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Hydaburg Cooperative Ass'n. v. Hydaburg Fisheries (10/17/96), 925 P 2d 246
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NOTICE: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska 99501; (907) 264-0607; fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
HYDABURG COOPERATIVE )
ASSOCIATION, ) Supreme Court No. S-6603
)
Appellant, ) Superior Court No.
) 1KE-88-866 CI
v. )
) O P I N I O N
HYDABURG FISHERIES and )
HYDABURG FISHERIES, INC. )
) [No. 4415 - October 17, 1996]
Appellees. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Ketchikan,
Thomas M. Jahnke, Judge.
Appearances: David C. Crosby, Wickwire,
Greene, Crosby, Brewer & Seward, Juneau, for
Appellant. No appearance for Appellees.
Before: Rabinowitz, Matthews, Eastaugh and
Fabe, Justices. [Compton, Chief Justice, not
participating.]
RABINOWITZ, Justice.
I. INTRODUCTION
In this appeal Hydaburg Cooperative Association (HCA)
focuses primarily on the issue of the subject matter jurisdiction
of the superior court to order execution on certain HCA property.
HCA has not challenged the judgment below but argues that certain
of its property is not subject to execution by the superior court
because it is owned by an entity organized under section 16 of the
Indian Reorganization Act. (EN1) HCA did not appear in the
execution proceedings below and is therefore raising this issue for
the first time on appeal. (EN2) HCA asserts that the superior
court had no jurisdiction to order execution upon and subsequently
approve the sale of HCA property which was not committed to the
commercial venture out of which the judgment in this case arose.
Appellees did not file a brief.
II. FACTS AND PROCEEDINGS
The facts of this case are reported in Hydaburg I and
Hydaburg II, and only those facts relevant to the issue on appeal
will be summarized. HCA is either one or two corporate entities
created under sections 16 and 17 of the Indian Reorganization Act
(IRA). In Atkinson v. Haldane, 569 P.2d 151 (Alaska 1977), we held
that entities created under section 16 of the IRA were legal
entities which were distinct from entities created under section 17
of the IRA. We referred to section 16 entities as governmental
units whereas section 17 entities were said to have business
purposes. Id. at 171. In Hydaburg I we recognized that the IRA
permitted Native groups to form two entities, 826 P.2d at 756, but
generally treated HCA as a single entity having both section 16 and
section 17 functions. This was not a critical point given our
resolution of the issues presented in that case. Id. at 758 n.12.
On remand from the present case, a determination of the status of
HCA will be necessary. For convenience and consistency with
Hydaburg I, we continue to treat HCA as one entity while
recognizing that in fact there may be two entities bearing the same
or similar names. (EN3)
HCA became involved in a commercial venture relating to
a fish processing plant and dedicated to this venture the building
used for fish processing and HCA's interest in the land on which
the building stood. This land was approximately one-third of Lot
1, Block 14, located in Hydaburg. HCA had initially owned all of
Lot 1. HCA then deeded this part of Lot 1 to the City of Hydaburg
and subsequently leased it back. The remaining two-thirds of Lot
1 were apparently never a part of the commercial project.
Eventually the venture collapsed and litigation ensued, resulting
in a superior court judgment against HCA. On July 20, 1990, the
superior court entered an Order Directing Application of Property
to Judgment. The order directed application of the following
property to judgment:
Hydaburg Cooperative Association has a legal
interest in real property located under the
fish processing building in Hydaburg, Alaska.
HCA also has a legal interest in the fish
processing building itself, and in the cold
storage facility and equipment located within
the building. HCA also has a legal interest
in a warehouse building adjacent to the fish
processing building.
The superior court's order did not explicitly mention the two-
thirds of Lot 1 which had never been dedicated to the commercial
venture -- that is, the part of Lot 1 which was not "located under
the fish processing building".
HCA's appeal of this order was rejected in Hydaburg I.
In our opinion we stated:
While HCA cannot at this point challenge the
judgment against it, the association can
protect certain of its assets from execution
under section 16 of the IRA. Section 16
provides in part:
In addition to all powers vested in
any Indian tribe or tribal council
by existing law, the constitution
adopted by said tribe shall also
vest in such tribe or its tribal
council the following rights and
powers: . . . to prevent the sale,
disposition, lease, or encumbrance
of tribal lands, interest in lands,
or other tribal assets without
consent of the tribe.
