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[ Footnote * ] Together with No. 75-50, Confederated Salish and Kootenai Tribes of the Flathead Reservation et al. v. Moe, Sheriff, et al., also on appeal from the same court.
An Indian tribe and some of its members residing on the tribal reservation in Montana brought actions challenging Montana's cigarette sales taxes and personal property taxes (in particular property taxes on motor vehicles) as applied to reservation Indians, and also the State's vendor licensing statute as applied to tribal members who sell cigarettes at "smoke shops" on the reservation, and seeking declaratory and injunctive relief. After finding that the actions were not barred by 28 U.S.C. 1341, which prohibits district courts from enjoining the assessment, levy, or collection of any state tax where a plain, speedy, and efficient remedy may be had in the state courts, the District Court held that Montana was barred from imposing cigarette sales taxes with respect to on-reservation sales by tribal members to Indians residing on the reservation, from imposing the vendor license fee on a tribal member operating a "smoke shop" on the reservation, and from imposing a personal property tax as a condition precedent for registration of a motor vehicle, but that the State may require a precollection of the cigarette sales tax imposed by law upon a non-Indian purchaser of cigarettes. Held:
REHNQUIST, J., delivered the opinion for a unanimous Court.
Sam E. Haddon, Special Assistant Attorney General of Montana, argued the cause for appellants in No. 74-1656 and appellees in No. 75-50. With him on the briefs were Robert L. Woodahl, Attorney General, and Jean A. Turnage, Special Assistant Attorney General.
Richard A. Baenen argued the cause and filed a brief for appellees in No. 74-1656 and appellants in No. 75-50.Fn
Fn [425 U.S. 463, 465] Briefs of amici curiae were filed by Slade Gorton, Attorney General, and Richard H. Holmquist, Assistant Attorney General, for the State of Washington; and by Michael Taylor for the Quinault Indian Nation.
MR. JUSTICE REHNQUIST delivered the opinion of the Court.
We are called upon in these appeals to resolve several questions arising out of a conflict between the asserted taxing power of the State of Montana and the immunity claimed by the Confederated Salish and Kootenai Tribes (Tribe) and its members living on the tribal reservation. Convened as a three-judge court, 1 the District Court for the District of Montana considered separate attacks on the State's cigarette sales and personal property taxes as applied to reservation Indians. After finding that the suits were not barred by the prohibition of 28 U.S.C. 1341, 2 [425 U.S. 463, 466] the District Court entered final judgments which, with one exception, sustained the Tribe's challenges, and from which the State has appealed (No. 74-1656). The Tribe has cross-appealed from that part of the judgments upholding tax jurisdiction over on-reservation sales of cigarettes by members of the Tribe to non-Indians. We noted probable jurisdiction under 28 U.S.C. 1253 and consolidated the appeal and cross-appeal. 3 423 U.S. 819 (1975). Concluding that the District Court had the power to grant injunctive relief in favor of the Tribe, and that it was correct on the merits, we affirm in both cases.
In 1855 an expanse of land stretching across the Bitter Root River Valley and within the then Territory of Washington was reserved for "the use and occupation" of the "confederated tribes of the Flathead, Kootenay, and Upper Pend d'Oreilles Indians," by the Treaty of Hell Gate, which in 1859 was ratified by the Senate and proclaimed by President Buchanan. 12 Stat. 975. Slightly over half of its 1.25 million acres is now owned in fee, by both Indians and non-Indians; most of the remaining half is held in trust by the United States for the Tribe. Approximately 50% of the Tribe's current membership of 5,749 resides on the reservation and in turn composes 19% of the total reservation population. Embracing portions of four Montana counties - Lake, Sanders, Missoula, and Flathead - the present reservation was generally described by the District Court:
In a later action, the Tribe and four enrolled members, all residents of the reservation, challenged 7 Montana's [425 U.S. 463, 469] statutory scheme for assessment and collection of personal property taxes, in particular the imposition of such taxes on motor vehicles owned by tribal members residing on the reservation. 8 The District Court, again by a divided vote, found its earlier decision interpreting McClanahan controlling in the Tribe's favor. While recognizing, as did the Tribe, that a fee required for registration and issuance of state license plates for a motor vehicle could be exacted from Indians residing on the reservation, 9 the court held that the additional personal property tax which was likewise made a condition precedent for lawful registration of the vehicle could not be imposed on reservation Indians. [425 U.S. 463, 470]
The important threshold question in both cases is whether the District Court was prohibited from entertaining jurisdiction over these suits to restrain Montana's taxing authority, inasmuch as Congress has provided that
The District Court, citing Department of Employment and cases from other courts, concluded:
We have indeed recently declined "the invitation to resurrect the expansive version of the intergovernmental-immunity doctrine that has been so consistently rejected" in this kind of case. Mescalero, supra, at 155. While the concept of a federal instrumentality may well have greater usefulness in determining the applicability of 1341, Department of Employment v. United States, supra, than in providing the touchstone for deciding whether or not Indian tribes may be taxed, Mescalero, supra, we do not believe that the District Court's expanded [425 U.S. 463, 472] version of this doctrine, quoted above, can by itself avoid the bar of 1341.
