Fain Land & Cattle Co. v. Hassell

P.2d COMPANY, FAIN LAND & CATTLE Petitioner, corporation,

an Arizona HASSELL, Land

M.J. as State Commis-

sioner; Land De- The Arizona State

partment, agency State

Arizona, Respondents.

No. CV-89-0186-SA. Arizona,

Supreme Court of

En banc.

March 1990. 8,May Denied

Reconsideration

FACTS AND PROCEDURAL HISTORY 16, 1985, applied Fain September On un- seq. der 37-604 to A.R.S. et private land it owned for state school trust question land. All land in is located in 24, 1988, Yavapai County. On March and three members of the Commissioner approved State Board the ex- Selection by acres Fain for 635 of 874 owned acres of school land. The state basis upon approved which the was “in was that it was the interest of the State control, proper management, for reasons protection public use of State land” and that “the selected State lands substan- tially equal Special in value.” Petition for (filed 31, 1989), Sup.Ct. May Action 2. 8, 1988, August Department On in- formed it take exchange, further action on the based on general’s advice the attorney from office this court’s decision Deer Court, Superior School Dist. v. Unified (1988),prohibit- P.2d 537 exchanges. ed such by Gammage & Burnham Karen L. for May On counsel Fain sent Artigue, Schroeder and Cameron C. Phoe- demanding letter to Commissioner nix, petitioner. for Department proceed exchange. Corbin, Gen., Atty. Robert K. and Antho- Department proceed to After the refused ny Ching, Craig B. Sol. Gen. Theresa M. demand, petition this on this Fain filed Pierson, Phoenix, and Charles S. for re- action,1 special requesting that this court spondents. prohibit hold 10 did not that article state school trust lands. He OPINION sought compelling also an order the Com- complete exchange. missioner to FELDMAN, Vice Chief Justice. (Fain) Company Fain Land & Cattle DISCUSSION brought against Hassell, this action M.J. Setting: Interplay A. Historical (Commissioner), State Land Commissioner Arizona Act Arizona Department and the Arizona State Land Constitution seeking require (Department) to the De- partment complete 1910, Congress passed the Arizona- state privately lands school trust held lands New Mexico which autho- pursuant seq. A.R.S. et rized territories to We the residents those governments. must determine whether transaction form state Act of June (ch. 310), permitted provi- this statute violates the Pub.L. No. 219 36 Stat. 557 (hereafter Enabling Act). sions 10 of Arizona of article Constitu- Sections 19 3, Ariz.R.P.Spec.Act., through apply provi- tion. Rule One 17B Arizona. jurisdiction granted A.R.S. We have under Ariz. sion of the Act Const, 5(1). purpose sup- art. certain federal land for the Arizona, formerly 1. In relief obtained action.” Rule Arizona Rules Procedure for Actions, traordinary by "special Special writs is now 17B obtained A.R.S. people and its porting public schools in the new state. The State of Arizona singular all and Congress required hereby Ari consent to trust, Enabling Act ... con- provisions of the granted zona to hold the land in cerning thereby granted the lands ... disposal only allowed of the trust land sub State, upon the terms and conditions the ject very specific and restrictive condi grants which said and confirmations tions. See Kadish v. Arizona State Land made, en- means and manner of and the 1183, Dep't, 155 Ariz. 747 P.2d — conditions, in forcing such terms and all (1987), U.S. -, 1186 109 aff'd, S.Ct. in every respect particular and the 2037, (1989). 104 L.Ed.2d 696 Enabling provided. Act aforesaid trust may only The state sell or lease hereby part made a This ordinance highest public auction land to the bidder at Ari- of the Constitution of the State of Enabling after notice. Act 28. § zona, no future Constitutional and disposal may or other No sale be made any in amendment shall be made which appraised unless the land is first for its changes abrogates manner or this ordi- value,” “true and the state receives consid- part nance in or in the whole without to, than, equal greater ap- eration or the Congress. consent of addition, praised value. In the En- Id. Const, 20, Ariz. art. Pars. 12 and 13. abling provides any disposition Act of addition, trust conformity explicitly land not substantial In the incor- framers provisions porated with its the restrictions of section 28 of the “null and void.” Id. Enabling pertaining disposal Act of trust require- The rationale behind these strict lands into article 10 of the Arizona prior Consti- grants ments is that land to other However, merely tution. article 10 is not improvidently managed, put states were rescript of section 28. The framers added mildly, Congress it and wanted to ensure provisions disposal their own of trust legislatures that the of Arizona and New example, pro- lands. For the constitution dissipate granted Mexico would not the part: vides in Kadish, land.2 See 155 Ariz. at 1185-87; State, 747 P.2d at Murphy v. 65 expressly All lands transferred and con- 338, 350-53, 336, Ariz. 181 P.2d provisions 344-46 firmed to the the of State (1947) (recounting 20, history Enabling approved abuses the Act June 1910 Congress led to insert accepted the restrictions in ... shall be the State and Act). the Enabling disposed Arizona-New Mexico held trust to be in whole part, only or in in manner as in the Enabling required Act that the state Enabling said Act and in this Constitu- people provisions and its consent to all its provided____ tion concerning granted lands to the state and Const, 10, added). (emphasis art. that an ordinance be included in the state language effectively disposi- This limits “in posi- constitution such terms as shall trust land to those authorized tions state tively preclude making the future Enabling Act the both the and state any change constitutional amendment or constitution. abrogation of the said ordinance whole in part 1911, without the consent of 10, Con- Ari- February people On result, gress.” Enabling constitution, Act 20. As a proposed zona ratified following the framers inserted the two making part thus accept- organic clauses the Arizona Constitution Valley, law of this state. See Deer ing 539, 539; Kadish, grant agreeing the land and 157 Ariz. at 760 P.2d at 487, 1185; restrictions of the Act: 155 Ariz. at 747 P.2d at Glad- states, Twenty-three including original disposal of trust land occurred abuse in states, states, enabling Congress impose do not decided to thirteen have acts. An- in these twenty-three disposal enabling other states have acts that stricter conditions for of trust lands give power authority legis- Murphy full and to the states’ the Arizona-New Mexico Act. 338, 350-51, 336, State, latures to determine the manner of trust land v. (1947). 65 Ariz. 181 P.2d disposal. frequent Because of fraud and other Farms, State, 516, legislature den 129 Ariz. adopted Inc. v. terms of Taylor 633 P.2d Grazing Act and the broader amendment. time, Congress From time to amended (codified Sess.Laws 633-34 at A.R.S. greater Act to allow (1948)). legislature ratified flexibility in management disposal prior passed all law Valley, land. Deer department that allowed the land to ex- Congress P.2d at 539. In change school trust land for federal land. passed Taylor Grazing which al- Id. enacted A.R.S. lowed a state to land located seq., 37-604 et which authorized ex- grazing within a federal district for other land, changes including of state school 865, land. Act of June ch. 48 lands, private trust for lands.3 These stat- (codified Stat. 1269 at 43 U.S.C. 315-316 §§ provision public utes have no for notice and (1934)). 1936, Congress In amended sec- exchange proposed auction. The in the Enabling permit tion 28 of the Act to ex- present made, therefore, case is to be with- tended leases and of school public out auction. 1936, 5, 517, trust land. Act of June ch. exchange portion general Stat. 1477. The attorney The formulates the fol- provided: lowing amendment May issue for our consideration: the state enter into transactions The State of Arizona is authorized to complying public without with the auction exchange any lands owned it for other requirement of the Arizona Constitution lands, public private, regu- under such permitted by when the transaction is state lations as the thereof passed authority statutes under the prescribe____ Enabling Act? added). (emphasis Id. These amendments were intended to liberalize the restrictions Impact B. of Deer on Land Ex- Valley greater on trust lands and the state allow changes manage granted by freedom to the land 2615, Enabling H.R.Rep. Act. See 74th 1. Two Levels Protection of (1936). Cong., 2d Sess. 3 In this court Valley, Deer held that 1937, In our state senate considered two school district could not condemn state concurrent resolutions have purposes. trust lands for school Deer Val- procedures amending commenced arti- 541, ley, 157 Ariz. at 760 P.2d at 541. The cle 10 of the Arizona in- Constitution to Valley Deer school district wanted to ob- changes Enabling clude the 1936 to particular parcel tain a of trust land on 12, Legis.Reg.Sess. Act. 11 and SCR 13th elementary which to build a new school. (1937). Both resolutions died on the calen- Department public The refused to hold a Senate, Legis. dar. Journal of the 13th auction an and allow the school district 1940, Reg.Sess. 788 In Arizona opportunity purchase property. leasing amended article 10 to include the Valley attempted then condemn provisions of the 1936 amendment to the proposed site under the eminent domain Enabling incorporate did but not provisions seq. A.R.S. et Const, 10, exchange provisions. Ariz. art. complaint trial court dismissed the on the (amendment 5, approved election Nov. grounds proposed condemnation 27, 1940). eff. Nov. The 1936 En- Enabling violated both the Act and the abling permitting Act amendment appeal Constitution. was changes incorporated has never been into transferred to this court to consider wheth- the Arizona Constitution. Enabling er either the Act or the Arizona commencing process without Constitution allowed a school district constitution, amending the state condemn trust land. We held that the Ari- lands,” seq. apply applies granted 3. A.R.S. et § 37-604 to "state to school trust lands to the state just today not school trust land. Our decision Act. statutory only affects this scheme so far it as highest Act did not trust land other than to the and zona-New Mexico duly property best bidder at a advertised auc- prevent acquisition of school trust tion.” 157 Ariz. at 760 P.2d at 540 condemnation, but the Arizona Constitu- Const, 3-4). (quoting Ariz. art. tion did. §§ accurately points out that the auc- We our decision in Deer based provision applies only tion section premise that because Arizona included leases, disposals, sales and all disposal state the restrictions on trust appraisal provision applies section constitution, its and because art. Thus, disposals. to all we must define disposed land be exchange and determine whether it differs “only provided in the must determine from a sale. We also constitution,” in the there exist state “two whether the word “sale” complementary protection against levels of en- Act and/or the Arizona Constitution improvident legislative state or executive exchange. compasses an disposal of Arizona’s school trust land.” generally accepted A definition of ex- 760 P.2d at 539-40. property “reciprocal is a transfer of protection Both levels of must be satisfied value, for other rather than for any disposal for of state trust land to be money a consideration.” 30 AM.JUR.2d Enabling valid. concluded that the Id. We 1, (2d Exchange ed. Property at 363 provides protection Act a minimum level of 1967); Exchange Prop- see also 33 C.J.S. land, for trust while our state constitution 1, (1942). Although 4 erty at a technical 541, goes much further. Id. at 760 P.2d at distinction exists a between sale and an plainly 541. The Arizona re- Constitution exchange property, the result is the quires disposed that school trust land legal same. Both transfer title from one notice, auction, only after and sale to fact, In party to another. the term “ex- Const, highest and best bidder. Ariz. change” may be construed to be a form of 10, Enabling may permit art. The Act 3..§ Exchange sale. 30 AM.JUR.2d disposal by condemnation. See Lassen v. 3, Property at 365-66. Arizona ex Highway Dep’t, rel. Arizona jurisdictions Courts in other have distin- 458, 584, 385 U.S. 87 S.Ct. 17 L.Ed.2d 515 guished exchanges prop- from sales of real (1967). Nonetheless, concluded we that the erty. key appears to be that an ex- express provisions prohibit of article 10 assigned if occurs no value is disposal methods of not enumerated our See, exchanged properties. to either of the Valley, constitution. Deer C.I.R., 363, 142 e.g., Gruver v. F.2d 366 541, Valley, 760 P.2d at 541. After Deer (transaction (D.C.Cir.1944) exchange is an Department suspended any further price if parties property); set no for the exchanges pending clarification of the Ashton, 148, 153, Ashton v. 89 359 impact exchanges. of the decision on 400, (1961) (where P.2d 403 the considera- property expressed tion for a transfer of Exchange Is an a Sale? in money or valued terms the transaction is Emphasizing that condemnation is a sale); a Herring Motor Co. v. Aetna Trust auction, forced sale without there- Co., 83, 29, Ind.App. 87 154 N.E. 31 & Sav. violating fore both the Act and (1926) (transaction exchange is an where Constitution, the Arizona Fain contends parties properties transfer two without exchange that an is not a sale. Because one); setting price for either Griswold explicitly by the authorized Tucker, 276, (Tex.Civ.App. 216 S.W.2d 278 expressly prohibited Act and not 1948)(exchange party passes occurs if one Constitution, argues the Arizona property property another and receives applicable that Deer is not to ex- any agreed upon in return without value changes. assigned property). commonly Valley, we said state accepted “exchange” definition of excludes “[o]ur plainly says enters, charter that the state money transactions into which ei- sell, dispose lease or of school ther one otherwise consideration furnished

