain and Mexico, predicating his title not alone on the right of discovery, but also upon a grant from the Pope contained in the Papal Bull of 1493. See Johnson v. McIntosh, 8 Wheat. 543, 573 (U. S. 1823); Hall, Laws of Mexico (1885), secs. 1, 2; Solorzano, Politica Indiana, bk. 1, ch. 9, sec. 16; id bk. 6, ch. 12, sec. 3. It follows that all rights or titles vested in private persons, severally or in groups, must derive their legal character from the Spanish Crown or succeeding proprietors.

    It is not claimed that a particular grant to the Papago Indians as a tribal group was ever made by Spain. It is contended, however, that the numerous decrees of the Spanish King protecting Indians in their occupation of land are in effect a grant of complete title to Indian communities in possession generally.

    The laws governing the disposition of Crown lands in Mexico under the Spanish regime appear principally in title 12 of book 4 of the Recopilacion of the Indies, and in a few uncompiled royal decrees. Law 14 of book 4, title 12 (apparently issued originally in 1578, but amended or republished in final form in 1591) is a convenient starting point.

    "Whereas we have fully inherited the dominion of the Indies; and whereas the waste lands and soil which were not granted by the Kings, our predecessors, or by ourselves, or in our name, belong to our patrimony and royal crown, it is expedient that all the land which is held without just and true titles be restored, as belonging to us, in order that we may retain, before all things, all the lands which may appear to us and to our Viceroys, Audiences and Governors, to be necessary for public squares, liberties (exidos), reservations (propios), pastures, and commons, to be granted to the villages and councils already settled, with due regard to their present condition as to their future state, and to the increase they may receive, and after distributing among the Indians whatever they may justly want to cultivate, sow and raise cattle, confirming to them what they may want besides, all the remaining land may be reserved to us, clear of any incumbrance, for the purpose of being given as rewards, or disposed of according to our pleasure. For all this we order and command the Viceroys, Presidents and Pretorial Audiences, whenever they shall think fit, to appoint a sufficient time for the owners of land to exhibit before them and the ministers of their audiences, whom they shall appoint for that

 

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purpose, the titles to lands, estates, Indian settlements, and caballerias, who, after confirming the possession of such as hold the same by virtue of good and legal titles, or by a just prescription, shall restore to us the remainder, to be disposed of according to our pleasure." See Reynolds, Spanish and Mexican Laws (1895) 47.

    Supplementing this law is, a separate decree of the same date, providing that lands occupied without lawful title-which lands are to be restored to the Crown under Law 14, supra,-"may be admitted to some convenient composition: and thereby confirmed to the possessor thus providing much needed accessions to the King's revenue. Exceptions are made, including a reservation "to the Indians what may be necessary for them to sow, cultivate and raise stock." Among the lands to be admitted to composition are "characas" which seem to have been Indian farms or settlements. Unoccupied "characas" may be conceded to those who present proper petitions. The execution of this decree is entrusted to the Viceroy and the Council of the Indies. Hall, 11-12. In 1735, another decree made it necessary that grants of Crown lands be confirmed by the King himself. The great inconvenience of this system resulted in the decree of October 15, 1754 (Galvan's Ordinances on Land and Water) in which formal confirmation was entrusted to local officers, and their procedure and jurisdiction defined. Section 2 of that decree provided:
    "The judges and officers in whom is delegated the jurisdiction over the sale and composition of crown lands shall act with lenity, forebearance and moderation, with verbal and not judicial process, in questions of lands held by Indians, and of others were it may be necessary, and in particular where their farms, farming and stock-raising are in question; since in regard to community lands and those granted their towns for pastures and commons, there is no occasion to do anything new but to maintain them in possession thereof and to restore to them those that have been taken from them and give them more land as the exigencies of the population require, and do not use rigor in regard to those held by Spaniards and people of other castes, keeping in mind the provisions of laws 14, 15, 17, 18 and 19, Title XII, Book IV, of the Compilation of the Indies." Reynolds, 51.
    Without further setting out in detail the text of title 12 of book 4, it seems a fair generalization that the several laws therein protect the Indians in their occupancy without defining any estate. Moreover, it seems ia clear implication of law 14, and of the Ordinance of 1754, that Indian lands are Crown lands and a part of the royal patrimony, the occupancy of which is surrounded by a special protection. This conclusion is supported by inference to be drawn from other laws of the Indies concerning Indians. In titles 2 and 3 of book 6, appear laws for the assembling of the Indians in villages. Law 23 in book 4, title 7, permits Spaniards to make new settlements in Indian territory, peaceably, if possible, but otherwise "without doing any greater damage than shall be necessary for the protection of the settlements and to remove obstacles to the settlement." Such laws are incompatible with any recognition of ultimate title in the Indians. Again, the several laws with respect to compositions, quoted above, are significant in their reference to Indians. They indicate that occupants without grants from the Crown, whether Indians or Spaniards, remained in possession by sufferance only. Although the Indian occupant enjoyed a particular paternal protection, neither Indian nor Spaniard could obtain title except by formal composition. The Papagos might have perfected their title by formal proceeding, but, failing to do so, they continued in a protected possession subject to the superior title of the Crown.

