In Uncategorized on 03/01/2018 at 16:33

Neither treaties with, or enactments by, the US of A (like the General Allotment Act of 1887, the Canandaigua Treaty of 1794, and the Treaty of 1842), nor the Two Wampum Belt from the 17th Century treaty with the Dutch, rescue Alice Perkins and Fredrick Perkins, 150 T. C. 6, filed 3/1/18, from income tax on the gravel they sold, even though Alice, an enrolled member of the Seneca Nation, extracted the gravel from the lands of the Seneca Nation with permission therefrom.

Alice and Fred are jousting with IRS in USDCWDNY, and doing OK in said Court, having stalled IRS’ attempted toss in a refund case.

But today Judge Holmes, who seems to specialize in Western New York cases, relishes the chance to second-guess USDCWDNY. He interprets the Canandaigua treaty to limit the exemption from tax to products of land allocated to individual member of the Nation in trust. Alice admits that the gravel came from common lands of the Nation.

Now when interpreting treaties between the US of A and the Indians (I use the term as the Court uses it; “Much of the literature in this area refers to ‘Indian law’ and ‘Indian treaties’ and the like, however; so to maintain some continuity with this legal-historical past, we will use the traditional nomenclature….” 150 T. C. 6, at p. 2, footnote 1), “(T)he normal maxims–cited almost every day our Court releases opinions–that deductions ‘are a matter of legislative grace,’ and that exemptions from tax are strictly construed are displaced a bit when Indians are involved.  We construe treaties and statutes in favor of Indians because courts have viewed Indians as being in a more vulnerable position in relation to the United States government.” 150 T. C. 6, at p. 7 (Citations omitted).

But that doesn’t help Alice and Fred. The General Allotment Act of 1887 means allocated to specific individuals. The Treaty of 1842 doesn’t exempt individuals, only the Seneca Nation as a whole and its allied members of the Iroquois Confederacy. It’s a non-alienation treaty, that prevents the lands of the Nation and its allies from being taken.

And the famous Two-Wampum Belt, which is two-parallel rows of contrasting colored shells, is insufficient to confer tax exemption. It means “peaceful coexistence” to Judge Holmes, but the Indian Citizenship Act of 1924 makes Alice and her fellow-Nationals US citizens, just like the rest of us, and subject to tax unless exempted.

Alice didn’t mine and sell the gravel for the benefit of the Nation, but only for herself (and Fred). Art. 9 of the 1842 Treaty pledges the US of A to prevent lands of the Nations and allies from being taxed by New York State (and New York State knows how to tax; I’ll say!). New York State was hot to tax the Nations and allies for roads in 1842. Some things never change.

It’s unnecessary to distinguish between gravel as realty or non-realty, because it was detached when sold. In any case, the 1842 Treaty only exempts the lands of the Nation from real estate taxes.

But see Judges Lauber and Pugh concurring, and especially Ch J-in-waiting Foley’s dissent. Judge Holmes shouldn’t play with gravel. Just stick to treaties and wampum.

As for chops, they’re off the table, as it’s another Fifty Shades of Graev, with IRS once more playing the Michael Corleone gambit.

Judges Vasquez, Morrison, Buch, and Nega are down with this.

Judges Lauber and Pugh, agreeing with the result, take issue about the gravel. Ch J-in-waiting Foley (I’m still taking applications for soubriquet) raises the very valid point about products taken from the land being part of the land. USDCWDNY went off on whether the gravel was real property, which would somehow take Alice out from all the other cases that taxed salaries, wages, royalties, rental income and unearthly stuff.

Judges Lauber and Pugh don’t want to go anywhere near the gravel or the land. “Unlike the opinion of the Court, we would not reach the issue of whether gravel constitutes real property.  Instead, we would grant summary judgment for respondent because article 9 of the 1842 Treaty conferred rights on the Seneca Nation, not its constituent members, and because immunity from Federal taxation was not among the rights conferred.” 150 T. C. 6, at p. 28.

Ch J Marvel, and Judges Gale, Thornton, Goeke, Gustafson, Paris, Kerrigan, and Ashford agree with this opinion concurring in part and concurring in the result.

Ch J-in-waiting Foley dissents, saying land is dirt. And it isn’t as simple as Judge Holmes thinks it is.

“The opinion of the Court concludes that gravel mined from Indian land is not part of Indian land, reasoning that ‘[t]he gravel wasn’t attached to the land when it was sold, so the Perkinses aren’t exempt from tax on the sale of the gravel under the 1842 Treaty.’  See op. Ct. p. 18.  More convincingly, the United States District Court for the Western District of New York stated that ‘[g]iven the liberal principles of treaty construction that apply here, there is no reason to believe that one rule would apply to taxing the dirt, gravel, and foliage that make up the property and another to the property itself–if ‘the property’ can even be distinguished from the dirt, gravel, and foliage that comprise it.’  The opinion of the Court’s conclusion, see op. Ct. p. 18, that it is not ‘difficult to distinguish real property from the gravel severed from it’ ignores the complexities relating to mineral rights and property law.” 150 T. C. 6, at pp. 29-30 (Citation omitted). I think you meant “op. cit.” Judge, but maybe supra would have done better.

I agree with Ch J-in-waiting Foley. As a dirt lawyer with fifty years in, it isn’t as simple as Judge Holmes would let on. “So affixed to the freehold that it cannot be removed without injury to the freehold” has fed many of my brethren and sistern very well, thank’ee. I remember all the throwdowns about fixtures in leasehold negotiations and litigations, mortgage negotiations, workouts and foreclosures; even in apartment sales, where “built-ins” was a fighting word; and what about cellphone towers, like Frank Dirico in my blogpost “Passive Aggressive – Part Deux,” 11/13/12?

Tell me that mining doesn’t damage the freehold.

Best advice came from Judges Lauber and Pugh: stay away from the dirt.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: