Professional Documents
Culture Documents
Darlene M. Johnston*
I. INTRODUCTION
* Student-at-Law, Saskatchewan.
I (1984), [1984] 2 S.C.R. 335, 13 D.L.R. (4th) 321 [hereinafter Guerin].
2 Ibid. at 391, 13 D.L.R. (4th) at 346.
3 Ibid. at 355, 13 D.L.R. (4th) at 360-1, Ritchie and McIntyre JJ. concurring.
4 Ibid. at 375-6, 13 D.L.R. (4th) at 334-5, Beetz, Chouinard and Lamer JJ.
concurring.
5 Ibid. at 387, 13 D.L.R. (4th) at 343.
6 Ibid. at 376, 13 D.L.R. (4th) at 334.
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Guerin decision clearly raises more questions than it answers. 7 Now that
an enforceable fiduciary obligation has been judicially acknowledged, the
courts must address issues of source, content, standards and remedies.
The American courts have been struggling with these issues for over
150 years. The seeds of their federal trust responsibility doctrine were
sown by Chief Justice Marshall in Cherokee Nation v. Georgia.8 He
characterized the relationship between the Indians and the United States as
that "of a ward to his guardian". 9 This guardianship theory of federal-
Indian relations was interpreted in such a way as to create both a duty of
protection and a power of interference.' 0 Eventually, it was relied upon to
enforce fiduciary duties against federal officials in the administration of
Indian affairs. 1' Recent decisions have underlined the duty of loyalty 12
and have measured the conduct13 of the government by the same standards
applicable to private trustees.
This paper will examine the development of the American federal
trust responsibility doctrine. Such an analysis will be instructive in
developing the nascent Canadian concept. Although close attention must
be paid to our specific historical and legislative context, the American
experience may suggest an approach to answering the questions raised by
Guerin.
7 See, e.g., J.I. Reynolds & L.F. Harvey, Re Guerin et al. (The Musqueam Case) in
INDIANS AND THE LAW i (Vancouver: The Continuing Legal Education Society of British
Columbia, 1985) at 1.1.01.
8 30 U.S. (5 Pet.) 1 (1831).
9 Ibid. at 16.
10 See United States v. Kagama, 118 U.S. 375 (1886) [hereinafter Kagama].
1' SeeSeminoleNation v. UnitedStates,316 U.S. 286 (1942) [hereinafterSeminole
Nation].
12 See, e.g., PyramidLake PaiuteTribe v. Morton, 354 F. Supp. 252 (D.C.) (1973)
[hereinafter PyramidLake]
13 ManchesterBandofPomoIndianshIn. v. United States, 363 F Supp. 1238 (N.D.
Cal.) (1973).
14 See the discussion by Norris J.A. in R. v. White (1964), 52 W.W.R. 193 at 211, 50
D.L.R. (2d) 613 at 630 (B.C.C.A.), affd 52 D.L.R. (2d) 481 (S.C.C.).
19861 Theory of Crown Trust Towards Aboriginal Peoples
them, you are in Our name to command all the Governors that they at no time5
give any just provocation to any of the said Indians that are at peace with us.1
This code made special provisions for those Indians who wished to place
themselves under British protection. Governors were to do everything in
their power to defend the Indians from all who would do violence to their
persons, goods or possessions. British subjects who dared to harm them
were to be punished severely. In future British Indian policy, the Crown
would continue to regard itself as the special protector of the Indian
nations.
The concern for peaceful relations was echoed in The Royal Pro-
clamation of 1763, wherein it states:
And whereas it is just and reasonable, and essential to our Interest, and
the Security of our Colonies, that the several Nations orTribes of Indians with
whom We are connected, and who live under our Protection, should not be
molested or disturbed in the Possession of such Parts of Our Dominions and
Territories as, not having been ceded to or purchased by Us, are reserved to
16
them, or any of them, as their Hunting Grounds.
20 D.E. Sanders, THE FRIENDLY CARE AND DIRECTING HAND OF THE GOVERN-
MENT: A STUDY OF GOVERNMENT TRUSTEESHIP OF INDIANS IN CANADA (1977) at 2
[unpublished] [hereinafter Sanders].
21 See, e.g., An Actfor the protectionof the landsof the Crown in thisProvincefrom
trespassand injury, S.U.C. 1792-1840, c. 15; An Actfor the betterprotection of the Lands
and Property of the Indians in Lower Canada, P.C.S. 1850-51, c. 42; An Act for the
protection of the Indians in Upper Canadafrom imposition, and the property occupiedor
enjoyed by themfrom trespass and injury, P.C.S. 1850-51, c. 74.
22 P.C.S. 1857, c. 26.
23 The enfranchisement provisions of the Indian Act have only been repealed
recently: see Bill C-31, An Act to Amend the Indian Act, 1st Sess, 33rd Parliament,
1984-85, c. 27, s. 19 (assented to 28 June 1985).
24 Journals, supra note 15.
1986] Theory of Crown Trust Towards Aboriginal Peoples
The language of the statute embodies the accepted view that these aborigenes
[sic] are, in effect, wards of the State, whose care and welfare are a political
trust of the highest obligation. For that reason, every such dealing with their
privileges must bear the imprint of governmental approval, and it would be
beyond the power of the Governor in Council to transfer that responsibility to
the Superintendent General. 2 7
empowered to "direct how, and in what manner, and by whom the moneys
arising from sales of Indian lands, and from the property held in trust for
the Indians ...shall be invested". 40 Finally, section 65 provided that the
land vested in the Crown in trust be exempt from taxation. 41 From the
foregoing, it can be seen that this statute granted sweeping powers of
management and disposal in relation to Indian property and that it did so in
terms which arguably have technical trust connotations. For these reasons,
several commentators have concluded that, on its face, the Indian Act
creates an express trust. 42
In addition to specific Indian legislation, there are at least three
constitutional documents which employ trust terminology. The 1871 terms
of Union of British Columbia and Canada provides that "[t]he charge of
the Indians, and the trusteeship and management of the lands reserved for'43
their use and benefit, shall be assumed by the Dominion Government."
Similarly, when lands were added to the provinces of Quebec and Ontario
in 1912, special attention was paid to the trusteeship of the Indians. The
Ontario Boundaries Extension Act provided "That the trusteeship of
Indians in the said territory, and the management of any lands now or
hereafter reserved for their use, shall remain in the Government of Canada
subject to the control of Parliament. "44 These examples display express
legislative recognition of the government trusteeship of Canadian Indians
and, more particularly, that it is a responsibility which falls within the
federal domain.
A new IndianAct 4 5 was passed on September 4, 1951, following an
intensive study of the matter by a parliamentary committee. 46 This legisla-
tion introduced a subsection which, although implicit in all previous
enactments, had never received express articulation. Subsection 18(1)
states:
Subject to the provisions of this Act, reserves shall be held by His Majesty for
the use and benefit of the respective bands for which they were set apart; and
subject to this Act and to the terms of any treaty or surrender, the Governor in
This subsection has become the focal point of the assertion that the Indian
Act creates an express trust with the federal Crown as trustee for reserve
lands. It was upon this section that the Musqueam Band based its charge
that "the federal Crown was in breach of its trust obligation in respect of
the leasing of approximately 162 acres of reserve land to the Shaughnessy
Heights Golf Club of Vancouver". 48
Given that no other member of the Court found the agency analysis
persuasive, it is unlikely that it will be employed in subsequent elaboration
of the fiduciary duty.
Mr. Justice Dickson purports to rest his distinction upon the lack of a trust
corpus, maintaining that upon an unconditional surrender" [n]o property
So stated, this principle would apply to the Crown because it has uni-
laterally undertaken powers of management and of disposition of Indian
proprietary interests. Furthermore, the Crown has established a com-
prehensive statutory scheme which impinges upon virtually every aspect
of native existence. However, after having articulated this expansive
notion of fiduciary duty, Mr. Justice Dickson proceeds to restrict the scope
of its application by suggesting that the fiduciary duty is not triggered until
a surrender occurs. Accordingly, "[w]hen, as here, an Indian Band
surrenders its interest to the Crown, a fiduciary obligation takes hold to
regulate the manner in which the Crown exercises its discretion in dealing
' 63
with the land on the Indians' behalf.
This view limits the scope of the Crown's responsibility in two
important ways. Firstly, the duty is not a continuing one, so that prior to a
surrender the Crown can exercise its powers of management with
impunity. Secondly, the duty relates only to proprietary interests, so that
the Crown can not be held responsible for harming interests which are not
of a strictly proprietary nature. Hence, the scope of the fiduciary duty
which Mr. Justice Dickson outlines is not coextensive with the powers
unilaterally assumed by the Crown.
64 Ibid. at 348ff, 13 D.L.R. (4th) at 356ff. While s. 18 does not per se create a
fiduciary obligation in the Crown, it recogniies the existence of such an obligation.
65 Ibid. at 355, 13 D.L.R. (4th) at 361.
66 Ibid. at 387, 13 D.L.R. (4th) at 343.
67 (7 October, 1763), reprinted in R.S.C. 1970, App. II, No. 1, 123.