    Our courts have accorded significant recognition to this legal situation by confirming the power of Spanish officers to grant lands while still in the possession of the Indians. United States v. Fernandez, 10 Pet. 303 (U. S. 1836); Breaux v. Johns, 4 La. Ann. 141 (1849); cf. United States v. Arredondo, 6 Pet. 691 (U. S. 1832).

    It is next contended on behalf of the Indians that even if no grant to them can be proved, lapse of time has resulted in the vesting of perfect title in them.

    It has been asserted by the Supreme Court of the United States that prescription as against the Crown was recognized by the Spanish law. See Holmes, J., in Carino v. The Insular Government of the Philippine Islands, 212 U. S. 449, 461 (1909); cf. United States v. Pendell, 185 U. S. 189 (1902); United States v. Chavez, 175 U. S. 509 (1899). But see Field, J., in Harrison v. Ulrichs,39 Fed. 654 (C. C. S. D., Cal. 1889); Crespin v. United States, 168 U. S. 208, 218 (1897). But, under Spanish law the prescriptive right which resulted from immemorial possession seems to have been no more than a privilege of acquiring title by appropriate formal procedure. See Ordinance of October 15, 1754, section 4 (Reynolds, 50); Novisima Recopilacion, bk. 11, tit. 8, law 4 (2 White New Recopilacion 154); Hall, section 56; Balanton v. Mur-
 


 

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ciano, 3 Phil. 537 (1904). In the Carino case, supra, where the question was whether the United States should confirm the title of an individual owner based on immemorial possession of a defined tract, no such formal proceeding had ever occurred. The Supreme Court avoided this difficulty by resort to the power of the United States as a sovereign to ignore "refined interpretation of an almost forgotten law of Spain," and to "recognize actual fact" in an effort to achieve what the court considered an essentially just result. In contrast, the present question is essentially a formal one, although its decision must affect substantial claims. But more fundamental distinctions are to be observed: (1) This is a case of Indian tribal occupancy which seems to have been permissive and under royal protection. (2) The tract in question is not clearly defined. (3) The claim is one of communal ownership, whether by tribe or by villages.

    This last consideration is decisive in itself. The nature of municipal and communal ownership of land under Spanish law too often has been adjudicated by the Supreme Court any longer to be a subject of controversy. The question has arisen most frequently with respect to the title of Spanish and Mexican pueblos rather than communities or tribes of Indians. Mr. Justice Field has thus described the tenure by which common lands within any community were held.

