Case Title: Turney v. Marion County Bd. of Educ.

Citation: 481 So. 2d 770

Docket Number: 

State: mississippi

Court: Mississippi Supreme Court

Date: 1985-11-27T00:00:00Z

Document:
481 So. 2d 770 (1985) Steven D. TURNEY, et ux v. MARION COUNTY BOARD OF EDUCATION and William A. Stafford, Superintendent of Education. No. 55764. Supreme Court of Mississippi. November 27, 1985. *772 S. Wayne Easterling, Easterling & Varnado, Hattiesburg, for appellants. Fred L. Cooper, Columbia, for appellees. Before ROY NOBLE LEE, P.J., and DAN M. LEE and PRATHER, JJ. PRATHER, Justice, for the Court: The legal authority of a county board of education in managing sixteenth section public school land is challenged in this appeal from the Chancery Court of Marion County. Steven and Michelle Turney, appellants and lessees of sixteenth section school land, claimed that re-lease rent calculations were incorrectly made and that the Marion County Board of Education, appellee, had no authority to require them *773 to sign a lease. From the chancellor's adverse ruling, the Turneys appeal and assign as error the following: (1) The trial court erred in failing to recognize the 1982 lease that was recorded in the chancery clerk's office; (2) The board of education was not authorized to draw up an additional lease without a request therefor being made by applicant pursuant to § 29-3-82; (3) The school board was not authorized to demand that appellants sign the lease; (4) The school board was not authorized to impose the conditions demanded in the lease; (5) The defendants incorrectly determined the dollar amount of the rental. Steven and Michelle Turney were the holders of a lease on a thirty-one acre tract of sixteenth section land in Marion County. Based on usage, the land is classified by the County Board of Education as "farm-residential." Before their original lease terminated in 1982, the Turneys applied for a renewal, and the Marion County Board of Education had the land reappraised. The new appraisal resulted in an appraised rental value of $11.25 per acre. The appraisal method was the subject of a former appeal to this Court by the same parties. Barber v. Turney, 423 So. 2d 133 (Miss. 1982). Pursuant to that court decision, the Marion County Board of Education employed two appraisers to reappraise the fair market rental value of the subject land. In 1983 a new lease was submitted to the Turneys by the Board. The 1983 lease was properly signed by the Superintendent of Education and the presidents of the Board of Education and the Board of Supervisors. The lease contained new lease provisions including a new rental amount of $5.25 per acre. Other than the 1982 application, no new application for re-lease was ever submitted by the Turneys. The Turneys refused to sign the new contract and brought the action that resulted in this appeal. In the trial court the Turneys complained that the Board of Education had improperly determined the rental amount and that the Board of Education had exceeded its lawful authority in requiring the Turneys to sign the new lease. The chancellor found, in summary, that: (1) The Board properly determined the rental amount; (2) The Board did not exceed its lawful authority to sign what was not an excessively burdensome lease; (3) The Turneys had twenty additional days to exercise their prior right to re-lease the thirty-one acres in question by signing the lease offered by the Board and their failure to do so would cancel the lease and authorize the Board to lease the land elsewhere. This appeal deals with sixteenth section school trust lands. Of benefit to the reader may be a brief summary of the history of the development of this trust, a history which antedates the formation of the State of Mississippi. Such a history is contained in Papasan v. United States, 756 F.2d 1087 (5th Cir.1985). (See Appendix for a partial text of Papasan v. United States, concerning the history of sixteenth section school lands.) This appeal basically challenges the authority of the Board of Education in its management of sixteenth section school lands. The first four assignments of error address an alleged usurpation of authority. First, did the trial court err in failing to recognize the 1982 recorded lease which was the subject of the prior appeal? The Turneys adhere to the position that the prior 1982 recorded lease remains in full force and effect, subject to judicial review of the methodology utilized in establishing the rental amount. Arguing that the validity of the 1982 lease has never been in question, the Turneys contend that *774 the Board of Education is bound by the stipulation it made in the prior suit that the lease was