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not for the past. White v. United States (191 U. S. 545); Cameron v. United States (231 U. S. 710), This rule is particularly applicable where, as here, retroactive operation of the statute would result not only in divesting the county courts of Oklahoma of a jurisdiction exercised by them under authority of Congress over a long period of years, but to reimpose restrictions and withdraw from the taxing power of the State of Oklahoma a considerable area of land. An intent to accomplish such a far-reaching result doubtless would be plainly expressed. So far from expressing such an intent, the act of January 27, 1933, contains no indication of a purpose to change the status of the lands of these Indians under the prior laws either by reimposing restrictions theretofore removed or by shifting from the county court to the Secretary of the Interior the jurisdiction to approve conveyance of interests in such lands theretofore vested in full blood Indians. To the contrary, section 8, of the act contains a provision to the affect that no conveyance of any interest in the land of any full blood Indian heir shall be valid unless approved in open court after notice in accordance with the rules of procedure in probate matters adopted by the Supreme Court of Oklahoma in June, 1914. While the purpose of this provision appears to have been to change the function of the county courts in approving conveyances from a ministerial to a judicial act, the recognition thus given to the jurisdiction of those courts in the matter of approving conveyances by full blood heirs evidences a plain purpose on the part of Congress not to disturb the existing jurisdiction of such courts over lands acquired by full blood Indians prior to that enactment. In addition to this, the language employed in the proviso under consideration shows that Congress had in mind transactions occurring after the date of the enactment. Apropos of this is the declaration that "Where the entire interest in any tract of restricted and tax-exempt land * * * is acquired * * * by restricted Indians, such lands shall remain restricted and tax-exempt". This declaration obviously looks to the future and not to the past and discloses a plain intent on the part of Congress to preserve existing restrictions rather than to reimpose restrictions once removed or change the form of existing restrictions. These considerations lead to the conclusion that the proviso related only to lands acquired after the date of the enactment and not to prior acquisitions.

                                                                                                                                            NATHAN R. MARGOLD,

54 I.D. 401

M-27681                                                                                                                              March 30, 1934.

The Honorable,
The Secretary of the Interior.

DEAR MR. SECRETARY:

    On March 13 you referred to me for my consideration and opinion the Washington Pulp and Paper Corporation's application for reduction of the stumpage prices in the Makah tribal timber sale contract covering the Wa-ach timber unit.

    Allowance of the reduction applied for has been forestalled by the Solicitor's opinion of August 8, 1933 (M-27499). In that opinion the Act of March 4, 1933 (Public No. 435, 72 Cong.), was construed and given application in determining the legality of various modifications of existing timber sale contracts proposed or allowed subsequent to March 4, 1933. Included among these modifications was one of applicant's contract. On April 12, 1933, the applicant had applied for a reduction of the stumpage prices in its contract; and on July 7, 1933, the Commissioner of Indian Affairs had proposed to act favorably upon the application. The proposed action was in accordance with the method for stumpage price modifications provided in the contract itself. This contract method does not require consent of the Indians to price reductions effected thereby; and consent of the Indians to the proposed reduction of July 7, 1933, had not been obtained. The Act of March 4, 1933, in so far as pertinent here, provides:

    "That the Secretary of the Interior, with the consent of the Indians involved, expressed through a regularly called general council, and of the purchasers, is hereby authorized and directed to modify the terms of now existing and uncompleted contracts of sale of Indian tribal timber: * * *."

    " (1) The power to modify, with the consent of the Indians and of the purchasers, inelastic terms of the contracts, where no provision for change is included in the contracts or Regulations; and

    " (2) The requirement of the consent of the Indians to modifications permitted under the contracts or incorporated Regulations."

The act was construed to authorize any contract modification and to make the consent of the Indians a condition to any contract modification. "Any type of modification of a term of the contract can be made, but the consent of the Indians is a condition thereto." Consequently, the proposed modification of stumpage prices in applicant's contract was declared to be illegal.

    Applicant by his letter of February 12, 1934, to the Commissioner of Indian Affairs has petitioned for further consideration of its application of April 12, 1933, on the ground that the Act of March 4, 1933, should not be construed to require consent of the Indians to a stumpage price modification effected pursuant to express contract provision therefor.

    The opinion rendered herein requires, therefore, consideration of the statutory construction embodied in the Solicitor's opinion of August 8, 1933, with the object of determining whether the Act of March 4, 1933, was therein correctly construed and applied to applicant's contract.

    Such consideration leads to the conclusion that the construction and application of the act to applicant's contract, made in the Solicitor's opinion of August 8, 1933, raises a serious question as to the act's constitutionality. If the act admits of another construction which avoids the constitutional question, then under the applicable rule of statutory interpretation such other construction should be adopted. Consideration of the background and legislative history of the act and the language of the act itself leads to the conclusions that it does admit of another construction, and that this other construction not only avoids the constitutional question but also, without regard to the constitutional question, is the only proper construction of the act which can be made with reference to applicant's contract. These conclusions require the adoption of this other construction.

   Applicant's contract was executed prior to March 4, 1933, and pursuant to the Act of June 25, 1910 (36 Stat. 855-857). This 1910 act provides as follows:

    "Sec. 7. That the mature living and dead and down timber on unallotted lands of any Indian reservation may be sold under regulations to be prescribed by the Secretary of the Interior, and the proceeds from such sales shall be used for the benefit of the Indians of the reservation in such manner as he may direct: Provided,That this section shall not apply to the States of Minnesota and Wisconsin."

    "Upon the presentation by the Purchaser of detailed information, supported by affidavits by a certified public accountant and by the Purchaser, showing that the logging of the said Unit is being conducted at a loss, investigation will be made by forest officers under the directions of the Commissioner of Indian Affairs, for the purpose of ascertaining whether, under existing market conditions, the Purchaser is able, with efficient management, to earn a reasonable profit on the operation. If such investigation shall show to the satisfaction of the Commissioner of Indian Affairs that the operation will not, under efficient management, earn a reasonable profit, he may, in his discretion, relieve the Purchaser from any portion or all of the increase in price over the original contract stumpage price for such period as he shall consider necessary to protect the Purchaser from serious loss on account of adverse market conditions; Provided, that none of the stumpage rates will ever be reduced below the prices specified in the contract for the period ending March 31, 1928; and the Commissioner shall have authority to reimpose any part or all of the increase in prices at any time upon giving notice to the Purchaser, subject to review by the Secretary of the Interior."

    Acting pursuant to the contract provision, the applicant applied for a reduction of stumpage prices; and the Commissioner of Indian Affairs, having found that the contract prices were too high to allow applicant a reasonable profit, proposed on July 7, 1933, to make a reduction. This proposed modification of prices was, however, declared to be
 

illegal by the Solicitor's opinion of August 8, 1933; and applicant had to continue paying the stumpage prices which had been found by the Commissioner of Indian Affairs to be too high. Subsequently applicant sought modification by the statutory method, but failed to get the consent of the Indians involved. The automatic price increase provision of the contract (against the possible unfairness of which the provision for reduction was undoubtedly inserted) is still operative, and the stumpage prices found by the Commissioner of Indian Affairs to be economically unreasonable will on April 1, 1934, be increased twelve per
centum.

