Opinion of the Court.

271 U.S.

by taking the stock as an evidence or measure of their value, . . ." In Howard v. The Oil Companies, 247 U. S. 503, this court affirmed, per curiam, the judgment of the United States District Court for the Western District of Oklahoma enjoining the enforcement of a tax imposed by the State on the gross value of the production of oil and gas, less the royalty interest, under leases upon Osage lands made for the benefit of the Indians. In Large Oil Co. v. Howard, 248 U. S. 549, this court reversed, per curiam, the judgment of the supreme court of Oklahoma (63 Okla. 143) sustaining a tax on gross value of production of petroleum and gas, less the royalty interest, where the owner of the property sought to be taxed was engaged under the authority of the Secretary of the Interior in the production of oil and gas in what formerly constituted the tribal lands of the Osage Nation. And in Gillespie v. Oklahoma, supra, it was held that the net income derived by a lessee from the sale of his share of the oil and gas received under leases of restricted Creek and Osage lands could not be taxed by the State. In each of these cases the tax was condemned as an attempt to tax an instrumentality used by the United States in fulfilling its duties to the Indians.

In this case the lease was made to secure the development of the lands and obtain for the benefit of the restricted Indian owners a percentage of the gross proceeds of the ores to be mined. The ad valorem tax here in controversy was assessed on the ores in mass at the mine before sale, and that was an attempt to tax an agency of the federal government within the principle of the cases cited.

From abundance of caution the company presented a petition for a writ of certiorari; but, as a writ of error lies, the petition will be denied. Gillespie v. Oklahoma, supra, 506.

Judgment reversed.

609

BRANDEIS, J., dissenting.

MR. JUSTICE MCREYNOLDS is of opinion that the effect of the assailed tax upon the instrumentality of the United States is remote and tax is valid under the doctrine in Central Pac. R. R. v. California, 162 U. S. 91, 119.

MR. JUSTICE BRANDEIS, dissenting.

The property taxed is lead and zinc ore in bins. The land from which the ore was extracted belongs to a Quapaw allottee under the Act of March 2, 1895, c. 188, 28 Stat. 876, 907. Restrictions on alienation of the land will not expire until 1946. Act of March 3, 1921, c. 119, § 26, 41 Stat. 1225, 1248. But the allottee may lease the land for mining and business purposes for ten years unless he is incompetent, in which case the power to lease is vested in the Secretary of the Interior. Act of June 7, 1897, c. 3, 30 Stat. 62, 72. The ore in question had been detached from the soil and is personal property. It is owned wholly by the Mining Company, a private Oklahoma corporation organized for profit. The ore is assessed under the general laws of the State which lays an ad valorem property tax on all property, real or personal, not exempt by law from taxation. Payment of the tax will not affect the financial return to the Indian under the lease. No state legislation exempts this property. There is no specific or general provision in any act of Congress which purports to do so. If an exemption exists, it arises directly from the Federal Constitution. Does ownership by an incompetent Indian of the land from which the ore was taken or ownership of the ore by an instrumentality of the Government create an exemption?

Is the ore exempt because it has been extracted out of restricted lands? The Quapaw might have conducted the mining operations himself. If he had been competent he might, without the approval of the Secretary of the Inte

BRANDEIS, J., dissenting.

271 U.S.

rior have leased the land to others for mining purposes for a period of ten years. If he had operated the mine himself, I see no ground on which it could be held that his ore in the bins would not have been taxable to him, like any other unrestricted property to which he had absolute title. The fact that he was incompetent does not render such property exempt from taxation.2 Such incompetency results simply in the imposition of restrictions upon the alienation of his realty, exempting that from taxation. The Kansas Indians, 5 Wall. 737. But such restrictions cannot by implication be deemed to extend to personalty, even though the product of the realty, so as to exempt them from taxation. Compare McCurdy v. United States, 246 U. S. 263; United States v. Gray, 284 Fed. 103; United States v. Ransom, 284 Fed. 108. Any exemption that attached to the land is limited thereto and does not extend to the ore extracted therefrom. Forbes v. Gracey, 94 U. S. 762, 765-766. Compare South Utah Mines v. Beaver County, 262 U. S. 325.

