City of Sherrill v. Oneida Indian Nation (03-0855)

Oral argument: January 11, 2005
Appealed from: United States Court of Appeals for the Second Circuit

Indian Law, Taxation, Constitutional Law, Real Property

In 1997 and 1998, the Oneidas re-purchased title to parcels of aboriginal land within Sherrill, New York, in open market transactions. Sherrill subsequently assessed property taxes, which the Oneidas ignored, asserting that the properties are contained within the Oneida Indian Reservation and therefore are considered to be "Indian Country", which is nontaxable by state municipalities. Sherrill sent the Oneidas notices of tax delinquency, held a tax sale where Sherrill repurchased the parcels, then initiated eviction proceedings. The U.S. District Court for the Northern District of New York found in favor of the Oneidas. On appeal, the Second Circuit affirmed the District Court and also found that the 1838 Treaty of Buffalo Creek, 7 Stat. 550, did not require the Oneidas to abandon their lands in the state of New York in exchange for land in Kansas, and further, that a reservation continues to exist even if a tribe ceases to exist and is protected under the Non-Intercourse Act. The Supreme Court must now assess the Second Circuit Court's interpretations.

This case consists of four separate questions, which ultimately address whether properties reacquired by the Oneida Indian Nation of New York are subject to taxation by the City of Sherrill, New York and Madison County, New York.

[Questions presented] | [Summary] | [Analysis]

Questions presented

1. Whether alleged reservation land is Indian Country pursuant to 18 U.S.C. § 1151 and this Court's decision in Alaska v. Native Village of Venetie Tribal Gov't, 522 U.S. 520 (1998) where the land was neither set aside by the federal government nor superintended by the federal government?

2. Whether alleged reservation land was set aside by the federal government for purposes of Indian Country analysis under 18 U.S.C. § 1151 and Native Village of Venetie Tribal Gov't where the alleged reservation was established by the State of New York in the 1788 Treaty of Fort Schuyler, and not by any federal treaty, action or enactment?

3. Whether the 1838 Treaty of Buffalo Creek, which required the New York Oneidas to permanently abandon their lands in New York, resulted in the disestablishment of the Oneida's alleged New York reservation?

4. Whether alleged reservation land may (i) remain Indian Country or (ii) be subject to the protections of the Indian Trade and Intercourse Act, or Non-Intercourse Act, 25 U.S.C. § 177, if the tribe claiming reservation status and Non-Intercourse Act protection ceases to exist?

Summary

From pre-Revolutionary War times, colonists respected the Oneida Indian Nation's (the "Oneidas") right of possession to their aboriginal lands, which comprised nearly one million acres in central New York covering an area from Lake Ontario to the Adirondack foothills and from Pennsylvania north to the St. Lawrence River. Oneida Indian Nation of New York v. City of Sherrill, New York, 145 F.Supp.2d 226, 232-36 (N.D.N.Y.,2001). The first treaty between the United States and an Indian tribe was executed in 1784, in recognition of the Oneida'ssupport during the Revolutionary War, and guaranteed the Oneidas' security "in the possession of the lands on which they are settled." Id. at 234 (quoting the Treaty of Fort Stanwix, 7 Stat. 15 (Oct. 22, 1784)).

Under the Treaty of Fort Schuyler between New York and the Oneidas, New York purchased most of the Oneida'sremaining land in 1788 while reserving 300,000 acres for use by the tribe. Id. The United States' Treaty of Canandaigua, 7 Stat. 44, acknowledged this reservation as established by the Treaty of Fort Schuyler; the parcels of land located in the Municipality of Sherrill ("Sherrill") at issue in this case were part of the reserved land. County of Oneida v. Oneida Indian Nation, 470 U.S. 226, 253 (1985). The Treaty of Canandaigua states:

The United States acknowledge the lands reserved to the Oneida … in their respective treaties with the state of New York and called their reservations to be their property; and the United States will never claim the same, nor disturb them ... but the said reservations shall remain theirs, until they choose to sell the same to the people of the United States, who have the right to purchase.

In 1795, New York purchased the majority of the Oneida'sremaining 300,000 acres; since that time, title to the land passed in numerous free market transactions. Id. at 231. In 1790, Congress passed the Non-Intercourse Act, 25 U.S.C. § 177, which prohibited conveyance of Indian lands except by treaty with the federal government. Id. at 234.

