SITL v. Mathis

2009 UT 85
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
State of Utah, acting by and through 	No. 20070910
the School & Institutional Trust
Land Administration,
Plaintiff and Appellant,
v.
Rex Morrell Mathis; JoAnn L.
Mathis-Ross; William Dale Mathis;
Mark Pickup; Shawnda Pickup Cave;
Mathis Land, Inc., a Utah corporation;
Buck Creek, LLC, a Utah limited
liability company; Mountain Mineral
Resources, LLC, a Utah limited 	F I L E D
company; John Does 1-10,
Defendants and Appellees. 	December 18, 2009
---
Seventh District, Price Dep’t
The Honorable Judge Douglas B. Thomas
No. 050700196
Attorneys: 	Mark L. Shurtleff, Att’y Gen., Thomas A. Mitchell,
Erin M. Arnold, Asst. Att’ys Gen., Salt Lake City,
for plaintiff
Ronald G. Russell, Daniel A. Jensen, Royce B.
Covington, Salt Lake City, for defendants
---
DURRANT, Associate Chief Justice:
INTRODUCTION
¶1 	Section 78B-2-201 of the Utah Code prohibits the State
of Utah from bringing any “action . . . for or with respect to
any real property, its issues or profits, based upon the state’s
right or title to the real property, unless . . . the right or
title to the property accrued within seven years before any

1 Utah Code Ann. § 78B-2-201 (2008).
2 The State argues that any ruling based on the statute of
limitations contains an implicit determination that the
underlying conveyance was valid and therefore that we must
determine both that the conveyance to the Mathises was valid and
that the statute of limitations bars the State’s claim in order
to affirm the district court. 	We disagree. 	The plain language
of the statute bars the State from bringing any action based on
its title to a piece of real property unless the State’s right or
title to the property accrued within seven years of the
challenge. 	Section 78B-2-201 simply prohibits the State from
mounting a challenge and says nothing about the validity of the
underlying conveyance. 	Accordingly, since the validity of the
underlying conveyance is irrelevant to our resolution of this
case, we decline to reach it.
3 Although the grant was made in the Utah Enabling Act,
which was enacted in 1894, it became effective upon Utah’s entry
into the Union in 1896. 	Utah Enabling Act, ch. 138, § 6, 28
Stat. 107, 109 (1894).
No. 20070910 	2
action or other proceeding is commenced.” 1 	In this case, the
State, acting through the School and Institutional Trust Lands
Administration (the “State”), seeks to void, and recover damages
based on, its own conveyance of school trust lands made nearly
ninety years ago.
¶2 	The parties do not dispute that section 78B-2-201 would
operate to bar the State’s claim against the Mathises in this
case. 	But the parties do dispute whether the seven-year statute
of limitations found in section 78B-2-201 may be constitutionally
applied to preclude the State from attempting to obtain full
value for school trust lands. 	Accordingly, the sole question we
must decide is whether the State’s constitutional appointment as
trustee over school trust lands exempts it from statutes of
limitations in actions involving school trust lands. 2 	Because we
hold that section 78B-2-201 may constitutionally be applied to
the State’s challenge, we affirm the district court’s grant of
summary judgment in favor of the Mathises.
BACKGROUND
¶3 	The Mathis Property was part of the trust lands
originally granted to Utah for the support of the public schools
by Congress in 1896. 3 	On February 5, 1905, the State entered
into an agreement to sell the Mathis Property to Clarence B.
Milner for $1.50 per acre, which was the then-standard price for

