Opinion ID: 1190432
Heading Depth: 1
Heading Rank: 1

Heading: the operator of the smoke shop

Text: Title 25 U.S.C. § 503 permits any recognized tribe in Oklahoma to obtain a corporate charter issued by the Secretary of the Interior. Under Section 503 the corporate charter may grant to the corporation any powers properly vested in a corporate body according to laws of the state. Id. Congress, purpose in enacting this statute and its similar counterpart, 25 U.S.C. § 477, which permits tribes from other states to organize as corporations, was to promote organization by tribes for economic purposes. Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439, 1442 (D.C. Cir.1988); see generally Cohen, Handbook of Federal Indian Law 147-149 (1982). Under Section 503, an Oklahoma tribe may incorporate and waive immunity for assets held by the corporation. However, assets not held by the corporation remain protected by immunity. See Comment, Tribal Self-Government and the Indian Reorganization Act of 1934, 70 Mich. L.Rev. 955 (1972); Getches and Wilkinson, Cases and Material on Federal Indian Law (2d 1986) at 315. It was under this statute that the Thlopthlocco Tribal Town obtained its federal corporate charter. The OTC offers three theories to support its argument that the corporation was the proper party to this suit. First, the OTC urges that the corporation operated the smoke shop. For evidentiary support it relies on the fact that the letterhead of the Thlopthlocco Tribal Town reads Thlopthlocco Tribal Town, a federal corporation since 1939. It also points out that the land on which the smoke shop is situated was deeded it to the federal government, to be held in trust for the Tribe. This argument fails. The overwhelming evidence shows that the smoke shop was operated and managed by the Business Committee, the governing body of the Tribe. The corporation has never been utilized to operate tribal businesses. While the Business Committee consists of the same individuals who the corporate charter names as officers of the corporation, the Committee did not act in the capacity of corporate officers. Instead, the Business Committee always acted according to the Tribe's constitution and by-laws as the governing body of the Tribe. All relevant business decisions regarding the smoke shop were made at the regular committee meetings where other tribal business was conducted. The supervisory rules of the smoke shop were enacted through resolutions passed by the Business Committee. The salaries, employment decisions, financing and operating decisions were made at these meetings. As its second theory, the OTC asserts that even if the Tribe operates the smoke shop, it is estopped from asserting its separate identity because of the letterhead. Citing Underwood v. Purcell Wholesale Grocery Co., 87 Okl. 94, 209 P. 736 (1922), the OTC claims that the Thlopthlocco Tribal Town held itself out to be a corporation. It is true that the letterhead indicated the corporate status. However, as Underwood clearly states, estoppel only applies if the party to whom the representation is made detrimentally relies on the representation. Here, the record is clear that from the inception of these proceedings the corporation has stated that it is not the operator of the smoke shop. The Tax Commission has not shown any reliance on that representation to its detriment. It appears that the OTC simply (and alertly) chose to sue the corporation because of the waiver of immunity in its corporate charter. The Tribe, of course, is not a party to the suit, and thus not subject to any such theory of estoppel. The corporation is not estopped from denying its non-participation in the operation of the smoke shop. Finally, the OTC urges that the corporation and the Tribe should be treated as one because they are so closely related as to be indistinguishable, if not one and the same thing. The two entities are closely related but cannot be considered one and the same, especially in light of congressional intent in permitting the incorporation of tribes. Early drafts of the Act proposed a single tribal entity continuing the tribe's preexisting power to govern its members politically and adding new corporate powers to allow the tribe to engage in business dealings. An objection was raised that tribal immunity would prevent such an entity from obtaining credit. To resolve this problem, Congress authorized the tribes to organize two separate entities: a political governing body to exercise preexisting powers of self-government pursuant to section 16 of the Act, and a new tribal corporation to engage in business transactions pursuant to section 17. The legislative scheme contemplates that a tribe must first organize under section 16 to be eligible to form a section 17 corporation; a number of tribes have formed only a section 16 government. Cohen, at 325-26. (emphasis added) In Atkinson v. Haldane, 569 P.2d 151, 170-72 (Alaska 1977), the Alaska Supreme Court considered the question of whether the sue and be sued clause in the corporate charter of the Metlakatla Indian Community served as a waiver of tribal sovereign immunity in a negligence suit against the tribe. Relying on the legislative history of the Indian Reorganization Act and opinions of the Solicitor General, the court concluded that the tribe and its corporation were two separate legal entities. Quoting Solicitor General Opinion No. M-36545, the court noted that: The corporation, although composed of the same members as the political body, is to be a separate entity, and thus more capable of obtaining credit and otherwise expediting the business of the tribe, while removing the possibility of federal liability for activities of that nature. As a result, the powers, privileges and responsibilities of these tribal organizations materially differ. Op. No. M-36515, 65 Interior Decision 483. Atkinson, 569 P.2d at 172. We agree with the Alaska court. Although the individuals who serve as tribal leaders also serve as officers of the corporation, the two entities are separate. See Cohen, at 326. In this case, Thlopthlocco Tribal Town has chosen not to utilize its corporate charter. All business, including the smoke shop, is conducted through the Tribe's Business Committee. We agree with the Court of Appeals that the wrong party was sued as defendant. There is no evidence that the corporation had any connection with the operation of the smoke shop so as to subject it to legal proceedings brought by the Tax Commission.