592

party measuring or as a disposals, any exchange basis for the value effectively property See, transferred. constitute a sale. e.g., C.I.R., Trenton Cotton Oil Co. v. 147 F.2d argues The dissent that the transac 33, (6th Cir.1945); 36 Badgett v. United question tion in merely here was “a trans States, 120, F.Supp. (D.C.Ky.1959); property” fer of and not a sale 179, Eagleton, Gill v. 108 Neb. 187 N.W. because there was “no definite value” fixed 871, (1922); State, Hoovel v. 125 Tex. land, “money on the state used as [was not] 104, (1934). Crim. 69 S.W.2d measure,” price the basis of and no “fixed required” by law. Dissent at [was] Thus, determining the test 48-49, 51. The dissent overlooks the En whether a transaction constitutes a sale or abling requirement Act that all is whether there is a fixed appraised “lands ... shall be at their true value at which the is to be value, disposal and no sale or other thereof made—it is considered a if sale there is a shall be made for less ... than the value so fixed value and an if there is not. ascertained.” Act 1 A.R.S. Malone, Hawn v. 188 Iowa 176 N.W. (first Thus, paragraph). full before The rationale of these and dispose land, the state can of trust it must succinctly other cases is accurately by appraisal ascertain a definite value summarized as follows: equal obtain consideration at least to that parties proper- one [W]here value. The same restrictions are in the ty for price another and the or the value Arizona Constitution in article 4.§ is not money, measured in terms of the Contrary dissent, to the view of the there exchange, transaction is an but fore, that a defi property disposed of for a valuable monetary price nite value or be fixed as the consideration with or without pay- basis for the transfer. money made, ment of bargain and the measured, and the value is in terms of Exchange C. The Statutes and the Ari- money, the transaction is a sale. zona Constitution Exchange AM.JUR.2d Property § Enabling amended, of at 365. clearly permits authorize ex changes public Having of trust lands. con Under the terms Enabling of the sale, exchange cluded that the is a we must constitution, Act and our state trust now determine whether the Arizona Consti appraised prior must be any disposal. prohibits exchange procedure tution mandatory appraisal This in effect a sets created the Arizona statutes. monetary value for the trust land to be conveyed. That “true value” must be ob the Arizona enacted disposal. Enabling tained on statutory authorizing Act a framework the De- Consequently, any disposition land, of partment exchange trust land all state includ- realizing preset land, is based on ing a dollar value public private school trust for and therefore results in a sale rather than land. seq. A.R.S. et This frame- exchange.4 conclude, therefore, We Department work to carefully that an of state any proposed exchange trust land based consider of trust appraised monetary on its requirements value is a form land. of Some of this sale, though of even statutory the consideration is scheme include a determination Department received kind and not cash. Given the proposed “that the ex- places trust”; restrictions the applicable constitution on all would benefit Thus, Attorney recently 4. The New Mexico General transaction results in a sale. “[b]ecause opinion concluding issued an could not that New mandatory Mexico appraisal, possible of the it is not for Attorney trust land. The engage 'exchanges’ the Commissioner to of that, General reasoned because the Arizona- Att’y trust land for other land." See N.M. Gen. Enabling requires appraisal New Mexico Act Op. No. at 4. New Mexico’s Act land, any disposition ap- before praisal of trust and exchanges. has not been amended to allow Id. land, sets a value on the in effect future independent appraisals at least that Arizona consented to two correctly for determine the value of the land offered amendments of the act. Fain substantially equal in value principle statutory to be cites as a settled of con- more than the state land to be worth the rule that amendments to a struction exchanged; writing inter- notice to other they construed as if statute should be were counties, agencies, municipali- ested state part original act. 1A N. See SING- ties, and lands that leaseholders state ER, SUTHERLAND STATUTORY CON- exchange; publish- be affected 22.35, (4th 1985). STRUCTION at 296 ed. proposed exchanges in ed notice of all the However, ques- this case does not involve required same manner for sales of trust statutory If tion construction. land; hearing public exchange; on the provisions amended Act conveyed dedication of the land to the state concern, our we would conclude were purpose exchanged; to the same as the land validly seq. that A.R.S. 37-604 et could hearing, provisions protest, public and for applied to school trust land. We are appeal exchanges of trust land. Id. however, required, apply also to read and constitution,