valid. The Turneys further contend that the 1982 lease is prima facie valid because it was executed and recorded in substantial conformity with Miss. Code Ann. § 29-3-82 (Supp. 1984). Appellees, on the other hand, contend the 1982 lease is void because it was not signed by the appellants. The Board is presently requiring the lessee to sign the new proposed lease. A comprehensive discussion of the law on signature requirement is found in 17 C.J.S. Contracts § 62 (1963) which, as cited in McInnis v. Southeastern Automatic Sprinkler Co., 233 So. 2d 219 (Miss. 1970), reads in pertinent part: 17 C.J.S. Contracts § 62 (1963) goes on to read in part: The common thread running through both of the above-quoted passages deals with the intent of the parties. Whether an unsigned writing constitutes a binding contract depends upon the intention of the parties. Collins v. Swope, 605 S.W.2d 538 (Mo. Ct. App. 1980). In the present case the Turneys chose not to sign the 1982 lease because they did not agree with the terms contained therein. Steve Turney testified regarding the 1982 lease: It is obvious from the testimony of Steven Turney that he wanted to use the land, but he did not want to be obligated to the terms of the lease contract which gave him possession of the land. His testimony indicated lack of mutuality, lack of assent, and lack of willingness to be bound by the contract he now claims is valid. Because of this apparent lack of intent to be bound, the chancellor committed no error in not recognizing the 1982 lease, and in supporting the Board's requirement of the lessees' signatures. Was the Board of Education authorized to draw up an additional lease without a request therefor being made by the Turneys? The thrust of appellants' argument under this assignment of error is that the Board was not authorized to draw the 1983 lease because the 1983 lease was not requested by the appellants. Appellants base this contention on Miss. Code Ann. § 29-3-82(a) (Supp. 1984) which reads, "Any present leaseholder who desires to *775 renew his lease, or any person who desires to lease sixteenth section or lieu lands, shall make application to the superintendent of education." While § 29-3-82(a) describes the process by which present leaseholders renew their leases, it does not purport to impose the kind of limitations on the board of education that the appellants contend. Appellants' contention seems frivolous in light of the circumstances leading up to this case. Was the Board authorized to require the Turneys' signature on the 1983 lease? The question posed here is whether the Board of Education may impose requirements of the lessee not specifically addressed by the empowering statute. Appellants contend that the Marion County Board of Education does not have the authority to require them to sign the 1983 lease agreement. Appellants rely on Miss. Code Ann. § 29-3-82 (Supp. 1984) which requires the following for the lease of sixteenth section property not classified as agricultural land: Section 29-3-82 is silent regarding the requirement that the lessee sign the lease. Furthermore, Attorney General Opinion 80-12 states, "It is not necessary for the lessee to sign the lease so long as there is a properly executed lease by the board." To the contrary, appellees cite three Mississippi Code Sections as authority for their contention that the lessee must sign the lease. First, the appellees cite Miss. Code Ann. § 89-1-3 (1972) which requires conveyances of land and estates for a term of more *776 than one year, to be in writing and signed. That section states: Second, appellees cite Miss. Code Ann. § 15-3-1(c) (1972) which requires a lease of more than one year to be in writing and signed by the party to be charged therewith. That section provides in pertinent part: Finally, appellees cite Miss. Code Ann. § 89-3-1 (1972) which requires an acknowledgment of the execution of a lease before recordation in the public records. That section provides in part: The Court agrees with appellee that these statutory provisions are pertinent to its requirement that the lessee sign the lease. But in addition, Miss. Code Ann. § 29-3-1(1) (Supp. 1984) grants the Board of Education that authority. The Board of Education derives its authority to manage sixteenth section land from Miss. Code Ann. § 29-3-1(1) which reads: It is clear from a reading of the history of sixteenth section lands, along with the above-quoted statute, that various governmental authorities are involved with federally donated trust lands. The lands were granted by the United States to Mississippi in trust, but the United States "has a continuing interest in the administration of both the