Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1962 No. 172 - Oct 1 1962
Attorney General John J. O'Connell


Personal property situated in the state of Washington is not exempt from taxation by reason of the fact that it is owned by the Annette Island Canning Company which company is owned and operated by the Metlakatla Indian Community of Alaska.

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                                                                 October 1, 1962

Honorable Richard A. Nelle
Prosecuting Attorney
Whatcom County
Court House, 311 Grand Avenue
Bellingham, Washington

                                                                                                              Cite as:  AGO 61-62 No. 172

Dear Sir:

            By letter previously acknowledged, you have requested the opinion of this office on a question which we paraphrase as follows:

            Is personal property situated in the state of Washington and owned by the Annette Island Canning Company exempt from property taxation by reason of the fact that the Metlakatla Indian Community of Alaska is the owner and operator of the canning company and therefore the owner of the personal property in question?

            We answer your question in the negative.


            The reason most frequently expressed by courts for exempting Indians and their property from taxation is the doctrine of federal instrumentality.  This doctrine is founded upon the premise that the power and duty of protecting tribal Indians is a federal function, and a state cannot impose a tax which will burden or impede this function.  United States v. Rickert, 188 U.S. 432, 235 S.Ct. 478, 47 L.Ed. 532 (1902);United States v. Thurston County, Neb. et al., 143 Fed. 287 (1906);United States v. Pearson, 231 Fed. 270 (1916).  We have been informed that the community's claim for an exemption from the property tax rests upon this basis.

            In order to determine whether this doctrine of federal instrumentality should be applied in this case, some background information is useful.

             [[Orig. Op. Page 2]]

            "Unique among native communities is that of the Metlakatla Indians.  Encouraged by Federal officials about 800 of these Indians migrated in 1887 to the Annette Islands in southeast Alaska from their homes in Metlakatla, British Columbia. . . . By the act of March 3, 1891, Congress created a reservation for the use of these immigrants and such other Alaskan natives as might join them, to be used in common under rules and regulations prescribed by the Secretary of the Interior. . . . Congress granted collective naturalization by the act of May 7, 1934, to the Metlakatlans and the Indians who emigrated from British Columbia not later than January 1, 1900, and resided continuously in Annette Island.

            "The community has flourished; it owns a salmon cannery which is operated under a lease from the Department of the Interior.  Out of their receipts they have built up a large trust fund in the Treasury of the United States, bearing 4 percent interest."  (Federal Indian Law, U.S. Interior Department, 1958, pp. 963, 964.)

            "The Indians of southeastern Alaska, who have very substantially adopted and been adopted by the white man's civilization, were never in the hostile and isolated position of many tribes in other States.  As early as 1886 a federal judge, holding Alaskan Indians subject to the Thirteenth Amendment, denied that the principle of Indian national sovereignty enunciated inWorcester v. Georgia (U.S.) 6 Pet. 515, 8 L.Ed. 483, applied to them.  Re San Quah, 31 F. 327 (D Alaska).  There were no Indian wars in Alaska, although on at least one occasion, see Gruening, The State of Alaska (1954), pp 36-37, there were fears of an uprising.  There was never an attempt in Alaska to isolate Indians on reservations.  Very few were ever created, and the purpose of these, in contrast to many in other States, was not to confine the Indians for the protection of the white settlers but to safeguard the Indians against exploitation.  Alaskan Indians are now voting citizens, some of whom occupy prominent public office in the state government.  SeeUnited States v. Booth, 161 F.Supp. 269 (D Alaska 1958); United  [[Orig. Op. Page 3]] States v. Libby, McNeil & Libby, 107 F.Supp. 697, 699 (D Alaska 1952).  Metlakatlans, the State tells us, have always paid state taxes, in contrast to the practice described and prescribed for other reservations in The Kansas Indians (Blue Jacket v. Johnson County) (U.S.) 5 Wall. 737, 18 L.Ed. 667, and it has always been assumed that the reservation is subject to state laws.  United States v. Booth, supra (161 F.Supp., at 270).  Congress in 1936, 49 Stat. 1250, 48 U.S.C. § 358a, by authorizing the Secretary of the Interior to create Indian reservations of land reserved for Indian uses under 48 U.S.C. § 358, seems to have believed that Metlakatla was no ordinary reservation, since Metlakatla alone is covered in § 358.  Finally, inUnited States v. Booth (F) supra, the District Court for Alaska held that a crime committed on the Metlakatla Reserve, before the extension of jurisdiction over Indian country to Alaska, see p 570, infra, was punishable under territorial laws, since for the reasons here outlined the Reserve was not 'Indian country' within the meaning of 18 U.S.C. §§ 1151-1153.