Although provides many provisions this scheme our state safeguards against improvident disposal unambiguously require public which sale at land, pro- provide it does not all the auction. No constitutional authority original Enabling tections of the Act or calling empts simply by sales of trust land article of the Arizona Constitution. exchanges allowing them the state notably missing requirement Most is the accept payment in kind instead of cash. highest public sale to the bidder at auction. Thus, agree cannot the dissent’s we purpose provision of this is to ensure simply view that transfers the trust receives the most benefit property and therefore ex- possible from sale or other use of the trust empt requirements from the auction Comment, lands. Arizona’s so, of the constitution. If this were Act and the State Lands Transfer of original restrictions of the Purposes, Public 8 ARIZ.L.REV. useless, would have been for the state auction, Without sale at disposed could of the trust lands sim- have guaranteed profit trust is not the additional ply by transfers kind. Nor would such might competitive bidding. that result from interpretation comport an with the under- 540, Valley, 760 P.2d at standing Congress. Congress If had certainly It is that some- conceivable exempt exchanges intended to from the might appraised one bid more than the public requirements En- auction of the price public at a auction for a particularly Constitution, abling Act and the Arizona parcel, Farms, desirable see Gladden there would have been no need for our 520, 329, Ariz. at 633 P.2d at whereas with legislature petition Congress to to amend exchange, guaranteed only the state is Enabling 5), post any the Act n. nor {see appraised property. the value of the We amendment, Congress pass need for to the hold, therefore, applied that as to land held authorizing thereby permit Arizona to ex- trust, school seq. the A.R.S. 37-604 et desired, changes, by amending if it so its comply do not with article 3 of the constitution. Arizona Constitution. Because the consti- tution all sales to be at by consenting Nor do that to we believe auction, and because an made for Act, provisions Enabling the the preset appraised monetary value amendments, presumably people to its sale, exchanges permitted form of no Congress of Arizona intended to cede to by the Arizona Constitution. power to amend the state constitution. suggestion Fain’s that amendments to the Effectively D. Does the Enabling Act should be construed as Amend the Arizona Constitution? they part original were of the act and argues by consenting part Fain therefore of the Arizona to Constitution original Enabling effectively grant Congress pow- the terms of the would delegation er. Such a directly conclude, therefore, con- We that the amend- provision flict with the people that the of ments to the Act have not effect- power the state propose reserve the ed an amendment to the Arizona Constitu- amendments to the constitution and to en- provisions tion. The textual of the Arizona amendments, reject act or indepen- those prohibiting except by pub- Constitution sale Const, legislature. dent of the art. lic auction are still effect and must be pt. 1(1). Surely, if applied, the framers de- unless the amendments to the En- prived legislature the state’s power abling Act can be preempted said to have constitution, to amend the they state’s contrary provisions can- of the Arizona Con- delegate have intended to it to Con- stitution. gress. Nor would such an intention have Preemption E.

been consistent with our founders’ concept relationship. Leshy, federal-state argues next that even if we Making Constitution, the Arizona interpret the pro Arizona Constitution to (1988). 20 ARIZ.ST.L.J. 1 land, hibit of school trust such preempted by restriction is the 1936 amend Congress, We are mindful that the set- ment to the correctly Act. Fain trust, granted permission tlor of the has points out that state constitutions state, trustee, permit for the Const, preempted by federal law. U.S. changes on legislature such terms as the (“This Constitution, art. cl. 2 and the proper. determines are We are mindful Laws of the United States which shall be also that has enacted a stat- in pursuance made thereof ... shall be the permits ute that exchanges to be consum- supreme any Thing Law of the Land ... only many mated designed conditions Constitution or Laws of State to protect interest. So far as this the Contrary notwithstanding.”); see also shows, record exchange proposed Developments Interpre in the Law—The agreed upon Fain and Department tation Rights, State Constitutional complies with the respects. statute in all It (1982). HARV.L.REY. The su tempting, course, under such condi- premacy clause mandates that federal law tions, approve legislative scheme. preempts state law where there is an actu However, principles jur- constitutional al conflict between the two. R. ROTUN isprudential prevent considerations us from DA, NOWAK, YOUNG, J. J. TREATISE ignoring plain, unambiguous text of ON CONSTITUTIONAL LAW: SUB- our constitution. 12.1, AND STANCE PROCEDURE The framers of our constitution were not required original to insert provisions previously acknowledged We have constitution, inAct the state Enabling superior the Act is to the Arizona consciously but chose to do so. When the See, Radish, e.g., Constitution. 155 Ariz. people of accepted Arizona voted on and 486, (“Because at 747 P.2d at 1185 federal constitution, the provisions with the of the supreme field, law is in this neither this Enabling included, Act they obviously in- court, legislature, nor the people nor the adopted tended the words so to become provisions alter or amend the trust part organic of the law of this state. In- contained in Enabling the Act without con deed, delegates the Congress, territorial to gressional Farms, approval.”); Gladden Morrison, Cameron, Robert E. Ralph H. 518, 327; 129 Ariz. at 633 P.2d at Murphy, Hubbell, and J. Lorenzo all testified to the (“The 181 P.2d at 340 senate committee that people of this Arizona Constitution cannot be inconsistent approved original provisions state of Act.”); Enabling with the Camp Boice v. Enabling Act in their entirety. See bell, 424, 428, (1926). 30 Ariz. 248 P. 35 Report of Beveridge, Senator Chairman of (Senate However, the Committee Comm, case, direct, on Territories in this no actual Territories, on Report 61st conflict exists between the Act Congress, Session). Second By the Arizona Constitution. includ- ing the disposal restrictions on of trust tions article of our constitution is the constitution, land in its Arizona does not same—the restrictions do not frustrate the require an act that federal law forbids. purposes of the Act. ROTUNDA, 12.6,

See R. supra, at 623. rule of The cardinal constitutional merely provides It protection additional construction is to follow the text and the lands, the trust may legitimately which it framers, intent of the it can where Id., 1.6, (“[S]tate do. at 31 courts are See, e.g., County Apache ascertained. of always grant free to individuals more Mills, Inc., Lumber Southwest rights guaranteed than those by the Consti- 323, 327, (1962) (“The P.2d tution, provided [they] do so on the basis of governing principle of constitutional con law.”). suite give struction is to effect to the intent and Generally, without clear evidence of con- purpose of the framers of the constitution gressional intent, a federal law will not provision al people adopted and of the who preempt regulations. Id., 12.6, state at it.”). us, In the case before we are com leg- 623. The amendment and its pelled provisions to conclude that the history suggest any islative do not intent applied. Arizona Constitution must be part Congress preempt Ari- statutes, A.R.S. 37-604 to can §§ By zona’s constitution. passing the 1936 constitutionally applied not be permit amendment, Congress merely consented to exchange—of sale—even it be called an removal of the against restrictions school compliance trust lands without change land, of trust require but did not provisions of article 10 of the Arizona Arizona to pass amend its constitution or to Constitution, including provisions those legislation to exchanges.5 allow The lan- require section 3 that that the state land be guage of the permissive amendment placed auction and sold to the only. It states that Arizona “is autho- highest bidder. In order for Arizona to permit rized” to exchanges under such legitimately permit exchanges of school legislature rules as may provide. Act land, trust it must amend the state consti 5, 1936, of June ch. 49 Stat. 1477. tution, setting as well as enact a statute grant Because the power in the ex- proper forth the procedure. permissive, amendment is no actual reasons, foregoing For the we hold that conflict exists between it and the Arizona 1936 amendment to the Constitution. preempt provisions does not of article Moreover, provisions of article 10 do 10 of the Arizona Constitution. “stand[ ] n as an obstacle to the accom-

plishment and execution pur- of the full Validity F. Exchanges—Constitu- of Past poses objectives Congress.” Pacific tional Nullification Gas & Elec. v. State Energy Resources Comm’n, Although validity past exchanges Conservation & Dev. 461 U.S. 190, 203-04, time, is not directly 103 S.Ct. before us at this argues L.Ed.2d purpose that a decision this court that disposal Act restrictions on lacks the au- constitutional thority land is to ensure that permit exchanges the trust re- of school trust possible ceives the most benefit from the land could potentially grave have ramifica- purpose trust lands. The of the restric- regarding tions the past status of ex- Congress any 5. Nor would have had applies only reason to that amendment to the state of (cid:127) require permit exchanges. Arizona to 5, 1936, 517, We can Arizona. See Act of June ch. 49 program objective conceive noof federal Stat. 1477. It does not even extend to our sister by requiring would be furthered the state of state, which also was covered the Arizona- permit exchanges. Arizona to The amendment Enabling Att’y New Mexico Act. See N.M. Gen. Enabling pursuant request Act came to a 4, Op. Certainly, Congress No. n. 1. if permitted from the state of Arizona that it be require permit had intended to Arizona to Ariz.Sess.Laws, exchanges. effect 1933 H.J.M. changes appropriate it would have used lan- policy No. 8. No national is furthered or even guage. Act; Enabling affected the amendment to the 596 Prospective Appli- ordinarily retroac- G. Retroactive Versus

changes. Although cation of this Decision of this decision could be left tive effect case, we believe determination in a future given opinion an will be Whether for this court to cloud it would be unwise only policy is a prospective application of land con- the title to thousands of acres this court’s discretion. See question within exchanges. veyed reconveyed past 490, Co., 152 Ariz. Ins. Hawkins v. Allstate the issue of re- We must therefore decide 1073, 1088, denied, 505, 484 733 P.2d cert. troactivity juncture. at this 874, 212, 177 98 L.Ed.2d U.S. 108 S.Ct. Arizona, (1987). speci otherwise In unless 10, per- Article 1 of our constitution fied, operates opinion an in a civil case lands disposition mits of school trust retroactively prospectively. as well Enabling provided by manner 147, 160, Court, Superior 157 Ariz. Law v. the Arizona Constitution. What Act and (1988); 1135, Lighting P.2d 1148 Mark 755 disposed land is of in a the result trust Co., 155 Supply Elec. Fixture v. General provisions of the way that does not violate (1987); 27, 30, 85, P.2d 88 Haw 745 the Arizona Enabling Act but does violate 1087; 504, kins, Ariz. at 733 P.2d at 152 Section 28 of Constitution? 513, 520, Raybuck, 136 Ariz. Brannigan v. provides: 213, (1983); 667 P.2d Chevron Chem. sale, lease, conveyance, or con- Every Court, Superior v.Co. concerning of the lands tract of Chevron 641 P.2d confirmed, not hereby granted or ... Chemical, three-part approved a test we conformity with made substantial re presumption this determine whether Act shall be null and provisions of this troactivity overcome and a deci has been void, any provisions the constitution only. applied prospectively sion should be contrary or laws the said State at 1280. The Ariz. at 641 P.2d notwithstanding____ are: factors to be considered added.) (Emphasis Article establishes a 1. Whether the decision important an Arizona Constitution contains by overruling clear legal principle new difference; provides: it deciding . precedent byor and reliable lease, was not foreshad- sale, con- issue whose resolution Every conveyance, or owed; concerning any of the lands tract of or not made in

granted or confirmed ... application 2. Whether retroactive provi- conformity with operation substantial or retard will further Act], shall history, pur- sions rule, considering prior [of rule; null and void. pose, and effect of the application 3. Whether retroactive added.) (Emphasis inequitable re- substantially produce will do provisions of our constitution These sults. not nullify dispositions of trust land all 30, 745 P.2d at 155 Ariz. at Lighting, Mark article 10 of compliance in strict with made have been termed 88. These factors only dispositions our constitution. The reliance, inequity factors. purpose, and those that are nullified Hawkins, P.2d at comply with the that do not Enabling Act as amended autho- Act. The always clear has not been legislation providing The case law pass Arizona to rizes prospective must favor has all factors exchanges of trust land. Arizona whether applica- Therefore, retroactive exchanges completed application, or whether done so. single fa- inappropriate if a factor seq. comply tion is pursuant to A.R.S. 37-604 et application. Light- Mark prospective are not vors and we 89; Haw- Ariz. at 745 P.2d at ing, constitution to by the text of our required kins, 733 P.2d at exchanges. validity 152 Ariz. at past nullify issue, Law, However, in we settled exchanges must turn on the completed reasoning decision of whether retroactivity opinion. question of the of this “[t]he prospective- Newspapers, Phoenix opinion applied an will 560 P.2d Where a deci- three ly balancing a of these involves produce court could a substan- factors,” sion of this concluding that our decision and tially inequitable applied result retroac- prospective effect in that case should have tively, may injustice avoid the or hard- we only, based on two of the three factors. prospectively the decision ship applying 157 Ariz. at 755 P.2d at 1149-50. Law, only. 755 P.2d See equities on this 1. The Reliance Factor at 1149. The balance tips strongly prospective in factor favor case, deciding issue In this we are application only. Several hundred land ex- certainly whose resolution was not fore- changes completed have over the been engaged shadowed. The state has in land years, affecting thousands of acres. If exchanges many years under the as- retroactively, opinion might in- applied this sumption statutory that valid authorization great hardship many peo- flict innocent Although there have been other existed. ple, perhaps disrupt economy dealing exchanges of state court cases impossible the state. It would be to undo lands, the issue of the constitutionali- exchanges transpired all the land that have ty exchanges of such did not arise. It was put everyone original posi- back in his Valley not until our decision in Deer tion. assumption question. this was called into Therefore, in Giving our decision this case was not consideration to the above clearly factors, foreshadowed Arizona caselaw we conclude balance decided Valley, weighs heavily limiting before Deer and this factor in the ef- favor weighs against operation prospective applica- retroactive of our fect of this decision to holding in Therefore, exchanges this case. accomplished tion. compliance fiduciary with the state’s ob- Purpose

2. The Factor ligations and with the 1936 prior amendment to the Act and case, entirely In this it is not clear wheth- opinion to the of the date Deer er weighs the balance on this factor are not void. prospective application only. favor of Es- sentially, prin- our decision is based on the CONCLUSION

ciple explicit that the terms of the Arizona Applying Constitution must be followed. The Arizona limits the dis- Constitution this retroactively impair decision would not posal solely of state trust lands to the purpose might of the rule and further provided methods Act and purpose by deterring its violation. On the the Arizona Constitution. As we stated hand, statutory other authorization for provides a Valley, exchanges, although passed without protection of state trust minimum level of proper authority, constitutional contains provided heightened land. has significant disposal, restrictions on all of incorporating protection by level of the re- designed which are to fulfill the state’s disposal directly strictions on of trust land fiduciary responsibility. appli- Ketroactive No into its constitution. authorization cation of this decision would not violate the exchanges of trust land exists in the Ari- Congress ex- trust because has allowed zona Constitution. amendment case, changes. purpose In this Enabling Act that allows prospective rule is not affected its incorporated school trust land was never application, retroactive and the balance on An into the Arizona Constitution. this factor is neutral. predetermined, approved dollar at a value is a sale. The Arizona Constitution Inequity 3. The Factor requires that all sales be made at injustice Therefore, This factor focuses on the auction. no constitutional au- hardship thority that would result from retroactive exists for the to autho- result, application exchanges. rule. rize find that Peagler new As we 598 the 1910 statutory exchanges lowed as “sales” under regulating scheme