lands and the funds which derive from them. The grant involved here thus expressly requires the Attorney General of the United States to maintain whatever proceedings may be necessary to enforce its terms." Lassen v. Arizona, 385 U.S. 458, 87 S. Ct. 584, 17 L. Ed. 515 (1967). Title to the trust lands rests in the State of Mississippi as trustee. The state official responsible for Mississippi's public lands is presently the Secretary of State. The Court notes that Miss. Code Ann. § 29-3-1 (Supp. 1984) gives general supervisory power to the state land commissioner. However, the office of state land commissioner was abolished January 1, 1980 by Miss. Code Ann. § 7-11-2 (Supp. 1984), with all the duties and responsibilities of that office transferred to the office of the Secretary of State. Today, pursuant to Miss. *777 Code Ann. § 7-11-11 (Supp. 1984) the Secretary of State has charge of the public lands. Section 7-11-11 states: The State, as trustee, may not divest itself of its duties. However, the State, by statute, may vest in others the authority to do acts which the trustee cannot practicably be expected to perform. Restatement (Second) of Trusts § 171 (1959). The State, as a matter of practical necessity, manages its sixteenth section trust property through local county boards of education. As Miss. Code Ann. § 29-3-1 relates, "The board of education ... shall have control and jurisdiction of said school trust lands and of all funds arising from any disposition thereof heretofore or hereafter made." The charge of the statute is that Boards of Education manage the school trust lands "as trust property" and "assure that adequate compensation is received." Even though the State has vested in the local boards of education certain management powers and duties, the State at all times holds the fee as trustee and maintains the authority and responsibility to oversee the management of the trust and to assure that the trust is properly executed. Under this trust arrangement, the inhabitants of the respective townships are the beneficiaries of the trust. Jones v. Madison County, 72 Miss. 777, 18 So. 87 (1895). Since the Northwest Territory Ordinance of 1785 it has been clear that the sole use to which the income of the trust may be put is "the maintenance of public schools within the said township... ." 1 Laws of the United States 565 (1815). Miss. Code Ann. § 29-3-1(1) (Supp. 1984). Therefore, in the context of sixteenth section land, the term "inhabitants" and the term "public schools" have come to be used interchangeably. Thus the federal, state, and local governmental bodies are authorized by either the original trust agreement or by subsequent statutory authorization to enforce the provision of the trust. Returning now to the School Board's management powers, the empowering statute does not detail the Board's specific authority, but creates a general charge that the lands be managed "as trust property." This direction necessarily assumes that the Board has authority to perform all actions necessary, lawful, and proper to perform its statutory duty. The use of the phrase "as trust property" recognizes that the Board may exercise the general powers of a trustee with the same general restrictions and general liabilities of a trustee. As to the standard of care chargeable to the Board in the performance of its statutory duty to act as a trustee, this Court holds that the same standard of care applicable to a general trustee applies to the Board of Education. This standard is expressed as follows: Bogert, Law of Trusts, § 93 (5th ed. 1973) See also, Scott, Scott on Trusts, § 174 (3rd ed. 1967). Applying to this case the general standard to exercise care and skill that a person of ordinary prudence would exercise in dealing with his or her own property, this Court holds that the Board of Education may require its lessees of sixteenth section land to sign its leases. This Court further holds that the Board of Education may include terms in the leases that persons of ordinary prudence would include. The signature requirement is a reasonable demand, and it is fully justified, by implication, by § 29-3-1(1). As noted in section II of this opinion, the testimony of Mr. Turney indicated his lack of assent. In requiring the lessees' signature, the Board exercised the care and skill of an ordinary prudent person to protect the beneficiaries of the trust. There is no merit to this assignment of error. Was the Board of Education authorized to impose the conditions demanded in the lease? Under their fourth assignment of error, appellants contend that the Marion County Board of Education exceeded its authority by including provisions in the 1983 lease which were violative of appellant's constitutional and statutory rights. Appellants take particular exception to paragraphs 3, 6, 7, 8, 9, 10, and 11. Paragraph 3 of the lease provides in part: Appellants have three complaints about paragraph 3. First, appellants contend that paragraph 3 demands that the Turneys consent to the very opposite of what was previously decided in Barber v. Turney, 423 So. 2d 133 (Miss. 1982). In Barber, the Board of Education contended that it was statutorily obligated to charge rent of 5% of the fair market sales price of the land.