            ". . .

            "The regulations issued by the Secretary for the government of the Annette Islands January 28, 1915, appear to be without parallel.  No such rules applying to other reservations are to be found in the Code of Federal Regulations.  The Secretary vested powers of local government in an elective council, 25 C.F.R. (1939 ed.), § 1.2, which was given authority to pass ordinances required not to conflict with 'the laws of the United States, the laws of the Territory of Alaska, or the rules and regulations in this part,' § 1.10, and subject to review by the Secretary, § 1.62.  As a condition to the right to vote in local elections members of the Reserve‑- limited to Metlakatlans and other natives, § 1.51‑- were required to swear obedience to local laws, laws of the United States, and laws of the Territory of Alaska, § 1.52.  Thus the Secretary, in the exercise of the authority delegated him by Congress, subjected self-government of Metlakatla  [[Orig. Op. Page 4]] not only to federal oversight but to territorial laws as well. . . ." (Metlakatla Indian Community v. Egan, U.S. [[369 U.S. 45]], 7 L.Ed. (2d 562, 82 S.Ct. [[82 S. Ct. 552)]](1962).) 82 S.Ct. (1962).)

            From this we can see that the United States has pursued a general policy of making the Metlakatla Indian Community subject to the rights and duties of ordinary citizens of Alaska.  Such a policy is quite inconsistent with the proposition that ownership of personal property by this Community automatically makes such property so affected with a federal interest and different from the property of ordinary citizens that it is beyond the reach of state or county taxing power.

            Moreover, the provisions of 28 U.S.C. 1360 should be noted:

            "(a) Each of the States or Territories listed in the following table shall have jurisdiction over civil causes of action between Indians or to which Indians are parties which arise in the areas of Indian country listed opposite the name of the State or Territory to the same extent that such State or Territory has jurisdiction over other civil causes of action, and those civil laws of such State or Territory that are of general application to private persons or private property shall have the same force and effect within such Indian country as they have elsewhere within the State or Territory:

            State or Territory of                  Indian Country Affected


            Alaska                                      All Indian country within the Territory.

            California                                All Indian country within the state

            Minnesota                                            All Indian country within the State, except the Red Lake Reservation

            Nebraska                                             All Indian country within the State

            Oregon                                      All Indian country within the State, except the Warm Spings Reservation

            Wisconsin                                             All Indian country within the State.

            "(b) Nothing in this section shall authorize the alienation, encumbrance, or taxation of any real  [[Orig. Op. Page 5]] or personal property, including water rights, belonging to any Indian or any Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States; or shall authorize regulation of the use of such property in a manner inconsistent with any Federal treaty, agreement, or statute or with any regulation made pursuant thereto; or shall confer jurisdiction upon the State to adjudicate, in probate proceedings or otherwise, the ownership or right to possession of such property or any interest therein."  (Emphasis supplied.)

            Under these provisions, it is quite clear that the tax laws of the State of Alaska extend to property that is not "held in trust by the United States or . . . subject to a restriction against alienation imposed by the United States."  We have no factual basis for believing that the property in question, owned by the canning company and situated in the State of Washington, is held in trust by the United States or is subject to a restriction against alienation imposed by the United States.  (We are informed that the property in question is canned salmon to be sold in the regular course of trade.)  Accordingly, the State of Alaska could tax such property if it were situated there; we fail to see why a county of the State of Washington should have any less power when the property is situated here.

            Moreover, the fact that the property is located outside the Metlakatla Indian Reservation strengthens the right of the county to tax such property.  As stated in Federal Indian Law, supra, at page 866:

            "On the other hand, personalty issued to an Indian by the Federal Government and used by him outside the reservation is taxable by the State."