4 245 U.S. 563, 572-73 (1918).
5 Act of Jan. 25, 1927, ch. 57 § 1, 44 Stat. 1026, 1026-27
(codified as amended at 43 U.S.C. §§ 70-71) (confirming that
title to mineral rights is vested in the State with regard to
lands granted in aid of public schools).
6 Id.
7 The parties dispute whether this actually occurred. 	In
light of our determination regarding the applicability of the
statute of limitations, however, we need not reach the impact of
(continued...)
3 	No. 20070910
nonmineral grazing land. 	Mr. Milner subsequently assigned his
rights in the Mathis Property to Carbon County Land Company
(“CCLC”). 	After receiving payment for the Mathis Property, the
State conveyed the land to CCLC by patent on February 28, 1912.
The State’s conveyance included no reservation of mineral rights.
¶4 	In 1918, the United States Supreme Court ruled, in
United States v. Sweet, that, in light of legislative history and
congressional policy, the Utah Enabling Act could not be
interpreted as having passed title to Utah of any lands that were
of known mineral character at the time of statehood. 4 	As a
result, in June 1924, the United States Department of the
Interior General Land Office ordered the commencement of
administrative proceedings to determine whether several sections
of land in Carbon County, including the Mathis Property, were
lands of known mineral character in 1896. 	On September 8, 1926,
the Secretary of the Interior issued a final order ruling that
the Mathis Property was of known mineral character at the time
Utah achieved statehood, and, therefore, that title to the Mathis
Property had never passed to the State and that Utah’s conveyance
of the property to CCLC was invalid. 	Shortly after this
administrative ruling, CCLC ceased paying taxes on the Mathis
Property.
¶5 	Due to the confusion engendered by the Supreme Court’s
1918 ruling, Congress passed the Jones Act in 1927. 5 	The Jones
Act attempted to resolve the confusion by granting title to all
school trust lands--regardless of whether they were of known
mineral character at the time of statehood or not--to the states
on the express condition that the states retain all mineral
rights in the lands. 6
¶6 	Carbon County appears to have assumed that the Jones
Act validated the State’s original conveyance of the Mathis
Property to CCLC through the doctrine of after-acquired title. 7

(...continued)
the Jones Act or the applicability of the doctrine of after-
acquired title.
8 Utah R. Civ. P. 56(c).
9 Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (quoting
Higgins v. Salt Lake County, 855 P.2d 231, 233 (Utah 1993)).
10 Id.
No. 20070910 	4
Accordingly, on May 28, 1932, the Carbon County Treasurer sold
the Mathis Property to Carbon County to offset CCLC’s unpaid
taxes. 	Subsequently, Carbon County sold the Mathis Property to
Rex Mathis in May of 1938. 	Since that time, Mr. Mathis and his
heirs have paid taxes on the property, leased the mineral estate,
and, in all other relevant ways, acted in a manner consistent
with ownership of the property.
¶7 	On January 1, 1998, the Mathises entered into an
underground coal lease agreement with Andalex Resources. 	The
State became aware of this lease agreement in 2002. 	In a letter
to the Mathises dated February 3, 2004, the State, for the first
time, asserted ownership of the Mathis Property. 	On March 14,
2005, the State brought this action (1) seeking to quiet title in
the mineral estate of the Mathis Property and (2) seeking an
accounting of proceeds from the mineral estate.
¶8 	Both sides filed motions for summary judgment. 	The
district court granted the Mathises’ motion, finding that the
State’s claims were barred by the seven-year statute of
limitations found in section 78B-2-201. 	The State timely
appealed, and we have jurisdiction pursuant to section 78A-3-
102(3)(j) of the Utah Code.
STANDARD OF REVIEW
¶9 	Summary judgment is appropriate only where “there is no
genuine issue as to any material fact and . . . the moving party
is entitled to a judgment as a matter of law.” 8 	In resolving
motions for summary judgment, the court views “‘the facts and all
reasonable inferences drawn therefrom in the light most favorable
to the nonmoving party.’” 9
¶10 	We review a district court’s decision to grant summary
judgment for correctness, with no deference to the district
court’s conclusions. 10 	Our review is limited to determining