Is the ore exempt because it is the property of an agency employed by the Government for the benefit of the Indian, its ward? We are not dealing here with property owned by the United States as in Van Brocklin v. Tennessee, 117 U. S. 151, or Lee v. Osceola, etc., Improvement District, 268 U. S. 643; nor with an agency all of whose property was acquired and is used solely for the purpose of serving the Government as in Clallam County v. United States, 263 U. S. 341. We are dealing with a private "corporation having its own purposes as well as those of the United States and interested in profit

1 Pennock v. Commissioners, 103 U. S. 44; Goudy v. Meath, 203 U. S. 146.

2 Keokuk v. Ulam, 4 Okla. 5. The exemption granted the personalty of the Indians in United States v. Rickerts, 188 U. S. 432, and in United States v. Pearson, 231 Fed. 270, rested upon the express ground that title to the property was held by the United States in trust for the Indians.

609

BRANDEIS, J., dissenting.

on its own account," ibid, p. 345. And we are dealing with a property tax, as distinguished from an occupation tax. Choctaw, Oklahoma & Gulf Ry. Co. v. Harrison, 235 U. S. 292; Oklahoma v. Texas, 266 U. S. 298, 301. Whether, under the circumstances, Congress had power to exempt the ore from the general property tax, we need not consider. It has not done so in terms; and I see no reason for assuming that it intended to do so. Compare Mid-Northern Oil Co. v. Montana, 268 U. S. 45, 49; Thompson v. Kentucky, 209 U. S. 340; Swarts v. Hamer, 194 U. S. 441.

In 1873 this Court said: "It may, therefore, be considered as settled that no constitutional implications prohibit a State tax upon the property of an agent of the government merely because it is the property of such an agent." Railroad Co. v. Peniston, 18 Wall. 5, 33. The rule there applied with respect to a railroad incorporated under a federal charter has since been followed as to other federal instrumentalities also. Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Central Pacific Railroad Co. v. California, 162 U. S. 91; Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375; Gromer v. Standard Dredging Co., 224 U. S. 362; Choctaw, Oklahoma & Gulf Ry. Co. v. Mackey, 256 U. S. 531, 537. Compare Thompson v. Pacific Railroad, 9 Wall. 579; National Bank v. Commonwealth, 9 Wall. 353, 362. It has been specifically applied to agencies, such as this mining company, whose employment was in aid of the Government's policy of protecting and developing the properties of its Indian wards. Thomas v. Gay, 169 U. S. 264; Wagoner v. Evans, 170 U. S. 588; Catholic Missions v. Missoula County, 200 U. S. 118. Those decisions seem to me controlling in the case at bar.

The rule that the property of a privately owned government agency is not exempt from state taxation rests fundamentally upon the principle that such a tax has only a remote relation to the capacity of such agencies

BRANDEIS, J., dissenting.

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efficiently to serve the Government. Such a tax, as distinguished from an occupation or privilege tax, does not impose a charge upon the privilege of acting as a government agent and thereby enable a State to control the power of the Federal Government to employ agents and the power of persons to accept such employment. The tax is levied as a charge by the State for rendering services relating to the protection of the property, which services are rendered alike to agents of the Government and of private persons. Such a tax cannot be deemed to be capable of deterring the entry of persons as agents into the employ of the Government. Conceivably an operating company might pay a higher royalty or bonus if it were assured that it would enjoy immunity from taxation for the small quantity of the year's output of the mine which might be in the ore bins on the day as of which property is assessed. Conceivably also, the cattle owner in Thomas v. Gay, supra, might have paid higher for the grazing rights if the cattle while on the reservation were immune from taxation. But, in either case, the effect of the immunity, if any, upon the Indian's financial return would be remote and indirect. If we are to regard

realities we should treat it as negligible.

"It is, therefore, manifest that exemption of Federal agencies from State taxation is dependent, not upon the nature of the agents, or upon the mode of their constitution, or upon the fact that they are agents, but upon the effect of the tax; that is, upon the question whether the tax does in truth deprive them of power to serve the government as they were intended to serve it, or does hinder the efficient exercise of their power. A tax upon their property has no such necessary effect. It leaves them free to discharge the duties they have undertaken to perform. A tax upon their operations is a direct obstruction to the exercise of Federal powers." Railroad Co. v. Peniston, 18 Wall. 5, 36. See T. R. Powell, "Indirect Encroachment on Federal Authority by the Taxing Powers of the States," 31 Harvard Law Rev. 321, 327; J. H. Cohen and K. Dayton, "Federal Taxation of State Activities and State Taxation of Federal Activities," 34 Yale Law Journ. 807.