(Citing United States v. Porter, 22 F. (2d) 365 (1927))

            So far as the personal property in question is concerned, it is not only outside of the Metlakatla Reservation, but it also can hardly be considered to be property issued by the federal government.

            The cases ofUnited States v. Rickert, supra, and United States v. Pearson,supra, in no way conflict with the conclusion that the personal property here in question is subject to property taxation.  These cases involved either property issued by the Federal government for use on the Indian reservation, or property for use on the reservation and directly traceable to property originally issued by the federal government.

             [[Orig. Op. Page 6]]

            The case ofUnited States v. Thurston County, Neb. et al.,supra, is likewise distinguishable.  This case involved the taxability of funds which were derived from the sale of lands held in trust by the federal government for the Indians and which were subject to the same trust as the lands themselves.

            We recognize that the case of Territory of Alaska v. Annette Island Packing Co., 289 Fed. 671 (1923), held that the predecessor to the present company was exempt from an Alaskan income tax.  We also recognize that this predecessor corporation was privately owned by non-Indians, whereas the present company is actually the Metlakatla Indian Community itself.

            However, this case rested upon two grounds, neither of which is any longer valid.  This case held that the lease of Indian lands under which the private corporation operated and from which it derived its income was a federal instrumentality, the income from which was exempt from taxation.  The case ofGillespie v. Oklahoma, 257 U.S.501, 42 S. Ct. 171, 66 L.Ed. 338 (1922), was decided on essentially the same ground; but this case was expressly overruled inHelvering v. Mountain Producers Corp., 303 U.S.376, 58 S. Ct. 623, 82 L.Ed. 907 (1938).

            Also, theAnnette Island case was based upon the ground that the Metlakatla Indians were wards of the federal government, and that this status as wards would entitle them and their property to exemption from state taxation.  However, the U.S. Supreme Court has expressly repudiated this principle that the status of Indians as wards of the federal government suffices, by itself, to exempt such Indians and their property from taxation.  Oklahoma Tax Com. v. United States, 319 U.S. 598, 63 S.Ct. 1284, 87 L.Ed. 1612 (1943).

            One final argument for granting a tax exemption in the case at hand should be considered and answered.

            "For the same reason that property purchased by Indians with restricted funds and property issued to the Indians by the Government are Government instrumentalities, property purchased by the Indians pursuant to a specific plan for economic rehabilitation approved by the Government and carried out under Government supervision should likewise be recognized as a Government instrumentality.  As said by the Solicitor of the Interior Department:

            "'. . . The purchase of property by the Indians themselves in accordance with an economic plan worked out with the Government is supplanting,  [[Orig. Op. Page 7]] as a method of assuring the possession by Indians of productive property, the old method of the Government's issuing such property to the Indians.  From a legal viewpoint the purpose and concern of the Government are identical whether the plow or the cattle are bought by the Indian with Individual Indian Moneys, the expenditure of which has been approved by the Superintendent, or bought by the Indians with revolving loan funds or judgment fund money, pursuant to a plan of rehabilitation approved by the Superintendent, or bought by the Superintendent with gratuity funds and issued to the Indians.  The reasoning of the courts applies equally to these procedures, except that in the cases above cited the Government had an ownership interest as the title to the property was found to be in the United States.  The form of title, while indicative of the interest of the Government, is not, in my opinion, the determining factor.  The important factor is the acquisition and use of the property in execution of a government plan for the Indians.'"  [57 I.D. 124, 127.]  (Federal Indian Law,supra, at 1865.)

            We appreciate the force of this argument when the property involved is, like a plow or cattle, property which could have been issued originally by the federal government, which is used on the reservation, and over which the government exercises as much supervision as it does over property which it actually has issued.

            However, we are here concerned with property which is not at all of this type.  Rather it is the merchandise of a commercial establishment, which competes with other commercial establishments in what appears to be a very wide market‑-certainly one covering more than the State of Alaska.  Government supervision of the processing and marketing of this merchandise seems to be negligible if not nonexistent.

            Accordingly, we cannot find any basis for giving this property a special tax exemption which similar property, owned by non-Indian competitors do not also share.

            We trust that the foregoing will be of assistance to you.

Very truly yours,

Attorney General