11 Murdock v. Springville Mun. Corp., 1999 UT 39, ¶ 12, 982
P.2d 65.
12 Utah Enabling Act, ch. 138, 28 Stat. 107 (1894).
13 Jensen v. Dinehart, 645 P.2d 32, 33 (Utah 1982) (“The
Utah Enabling Act authorized the people of Utah to form a
constitution and state government; and to be admitted into the
Union on an equal footing with the original states . . . .”).
14 Utah Enabling Act § 6.
15 Id. § 10.
16 Id. § 12.
17 Utah Const., art. XX, § 2.
5 	No. 20070910
whether the district court correctly applied the summary judgment
standard in light of the undisputed material facts. 11
ANALYSIS
¶11 	In order to authorize Utah’s entry into the Union,
Congress passed the Utah Enabling Act, 12 which set out the terms
and conditions upon which Utah could be admitted as a state. 13
The Enabling Act provided that, upon Utah’s admission into the
Union, sections 2, 16, 32, and 36 of each township within Utah’s
borders would be “granted to [the State] for the support of the
common schools,” 14 and “[t]hat the proceeds of lands . . .
granted for educational purposes . . . [would] constitute a
permanent school fund.” 15 	The Enabling Act expressly limited the
use of “the lands granted . . . exclusively for the purposes
[t]herein mentioned.” 16
¶12 	The requirements of the Enabling Act were incorporated
into section 2 of article XX of the Utah Constitution, which
currently provides as follows:
Lands granted to the State under Sections 6,
8, and 12 of the Utah Enabling Act, and other
lands which may be added to those lands
pursuant to those sections through purchase,
exchange, or other means, are declared to be
school and institutional trust lands, held in
trust by the State for the respective
beneficiaries and purposes stated in the
Enabling Act grants. 17

18 	Utah Code Ann. § 53C-1-102(1)(b) (2006); see also Nat’l
Parks & Conservation Ass’n v. Bd. of State Lands, 869 P.2d 909,
917, 920 (Utah 1993).
19 Utah Code Ann. § 53C-1-102(2)(b); Archer v. Bd. of State
Lands & Forestry, 907 P.2d 1142, 1146-47 (Utah 1995).
No. 20070910 	6
¶13 	This constitutional incorporation “creat[ed] a compact
between the federal and state governments, which imposes upon the
state a perpetual trust obligation.” 18 	This obligation requires
the State, as trustee, to “manage the lands and revenues
generated from the lands in the most prudent and profitable
manner possible, and not for any purpose inconsistent with the
best interests of the trust beneficiaries.” 19
¶14 	The State contends that these constitutional provisions
confer upon it an absolute right to receive full value for school
trust lands and that this right cannot be taken away by operation
of other law. 	Specific to this case, the State argues that its
constitutionally imposed duties as trustee prohibit applying the
seven-year statute of limitations found in section 78B-2-201 of
the Utah Code to prevent the State from suing to recover full
value for the Mathis Property. 	Under its proposed rule, the
State might, at any time, point to its own past failure to obtain
full value as the basis for overturning its prior conveyance of
school trust lands--with the cost of the State’s error being
borne by the innocent third-party purchaser or its successors in
interest.
¶15 	We disagree with the State’s interpretation of the Utah
Constitution. 	The constitutional compact over school trust lands
does nothing more than impose on the State the fiduciary
obligations of a trustee--including the well-settled obligation
of a trustee to make the beneficiary whole when the trust has
suffered a loss resulting from the trustee’s mismanagement. 	In
other words, nothing in the constitution exempts the State from
the consequences of its own fiduciary mismanagement, much less
from applicable statutes of limitations. 	Accordingly, we
determine that the district court’s application of section 78B-2-
201 was correct.
¶16 	We begin by analyzing whether the Utah Constitution
protects the State from the general liability of a trustee to
reimburse the trust for conveyances made for less than full
value. 	We then discuss the extent to which our interpretation is
consistent with our prior case law, with particular focus on two
decisions upon which the State heavily relies--Van Wagoner v.

