Arenas v. Preston

¶6STEPHENS, Circuit Judge.

¶7Lee Arenas, a Mission Indian, sued the United States to have determined his right to an allotment of certain land situated in the Palm Springs Indian Reservation in California. After extended litigation,12he was substantially though not wholly successful in his claim.

¶8This appeal is from a supplemental decree8 of the district court awarding to Arenas’ attorneys fees and expenses and securing the payment thereof by the impression of a lien upon the land inuring to his benefit as a result of the litigation. The appeal was taken by the United States on behalf of the Indian and by the Indian individually.

¶9The claim of Arenas was assertable against the United States by virtue of the sovereign immunity · Case Law">waiver of sovereign immunity to suit found in the Act of 1894, 28 Stat. 286, 305, as amended, 25 U.S.C.A. § 345.3

¶10The key question for decision in this appeal concerns the jurisdiction of the district court to declare a lien on property in *64the circumstances obtaining. The government argues that such declaration is in effect a judgment against the United States by which it has not consented to be bound and that it violates congressional intent as expressed in applicable enactments relating to Indian lands.

¶11On the other hand it is contended by ap-pellees that the district court, having acquired the equity jurisdiction to hear and decide the case in which the United States is a party, may fully adjust the matter by providing for the payment of expenses and attorneys’ fees through the impression of a lien on the land which it adjudges to be the Indian’s allotment.4

¶12Under the General Allotment Act and related legislation,5 the Indian allot-tee receives what is called a “trust patent”, The legal title to the allotted land is retained by the United States under the immediate supervision of the Secretary of the Interior. Whether the allotment has been made by the Secretary or by a judgment of the court, the Indian has an equitable estate in the allotted land with the right of occu pancy and the use of produce but withou the right of alienating or encumbering thland.6 United States v. Hellard, 1944, 321 U.S. 363, 64 S.Ct. 985, 88 L.Ed. 1326. Throughout the history of Indian legislation the Congress has been aware that the *65inexperienced and uneducated Indian would be subject to imposition and would suffer from his own improvidence unless protected therefrom by the Government.

¶13We come to the question: Does the equity jurisdiction of federal courts under the Act of 1894 invoke all equitable processes and hence permit the application of rules “ … which experience has shown to be essential to the adequate protection of a wronged cestui que trust … ? ” United States v. Equitable Trust Co., 1931, 283 U.S. 738, 745, 51 S.Ct. 639, 641, 75 L.Ed. 1379.7The opinion in United States v. Equitable Trust Co., supra, is pointed to by appellee as decisive of the issue. We quote: “Counsel for the United States concede the general rule [see footnote 4 ante], but regard it as inapplicable here. They assume that Barnett’s fund was restricted in the sense that it was not subject to disposal in any form or for any purpose, save with the *66approval of the Secretary of the Interior; and from this they argue that the court by charging the fund with the costs and expenses and requiring their payment therefrom would be disposing of a part of the fund in violation of applicable restrictions. We make the assumption that, the restrictions had substantially the same application to the fund that they had to the land from which it was derived, but we think the argument-carries them beyond their purpose and the fair import of their words. Without doubt they were intended to be comprehensive and to afford effective protection to the Indian allottees, but we find no ground for thinking they were intended to restrain courts of equity when dealing with situations like that disclosed in this litigation from applying the rules which experience has shown to be essential to the adequate protection of a wronged cestui que trust such as Barnett was shown to be. … When all is considered, we are brought to the conclusion that the United States by its intervention and participation in the suit, consented, impliedly at least, that reasonable allowances be made from the fund, under the rule before stated, for the services and expenses of the next friend and his attorneys.” United States v. Equitable Trust Co., 1931, 283 U.S. 738, 744, 745, 746, 51 S. Ct. 639, 641, 75 L.Ed. 1379.

¶14Appellant United States in the instant case makes practically the same argument as it made- in the Equitable case. That is, that the court cannot apply the general rule, to wit: That a court of equity may settle incidental questions as well as fundamental questions, because the applicable statutes in this case do not specifically authorize it. It is also argued that as to our case the applicable statute does not authorize the impression of a lien upon the property, because its foreclosure would have the effect of. disposing of a part of the property. But the Supreme Court rejected the argument by saying that it was intended that the restrictions on the allotted land, which apply as •well to produce from the land, should afford protection to the allottee, rather than to restrict courts of equity from giving such protection.

¶15Since the restrictions on the land and its produce are one and the same and since attorney fees and expenses necessary to protect the fund can be paid out of the fund, it follows that so much of the land as is necessary to satisfy the lien can be resorted to for these necessary expenses.