The District Court, however, also relied on a more recent jurisdictional statute, 28 U.S.C. 1362, which provides:
Looking to the legislative history of 1362 for whatever light it may shed on the question, we find an indication of a congressional purpose to open the federal courts to the kind of claims that could have been brought by the United States as trustee, but for whatever reason were not so brought. Section 1362 is characterized by the reporting House Judiciary Committee as providing "the means whereby the tribes are assured of the same judicial determination whether the action is brought in their behalf by the Government or by their own attorneys." 12 [425 U.S. 463, 473] While this is hardly an unequivocal statement of intent to allow such litigation to proceed irrespective of other explicit jurisdictional limitations, such as 1341, it would appear that Congress contemplated that a tribe's access to federal court to litigate a matter arising "under the Constitution, laws, or treaties" would be at least in some respects as broad as that of the United States suing as the tribe's trustee.
That the United States could have brought these actions, by itself or as coplaintiff, seems reasonably clear. In Heckman v. United States, 224 U.S. 413 (1912), the United States sued to cancel numerous conveyances by Cherokee allottees-grantors, who were not parties, as violative of federal restrictions upon the Indian's power of alienation. In the course of concluding that the United States had the requisite interest in enforcing these restrictions for the Indians' benefit, the Court discussed United States v. Rickert, 188 U.S. 432 (1903), which upheld the right of the Government to seek injunctive relief against county taxation directed at improvements on and tools used to cultivate land allotted to and occupied by the Sioux Indians. Of Rickert, the Court in Heckman stated:
In McClanahan this Court considered the question whether the State had the power to tax a reservation Indian, a Navajo, for income earned exclusively on the reservation. We there looked to the language of the Navajo treaty and the applicable federal statutes "which define the limits of state power." 411 U.S., at 172 . Reading them against the "backdrop" of the Indian sovereignty doctrine, the Court concluded "that Arizona ha[d] exceeded its lawful authority" by imposing the tax at issue. Id., at 173. In Mescalero, the companion case, the import of McClanahan was summarized:
The State pointed below to a variety of factors: reservation Indians benefited from expenditures of state revenues for education, welfare, and other services, such as a sewer system; the Indians had the right to vote and to hold local and state office; and the Indian and non-Indian residents within the reservation were substantially integrated as a business and social community. The District Court also found, however, that the Federal Government "likewise made substantial payments for various purposes," and that the Tribe's own income contributed significantly to its economic well-being. 392 F. Supp., at 1314. Noting this Court's rejection of a substantially identical argument in McClanahan, see 411 U.S., at 173 , and n. 12, and the fact that the Tribe, like the Navajos, had not abandoned its tribal organization, the District Court could not accept the State's proposition that the tribal members "are now so completely integrated with the non-Indians . . . that there is no longer any reason to accord them different treatment than other citizens." 392 F. Supp., at 1315. In view of the District Court's findings, we agree that there is no basis for distinguishing McClanahan on this ground. [425 U.S. 463, 477]
As to the second ground, we note that the State does not challenge the District Court's overall conclusion that the treaty and statutes upon which the Tribe relies in asserting the lack of state taxing authority "are essentially the same as those involved in McClanahan." 15 We agree, and it would serve no purpose to retrace our analysis in this respect in McClanahan, 411 U.S., at 173 -179. The State instead argues that the District Court failed to properly consider the effect of the General Allotment Act of 1887, 24 Stat. 388, and a later enactment in 1904, 33 Stat. 302, applying that Act to the Flathead Reservation. Section 6 of the General Allotment Act, 24 Stat. 390, as amended, 25 U.S.C. 349, provides in part:
We find the argument untenable for several reasons. By its terms 6 does not reach Indians residing or producing income from lands held in trust for the Tribe, which make up about one-half of the land area of the reservation. If the General Allotment Act itself establishes Montana's jurisdiction as to those Indians living on "fee patented" lands, then for all jurisdictional purposes - civil and criminal - the Flathead Reservation has been substantially diminished in size. A similar claim was made by the State in Seymour v. Superintendent, 368 U.S. 351 (1962), to which we responded:
The State's argument also overlooks what this Court has recently said of the present effect of the General Allotment Act and related legislation of that era:
A second, discrete claim advanced by the State is that the tax immunity extended by the District Court in applying federal law constitutes an invidious discrimination against non-Indians on the basis of race, contrary to the Due Process Clause of the Fifth Amendment. It is said that the Federal Government has forced this racially based exemption onto Montana so as to create a state statutory classification violative of the latter's duty under the Equal Protection Clause of the Fourteenth Amendment.
