Document: 424 U.S. 295 96 S.Ct. 910 47 L.Ed.2d 1 ALAMO LAND & CATTLE CO., INC., Petitioner,v.State of ARIZONA. No. 74-125. Argued Oct. 14, 15, 1975. Decided Feb. 24, 1976. Syllabus In 1962 Arizona, as lessor, and petitioner, lessee, executed a 10-year grazing lease certain tracts land which had been granted to Arizona be held in trust under the New Mexico-Arizona Enabling Act. 1966 United States filed condemnation complaint connection with flood control dam reservoir included leased tracts. allocating stipulated compensation payable by for District Court awarded amount its fee interest petitioner one improvements another "its leasehold at time taking reasonable prospective interest." The Appeals, while recognizing that was entitled improvements, finding it unnecessary determine petitioner's rights based upon provisions or state law, Act trustee, no power grant compensable therefore never acquired property right is compensation. Held: 1. Nothing Act, apart, possibly, from extent may incorporate law reference, prevents usual application Fifth Amendment protection outstanding whereby holder such an just value when taken States. Pp. 300-308. 2. To determined on remand are (1) whether, lease, could not possess federal condemnation; (2) if did interest, how properly evaluated calculated (with subsidiary questions relevance possible renewals additions reason development adjoining properties); (3) proves substantial, whether permissible find fact violation Act's requirement offered, shall appraised "true value" given less than value. 308-311. 9 Cir., 495 F.2d 12, reversed remanded. J. Gordon Cook, Phoenix, Ariz., petitioner. Mr. Justice BLACKMUN delivered opinion Court. This case presents issue relates lands that, we told, affects substantial acreage our Southwestern Western 2 * Under § 241 36 Stat. 572 (1910), specified sections every township then proposed State were "for support common schools." By 282 same 574, amended June 5, 1936, c. 517, 49 1477, 2, 1951, 65 51, transferred "shall said trust, disposed whole part only manner herein provided several objects . proceeds any subject trusts producing same." Constitution, Art. 10, 1,3 accepted so trusteeship over them. 3 Among constituting two parcels referred Tract 304 305, respectively.4 On February 8, 1962, Alamo Land Cattle Company, Inc. (Alamo), these period ending 7, 1972. App. 6-14. statute, Ariz.Rev.Stat.Ann. 37-281D (1974), incorporated general reference into use purpose other grazing. 4 May 31, 1966, utilized Alamo's larger operating cattle ranch, establishment site Bill Williams River. their entirety among properties condemnation. duly entered customary order delivery possession.5 5 Thereafter, and, separately, Alamo, "the full compensation" property, together all thereon appurtenances thereunto belonging" $48,220 $70,400 thus total $118,620 two. Record 156, 162.6 6 At distribution hearing proper allocation amounts, parties claiming awards respondent asserting title through grants it, thereon. conceded receive but contested right, participate portion award allocated Court, unreported opinion, 1-5, $57,970 $3,600 $57,050 taking, 227-228. appeal, Appeals Ninth Circuit, "had Alamo," "Alamo compensation." v. 2,562.92 Acres Land, 14 (1974). judgment insofar concerned interests. It remanded cause entry new accordance opinion. Id., 15. Because Circuit's decision appeared implicate this Court's Lassen ex rel. Highway Dept., 385 458, 87 584, 17 515 (1967), because claimed conflict Nebraska States, 164 866 (CA8 1947), cert. denied, 334 815, 68 1070, 92 L.Ed. 1745 (1948), petition certiorari. Co., 420 971, 95 1390, 43 650 (1975). II 7 action instituted Department prohibit Commissioner rules governing acquisition rights-of-way material sites federally donated pursuant What involved, therefore, interests itself. Supreme presumed conclusively highways constructed across always enhanced remainder amounts least equal areas refused compensate trust. Lassen, 99 Ariz. 161, 407 P.2d 747 (1965). unanimously reversed. doing, observed more recent newly admitted including "make clear has continuing administration both funds derive them." U.S., 460, S.Ct., 585. 8 read 28 particularity. emphasized requirements sold " 'the highest best bidder' "; value; disposal 'only provided' disposition way 'shall deemed breach trust' sale 'not made conformity null void.' 461-462, 586. examined purposes concluded "was plainly expected produce fund, accumulated lands, public institutions designated Act." 463, 587. Sales leases intended. "central problem" "to devise constraints would assure received fair lands." Ibid. concluded, reasons stated procedural restrictions apply itself sought highway program. turned standard must employ recompense acquired. terms permit diminish actual monetary enhancement remaining lands. "unequivocally demands employed given." 