and hearing, under such rules as he may prescribe, shall ascertain the legal heirs of such decedent, and his decision thereon shall be final and conclusive. ✶✶ ✶ Section 2 of the 1910 act, as amended, provides, so far as relevant here, that: "Any persons of the age of 21 years having any right, title, or interest in any allotment held under trust or other patent containing restrictions on alienation or individual Indian moneys or other property held in trust by the United States shall have the right prior to the expiration of the trust or restrictive period, and before the issuance of a fee simple patent or the removal of restrictions, to dispose of such property by will, in accordance with regulations to be prescribed by the Secretary of the Interior: Provided, however, That no will so executed shall be valid or have any force or effect unless and until it shall have been approved by the Secretary of the Interior ***." While the 1910 aet provided in so many words only for the ascertainment of heirs and the approval of wills, and did not expressly grant to the Secretary the power to allow or disallow claims against the trust or restricted estates of deceased Indians, the practice of considering and allowing claims against the estates of deceased allottees was almost immediately instituted.' The regulations of September 13, 1915, and June 19, 1923, relating to the determination of heirs and the approval of wills provided in sections 14 and 9, respectively, for serving notices of hearing on "claimants" as well as on "presumptive heirs." Detailed provisions relating to the handling of claims were contained in sections 46, 47, 48, and 49 of the regulations on the same subject promulgated May 31, 1935, which preceded the present regulations. The propriety of paying claims against the trust or restricted estates of Indians has been recognized in recent years by two Solicitors of the Department, who expressly stated that such claims might be paid not only from income to the credit of the estate at the time of the decedent's death but also from income accruing to the estate subsequent to the death of the decedent.2 It is clear that the 1910 statute confers upon the Secretary of the Interior an implied power to allow claims against trust or restricted Indian estates. As the Supreme Court said in an early case, United States v. Macdaniel (7 Pet. 1, 14 (1883)), in speaking of the duties and responsibilities of the head of a department of the Federal Government: "He is limited in the exercise of his powers by the law; but it does not follow that he must show a statutory provision for everything he does." " The exigencies of Government in more recent times have led to the enactment of many statutes which merely lay down broad general policies or objectives and leave it to the executive to fill in the details. The lacunae of the 1910 act in particular have had to be filled in by administrative practice. For example, section 1 of the act did not expressly confer upon the Secretary of the Interior the power to ascertain the heirs to Indian allotments which were patented in fee but held subject to restrictions against alienation; yet the power of the Secretary to do so was upheld in United States v. Bowling, 256 U.S. 484 (1921). On the authority of that case, the Department held that the Secretary had the power to determine the heirs to lands which had been purchased with restricted funds, and had been subjected by the Secretary to restrictions against alienation. Moreover, although section 1 (unlike section 2) of the 1910 act does not expressly give the Secretary jurisdiction over Indian trust funds, it has been the uniform practice of the Department to determine the heirs to such funds as an incident of the power to determine the heirs to the lands from which such funds are derived.5 The implied power to allow claims against trust or restricted Indian estates is readily deducible from the terms of the 1910 act. A rulemaking power is 1 See Grace Cox et al., 42 L.D. 493, 501-502 (1913), where it was said apropos of claims: "Claims for reasonable expenditures of this nature receive favorable consideration in this Office and are paid out of rentals or other funds remaining to the credit of the estate." * See letter dated June 20, 1940, from Solicitor Margold to the Solicitor of the Department of Agriculture, and letter dated Sept. 28, 1944, from Solicitor Harper to Senator Harlan J. Bushfield of South Dakota. See also Rainbow v. Young, 161 Fed. 835 (C.C.A. 8th, 1908); William Small, Executor v. United States, 45 Ct. Cl. 13, 17 (1909); 34 Op. Atty. Gen. 320, 326 (1924). See 49 L.D. 414 (1923). The propriety of this practice was inferentially recognized in the act of Jan. 24, 1923 (42 Stat. 1185, 25 U.S.C., 1946 ed., sec. 377), which provided for the collection of fees by the Secretary of the Interior for the cost of the work performed by him in determining the heirs to any trust or "restricted Indian property" or in approving wills covering "restricted property" and which authorized the fees to be collected "from any trust funds belonging to the estate of the decedent." expressly conferred upon the Secretary of the Interior by both sections 1 and 2 of the act, and this rulemaking power necessarily carries with it the authority to utilize all proper means for effectuating the purposes of the act. Now, conceivably, if creditors could, without the assistance of the Secretary of the Interior, collect debts which Indians had incurred before their deaths but which remained unpaid at the time of their deaths, it might be possible to