    "By the laws of Mexico, in force at the date of the acquisition of the country, pueblos or towns were entitled, for their benefit and the benefit of their inhabitants, to the use of lands constituting the site of such pueblos and towns, and of adjoining lands, within certain prescribed limits. This right appears to have been common to the cities and town of Spain from an early period in her history, and was recognized in the laws and ordinances for the settlement and government of her colonies on this continent. * * * It may be difficult to state with precision the exact nature of the right or title which the pueblos held in these lands.

    "It was not an indefeasible estate, ownership of the lands in the pueblos could not in strictness be affirmed. It amounted in truth to little more than a restricted and qualified right to alienate portions of the land to its inhabitants for building or cultivation, and to use the remainder for commons, for pasture lands or as a source of revenue, or for other public purposes. The right of disposition and use was, in all particulars, subject to the control of the government of the country." (Underscore added.) Townsend v. Greeley, 5 Wall. 326, 336 (U. S. 1866). Accord United States v. Sandoval, 167 U. S. 278, 295-298 (1897); United States v. Santa Fe, 165 U. S. 675, 707-711 (1897); Grisor v. McDowell, 6 Wall. 363, 372-3 (1867); United States v. Pica, 5 Wall. 536, 540 (1866); State v. Gallardo, 106 Tex. 274, 166 SW., 369, 372 (1914).

It is clear that the fee to all community land within the limits of any pueblo remained in the sovereign. Lapse of time did not improve the communal title of the group. There is no basis for any contention that the communal title of Indians, whether claimed by villages or by tribe, attained any greater estate. Indeed, in the case of the Papagos, where the greater part of the area involved is grazing land, both within and outside of the limits of particular villages, prescription is further impeded by specific provisions of the law of the Indies that pastures are common to all persons. Bk. 4, tit. 17, law 5 (2 White, 56). The Papago claim to ownership in fee under the Spanish and Mexican law, whether based on grant or prescription, must fail.

    Other and additional considerations make it clear that the Papagos enjoy no estate in the minerals contained in the land. The Spanish law concerning mines, as it existed from medieval times down to 1783, is conveniently summarized in an opinion of Chief Judge (later Mr. Justice) Field. See Moore v. Smaw, 17 Cal. 199, 213-215 (1861). The modern Spanish and Mexican mining law begins with a complete mining code for Spain and its colonies, issued in 1783 and promulgated in Mexico the next year. For translations, see Hamilton, Mexican Law (1882), 235 ff.; 1 Rockwell, A Compilation of Spanish and Mexican Mining Law (1851), 49 ff. This code, commonly called the Ordinance of 1783, remained authoritative in New Spain and in the Republic of Mexico until after the Gadsden Purchase. See United States v. Castillero, 2 Black 17 167 (U. S. 1862); Hall, 357. Title 5 of the ordinance concerns the ownership of mines.

    "Sec. 1. The mines are the property of my royal crown * * *.

    Sec. 2. Without separating them from my royal patrimony I grant them to my subjects in property and possession * * *."

That section 2, supra, is not a present grant and does no more than make possible specific transfers of a qualified property right in the future is made clear in title 6 of the ordinance. In that title the manner in which new mines may be discovered and
 


 

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the formal proceeding of denouncement and registry, whereby a qualified title to any particular mine may be acquired from the Crown, are described. The exact language of certain sections may indicate more clearly the purport of this title.

    "Sec. 14. Anyone may discover and denounce a vein, not only on common land, but also on the property of any individual, providing he pays for the extent of surface above the same, and the damage which immediately ensues therefrom * * *

    "Sec. 18. Beds of ore (placers) and all other deposits (criadores) of gold and silver, on being discovered, shall be registered denounced in the same manner as mines or veins, the same being understood of all species of metal."

Section 22 makes the ordinance applicable to deposits of copper, tin, lead, quicksilver, and other metals.