466, 588. again stressed noted "these combination indicate Congress' concern provide most beneficiaries those profit trust." 467, 589. All confirmed background legislative history Accordingly, even where acquisitor, benefit grant. Thus, "Arizona actually money obtains 469, 590.7 (footnotes omitted). standard, said, "most consistently reflects essential grant." 470, 590. 10 Much what also decades earlier, Ervien 251 41, 40 75, 64 128 (1919), consideration Mexico. integrity conditions imposed long evident. 11 But say, say requires, condemnation, entire possessor nothing whatsoever. requires think receive, land, particular being dispensed. 12 established unexpired entitled, Amendment,8 Petty Motor 327 372, 66 596, 90 729 (1946); A. W. Duckett Co. 266 149, 45 38, 69 216 (1924). See General Motors Corp., 323 373, 357, 89 311 (1945); Almota Farmers Elevator Warehouse 409 93 791, 35 (1973); P. Nichols, Eminent Domain 5.23 (Rev.3d ed. 1975); id. 12.42(1). seem follow made, lessee rental possessory subsequent reversionary plus, course, lease. should addition this, value, any, interest. That, exists valid, lessee's. La Prade Carrow, 57 429, 433-434, 114 891, 893 (1941). 13 Ordinarily, whenever capitalized term plus renewal exceeds specifies. expressed way: "The measure damages occupancy tenant's term, renew ., agreed rent tenant pay occupancy." 381, 601. 15 supra. A number factors, operate eliminate existence Presumably, provided, does not, revocable will State, lessee. require provision kind 375-376, 598-599, n. 4; see supra, 12.42(1), pp. 12-488 12-489. 16 difference between arise either rentals set initially during consequently increased. protective against initial setting specifically prohibited 28. prohibition bite further very drastic void." calls substantially land's void hand, increase lease.9 If takes place, operates create point, feel, erred terms, apart barred leasing might result lessee's becoming constitutionally Instead, completely silent respect. III 18 however, suggests usually acceptable analysis applied argues, held, bases thesis "mortgage encumbrance" claims encumbrance, citing cases, Hecketsweiler Parrett, 185 Ore. 46, 52, 200 974 (1948) (agreement sell real estate free encumbrances), Hartman Drake, 166 Neb. 87, 91, N.W.2d 895, 898 (1958) (partition). One seemingly apparent complete answer argument goes authorize years less, provides leasehold, before value." These contemplate possibility intimate encumbrance."10 Furthermore, statutes contexts protect §§ 41-511.06, 37-291 Ehle Tenney Trading 56 241, 107 210 (1940). responds possible, falls short prohibits unless receives land. assumes measured despite presence That approach overlooks actuality two-step first granting second Full times respective interests, values times, met. State's serve convert downgrade fully recognized permitted terminable automatically terminated sells condemned. better treatment neither nor contains provision. We have above both, result. provide. Whether incorporation addressed considered remand. merely note within Arizona's insert clause makes mean claim clause. IV 19 Appeals' odds above-cited (1948). There, face totality like here, Eighth Circuit ruled treated trustee agricultural April 19, 1864, 59, 47, earlier edition type adopted four contain detailed restrictive appear 1910 developed passing experience demonstrated need does, distinguishable present one. devoid precedential consistent recognition demonstrates incompatible concept. 78.61 265 F.Supp. 564 (Neb.1967), post-Lassen ; 40,021.64 387 839, 848-849 (N.M.1975). V 20 Finally, observed, passing, F.2d, recited laws Arizona; "relinquished" pertain relinquished"; vested lessee." court ibid., 37-242 37-29311 restrict participation improvements. Having observations, thereupon necessary law." 14. 21 significance cited now determination question condemned technically States; sure there language restriction 37-293; 37-288 37-290 respectively forfeiture nonpayment rent, cancellation reclassified higher use, explain lease's vesting technical sense contingency 22 repeat: hold leave following: provisions, renewals12 properties, cf. Fuller, 488, 801, (1973)); (its) true 23 reversed, proceedings 24 ordered. 25 Reversed 26 STEVENS took case. 27 WHITE, whom BRENNAN joins, dissenting. issue. solely statutory construction. As I agree Congress intended lessees covered acquire "improvements placed lessee," dissent. 29 states expressly, respect involved "no mortgage encumbrance valid favor person circumstances whatsoever." clearly "encumbrance." G. Thompson, Real Property 3183, p. 277 (1962); Bouvier's Law Dictionary 1530 (8th 1914). is, expressly majority finds implicit exception express ban encumbrances less. points school treat "encumbrance" "downgrade condemned." Ante, 307. Treating certainly effect says would. disclose, why contrary intent Apparently, simply illogical notion still "10-year" notwithstanding treating square them unqualified encumbrances. 