    To construe the Act of March 4, 1933, so as to deprive applicant of the administrative recourse which is one of applicant's contract rights, is to raise a serious question as to the act's constitutionality. It is very questionable whether the statute so construed meets the due process requirements of the Fifth Amendment to the Federal Constitution.

    It is a well established rule of statutory construction that a statute should not be given a construction which raises a serious question as to its constitutionality, if it admits of another construction which avoids the question.

    In the leading case of United States v. Delaware and Hudson Company (213 U.S. 366, 407, 408-1909), the Supreme Court of the United States announced this rule of statutory construction to be that,

"where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter."

    "The action, if so construed (as contended for) would, at least, raise a grave and doubtful constitutional question. Under the settled practice, a construction which does so will not be adopted, where some other is open to us."

    Examination of the background and legislative history of the Act of March 4, 1933, shows that the primary legislative intent was to authorize modifications of those Indian timber sale contracts which did not specifically provide for price modifications. It does not reveal any intent to hedge modifications provided for by contract with the requirement of the Indians' consent thereto.

    Most of the Indian timber sale contracts do not contain the provision for reduction of stumpage prices which is contained in applicant's contract. Most of the Indian timber sale contracts do contain provisions for periodic and automatic increases of stumpage prices. When the economic depression overtook many purchasers with contracts under which the stumpage prices were high and were automatically becoming higher and under which there were no contract provisions for price reductions, then, because of the depressed lumber market, logging operations on many Indian timber units ceased. With the cessation of logging the income to the Indians from the sale of the timber ceased,

    The situation thus created was one in which contract modifications would work to the mutual benefit of the parties concerned. The purchasers, of course, would gain by any reduction. The Indians would gain by reductions of stumpage prices great enough to enable the purchasers to resume operations, since she contracts so modified would realize more income for the Indians than would cancellation of the existing contracts and execution of new ones in the depressed buyers' market.

    Since price reductions in those contracts without provision therefor would be to the advantage of the Indians, the Secretary of the Interior, in order to determine his authority in the premises, requested from the Comptroller General his decision on the following points:

    "(1) Has this Department authority to reduce the stumpage prices on contracts for the purchase of Indian timber where it appears that such reduction would be to the advantage of the Indians entitled to the proceeds from such sales, where the contract does not specifically provide that the Commissioner of Indian Affairs or the Secretary of the Interior may reduce prices?

    "(2) If the Department is not authorized to reduce prices as appears to it just and necessary, would the consent of the Indians of any tribe, as expressed by the majority vote of an assembled council, operate to authorize a revision of contracts, upon the theory that all par-
 

ties to the contract or having any beneficial interest in it have agreed to a revision?"

    Finally, the necessary legislative authority was granted by Congress in its Act of March 4, 1933.

    It is true that some statements of Congressmen appearing in the legislative history of the act are general, to the effect that the bill then being debated required consent of the Indians involved to any modification of Indian timber sale contracts. But these statements were made with reference to the modifications which the pending bill authorized and directed. Examination of the Congressional Record not only shows that the legislative debates on this act were primarily concerned with those contracts which did not provide for price reductions and with the proposed authority to modify those contracts, but also shows that there was no legislative intent to require consent of the Indians to modifications of stumpage prices effected pursuant to express contract provision therefor. Congress was concerned with creating authority to modify, not with conditioning authority already existing.

    It should also be noted that the memorandum of the Commissioner of Indian Affairs, which was incorporated into the reports of both legislative committees on Indian Affairs and which formed the basis of much of the legislative debates, was concerned only with the situation created by those contracts which made no provision for price reductions. This memorandum specifically refers to and quotes from the Comptroller General's decision of December 17, 1931, in explaining the necessity of legislation for relief from the situation created by high contract stumpage prices and the depressed lumber market. The limited scope of this Comptroller General's decision has been indicated above.

    The background and legislative history of the act, as indicated above, are not inconsistent with a statutory construction which leaves contract modifications effected pursuant to contract provision therefor unhampered by the act's required conditions.

    Although the language of the Act of March 4, 1933, is broad in scope, it does not purport to establish the conditioned authority and direction given therein as the exclusive means of modifying Indian timber sale contracts.

    It undoubtedly includes within its purview contracts which by their own provisions provide for modifications of stumpage prices. It cannot be doubted, I believe, that stumpage price modifications of such contracts effected by the statutory means would be valid. The statute does not, however, make its authority and direction exclusive. No such exclusiveness is expressed in the language of the act; nor is it implied. With reference to those contracts which contain provisions for reduction of stumpage prices, the act is to be construed as furnishing an additional means of modification.

    Different construction of the statute would do violence to its plain purport. It authorizes and directs the Secretary of the Interior, with the consent of the Indians involved and the purchasers, to modify then existing contracts. The act is not self-operating. It does not purport, by its own operation, to modify the contracts in any respect. Yet, if construed to require consent of the Indians to any modification and thereby to alter the price reduction provision in applicant's contract, then the act itself operates to modify the contract. In all probability no purchaser would consent to such a modification of his contract. In my opinion the act which merely authorizes and directs the Secretary of the Interior, with the consent of the Indians and the purchasers, to modify Indian timber sale contracts, cannot properly be construed to modify, by its own operation and without the consent of the purchaser, a contract provision for price reduction.

    For the reasons herein set forth, it is my opinion that the Commissioner of Indian Affairs may consider the Washington Pulp and Paper Corporation's application for reduction of the stumpage prices in its Makah tribal timber contract and may reduce said stumpage prices pursuant to the pertinent contract provision, notwithstanding the required conditions of the Act of March 4, 1933. The Solicitor's opinion of August 8, 1933 (M-27499), is so far as it is inconsistent herewith, is hereby overruled.

                                                                                                                                              NATHAN R. MARGOLD,

54 I.D. 418
M-27631                                                                                                                                           April 5, 1934.

The Honorable,
The Secretary of the Interior.

DEAR MR. SECRETARY:

    Certain questions propounded by the Commissioner of Indian Affairs with reference to fishing rights claimed by Yakima Indians at Celilo Falls, Oregon, have been referred to the Solicitor for opinion. The questions are:

    "1. Whether, under their treaty, the Yakima Indians have a right to construct what is known as a "willow weir" across the Columbia River for the purpose of holding the salmon run, and

    2. Whether the Indians must comply with the Oregon State law requiring them to secure a license for the purpose of selling fish caught by them in the Columbia River and to pay a poundage tax on such sales."

    The treaty between the United States and the Yakama (usually designated Yakima) Nation of Indians was concluded January 9, 1855. (12 Stat. 951) Article 3 of that treaty provides that "the exclusive right of taking fish in all the streams, where running through or bordering said reservation, is further secured to said confederated tribes and bands of Indians, as also the right of taking fish at all usual and accustomed places, in common with citizens of the Territory." The nature of the fishing privilege thus reserved at usual and accustomed places outside the Yakima Reservation has been adjudicated by the Supreme Court of the United States.