[1] This Court held that: Barber, 423 So. 2d at 135. Barber did not hold that the Board is precluded from using the percentage of fair market sale value method if that method best yields fair rental value. Barber simply holds that the Board is not bound to use that method. The Board may choose its own method of valuation as long as the evaluation results in the fair market rental value of the subject land. Although the terminology of paragraph 3 and the Barber decision are similar, a careful reading of them in the light of the contentions made in the prior case will demonstrate that they are not mutually exclusive. Barber contemplates statutory obligation while paragraph 3 contemplates contractual obligation. Appellants' second argument concerning paragraph 3 focuses on the question of who has to pay the cost of additional appraisals if the parties are in dispute about the reappraised value of the land. Paragraph 3 says that in a dispute between the lessee and lessor, the lessee has to absorb the cost of the additional appraisals. Appellants cite Miss. Code Ann. § 29-3-82(f) (Supp. 1984) and § 29-3-1(2) (Supp. 1984) as authority that the cost of any reappraisals is to be paid from available sixteenth section school funds or other school funds of the district. A reading of those statutes clearly indicates that the appraisals paid for out of sixteenth section school funds are the appraisals resulting from a dispute between a board of supervisors and a board of education in the initial leasing or re-leasing of the property. The statutes clearly do not provide for paid appraisals resulting from disputes between lessees and boards of education in the reappraisal of land during the pendency of a lease. Appellants' third argument concerning paragraph 3 is that the language of paragraph 3 "is an attempt to divest appellants of their right to seek judicial review of any decision of the Board of Education and the appraisers." Appellants refer to section (a) of paragraph 3 which reads, "Any adjustments of annual ground rental determined by the above mentioned statutory appraisal procedure shall be binding upon the lessor and lessee." Appellees contend that this language is "merely an attempt to put a stop to any repeated requests for new appraisals and is not an attempt to prevent the lessee from any statutory right of appeal." In light of § 29-3-1, this Court does not believe paragraph 3 divests, or is an attempt to divest, appellants of their right to appeal the appraisers' decision to the chancery court if the appellants feel aggrieved. Section 29-3-1 states, in relevant part, "In the event any party is aggrieved by the decision of the appraisers setting forth the appraised rental value, the party so aggrieved shall be entitled to an appeal to the chancery court in which the land is located." Paragraph 6 of the lease provides in part: Appellants contend that if the land they are now leasing should be reclassified as forest land, rendering it unavailable for further leasing, Miss. Code Ann. § 29-3-43 (Supp. 1984) requires the Board of Education to either purchase improvements made by the lessee or allow the lessee to remove the improvements. Section 29-3-43 reads: Appellants describe paragraph 6 as follows, "The proposed paragraph restricts petitioners to the right to remove improvements and denies their right to require the Board of Education to pay for the improvements that cannot be removed." (Emphasis added). Appellants apparently believe § 29-3-43 gives them a "right" to choose whether they will remove improvements or "require" the Board of Education to purchase them. To the contrary, Miss. Code Ann. § 29-3-43 grants the Board of Education the option to purchase the improvements or allow the improvements to be removed. Paragraph 6 of the written contract follows § 29-3-43 and this Court holds that the Board was within its authority by including paragraph 6 in the written contract. Paragraphs 7, 8 and 9 of the lease provide: Appellants contend that these paragraphs relating to default and termination are "in sharp contrast" to the provisions of Miss. Code Ann. § 