the include in 1936 to found 37-604 to Act until it was amended state land in A.R.S. §§ in is a Implicit to amendment applied is as them. that 37-607 unconstitutional Congress the recognition by that trust land. school exchanges. The 1910 did not Act of allow consequences Because of the that severe Constitution, contains sub which applied opinion result this were would En wording the 1910 stantially identical to opinion retroactively, we hold that this Act, amend abling and which has not been applied only, from prospectively shall be to to the 1936 amendment ed to conform decid- on which was the date Deer not also does therefore ed. indi exchanges. persuasive allow Further cation that Arizona Constitution C.J., MOELLER, J., GORDON, and explicitly in to have to be amended order concur. exchanges in the fact is found authorize CORCORAN, Justice, concurring in Montana have North Dakota and that both part: allow ex their constitutions to amended conclusion agree majority’s I with the authority being federal changes given after exchanges for that authorization “[n]o of those exchange trust lands. Neither to lands exists in Arizona Constitu- state exchanges simply recognize chose states to in tion,” that I concur and for reason the ru constitutionally under as authorized are un- holding that statutes “sales,” requires public and neither bric as to school trust applied constitutional state land. exchanges auctions for not, however, agree I do with lands. background, I do not believe Given this reasoning utilized to reach by the exchanges logically can included be reason, result, I and write for that Be- of “sales.” a constitutional definition separately. disposal of limits cause the constitution provided state lands those methods Exchange 1. An is Not a “Sale” Constitution, both the Act and Authorized the Constitution. “sale,” exchange is and is not if an not a conclusion disagree majority’s with the constitution, provided for in the otherwise an is on an that because based au- legislature had no constitutional value, establishing monetary it appraisal statutory pro- scheme thority to enact meaning of art. is a “sale” within the exchanges viding for in A.R.S. §§ auction. 3§ through applied as to school in which pointed has out similar situations provision 10 of our No of article lands. distinguished courts have between exchanges. Fur- authorizes constitution See, changes e.g., and sales. Watson thermore, requires that clearly art. Caldwell, 160 Fla. 35 So.2d 125 only as disposed land is to state trust be meaning The semantic battle over En- provided both the constitution “sale,” however, not, my the word exchanges in abling Act. Authorization for opinion, dispositive of this issue. alone, analogous Enabling Act without well, is in the as authorization constitution The best indication that inadequate. Valley. simply in the context of a “sale” constitutional not empowered therefore not al was 10 is that were article board, interests, may, Exchange approval of said years Amend- before the 6. Four Dakota, ment, Congress exchanged Mon- authorized North for coal mineral inter- be lands and tana, Washington States, state trust North the United the state of ests of Dakota, 7,May No. Act of Pub.L. lands. See any municipality county thereof or (Ch. 172), and Mon- 47 Stat. North Dakota legislature may provide____”); Mont. as the Const, subsequently con- their state tana both amended X, (“Any public art. provide exchanges. See N.D. stitutions Const, land, exchanged any private, other IX, ("Any lands and art. of said and, value, closely possi- equal as which is of universi- lands controlled the board other ty ble, area.”) equal in lands, including state coal mineral and school result in a trans- exchanges, which I tion of challenged legislation. believe enact the interest, the consti- simple from fer of a fee constitutional issue this is the crux of the disposals or to “other” references tutional in this case. dispositions. Exchange An is Not an “Other” 2. although the I that conclude Disposal Disposition Authorized by amendments authorized statutes are by the Constitution. Act, constitu- Enabling they are not to the however, argues, that even

Fain also legislature The there- tionally authorized. the con- exchanges are not included within statutory a authority to enact fore had no “sales,” they are meaning of stitutional exchanges of state providing for scheme language by the constitutional authorized lands; thus, those statutes school trust “any dispo- referring disposal” or to “other void. of article 10. in various sections sition” Decision. Majority again by the 3. argument is contradicted

This Effect Enabling Act did not fact that the 1910 attorney gen- majority notes that the The any “sales” or as exchanges as either allow phrased issue in this case eral has disposition, as evi- disposal or “other” follows: subsequent amendment by its denced exchange trans- state enter into May the (cid:127) logical A more 1936 to include them. pub- complying with the actions without meaning constitu- planation of the of these Arizona requirement lic of the auction disposals or to “other” tional references per- is when the transaction Constitution by examining the dispositions is derived under the by passed state statutes mitted Enabling the 1910 overall scheme of both authority of the Act? For ex- Act and the Arizona Constitution. part relies in on this court’s to “the ample, the Act referred answering this Valley decision in Deer products” of the natural use thereof However, I negative. question in the granted. Ch. lands literally apply not so some would 557, Disposi- 36 Stat. language Valley of Deer broadly worded is mentioned products” tion of “other also exam- in this case. For the issues raised by which notice art. the constitution ple, holds that publication “any sale or contract for sell, not says that the state “plainly product or other natural sale of timber lease, trust dispose school or otherwise Additionally, art. of such lands.” highest and best than to the land other “timber, products and other refers to public auction. duly at a advertised bidder appraisal requirement. land” in its Const, art. 3-4.” §§ “disposition provided has added). (emphasis 760 P.2d at 540 by requiring that products of state lands” However, reading of sections 3 “plain” stone, products, gravel, and sale of “timber public and 4 of article 10 indicates upon products lands other only for the “sale or required auction is must conform to belonging to the state” lands, ap- while an lease” of state the constitution. Act and both dispo- praisal required for “sale or other Attorney 37-481. The Gener- See A.R.S. § that the Deer To the extent Val- sition.” dispositions these in 1979 that opined al 4 into conflates sections 3 and ley decision land, than sale of the products, other requirement unjustifiably broad subject auction re- not were disposals required for all auction 10, 3, but could not be quirement of art. land, lease, not just do not sale appraised less than their disposed of for plain lan- supported it is believe 179-166. Given Op.Ariz.Att’y Gen. value. guage of article appears it that constitu- background, this exchange is analysis that an my Under disposals apply references to “other” tional therefore, “sale,” if an fee not a involve less than a disposals constitutionally authorized I therefore were otherwise interest in the land. simple amendment, pub- require it would infer a constitutional authoriza- would not lie auction under the present wording of reasonably construe the constitution article 10. majority’s analysis, Under the to conclude that an is not a however, exchange because an is a “sale” “sale,” and is not constitutionally otherwise already constitutionally authorized, that is authorized. What is needed is a constitu- all necessary remedy that would be to authorizing exchanges, tional amendment infirmity present constitutional stat- statutory requirement public not a of auc- utory scheme legislature would be for the challenged legislation. tion to validate the to exchange reenact the statutes with the requirement public that a auction be held Statutory 4. Provisions Effect of exchange before an could be made. Such a Regarding Sales. statutory enactment would render the ex- I am also concerned about how the ma- change compliance statutes with the re- jority decision will affect the scope of other quirement that “sales” be made after statutory provisions. exchanges If public auction, and no constitutional constitutionally categorized “sales,” as do authorizing exchanges amendment applicable the statutes ap- to “sales” now necessary. be I contend that this leads to ply exchanges? example, to For “void requirement an absurd result: of hold- statutorily provided sales” are for as fol- ing public exchange a auction for an lows: impossible implement. to A by sale made mistake or not accord- agrees When exchange the state to land law, fraud, by ance with or obtained private party, with a specif- it does so for a purchase void the certificate and is- purpose relating ic unique to the nature of sued thereon is void. The holder of the the land it acquire, wishes to not for the certificate shall surrender it to the state general purpose obtaining highest department. shall, department monetary equivalent land, for the as is the fraud, except in case of refund the mon- Thus, case require sale. to the state ey paid thereon to the holder of the cer- forego to desirable of state tificate, compensation and make specific private land for a parcel with a holder for the actual value of the im- unique benefit to the state because some provements placed by on the land private other party has offered an ex- purchaser. The value shall be deter- private higher ap- land with a department paid mined from praised monetary value would be to defeat general fund. specific purpose exchange. of an It state, instance, would force the in every majority’s A.R.S. 37-249. The conclu- auction, first sell its own land at today’s applies sion that decision only pro- attempt purchase, then pro- with the spectively from the date of the mandate in sale, ceeds from that the specific property Valley suspend does not opera- attempted it would have to obtain tion statutory remedy of this for a void role, change. purchaser In a the state’s sale, because that issue is not even ad- bargaining position with the seller of the case, dressed the context of this which hopes that the state to obtain incomplete involves an transaction. If an always not be advantageous as if the sale, however, exchange is not a the above state were able specific land in voiding completed statute transactions return. An auction is would apply past exchanges, and this oxymoron, certainly not in- within the issue would not need to be resolved. tentions of the framers of either the 1910 Retroactivity Analysis. Act or our constitution. points previously This court has out that since when the held that these provisions should first enacted the “reasonably statutory con- strued, in object grant, allowing exchanges, view of the scheme these “30 such purpose and the exchanges of the restrictions.” have completed involving State been 170,000 Conway ex rel. Department, nearly v. Land acres of land.” Fain also correctly points 156 P.2d out that validity “the is un- exchanges directly statutory conclusion that the scheme past these is not before language the Court.” Other than references to constitutional under the clear brief transactions, that an past parties My this case conclusion the constitution. appli- no did not brief the issue of retroactive is not a sale involves new holding overruling prior prece- cation of a are un- interpretation or Additionally, constitutional. the Deer application Val- of a hold- prospective dent. A ley decision did not address the issue of its ing is unconstitutional on that a statute application. own retroactive wording of the clear of the constitu- basis tion, effect, results in this court’s sus- Neither this case nor Deer pension limits on the of the constitutional issue, presents retroactivity nei- because disposal of state land from 1971 to completed exchange. ther case involved a when the Deer case was decided. presented In this case the court is not question any previous whether to undo However, I too believe that there au- exchange, Department because the did not thority today’s to reach the conclusion that thus, approve application; Fain’s no ex- applied prospectively, decision should be In change Valley, occurred. the su- First, although the for several reasons. perior court dismissed the district’s school disposals provides constitution that made site; proposed action to condemn a school “null violation Act shall be merely this court affirmed the trial court’s void,” provide dispos- it does not so action, dismissal of the and also did not comply als that with the Act but need to address the voidness of a land Thus, although violate the constitution. completed transaction in reliance on an in- legislation, we must void we are statutory valid scheme. constitutionally compelled to void all trans- Because the retroactivity issue of the actions that occurred reliance today’s directly decision is not before this legislation.

