Squire v. Capoeman

351 U.S. 1 (1956)

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Nature of the Case

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Facts

The issue is whether the gain from the sale of timber from restricted allotted lands, held in trust for a noncompetent Indian under the General Allotment Act of 1887 is subject to Federal income tax. Manifest Destiny ran into the Quinaielt Tribe of Indians and their neighboring allied tribes occupying a tract of country lying between the Coast Range and the Pacific Ocean. A vast tract was ceded by the Quinaielts and their neighbors to the United States in exchange for protection and tutelage by the treaty of July 1, 1855, and January 25, 1856, and exclusive use of reservation lands by the tribe. The Quinaielts were to have exclusive use of their reservation 'and no white man shall be permitted to reside thereon without permission of the tribe . . . .' Congress passed the General Allotment Act of 1887. Indians were to be allotted lands on their reservations not to exceed 160 acres of grazing land or 80 acres of agricultural land, and 25 years after allotment the allottees were to receive the lands discharged of the trust. Ps, husband and wife, were born on the reservation, and are full-blood, noncompetent Quinaielt Indians. They have lived on the reservation all their lives. Ps were allotted from the treaty-guaranteed reservation 93.25 acres and received a trust patent dated October 1, 1907. In the disputed year, fee title was still held by the United States and was not subject to alienation or encumbrance by him, except with the consent of the United States Government, which consent had never been given. It was forest land not adaptable to agricultural purposes and was of little value after the timber was cut. The Bureau of Indian Affairs entered into a contract of sale for the standing timber on P's allotted land for the total price of $15,080.80. The Government received the sum of $8,418.28 on behalf of P. Ps filed a joint income tax return for the tax year 1943, reporting long-term capital gain from the sale of the timber in that year. They paid the taxes due. They then filed a claim for a refund of the taxes paid claiming the sale was not subject to federal income taxation because such taxation would be in violation of the provisions of the Quinaielt Treaty, the trust patent, and the General Allotment Act. The refund was denied. Ps instituted this action. The District Court found that the tax had been unlawfully collected and ordered a refund. The Court of Appeals affirmed. The Supreme Court granted certiorari.