20 199 P. 670 (Utah 1921).
21 886 P.2d 514 (Utah 1994).
22 Utah Enabling Act, ch. 138, § 6, 28 Stat. 107, 109
(1894). 	Section 2 of Article XX of the Utah Constitution
provides that school trust lands are “held in trust by the State
for the respective beneficiaries and purposes stated in the
Enabling Act grants.” 	Utah Const., art. XX, § 2. 	And Section 6
of the Utah Enabling Act states that the trust lands are granted
“for the support of the common schools,” while Section 12
requires that they be “held, appropriated, and disposed of
exclusively for the purposes herein mentioned.” 	Utah Enabling
Act §§ 6, 12.
23 Utah Const., art. X, § 5(2)(d). 	The constitution
establishes the State School Fund, which is comprised of
(a) proceeds from the sales of all lands
granted by the United States to this State
for the support of the public elementary and
secondary schools; (b) 5% of the net proceeds
from the sales of United States public lands
lying within this state; (c) all revenues
derived from nonrenewable resources on state
lands, other than sovereign lands and lands
granted for other specific purposes; (d) all
revenues derived from the use of school trust
lands; (e) revenues appropriated by the
Legislature; and (f) other revenues and
assets received by the fund under any other
provision of law or by bequest or donation.
Id. art. X, § 5(1).
7 	No. 20070910
Whitmore 20 and Consolidation Coal Co. v. Utah Division of State
Lands & Forestry. 21
I. 	THE CONSTITUTIONAL APPOINTMENT OF THE STATE AS TRUSTEE OVER
SCHOOL TRUST LANDS AND THE REQUIREMENT THAT THE STATE GUARANTEE
THE STATE SCHOOL FUND AGAINST LOSS MAKE CLEAR THAT THE STATE
ITSELF MUST BEAR THE COSTS OF ITS OWN MISMANAGEMENT
¶17 	Nothing in the text of the Utah Constitution gives the
State a right to obtain “full value” for trust lands it conveys
to a third party. 	Rather, the constitution appoints the State as
trustee over school trust lands and directs the State to
administer the lands “for the support of the common schools.” 22
The constitution also provides that “[t]he State School Fund
shall be guaranteed by the state against loss or diversion.” 23

24 See Nat’l Parks & Conservation Ass’n v. Bd. of State
Lands, 869 P.2d 909, 918 (Utah 1993) (recognizing that “[t]he
duties of a trustee apply to the State in administering the
school trust lands” and citing authority in support of the
proposition that the State is under the same fiduciary duties as
a private trustee).
25 Restatement (Second) of Trusts § 205 cmt. d.
26 Id. § 205 cmt. d, illus. 8.
No. 20070910 	8
¶18 	These constitutional provisions bestow on the State
the usual authority and obligations of a trustee. 24 	And it is a
well-established principle of trust law that when a trustee
breaches its fiduciary duty to the beneficiary by conveying away
trust property for insufficient value, it is the trustee, rather
than innocent third parties, that must reimburse the trust.
Comment “d” of Section 205 of the Restatement (Second) of Trusts
sets out the general rule: 	“If the trustee is authorized to sell
trust property, but in breach of trust he sells it for less than
he should receive, he is liable for the value of the property at
the time of the sale less the amount which he received.” 25
¶19 	Illustration 8 of Section 205 is especially on point in
relation to this case: 	“A is trustee for B of Blackacre. 	By the
terms of the trust he is directed to sell Blackacre. 	He sells
Blackacre for $10,000, although if he had not been negligent he
could have sold it for $12,000. 	A is liable for $2,000.” 26
Thus, well-settled principles of trust law require that the
State, as trustee, bear the cost of its conveyances made in
breach of its fiduciary duties.
¶20 	The State contends that, despite these usually
applicable principles, because the school lands trust is created
and defined by the constitution, any conveyance inconsistent with
the terms of the trust is void because it is unconstitutional.
But there is no suggestion in the Utah Constitution that the
State should be treated any differently from any other trustee.
Instead, the constitution’s express creation of a trust and the
provision requiring the State to guarantee the State School Fund
against loss indicate that the general law of trusts--at least to
the extent that it is the duty of a trustee to bear the cost of
its breaches of trust--is what has been constitutionalized in
Utah.
¶21 	As noted above, the constitution specifically provides
that “[t]he State School Fund shall be guaranteed by the state

