Court Opinion

ID: 9625507
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:43:01.286963+00
Date Added: 2024-06-11T18:06:09.698650
License: Public Domain

GORDON, Justice
(dissenting):
I must dissent from the majority opinion, because it distinguishes Warren Trading Post v. Arizona Tax Commission, 380 U.S. 685, 85 S.Ct. 1242, 14 L.Ed.2d 165 (1965) from the facts of this case. I believe that Warren, supra, controls and prohibits the imposition of the tax in question.
In both Warren, supra, and in this case, the vendors are non-Indians making sales to Indians on reservation land. The tax in dispute in both cases is the same, and in both, although the non-Indian seller is legally required to pay the tax, the economic impact is borne by the Indian buyer. The tax was invalidated in Warren but is upheld here. Only two meaningful differences exist between the cases: Central Machinery did not maintain a permanent place of business on the reservation and did not possess a trader’s license. Neither of these differences merits the outcome of the majority opinion.
CENTRAL MACHINERY’S LACK OF A PERMANENT PLACE OF BUSINESS
Volume 25 C.F.R. § 251.9(b) provides for the licensing of “[ijtinerant peddlers * * as traders.” Peddler is defined in 25 C.F.R. § 252.3(i) as “a person who offers goods for sale within the exterior boundaries of the Hopi, Navajo or Zuni Reservations, but does not do business from a fixed location or site on any of those reservations.” Section 252 deals with business practices on the Navajo, Hopi, and Zuni reservations and, therefore, is riot binding on this case. Its definitional section, however, can reasonably be consulted to construe § 251, which is without such a definitional aid. It would be illogical to believe that the term “peddler” in each of these parts refers to different types of people. The obvious purpose of sections 251 and 252 is to protect the reservation Indians from unscrupulous vendors, .whether they be based on the reservation or off. Central Machinery’s lack of a permanent place of business on the reservation is not fatal, therefore, to its claim that it should be granted the tax preference extended to Indian traders. A peddler can be licensed as a trader. This issue was raised and briefed by the parties, but is not discussed in the majority opinion.
CENTRAL MACHINERY’S LACK OF A TRADER’S LICENSE
Central Machinery sold tractors to Gila River Farms without first being licensed pursuant to 25 C.F.R. § 251.9(b), which requires that such a license or permit be obtained from the Superintendent of the Pima Agency, the Bureau of Indian Affairs agency supervising the reservation. Approval, therefore, was obtained from the very person authorized to grant a license.
*186It is unclear from the record why a license or permit was not obtained. To penalize the Indian purchaser because the specific licensing procedure was not followed is illogical, especially in light of the Bureau of Indian Affairs’ knowledge and approval of the transaction. The license requirement is for the protection of Indians. Warren, supra. Sanctions for violation of the licensing regulations include forfeiture of all merchandise offered for sale and a fine of $500.00. 25 C.F.R., § 251.3. The penalty is to punish the trader, not the Indian. If Central Machinery’s failure to have a license were to remove this case from the protection of Warren, the result would compel the Indians to pay economic sanctions to Arizona because of the Bureau of Indian Affairs’ failure to enforce its regulations. As the trial court’s opinion stated, “Nowhere do the federal statutes and regulations indicate that non-compliance by a trader or the Bureau of Indian Affairs will allow imposition of state laws which would otherwise be inapplicable. It is the existence of the federal laws and accompanying regulations and not their enforcement which preempts the State’s ability to tax the transaction in question.”
ECONOMIC IMPACT
The majority opinion concludes that the tax in question is not barred, because it is imposed on the seller, Central Machinery, and not on the Indian buyer. First Agricultural National Bank v. State Tax Commission, 392 U.S. 339, 88 S.Ct. 2173, 20 L.Ed.2d 1138 (1968), however, held that in questions of immunity, the Supreme Court is not bound by a state court’s characterization of a tax. There a state sales tax was levied against the seller but passed on to the purchaser. The purchaser was a federal bank, and, like the Gila Indians, was immune from tax. The Supreme Court ignored the state’s contention that the tax was not on the bank and found it impermissible. In Warren, supra, the Supreme Court has already addressed the status of the tax in question and held it to be impermissible when levied against licensed Indian traders.
Furthermore, I believe the facts in this case show that the financial impact of Arizona’s tax falls directly on the Indians as passed on by the vendor and that the cases dealing with taxation of Indians do focus on economic impact. This in fact appears, to be the decisive factor in determining if a tax will be upheld. In G. M. Shupe, Inc. v. Bureau of Revenue, 89 N.M. 265, 550 P.2d 277 (1976), a corporation constructing a dam on reservation land for the Department of the Interior was not exempt from state tax. The activity was merely on Indian lands, and the tribe would suffer no direct effect because of the tax. In Fort Mohave Tribe v. County of San Bernardino, 543 F.2d 1253 (9th Cir. 1976), non-Indians leasing Indian land had to pay a tax on the land. Although this might have had an indirect effect on the Indians’ bargaining power, the direct result was to give the non-Indian leasee a more attractive investment. In Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976) an Indian selling cigarettes on the reservation was required to pay a sales tax on cigarettes sold to non-Indians, but not on cigarettes sold to other Indians. Although the Indian vendor argued that he would suffer an out-of-pocket loss, the only certainty was that the non-Indian buyer would benefit. The effect on the Indian seller was too indirect.
In none of the cases in which a tax is upheld is an Indian the consumer who is directly hit. The direct impact is on the non-Indian, and the effect on the Indian is to some degree speculative. In Warren, supra, and in this case, it is the Indian consumer who must directly bear the burden. The subsequent case law is not an inroad on Warren, which still controls this issue and renders the tax imposed on Central Machinery illegal.
I must, therefore, respectfully dissent.