    "It is not to be doubted that the power to preserve fish and game within its borders is inherent in the sovereignty of the State (Geer v. Connecticut, 161 U.S. 519; Ward v. Racehorse, 163 U.S. 504, 507), subject of course to any valid exercise of authority under the provisions of the Federal Constitution. It is not denied-save as to the members of this tribe-that this inherent power extended over the locus in quo and to all persons attempting there to hunt or fish, whether they are owners of the lands or others. The contention for the plaintiffs in error must, and does, go to the extent of insisting that the effect of the reservation was to maintain in the tribe sovereignty quoad hoc. As the plaintiffs in error put it: 'The land itself became thereby subject to a joint property ownership and the dual sovereignty of the two peoples, white and red, to fit the case intended, however infrequent such situation was to be.' We are unable to take this view. It is said that the State would regulate the whites and that the Indian tribe would regulate its members, but if neither could exercise authority with respect to the other at the locus in quo, either would be free to destroy the subject of the power. Such a duality of sovereignty instead of maintaining in each the essential power of preservation would in fact deny it to both.

    * * * We do not think that it is a proper construction of the reservation in the conveyance to regard it as an attempt either to reserve sovereign prerogative or so to divide the inherent power of preservation as to make its competent exercise impossible. Rather are we of the opinion that the clause is fully satisfied by considering it a reservation of a privilege of fishing and hunting upon the granted lands in common with the grantees, and others to whom the privilege might be extended, but subject nevertheless to that necessary power of appropriate regulation, as to all those privileged, which inhered in the sovereignty of the State over the lands where the privilege was exercised. This was clearly recognized in United States v. Winans, 198 U.S. 371, 384, where the court in sustaining the fishing rights of the Indians on the Columbia River, under the provisions of the treaty between the United States and the Yakima Indians, ratified in 1859, said (referring to the authority of the State of Washington): 'Nor does It' (that is, the right of "taking fish at all usual and accustomed places") 'restrain the State unreasonably, if at all, in the regulation of the right. It only fixes in the land such easements as enable the right to be exercised.' " Kennedy v. Becker, 241 U.S. 556, 562, 562-564 (1916).
 

    Accord: United States v. Winans, 198 U.S. 317 (1905); People v. Chose, 252 Mich. 154, 233N.W. 205 (1931).

    The first question propounded by the Commissioner of Indian Affairs concerns the use of a "willow wier," a device long employed by the Indians to obstruct a stream in such wise that the salmon run is directed through a particular channel. The Commercial Fisheries Code of Oregon makes it "unlawful for any person or persons to operate or maintain * * * any fish traps, wier * * * or any device * * * used in catching salmon * * * without first having obtained * * * a license therefor." Ore. Code Ann. (1930) Sec. 40-503. See also Sets. 40-309 ff. All funds derived from license fees are employed under the direction of the State Fish Commission in the preservation, propagation and protection of fish, the maintenance of hatcheries and related enterprises. Sec. 40-105. The classification of fishing devices is entrusted to the State Fish Commission. Sec. 40-115. It does not appear that any regulation promulgated by the State Fish Commission discriminates against Indian fishermen. Nor is it claimed that license to employ any device has been refused to Indian fishermen arbitrarily.

    Therefore, answering question 1, it is my opinion that the Treaty of 1885 does not reserve to the Yakima Indians the privilege of constructing a "willow wier" in the channel of the Columbia River at Celilo Falls in disregard of the State laws and regulations above mentioned.

    The second question concerns the right of the State to require the Indians to secure a license for the selling of fish and to require that they pay a poundage tax upon such sales. Such requirements are imposed by the Commercial Fisheries Code and operate equally upon all persons. Sets. 40-501, 40-515. The privilege reserved in the Treaty of 1855 is expressly defined as a "right of taking fish". It can not be construed as a exemption from the general laws of the State taxing and regulating the sale of fish. It does not appear that a license has been required for or a tax imposed upon the sale of fish by the Indians upon their reservation or at any other place under the jurisdiction of the United States. Answering question 2, it is my opinion that no Indian may lawfully sell fish at any place within the jurisdiction of the State of Oregon unless he shall have obtained a license for that purpose and shall pay such tax as the State may impose upon vendors. Of course any discriminatory treatment of Indian vendors in the administration of these regulations would be unlawful.

                                                                                                                                             NATHAN R. MARGOLD,

M. 27654                                                                                                                               April 19, 1934.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    You have requested my opinion upon a question arising out of an oil and gas lease owned by the Deep Rock Oil Corporation on land allotted to Lannie and Lewis Long, deceased full blood Creek Indians.

    The lease was made and approved under authority of section 2 of the act of May 27, 1908 (35 Stat. 312). The period of the lease, as set forth in the granting clause, is five years from the date of approval-November 3, 1920-"and as much longer thereafter as oil or gas is found in paying quantities." Section 2 of the lease provides for the payment to the lessor as royalty on oil of 12 1/2 per cent of the gross proceeds from sales. With respect to gas wells, section 2 of the lease further provides:

  "And the lessee shall pay as royalty on each gas producing well three hundred dollars per annum in advance, to be calculated from the

date of commencement of utilization: Provided, however, in the case of gas wells of small volume, when the rock pressure is one hundred pounds or less, the parties hereto may, subject to the approval of the Secretary of the Interior, agree upon a royalty, which will become effective as a part of this lease: Provided, further, That in case of gas wells of small volume, or where the wells produce both oil and gas or oil and gas and salt water to such extent that the gas is unfit for ordinary domestic purposes, or where the gas from any well is desired for temporary use in connection with drilling and pumping operations on adjacent or nearby tracts, the lessee shall have the option of paying royalties upon such gas wells of the same percentage of the gross proceeds from the sale of gas from such wells as is paid under this lease for royalty on oil. The lessor shall have the free use of gas for domestic purposes in his residence on the leased premises, provided there shall be surplus gas produced on said premises over and above enough to fully operate the same. Failure on the part of the lessee to use a gas producing well, which cannot profitably be utilized at the rate herein prescribed, shall not work a forfeiture of this lease so far as the same relates to mining oil, but if the lessee desires to retain gas producing privileges, the lessee shall pay a rental of one hundred dollars per annum, in advance, calculated from the date of discovery of gas, on each gas producing well, gas from which is not marketed or not utilized otherwise than for operations under this lease. Payments of annual gas royalties shall be made within twenty-five days from the date such royalties become due, other royalty payments to be made monthly on or before the 25th day of the month succeeding that for which such payments is to be made, supported by sworn statements." (Italics supplied.)

    The question presented is whether the gas well drilled and completed by the lessee in April, 1925, and the payments made by the lessee thereon, operated to extend the lease beyond the fixed period of five years.

