Arizona Constitution Article 10 Section 3 - Interpretation
In Fain Land & Cattle Co. v. Hassell, 163 Ariz. 587, 790 P.2d 242 (1990), the Arizona Supreme Court analyzed whether a transaction labeled as an exchange of state trust land for private land was a sale of state trust lands under article 10, 3 of the Arizona Constitution.
The court first defined "exchange" as "a 'reciprocal transfer of property for other property of value, rather than for a money consideration'" and stated that "the term 'exchange' may be construed to be a form of sale." 163 Ariz. at 591, 790 P.2d at 246, quoting 30 Am. Jur. 2d Exchange of Property 1, at 363 (2d ed. 1967).
The court then held that the key distinction between a sale and an exchange is that "an exchange occurs only if no value is assigned to either of the exchanged properties." Id.
Finding that the constitution required the state to obtain a "definite value by appraisal and . . . a consideration at least equal to that amount" before disposing of its lands, the court concluded that the land department could not validly exchange the state trust lands because such an "exchange" would effectively be a sale, and under the pertinent law, state trust lands could only be sold at auction to the highest bidder. Id. at 592, 597-98, 790 P.2d at 247, 252-53.