Rumery v. Baier
268 P.3d 1120
Ariz. Ct. App.2011Background
- Arizona holds state trust lands for beneficiaries, including common schools, under the New Mexico-Arizona Enabling Act and Article 10, §7.
- In 2009, Arizona enacted A.R.S. § 37-527 establishing the State Trust Land Management Fund to pay trust-land management costs.
- A portion of annual trust-land proceeds and product sales are directed to the Management Fund; the rest go to permanent funds for beneficiaries.
- Plaintiffs sued, alleging §37-527 diverts trust proceeds from permanent funds in violation of Art. 10, §7 and the Enabling Act, and voter protections.
- The trial court held §37-527 unconstitutional under Art. 10, §7 and enjoined fund transfers; it did not decide Enabling Act conformity.
- On appeal, the court addresses whether constitutional provisions bar diversion of trust proceeds to management costs and whether prior/common-law or other states’ decisions apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does AR.S. § 37-527 violate Art. 10, §7 by diverting proceeds from permanent funds? | Rumery argues diversion violates §7. | Baier contends §7 allows management funding from trust proceeds. | Yes; §37-527 violates Art. 10, §7. |
| Should interpretation rely solely on Arizona Constitution, not Enabling Act provisions? | Rumery prefers constitution-based limits. | Baier argues Enabling Act permits broader use. | We interpret solely under the Arizona Constitution. |
| Do pre-statehood common-law or other states’ decisions control the result? | Rumery argues precedent supports restricting diversion. | Baier relies on common-law and other states’ decisions to justify diversion. | No; such precedents do not support diversion under Arizona law. |
Key Cases Cited
- Lassen v. Arizona ex rel. Ariz. Highway Dept., 385 U.S. 458 (1967) (trust beneficiaries must receive full benefit of lands)
- Fain Land & Cattle Co. v. Hassell, 163 Ariz. 587 (1990) (trust funds must fully benefit beneficiaries)
- Radish v. Ariz. State Land Dep’t, 155 Ariz. 484 (1987) (trust provisions stricter than Enabling Act influence Arizona interpretation)
- Moon v. Inv. Bd., 98 Idaho 200 (1977) (state endowment fund cannot fund administrative expenses)
- Betts v. Comm’rs of the Land Office, 110 P. 766 (1910) (pre-constitutional opinions on trust fund use for management)
- Rhoades, 4 Nev. 312 (1868) (Nevada permits some management expenses from trust proceeds; distinguishes Arizona case)
- Empress Adult Video & Bookstore v. City of Tucson, 204 Ariz. 50 (2002) (framers presumed aware of existing law; cited for contextual principle)