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In art. II of the Fort Laramie Treaty of April 29, 1868, 15 Stat. 635 (abrogated 1877), the United States pledges that the Great Sioux Reservation, including the Black Hills, would be set apart for the absolute and undisturbed use and occupation of the Indians therein named.
Under the Fort Laramie Treaty of 1868, the United States had originally pledged that the Great Sioux Reservation, including the Black Hills, would be set aside for the absolute and undisturbed use and occupation of the Sioux Indian Nation. The treaty also provided that no treaty for the cession of any portion of the reservation would be valid unless signed by at least three fourths of the adult male Sioux. In 1876, after gold was discovered in the Black Hills, a special Commission representing the United States presented a new treaty to the Sioux under which the Sioux were to relinquish their rights to the Black Hills in exchange for subsistence rations for as long as they would be needed to ensure survival of the Sioux. The treaty was signed by only 10 percent of the adult male Sioux population, but Congress resolved the impasse in 1877 by enacting the "agreement" into law, thereby abrogating the Fort Laramie Treaty.
In 1920, the Sioux brought suit against the United States, alleging that the government had taken the Black Hills from them without just compensation in violation of the Fifth Amendment. In 1942, the Court of Claims dismissed the claim of the Sioux, concluding that it was not authorized to question whether the compensation afforded the Sioux by Congress in 1877 was an adequate price for the Black Hills, and that the claim of the Sioux was a moral claim not protected by the just compensation clause of the Fifth Amendment. Congress then passed, in 1946, the Indian Claims Commission Act creating a new forum to hear and determine all previous tribal grievances. The Sioux resubmitted their claim to the Indian Claims Commission, which ultimately held that the 1942 Court of Claims decision did not bar the Indians' Fifth Amendment taking claim through application of the doctrine of res judicata, and that the government was required to pay the Indians just compensation for the taking of the Black Hills. On appeal, the Court of Claims affirmed the Commission's holding that the government had acquired the Black Hills through a course of unfair and dishonest dealings for which the Sioux were entitled to damages of over $17 million; however, without reaching the merits of the claim, the court held that the just compensation claim was barred by the res judicata effect of its 1942 decision. According to the court, the Sioux would be entitled to interest only if the government's acquisition of the Black Hills amounted to an unconstitutional taking.
Congress thereupon passed a statute in 1978, 25 U.S.C.S. § 70a(b) authorizing the Court of Claims to take new evidence in the case, and to conduct its review of the merits de novo without regard to the defense of res judicata. Applying the test of whether Congress had made a good faith effort to give the Indians the full value of their land, the Court of Claims affirmed the Commission's holding that the 1877 Act effected a taking of the Black Hills, and awarded to the Sioux interest of five percent on the principal sum of $17.1 million, dating from 1877. The United States sought review by the United States Supreme Court.
Did the U.S. government unconstitutionally take the Black Hills from the Sioux, thereby entitling the latter with just compensation?
The Court held that the Court of Claims, in determining that the United States' acquisition of the Black Hills constituted a taking compensable under the just compensation clause, properly inquired into whether Congress made a good faith effort to give the Sioux the full value of the Black Hills, an essential element of the inquiry involving a determination of the adequacy of the consideration the government gave for the Indian lands it acquired, the presumption that Congress acted in perfectly good faith in its dealings and that it exercised its best judgment being inappropriate in this situation. Consequently, the Court ruled that the government was obligated under the Fifth Amendment to make just compensation to the Sioux, including an award of interest to the Sioux on the principal sum.