United States of America, on Behalf of the Saginaw Chippewa Indian Tribe, Saginaw Chippewa Indian Tribe of Michigan, Intervenor-Appellant v. State of Michigan

Citation: 106 F.3d 130Docket: 95-1574

Court: Court of Appeals for the Sixth Circuit; March 30, 1997; Federal Appellate Court

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The United States Court of Appeals for the Sixth Circuit addressed a case involving the Saginaw Chippewa Indian Tribe and individual Indian property owners against the State of Michigan and its political subdivisions regarding ad valorem property taxes on Indian-owned lands. The central issue was whether certain lands owned by the Tribe and its members are subject to state taxation. The court reaffirmed the established legal principle that, without explicit cession of jurisdiction or federal statutes permitting it, states lack the authority to tax reservation lands and Indians. Citing the Supreme Court's decision in County of Yakima, the court emphasized that Congress must clearly express its intent to allow state taxation. The court found no such unmistakable intent from Congress regarding the lands in question, leading to the reversal of the district court's summary judgment favoring Michigan and other defendants. The case was remanded for further adjudication on the defendants' claims that the lands are not reservation property and that the Tribe has been dissolved, which remain unresolved.

On August 2, 1855, the United States entered into a treaty to allocate certain public lands to the Saginaw, Swan Creek, and Black River Chippewas, agreeing to convey these lands to individual Chippewa Indians. A subsequent treaty on October 18, 1864, modified the original agreement, allowing the Chippewas to return land near Saginaw Bay to the United States in exchange for exclusive rights to unsold public lands in specific townships in Isabella County. The United States conveyed parcels of land to individual Chippewa owners under the 1864 treaty, which later changed hands, including ownership by non-Indians, before being reacquired by the Saginaw Chippewa Indian Tribe or its members.

Despite the Tribe's ownership, local government entities continued to impose property taxes on these parcels. The United States and the Tribe are seeking declaratory and injunctive relief, arguing that the land falls under Indian Country, thus exempt from such taxation. The district court ruled in favor of the defendants, asserting that the unrestricted fee simple conveyed under the 1864 treaty allowed state taxation.

The primary legal issue revolves around whether Michigan and its subdivisions can levy property taxes on these lands, as neither the 1855 nor the 1864 treaties explicitly address taxation. Both treaties allowed for the alienability of the land without restrictions. The defendants incorrectly interpret a Supreme Court ruling in County of Yakima v. Confederated Tribes, asserting that the alienability of land by Indians implies it is subject to state taxes. This interpretation misrepresents the context of the ruling, which discussed the General Allotment Act of 1887, under which the United States held allotted lands in trust for a period before transferring them in fee simple to individual Indian owners.

The original Act did not clarify the tax status of conveyed land. In 1906, the Burke Act amended the General Allotment Act, establishing that land conveyed in fee would be subject to ad valorem taxation, removing all restrictions related to sale, incumbrance, or taxation following the issuance of a patent in fee. The Burke Act allows the Secretary of the Interior to issue such patents when an Indian allottee is deemed competent. Until the issuance of these patents, allottees remain under the exclusive jurisdiction of the United States. 

The Yakima Court's reliance on the Burke Act's taxation language was correct, as it did not differentiate between lands conveyed to competent Indians before the trust period's expiration and those conveyed afterwards. The Court interpreted "thereafter" to apply to both scenarios, suggesting that treating the two types of land differently regarding taxability lacks rational justification. The ruling emphasized that while alienability implies taxability in general, the Burke Act specifically links these concepts only for the Indian lands covered under its provisions. The Supreme Court in Yakima affirmed that the explicit mention of immunity from land taxation in the Burke Act indicated Congress's intent to allow state taxation of such lands. However, it also clarified that the mere alienability of Indian land does not equate to a clear congressional intent permitting state taxation. Furthermore, the Yakima decision concluded that the General Allotment Act does not authorize state excise taxes on the sale of such lands.

Land subject to excise sales taxes is implied by congressional action making it alienable, similar to ad valorem property taxes. However, the Court has prohibited excise taxation of land transfers, emphasizing that the General Allotment Act only permits "taxation of land," not "taxation with respect to land" or related transactions. The defendants reference Goudy v. Meath, suggesting alienability equates to taxability, yet the Ninth Circuit notes that Congress must clearly intend to authorize state taxation of Indians, as established in Lummi Indian Tribe v. Whatcom County. The Lummi court's skepticism about the Goudy proposition aligns more closely with the Yakima Court's direction to avoid judicial policy-making in taxation matters. The Yakima Court parsed the General Allotment Act's language to find no clear congressional intent for excise taxes on alienable Indian lands. The defendants' reliance on Pennock v. Commissioners is misplaced, as it only confirms that states can tax land not located within Indian Country. Congressional action making Indian land alienable does not inherently indicate intent for state taxation. The treaties applicable in this case lack evidence of such intent, and the defendants have not substantiated their claims that the General Allotment Act applies to previously conveyed lands. Consequently, Congress has not authorized state property taxes on the land in question, and the defendants are without authority to impose such taxes.

Defendants assert that the General Allotment Act applies to all Indian reservations, relying on two specific passages from Section 1 of the Act. The first passage indicates the President’s authority to allot lands deemed beneficial for agricultural and grazing purposes within reservations established by treaties, statutes, or executive orders. However, while it affirms the Act's general applicability to reservations, it does not imply that its substantive provisions extend to all land grants made under any treaty. The Act serves as a mechanism for the President to allocate reservation lands to individual Indians, but this allocation is contingent upon Presidential action and does not retroactively impact property rights established under prior treaties.

The second cited passage, which the defendants interpret as evidence of Congressional intent for the Act's provisions to apply broadly, merely clarifies the scope of the President's authority under the Act. It does not suggest that the Act governs lands granted outside its framework or prior to its enactment. Consequently, the court concludes that the district court's summary judgment is reversed, and the case is remanded for further proceedings, including considerations of the defendants' claims regarding the status of the land and the Saginaw Chippewa Tribe's dissolution.