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States government after the land had been ceded by treaty. The issue was
whether the title granted to unsurrendered land (that is, the aboriginal title)
could be legally recognized. Chief Justice Marshall, in delivering the
opinion of the Court, discussed the effect of the European doctrine of
discovery upon aboriginal title:
They [the natives] were admitted to be the rightful occupants of the soil, with
a legal as well as just claim to retain possession of it, and to use it according to
their own discretion; but their rights to complete sovereignty, as independent
nations, were necessarily diminished, and their power to dispose of the soil at
their own will, to whomsoever they pleased, was denied by the original
fundamental principle, that discovery gave exclusive title to those who made
it.78
In his concluding remarks, the Chief Justice readily admitted that this
characterization of the Indian interest in land was motivated by the need to
reconcile Indian occupancy with the common law system of land tenure.
He concluded that:
[Tihe Indian inhabitants are to be considered merely as occupants, to be
protected, indeed, while in peace, in the possession of their lands, but to be
deemed incapable of transferring the absolute title to others. However this
restriction may be opposed to natural right, and the usages of civilized
nations, yet, if it be indispensable to that system under which the country has
been settled, and be adapted to the actual condition of the two people, it may,
perhaps, be supported by reason, and certainly cannot be rejected by courts of
justice. 79
8o
Although it is the doctrine of discovery and not The Royal Proclamation
which is relied upon to reach these conclusions, 8 I the principles embodied
in the latter are echoed in the judicial articulation of the Indians' claim to
possession of their lands and of their inability to alienate the same, except
upon surrender to the federal government.
Chief Justice Marshall had occasion to readdress the issue of the
sovereignty of Indian nations in Cherokee Nation v. Georgia.82 In this
case, the tribe sought to enjoin the enforcement of Georgia statutes in its
territory. The decision contains the first judicial formulation of the trust
responsibility doctrine. The Chief Justice characterized the relationship
between the Indians and the United States government in the following
manner:
78 Ibid. at 574.
79 Ibid. at 591-2.
SO (7 October, 1763), reprintedin R.S.C. 1970, App. II, No. 1, 123.
81 Later in his judgment, Marshall C.J. describes The Royal Proclamationof 1763 as
an "additional objection" to the purported conveyance of Indian lands to private individu-
als. Supra, note 70 at 594. He goes on to confirm that "[tihe authority of this proclamation,
so far as it respected this continent, has never been denied, and the titles it gave to lands
have always been sustained in our courts". Ibid. at 597.
82 Supra, note 8.
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[T]he relation of the Indians to the United States is marked by peculiar and
cardinal distinctions which exist nowhere else.
... [I]t may well be doubted whether those tribes which reside within the
acknowledged boundaries of the United States can, with strict accuracy, be
denominated foreign nations. They may, more correctly, perhaps, be
denominated domestic dependent nations. They occupy a territory to which
we assert a title independent of their will, which must take effect in point of
possession when their right of possession ceases. Meanwhile they are in a
state of pupilage.8 3Their relation to the United States resembles that of a ward
to his guardian.
The Chief Justice viewed the treaties and federal legislation as affording
the Cherokees a special protectoratestatus. Apart from the congressional
83 Ibid. at 16-7.
84 Ibid. at 17.
85 See Note, Rethinking the Trust Doctrine in FederalIndianLaw (1984) 98 HARV.
L. REv. 422 at 425.
86 Ibid.
87 31 U.S. (6 Pet.) 515 (1832).
88 Ibid. at 560-1.
89 Ibid. at 557.
1986] Theory of Crown Trust Towards Aboriginal Peoples
Having confirmed the exercise of federal power over Indian affairs on the
basis of the fiduciary obligation, Kagama established the guardianship as
an extra-constitutional source of power. 95
The scope of this federal power proved quite expansive indeed. Even
treaty terms did not impose a barrier to the exercise of the plenary power.
Perhaps the most notorious case of the era, Lone Wolf v. Hitchcock,9 6
established that Congress could unilaterally abrogate treaty rights. The
case involved an attempt by tribal members to enjoin the enforcement of an
97 Ibid. at 564.
98 249 U.S. 110 (1919) [hereinafter Lane].
99 Ibid. at 113. See also Shoshone Tribe v. United States, 299 U.S. 476 at 498
(1937), wherein Cardozo J. stated: "Spoliation is not management."
1oo 261 U.S. 219 (1923) [hereinafter.Cramer].
101 Ibid. at 227.
102 Ibid. at 229.
103 295 U.S. 103 (1935) [hereinafter Creek Nation].