court, I would not address it until a case Second, prospective-only application involving arose parties interested who based on reliance on an unconstitutional authoritatively argue could Al- the issue. supported by statute is other cases in ternatively, if majority must address great which economic harm could occur to case, the issue in the context I of this application. the state from a retroactive preferred ordering would have supplemen- that, recognized This court has at common briefing parties tal from spe- these on the law, unconstitutionality a declaration of However, retroactivity. cific issue of I will however, complete effect; had retroactive retroactivity comment on the issue because the rule that an unconstitutional statute has chosen to decide it. inception was void from its and thus con necessarily disagree do not with the operative rights ferred no “has been con majority’s retroactivity analysis utilizing time, siderably eroded with ... and is not Oil, 3-prong test from Chevron in Arizona.” law Shreve v. Western adopted by this court in Chevron Chemi- 215, 217, Corp., Coach 540 P.2d cal, that, although to conclude the ex- 687, (1975) (refusing to follow the unconstitutional, change statutes are our “Blackstonian view” set forth Norton v. today decision applied only prospec- will be 425, 442, Shelby County, 118 U.S. 6 S.Ct. tively. majority’s analysis that an ex- 1121, 1125, (1886)). 30 L.Ed. 178 This court clearly is a “sale” is a new and recognized has also that citizens are enti interpretation novel constitutional rely validity tled to on the of a statute until hardly by prior could be foreshadowed case repeal judicial its or a declaration of its retroactivity law. The cases cited unconstitutionality. example, For we have however, largely majority, deal with com- appellant held that an who relied on a principles changed mon law have been vetoed law before the veto was found un by judicial decision. constitutional could not be liable for monies My retroactivity concern is that such a that would have been due had the law been effect, analysis appropriately apply my height does not because “it would be the injustice penalize spective application great for the state to ... one hard- “where obeying ship of its long citizens for a law which on result if from contin- will caused adopted face legal right.” its was in a constitutional ued failure to exert a South- manner, was, County, but which after such obedi- ern Co. v. Cochise Pacific citizen, (1963). ence held to be unconstitu- Ariz. 377 P.2d State, tional.” “non- pointed appellant’s Texas Co. v. The court out that 254 P. in delaying a later action” to seek discontinuance case, reasoning practice this court relied on that of a settled in the “culminates conclude: present govern- threat to the existence of grace itself. The does not ment State’s nullity

However desirable the total doc- to its extend own destruction.” Id. As a trine of from Norton the stand- “great hardship” result of the economic point symmetrical jurisprudence it state, apply the court refused to reality. does not conform to For a stat- retroactively. decision ute, legislatively judicially until cised, operative is an fact which cannot case, appeals ap- In a later the court of ignored. presumes every be This court plied analysis holding this to its that a legislative indulges act constitutional and property system valuation of assessment in every intendment in favor of its validi- illegal was and unconstitutional. See Bade ty____ penalties No should be visited Drachman, 4 Ariz.App. 417 P.2d 689 upon the citizenry doing likewise. (1966). The court declined to make the Campbell, Austin v. 370 decision prospective only, reasoning as fol- P.2d lows: modifying overruling If we were or a