27 Utah Const., art. X, § 5(2)(d).
28 Id. art. X, § 5(1).
29 199 P. 670 (Utah 1921).
9 	No. 20070910
against loss or diversion.” 27 	The State School Fund includes,
among other things, all revenues and proceeds obtained from the
use and sale of trust lands. 28 	When the State conveys away
school trust land for less than its full value, the State School
Fund suffers a “loss” in the sense that the value of the land
sold was not replaced by sale proceeds of equivalent value.
Similarly, such a conveyance also results in a “diversion” of
funds because a portion of the full value of the trust lands--
which would have become part of the State School Fund upon sale--
is diverted to the third-party purchaser instead.
¶22 	By constitutional mandate, it is the State that must
make the State School Fund whole when this occurs. 	Allowing the
State to sue to void, or recover damages for, a conveyance it
made that resulted in a loss to the State School Fund does not
require the State to guarantee anything. 	Under such a rule, the
ultimate guarantor of the State’s breach of fiduciary duties
would be the innocent purchaser of the lands or his successors in
interest. 	This is contrary to the plain meaning of the
constitutional command, which expressly places the State in the
position of guarantor of the State School Fund.
¶23 	Because the Utah Constitution does nothing more than
place the State in the position of trustee over school trust
lands, we conclude that it does not confer a constitutional right
on the State to void conveyances of school trust lands solely on
the ground that the conveyance was made for less than full value.
In light of this conclusion, the district court was correct in
determining that section 78B-2-201 could be constitutionally
applied to bar the State’s claim against the Mathises in this
case.
II. 	THE CASE LAW CITED BY THE STATE IN FAVOR OF ITS POSITION IS
EITHER DISTINGUISHABLE FROM THE CURRENT CASE OR ERRONEOUSLY
DECIDED
¶24 	The State suggests that our interpretation of the Utah
Constitution is a radical departure from our prior precedent
regarding school trust lands. 	The State places particularly
heavy reliance on two of our prior cases in support of its
reading of the constitution: 	Van Wagoner v. Whitmore 29 and

30 886 P.2d 514 (Utah 1994).
31 869 P.2d 909, 918 (Utah 1993).
32 685 P.2d 576 (Wash. 1984).
33 Nat’l Parks & Conservation Ass’n, 869 P.2d at 918.
No. 20070910 	10
Consolidation Coal Co. v. Utah Division of State Lands &
Forestry. 30
¶25 	We believe that our prior case law is generally
consistent with the interpretation we set out above, but
recognize that certain statements from both Van Wagoner and
Consolidation Coal could be construed to be in tension with our
holding today. 	Accordingly, we take this opportunity to clarify
the nature and scope of our holding in Van Wagoner and to disavow
certain suggestions in Consolidation Coal that were based on an
erroneous reliance on United States Supreme Court precedent.
A. 	Our Prior Decisions Have Recognized That the State’s
Constitutional Appointment as Trustee Is Governed by Ordinary
Trust Principles
¶26 	The core of our holding today is that the
constitutional appointment of the State as trustee over the
school trust lands does no more than impose on the State the
ordinary authority and obligations of a trustee. 	We, as well as
the legislature, have recognized this principle in the past.
¶27 	For example, in National Parks Conservation Ass’n v.
Board of State Lands, we stated that “[t]he duties of a trustee
apply to the state in administering school trust lands,” 31 and
cited County of Skamania v. State,32 a Washington Supreme Court
case, in support of the proposition that there was a judicial
consensus that states charged with administering school trust
lands are under the same obligations as those assumed by a
private trustee. 33
¶28 	Additionally, the legislature, in enacting the School
and Institutional Trust Lands Management Act in 1994, set forth
its view of the nature of the State’s constitutionally imposed
fiduciary obligations as follows:
(1)(a) The purpose of this title is to
establish an administration and board to
manage lands that Congress granted to the
state for the support of common schools and