30 policy, own Act; prior strongly proposition viewed permitting entirely making 1888 Wyoming, 5-year periods annulled Secretary Interior. 393. Of far Oklahoma enter Union recently Mexico C. 3335, 34 267. authority providing sales "preference purchase bid (is) sale," id., 274 (emphasis added); provides: 31 "(I)n leaseholder become purchaser, purchaser shall, regulations legislature prescribe, exclusive ." added). 32 declines alone attribute passed later. Moreover, single piece shedding light relevant Senate sponsor Senator Beveridge spoke approvingly dealing indicated his belief stringent. He stated: 33 "We position (in drafting Act) owned creating giving specific purposes, thrown about used purposes." around heretofore, notably Oklahoma, thorough this." Cong.Rec. 8227 (1910). creation except him. literal here reaches latter after similar former. cannot conclude construed prevent leaseholds limiting leaseholders easily discernible history. anticipated schools, leaseholders, increase. Pursuing end, minimum price $3 per acre, House committee report explaining: 37 bill fixes educational sold. 38 "It well earnest advocates price, practically none worth anything fixed. believed, advance science, extension private irrigation projects, tendency toward smaller holdings will, Mexico, sure, although possibly slow, values. 39 probably bring market much cents prices, prohibitive, fixed repeated utmost importance some fixing selling following extract letter former Interior Garfield chairman last Congress: 41 'The public-land matter convinced me get return am informed advantage, seriously failing schools entitled. North South Dakota, Montana, Idaho, Washington $10 feels high harmful. 42 'On contrary, officials zealous proud splendid they few ago seemed immense poor informed, obtaining many cases $15 $20 acre sections. Colorado seems exceedingly low minimum, $2.50; nevertheless administered unusually well, securing large returns, leases. For reasons, urge They able to-day thereby obtain income.' H.R.Rep. 152, 61st Cong., 2d Sess., 2-3 encumber rose more, give Such utterly irreconcilable prices. Plainly, disposing fashion receiving Lessees appreciated 44 make clearer, Congress, share sold, provided: "Nothing contained (4) Legislature protected (including water rights) paid succeeding 52. 46 could, increased into, expired 588, it." construes "unequivocal demand" accordingly, "Sec. 24. sixteen thirty-six, heretofore reserved Territory thirty-two otherwise appropriated date passage hereby declared granted, which, having Territory, confirmatory natural products same. "Disposition thing directly indirectly derived therefrom, object derived, confirmed, "No thereof, prevent: section, grazing, agricultural, commercial, homesite ten less; "All leaseholds, timber, thereof ascertained (their value) "A separate fund each moneys deposited treasurer corresponding conveyed confirmed. No ever deposit other, "Every sale, conveyance, contract concerning void, constitution notwithstanding." approved 20, 1910, part, Constitution provisions. "Tract 304: Section Township North, Range West, Gila Salt River Base Meridian, Yuma County, Arizona." 305: 36, 1-2. raised propriety effectiveness procedure. figures estimated declaration court. full-value exclude appropriate deferred-payment arrangement. 21, "(N)or without recognize adjustment account fluctuations 37-283, 37-285 Indeed, termination re-evaluation required release renewal. encumbrance," meaning identical prohibition, applicable 563. American Mortgage White, N.M. 602, 605-606, 287 702, 703 (1930). (N.M.1975); Comm'n Chavez, 80 394, 456 868 (1969). 37-242: "A. When owner compensated offered conducting cent balance thirty days thereafter. department determines great competitive bidding hindered, installments announcement successful bidder, fifteen thereafter, annually thereafter five years, six unpaid, amount, until paid, lien keep insurable insured state. Payments prescribed payments default "B. installments, twenty-five cent, deducting rents, penalties costs owing legal charge "C. Upon surrendering possession file commissioner finance bears approval correctness, certificate surrendered persons lawful warrant investment. principal returned him taken. "D. Failure bidder constitute made." 37-293: reimbursed removable. retiring do party appraisal Thereafter appraisals appraisal, notice registered mail interested appraisal. notice, department, greater payment days, sixty end year paid. sell, assign, transfer assign remove whatever he liabilities failure lease." regard limited statute duration, adjusted reflect current 9, Therefore, foreclose renewals, calculation include prospect renewing

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