#### A. M. LANDMAN, SUPERINTENDENT OF THE FIVE CIVILIZED TRIBES, FOR ESTATE OF JACOB PIERCE, DECEASED CREEK, ROLL #3074, v. THE UNITED STATES

[No. 45348.

Decided May 7, 1945]

*200
      *Mr. Huston Thompson*for the plaintiff.

*Mr. J.*IF. *Hussey,*with whom was *Mr. Assistant Attorney General Samuel 0. Clark, Jr.,*for the defendant. *Messrs. Robert N. Anderson*and *Fred K. Dyar*were on the brief.

**Ch. 162, Sess. Laws of the State of Oklahoma, 1915; Ch. 66, Art. 5, Sess. Laws of the State of Oklahoma, 1935.

*207Whitaker, Judge,

delivered the opinion of the court:

This is a suit by plaintiff, as the Superintendent of the Five Civilized Tribes, to recover estate taxes assessed against the estate of Jacob Pierce, a full-blood Creek Indian, who died on January 2,193B.

Upon Pierce’s death the plaintiff filed for him an estate tax return showing no estate taxes’ due. The Commissioner of Internal Eevenue, however, determined and assessed a deficiency against his estate of $88,393.66. This was later reduced to $75,062.92. Plaintiff sued to recover this sum on the ground that the Commissioner wrongfully included in the gross estate of Jacob Pierce the value of an allotment to him of 160 acres of land in Oklahoma and certain inherited lands and certain restricted cash, all of which was said to be tax-exempt. However, in his brief plaintiff limits his claim to the alleged wrongful inclusion within Pierce’s gross estate of the value of 160 acres of allotted lands.

It is agreed that the amount included in the gross estate for the value of the 160 acres of land was $128,461.25. Plaintiff says that this should not have been included in his estate because of the provisions of the original Creek Agreement of March 1, 1901 (c. 676, 31 Stat. 861), and of the Act of April 26, 1906 (c. 1876, 34 Stat. 137), and of the Act of May 27, 1908 (c. 199, 35 Stat. 312), and of section 4 of the Act of May 10, 1928 (c. 517, 45 Stat. 495, 496). Section 4 of the Act of May 10, 1928, provides, in part:

> * * * That the Indian owner of restricted land, if an adult and not legally incompetent, shall select from his restricted land a tract or tracts, not exceeding in the aggregate one hundred and sixty acres, to remain exempt from taxation and shall file with the superintendent for the Five Civilized Tribes a certificate designating and describing the tract or tracts so selected. * * *

> The section further provides for the recording of this certificate with the superintendent of the Five Civilized Tribes and in the records of the county in which the land is situated, and then further provides:

> * * * and said lands, designated and described in the approved certificates so recorded, shall remain ex*208empt from taxation while the title remains in the Indian designated in such approved and recorded certificate, or in any full-blood Indian heir or devisee of the land * * *.

The Act of January 27,1933 (47 Stat. 777), extended the period of tax exemption of such lands until April 26, *1956.*Decedent died on January 2, 1933.

The 160 acres of allotted lands, the value of which was included by the Commissioner in the decedent’s gross estate, had been designated and described in approved certificates and recorded in full compliance with the provisions of section 4 of the Act of May 10,1928, *supra.*

We are of the opinion that the transfer of such land at the death of the decedent was exempt from Federal taxation under the provisions of section 4 of the Act of May 10,1928, *supra,*and under the decision of the Supreme Court in *Oklahoma Tax Commission*v. *United States,*319 U. S. 598. In that case there was involved the right of the State of Oklahoma to subject to its estate tax certain land exempt from direct taxation, land not exempt from direct taxation, restricted cash and securities held for the Indians by the Secretary of the Interior, and miscellaneous personal properties and insurance. The court divided 5 to 4 on the propriety of the inclusion within the estate of the Indians of the land not exempt from direct taxation, the restricted cash and securities, and the miscellaneous personal properties and insurance, but it was unanimous in holding that the land exempt from direct taxation under the provisions of section 4 of the Act of May 10, 1928,, *supra,*should not have been included. In the majority opinion (pp. 610, 611) it was said:

> The validity of the taxes on the transfer of the land presents a somewhat different problem. Some of these lands are exempt from direct taxation by virtue of explicit congressional command. The Act of May 10, 1928, 45 Stat. 495, for example, provides that Indians of a class which includes the three deceased should select up to 160 acres of his allotted, inherited or devised restricted lands, which “shall remain exempt from taxation while the title remains in the Indian designated * * * or in any full-blood Indian heir or devisee,” while all other restricted lands are made subject to taxation by Oklahoma. The State argues that congressional *209exemption of the land from direct state taxation does not exempt the land from an estate tax, because of the principles announced in *United States Trust Co.*v. Helvering, *supra.*A majority of the Court concludes that this principle does not apply 'to Indian lands specifically exempted from direct taxation. We therefore hold that the transfer of those lands which Congress has exempted from direct taxation by the State are also exempted from estate taxes.

Mr. Justice Murphy, in his dissenting opinion, in which the Chief Justice and Mr. Justice Reed and Mr. Justice Frankfurter joined, said:

> * **** Most of their allotted lands were expressly exempt from taxation, and, as the opinion of the Court recognizes, this removed them from the operation of Oklahoma’s estate tax.

In a note supplementing this statement he further said:

> The fact that the exemptions do not mention inheritance or estate taxes is unimportant. As pointed out before, contrary to the general rule Indian tax exemptions are to be liberally construed. See *Carpenter*v. *Shaw,*280 U. S. 863, 366-67. For that reason decisions, such as *U. S. Trust Co.*v. Helvering, 307 U. S. 57, that statutory exemptions from taxation do not include an exemption from estate taxes, have no application here.

It appears, therefore, that both the majority and the minority were in agreement that the Act of May 10, 1928, was intended not only to cover direct taxes on the lands, but was intended to cover as well a tax on the privilege of transferring the lands at death.

The tax under consideration in *Oklahoma Tax Commission*v. *United*States, supra, was a State tax; the tax levied in the case at bar is a Federal tax, but this is immaterial, since both taxes are identical in character; both are estate taxes levied upon transfers of property by death. Section 301 (a) of the Revenue Act of 1926 (c. 27, 44 Stat. 9, 69) levies a tax “upon the transfer of the net estate of every decedent * * The Oklahoma tax, according to the opinion of the Supreme Court in *Ohlahoma Tax Commission*v. *United*States, supra, p. 600, was levied “upon all transfers made in contemplation of death or intended to take effect after death as well as transfers ‘by will or the intestate laws *210of this state.’ ”1 Since the lands are exempt from State estate taxes, it necessarily follows they are exempt from Federal estate taxes.

We are of the opinion that the Commissioner of Internal Revenue wrongfully included in the decedent’s gross estate the value of the 160 acres of allotted lands, and, therefore, under the special findings of fact and conclusion of law which have been made by the court in this case, that plaintiff is entitled to recover so much of the taxes assessed as resulted from the inclusion in decedent’s gross estate of the value of the allotted lands. This amount it is agreed is $15,782.13. Judgment for this amount, plus interest according to law, will be entered in favor of plaintiff. It is so ordered.

Madden, Judge/ Littleton, Judge/ and Whaley, *Chief Justice,*concur.

Jones, Judge, toot no part in the decision of this case.