Kadish v. Arizona State Land Department

747 P.2d 1183, 155 Ariz. 484, 1987 Ariz. LEXIS 237
CourtArizona Supreme Court
DecidedDecember 10, 1987
DocketCV-86-0238-T
StatusPublished
Cited by47 cases

This text of 747 P.2d 1183 (Kadish v. Arizona State Land Department) is published on Counsel Stack Legal Research, covering Arizona Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kadish v. Arizona State Land Department, 747 P.2d 1183, 155 Ariz. 484, 1987 Ariz. LEXIS 237 (Ark. 1987).

Opinions

FELDMAN, Vice Chief Justice.

Frank and Lorain Kadish, Marion Pick-ens, and the Arizona Education Association, petitioners, brought a taxpayers’ action against the Arizona State Land Department and others. The issue raised is whether the fixed royalty provisions of A.R.S. § 27-234(B), permitting the land department to lease minerals on a flat rate royalty, violate the appraisal and true value provisions of the Arizona Enabling Act and the comparable provisions of the state constitution.

FACTS AND PROCEDURAL BACKGROUND

The individual petitioners are taxpayers who allege that their taxes support public education in Arizona. The Arizona Education Association represents approximately 20,000 public school teachers throughout the state. All petitioners contend that the provisions of A.R.S. § 27-234(B),1 fixing a [486]*486flat rate, five percent royalty on minerals extracted from leased state school trust land impermissibly result in the extraction of minerals without payment of full value to the school trust. Petitioners claim that such a limitation of income is contrary to the appraisal and true value requirements of the Enabling Act and the Arizona Constitution. They seek a declaration that A.R.S. § 27-234(B) is void and ask for appropriate special action relief.2

The defendants originally named were the Arizona State Land Department, the State Land Commissioner, and Cyprus Pima Mining Company, a mineral lessee. The trial court allowed other mineral lessees of state school trust lands (Magma Copper Company, ASARCO, Inc., James Sullivan, Eisenhower Mining Company, and Can-Am Corporation) to intervene as defendants. (Original and intervenor defendants are hereafter referred to as “respondents.”) The trial court eventually certified the case as a defendant class action pursuant to Rule 23, Ariz.R.Civ.P., 16 A.R. S. The class consists of all present and future mineral lessees of state lands.

The parties filed cross motions for summary judgment. The trial court granted respondents’ summary judgment motions, and held A.R.S. § 27-234(B) did not violate the Arizona Enabling Act or the Arizona Constitution. Petitioners timely moved for an order transferring the case from division one of the court of appeals' to this court. We granted the motion because the issues in this case are matters of first impression and substantial statewide importance. See Rule 19, Ariz.R.Civ.App.P., 17A A.R.S. We have jurisdiction pursuant to Ariz. Const, art. 6, § 5, A.R.S. §§ 12-102, -2103, and Rules 8 and 9, Ariz.R.P. Spec.Act., 17A A.R.S. We now reverse the judgment below, and remand with instructions to enter summary judgment in favor of petitioners.

HISTORICAL BACKGROUND OF THE ARIZONA ENABLING ACT

The issue before us can neither be understood nor resolved without an understanding of the historical process from which it evolved. In 1910, the Arizona-New Mexico Enabling Act became law, authorizing the people of the territories of Arizona and New Mexico to form state governments. Act of June 20,1910, Pub.L. No. 219 (ch. 310), 36 Stat. 557. Sections 19 through 35 of the Act referred exclusively to the proposed state of Arizona.3 The Enabling Act included provisions that confirmed prior land grants to the Arizona Territory and granted still more land to the new state. In 1911, the Arizona electorate accepted the land grants by ratifying art. 10, § 1 of the Arizona Constitution. The full provisions of the Enabling Act became part of the organic law of this state. Ariz. Const, art. 20, II12. See also Gladden Farms, Inc. v. State, 129 Ariz. 516, 518, 633 P.2d 325, 327 (1981). Because federal law is supreme in this field, neither this court, nor the legislature, nor the people may alter or amend the trust provisions contained in the Enabling Act without congressional approval. Murphy v. State, 65 Ariz. 338, 181 P.2d 336 (1947).

Pursuant to the Enabling Act, the United States granted four sections of land in each township to Arizona. Almost ten million acres were granted. The land could be used only for the support of the common schools of the state (school trust lands) and for internal improvements to the state. See generally Dunipace, Arizona’s Enabling Act and the Transfer of State Lands for Public Purposes, 8 ARIZ.L. [487]*487REV. 133 (1966). The school land trust now encompasses approximately nine and one-half million acres. AUDITOR GENERAL, A PERFORMANCE AUDIT OF THE STATE LAND DEPARTMENT, at 2' (1987).

Section 28 of the Enabling Act prohibited the sale, conveyance, or encumbrance of any part of the school trust land “except to the highest and best bidder at a public auction” after notice “duly given by advertisement.” The state could dispose of the land or its products only if it obtained “true value” as determined by a prior appraisal. No disposal could be made “for a consideration less than the value so ascertained.” Finally, § 28 provided that every disposition of the land or its products “not made in substantial conformity with the provisions of this Act [would be] null and void, any provisions of the constitution or laws of the said State to the contrary notwithstanding.” Except for several matters irrelevant to the case before us, art. 10 of the Arizona Constitution is “practically a rescript of section 28 of the Enabling Act. Murphy, 65 Ariz. at 348, 181 P.2d at 342.

Murphy capsulizes the historical reasons for the stringent provisions of the Enabling Act. Land grant acts similar to our Enabling Act previously had authorized the formation of other state governments. These acts had given the new states authority to determine how school trust lands were to be sold and the proceeds preserved for trust purposes. The result of this largess was highly unsatisfactory:

The sad experience of Congress with the handling by these twenty-three states of the granted lands, the sale thereof, and the investment of monies derived from a disposition of the granted lands, brought about a new policy which found expression in the Enabling Act for New Mexico and Arizona. The dissipation of the funds by one device or another, sanctioned or permitted by the legislatures of the several states, left a scandal in virtually every state, and these granted lands and the monies derived from a disposition thereof were so poorly administered, so unwisely invested and dissipated, that Congress concluded to make sure, in light of experiences of the past, that such would not occur in the new states of New Mexico and Arizona.

Murphy, 65 Ariz. at 351, 181 P.2d at 344.

To ensure that Arizona and New Mexico would not dissipate the assets granted, Congress required that they hold the granted land in trust and enacted the restrictive provisions of § 28 of the Enabling Act noted above. 65 Ariz.

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Bluebook (online)
747 P.2d 1183, 155 Ariz. 484, 1987 Ariz. LEXIS 237, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kadish-v-arizona-state-land-department-ariz-1987.