19861 Theory of Crown Trust Towards Aboriginal Peoples
control and management of that government. But this power to control and
manage was not absolute. While extending to all appropriate measures for
protecting and advancing the tribe, it was subject to limitations inhering in
such a guardianshipand to pertinent constitutional restrictions.Y°4
with moral obligations of the highest responsibility and trust. Its conduct, as
disclosed in the acts of those who represent it in dealings with the Indians,
should therefore be judged by the most exacting fiduciary standards.109
trusts, the Court concluded that by failing to pay interest on tribal funds
invested in treasury accounts, the government-defendants "breached their
solemn fiduciary duty owed to the Band to manage properly their trust
funds, and are therefore liable".' 9
Perhaps the most problematic aspect of government trusteeship is the
potential for conflict of interest situations. It often happens that different
government branches propose projects which directly prejudice tribal
interests. Governmental resolution of these administrative conflicts typ-
ically do not accord with strict fiduciary standards. In a 1970 message to
Congress on reorganizing federal programs for American Indians, Presi-
dent Nixon recognized that the government was in a conflict of interest
position:
The Secretary of the Interior and the Attorney General must at the same time
advance both the national interest in the use of land and water rights and the
private interests of Indians in land which the government holds as trustee ....
There is considerable
20
evidence that the Indians are the losers when such
situations arise.
of an opportunity, prevents the beneficiary from getting it, and seizes it for
himself', 25 the Court concluded that the government had breached its
duty of loyalty and they sustained the tribe's claim for compensation.
The duty of loyalty has received its most forceful articulation in the
District Court decision of Pyramid Lake Paiute Tribe of Indians v.
Morton. 126 This case is concerned with federal regulations which
impacted negatively upon tribal water resources rather than with the
management of Indian trust property. Located on the Paiute reservation,
Pyramid Lake is the Tribe's principle source of livelihood. In 1972, the
Secretary of the Interior issued a regulation implementing a federal dam
and reclamation project which lowered the lake's water level. As a result,
the lake's fishery was endangered and its value as a trust asset was
diminished. The Tribe alleged that the Secretary had failed to fulfill his
trust responsibilities
127
by "illegally and unnecessarily diverting water from
Pyramid Lake".
In asking itself whether the regulation could be justified on a rational
basis, the Court recognized that the Secretary's action was necessarily
controlled by three factors: 1) the contractual rights of the Irrigation
District; 2) certain applicable court decrees; and 3) the Secretary's trust
responsibilities to the Indians. In reviewing the Secretary's resolution of
the conflicting demands, the Court concluded that he had misconstrued the
legal requirements governing his actions, stating "[a] judgment call was
simply not permissible .... The burden rested on the Secretary to justify
any diversion of water from the Tribe with precision. It was not his
function to attempt an accommodation. ' 1 28 In the opinion of the Court,
"[t]he Secretary was obliged to formulate a closely developed regulation
that would preserve water for the Tribe". 129
It should be noted that the duty of loyalty was not framed so strictly as
to prohibit the Secretary from authorizing any water diversions, since that
would have meant ignoring completely the other legitimate considera-
tions. Rather, the Secretary was required to demonstrate "an adequate
recognition of his fiduciary duty to the Tribe". 130 The Court was unable to
discern any such recognition. To begin with, the grounds for the Secre-
tary's action were not disclosed. More importantly, the Court was satisfied
that water could be conserved for Pyramid Lake without offending the
existing decrees and contractual rights. As a result, the Secretary was
ordered to submit to the Court an amended regulation in which "the
amount of water diverted shall131be wholly consistent with the Secretary's
fiduciary duty to the Tribe".
At the same time, however, the Court reiterated that "[t]he United States
undoubtedly owes a strong fiduciary duty to its Indian wards", 13 5
and that
if, in the course of representing both interests, the government in fact
violated its obligations to the tribe, the tribe would have a remedy against
it. 136
Although the Court tempers the rigorous standards of the fiduciary by
recognizing in this particular context that the government has a statutory
duty to represent different interests, it by no means jettisons the applica-
tion of the law of private trustees to the federal-Indian relationship. The
Court observes that "where only a relationship between the Government
and the tribe is involved, the law respecting obligations between a trustee
and a beneficiary in private litigation will in many, if not all, respects
adequately describe the duty of the United States". 137 So we see that forty
years after its landmark decision in Seminole Nation, the United States
145 (U.K.), 30 & 31 Vict., c. 3 (formerly British North America Act, 1867).
146 (1964), 46 W.W.R. 65,43 D.L.R. (2d) 150 0(N.W.T.C.A.), affd [1964] S.C.R.
642, 50 D.L.R. 80.
147 Ibid., 46 W.W.R. at 69, 43 D.L.R. (2d) at 154.
148 This has included land, minerals, water, timber and trust funds.
19861 Theory of Crown Trust Towards Aboriginal Peoples
Some support for this approach can be found in the judgment of Mr.
Justice Dickson in the Guerin case. When discussing the indicia of a
fiduciary relationship, he formulated the following principle:
[W]here by statute, agreement, or perhaps by unilateralundertaking, one
party has an obligation to act for the benefit of another, and that obligation
carries with it a discretionary power, the party thus empowered becomes a