In the early 1800's, federal policy toward the Indians shifted and favored the removal of Indians from the east into western territories: treaties during this period provided for the relinquishment of Indian land in the east and created reservation land for the Indians in the west. Oneida Indian Nation of New York, 145 F. Supp. 2d at 234. In 1830, Congress passed the Indian Removal Act, ch. 148, 4 Stat. 411, which ultimately authorized the exchange of Indians' eastern land for land west of the Mississippi River. Removal of Indian tribes was required by the government in order to "mak[e] available for white settlement a vast area and solving the problem of conflict of authority caused by a presence of Indian nations within state boundaries." Oneida Indian Nation of New York, 337 F.3d at 148 (citing Felix S. Cohen, Handbook of Federal Indian Law 53 (1942)).

Among these removal treaties was the Treaty of Buffalo Creek, 7 Stat. 550 (Jan. 15, 1838). New York Indians v. United States, 170 U.S. 1 (1898). This treaty contained an agreement that provided for the cession of the New York Indians' Wisconsin lands in exchange for reservation land in Kansas. Oneida Indian Nation, 337 F.3d at 160. Most importantly, the Treaty of Buffalo Creek also provided that New York Oneidas "hereby agree to remove to their new homes in the Indian territory, as soon as they can make satisfactory arrangements with the Governor of the State of New York for the purchase of their lands at Oneida." 7 Stat. § 550 Art. 13. However, the Oneidas did not completely remove to Kansas. New York Indians, 170 U.S. at 9-10.  Hundreds of New York Oneidas moved to Wisconsin and to Ontario, Canada and by 1848, only about 200 Oneidas resided in New York. Oneida Indian Nation, 337 F.3d at 150. By the middle of the nineteenth century, three distinct bands of Oneidas existed: the New York Oneidas, the Wisconsin Oneidas, and the Canadian ("Thames") Oneidas. Id. at 150.

The federal government eventually appropriated the unoccupied Kansas land and placed it in the public domain for sale to settlers. Id. The Oneida, along with other New York tribes, sued claiming entitlement to the Kansas lands ceded to them under the Treaty, and sought the value of the land sold and the money the government had agreed to pay on their removal. Id. at 151. In 1898, the Supreme Court held that the Buffalo Creek Treaty resulted in a grant of the Kansas lands to the Indians and that forfeiture of these lands could occur only through legislative action; opening the land to settlement, as the federal government had done, was insufficient. New York Indians, 170 U.S. at 25-36. The Court concluded that the tribes affected, including the Oneidas, were entitled to monetary damages. Id.  Although most of the tribe never moved to Kansas, the Oneidas still benefited from the land after suing for its worth.

In 1997 and 1998, the Oneidas purchased title to particular parcels of land in open market transactions within Sherrill, New York. Oneida Indian Nation of New York v. City of Sherrill, New York, 337 F.3d 139, 144 (2d Cir. 2003). The Oneidas operate a gasoline filling station with a convenience store, and a textile factory on these properties. Id. Sherrill assessed property taxes against these parcels; however, the Oneidas did not pay the assessed taxes, asserting that the properties are contained within the Oneida Indian Reservation and therefore are considered to be "Indian Country" which is nontaxable by state municipalities. Id. Regardless of the Oneidas' claims, Sherrill denied that the parcels were part of "Indian Country" and sent the Oneidas notices of tax delinquency for these parcels of land and eventually held a tax sale where Sherrill repurchased the parcels. Id. Sherrill then initiated eviction proceedings in New York State Supreme Court. Id.

The Oneidas sued Sherrill in United States District Court for the Northern District of New York, seeking a declaratory judgment that the parcels of land were part of their historic reservation and therefore exempt from state taxation. Id. The Oneidas also removed the state eviction case to federal court. Id.  In June of 2004, the district court ruled in favor of the Oneidas.  See id. 

Sherrill appealed to the United States Court of Appeals for the Second Circuit, which affirmed the decision of the district court.  The Second Circuit found that the parcels of land were "Indian Country" because the reservation had been established by the federal government through the Treaty of Canandaigua in 1794. "Indian Country" is defined under 18 U.S.C. § 1151 as:

(a) all land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, and, including rights-of-way running through the reservation,

(b) all dependent Indian communities within the borders of the United States whether within the original or subsequently acquired territory thereof, and whether within or without the limits of a state, and

(c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same.

Id.

The Second Circuit also found that the 1838 Treaty of Buffalo Creek, 7 Stat. 550, did not require the Oneidas to abandon their lands in the state of New York in exchange for land in Kansas.  As a final point, the court found that a reservation continues to exist even if a tribe ceases to exist and is protected under the Non-Intercourse Act, which was enacted to protect Indian country by mandating that the federal government approve sales and transfers of land from any Indian nation or tribe.

