Court Opinion

ID: 9426278
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:17:25.605531+00
Date Added: 2024-06-11T17:22:59.908936
License: Public Domain

Mr. Justice White,
with whom Mr. Justice Brennan joins, dissenting.
The question in this case is whether, under § 28 of the *312New Mexico-Arizona Enabling Act, 36 Stat. 574, the State of Arizona had the power to grant to petitioner a compensable leasehold interest in the property in issue. The question is solely one of statutory construction. As I agree with the Court of Appeals for the Ninth Circuit that Congress intended that lessees of land covered by the Act should acquire a compensable interest in leased land only to the extent of “improvements . . . placed thereon by such lessee,” United States v. 2,562.92 Acres of Land, 495 F. 2d 12, 14 (1974), I dissent.
The Act states expressly, with respect. to the lands involved here, that “no mortgage or other encumbrance of the said lands . . . shall be valid in favor of any person or for any purpose or under any circumstances whatsoever.” A lease, if not terminable at will by the State or terminable automatically upon sale or condemnation, is clearly an “encumbrance.” 7 G. Thompson, Real Property § 3183, p. 277 (1962); 2 Bouvier’s Law Dictionary 1530 (8th ed. 1914). A lease not so terminable is, therefore expressly prohibited by the Act. The majority opinion, however, finds implicit in the Act an exception to the express ban on encumbrances in the case of leases for terms of 10 years or less. It points to the fact that 10-year leases of school trust lands are expressly permitted by the Act and states that to treat a lease as an “encumbrance” under the circumstances would be to “downgrade a 10-year grazing lease, fully recognized and permitted by the Act, into a lease terminable at will or into one automatically terminated whenever the State sells the property or it is condemned.” Ante, at 307. Treating the lease as an encumbrance would certainly have the effect which the majority says it would. The majority does not disclose, however, why such an effect is contrary to the intent of the Act. Apparently, it simply finds illogical *313the notion that a lease could be terminable on sale or condemnation and still be a “ 10-year” lease, notwithstanding the fact that treating 10-year leases as being so terminable is the only way to square them with the Act’s unqualified ban on encumbrances.
It is Congress’ policy, however, and not our own which we must apply to the Act; and Congress’ prior statutes governing leases by States of school trust lands granted to them by the United States strongly support the proposition that Congress viewed an express statutory provision permitting leases of such land for a term of years as entirely consistent with provisions making such leases terminable at will or by sale or condemnation. In 1888 Congress provided, with respect to school trust lands granted to Wyoming, that the lands could be leased for 5-year periods but that such leases could be annulled at will by the Secretary of the Interior. 25 Stat. 393. Of far more significance to this case was Congress’ treatment of the lands granted to Oklahoma— the State to enter the Union most recently prior to the entry of Arizona and New Mexico — in the Oklahoma Enabling Act. C. 3335, 34 Stat. 267. In that Act, Congress expressly provided Oklahoma with the authority to lease school trust lands for 10-year periods while also clearly providing that upon sale of the lands during the period of the lease, the lessee would receive only the value of its improvements. That Act states with respect to sales of lands subject to a lease that “preference right to purchase at the highest bid [is] given to the lessee at the time of such sale,” id., at 274 (emphasis added); and then provides:
“[I]n case the leaseholder does not become the purchaser, the purchaser at said sale shall, under such rules and regulations as the legislature may prescribe, pay to or for the leaseholder the appraised value *314of . . . improvements, and to the State the amount hid for said lands, exclusive of the appraised value of improvements . . . Ibid, (emphasis added).
The Oklahoma Enabling Act thus clearly provides for the result which the majority finds so illogical and which it declines for that reason alone to attribute to Congress under the New Mexico-Arizona Enabling Act passed only four years later. . Moreover, in the single piece of legislative history shedding any light on the relevant portion of the Act, the Senate sponsor of the Act — Senator Beveridge — spoke approvingly of the restrictions placed on Oklahoma in dealing with school trust lands granted to it in the Oklahoma Enabling Act and indicated his belief that the restrictions on Arizona and New Mexico were more stringent. He stated:
“We took the position [in drafting the Act] that the United States owned this land, and in creating these States we were giving the lands to the States for specific purposes, and that restrictions should be thrown about it which would assure its being used for those purposes.”
“We have thrown conditions around land grants in several States heretofore, notably in the case of Oklahoma, but not so thorough and complete as this.” 45 Cong. Rec. 8227 (1910).