    The lease contains no provision under which it may be extended beyond the fixed or primary period by a mere money payment and no such payment alone can operate to extend that period. See United States v. Brown, 15 Fed. (2d) 565. The $100 payment tendered by the lessee represents, under the terms of the lease, the consideration for retention of gas producing privileges in an unprofitable well, the gas from which is not marketed nor utilized other than for operations under the lease. The provision made for such payment, like many others contained in the lease contract, is operative only while the lease is alive without having any bearing whatsoever upon the duration of the lease. The duration of the lease is governed solely by the granting clause and that clause fixes the period of the lease at five years from the date of approval by the Secretary of the Interior "and as much longer thereafter as oil or gas is found in paying quantities." The five-year period expired in 1925, and, if the lease has been continued in force since that time, it is by reason of the provision "as much longer thereafter as oil or gas is found in paying quantities." That provision is a familiar one in oil and gas leases and is usually construed to mean not only that oil or gas must be discovered but that one or the other must be actually produced in paying quantities, otherwise, the lease expires by its own limitations. Murdock-West Co. v. Logan, 69 Ohio St. 514, 69 N. E. 984; Detlor et al. v. Holland, 57 Ohio St. 492, N. E. 690; Gas Co. v. Tiffin, 59 Ohio St. 420, 54 N. E. 77; Cassel v. Crothers, 193 Pa. 359, 44 Atl. 446; Anthis v. Sullivan Oil & Gas Co. (Okla.) 203 Pac. 187; Collins v. Mt. Pleasant Oil & Gas Co. (Kans.) 118 Pac. 54; United States v. Brown, supra; Union Gas
 

& Oil Co. v. Adkins, 278 Fed. 854, 856. Where, however, gas alone is discovered under a lease providing, not for the payment of a percentage of the gross proceeds from sales of oil or gas, but a fixed sum as a periodic rental for each gas well, there is after" clause is complied with by the completion of a well capable of producing gas, even though the product is not marketed or utilized. See Roach v. Junction Oil & Gas Co., 72 Okl. 213, 179 Pac. 934; Summerville v. Apollo Gas Co., 207 Pa. 334, 56 Atl. 876; Smith v. McGill,12 Fed. 2d 32. The lease involved in the case last cited was identical with that under consideration. Shortly prior to the expiration of the fixed period of the lease, the lessee completed a well with a daily production of 750,000 cubic feet. After marketing the gas for a few months, the gas ceased to flow through the pipe line because of lack of pressure. The lessee then drilled the well deeper and struck oil in paying quantities. During the period the lease was not producing,-a period of about three months-the lessee tendered payment of the fixed royalty of $300, but the lessor declined to accept the same and brought the suit to cancel the lease on the ground that the lease expired upon the cessation of production by its own terms. The court ruled that the finding of gas in paying quantities within the fixed period of the lease vested the lessee with a limited estate in the leased premises for further operations in accordance with the terms of the lease, and that such estate was not lost by a temporary suspension in marketing gas while the lessee was engaged in drilling the well deeper in an effort to find production in the lower sands. While such a temporary suspension of production was held not to effect a termination of the lease, the court recognized that the limited estate vested in the lessee by finding gas in paying quantities "might be lost by abandonment manifested by neglecting to produce oil or gas or to pursue the work of production or further development." See also Eastern Oil Company v. Coulehan, 65 W. Va. 531, 64 S. E. 836; Roach v. Junction Oil & Gas Co., supra; United States v. Brown, supra. In the latter case, it was held that the failure of a lessee under a lease like that under consideration to undertake development after disconnecting a gas well for a period of ten months was unreasonable and sufficient in itself to defeat a lease conditioned on oil or gas being found in paying quantities.

    Save for the year 1926 when some gas was sold from the well drilled by the Deep Rock Oil Corporation, that company has made no offer of payment of the prescribed royalty for a well producing gas in paying quantities. The payments of $100 were tendered under a provision in the lease relating to unprofitable wells and constitutes in effect an admission by the lessee that the well was not producing gas in paying quantities. For a period of nearly eight years, there has been no production whatever from the lease. No effort has been made by the lessee to market the gas nor has it spent a single dollar in further development work. The rule of temporary suspension announced in Smith v. McGill, supra, obviously has no application to such a case, and as it is an undisputed fact that production ceased at some time during the year 1926-27, it is my opinion, upon authority of the cases hereinbefore cited, that the lease then terminated by its own limitations.

    The holding over the lessee after termination of the lease can be regarded at the most as creating a tenancy at will (See Cassell v. Crothers, supra; Continental Oil and Refining Company, decided February 3, 1934, by the Circuit Court of Appeals, Tenth Circuit, but not yet reported). The holding over by the lessee having operated to deprive the lessors of the valuable privilege of leasing the lands to others, they are equitably entitled to retain the payments made by the lessee as a consideration for its continued occupation of the premises. Tenancies at will, under the laws of the State of Oklahoma (Sec. 7344 Compiled Okla. Stats. 1921) may be terminated upon thirty days' notice in writing. A proper regard for the interests of the Indian lessors suggests that such notice be given without further delay.

                                                                                                                                                    CHARLES FAHY,

M-27656 (Supp.)                                                                                                                         May 7, 1934.

The Honorable,
The Secretary of the Interior.

DEAR MR. SECRETARY:

    The following question, propounded by the Commissioner of Indian Affairs, has been referred to me for opinion:

    "What effect, if any, has the mineral or non-mineral character of land within the Papago Indian Reservation upon the Indian right of surface occupancy?"

    Decision upon this question is essentially supplemental to a Solicitor's opinion, dated March 7, 1934 (M-27656), in which surface and mineral rights within the Papago Reservation were considered. In the last paragraph of that opinion appears the conclusion "that in 1853 the United States acquired title to the land in question subject to an Indian right to occupancy of an area not exactly determined". Earlier in the opinion it was pointed out that under Spanish and Mexican law mineral deposits constituted a tenement distinct from the surface which covered them. It was not intended to suggest in any way that the Indian right of surface occupancy is limited to "nonmineral" lands. Indeed, no formal classification of the land seems ever to have been made.

    When the United States acquired the Papago country as a part of the Gadsden Purchase, the area now included within the Papago Reservation was in the possession of the Papago Indians. The fact of immemorial Indian occupancy of this entire area is not disputed. The courts have consistently recognized such possession as vesting a legally protected possessory interest in the Indians. "The Indians' right of occupancy has always been held to be sacred; something not to be taken from him except by his consent." See Minnesota v. Hitchcock, 185 U. S. 373 (1902). No reason appears for denying such recognition with respect to Indian country acquired from Spain or Mexico. Cf. Chouteau v. Molony, 16 How. 203 (U. S. 1853). Nor does any basis appear for limitation of Indian right of surface occupancy to nonmineral lands when the factual immemorial possession upon which their right is based has continuously embraced the entire controverted area, quite irrespective of the mineral or nonmineral character of any tract.

    The Indian right of surface occupancy was confirmed by Executive Order of February 1, 1917. That order reserved "all surveyed and all unsurveyed lands" within the controverted area for the benefit of the Indians, excepting only the "minerals therein contained". A similar general reservation with the same limited exception of minerals appears in the Act of February 21, 1931 (46 Stat. 1202) 3 which extended the reservation to its present area. It must be clear, therefore, that the Indian right of occupancy within the exterior boundaries of the Papago Reservation is quite independent of the mineral or nonmineral character of any land.

    It  has been contended that a regulation of this Departments approved April 19, 1916 (45 L. D. 537), recognizes a restriction of Indian surface rights to those lands which are nonmineral in character. In fact, that regulation does no more than to declare that certain general mining regulations, with minor modifications, shall be applicable to mining operations within the reservation as permitted by Executive Order of January 14, 1916-an order superseded by the presently effective Executive Order of February 1, 1917. The regulation is in form a recommendation by the Commissioner of Indian Affairs, approved by the First Assistant Secretary of the Interior. In his recommendation the Commissioner remarked that "ample protection will be given the Indians in the occupation and use of their nonmineral lands".