Analysis

Importance of the case

This case is important because it deals with not only the future of the small New York city of Sherrill, but also the much broader issue concerning the origins of the United States and the ongoing conflict between its native inhabitants and intervening settlers. The taxpayers of Sherrill are keenly interested in the outcome because if the land at issue is deemed to be Indian country, they will be effectively subsidizing municipality services consumed by the Oneidas. Such an outcome could produce a deleterious outcome in which taxpaying Sherrill homeowners and businesses could be forced to move or close due to the unbalanced tax structure.  In turn, this could signal the end of the municipality. The attorney for Sherrill, Ira Sacks, warned that if the Second Circuit's decision stands "the tax base and viability of cities such as the city of Sherrill -- across New York and elsewhere -- will be imperiled." Alexis Grant, Indian Sovereign: Taxation Without Reservation, Medill News Service (July 12, 2004).

This case also has the potential to affect public policy as well as erode freedoms that generations of Indians have fought for.  When reviewing the history of native and settler conflicts, particularly the Treaties and Acts at issue here, we find the Congress to be ultimately unclear with respect to its intentions. 

Issues to address

Basic Governing Principles as Noted by the Second Circuit

The Second Circuit cited three basic principles that govern the issues at hand. The first is the Oneida's right of occupancy on Indian country, which "may extend from generation to generation, and will cease only by dissolution of the tribe, or their consent to sell to the party possessed of the right of pre-emption." Oneida Indian Nation, 337 F.3d. at 152 (citing In re New York Indians, 72 U.S. 761, 771 (1866)). The second, codified in the Non-Intercourse Act, represents federal preeminence over the disposition of land in Indian country, since "Congress alone has the right to say when the [United States'] guardianship over the Indians may cease." Id. (citing United States v. Boylan, 265 F. 165, 171 (2d. Cir. 1920)).  The sale or conveyance of reservation land can only be made with congressional sanction, that is, "by treaty or convention entered into pursuant to the Constitution." Id. (citing 25 U.S.C. § 177 (2000)). The third principle is federal preemption, which prohibits states from imposing property taxes upon Indian reservation land without congressional approval. Id. (citing In re New York Indians, 72 U.S. at 771).

Analysis of First and Second Issues

Sherrill argues that the parcels of land at issue are taxable because they are not currently located within Indian country as defined under 18 U.S.C. § 1151. Sherrill's main argument is that the Second Circuit was incorrect in finding that the federal government set aside the land in New York for Indian use and placed such land under federal superintendence, as required to be Indian country by Native Village of Venetie Tribal Government. Native Village of Venetie Tribal Gov't.,522 U.S. at 520. Rather, it is contended that the properties were acquired in private, open-market transactions and benefit from

In Native Village of Venetie Tribal Government, the Supreme Court considered whether certain land owned by members of the Venetie tribe was part of Indian country. Id. at 527. The land had been part of the Neets'aii Gwich'in reservation, which was disestablished under the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601 et seq. and title was then conveyed to the Venetie native corporations, which then transferred title to the tribe. Id. at 524. The Court ruled that the land was not Indian country because it neither had been "set aside by the Federal Government for the use of the Indians as Indian land" nor was "under federal superintendence". Id. at 527, 532-34.  This is the authoritative test to determine land's status as Indian country.

Sherrill compares the Oneidas to the Venetie, claiming that since the Oneidas purchased the properties and can freely alienate them, the land no longer be in Indian country.  Oneida Indian Nation, 337 F.3d at 155. However, it would appear that under the Treaty of Canandaigua, the federal government did approve of the reservation created under the Treaty of Fort Schuyler, between the state of New York and the Oneidas, and therefore set aside the land for Indian use.  However, it is the second "superintendence" prong of the Venetie test that makes deeming the parcels at issue in Indian country questionable.  In Venetie, the Court reasoned that superintendence exists where the federal government "actively controls the lands in question, effectively acting as a guardian for the Indians." Native Village of Venetie Tribal Gov't, 522 U.S. at 533. Superintended land is "under the jurisdiction and control of Congress for all governmental purposes, relating to the guardianship and protection of the Indians." Id. The Second Circuit seemingly ignored this prong of the test in its analysis. However, when seriously considered, the federal government's superintendence, or guardianship of this particular land appears uncertain in light of the passage of federal removal acts, such as the 1838 Treaty of Buffalo Creek, subsequent to the Treaty of Canandaigua.

Analysis of Third Issue

Sherrill contends that even if the parcels of land were once Indian country, the land lost its status when the tribe moved from New York to Kansas under the 1838 Treaty of Buffalo Creek. Oneida Indian Nation, 337 F.3d. at 158; 7 Stat. 550. The city claims that even if the Oneidas did not physically move to the other side of the Mississippi, they received compensation from the state to cover the cost of the relocation as well as subsequent recovery of damages over Kansas land value, which were benefits derived from the exchange of their New York land. Id. at 164.