The Oklahoma Enabling Act prevents the creation of a compensable interest in a lessee of school trust lands except to the extent of improvements placed thereon by him. A literal application of the New Mexico-Arizona Enabling Act at issue here reaches the same result. The latter Act, passed only four years after the Oklahoma Enabling Act, had purposes similar to those of the former. I cannot but conclude that it should also be *315construed to prevent the creation of a compensable interest in leaseholds of school trust lands.
Congress’ reasons for so limiting the rights of leaseholders is easily discernible from the Act and its legislative history. Congress anticipated that the value of the school trust lands would increase over time and it intended that the schools, not leaseholders, benefit from this increase. Pursuing this end, the Act set a minimum sales price for school trust lands of $3 per acre, 36 Stat. 574, the House committee report explaining:
“The bill fixes a minimum price at which the lands granted for educational purposes subject to sale may be sold. . . .
“It is recognized by the committee as well as by other earnest advocates of a minimum price, that practically none of these lands are worth now anything like the minimum price fixed. ... It is believed, however, that the advance of science, the extension of public and private irrigation projects, and the tendency toward the higher development of smaller holdings will, in the case of Arizona and New Mexico, as in the case of other States, result in a sure, although possibly slow, increase of land values.
“The educational lands which are subject to sale would probably not bring on the market now much more than 25 cents an acre, but if the history of other states in which minimum prices, which at the time were considered prohibitive, were fixed shall be repeated in Arizona and New Mexico, it is of the utmost importance that some restriction be placed upon the sale of these lands.
“The experience of other States and the importance of fixing a minimum selling price for educational lands is indicated in the following extract *316from a letter from former Secretary of the Interior Garfield addressed to the chairman of the committee in the last Congress:
“ ‘The history of the public-land States in the matter of the disposal of granted school lands has convinced me that those States which have a minimum price fixed on their lands granted for educational purposes get a much larger return from their lands. I am informed that most States with no minimum have not disposed of their lands to the best advantage, thus seriously failing to derive the full benefit to which the schools are entitled. The States of North and South Dakota, Montana, Wyoming, Idaho, and Washington have a $10 minimum fixed on their lands, and I am informed that none of these States, unless it is Wyoming, feels that this high minimum is harmful.
“ ‘On the contrary, I find that officials of these States are zealous and proud of the splendid school funds which they are creating from the sale of school lands. North Dakota, which a few years ago seemed to contain immense areas of poor land, is, I am informed, obtaining in many cases $15 or $20 per acre for its school sections. Colorado seems to have an exceedingly low minimum, $2.50; and nevertheless it has administered its land grants unusually well, securing from them very large returns, both from sales and from leases. For these reasons, I urge that a minimum price be fixed for these proposed new States. They will be able to lease most of their land, if it is not worth to-day the minimum price, and will thereby obtain an income.’ ” H. R. Rep. No. 152, 61st Cong., 2d Sess., 2-3 (1910).
If leases were permitted to encumber school trust lands *317at a time when they were worth less than the minimum sales price, then when the land rose in value — as Congress anticipated it would — and was sold for the minimum price or more, the State would have to give part of such sales price to the lessee. Such a result is utterly irreconcilable with the reasons for setting minimum sales prices. Plainly, Congress intended the school trust to receive the full sales price and to prevent the States from disposing of the lands in any fashion which would result in its receiving any less. Lessees were to receive none of the proceeds of sale of the land itself even if the land had appreciated in value subsequent to the creation of the lease.
To make its purpose even clearer, Congress, in dealing with the very question of whether the lessee should share in the proceeds when lands subject to the lease are sold, provided:
“Nothing herein contained shall prevent ... (4) the Legislature of the State of Arizona from providing by proper laws for the protection of lessees of said lands, whereby such lessees shall be protected in their rights to their improvements (including water rights) in such manner that in case of lease or sale of said lands to other parties the former lessee shall be paid by the succeeding lessee or purchaser the value of such improvements and rights placed thereon by such lessee.” 65 Stat. 52.
The Act provides for no other kind of compensation to the lessee of lands sold. Under the majority opinion a lessee could, if the value of the lands increased after the lease was entered into, and if the lease had not expired at the time of any sale or condemnation, receive a portion of the sale or condemnation price over and above the value of any improvements. In Lassen v. Arizona *318ex rel. Arizona Highway Dept., 385 U. S. 458, 466 (1967), we said that Act “unequivocally demands ... that the trust receive the full value of lands transferred from it.” The majority now construes the Act to authorize a result contrary to the Act’s “unequivocal demand” and, accordingly, I dissent.