Hydaburg I, 826 P.2d at 756 (quoting 25 U.S.C. sec. 476 (1988)
(footnote omitted)). (EN4)
We went on to point out that "[t]he order [applying
property to judgment] applies only to those HCA assets involved in
the joint venture with Hydaburg Fisheries. Operation of a fish
processing facility was a section 17[ (EN5)] corporate function
under paragraph 1 of the charter." Id. at 757 (footnote omitted).
After Hydaburg I, the superior court rejected attempts by
the City of Hydaburg and the United States Department of Commerce
Economic Development Administration (EDA) to block execution.
Following the execution sale, the superior court entered an order
confirming the sale of HCA's property in satisfaction of the
judgment. However, included in the execution sale was the two-
thirds of Lot 1 which apparently had never been dedicated to the
commercial venture, (EN6) and had not been identified in the
superior court's July 20, 1990 Order Applying Property to Judgment.
Hydaburg II, an appeal by the City and EDA, in which HCA did not
participate, followed. The execution on and confirmation of sale
of HCA's portion of Lot 1 were not at issue. On remand from
Hydaburg II, the superior court adopted the position that Hydaburg
II left execution on this portion of Lot 1 undisturbed. HCA now
appeals the order confirming the sale of the disputed two-thirds
portion of Lot 1 to Hydaburg Fisheries.
III. STANDARD OF REVIEW
This appeal raises questions of law regarding the
superior court's subject matter jurisdiction. "[W]hether the
superior court had subject matter jurisdiction . . . is a question
of law, subject to de novo review by this court." Andrews v.
Operating Engineers-Employers Training Trust Fund, 871 P.2d 1142,
1144 (Alaska 1994). Though HCA did not raise the issue of subject
matter jurisdiction before the superior court, "subject matter
jurisdiction may be raised at any stage of the litigation and if
noticed must be raised by the court if not raised by one of the
parties." Burrell v. Burrell, 696 P.2d 157, 162 (Alaska 1984)
(citations omitted).
IV. DISCUSSION
A. HCA's Untimeliness
HCA did not raise its objection to the sale of its two-
thirds interest in Lot 1 immediately, as would be expected. It was
not until the case was remanded to the superior court on other
issues, and the superior court reaffirmed its own order regarding
this sale, that HCA filed this appeal. It is not entirely clear,
however, what the proper time for HCA to object would have been.
HCA probably should have objected to the sale of its interest in
two-thirds of Lot 1 at the time the superior court was issuing its
confirmation of the sale. However, we hold that HCA is not bound
by its failure to object at that time for the following reasons.
1. Civil Rule 69(g) Does Not Apply
Civil Rule 69(g), governing the confirmation of sale of
real property on execution, as well as objections to such
confirmation, applies only to property sold pursuant to a writ of
execution. (EN7) Apparently two-thirds of Lot 1 was never the
subject of a writ of execution in the case at bar. HCA's
objections are not to an irregularity in the method of sale, as
contemplated by Rule 69(g)(2), but rather are to the very right of
the creditors to sell HCA's property. By its terms Rule 69(g) does
not apply to this situation, and thus HCA is not bound by its
procedures.
2. HCA Should Not Be Bound by the Time for Appeal of
the Superior Court's Initial Order Confirming the
Sale
Ordinarily, a party which does not raise issues on the
initial appeal following the superior court's judgment waives those
issues. However, in this case, HCA had excellent reasons for not
raising the issue of lack of subject matter jurisdiction
immediately. HCA had stopped appearing at the proceedings because
Hydaburg I had apparently resolved all of the important issues
relating to it. HCA lost its appeal in Hydaburg I but had received
an unequivocal statement from this court that (a) it could protect
"section 16 assets,"id. at 757, and (b) the superior court's order
applying property to judgment was applied "only to those HCA assets
involved in the joint venture with Hydaburg Fisheries." Id. HCA
should have been able to reasonably rely on these assurances in
discontinuing its participation in the proceedings. The extent of
its liability was established and this court had delineated the
limits of the superior court's order of execution. At this point,
HCA had no reason to suspect that other parts of its property would
be sold without the issuance of a writ of execution covering this
other property. It is entirely possible that HCA never even knew
about the sale of this property by the time of Hydaburg II.
As mentioned above, the issue of subject matter
jurisdiction is not waivable and can even be raised at a very late
stage in the litigation. (EN8) See O'link v. O'link, 632 P.2d 225,
226 n.2 (Alaska 1981).
B. Whether the Superior Court had Subject Matter
Jurisdiction to Allow Execution on the Two-Thirds of
Lot 1
HCA was organized under sections 16 and 17 of the Indian
Reorganization Act (25 U.S.C. sec.sec. 476 and 477 (1988) (1990 and
1994 amendments to these sections are not relevant to this case)).
In Hydaburg I, we held that HCA could protect those of its assets
which were dedicated to its section 16 function: "[HCA] can protect
certain of its assets from execution under section 16 of the IRA."
Hydaburg I, 826 P.2d at 756 (footnote omitted). "The [superior
court's] order applies only to those HCA assets involved in the
joint venture with Hydaburg Fisheries. Operation of a fish
processing facility was a section 17 corporate function under
paragraph 1 of the charter."Id. at 757. Thus we declared that the
portion of HCA's land which was not owned under or dedicated to the
section 17 corporate function was protected from execution.
Given that the exemption of this property is created by
federal law, the defect in execution upon the property by a state
court is indeed jurisdictional. (EN9) Jurisdiction in this case is
governed by 28 U.S.C. sec. 1360(b). "Subsection 1360(b) precludes
state courts from adjudicating the ownership or right to possession
of property or an interest therein belonging to an Indian tribe or
community that is held in trust by the United States or is subject
to a restriction against alienation imposed by the United States."
Ollestead v. Native Village of Tyonek, 560 P.2d 31, 34 (Alaska
1977). This statement is not limited to reservation lands, but
includes all property subject to a federally imposed restraint.
See id. at 35-36 n.9. In Heffle v. State, 633 P.2d 264 (Alaska
1981), we noted the lack of state court jurisdiction to adjudicate
"ownership and other interests in property which is subject to a
restriction against alienation imposed by the United States," Id.
at 267 (citing 28 U.S.C. sec. 1360(b)). The property at issue in
Heffle was Native allotments. (EN10) In a case involving intestate
succession of Native Regional corporation shares, we noted that if
resolution of the matter involved more than an interpretation of
state law on adoption and intestacy, state courts would lack
jurisdiction to adjudicate the ownership of the stock. Calista
Corp. v. Mann, 564 P.2d 53, 58 (Alaska 1977) (citing 43 U.S.C. sec.
1606(h)(2) as conferring jurisdiction otherwise withheld by 28
U.S.C. sec. 1360(b)).
Thus, Alaska's state courts lack jurisdiction to
authorize executions on properties exempted by 25 U.S.C. sec. 476
(IRA sec. 16). More particularly, if HCA proves that the disputed
two-thirds of Lot 1, Block 14 is exempt property under 25 U.S.C.
sec. 476, it is entitled to have the execution vacated as against
this property and the proceedings dismissed.
V. CONCLUSION
Given the law of the case established in Hydaburg I and
Hydaburg II, we conclude that the most appropriate disposition of
this appeal is to remand the case to the superior court for
resolution of the following issues:
(a) Whether HCA consists of two entities, one of which
exercises section 16 functions and one of which exercises section
17 functions and, if so, which of the two entities owns the
disputed two-thirds of Lot 1, Block 14, and
(b) if it is determined that part of Lot 1, Block 14 is
owned by HCA under section 16, whether HCA dedicated this portion
of Lot 1 to its joint venture with Hydaburg Fisheries.
On remand the burden of proving a Section 16 exemption
from execution is on HCA. In the event the superior court
concludes that HCA has met its burden and proved that it is
entitled to an exemption under section 16, the superior court
should set aside and vacate its order confirming the sale to
Hydaburg Fisheries of the two-thirds of Lot 1, Block 14. Moreover,
the superior court should vacate the deed to the two-thirds of Lot
1, Block 14 which was issued on June 11, 1993, grant such
additional relief as it deems appropriate, and dismiss this
execution proceeding.
REMANDED for further proceedings consistent with this
opinion. (EN11)
ENDNOTES:
1. 25 U.S.C. sec. 476.
2. After this court's decision in Hydaburg Cooperative
Association v. Hydaburg Fisheries, 826 P.2d 751 (Alaska 1992)
("Hydaburg I"), HCA, having run out of money for litigation, ceased
participating actively in the litigation. Thus HCA did not join in
the appeal which led to Hydaburg v. Hydaburg Cooperative
Association, 858 P.2d 1131 (Alaska 1993) ("Hydaburg II").
3. We note in addition that there are references in the record to
another entity referred to as the "Hydaburg Indian Reorganization
Act Council." The name of this organization implies that it may be
the entity which fulfills section 16 functions for the Natives of
Hydaburg. We observe also that the charter and constitution of
HCA are occupationally based ("whereas, a group of Indians having
a common bond of occupation in the fish industry in Hydaburg
. . . .") suggesting a section 17 rather than a section 16
function.