However, the Second Circuit noted pertinent authority regarding the interpretation of treaties dealing with Indian reservations. It is "well established that treaties should be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit." Oneida Indian Nation, 337 F.3d. at 158 (citing County of Oneida, 470 U.S. at 247). "Any finding that Congress has abrogated Indian treaty rights is inappropriate ‘[a]bsent explicit statutory language.'" Id. Congress' intention must be "clearly expressed." Id. (citing Hagen v. Utah, 510 U.S. 399, 423 (1994) (Blackmun J., dissenting)).  

The pertinent language of the Treaty of Buffalo Creek, as stated above, does not seem to clearly indicate the intentional disestablishment of the Oneida reservation in New York, as required by the standards of interpretation. The Treaty of Buffalo Creek, in regard to the land at issue in New York, did not explicitly disestablish the reservation, but rather opened up the possibility that the Oneidas would remove to Kansas as soon as possible. If the Court does find that the parcels at issue are in fact Indian country, there is a strong likelihood that the Court will also find a lack of obvious congressional intent to disestablish the reservation through the Treaty of Buffalo Creek.

Analysis of Fourth Issue

Sherrill claims that the parcels of land in question lost their status as Indian country, as well as protection under the Non-Intercourse Act, 25 U.S.C. § 177, because the Oneidas ceased to exist as a tribe during a period at the end of the nineteenth century and the beginning of the twentieth century.  Although the Second Circuit held otherwise, as explained in the first basic governing principle noted above, Indian country may cease to exist by dissolution of the tribe. Oneida Indian Nation, 337 F.3d. at 152.

There is some legal support for the proposition that once an Indian tribe ceases to exist, the land it once owned can no longer be in possession of a non-existent entity.  Judge Van Graafeiland, the Second Circuit's dissenter, noted authorities claiming the same. For example:

[W]hen an Indian tribe ceases for any reason, by reduction of population or otherwise, to actually and exclusively occupy and use an area of land clearly established by clear and adequate proof, such land becomes the exclusive property of the United States as public lands, and the Indians lose their right to claim and assert full beneficial interest and ownership to such land; and the United States cannot be required to pay therefore on the same basis as if it were a recognized treaty reservation.

Quapaw Tribe of Indians v. United States, 120 F.Supp. 283, 286 (CT.CL. 1954).

Also, to establish a prima facie case based on a violation of the Non-Intercourse Act, a group claiming to be a tribe must show that (1) it is an Indian tribe, (2) the land is tribal land, (3) the United States has never consented to or approved the alienation of this tribal land, and (4) the trust relationship between the United States and the tribe has not been terminated or abandoned. Golden Hill Paugussett Tribe of Indians v. Weicker,  39 F.3d 51, 56 (2d. Cir. 1994)[emphasis added]. 

Although this may seem like a blatant error on behalf of the Second Circuit, that court did note that even if constant tribal existence were required, the Oneidas did not actually cease to exist. "Once a tribe has been recognized, the removal of that recognition, like reservation diminishment or disestablishment, is a question for other branches of government, not the courts. And Sherrill has identified no legislative or executive action withdrawing recognition." Oneida Indian Nation, 337 F.3d at 166 (relying on United States v. Holliday, 70 U.S. 407, 419 (1865)). A particular authority relied on by Sherrill, letters from the Assistant Commissioner of Indian Affairs in 1916 and 1925, stated that the tribe no longer existed in New York; however, the court found that these sources were too informal and not representative of proof of federal action withdrawing the tribe from government protection. Oneida Indian Nation, 337 F.3d at 167. "This conclusion is, to some degree, understandable, since most of the Oneida reservation land had been sold to the State, with the remaining parcels divided among members who, increasingly, lived separately from one another and received state services." Id. at 167; See United States v. Boylan, 265 F. at 167-70. If this authority is considered to be insufficient, then Sherrill's arguments may be extremely weakened.

Conclusion

Overall, the outcome of this case will likely have serious effects on the losing party.  Although the decision may seem difficult to predict, it appears possible that the Supreme Court may follow the lead of both lower federal courts and ultimately affirm the Second Circuit's decision. It is also likely that the Court will find that the federal government set aside the land in New York for Oneida use under the Treaty of Canandaigua and that the two prong test as outlined in Native Village of Venetie Tribal Gov't is satisfied.  Further, it seems probable that the Court will find that the language of the Treaty of Buffalo Creek does not clearly indicate an intentional disestablishment of the Oneida reservation in New York due to the Treaty's lack of explicit language on the matter.  Finally, the Court will likely find that even though tribal existence must be continuous in order for the parcels of land at issue to remain Indian country and for the Oneidas to maintain protection under the Non-Intercourse Act, due to lack of formal authority stating differently, the Oneidas existence was continuous and therefore the lands at issue would remain Indian country and the tribe would maintain its protections.