argue that the power of the Secretary to see that such debts were paid was not necessarily to be implied from his power to ascertain the heirs or approve the wills of the debtors. Section 1 of the 1910 act expressly declares, however, that the decision of the Secretary in this respect "shall be final and conclusive;" and, although section 2 of the act contains no such express declaration, wills devising trust or restricted Indian property cannot be probated in the courts." As the jurisdiction over the trust or restricted estates of Indians is thus vested in the Secretary, their creditors cannot resort to the courts to collect their debts; and if these were not paid at the direction of the Secretary of the Interior, the creditors would be left without any remedy. It is hardly to be assumed that the Congress intended to make itself a party to such dishonesty. So far as concerns the allowance of claims against the estates of Indians who have left wills, there is an additional factor which supports the power of the Secretary. Indian testators almost invariably direct that their just debts shall be paid. Thus, the Secretary, in allowing claims against their estates, is only carrying out their express wishes. In recent years, Congress has recognized that the Secretary of the Interior was exercising a general probate jurisdiction with regard to the trust or restricted estates of deceased Indians. In adopting the act of July 8, 1940 (54 Stat. 746, 25 U.S.C., 1946 ed. sec. 372a), which regulates the adoption of children by Indians who own trust or restricted estates, Congress provided that the statutory procedure should apply to "probate matters under the exclusive jurisdiction of the Secretary of the Interior ***," and, even more significantly, that the act should not apply to "the distribution of estates of Indians who have died prior to the effective date of this act." The distribution of an estate clearly includes the allowance of any just claims against the estate. Moreover, in providing in the act of November 24, 1942 (56 Stat. 1021, 25 U.S.C., 1946 ed., secs. 373a-373c) for the disposition of the trust or restricted estates of Indians who died intestate without heirs, Congress expressly declared that the estate should escheat only "subject to the payment of such creditors' claims as the Secretary of the Interior may find proper to be paid from the cash on hand or income accruing to said estate * * *." The legislative history of the act of November 24, 1942, is particularly interesting as a test of congressional sentiment on the question of the payment of creditors' claims against Indian estates. In its original form, the bill (H.R. 4533, 77th Congress) which became the act of November 24, 1942, made no express provision for the payment of creditors' claims. Indeed, it was couched in such phraseology that it seemed to exclude the payment of any creditors' claims. Thus, it provided: "That upon final determination by the Secretary of the Interior that the Indian holder of a trust or restricted allotment of lands or an interest therein has died intestate without heirs, the land or interest, together with all accumulated rents, issues, and profits therefrom held in trust for the decedent, shall escheat to the tribe owning the land at the time of allotment." When the bill came up for consideration in the House on May 19, 1941, Congressman Case of South Dakota objected to the bill. "The bill, as I read section 1," he pointed out "provides that not merely the land but all the accumulated rent, issues, and profits therefrom held in trust for the decedent shall escheat to the tribe owning the land at the time of the allotment. It occurs to me that As the Supreme Court said in Hallowell v. Commons (239 U.S. 506, 508 (1916)), the Secretary in promulgating regulations under the act has "considerable discretion as to details." As the Supreme Court said, in speaking of the words of sec. 2 of the 1910 act in Blanset v. Cardin (256 U.S. 319, 326 (1921)): "They not only permit a will but define its permissible extent, excluding any limitation or the intrusion of any qualification by State law." It then added that "the act of Congress is complete in its control and administration of the allotment and of all that is connected with or made necessary by it ** *." many times when Indians die under this circumstance claims against the estate of the Indian could not be taken care of. I find no provision in the bill that would permit the settlement of the claims before the property, the rents, and so forth, go to the tribe." To this Congressman Rogers of Oklahoma, who had introduced the bill at the request of the Department, replied: "That is under the supervision of the Secretary. The estate would have to be settled before any of it would revert." Still dissatisfied with the language of the bill, however, Congressman Case asked that the bill be passed over, and on June 16, 1941, he offered an amendment expressly providing for the payment of creditors' claims, and this amendment was adopted by the House." 