29-3-57 (Supp. 1984) which reads in pertinent part: Further, appellants contend that paragraph 8 violates their right to due process under Article 3 of the Mississippi Constitution and the Fifth and Fourteenth Amendments to the United States Constitution. More particularly, appellants take exception to the language allowing the lessor to enter the land upon default without due process of law. Section 29-3-57 provides a procedure for the termination of the lease by the board of education after the rent payment has been in default for sixty days and this was incorporated into the lease. The requirement of "legal proceedings to terminate the lease" affords the due process of which the appellant complains. The legal proceeding necessitates notice and an opportunity to be heard. There is no merit to this contention. Paragraph 10 requires the lessee to "exercise due diligence in the protection of all improvements, timber and other property of lessor, which may be located on the leased premises or in the vicinity thereof... ." Appellants contend that "the only obligations that can be legally imposed upon [them] are those established by statutes or common law." Appellants cite no authority for this proposition, and this Court finds no merit to this contention. The Board of Education has the duty of imposing those provisions and obligations that a prudent lessor would require. Paragraph 11 requires the lessee to indemnify the lessor for claims against the lessor "arising from or in any manner connected with the exercise of any right granted or conferred" by the lease agreement. Appellants contend the indemnity clause is not statutorily authorized or permitted by common law. Appellants again cite no authority for their contentions. This Court finds no reason to prevent appellants, as a matter of law, from voluntarily contracting to indemnify the lessor. This contractual provision is indicative that the Board was acting as a prudent lessor. Regarding appellants' assignment of error that the Board of Education exceeded *782 its authority in requiring these lease provisions, the court holds that the Board was within its statutorily authorized duties as manager of trust property, empowered with duties of a general trustee, to manage the school lands through the exercise of the ordinary care and skill of a prudent person. The chancellor is affirmed in his finding that the conditions were not burdensome and were within the lawful authority of the Board. Was the dollar amount of the rentals incorrectly determined? Two appraisers made appraisals and recommendations as to the fair rental value. One appraiser recommended a fair rental value of $5.00, while the other appraiser recommended $5.50. The Board of Education, following the suggestion of the Superintendent of Education, averaged the two recommendations to arrive at a fair rental value of $5.25. The appraisers based their recommendations on the examination and valuation of comparables. In examining those comparables and making his recommendation, the appraiser of the Turneys' leasehold property took into consideration location, road proximity, elevation, road frontage, and whether there were any ponds on the property. However, in every comparable the appraiser used, the landowner, and not the lessee, paid the property taxes on the land. The Turneys make essentially two contentions under this assignment of error. First, they contend that the method used by the Board of Education in arriving at a fair rental value of $5.25 per acre was arbitrary and capricious and was not supported by substantial evidence. This Court recognized in Barber v. Turney that the board of education has the final authority, duty, and responsibility to determine the reasonable annual rental amount to be assessed on sixteenth section lands. Commenting on the methodology used to arrive at the fair rental value this Court said: Barber, 423 So. 2d at 136. In light of the fair rental value of the comparables, this Court holds that the Board made no mistake in arriving at a fair rental value of $5.25. The Turney's second contention is that their monthly rent should be reduced to reflect their payment of the ad valorem taxes. According to the appellants' calculations, their rent should be reduced to $3.56 per acre. They arrive at this figure by subtracting $1.44 (yearly tax per acre) from $5.00 (the lower appraisal value). The liability for payment of taxes is a matter of contract. The Board of Education, as a prudent manager of lease lands, is within its general powers to require that the lessee pay the general taxes in addition to the fair rental value of the land. Taxation of sixteenth section land is governed by