4. In Hydaburg I, we observed:
The burden of proving a section 16
exemption from execution was upon HCA.
A debtor claiming an exemption generally
must prove that his claim comes within
the exemption provisions. Where an issue
is left in doubt by the proof so that a
court would be required to speculate, the
party on which the burden of proof
ultimately rests must lose.
31 Am. Jur. 2d Exemption sec. 367 (1989);
accord Hancock v. Stockmen's Bank & Trust Co.,
739 P.2d 760, 761-63 (Wyo. 1987) (holding that
exemptions are affirmative defenses which
debtor must assert and prove). This is
consistent with the general rule that a Native
entity asserting sovereign immunity bears the
burden of proving it is a tribe. See The
Board of Equalization for the Borough of
Ketchikan v. Alaska Native Brotherhood and
Sisterhood, No. 14, 666 P.2d 1015, 1023
(Alaska 1983) (Rabinowitz, J., concurring).
It is also consistent with the general policy
of placing the burden on the party that
controls the proof. See Sloan v. Jefferson,
758 P.2d 81, 83 (Alaska 1988).
Hydaburg I, 826 P.2d at 757 (footnote omitted).
5. 25 U.S.C. sec. 477.
6. HCA contends that this two-thirds of Lot 1 was an asset of
HCA's section 16 non-commercial or tribal function, rather than its
section 17 commercial or business function.
7. Civil Rule 69(g) provides:
(1) Confirmation. Where real property
has been sold on execution the plaintiff in
the writ of execution, on motion, is entitled
to have an order confirming the sale, after
the expiration of 10 days after the filing of
the return of sale, unless the judgment debtor
has filed objections to the sale within 10
days after the filing of the return of sale.
(2) Objections. If objections are filed
the court shall determine at a hearing whether
there were substantial irregularities in the
proceedings of sale which caused probable loss
or injury to the judgment debtor. If not, the
order confirming the sale shall be granted.
If so, the court shall deny the motion and
direct that the property be resold, in whole
or in part as upon an execution received of
that date.
8. It should be noted that this issue was not raised quite as
late as it might initially seem. The jurisdictional defect is only
as to execution on certain of HCA's property which was not listed
in the order mentioned in Hydaburg I. There is no objection to the
jurisdiction to hear the merits of the underlying case. Therefore,
the absolute earliest opportunity that HCA could possibly have
raised the issue was when the jurisdictional defect was created --
at the execution sale. In fact, since there is no indication of
when HCA received notice that this property had been sold, HCA's
first chance to raise the jurisdictional challenge could have been
even later than the sale date.
9. In In re City of Nome, 780 P.2d 363, 367 (Alaska 1989), we
described the protections of IRA section 16 (25 U.S.C. sec. 476):
"The Act was intended to stop the alienation of tribal land needed
to support Indians . . . ."(citation omitted).
More specifically, and analogous to the execution which is at
issue in this case, we stated:
The language of 25 U.S.C. sec. 476
appears to protect [tribal] lots from
foreclosure by the City. The purpose for
which this provision was enacted is clear;
application of the provision to foreclosure
proceedings will further that purpose. If any
doubt remained, this court would rest on the
settled principle that, in Indian law, all
ambiguities must be resolved in favor of the
Indians.
. . . .
. . . . By barring transfer without [tribal]
consent, Congress has determined that state
law permitting foreclosure does not apply.
Id. (citation omitted).
10. The mention of restraints on "alienation"should not be
construed to limit this denial of jurisdiction to cases where the
natives themselves are restrained from alienating property. The
text of section 1360(b) reads:
Nothing in this section shall authorize the
alienation, encumbrance, or taxation of any
real or personal property . . . belonging to
any Indian or any Indian tribe, band, or
community that is held in trust by the United
States or is subject to a restriction against
alienation imposed by the United States; or
shall authorize regulation of the use of such
property in a manner inconsistent with any
Federal treaty, agreement, or statute or with
any regulation made pursuant thereto . . . .
If the execution on HCA's section 16 property does not fall under
the "restriction against alienation"heading, it does fall under
the "inconsistent with any . . . statute"heading.
Furthermore, the protection of section 16 property could be
called a restraint on the alienation of non-commercial property by
the commercial section 17 entity.
11. Our disposition makes it unnecessary to address whether Civil
Rule 69(a) was complied with or whether the execution and sale of
possibly exempt property without notice or an opportunity to be
heard is violative of due process.
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