    No such dictum in an administrative recommendation may be used as a basis for any inference that this Department has ruled or should now rule that Indian surface rights are restricted to non-mineral lands. The Indian right of surface occupancy extends over the entire reservation, and the Executive Order and statute which created the present reservation so declared. Any situation in which there exists the possibility of a progressive abridgment of those surface rights, without the consent of the Indians and without compensation to them, is anomalous and "paradoxical". See statement of Senator Wheeler in Vol. 17, Hearings Before Subcommittee of Committee on Indian Affairs of the United States Senate (1929-1932) at 8413, 8414.

                                                                                                                                              NATHAN R. MARGOLD

    It has long been recognized that the Federal Government has constitutional authority to create corporations for the administration of proper Federal Functions. Thus the United States has issued charters of incorporation to national banks (McCulloch v. Maryland, 4 Wheat. 316 1819); interstate bridge companies (Luxton v. North River Bridge Company, 153 U.S. 528); interstate railroads (Pacific Railroad Removal Cases, 115 U.X. 2); and patriotic societies (e.g. American Legion; see U.S. Code Title 36, Chapter 3).

    The constitutional authority of the United States to incorporate an Indian tribe, for the more convenient administration of Indian affairs, is beyond question. See Lane v. Pueblo of Santa Rosa, 249 U.S. 110, upholding corporate character of pueblo, under 10 Stat. 575, and Laws of New Mexico 1851-1852, pp. 176, 418; and see 14 C. J. 97: "Quasi-
 

municipal corporations have been created by Congress within State limits upon Indian reservations, and the power of Congress so to do is understand to stand unquestioned, (Citing authorities)."

    In the exercise of the congressional power to charter Federal corporations, there is no constitutional restriction upon the method of incorporation that Congress may select.

    A corporation may be created either by a special act, whereby a legislative body charters a corporation directly, or by a general act authorizing some administrative officer to issue a charter of incorporation to a body of "incorporators" under prescribed conditions. Both methods of incorporation are equally valid and constitutional. Falconer v. Campbell, 8 Fed. Cas. No. 4620 (1840); Cranby Min. Co. v. Richards, 95 Mo. 106; Ames v. Port Huron Co., 6 Mich. 266; 1 Blackstone comm. 474. The choice between these two methods of incorporation is a question of legislative policy.

    The Wheeler-Howard Bill is, in effect, a general incorporation law for a defined class of Federal corporations, to wit, incorporated Indian tribes or communities. The proposed bill (April Committee Print) specifies the procedure to be followed in the issuance of a charter (Title I, Section 2 and Section 15); enumerates the corporate powers which may be conveyed by charter (Title I, Section 4 and Section 15); specifies those corporate powers which every charter is to contain (Title I, Section 3); and otherwise defines the status and powers of a chartered Indian corporation, in many detailed provisions of the bill. The Wheeler-Howard Bill is, therefore, similar to the general incorporation bills enacted by Congress for certain classes of corporation in the District of Columbia (26 Stat. L. 625) and for national banks generally (U.S. Code, Title 12, chap. 2).

    In earlier times, all corporations were created by special legislation. This practice is still commonly followed by Congress. The Federal corporations thus chartered have been few in number and varied in character. In the various States, the difficulties and delays incident to the process of incorporation by special act led to the passage of general laws for the chartering of various types of corporation (e.g. stock corporations, charitable corporations, religious corporations, and other membership corporations). In many cases the States have gone so far as to prohibit, by constitutional provision, all special incorporation acts.

    It is noteworthy that Congress likewise prohibited territorial Legislatures from granting special legislative charters (Rev. Stat. Sec. 1889; Comp. Stat. (1913) Section 3478).

    It is also worthy of note that when a general law for the Federal incorporation of interstate carriers was recommended by President Taft (in a special message to Congress, dated January 10, 1910), the opponents of that measure, while objecting to many of its features, raised no objection to the general character of the law. Thus Mr. Garret of Tennessee declared on the Floor of the House (February 7, 1910):

    "In passing, let me say, Mr. Chairman, that if we are to have any such incorporation, I quite agree that it should be under a general law, and only under a general law. There should be no special acts of Congress granting charters to particular associations for special purposes. * * * I have frequently protested against the passage of special bills granting charters of incorporation to District associations, simply on the ground that we ought not to pass such special acts. I am glad to see that we have fewer of these than formerly. If we are to have this general policy, by all means let it be under a general law, but let us consider well before we have it at all."

M-27690                                                                                                                                 June 15, 1934.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    You have requested my opinion as to whether the Migratory Bird Treaty Act of July 3, 1918 (40 Stat. 755), in applicable to the Indians of the Swinomish Indian Reservation in the State of Washington.

    On December 8, 1916, a treaty between the United States and Great Britain was proclaimed by the President (39 Stat. 1702). It recited that many species of birds in their annual migrations tra-
 

versed certain parts of the United States and of Canada and that they were of great value as a source of food and in destroying insects injurious to vegetation, but were in danger of extermination through lack of adequate protection. The treaty therefore provided for specific close seasons and protection in other forms, and agreed that the two powers would take or propose to their lawmaking bodies the necessary measures for carrying out the treaty. The act of July 3, 1918, supra, entitled "An Act to give effect to the convention", prohibits the killing, capturing, or selling of any of the migratory birds included in the terms of the treaty except as permitted by regulations compatible with its terms to be made by the Secretary of Agriculture.

    The treaty and statute contain no provision excluding the Indians or Indian reservations from their operation. The treaty expressly mentions the Indians and makes concessions to them not extended to any other race. Article II, paragraph 1, dealing with close seasons, declares that the "Indians may take at any time scoters for food but not for sale". Paragraph 3 of the same article further declares:

    "The close season on other migratory non-game birds shall continue throughout the year, except that Eskimos and Indians may take at any season, auks, auklets, guillemots, murres and puffins, and their eggs, for food and their skins for clothing, but the birds and eggs so taken shall not be sold or offered for sale".

    It is urged that such other controlling law is found in the treaty under which the Swinomish Indian Reservation was created. That treaty, known as the Treaty of Point Elliott, was concluded on January 22, 1855, between the United States and the Dwamish, Suquamish, and other allied and subordinate tribes of Indians in Washington Territory. Article V of the treaty, relating to the fishing and hunting rights of the Indians, provides:

    "The right of taking fish at usual and accustomed grounds and stations is further secured to said Indians in common with all citizens of the Territory, and of erecting temporary houses for the purpose of curing, together with the privilege of hunting and gathering roots and berries on open and unclaimed lands: Provided, however, that they shall not take shell fish from any beds staked or cultivated by citizens."