    In the Laws of the Indies special provisions were made to bring the Indians within the general mining laws. The occasion seems to have been a loss of royal revenues caused by the failure of Indians to disclose mines for fear of confiscation. See Gamboa, Commentaries on Mining Ordinances of Spain (Heathfield's Trs., 1830) 34. In book 4, title 19, it is provided that all persons, including Indians, may discover and work mines, butt that in doing so they must refrain from injuring Indians or other persons. Law 14 prohibits any restriction from being "imposed on their (the Indians) discovering, holding and occupying mines of gold and silver or other metals, * * * in conformity with the ordinance of any province." Law 16 provides that groups of Indian discoverers shall share in a mine in the same way as Spaniards. In brief, under the mining laws of Spain and Mexico the Mian enjoyed the same status and privileges as persons of Spanish descent. The legal situation as it existed down to the time of the Gadsden Purchase is summarized in two statements, one a judicial opinion of the Mexican Supreme Court of Justice, the other a text by a Spanish jurisconsult, Preeminent in the field of mining law.

    "The ordinance (of 1783) disallows and condemns the system of accession, preserving the principles by which mines may be denounced upon the land of another person, and establishing the right upon the owner of the land to demand its estimated value (Por tanto) thus declaring that mines are not accessories to the soil; 5th, as a consequence of this principle, independent in their judicial relations, the ownership of the mine and that of the soil, create two separate and diverse proprietors." Opinion of Chief Justice Vallarta, June 24, 1880, Hamilton, Appendix VIII.

    "The correct opinion then seems to be that the property of the mines remained in the Crown, and that as the Sovereign can not work them on his own account, he has given his subjects a partial interest in them under various restrictions." Gamboa, at 24.

    Since the cession to the United States the courts in this country have recognized both the ownership of mines by Spain and Mexico before the cession, and the succession of the United States to that ownership. See United States v. Castillero, supra, at 190; Chouteau v. Molony, 16 How. 203, 228 ff. (U.S. 1853); Moore v. Smaw, supra, at 217; Boggs v. Merced Mining Co., 14 Cal. 279, 308-313 (1859). The Supreme Court has stated expressly that under Spanish law minerals in Indian lands were the property of the Crown,
"but the privilege to work the mines in lands still in the occupancy of the Indians, he (the Spanish Governor) could give, because the mines were a part of the royal patrimony of the Crown, and the King had directed that they might be searched for and worked in all his dominions by his subjects, both Spaniards and Indians."

Chouteuu v. Moloney, supra, at 240.

    The executive and legislative branches of the Federal Government likewise have recognized the succesion of the Federal Government to the ownership of mines in what was formerly Spanish and Mexican territory. The Secretary of the Interior in his annual report for 1849 made the following statement:
    "By the laws of Spain these mines did not pass by a grant of the land, but remained in the crown, subject to be disposed of according to such ordinances and regulations as might be from time to time adopted. Any individual might enter upon the lands of another to search for ores of the precious metals; and having discovered a mine, he might register and thus acquire the right to work it on paying to the owner the damage done to the surface, and to the crown, whose property it was, a fifth or tenth, according to the quality of the mine. If the finder neglected to work, or worked it imperfectly, it might be denounced by any other person, whereby he would become entitled.



 

398

DEPARTMENT OF THE INTERIOR

MARCH 7, 1934

    "This right to the mines of precious metals, which, by the laws of Spain, remained in the crown, is believed to have been also retained by Mexico while she was sovereign of the Territory, and to have passed by her transfer to the United States. It is a right of the sovereign in the soil as perfect as if it had been expressly reserved in the body of the grant, and it will rest with Congress to determine whether, in those cases where lands duly granted contain gold, this right shall be asserted or relinquished. If relinquished, it will require an express law to effect the object; and if retained, legislation will be necessary to provide a mode by which it shall be exercised. For it is to be observed that the regulation permitting the acquisition of a right in the mines by registry or by denouncement was simply a mode of exercising by the sovereign the proprietary right which he had in the treasure as it lay in and was connected with the soil. Consequently, whenever that right was transferred by the transfer of the eminent domain, the mode adopted for its exercise ceased to be legal, for the same reason that the Spanish mode of disposing of the public lands in the first instance ceased to be legal after the transfer of the sovereignty." 2 Sen. ex. doc., 31st Cong., 1st Sess., 1849-50, 9-10.