Although these cases involved whether a previous decision, judicial or if we were citizen who relied on an unconstitutional ordering complete revampment a of the penalized by law should be criminal or civil rolls, process assessment a that would reliance, prosecution for that I believe the require accomplish, substantial time to reasoning applies analogously to this situa- request prospective application] this tion, participants [for where in at least 30 land doing would have some merit. areWe exchanges provisions relied on the neither____ rights When the of a tax- presumed statutes that are to be payer by explicit are established statu- valid until this court holds otherwise. To law, case, tory question as in this we our subject cloudy those transactions to titles authority deny postpone relief, exchanged require on the land or to stability unless the the tax- participants exchanges to reverse the after financial of ing body is threatened destruction with period penalize every- a of time would to inas the Southern case. We are one involved transactions that were Pacific granting not convinced of relief meant to benefit the state. taxpayer to the in this case will substan- retroactivity analysis used several impair integrity tially the financial of involving validity taxing older cases this, county either or this state. regulations applied statutes or can be Bade, Ariz.App. at P.2d situation, challenged this where the statute added). (emphasis clearly defective and is not the result of case, I judicial interpretation. apply a novel In one these standards to this However, taxing practice briefing this court found that con- case. without further “willful, systematic by adversely parties, and inten- affected I find it diffi- stituted law”; however, cult the exact extent eco- tional violation of the be- to determine remedy the court also found that the nomic harm that would occur to the state cause refunding appellant’s parties by application and similar claims or other retroactive if solvency many today’s “threatens the financial decision. But we must decide state, here, taxing particularly retroactivity I units of the those issue would con- areas,” undeveloped signif- in rural and the court cede that could take notice of the we pro- repercussions icant concluded it could make its decision adverse economic property, it is price is set for either required to If no state were would result exchange; if each is but exchanges them as sales said to be undo the and redo in mon- paid requisite public auc- valued and the difference with the would, tions, anyone pro- ey, it is a sale. assuming that could, cause bring an action to cedurally Gruver, at 366. 142 F.2d potential great chaos. Based on this such a sale of held that The court Gruver I hold that to- hardship, would economic price,” a “fixed requires only not day’s applies only prospectively. decision in cash. Id. paid difference but also the Although agree I that the decision do price” and no Fain, is no “fixed there Valley date the should run from the Arizona law cash difference. mandated, that distinction decision was exchanged must be lands to be that state light practical no difference makes lesser “substantially equal value or val- Department has sus- fact that the Land applicant.” the land offered ue than pended since Deer all 37-604(C)(l). appraisal of A.R.S. § decided. was “fixed mean that there is a land does not price.” cites to Cor- The court Gruver Issues. Other which states: pus Secundum Juris agree that the 1936 However, technically speaking the words Act do not amendments express logically “sale” “exchange” and Constitution, effectively amend the Arizona transactions. It has been stat- different Act does not and that specifically or broadly ed either substan- preempt the Arizona Constitution because there is a transfer of tially, that where anything that the consti- it does forbid money than property property for other in tution allows. therefore concur exchange, is an and that the transaction majority. result reached money the transfer is for where sale, is a and this is the transaction CAMERON, Justice, dissenting. meaning usually ques- when a ascribed authority sell is in- power tion of I. volved. majori- agree I dissent. I do not with the C.J.S., Gruver, (citing 33 142 F.2d at 366 exchange simply ty that an of land is a sale (1942)). Property, at 5 Exchange of assigned because a value is to one or all of in is a “transfer of The transaction meaning properties. plain I believe the for property property,” not a transfer “exchange” of the word is the same as Therefore, an money. the transaction is Statute) (Exchange used A.R.S. 37-604 exchange. in the Act. majority The next cites Ashton v. Ash (1961), ton, 359 P.2d II. is a sale proposition that a transaction exchange The states that “an of price is mentioned the transfer assigned either only occurs if no value is case, Ashton, property. a divorce involved exchanged properties.” majori- The concerning of tax issues the transfer stock ty support nine cases in of this state- cites other; party to the it was not a from one I do not these nine cases ment. believe Ashton, property real matter. assigning a support proposition Apparently, 359 P.2d at exchange into value to land transforms an assigning a parties were concerned with a sale. property. The Arizona dollar value Supreme held that this was a tax- Court In v. Commissioner Internal Gruver of Moreover, Cir.1944), exchange. we note that Revenue, (4th free 142 F.2d 363 a tax purpose of taxation can case, definitions for the Appeals the Fourth Circuit Court deceiving applied when to transfers the issue of whether a transac- be addressed legislation in tax property an and stated: real because tion is a sale or unique matters is legisla- personal and reflects the case of a transfer property tive intent to raise personal property, revenue. for other or of real property property. for other real Ashton, general this court stated the (quoting 185). Id. 23 C.J. Where no defi- rule that a sale is “where the consideration set, Fain, price nite value or is as in an property expressed for a transfer of exchange occurs. money valued in terms and treated as a specified money.” Ashton, amount of Tucker, In Griswold v. 216 S.W.2d 276 Ariz. at (citing 359 P.2d at 403 33 (Tex.Ct.App.1948), buyer a traded his 1942 Exchange 4) (em- Property C.J.S. 1 at plus truck some cash for a 1947 model added). phasis proposed The Fain transac- buyer purchased truck. The believed he a tion not a sale because an 1947 model when in fact he was sold a 1946 require specified land in does not money. model buyer worth less The sued amount in consideration. See A.R.S. warranty. seller for breach of exchanged 37-604. The lands to be court held that the transaction was a sale required only substantially equivalent to be stating: to each other. Id. recognized There is a difference between an and a sale. test seems

In Herring Motor Co. v. Aetna Trust & party passes if one property his Co., Savings Ind.App. 154 N.E. 29 another and turn receives from the (1926), group the seller delivered a of shock property having latter his without an consignment. buy- absorbers on When both, agreed placed value it is deemed dispose er products, was unable to hand, exchange. Upon the other buyer agree- and seller entered into an although transaction is a sale made for agreed ment under which the seller to take something money, other than where the back the shock give absorbers and other property each is transferred at an merchandise in buyer as the agreed or market value. This is likewise Upon receiving ship- needed it. notice of true if the of one is transferred said, ment of the shock absorbers the seller agreed price part to another at an shipment “Just as soon as this comes we payment agreed total cash value you per will send a credit memorandum our of the other. agreement, you for which are to take products covering wheels or other the en- Id., at 278. The in transaction Griswold Motor, Herring tire amount.” 154 N.E. at involved two trucks with definite mar- two 31. This was held to abe sale and not an specific ket one values and cash amount. exchange. I disagree do not with Herring Fain, It therefore was a sale. In we deal However, in Motor. the facts Mo- Herring parcels equiva- with two of land with an distinguishable tor are from the facts in lent, Again, agreed but unnamed value. no Fain. upon placed upon dollar value was either Fain’s the land or State’s land. in Herring

The court found that Motor there majority was a “definite value fixed the The in asserts that a transaction parties money on the shock absorbers returned.” which is used as the “basis for value,” however, A measuring Id. “definite property was the value of the trans- present Arizona, exchange. Fain. The State of majority via ferred” is not an Commissioner, State Land stated then cites I actually four cases that believe private that the “offered land and the se- pro- contradict their contention that substantially equal lected state lands are in posed transaction in is a sale. Order, value.” Decision Applica- majority and first cites Trenton Cotton Co. Oil Exchange, Revenue, tion to 61-92301. As the court v. 147 Commissioner Internal (6th Cir.1945), in Herring Motor noted: F.2d 33 in which the court stated: property prop- is transferred for [W]here

erty, price being upon piece, no set “Exchange” precise import, either is a word of exchange, meaning the transaction is an and the giving thing of one for an- recognized other, distinction requiring has been in the transfers to be kind, pretenses City Ser- excluding transactions into false shares and money City as the consid- which enters either Preferred Stock for 300 shares of vice eration or as a of measure. Although basis this Service Common Stock. issues, criminal law case involved course, proposed land Id. at 36. Of court stated: Hoovel using transaction Fain does not involve “exchange” money as a basis of measure. The Fain The word has well-defined only proposed trans- meaning transaction involved should construed and and property. fer in of real accepted kind given generally the usual and “ giving meaning. ‘Exchange’ means the States, Badgett F.Supp. In v. United thing To constitute of one for another. (D.C.Ky.1959), the court noted: sense, legal in the the mutu- “exchange” given The word is to be its kind, al transfers must be in ordinary meaning. pre- It is a word enters, money transaction into which ei- import meaning giving cise of one ther as the consideration furnished another, thing requiring for the transfers party measuring one as a basis for excluding to be in kind and transactions transferred, thing value exclud- money into either con- which enters as a (Citation omitted) ed.” (Ci- sideration or as a basis of measure. omitted) An “exchange” recip- tation is a This, Id. 69 at 108. case cited S.W.2d property rocal transfer of as distin- majority, support does little to the con- guished property from the transfer of Fain, tention of a sale in In Fain. money only. for a consideration parties agreed to a “mutual transfer” of property money in kind no involved proposed Id. at 126. The transaction exchange. which constitutes an “reciprocal prop- Fain is such a transfer of erty” opposed to a sale. Finally, cites v. Mal- Hawn lone, (1920), Iowa 176 N.W. 393 Eagleton,

In Gill 108 Neb. proposition (1922), that a transaction is a N.W. 871 the court considered a sale if transfer of 68 there is a fixed value and that a sale acres of land valued at $5100 occurred in Fain plow a tractor outfit worth because $1000, in cash and a note. The a determination of the land’s “true value” $1600 $2500 Supreme (correctly, prior disposition. Enabling Nebraska Court held believe) Hawn, however, this transaction was a sale the court noted: because the land was transferred at a fixed determining The test for whether there agreed upon price for a set sum of has been a sale or money and a tractor outfit worth a set price there whether was a fixed price. Id. 187 N.W. at 873. The court which the to be made. If was noted: price, there was a fixed the transaction exchange

At common law an of land was sale; not, (citation exchange, an grant equal interests, a mutual not omitted) value, in necessarily dignity, but in as a Hawn, Fain, at 395. In there 176 N.W. fee, fee for a the one in consideration of price any was no fixed of the land other, the and differed from a in sale transaction, proposed involved in the nor money price that no or value was fixed price required by was a fixed either A.R.S. placed properties on either the 37-604 the Arizona As or Constitution. § changed. in eight by majori- the other cases cited added). Fain, (emphasis at 872 In Id. we ty, support majority’s Hawn does not dealing proposed grant with a mutual contention that Fain involved a sale of land equivalent interests in no land with with the state. price.