¶16The appellant’s argument carried it to the cruelly farcical posture that the government must protect the- Indian by strictly preventing any diminution of the allotted land even though by exercising such protection the Indian without funds cannot have any part of his rightful allotment of land. “It must be remembered that the fundamental consideration is the protection of a dependent people.” United States v. Pelican, 1914, 232 U.S. 442, 450, 34 S.Ct. 396, 399, 58 L.Ed. 676. And legislation must be construed in the way most favorable to the Indian. United States v. Celestine, 1909, 215 U.S. 278, 290, 30 S.Ct. 93, 54 L.Ed. 195; Choate v. Trapp, 1912, 224 U.S. 665, 675, 32 S.Ct. 565, 56 L.Ed. 941; Chase v. United States, 8 Cir., 1916, 238 F. 887, 893; Arenas v. United States, D.C.S.D.Cal. 1945, 60 F.Supp. 411, 420.

¶17At the risk of being unnecessarily repetitious we summarize as follows: ■ .-

¶18We appreciate the fact that the allotment scheme as to Mission Indians was adopted by Congress in accordance with its belief that the time had come to direct the Indian away from the tribal system of life and into the nation’s system of individual responsibility and ownership of property. It thought, however, that a sudden and complete change' over at one step would result in many allottees losing their property through inexperience. Accordingly the restriction against alienation and encumbering was provided. It was contemplated, however, that eventually (the details need not be recited) all restrictions would be removed.

¶19When the United States authorized the Indian to make the United States an adversary party in its own courts, it did so knowing that the -Indian by himself was incapable of talcing advantage of the privilege and that attorney fees and other expenses would be the unavoidable concomitant. It also knew that the Indian litigant, with few exceptions, was- without the means to meet the necessary expenses. It *67seems to us'that Congress could not have intended to commit the subject to its courts with any paralyzing limitation but, in committing the subject to its courts it intended them to fully exercise their general equitable jurisdiction. The chancellor will, of course, see to it that no unconscionable fee or extravagant expenditure will be allowed and will protect the allotment from being affected in the slightest unnecessary manner or degree.

¶20We think the case of United States v. Equitable Trust Co., supra, is authority in support of appellees’ contention, and the trial court’s holding, that the land comprising the allotment awarded Arenas may be impressed with a lien as security for the payment of attorney’s fees and necessary expenses of the litigation.8

¶21It is argued by appellant Arenas that the amount of fees awarded should have been governed by the written attorney’s contract executed in 1940. This contract provided for an aggregate fee of 10% of the value of the land recovered. Appellees Clark and Sallee performed under such arrangement until 1943 when appellee Preston became associated. In 1945 Arenas signed another contract wherein he agreed to compensate appellees on a quantum meruit basis. The district court, having ruled that the 1945 contract superseded the 1940 contract, allowed to appellees Clark and Sallee 10% of the value of the interest secured for Arenas and to appellee Preston 12%% of such value as the reasonable value of his services. See Blair v. Cullom, 2 Cir., 1948, 168 F.2d 622.

¶22We think, however, that the fee and necessary expenditures which cari be the United States still retains an interest in the subject of a lien on the property cannot be awarded upon any contract by and between the allottee and his attorneys since the land. When, as here, the attorneys seek to secure their fees by a lien upon the property the judge as the chancellor has the jurisdiction to impress the lien for a sum equal to but not in excess of the sum which he deems reasonable.

¶23The record before us reveals the fact that the court did not determine the value of the allotment Arenas secured and therefore could not have known the value of the percentage allowances made for which a lien was ordered. It may be that the value of the percentage allowed for attorney’s fees upon a finding of the property value, would prove either inadequate or grossly excessive. The interest of the United States in the allotment will not cease to exist until the “trust patent” to the property is ripened into an unqualified patent to it and the impressment of a lien for an excessive fee would illegally and inequitably affect such interest. However, should a sale of a portion of the land take place to satisfy the lien, such portion would be freed of any governmental interest under the same sanction that a portion of the fund in the Equitable case was freed of any governmental interest. The district court should have proceeded expressly to fix the dollar value of the services performed as the basis for the sum secured by the lien and' in so doing should have considered and determined the value of the thing secured by the litigation, namely, the reasonable value of the Indian’s interest in the allotted land under the trust patent, as one of the elements to be taken into consideration. See Sampsell v. Monell, 9 Cir., 1947, 162 F.2d 4.

¶24The case is remanded to the district court with instructions to determine the sum of money for which amount the lien against the allotted property is to be impressed. Upon such determination having been made *68and upon the lien having been accordingly impressed upon the property the judgment shall stand affirmed, except as to proper assignments of error which may be claimed to have occurred in the determination herein ordered. The district court should retain jurisdiction to do all things necessary in regard to the lien as it did in the judgment under review here.

¶25Affirmed in part, reversed in part, and remanded.