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Director of the Office of State Lands & Investments v. Merbanco6/6/2003
held the transfer of property from the State Board of Land Commissioners to RTD in exchange for RTD land of equivalent value was not a "sale" of the property. Consequently, if true exchanges are involved, it appears the Colorado courts would agree that the public sale provisions of the Colorado statutes do not apply.
The only case involving school lands where the court concluded an exchange without the public auction required for sales was prohibited is Fain Land & Cattle Company v. Hassell, 790 P.2d 242 (Ariz. 1990) (en banc). The Arizona Supreme Court held that a proposed exchange of school lands constituted a sale and, without a public auction, violated the state's constitution. One justice, concurring with the result but for different reasons, explicitly concluded sales and exchanges were clearly different and the transaction proposed was an exchange. However, the justice concluded, because the constitution did not specifically grant the state authority to exchange lands, the proposed exchange must fail. 790 P.2d at 598 (Corcoran, J., concurring in part).
Arizona's unique constitutional and historical context prevents the Fain holding from controlling the result in Wyoming. The Arizona-New Mexico Enabling Act, adopted in 1910, twenty years after Wyoming's Act of Admission, imposed vastly different and far more restrictive limitations on the state with regard to the administration of its school lands. Act of June 20, 1910, Pub. L. No. 219 (ch. 310), 36 Stat. 557. The statute provided the state
may only sell or lease trust land to the highest bidder at public auction after public notice. Enabling Act § 28. No sale or other disposal may be made unless the land is first appraised for its "true value," and the state receives consideration equal to, or greater than, the appraised value. In addition, the Enabling Act provides that any disposition of trust land not in substantial conformity with its provisions is "null and void."...
The Enabling Act required that the state and its people consent to all its provisions concerning lands granted to the state and that an ordinance be included in the state constitution "in such terms as shall positively preclude the making of any future constitutional amendment or any change or abrogation of the said ordinance in whole or in part without the consent of Congress." Enabling Act § 20.
Fain, 790 P.2d at 589 (some citations omitted). Pursuant to this more restrictive enabling act, Arizona adopted detailed and restrictive constitutional provisions including, by reference, all the terms of the enabling act itself. Later, in response to the passage of the Taylor Grazing Act, Congress amended the Arizona-New Mexico Enabling Act to specify the state was authorized to exchange school lands. Act of June 5, 1936, ch. 517, 49 Stat. 1477; Fain, 790 P.2d at 590. However, Arizona rejected a constitutional amendment which would have specifically authorized exchanges. Fain, 790 P.2d at 590. On the basis of that history, the Arizona Supreme Court held "the Enabling Act provides a minimum level of protection for trust land, while our state constitution goes much further" and "the express provisions of article 10 prohibit methods of disposal not enumerated in our constitution." Id. at 591. In reliance, in part, on this authority, the court in Fain applied, in our view, an overly restrictive definition of "exchange" as any transaction with a fixed value, including an exchange "based on its appraised monetary value." Id. at 592. However, the concurring opinion rejected this logic and concluded that an appraisal establishing a monetary value did not transform the exchange transaction into a sale. Citing to the Florida case of Watson
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