fixed III. State, In Hoovel v. Tex.Crim. best, (1934), majority argu- S.W.2d 104 the defendant was tried At can make the ment in convicted theft. His crimi- that the transaction Fain is like a however, exchange This, nal consisted of ignores specific acts an under sale. use of exchange exchange by the word in both the En- ceived in not Board was 37-604(A). abling of, equal Act and A.R.S. We disposed value to the lands plain meaning will use the of a word in a slight- so the school fund not in was appears statute unless it that a or different depleted. est contrary meaning was intended. State v. Id. Wise, (1983); 671 P.2d 909 in facts Fain are similar to the facts McIntyre v. County, Mohave attempted exchange Watson. 620 P.2d 696 A sale and an ex- pursuant land permit- to an Arizona statute concepts are two different with dif- ting exchanges. such See A.R.S. 37-604. legal each; significance ferent attached Department Land State refused to otherwise, synonyms the words would be complete exchange arguing, part, legal for each other with no difference. exchange comply that the does not with the majority The cases cited address requirement that state lands “shall not be issues, patterns, fact various such as tax leased, part, except or sold whole or personal property purchases Const, in- and deals highest to the bidder.” Ariz. art. 10 volving cash. Nowhere does the added). (emphasis why I see no reason authority dealing cite with an in the outcome in Fain should be differ- private kind of In land. ent than the outcome An ex- Watson. fact, ignores the majority Watson Cald- change of land is not the same or as a sale well, (1948), 160 Fla. 35 So.2d 125 cited lease of land. by petitioner, exactly point. which is V. IV. majority ignores We also note that the Watson, Attorney General of the Appeals North Carolina Court of case con- sought State of Florida to cancel two cerning of land which stated: deeds. One deed from the State Board of Here, plaintiff originally expressly (Board) conveyed Education school land to sought to have the entire transaction— the Trustees of the Improvement Internal “exchange”—declared void. Defen- (Trustees). conveyed Fund The other deed grounds dants resisted on the that an swamp lands from the Trustees to the subject should not be Attorney argued Board. The General statutory procedures governing sales the Board and the Trustees comply did not Redevelopment Commission under law,

with Florida which stated that no (now N.C.G.S. N.C.G.S. 160A- sold, lands “shall conveyed disposed 514). remanded, Until the action was byof the said trustees or the said board parties regarded none of the ever advertisement, of education” unless notice single as other than a transac- requirements and auction were followed. “exchange” tion or occurrence. To has (citing Id. 35 So.2d at 126-27 Fla.Stat.Ann. with, give, part been defined as “[t]o 270.07) added). (emphasis The Florida equivalent.” transfer for an Black’s Supreme Court held that the statute did 1968). (4th Dictionary Law ed. rev. apply and stated: exchange, specific property giv- In an exchange This was not a “sale” but an en in consideration of other legislative kind to effectuate a definite money, although parties than one of purpose which we shall now discuss more may pay money a sum in addition of fully. property. at 127. The further that Id. court found no Church, Campbell Baptist v. First 51 N.C. required exchange laws an to be adver- 393, 712, (1981) (em- App. 276 S.E.2d added). (Emphasis tised. Id. The court added). phasis added: VI. An exchange in kind to aid the Park

project exchange is involved here. There is not the Because I this is an believe sale, slightest suggestion only that the land re- not a we need determine if our exchange, ap- ordinary definition of the word exchange. It prohibits constitution an Congress believed an prohibitions. The we note that pears that there are no is, It there- exchanges. change land was not a sale. specifically allows of fore, Congress of the arguable 3 of that Enabling Act 28. Article See § § Enabling Act to specifically allows amended the the Arizona Constitution United States exchange for an under specifically provide the state and federal between legislature. safeguards provided by the government. In addition: for less than No lands shall be sold federal, state, or constitutional I find no acre, lands per dollars and no three exchange an of provision providing that irri- susceptible of which are or shall be Alaska, example, sale. for state land is a or hereaf- gation any projects under now exchange of state lands after provides for completed adopted by the United ter Alas- of fair market value. determination legislation for the reclama- States under (Value Properties of ka Stat. 38.50.020 § lands, project any or under other tion of Exchanged). also Cal. See Res.] [Pub. lands, sold for the reclamation of shall be (Exchange place 7303. of lands Code § acre; twenty-five per dollars at less than sales); Nev.Rev.Stat. reserved from Provided, State, request that the at the land seq. (Authority of state 323.010 et § Interior, Secretary shall for lands registrar exchange state lands its relinquish from time to time such of value); equal Haw.Rev.Stat. § any time lands to the United States as (Exchanges). irrigation in con- are needed for works nection with such Government VIII. project, and other lands in lieu thereof argu- majority makes several other The the char- shall be selected from lands of agree. One ments with which cannot pre- acter named and in the manner that, argument pursuant to Deer Twenty-Four scribed Section Court, Superior School Dist. v. Unified said Act. (1988), 760 P.2d 537 Const, art. A.R.S. requires that school Arizona Constitution nothing I find in our constitution which disposed only after land prohibits providing a from notice and auction. whereby exchanges may take method prohibit does certain Our constitution place. Article 3 restricts lease. disposal, methods of sale or lands, sale or lease of not the 537; P.2d Valley, (A.R.S. land. statute art. 10 1-4. This does Ariz. Const. §§ 37-604), hand, per- on the other necessarily mean that an Department mission from the State Land Indeed, if constitution prohibited. our provides and notice to other entities and prohibits exchanges, there is no reason protection of the trust lands in the time and majority spend so much by requir- same manner as other states prove an is a trying effort ing appraisal exchange may before sale. place. take IX.

VII. Ex- majority also contends that the presumption that statutes are There is a (A.R.S. 37-604) does not other- constitutional unless shown to be Statute protection much to state lands not declare an act of the afford as wise. We will argues unless does Article 10. The legislature unconstitutional we Article 10 is to “ensure that purpose beyond satisfied a reasonable doubt possible the most benefit the federal or state the trust receives the act conflicts with lands” sale or other use of the trust Co. v. from constitutions. Chevron Chemical through the Court, this is assured 641 P.2d and that benefit Superior requirement. (1982). looking public common and auction at the I Exchange provides believe the Statute P.2d ample protection to benefit the trust lands. PRESCOTT, municipal corpo OF CITY a are, hand, There other some draw- ration, Plaintiff, Counterdefendant, Ap public requirement. backs to the auction pellee, Cross-Appellant, example, For parties private in the sector flexibility have more and financing can VALLEY, municipal OF TOWN CHINO capital ways raise unavailable to the Defendant, corporation, Counterclaim public A private sector. would party ant, Appellant, Cross-Appellee. able, therefore, public agency to outbid a public Comment, auction. See Arizona’s No. 1 9754. CA-CIV Enabling Act and the State Transfer Purposes, Arizona, Lands Public 8 Ariz.L.Rev. Appeals Court of Division Department B. speculates The also it “is Nov. 1989. bid might conceivable that someone more May 8, Review 1990. Denied price appraised than the auc- at a goal profit tion.” if the Even state’s Cross-Petition for Granted in Review possible, nothing prevents as much as Part and Denied Part realizing prof- State from such benefits 8,May through exchanges its of state lands. The an appli- statute makes clear that

cant’s land be at must least of “substantial-

ly value,” more, equal to the value of 37-604(C)(l).

the state land. A.R.S. Department

State Land power has the proposed exchange

determine if the

actually benefit trust A.R.S. land. 37-604(B)(3). pro- statute

vides for notice provides

any person may protest proposed 37-604(0(7).

change. A.R.S. § argues

The majority “there is no consti- authority exempt

tutional sales calling

land simply by them

allowing accept payment state

kind I majori- instead of cash.” believe the

ty misses point. legal Certain conse-

quences (tax to an attach conse-

quences, example) and payment kind payment

is different than in cash. To hold strip legal away any sig-

otherwise would “exchange”

nificance of term and we

may as all well label transactions “sales” “disposals.”

X. proposed exchange would allow un-

der our constitution.

Case Details

Case Name: Fain Land & Cattle Co. v. Hassell

Court Name: Arizona Supreme Court

Date Published: Mar 30, 1990

Citation: 790 P.2d 242

Docket Number: CV-89-0186-SA

Court Abbreviation: Ariz.