Miss. Code Ann. § 29-3-71 (1972) as follows: The school lands are not liable for general taxation as long as they remain unleased, but following their lease, the leasehold is liable for taxation. The lessee, not the county, is liable for general taxation. However, by virtue of Miss. Code Ann. § 29-3-73 (Supp. 1984), drainage taxes may be assessed against school lands. Those lands must then bear their pro rata share *783 of the special assessment. The drainage tax statute provides in part: This Board of Education set the terms of its lease to include the lessee's liability for special assessment. Such requirement is a matter of contract between the parties and is a reasonable demand. The lessee contends, however, that the fair rental value should be reduced by the amount of the taxes on the leasehold. This Court does not agree because the two items are separate and distinct. The fair rental value of the land is computed and set; the lessee by contractual requirement of the Board of Education pays an additional amount for taxes. No credit for taxes should be given against the rent. The chancellor was correct in his holding that a fair rental value was determined and that the contract specified the payment of taxes in addition thereto. This Court finds no error in the trial court's ruling. Therefore, this appeal is affirmed. AFFIRMED. PATTERSON, C.J., WALKER and ROY NOBLE LEE, P.JJ., and HAWKINS, DAN M. LEE, ROBERTSON and ANDERSON, JJ., concur. SULLIVAN, J., not participating. The following is a brief history of Sixteenth Section land as discussed in Papasan v. United States, 756 F.2d 1087 (5th Cir.1985). [1] The school board was apparently relying on Attorney General Opinions 78-38 and 79-39. [1a] See Andrus v. Utah, 446 U.S. 500, 522-28, 100 S. Ct. 1803, 1814-17, 64 L. Ed. 2d 458 (1980) (Powell, J., dissenting) for a historical overview of school land grants in this country. [2] The Northwest Territory included all of the land west of the original thirteen states, north of the Ohio River, east of the Mississippi River and south of Canada. Public Land Law Review Commission, History of Public Land Law Development, Ch. 1-3 (1968). [3] The Northwest Territory and all territory acquired thereafter was divided by survey into townships of thirty-six numbered sections, each one square mile in area. "Sixteenth Section" land thus refers to section number sixteen, reserved in each township for public schools. The Northwest Ordinance of 1789, which provided for the government of the Northwest Territory, 1 Stat. 50, echoed the policy behind this reservation, declaring: "Religion, morality, and knowledge, being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged." 1 Stat. 52. [4] See Articles of Cession and Agreement, April 24, 1802, V Territorial Papers of the United States, 142 (1802); 1802 Laws of Georgia, No. 35, art. 1, 5th Condition. Earlier, in 1789, Congress established the Mississippi Territory, comprising what is now the southern two-thirds of Mississippi and Alabama, and provided that it be governed by the provisions of the Northwest Ordinance of 1789. 1 Stat. 549, 550, § 6 (1798). The Mississippi Territory was extended in 1804. 2 Stat. 303, § 7 (1804). [5] Because some of this Sixteenth Section land was subject to the prior claims of settlers and grantees, Congress authorized the Secretary of the Treasury to select substitute school lands in lieu of unavailable reserved sections. 2 Stat. 400, 401, § 6 (1806). [6] Apparently there was dispute in the court below as to whether any of the pre-1832 Acts of Congress reserving Sixteenth Section land for public schools applied to the Chickasaw Indian land. We need not face these issues here. [7] The Chickasaw Cession territory encompassed the twenty-three North Mississippi counties in which the plaintiffs reside. These counties include: Alcorn, Benton, Calhoun, Chickasaw, Clay, Coahoma, DeSoto, Itawamba, Lafayette, Lee, Marshall, Monroe, Panola, Pontotoc, Prentiss, Quitman, Tate, Tippah, Tishomingo, Tunica, Union, Webster and Yalobusha Counties. Of these, Coahoma, Quitman, Webster and Yalobusha are only partly within the Cession. [8] All of the Chickasaw lands were sold despite the fact that the Treaty provided that the land would be surveyed and sold "in the same manner and on the same terms as other public lands...." Art. II, Treaty of Pontotoc Creek. [9] Though Congress originally authorized the Secretary of the Treasury to select lieu lands, it later allowed Mississippi's Governor to direct the selection. 5 Stat. 490 (1842). [10] The Chickasaw Cession Lieu Lands comprised some 174,555 acres located in the counties of Bolivar, Coahoma, Tallahatchie, Quitman, Panola and Leake.