34 Utah Code Ann. § 53C-1-102(a)-(b) (2006). 	While we
recognize that the legislature’s conception of the constitutional
rule is not a controlling statement, it helps refute the State’s
suggestion that our holding today is inconsistent with a long-
settled rule.
35 199 P. at 676.
36 Id. at 675-76.
11 	No. 20070910
other beneficiary institutions, under the
Utah Enabling Act.
(b) This grant was expressly accepted in
the Utah Constitution, thereby creating a
compact between the federal and state
governments which imposes upon the state a
perpetual trust obligation to which standard
trust principles are applied. 34
Accordingly, the principle upon which our holding rests--that the
constitution imposes on the State the normal authority and
obligations of a trustee--is not a radical departure from, but is
entirely consistent with, our past pronouncements.
B. 	Our Prior Holding in Van Wagoner Does Not Stand for the
Blanket Proposition That Statutes of Limitations May Never Be
Applied to School Trust Lands
¶29 	In Van Wagoner v. Whitmore,35 we refused to apply the
limitations period for adverse possession to school trust lands.
The State cites Van Wagoner in support of its contention that
statutes of limitations can never be constitutionally applied to
prevent the State from challenging a conveyance of school trust
lands on the ground that it was made for less than full value.
But we did not interpret the Utah Constitution in Van Wagoner,
and even if we had, any constitutional rule we set out in Van
Wagoner would not govern affirmative conveyance cases.
¶30 	Even though constitutional concerns regarding school
trust lands appeared to play a significant role in our analysis
in Van Wagoner, our holding ultimately rested on statutory,
rather than constitutional, grounds. 	In Van Wagoner, we held
that, in light of the State’s constitutionally imposed duty as
trustee over school trust lands, it was not conceivable that the
legislature could have intended that the adverse possession
statute of limitations apply to school trust lands. 36 	And
although our reading of the statute of limitations in Van Wagoner
was apparently influenced by our view of the constitutional

37 See id. at 679 (“Believing, as we did, that by the
Enabling Act the state was morally bound because of the ‘sacred
obligation imposed upon its public faith,’ and believing also
that by the provisions of the state Constitution it was not only
morally but legally bound to see that these lands or the proceeds
thereof were devoted to school purposes, the court was of [the]
opinion the statutes of limitation had no application to the
case.” (quoting Cooper v. Roberts, 59 U.S. (18 How.) 173, 181-82
(1856)) (on rehearing)).
38 Id. (“To bring such lands within the operation of
limitation statutes, it is extremely doubtful if anything short
of an amendment to the Constitution could effect the result. 	It
is not necessary, however, to determine that question in the
instant case.” (on rehearing) (emphasis added)).
No. 20070910 	12
issues presented, 37 we expressly declined to resolve the case on
constitutional grounds. 38 	Thus, while our decision in Van
Wagoner contains dicta regarding this court’s opinion of the
constitutionality of applying an adverse possession statute of
limitations to school trust lands, when stripped down to its
essential holding, the opinion speaks only to the question of
legislative intent regarding the adverse possession statute.
¶31 	Furthermore, even if we were to read Van Wagoner as a
constitutional case, the analysis from Van Wagoner would not be
controlling here given the significant differences in context and
governing law. 	Rather than a mere claim that a passive state has
been deprived of title to school trust land solely by a third
party’s improvement of the land in question, as was the case in
Van Wagoner, this case involves an active state’s attempt to void
its own affirmative conveyance based upon its own failure to
negotiate for sufficient consideration. 	Even if it were correct
that the Utah Constitution prohibits the State, as
constitutionally appointed trustee, from losing title to school
trust lands through adverse possession, it does not necessarily
follow that the State may, after affirmatively exercising the
authority granted to it as trustee, require another to bear the
costs of its mismanagement.
¶32 	The text of the Enabling Act, upon which the Utah
Constitution’s treatment of school trust lands is based, confirms
this view. 	While the Enabling Act does not specifically speak to
whether affirmative conveyances for less than full value are
prohibited, it does speak to the loss of title by preemption:
That the proceeds of lands herein granted for
educational purposes, except as hereinafter
otherwise provided, shall constitute a