998 It might be contended that the departmental practice in the matter of allowing claims against trust or restricted Indian estates runs counter to the provision in section 5 of the General Allotment Act of February 8, 1887 (24 Stat. 389), as amended (25 U.S.C., 1946 ed., sec. 348), which states that at the expiration of the trust period of an allotment the United States will convey the same "free of all charge or encumbrance whatsoever," and to a related provision in the act of June 21, 1906 (34 Stat. 327, 25 U.S.C., 1946 ed., sec. 354), which states that no allotted land shall become "liable to the satisfaction of any debt contracted prior to the issuing of the final patent in fee therefor." Even conceding, for the sake of argument, that these provisions would preclude the allowance of claims against the estates of allotted Indians, it is clear that they have, in effect, been set aside by the later adoption of the act of June 25, 1910, which, properly construed, permits the allowance of such claims. The General Allotment Act, to be sure, attempted to forbid the alienation or incumbrance of allotted lands in any manner during the trust period, but this policy was soon abandoned, and all sorts of transactions affecting allotted lands were subsequently authorized by a long series of congressional enactments. The allowance of creditors' claims against trust or restricted estates is only another example of such an authorization. It might also be contended that even if claims against trust or restricted Indian estates may be allowed from cash on hand at the time of the decedent's death, such claims cannot be allowed from the rents, profits, or income of the decedent's lands accruing after his death. If, however, the Secretary of the Interior has authority to allow claims against Indian estates, the question of the time of the accrual of the income to be applied to the satisfaction of a claim is to be determined entirely in his discretion. It is true that it is the rule generally that the rents, profits, and income derived from realty vest in their heirs or devisees of the decedent and are not assets in the hands of an executor or administrator, but this rule does not apply where the personality is insufficient to pay the debts of the estate. Moreover, in many States the general rule has been altered by statutes which make subsequently accruing rents and profits from realty assets in the hands of personal representatives for the payment of debts.1 In any event, the Secretary of the Interior is not bound by these rules of State law, for under section 5 of the General Allotment Act (25 U.S.C., 1946 ed., sec. 348), he is bound by State law only in his determination of heirship. 10 I am of the opinion, therefore, that the regulation of the Department which requires the allowance of claims of States on account of social security or oldage assistance payments, and which gives such claims priority over the claims of general creditors, has an adequate statutory basis. It is possible, however, that in some instances the application of the regulation may cause undue hardship. You may wish to reconsider the policy question whether or under what circumstances income accruing to trust or restricted Indian estates subsequent to the death of the decedent should be used to pay State social security claims, with the idea of perhaps proposing a change in the regulation. 8 See Congressional Record for May 19, 1941, p. 4316. MASTIN G. WHITE, Solicitor. See Congressional Record for June 16, 1941, pp. 5314-5315. 10 See 33 C.J.S., title "Executors and Administrators," sec. 105, and authorities there cited. DEPARTMENT OF THE INTERIOR, Memorandum. To: Commissioner of Indian Affairs. OFFICE OF THE SOLICITOR, Washington, D.C., November 29, 1956. From: Associate Solicitor, Indian Affairs. In a memorandum dated July 6, 1956, you requested an opinion on the question whether the Commissioner of Indian Affairs has authority to approve Indian mortgages and/or voluntary certificates acknowledging indebtedness for public assistance received from the State of Montana. It is the opinion of this Office that, while as a matter of law the Secretary of the Interior has authority to approve Indian mortgages pursuant to the act of March 29, 1956 (70 Stat. 62), no action is required to be taken by the Commissioner of Indian Affairs to request the Montana Welfare Board to substitute such mortgages in lieu of a certificate of indebtedness which when filed under Montana law (ch. 228, Sess. Laws, 1953) constitutes a lien against real property situated in that State. The lien provisions of the Montana law do not apply to trust or restricted Indian lands. Further, that law does not require a welfare client to execute a mortgage on real property owned by him as a condition precedent to the receipt of public assistance. There is no reason, therefore, why an Indian should be required to encumber his lands with a mortgage for such purpose. In Solicitor's opinion M-36121, dated June 2, 1952, this office had under consideration the regulation of the Department, 25 CFR 81.25, which directs the allowance of claims of States on account of social security or old age assistance payments, and which gives such claims priority over the claims of general creditors. The opinion held that income accruing to trust or restricted Indian estates subsequent to the death of the decedent might be used to pay State social securiy claims. In holding that the act of June 25, 1910 (25 U.S.C. 372, 373), vested an implied power in the Secretary to allow such claims against trust or restricted Indian estates, the opinion at page 8 states: "It might be contended that the departmental practice in the matter of allowing claims against trust or restricted Indian estates runs counter to the provision in section 5 of the General Allotment Act of February 8, 1887 (24 Stat. 389), as amended (25 U.S.C. 348, 1946 ed.), which states that at the expiration of the trust period of an allotment the United States will convey the same 'free of all charge or encumbrance whatsoever,' and to a related provision in the act of June 21, 1906 (34 Stat. 327, 25 U.S.C., 354, 1946 ed.), which states that no allotted land shall become 'liable to the satisfaction of any debt contracted prior to the issuing of the final patent in fee therefor.' Even conceding, for the sake of argument, that these provisions would preclude the allowance of claims against the estates of allotted Indians, it is clear that they have, in effect, been set aside by the later adoption of the act of June 25, 1910, which, properly construed, permits the allowance of such claims. The General Allotment Act, to be sure, attempted to forbid the alienation or encumbrance of allotted lands in any manner during the trust period, but this policy was soon abandoned, and all sorts of transactions affecting allotted lands were subsequently authorized by a long series of congressional enactments. The allowance of creditors' claims against trust or restricted estates is only another example of such an authorization." That opinion, however, did not touch directly upon the question presented here, viz, whether the Commissioner of Indian Affairs may approve or recognize a lien other than a mortgage on trust or restricted Indian land during the lifetime of a public assistance recipient prior to or at the time of the issuance of a patent in fee. It is our opinion that the act of March 29, 1956, supra, merely clarifies and makes definite the authority of the Secretary of the Interior or his duly authorized representative to approve mortgages already given. The statute does not increase or expand such authority. It was enacted so that Indian landowners might avail themselves of the services of commercial lending organizations which require statutory language authorizing the encumbrance of Indian trust and restricted land by mortgage. While the Indian should be encouraged to discharge all indebtedness to which he voluntarily binds himself, he cannot, in the absence of congressional authority, be placed in the position of losing his interests in trust lands through foreclosure of a statutory lien based solely on a law of the State. It is our opinion that the State of Montana has adequate means for its protection in such matters as a preferred creditor under the regulations of this Department found in 25 CFR 81.25. W. H. FLANERY, Associate Solicitor, Indian Affairs. INTERPRETATION OF ACT OF MARCH 29, 1956 (70 Stat. 62), as to USE OF APPROVED MORTGAGES OR CERTIFICATES OF LIEN ON INDIAN TRUST LANDS FOR ENFORCING REIMBURSEMENTS OF PUBLIC ASSISTANCE GRANTS IN MONTANA TO INDIANS STATUTORY INTERPRETATION: ADMINISTRATIVE The act of March 29, 1956 (70 Stat. 62) clarifies and makes definite the authority to approve mortgages given the Secretary of the Interior and his duly authorized representative under prior acts. Certificates of Indebtedness giving rise to a State statutory lien against real property for public assistance granted are not deemed to be mortgages which may be approved under authority of this act. [For release August 9, 1961] DEPARTMENT OF THE INTERIOR BUREAU OF INDIAN AFFAIRS Information Service INTEREST RATES LOWERED ON REVOLVING LOANS TO INDIANS A substantial reduction in interest rates charged on loans from the revolving fund of the Bureau of Indian Affairs, in line with recommendations of the Task Force on Indian Affairs for economic development on Indian reservations, was announced today by Secretary of the Interior Stewart L. Udall. The most important reduction is from 41⁄2 to 2 percent on loans to tribes for land acquisition. This ties in with the task force finding that a serious deterrent to more adequate use of Indian resources is the divided ownership or “heirship” status of numerous tracts that were alloted years ago to individual Indians. Tribes which had received land-purchase loans at the old rate of 42 percent found it difficult to work out programs for acquiring these "heirship" tracts on terms that would permit repayment of the loans within a reasonable period. The new rate of 2 percent will permit land purchase and consolidation programs to be undertaken which were not possible at the old rate, Secretary Udall said. Another important change is in the rate of loans to tribes to finance business enterprises. A uniform rate of 42 percent has been charged in the past. The new regulation will permit a rate as low as 2 percent and as high as 5 depending upon the income-producing ability of the enterprise, and the benefits it will bring to Indians. The new rate should prove helpful in the development of new business enterprises which use reservation resources and provide employment for tribal members, the Secretary declared. Indian young people receiving loans for educational purposes also will get some relief under the new revolving credit regulations. Up to the present time, interest has been charged on such loans from the time they were made. This has worked a hardship on many borrowers because interest accrued during the educational period. Upon graduation they were faced with large debts, much of which represented interest accruals. The new regulation provides that interest accrual will not begin until 1 year after completion of the course for which the loan was made. The rate of loans to individual Indians for agricultural operating expenses is also being reduced from 6 to 5 percent, and the new regulations provide greater flexibility in the rate charged cooperative associations. In the past, cooperative associations have been charged 5 percent a year. The amended regulations will permit rates ranging from 2 to 5 percent according to the nature of the cooperative's business. |