Opinion ID: 1305826
Heading Depth: 1
Heading Rank: 4

Heading: does the preference violate the enabling act?

Text: Section 28 of the New Mexico/Arizona Enabling Act of 1910, ch. 310, 36 Stat. 557 governs the administration of state trust lands and provides: No mortgage or other encumbrance of the said lands, or any part thereof, shall be valid in favor of any person or for any purpose or in any circumstances whatsoever. The language was adopted by the Arizona Constitution, which also adopted the Enabling Act in its entirety. Ewing insists that the preferred right granted by A.R.S. § 37-335 violates this Enabling Act provision. The statute reads as follows: § 37-335. Sale or lease of state lands for development.       C. Upon the cancellation of a lease due to a reclassification of state lands under subsection A of this section, the existing lessee shall have a preferred right to lease the reclassified land at a rental that is not less than the highest and best bid received by the commissioner for the reclassified lease at public auction. If the existing lessee is not successful in obtaining the reclassified lease, or if the existing lessee chooses not to exercise the preferred right specified in this subsection, the existing lessee is eligible for compensation and reimbursement as provided in § 37-335.01. The preferred right described in this section is subject to the requirements of § 37-291, subsection B, and the preferred right shall expire after the commissioner receives the highest and best bid at public auction. If the commissioner determines that no bid will be accepted, the preferred right to lease the reclassified lease shall remain in effect, subject to any subsequent public auction. The preferred right is not transferrable, and can be exercised only by the existing lessee.
Petitioner seeks to distinguish the preferred rights conferred by this statute from those in similar statutes which have been construed by the Arizona Supreme Court. See Williams v. Green, 95 Ariz. 378, 390 P.2d 907 (1964); Boice v. Campbell, 30 Ariz. 424, 248 P. 34 (1926); Campbell v. Mutual Cattle Co., 24 Ariz. 620, 212 P. 381 (1923); Campbell v. Caldwell, 20 Ariz. 377, 181 P. 181 (1919). Those cases held that the statutory preference in lease renewal are simply equities to be considered and are not absolute or exclusive rights. Indeed, Boice v. Campbell is dispositive of the issue in this case. In Boice v. Campbell , the court was called upon to determine whether a cattle lease gave a preferred right to renew to the occupant of a U.S. homestead adjoining the land to be leased or to an occupant under an existing lease. The court noted that: any limitation upon the disposition of public land provided in the Enabling Act is absolutely binding on the State of Arizona, unless the Congress of the United States may consent to a change, and any statute or amendment to the state Constitution in conflict therewith is null and void. 30 Ariz. at 428, 248 P. at 34, 35. The court further stated that if the right is to be construed as an enforceable interest in property, arising out of a contract, then a preferred right of renewal is a contractual interest in the land which the lessee may enforce at his option, subject only, as provided in the statute, to an increased rental, or the entire withdrawal of the land from lease. Such an interpretation would be in conflict with the Enabling Act. `The statutory obligation' to lease the premises, if leased at all, to the former lessee in our opinion is ... obnoxious to the Enabling Act and Constitution. Id. at 430, 248 P. at 36. The court then went on to state: If, on the other hand, we give to the words preferred right of renewal a construction which implies that it is discretionary with the land department as to which of several applicants, taking into consideration all the facts surrounding the matter, including, of course, the prior occupancy, is best entitled to the land, notwithstanding the prior occupant is asking for it, then the so called right given is no right at all in the ordinary sense of the term, but merely a direction to the land department to regard as an equity in the case what it doubtless would have taken into consideration in the absence of the statute. Id. at 430, 248 P. at 36. Although Boice construed a different statute, the two statutes are similar enough to make the Boice decision dispositive in this case. Petitioner argues, however, that the legislature did not intend the term preference right in § 37-335(C) to be construed in the same manner as the preference right in § 37-290, the subject of Boice. We do not agree. The statute granting this preference right (A.R.S. § 37-335(C)) obviously used the very words preferred right to lease because of the previous judicial construction of the preferred right of renewal in A.R.S. § 37-290. In fact, § 37-335(B) specifically refers to § 37-290, the statute in Boice. We do not find that the statute is contrary to the Enabling Act.