    The Migratory Bird Treaty Law, in so far as it restrains the Indians from taking and killing the class of game to which it applies, does not therefore conflict with the Indian treaty, and its validity, as applied to the Indians, depends upon the power of Congress to prescribe game laws restricting the Indians in their rights of hunting on the reservation lands. That Congress has such power appears to be beyond question. From the earliest traditions, the right of every individual to reduce wild game to possession has been subject to regulation and control by the lawmaking power. Geer v. Connecticut (161 U.S. 519). Primarily the State, both as trustee for the rights of all its people and in the exercise of its police power, has control over the right to reduce wild game to possession (United States v. Samples, 258 Fed. 479, 481). But this rule is without application to Indian reservations to which, according to repeated decisions of our Federal courts, the State's game and fish laws do not extend. In re Blackbird (109 Fed. 139); in re Lincoln (129 Fed. 247); United States v. Hamilton (233 Fed. 685). See also Peters v. Malin (111 Fed. 244), and State v. Campbell (53 Minn. 354; 55 N. W. 553). Congress has paramount authority over such reservations and the Indians occupying them (Lone Wolf v. Hitchcock, 187 U.S. 553, 565), and may, if it sees fit so to do, provide game
 

laws to restrict the Indians in their natural and immortal rights of fishing and hunting. In re Blackbird supra. And even though such laws should conflict with the provisions of prior treaties with the Indians, there is respectable authority for upholding their validity. Thus in The Cherokee Tobacco Case (11 Wall. 616), it was held that a law of Congress imposing a tax on tobacco, if in conflict with a prior treaty with the Cherokees, was paramount to the treaty. And in Ward v. Race Horse (163 U.S. 504), the court ruled that the provision in treaty of February 24, 1869, with the Bannock Indians, whose reservation was within the limits of what is now the State of Wyoming, that "they shall have the right to hunt upon the unoccupied lands of the United States so long as game may be found thereon", was superseded by the provisions of the Enabling Act admitting Wyoming into the Union, and that the treaty provision did not give the Indians the right to exercise the hunting privilege within the limits of the State in violation of its laws.

    As hereinbefore pointed out, the treaty of December 8, 1916, is drawn in terms disclosing a clear intent on the part of the high contracting powers that the Indians as well as all other persons should be bound by the terms of the convention, and in the absence of any other legislation purporting to exempt them, it is my opinion that the Indians of the Swinomish Reservation are included within the prohibition of the treaty and the statute enacted for its enforcement.

                                                                                                                                        CHARLES FAHY,

Approved: June 15, 1934.
OSCAR L. CHAPMAN, Assistant Secretary.

M-27750                                                                                                                          July 14, 1934.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    At the suggestion of the Commissioner of Indian Affairs, my opinion has been requested upon a question arising out of the following circumstances:

    Under the provisions of the act of February 28, 1919 (40 Stat. 1206) as amended by the act of May 4, 1932 (47 Stat. 146), two tracts of land within the Capitan Grande Indian Reservation in California have been sold to the city of San Diego for the construction of a dam and reservoir in aid of conservation and storage of water. On one of the tracts is located an Indian cemetery containing the remains of about sixty Indians. Notwithstanding the fact that the cemetery area will be inundated, the Indians occupying the reservation appear to object to removal of the bodies and desire that the graves remain undisturbed. Section 4 of the act of February 28, 1919, supra, reserves to the Indians of the Capitan Grande Reservation the right
to

"reside on, occupy, and cultivate the lands of their present reservation up until within ninety days of the time when water for storage purposes will be turned into the reservoir to be constructed hereunder."

    The question thus presented is whether the Secretary of the Interior has authority to order the removal of the bodies without the assent of the interested Indians.

    It may be argued with some force that the acquisition of title by the city of San Diego divests the Federal Government of jurisdiction and that the city, as the owner of the soil, has succeeded to the position formerly occupied by the Federal Government as custodian of the bodies of the Indians buried in the cemetery. Under such view, the responsibility in the matter of the removal of the bodies would rest in the city of San Diego, and its authority in the premises would be governed and controlled by the laws of the State of California. It has been held, however, that a conveyance of land, without reservation of a family burying ground, neither confers any rights in the grantee to the bodies of the dead nor authorizes the grantee to remove the soil over them or to mutilate the graves. See 17 C. J. 1142 and cases there cited. Moreover, the right of the Indians to occupy the lands, notwithstanding the conveyance of title to the city, has not terminated and will not terminate until 90 days prior to the time water is turned into the reservoir. In the meantime, Federal jurisdiction necessarily continues with the right in the Secretary of the Interior to exercise all the powers which Congress has conferred upon him expressly or by necessary implication.

    It is established by the decision of the Supreme Court of the United States in Conley v. Ballinger
 

(216 U.S. 84) that lands within an Indian reservation set aside for use of the cemetery remain tribal property subject to the legislative authority of Congress; that legislation providing for the sale of the cemetery lands and removal of the bodies buried there is valid; and that no individual member of the tribe having relatives buried in the cemetery has any right to have the cemetery remain undisturbed by the United States. Under this decision, it is clear that if authority exists in the Secretary of the Interior to remove the remains of the Indians buried on the lands conveyed to the city of San Diego, such removal may be effected irrespective of the assent of the interested Indians.

    The acts of February 28, 1919, and May 4, 1932, supra, under which the lands here involved were conveyed to the city of San Diego, contain no express provision authorizing the Secretary to remove the bodies of the Indians interred in the cemetery. But a conveyance of the lands to the city for water storage purposes is so utterly inconsistent with the continued use of the lands as a cemetery as necessarily to imply that the remains of the Indians were intended to be removed. The authority to remove them must rest in someone and ic is in keeping with other legislation relating to the Indians that such authority be vested in the officer charged with the supervision of the Indians and their affairs. See West v. Hitchcock (205 U.S. 80, 84); Rainbow v. Young (161 Fed. 835). Indeed, the authority of the Secretary to remove the remains may be reasonably regarded as included within the broad grant of powers made to the Secretary by section 3 of the act of February 28, 1919, supra. Section 3 reads in part as follows:

"* * * That the Secretary of the Interior shall require from the city of San Diego in addition to the award of condemnation such further sum which, in his opinion, when added to said award, will be sufficient in the aggregate to provide for the purchase of additional lands for the Capitan Grande Band of Indians, the erection of suitable homes for the Indians on the lands so purchased, the erection of such schools, churches, and administrative buildings, the sinking of such wells and the construction of such roads and ditches, and providing water and water rights and for such other expenses as may be deemed necessary by the Secretary of the Interior to properly establish these Indians permanently on the lands purchased for them; and the Secretary of the Interior is hereby authorized to expend the proceeds or any part thereof, derived from this grant for the purposes above enumerated, for the exclusive use and benefit of said Indians:"

    Removal of the Indians to and their permanent establishment on the lands to be purchased with the proceeds derived from sale of the reservation lands to the city of San Diego is the main object of the foregoing provision. In attaining that object the Secretary is not only authorized to expend the moneys for the specific purposes mentioned but for such other purposes as in his judgment of the Indians on the lands. A cemetery for burial of their dead, including the remains of those in the existing cemetery soon to be rendered unfit as a final resting place for the dead by a development in the public interest, appears to be such a real need that the expense of providing such a cemetery and the removal thereto of the remains of deceased Indians may be properly regarded as being within the general authority of the statute fairly construed. The authority existing, its exercise is not dependent upon assent of the Indians. Conley v. Ballinger, supra.

    In reaching this conclusion, I am mindful of the general policy of the law that the sanctity of the grave should be maintained and that a body once solemnly buried should remain undisturbed; also that the right to change the place of burial belongs primarily to the next of kin unless there is a surviving spouse, in which case he or she has the preference. But, as pointed out in Gray v. State (114 S. W. 635), these rights are not absolute and must and should yield when in conflict with the public good or where the demands of justice require subordination.