39 Utah Enabling Act, ch. 138, § 10, 28 Stat. 107 (1894)
(emphasis added).
40 886 P.2d 514 (Utah 1994).
41 424 U.S. 295 (1976).
42 See id. (discussing section 28 of the New Mexico-Arizona
(continued...)
13 	No. 20070910
permanent school fund, the interest of which
only shall be expended for the support of
said schools, and such land shall not be
subject to pre-emption, homestead entry, or
any other entry under the land laws of the
United States, whether surveyed or
unsurveyed, but shall be surveyed for school
purposes only. 39
The Enabling Act’s express prohibition of preemption provides
support for reading Van Wagoner to stand for the proposition that
statutes of limitations cannot be applied in a way that results
in the State losing title to school trust lands through adverse
possession. 	But it provides no support for extending that rule
to affirmative conveyances of school trust lands. 	And given this
lack of textual support, coupled with the significant differences
in context presented by affirmative conveyance cases, we conclude
that Van Wagoner, to the extent it might be construed to set
forth a constitutional rule, is limited to the adverse possession
context. 	It simply does not speak to whether a statute of
limitations may be applied to bar the State’s challenge to its
own prior conveyance.
C. 	We Disavow Our Prior Suggestion in Consolidation Coal That
Conveyances of School Trust Lands for Less Than Full Value Are
Null and Void Because It Was Based on Erroneous Reliance on the
United States Supreme Court’s Decision in Alamo Land & Cattle
¶33 	In contrast to Van Wagoner, Consolidation Coal Co. v.
Utah Division of State Lands & Forestry 40 did reach the
constitutional issue presented in this case and therefore does
provide support for the State’s position. 	Nevertheless, certain
key statements in Consolidation Coal were taken from the Supreme
Court’s decision in Alamo Land & Cattle Co. v. Arizona,41 in
which the Court interpreted controlling provisions of the New
Mexico-Arizona Enabling Act that are simply not present in the
Utah Enabling Act. 	Specifically, although the New Mexico-Arizona
Enabling Act expressly provided that conveyances of school trust
lands for less than full value were “null and void,” 42 the Utah

42 (...continued)
Enabling Act, Pub. L. No. 61-219, 36 Stat. 557, 575 (1910)).
43 Compare Utah Enabling Act § 6 with New Mexico-Arizona
Enabling Act § 28.
44 See Consolidation Coal, 886 P.2d at 526 n.17.
45 Id. at 517-18.
46 Id. at 525.
47 Id. at 525-26.
48 424 U.S. 295 (1976).
No. 20070910 	14
Enabling Act contains no such provision. 43 	We therefore take
this opportunity to disavow our suggestion in Consolidation Coal
that any conveyance of trust lands made for less than full value
is “null and void.” 44
¶34 	Consolidation Coal involved the State’s lease of trust
lands to a coal company. 	The lease required the company to make
royalty payments to the State based on the profits derived from
the sale of the coal mined on the land. 	It was the State’s
practice to take the royalty payments and invest them in trust
accounts, where the funds would earn a certain interest rate.
The coal company was late on its royalty payments, and because
the lease specified no contract interest rate in the event of
default, the 6 percent statutory rate of interest applied to the
late payments. 45
¶35 	The State argued that it was entitled to the same level
of interest that the royalty funds would have earned had they
been paid on time and deposited in the trust accounts. 	The
State’s position was based on its contention that application of
the 6 percent interest rate was an unconstitutional infringement
of its right to receive “full value” for the trust lands. 46 	We
agreed with the State’s argument, emphasizing that the Utah
Constitution required that the State receive “full value” for its
conveyances of school trust lands. 47
¶36 	In our analysis, we referenced Alamo Land & Cattle Co.
v. Arizona,48 a United States Supreme Court decision that
reviewed the disposition of school trust lands in Arizona under
the New Mexico-Arizona Enabling Act. 	We quoted approvingly from
the Supreme Court’s opinion, stating:

49 Consolidation Coal, 886 P.2d at 526 n.17 (quoting Alamo
Land & Cattle, 424 U.S. at 303) (omission in original).
15 	No. 20070910
In Alamo Land & Cattle Co. v. Arizona, the
United States Supreme Court held that a state
could not lease its school trust lands for
less than full value. 	According to the
Court:
The trust is to receive, at the time of
its disposition of any interest in the
land, the then full value of the
particular interest which is being
dispensed . . . . 	Thus, if the lease of
trust lands calls for a rental of
substantially less than the land’s then
fair rental value, it is null and
void. 49
¶37 	Our reliance on Alamo Land & Cattle as controlling
authority for the proposition that a lease of school trust lands
inconsistent with the fiduciary obligation to receive “full
value” is “null and void” was clearly incorrect. 	Upon review of
Alamo Land & Cattle it is clear that the Supreme Court’s holding
did not rest on any general proposition that conveyances not made
in accordance with a constitutionally created trust were
automatically “null and void,” but upon its interpretation of
specific provisions contained in the New Mexico-Arizona Enabling
Act. 	The Supreme Court stated:
What the Act requires--and we think that this
is clear from Ervien and Lassen--is that the
trust is to receive, at the time of its
disposition of any interest in the land, the
then full value of the particular interest
which is being dispensed.
. . .
. . . The New Mexico-Arizona [E]nabling Act
has a protective provision against the
initial setting of lease rentals at less than
fair rental value. 	This is specifically
prohibited by § 28. 	The prohibition is given
bite by the further very drastic provision
that a lease not made in substantial
conformity with the Act “shall be null and
void.” 	Thus, if the lease of trust lands
calls for a rental of substantially less than

50 Alamo Land & Cattle, 424 U.S. at 303-05 (referring to
Ervien v. United States, 251 U.S. 41 (1919); State v. Lassen, 407
P.2d 747 (Ariz. 1965)).
No. 20070910 	16
the land’s then fair rental value, it is null
and void and the holder of the claimed
leasehold interest could not be entitled to
compensation upon condemnation. 50
¶38 	Neither the Utah Constitution nor the Utah Enabling Act
have comparable “drastic provision[s]” stating that any
conveyance of school trust lands contrary to the terms of the
trust is “null and void.” 	And the Supreme Court’s holding in
Alamo Land & Cattle that a conveyance of trust lands in Arizona
for less than full value was “null and void” was based on the
existence of these separate provisions in the New Mexico-Arizona
Enabling Act. 	Therefore, our reliance on Alamo Land & Cattle was
in error, and we now disavow our suggestion from Consolidation
Coal that conveyances of school trust lands for less than full
value are null and void. 	Instead, as set out above, when the
State breaches its obligation to receive full value in conveying
trust lands, such conveyances are effective, but the State is
required to reimburse the trust for the loss.
CONCLUSION
¶39 	The Utah Constitution mandates that the State manage
school trust lands for the benefit of Utah’s public schools. 	It
invests the State with the authority to do so and imposes on it
the fiduciary obligations of a trustee. 	But it does not confer a
right on the State to be immune from the consequences of its own
fiduciary mismanagement. 	If the State has failed to meet its
fiduciary obligations, the State itself, rather than third-party
purchasers, must bear the costs of such a failure. 	Accordingly,
we affirm the district court’s decision to grant summary judgment
in favor of the Mathises.
---
¶40 	Chief Justice Durham, Justice Wilkins, Justice Parrish,
and Justice Nehring concur in Associate Chief Justice Durrant’s
opinion.