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Director of the Office of State Lands & Investments v. Merbanco6/6/2003
agement of a trust. 76 Am. Jur. 2d Trusts § 433 (1990) (transfer of trust assets is common and may be necessary for reinvestment into more productive assets). Accordingly, so long as the exchanges are performed to benefit the public schools, neither the Enabling Act nor common trust law prohibits non-simultaneous exchanges of land within the trust.
Id. at 1518-19.
Implicit in the court's reasoning is the assumption that simple exchanges likewise are not violative of the enabling act's requirement that all "sales" be only at a public auction or sale. The Tenth Circuit Court of Appeals affirmed this decision and, while recognizing the Colorado Enabling Act's sole and exclusive method for "disposing of the school lands" was a "'public sale' with a certain minimum price," upheld the amendment's provision "to facilitate land exchanges." Branson School District Re-82 v. Romer, 161 F.3d 619, 637-42 (10th Cir. 1998). The court concluded that, so long as the interest from a non-simultaneous land exchange was used for acquiring replacement lands which were themselves held in trust, the requirements of the enabling act were met. A fair reading of these cases discloses no suggestion by either the litigants or the courts that land exchanges are subject to the requirement of Colorado's enabling act that school lands be "disposed" of through a public auction.
Following the Branson cases, the Colorado Court of Appeals considered a transaction involving school lands and concluded it constituted a sale, not an exchange, and was void for failure to comply with a Colorado statute which governed sales. East Lake Creek Ranch, LLP v. Brotman, 998 P.2d 46 (Colo. Ct. App. 1999), rev'd on other grounds, 31 P.3d 886 (2001). The facts of that case were clearly determinative of the outcome and suggest that a pure exchange transaction would not have been considered by the court to be a "sale." In a non-simultaneous exchange, the state granted the school lands to a private party before the corresponding private lands were identified and with no time limit in place for when that exchange was to occur. In addition, the state and the private party had agreed upon an appraised price for the school lands, and, when the private party deposited that amount with the state, he received the state patent. The court held the test for determining whether the transaction was an exchange or a sale was whether there was a fixed value for the exchange; if there was, the court held, it was a sale. Id. at 50. However, the court also stated:
Admittedly, the mere fact that a price is placed on the properties involved in an exchange does not render the transaction a sale where the price fixed is evidently for the purpose of constituting a basis on which the exchange may be made. However, where the price is determined for the purpose of fixing definitely the value of the respective properties involved in the purported exchange, that determination is conclusive that a sale, not an exchange, has occurred. 33 C.J.S. Exchange of Property 2(b) (1998); see Higbie v. Johnson, 626 P.2d 1147 (Colo. App. 1980); see also Hamburger v. Berman, 203 Mich. 78, 168 N.W. 925 (1918) (contract held to be exchange of two properties where values fixed by the respective parties upon the properties were mere estimates and were merely for the purposes of effecting an exchange).
Id. The entire thrust of the East Lake Creek Ranch opinion is the court's recognition that, in the context of state school lands, sales and exchanges are distinct and mutually exclusive. This holding is consistent with the decision in Sorenson v. Regional Transportation District, 745 P.2d 1047, 1049 (Colo. Ct. App. 1987), where the Colorado Court of Appeals
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