    The Commissioner of Indian Affairs advises that purchases of new lands for permanent homes for the Indians have not been completed. If, under such circumstances and in view of the exigencies of the situation, it is your judgment that the bodies should be removed, reinterment of the bodies, temporarily at least, in a suitable place on the diminished reservation, doubtless could be arranged; bearing in mind, of course, that the wishes of the interested Indians as to the final resting place of their dead should be ascertained and respected, if possible.

                                                                                                                                              NATHAN R. MARGOLD,

MY DEAR MR. KNUTSON:

    I have received your letter of July 2 stating that it is your understanding that the act of June 11, 1934 (Public No. 301, 73d Congress), permits the sale of liquors, wines and beer in all portions of the so-called Indian territory in Minnesota, with the exception of the Red Lake Indian Reservation, and asking whether this interpretation is correct.

    By the treaties of September 30, 1855 (10 Stat. 1109) and February 22, 1855 (10 Stat. 1165), the Chippewa Indians ceded large tracts of land to the United States subject to the provision contained in article 7 of each treaty that the Indian liquor laws should continue in force throughout the ceded areas. The act of June 11, 1934 declares that the land so ceded by the two treaties shall cease to be considered as Indian country for the purposes of article 7, with two exceptions: First, the Indian liquor laws continue to apply "to the sale, gift, barter, exchange, etc., of liquors to ward Indians of the classes set forth in the act of January 30, 1897 (29 Stat. 506)"; and, second, the Indian liquor laws continue to apply "to the manufacture or sale of liquors on individual Indian allotments or other individual Indian-owned lands while the title to same is held in trust by the United States or while the same shall remain inalienably by the Indian without the consent of some governmental officer."

    As the act applies in terms only to the land ceded by the treaties of 1854 and 1855, your attention is called to the fact that both of the treaties reserve from the cession specific Indian reservations, such as Fond du Lac, Grand Portage or Pigeon River, Vermillion Lake, Bois Fort, Mille Lac, Rabbit Lake, Gull Lake, Pocagamon, Sandy Lake, Rice Lake, Leech Lake, Lake Winnibigoshish, and Cass Lake. None of these reservations were ceded by the treaties of 1854 and 1855; hence, it is my opinion that the lands within them are unaffected by the act of June 11, 1934. However, the Indian liquor laws will now apply only to those lands still remaining in tribal ownership or which may be embraced in individual allotments still held under trust or subject to restrictions against alienation. Lands, the Indian title to which has been completely extinguished, and over which the jurisdiction of the State for governmental purposes is full and complete would no longer be termed Indian country for the purpose of enforcing the Indian liquor laws.

    The White Earth Indian Reservation in Minnesota was created by the treaty of March 19, 1867 (16 Stat. 719), on lands which had been ceded to the United States by the treaty of February 22, 1855. This reservation, therefore, comes within the terms of the act of June 11, 1934 and, with the exceptions noted above, the Indian liquor laws no longer apply.

    The Red Lake Indian Reservation is not within the areas ceded by the treaties of 1854 and 1855, and the act of June 11, 1934 is without application to that reservation. None of the lands within the reservation have been allotted and the Indian liquor laws continue in full force and effect thereover.

    The second paragraph of the attached letter to the Superintendent of the Fort Totten Indian Agency does not appear to be sufficiently responsive to the question of whether the Indians under his jurisdiction are subject to the State per capita school tax. I suggest that the paragraph be revised to read as follows:

    "The statute quoted in Mr. Gilbertson's letter subjects residents of the State of North Dakota twenty-one years of age or over to a per capita school tax (Session Laws of 1931, Chapter 247, page 423). Section 6 of the act of May 8, 1906 (34 Stat. 182), expressly declares that until the issuance of fee simple patents all allottees holding trust patents shall be subject to the exclusive jurisdiction of the United States. As exclusive jurisdiction of necessity means the exclusive right to legislate (Surplus Trading Co. v. Cook, 281 U.S. 647, 652), the State of North Dakota is clearly without authority to tax those Indians who have not received fee simple patents. Section 6 of the act of 1906 further declares, however, that Indians to whom fee simple patents have issued shall have the benefit of and become subject to the laws, both civil and criminal, of the State or territory in which they may reside. The Indians in your jurisdiction to whom fee simple patents have issued have, therefore, been subjugated to the general laws of the State of North Dakota,

including, of course, the law imposing a per capita school tax upon the residents of that State."

    You have asked my advise as to whether the attached contract by which the Snake or Paiute Indians of Burns, Oregon, employ Father Peter Huel to represent them in the matter of formulating and presenting their claims against the United States, should be approved.

    The contract provides for payment of compensation to Father Huel of not to exceed 10 per cent of the amount recovered, plus necessary actual expenses to be paid from the recovery. The contract further provides for the employment by Father Huel of such assistants, including attorneys, as he may select, the compensation of such assistants and attorneys to be paid by him and not the Indians. Under this provision it appears that neither the Indians nor the Department would have anything to do with the selection of the attorneys employed.

    The contract is executed by two delegates selected by a council called at Burns, Oregon, on the 2d day of February, 1933. Some affirmative showing that the two delegates were selected by a representative body of the Indians should be required. The present record continues no such affirmative showing.

    There is no legal objection to approval of the contract, provided it meets the requirements of Section 81, Title 25, United States Code. An examination of the contract discloses that two essential requirements of the statute have not been met.

    1. The contract has not been executed by Father Huel before a judge of a court of record.

    2. The period of the contract, as set forth therein, is five years from the date of approval of the Secretary of the Interior "and as much longer as may be necessary to complete the business provided for herein". The quoted phrase converts the period of the contract into an indefinite term and this is in violation of the provision in the statute that such a contract "shall have a fixed limited time to run which shall be distinctly stated."

    The contract is further defective from an administrative viewpoint in that it fails to contain the usual provisions subjecting conduct of the case to the supervision and direction of the Commissioner of Indian Affairs and the Secretary of the Interior and prohibiting compromise or other settlement without the Secretary's approval.

    It has been held by the Supreme Court that, as distinguished from lobbying in the odious sense, professional services before Congress and its committees, individual Representatives and Senators, intended to establish just and legitimate claims of the Indians and to secure such legislation by Congress as may be needed for attainment of the object sought, are legitimate and proper. See Winton v. Amos, (255 U.S. 373, 392, 393). Under the terms of the contract under consideration, such professional services are to be provided by Father Huel, himself not a lawyer, neither the Indians nor the Department having any voice in the selection of the persons to perform the services. Whether the needed services should be provided in this way or not presents, of course, a question of policy and not law. I am not sufficiently informed as to the facts or circumstances to venture a definite opinion upon the propriety of approving this particular contract-this is a matter for administrative determination. My general view is, however, that the better policy would be to confine approval to contracts with reputable attorneys qualified by experience and training to perform the highly specialized services required in the prosecution of
Indian tribal claims.

    If it should be your desire to approve the employment of Father Huel and retain control over the selection of attorneys, this could be accomplished, of course, by amending the contract to provide that the selection of attorneys shall be subject to the approval of the Commissioner and the Secretary.

M-27728                                                                                                                                            July 26, 1934.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    You have requested my opinion as to whether the Crystal Creek Logging Company timber sale contract on the Crooked Creek unit, Klamath Indian Reservation, is eligible for modification under the act of March 4, 1933 (47 Stat. 1568), as amended.
 