We need not dwell at length on this constitutional argument, for assuming that the State has standing to raise it on behalf of its non-Indian citizens and taxpayers, [425 U.S. 463, 480] we think it is foreclosed by our recent decision in Morton v. Mancari, 417 U.S. 535 (1974). In reviewing the variety of statutes and decisions according special treatment to Indian tribes and reservations, we stated, id., at 552-555:
The Tribe would carry these cases significantly further than we have done, however, and urges that the State cannot impose its cigarette tax on sales by Indians to non-Indians because "[i]n simple terms, [the Indian retailer] has been taxed, and . . . has suffered a measurable out-of-pocket loss." But this claim ignores the District Court's finding that "it is the non-Indian consumer or user who saves the tax and reaps the benefit of the tax [425 U.S. 463, 482] exemption." 392 F. Supp., at 1308. That finding necessarily follows from the Montana statute, which provides that the cigarette tax "shall be conclusively presumed to be [a] direct [tax] on the retail consumer precollected for the purpose of convenience and facility only." 18 Since nonpayment of the tax is a misdemeanor as to the retail purchaser, 19 the competitive advantage which the Indian seller doing business on tribal land enjoys over all other cigarette retailers, within and without the reservation, is dependent on the extent to which the non-Indian purchaser is willing to flout his legal obligation to pay the tax. Without the simple expedient of having the retailer collect the sales tax from non-Indian purchasers, it is clear that wholesale violations of the law by the latter class will go virtually unchecked.
The Tribe asserts that to make the Indian retailer an "involuntary agent" for collection of taxes owed by non-Indians is a "gross interference with [its] freedom from state regulation," and cites Warren Trading Post v. Arizona Tax Comm'n, 380 U.S. 685 (1965), as controlling. However, that case involved a gross income tax imposed on the on-reservation sales by the trader to reservation Indians. Unlike the sales tax here, the tax was imposed directly on the seller, and, in contrast to the Tribe's claim, there was in Warren no claim that the State could not tax that portion of the receipts attributable to on-reservation sales to non-Indians. Id., at 686 n. 1. Our conclusion in Warren that assessment and collection of that tax "would to a substantial extent frustrate the evident congressional purpose of ensuring that no burden shall be imposed upon Indian traders for trading with Indians on reservations," id., at 691, does not apply to the instant case. [425 U.S. 463, 483]
The State's requirement that the Indian tribal seller collect a tax validly imposed on non-Indians is a minimal burden designed to avoid the likelihood that in its absence non-Indians purchasing from the tribal seller will avoid payment of a concededly lawful tax. Since this burden is not, strictly speaking, a tax at all, it is not governed by the language of Mescalero, quoted supra, at 475-476, dealing with the "special area of state taxation." We see nothing in this burden which frustrates tribal self-government, see Williams v. Lee, 358 U.S. 217, 219 -220 (1959), or runs afoul of any congressional enactment dealing with the affairs of reservation Indians, United States v. McGowan, 302 U.S. 535, 539 (1938): "Enactments of the Federal Government passed to protect and guard its Indian wards only affect the operation, within the colony, of such state laws as conflict with the federal enactments." See also Thomas v. Gay, 169 U.S. 264, 273 (1898). We therefore agree with the District Court that to the extent that the "smoke shops" sell to those upon whom the State has validly imposed a sales or excise tax with respect to the article sold, the State may require the Indian proprietor simply to add the tax to the sales price and thereby aid the State's collection and enforcement thereof.
For the foregoing reasons, the judgments of the District Court are
[ Footnote 2 ] See Part II, infra, for the discussion of the jurisdictional question.