    When Congress created the office of Surveyor General of New Mexico and provided machinery for the establishment and confirmation of land claims existing under the Spanish and Mexican law, it expressly excluded mineral lands from the operation of the statute. 10 Stat. 308, sec. 4 (1854). In the Court of Private Land Claims Act it is provided:
    "Third. No allowance or confirmation of any claim shall confer any right or title to any gold, silver or quicksilver mines or minerals of the same unless the grant claimed effect the donations of such mines or minerals to the grantee or unless such grantee has become otherwise entitle thereto in law or in equity; but all such mines and minerals shall remain in the property of the United States." 26 Stat. at L. 854, 860 (1891); see Lockhart v. Johnson, 181 U. S. 516, 524 (1900).
    Upon the whole case, in the light of the facts now at hand, it is my opinion that in 1853 the United States acquired title to the land in question subject to an Indian right of occupancy of an area not exactly determined; that whatever surface rights the Papago Indians may have enjoyed, no interest in minerals was accessory or incidental to those surface rights; that complete and unencumbered title to minerals in the land was vested formerly in the Mexican State and passed to the United States upon cession of the territory. It follows that the question of the appropriate manner of protecting the Papagos in their possession was, and still is, a matter exclusively of political cognizance. Cf. United States v. Santa Fe, 165 U. S. 675 (1896); Les Bois v. Bramell, 4 How. 449 (1846). The present measure of the rights of the Papagos is the Executive order of February 1, 1917, as modified by the act of February 21, 1931. The Papagos have no independent title which can make that action ineffective or embarrass any future action that to Congress may seem appropriate in the premises.

                                                                                                                                              NATHAN R. MARGOLD,

Solicitor.

Approved: March 7, 1934.
OSCAR L. CHAPMAN, Assistant Secretary.

RESTRICTIONS APPLICABLE TO FIVE
TRIBES

54 I.D. 382

M-27554                                                                                                                                 March 14, 1934.

Synopsis

    The First proviso to section 1 of the act of January 27, 1933 (47 Stat. 777), declaring that where the entire interest in restricted tax-exempt lands belonging to members of the Five Civilized Tribes in Oklahoma is acquired by inheritance, devise, gift or purchase with restricted funds, by or for restricted Indians, such lands shall remain restricted and tax exempt, is prospective and not retrospective in operation, being designed to preserve existing restrictions on lands acquired in the manner specified after the date of the enactment and not to reimpose restrictions once removed or to change the form of the existing restrictions.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    You have requested my opinion upon certain questions arising out of section 1 of the act of January 27, 1933 (47 Stat. 777) which reads:

    "That all funds and other securities now held by or which may hereafter come under
 

 

399

OPINIONS OF THE SOLICITOR

MARCH 14, 1934

the supervision of the Secretary of the Interior, belonging to and only so long as belonging to Indians of the Five Civilized Tribes in Oklahoma of one-half or more Indian blood, enrolled or unenrolled, are hereby declared to be restricted and shall remain subject to the jurisdiction of said Secretary until April 26, 1956, subject to expenditure in the meantime for the use and benefit of the individual Indians to whom such funds and securities belong, under such rules and regulations as said Secretary may prescribe: Provided, That where the entire interest in any tract of restricted and tax exempt land belonging to members of the Five Civilized Tribes is acquired by inheritance, devise, gift, or purchase, with restricted funds, by or for restricted Indians, such lands shall remain restricted and tax-exempt during the life of and as long as held by such restricted Indians, but not longer than April 25, 1956, unless the restrictions are removed in the meantime in the manner provided by law: Provided further, That such restricted and tax-exempt land held by anyone, acquired as herein provided, shall not exceed one hundred and sixty acres: And provided further, That all minerals including oil and gas, produced from said land so acquired shall be subject to all State and Federal taxes as provided in section 3 of the Act approved May 10, 1928 (45 Stat. L. 495)". (Italics supplied).