    The question of eligibility has been raised because a suit was prosecuted to judgment against the bonding company on the penal bond given by the purchaser, Mr. J. M. Bedford, doing business as the Crystal Creek Logging Company, to secure performance of the contract, an attempt being made to join Mr. Bedford as codefendant in the suit which was commenced after default on an apparent abandonment of the contract by the purchaser. Whether the contract is eligible for modification as a "now existing and uncompleted" one within the meaning of the statute in view of these facts is the question to be answered herein.

    The contract was made between the Superintendent of the Klamath Reservation, for and in behalf of the Klamath Tribe of Indians, and Mr. J. M. Bedford, doing business as the Crystal Creek Logging Company. The contract, together with a $10,000 penal bond with the Metropolitan Casualty Insurance Company of New York as surety, was approved by the Assistant Secretary of the Interior on October 20, 1926. The contract is for the purchase of 40 million feet of timber, five million to be cut before March 31, 1928, and five million each 12 months thereafter until the operation is completed. The timber is to be paid for on an increasing price scale, with a basic price of $8 per thousand feet of yellow pine timber. The contract also provides for advance payments on certain contracts for the purchase of timber on Indian allotments within the logging unit.

    Prior to June 30, 1928, only 1,742,450 feet of timber had been cut and no work has been done since then. By December 3, 1929, Mr. Bedford was in arrears $14,435.48 in advance payments on allotment contracts; and $35,936.80 are now due and delinquent on these contracts. On May 22, 1929, Mr. Bedford asked to have the contract canceled. On June 10, 1929, the Department of the Interior notified the surety company that the bond would be forfeited because of the defaults. However, on October 29, 1929, at the instance of Mr. Bedford, the Department gave its assent to a proposed assignment of the contract to one G. C. Grimmett. This assignment was not consummated.

    Suit on the bond was recommended by the Department on June 24, 1930, and the Department of Justice filed a complaint on or about December 2, 1930, naming Mr. Bedford and the surety company as defendants. The complaint demanded damages in the sum of $10,000 setting forth breaches of the contract and of the terms of the bond. Service of process was not made on Mr. Bedford, but judgment on the bond for the full amount of the penalty was obtained against the surety company on March 13, 1934. Whether this judgment has been appealed from is not shown in the file; but the United States District Attorney in charge of the case has expressed an opinion that one would be taken by the surety company.

    From Mr. Bedford's first default until December 24, 1931, the Klamath Reservation Superintendent continued to attempt collection of the amounts due on the contract. On the latter date he was advised not to attempt collection while the suit was pending.

    On May 2, 1934, Mr. Bedford submitted an application seeking to have his contract modified by the Secretary under authority given by the act of March 4, 1933. The statute provides in part:

    "That the Secretary of the Interior, with consent of the Indians involved, expressed through a regularly called General Council, and of the purchasers, is hereby authorized and directed to modify the terms of now existing and uncompleted contracts of sale of Indian tribal timber."

    Although the complaint filed in the suit named Mr. Bedford and the surety company as defendants and asked for damages for breaches of the terms of the contract and the bond, because Mr. Bedford was not served, judgment was entered only against the surety company and only for the breach of the terms of the bond. That this judgment did not terminate the contract between the Government and Mr. Bedford is clear, for the contract and bond are separate agreements. This judgment on the bond would not preclude an action for damages on the contract, at least insofar as such damages would exceed the recovery had on the bond; and if another action would lie on the contract it cannot be said to be terminated. Cramp and Co. v. Doughty (98 Atl. 260, New Jersey). No Federal cases appear to be directly on this point, but the reasonableness of the rule indicates that it would be followed. In this case, therefore, judgment on the bond against the surety company has no effect on the status of the contract as an existing one.

    The attempt to sue Mr. Bedford for damages likewise did not terminate the contract. Rather this was an affirmation of it, for a damage action must be predicated upon a contract. Wigent v. Marrs (90 N.W. 423); Williston on Contracts, Section 1301. Had there been a recision of the contract there could have been no recovery of damages. Heagney v. J. I. Case Co. (96 N.W. 197); McCormack Machinery Co. v. Brown (98 N.W. 697). If there is any recovery after a recision such
 

is not in the nature of damages, but is an attempt to put the parties in their original position. Williston on Contracts, Sections 1454 and 1455. Had the action against Mr. Bedford been carried to final judgment there would have been a merger of the contract in that judgment. Mason v. Eldred (6 Wall. 231); Hamer v. New York Railways Company (244 U.S. 272). In such event the contract would cease to exist. Here, however, because no service was made on Mr. Bedford, no such result could obtain.

  In determining whether the acts of the parties subsequent to default by Mr. Bedford terminated the contract, a distinction should be noted between existing, though breached, contracts and terminated contracts. A contract remains a contract even though a party has defaulted in performance thereof. Williston's treatise on contracts supports this conclusion, Williston on Contracts, Section 1302:

    "Neither where the plaintiff's excuse for his own nonperformance is the defendant's actual breach of the contract, nor where that excuse is a prospective breach because of repudiation does the plaintiff terminate the contract, merely by availing himself of his excuse. The contract still exists, but one party to it has a defence and an excuse for nonperformance."

    In view of the foregoing, it is my opinion that the contract between the Government and Mr. Bedford, though broken, is now existing within the meaning of the act of March 4, 1933, as amended. It is, therefore, eligible for modification by the Secretary pursuant to statutory authority.

                                                                                                                                            NATHAN R. MARGOLD,

54 I.D. 546

M-27744                                                                                                                              Opinion, July 26, 1934

    A contract must be viewed and interpreted with reference to the nature of the obligations between the parties and the intention which they have manifested in forming them, and, once ascertained, the intention of the parties must be given effect, sacrificing, if necessary, the literal meaning in order that the major purpose may not fail.

    A provision in a contract between an Indian tribe and a logging company required that before a reduction could be made in the stumpage price paid to the Indians it must be established that the logging "is being conducted" at a loss. Held, That by the use in the contract of the words "is being conducted" it was not intended that the means of proof should be limited to logging then and there actually being performed, but that it would be permissible to establish by other means that logging could not be conducted on the land at a profit unless a reduction was made in the price to be paid the Indians.

    The Algoma Lumber Company having made application to the Commissioner of Indian Affairs for a reduction in stumpage prices under its contract for the purchase of timber on the Antelope Valley Unit of the Klamath Indian Reservation, you have requested my opinion as to the authority of the Commissioner in the premises.

    The contract was approved by the Secretary of the Interior on September 13, 1923. It provides for basic prices of $3.75 per thousand feet of yellow pine, $1.50 per thousand feet of Douglas fir and incense cedar, and .75 per thousand feet of all other species of timber. The contract further provides for automatic increases in prices over successive three-year periods beginning April 1, 1928, and under this provision the prices for the period beginning April 1, 1934 are $5.457, $2.183 and $1.091 per thousand feet, respectively, on the species of timber mentioned above. The contract requires minimum annual cuts of timber, but under authority conferred by the contract the company has been relieved from such annual cutting requirements.

    It appears that the Algoma Lumber Company has heretofore sought price reductions under the