Rumery v. Baier

268 P.3d 1120, 228 Ariz. 463, 621 Ariz. Adv. Rep. 16, 2011 Ariz. App. LEXIS 190
CourtCourt of Appeals of Arizona
DecidedNovember 10, 2011
DocketNo. 1 CA-CV 10-0807
StatusPublished
Cited by1 cases

This text of 268 P.3d 1120 (Rumery v. Baier) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rumery v. Baier, 268 P.3d 1120, 228 Ariz. 463, 621 Ariz. Adv. Rep. 16, 2011 Ariz. App. LEXIS 190 (Ark. Ct. App. 2011).

Opinion

OPINION

KESSLER, Judge.

¶ 1 Defendant/Appellant Maria Baier, Arizona State Land Commissioner (“Commissioner”), appeals the trial court’s summary judgment for Plaintiffs/Appellees Rae Ann Rumery, John Skarhus, and Cartwright Elementary School District.1 Plaintiffs complained in part that the Arizona Legislature violated the Arizona Constitution and the New Mexieo-Arizona Enabling Act when it enacted Arizona Revised Statutes (“A.R.S.”) section 37-527 (Supp. 2010),2 to establish a fund comprised of proceeds derived from trust lands to pay for management of trust lands. The trial court held that AR.S. § 37-527 violated Article 10, Section 7, of the Arizona Constitution because the “appropriation of proceeds from state trust lands for trust administrative expenses clearly diverts money from the permanent state school fund specified in [A.R.S.] § 37-521.” We agree with the trial court and thus affirm.3

FACTUAL AND PROCEDURAL HISTORY

¶ 2 In 1910, Congress granted Arizona over 10.7 million acres of land to be held in trust for enumerated beneficiaries, with the “common schools” being the largest beneficiary.4 Lassen v. Arizona ex rel. Ariz. Highway Deft, 385 U.S. 458, 460, 87 S.Ct. 584, 17 L.Ed.2d 515 (1967). In granting the lands, Congress set forth rules governing the use of the trust lands, found in the New Mexico-Arizona Enabling Act of June 20, 1910, 36 Stat. 557. Id. at 461, 87 S.Ct. 584. “[T]he Arizona electorate accepted the land grants by ratifying” Article 10, Section 1, of the Arizona Constitution in 1911, and the “full provisions of the Enabling Act became part of the organic law of this state.” Radish v. Ariz. State Land Dep’t, 155 Ariz. 484, 486, 747 P.2d 1183, 1185 (1987), affd sub nom. ASARCO Inc. v. Radish, 490 U.S. 605, 109 S.Ct. 2037, 104 L.Ed.2d 696 (1989). However, the Enabling Act and the Arizona Constitution are silent as to how the costs of managing the trust lands are to be paid.5

[466]*466¶ 3 Prior to 2009, the legislature paid the administrative expenses of managing state trust lands from the state general fund. Proceeds derived from state trust lands were distributed to the individual funds (called permanent funds) of the enumerated beneficiaries to be held in trust by the Commissioner. Ariz. Const, art. 10, § 7(A).

¶ 4 In 2009, the legislature passed HB 2014, now codified in A.R.S. § 37-527, which set up the Trust Land Management Fund (“Management Fund”). 2009 Ariz. Sess. Laws, ch. 5, § 9 (3d Spec. Sess.). Section 37-527 provides that up to ten percent of both the annual proceeds from “[e]ach beneficiary’s trust lands” and “[a]ll sales of timber, mineral, gravel or other natural products or property from each beneficiary’s trust lands” are to be deposited into the Management Fund “exclusively to manage trust lands.” The money in the Management Fund is appropriated to the Arizona State Land Department, the agency that manages the trust lands. AR.S. § 37-102 (Supp. 2010); Forest Guardians v. Wells, 201 Ariz. 255, 257, ¶ 2, 34 P.3d 364, 366 (2001). The Commissioner administers the Management Fund. AR.S. § 37-527(D). Section 37-527(F) provides that it “does not prevent the legislature from appropriating state general fund monies for the purposes” of paying for the costs to manage the trust lands.

¶ 5 In passing HB 2014, the Legislature also appropriated over $9.7 million in fiscal year 2010 from proceeds derived from trust land, thereby diverting some money from entering the trust into the Management Fund. 2009 Ariz. Sess. Laws, ch. 5, § 18 (3d Spec. Sess.). For fiscal year 2011, the Commissioner designated the full ten percent of funds allowed by A.R.S. § 37-527, approximately $10.5 million, for deposit in the Management Fund. As the Commissioner conceded at oral argument on appeal, other than possibly its fiduciary duties, nothing would prevent the Legislature from passing a statute taking ninety percent or more of the funds to pay to manage the trust lands.

¶ 6 Plaintiffs filed suit alleging the legislature violated Section 28 of the Enabling Act (regulating the deposit of proceeds derived from state trust lands); Article 10, Section 7, of the Arizona Constitution (same); and the voter-protection provisions of the Arizona Constitution.

¶ 7 Plaintiffs and the Commissioner filed motions for summary judgment. The trial court granted Plaintiffs’ motion, holding that A.R.S. § 37-527 violated Article 10, Section 7, as well as Article 4, Part 1, Section 1(6)(D), of the Arizona Constitution. In so holding, the court rejected the Commissioner’s argument that common-law principles of trust law apply. The court held that “the language of Art. 10, § 7 is clear and unambiguous” and thus resorting “to [common-law] principles to modify or clarify the language is contrary to established Arizona law.” It also held the “appropriation of proceeds from state trust lands for trust administrative expenses clearly diverts money from the permanent state school fund specified in [A.R.S.] § 37-521,” and the legislature’s doing so without a three-quarters vote violated the voter-protection provisions. The court did not address whether the law violated the Enabling Act.

¶ 8 The trial court enjoined the Commissioner “from designating any amount of state trust land proceeds for deposit into the State Trust Land Management Fund,” ordered the state treasurer to “deposit all state trust land proceeds into the appropriate permanent funds,” and ordered “all amounts previously transferred from state trust land proceeds to the Trust Land Management Fund, whether expended or not, be repaid by the ... Commissioner to the State Treasurer for deposit into the separate permanent funds.” The court also awarded Plaintiffs their attorneys’ fees and costs and denied the Commissioner’s motion to stay injunctive relief pending appeal.

¶ 9 The Commissioner filed a timely notice of appeal. We granted a stay of the trial court’s order pending appeal, which terminated on June 30, 2011. We have jurisdiction pursuant to AR.S. § 12-2101(B) (2003).

STANDARD OF REVIEW

¶ 10 We review de novo “a grant of summary judgment determining the constitutionality of legislation and interpretation of statutes.” Ariz. Farm Bureau Fed’n v. [467]*467Brewer, 226 Ariz. 16, 19, ¶ 6, 243 P.3d 619, 622 (App.2010).

DISCUSSION

¶ 11 The issue before us is whether the Arizona Constitution allows the cost of managing state trust lands to be paid from proceeds derived from those lands. Such diversion of trust land proceeds violates Article 10, Section 7, because it deprives the trust beneficiaries of the full benefit of the trust without express permission.

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Related

Rae Ann Rumery v. Maria baier/doug Ducey
294 P.3d 113 (Arizona Supreme Court, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
268 P.3d 1120, 228 Ariz. 463, 621 Ariz. Adv. Rep. 16, 2011 Ariz. App. LEXIS 190, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rumery-v-baier-arizctapp-2011.