    The questions presented arise from the first proviso underscored above and may be stated as follows:
1. Does said proviso reimpose the restrictions upon inherited lands which were restricted and tax exempt in the hands of the original allottee where the heirs are of one-half blood or more but less than the full blood, and if so, would a conveyance by the heirs require the approval of the County Court having jurisdiction of the settlement of the estate of the deceased allottee or approval by the Secretary of the Interior?

2. Does the proviso take away from the County Courts the jurisdiction to approve conveyances by full blood Indian heirs where such heirs have inherited the entire interest in lands which were restricted and tax exempt in the hands of the original allottee so that a removal of restrictions by the Secretary of the Interior is necessary before the land can be alienated by the full blood heirs?

    The above questions can not well be understood or intelligently answered without a general discussion of the scope of the first proviso to section 1 of the act of January 27, 1933, preceded by a brief review of the status of the lands allotted to members of the Five Civilized Tribes with particular regard to the restrictions against alienation the ways of removing such restrictions, and the taxability of the lands under the prior laws.

    Under the provisions of section 1 of the act of May 27, 1908 (35 Stat. 312), as amended by the act of May 10, 1928 (45 Stat. 495), the homestead allotments of allottees of the Five Civilized Tribes of one-half or more Indian blood and both homestead and surplus allotments of allottees of three fourths or more Indian blood are restricted against alienation and uncumbrance for a period expiring in the absence of further action by Congress on April 26, 1956. During this period, the restrictions may be removed in whole or in part by the Secretary of the Interior (section 1 of the act of May 27, 1908, supra), or by the death of the allottee leaving heirs or devisees of less than the full blood (section 9 of the act of May 27, 1908, supra, as amended by the act of April 12, 1926, (45 Stat. 495). As to full blood heirs or devisees, section 9 of the act of 1906 as amended declared that no conveyance of their interests in the land should be valid unless approved by the county court having jurisdiction of the settlement of the estate of the deceased allottee or testator. The county court is approving such conveyance acts as a Federal agency; hence these lands in the hands of the full blood heirs and devisees remained restricted lands (Parker
v. Richard, 250 U.S. 235).

    The usual rule is that Indian lands during the period of restrictions are exempt from State taxation. (United States v. Rickert, 188 U.S. 452; Carpenter v. Shaw, 280 U. S. 363, 366; United States v. Shook, 187 Fed. 870). Prior to April 26, 1931, therefore, all of the restricted lands of the Indians of the Five Civilized Tribes, i.e., the restricted allotments of living allottees and restricted allotments inherited by or devised to full blood Indians, were protected from State taxation. By section 4 of the act of May 10, 1928, Congress declared that on and after April 26, 1931, all of the restricted lands of these Indians, allotted, inherited or devised, in excess of 160 acres, shall be subject to taxation by the State of Oklahoma under and in accordance with the laws of that State in all respects as unrestricted and other lands. Selection of tax-exempt acreage within the prescribed limit were to be made from restricted allotted, inherited or devised lands with the approval of the Secretary of the Interior by each Indian owner or the superintendent for him. It is understood that all sections of tax-exempt acreage under the provisions of the act have been made and approved.
 