[ Footnote 3 ] For ease of reference, the various parties involved in the appeal and cross-appeal will be referred to simply as the State and the Tribe, except as otherwise noted.
[ Footnote 4 ] The defendants-appellants in the cigarette tax case are Montana's Department of Revenue, its director, and the sheriffs of the counties in which the "smoke shops" were located. No monetary relief has been sought in this action.
[ Footnote 5 ] Suit was brought shortly after the arrests. The record does not indicate whether criminal proceedings were instituted in state court, and in any case the State has made no claim as to the propriety of the District Court's entry of relief under Younger v. Harris, 401 U.S. 37 (1971), and related decisions of this Court.
[ Footnote 6 ] The District Court noted that the State's present statutory scheme contemplates advance payment or "precollection" of the sales tax by the retailer when he purchases his inventory from the wholesaler. Recognizing that its holding - a distinction between sales to Indians and to non-Indians - would result in "complicated problems" of enforcement by the State, the District Court deferred passing on these problems pending a decision by this Court. We, of course, express no opinion on this question.
[ Footnote 7 ] Named as defendants were various county officials, the State's Department of Revenue and its director, and the State itself. In contrast to the cigarette tax case, however, the plaintiffs, suing as representatives of all other members of the Tribe residing on the reservation, demanded a refund of personal property taxes paid to the date of the District Court's final judgment. In the opinion accompanying the District Court's judgment entering the requested declaratory and injunctive relief in favor of the Tribe and the individual Indians, it stated that "any further questions" were reserved pending this Court's final determination of the constitutionality of the personal property tax statutes. Our conclusions in Parts II and III, infra, that the District Court, with subject-matter jurisdiction over the Tribe's claims, properly entered injunctive relief in its favor implicitly embrace a finding that the Tribe, qua Tribe, has a discrete claim of injury with respect to these forms of state [425 U.S. 463, 469] taxation so as to confer standing upon it apart from the monetary injury asserted by the individual Indian plaintiffs. Since the substantive interest which Congress has sought to protect is tribal self-government, such a conclusion is quite consistent with other doctrines of standing. See, e. g., Warth v. Seldin, 422 U.S. 490, 498 -499 (1975). Whether in like fashion standing rests in the Tribe to litigate the pending individual refund claims is a question properly left for the District Court as and when these claims are pursued, and we express no opinion thereon. We note, however, that if only the individual Indians have standing to sue for refunds, their claims must be properly grounded jurisdictionally. See, e. g., Zahn v. International Paper Co., 414 U.S. 291, 294 (1973).
[ Footnote 8 ] The Tribe and the individual members had earlier filed an identical attack against Montana's personal income tax as applied to income earned by tribal members on the reservation. Shortly after this Court's decision in McClanahan v. Arizona State Tax Comm'n, 411 U.S. 164 (1973), the State stipulated that McClanahan barred its taxing jurisdiction in this respect and agreed to cease voluntarily its collection efforts and make refunds. Relying on this settlement, the Tribe thereafter requested the State's Attorney General to order a similar cessation with respect to personal property taxes. Advised that its request was rejected, the Tribe instituted this action.
[ Footnote 9 ] The Tribe has from the beginning expressly disclaimed any immunity from this nondiscriminatory vehicle registration fee.
[ Footnote 10 ] There the United States sought injunctive relief against certain state taxation of its coplaintiff, the American National Red Cross, which on the merits this Court held was immune from same as a federal instrumentality.
[ Footnote 11 ] Section 1341 itself, of course, includes a proviso that the remedy in state court must be "plain, speedy and efficient." The Tribe does not claim that it would not have had such a remedy under Montana law.
[ Footnote 12 ] H. R. Rep. No. 2040, 89th Cong., 2d Sess., 2-3 (1966).