 

400

DEPARTMENT OF THE INTERIOR

MARCH 14, 1934

    The first proviso to section 1 of the act of January 27, 1933, declares that:

    "Where the entire interest in any tract of restricted tax-exempt land belonging to members of the Five Civilized Tribes is acquired by inheritance, devise, gift or purchase, with restricted funds, by or for restricted Indians, such lands shall remain restricted and tax exempt during the life of and as long as held by such restricted Indians, but not longer than April 26, 1956, unless the restrictions are removed in the manner provided by law".
    It may be observed that the term "restricted Indians", in so far as it relates to Indians of the Five Civilized Tribes, obviously embraces Indians of one-half or more Indian blood. It may also be observed that the proviso applies only to lands which are both restricted and tax-exempt and unless both elements are present the proviso is without application. At the time of the passage of the act of January 27, 1933, the only lands possessing both of these characteristics were those lands which the Indians had selected as their tax-exempt acreage under the provisions of section 4 of the act of May 10, 1928, supra. The tax-exempt selections, as we have seen, were made from two classes of restricted lands; (1) restricted allotments of living allottees. with respect to which the Secretary of the Interior alone has the power to remove the restrictions, and (2) lands inherited by or devised to full blood Indians in whose hands the lands were subject to the restriction that no conveyance by them should be valid unless approved by the proper local court. In enacting the proviso under consideration, Congress must be deemed to have legislated in the light of this existing situation and to have had both classes of restricted and tax-exempt land in mind. The declaration that such lands shall remain restricted and tax exempt where the entire interest therein is acquired by restricted Indians, can therefore, have no other meaning than that the existing restrictions in whatever form they may be, are preserved. Subject, of course, to the limitation that no one person can hold in excess of 160 acres of tax exempt land, it follows that restricted tax-exempt allotments, the entire interest in which is acquired by an Indian of the Five Civilized Tribes of one half or more Indian blood, or by any group of such Indians, comes to such Indian or Indians in the same condition and subject to the same restrictions resting upon the land in the hands of the allottee. In other words, the existing restrictions prohibiting alienation or encumbrance unless the restrictions be removed by the Secretary of the Interior run with the land and bind it for the time stated in the hands of such restricted Indian or Indians. The same rule applies with respect to the second class of restricted and tax-exempt lands, i.e., lands belonging to full blood heirs or devisees, Indians of the Five Civilized Tribes of one-half or more Indian blood who acquire the entire interest in such lands are bound by the same restriction resting upon the full blood heirs or devisees, namely, that they cannot convey the same without the approval of the proper local court.

    The rules just stated have no application, of course, to lands purchased by restricted Indians with unrestricted moneys.

    Turning now to the particular questions presented for opinion: The first question presupposes the case of an allottee who died prior to April 26, 1931, at which time his entire allotment was restricted and tax exempt, leaving heirs of one-half or more but less than the full blood. The heirs of this degree of blood are brought within the restricted class by the act of January 27, 1933, and had the allottee died after that enactment, there would be little doubt that the restrictions and the incidental supervision of the Secretary of the Interior would have remained in full force and effect. But the death occurred at a time when there were no restrictions upon heirs of less than the full blood and hence the land passed to the heirs free from restrictions. The inquiry is whether the restrictions are reimposed by the act of 1933. The second question deals with the case of an allottee dying under similar circumstances, leaving full blood heirs. In connection with this question, the Superintendent of the Five Civilized Tribes presents the specific case of Liza Gipson, deceased full blood Chickasaw. The allottee died July 11, 1929, leaving several full blood heirs to whom her allotted lands, then restricted and tax exempt, passed under the then existing law subject to the restriction that a valid conveyance of the lands could only be made with the approval of the proper county court. Certain conveyances of the land having been executed after the passage of the act of January 27, 1933, the question has been raised as to whether that act takes away from the county court and vests in the Secretary of the Interior jurisdiction to approve the conveyance.

    Both of these questions must, I think, be answered in the negative. To hold otherwise is to hold that the act of January 27, 1933, is retroactive in scope and operation. Retrospective laws are not favored, and unless the intention that a statute is to have retrospective operation is clearly evidenced in the statute and its purpose, it will be presumed that it was enacted for the future and