[ Footnote 13 ] Heckman and Rickert were both cases in which the protection asserted by the United States on behalf of the Indians was grounded in the federal-instrumentality doctrine. Since Mescalero, as we have noted, effectively eliminated that doctrine as a basis for immunizing Indians from state taxation, there might appear to be a certain inconsistency in our reliance on Heckman. But the question of whether the United States has standing (Heckman used the term "capacity") to sue on behalf of others is analytically distinct from the question of whether the substantive theory on which it relies will prevail, and each is in turn separate from whether injunctive relief can issue at the United States' behest irrespective of 1341. Department of Employment, see supra, at 470, and n. 10, did not hold that the United States had standing only in actions falling within the federal-instrumentality doctrine. Cases in the lower federal courts cited therein ( 385 U.S., at 358 n. 6), e. g., United States v. Arlington County, Virginia, 326 F.2d 929, 931-933 (CA4 1964), and other cases from this Court, see In re Debs, 158 U.S. 564, 584 (1895); United States v. San Jacinto Tin Co., 125 U.S. 273, 284 -286 (1888), indicate otherwise. The proper basis for the protection asserted here, of course, is not the federal-instrumentality doctrine eschewed in Mescalero, but is that which McClanahan identified, i. e., that state taxing jurisdiction has been pre-empted by the applicable treaties and federal legislation. While not deciding what limits there are upon the United States' standing to sue absent enabling legislation, we conclude that the relationship between the United States and the Tribe - grounded in the Hell Gate Treaty and a century of subsequent legislation - would have established the former's standing to raise the pre-emption claim on behalf of the latter, and that an injunctive remedy to enforce that claim would not have been barred by 1341.
[ Footnote 14 ] The District Court went on to find jurisdiction over the individual Indian plaintiffs in both actions on the basis of 28 U.S.C. 1343 (3), together with their allegation that these taxes deprived them of a right secured by the Commerce Clause. Noting that 1362 by its terms goes only to an "Indian tribe or band," the State has argued that to hold 1341 inapplicable merely because the state tax is attacked on constitutional grounds virtually strips it of force and is contrary to other federal-court decisions: Bland v. McHann, 463 F.2d 21 (CA5 1972), cert. denied, 410 U.S. 966 (1973); American Commuters Assn., Inc. v. Levitt, 405 F.2d 1148 (CA2 1969). Cf. Lynch v. Household Finance Corp., 405 U.S. 538, 542 n. 6 (1972). The Tribe's brief does not discuss this aspect of the District Court's holding. We need not decide this question, however, since all of the substantive issues raised on appeal can be reached by deciding the claims of the Tribe alone, which did bring this action in the District Court under 1362. See n. 7, supra. Cf. California Bankers Assn. v. Shultz, 416 U.S. 21 (1974). Any further proceedings with respect to refund claims by or on behalf of individual Indians, see n. 7, supra, would not appear to implicate 1341.
[ Footnote 15 ] The quotation is taken from the first (unpublished) opinion of the District Court, Civ. No. 2145 (Mont., Oct. 10, 1973), Jurisdictional Statement, App. 73, 81 n. 9, the conclusions of which with respect to McClanahan were reaffirmed in the later opinions filed May 10, 1974, February 4, 1975, and March 19, 1975, published at 392 F. Supp. 1297, 1312; 392 F. Supp. 1325.
[ Footnote 16 ] The District Court noted two further distinctions within its ruling. It extended its holding to sales of cigarettes to Indians [425 U.S. 463, 481] living on the Flathead Reservation irrespective of their actual membership in the plaintiff Tribe. The State has not challenged this holding, and we therefore do not disturb it. Secondly, while recognizing that different rules may apply "where Indians have left the reservation and become assimilated into the general community," McClanahan, 411 U.S., at 171 , the District Court on the present record did not decide whether the cigarette sales tax would apply to on-reservation sales to Indians who resided off the Flathead Reservation. That question, too, is therefore not before us.
[ Footnote 17 ] It is thus clear that the basis for the invalidity of these taxing measures, which we have found to be inconsistent with existing federal statutes, is the Supremacy Clause, U.S. Const., Art. VI, cl. 2, and not any automatic exemptions "as a matter of constitutional law" either under the Commerce Clause or the intergovernmental-immunity doctrine as laid down originally in M`Culloch v. Maryland, 4 Wheat. 316 (1819). If so, then the basis for convening a three-judge court in this type of case has effectively disappeared, for this Court has expressly held that attacks on state statutes raising only Supremacy Clause invalidity do not fall within the scope of 28 U.S.C. 2281. Swift & Co. v. Wickham, 382 U.S. 111 (1965). Here, however, the District Court properly convened a 2281 court, because at the outset the Tribe's attack asserted unconstitutionality of these statutes under the Commerce Clause, a not insubstantial claim since Mescalero and McClanahan had not yet been decided. See Goosby v. Osser, 409 U.S. 512 (1973).
[ Footnote 18 ] Mont. Rev. Code Ann. 84-5606 (1) (1947).
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Citation: 425 U.S. 463
Docket No: No. 74-1656
Argued: January 20, 1976
Decided: April 27, 1976
Court: United States Supreme Court
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