Opinion
May 24, 2010.
71 — Municipalities90-A-1 — Public Funds Contracts 90-B-1 — Public Lands — State Lands, Homestead, Rights-of-Way, Transfer 97 — Schools School Districts — Property, Contracts, etc.
La.R.S. 17:87.6; La.R.S. 33:1321 et seq.; La.R.S. 33:4712.10; La.R.S. 41:891; La.R.S. 41:892; La.Const. art. VII, § 14
La. Atty. Gen. Op. Nos. 92-545, 95-325, 01-0321, 06-0285, 08-0352, 08-0353, and 09-0293.
Pursuant to the Local Services Law (La.R.S. 33:1321 et seq.) St. Mary Parish School Board is not required to advertise for bids in order to transfer public property that is no longer needed for school purposes to the Town of Baldwin subject to compliance with La.R.S. 33:4712.10 and receiving fair value pursuant to article VII of Section 14 of the Louisiana Constitution. Pursuant to Louisiana law, a claim for breach of contract must be asserted within ten (10) years of the alleged breach, or such claim is deemed to have prescribed. Here, the alleged breach of contract would have occurred in 1969; therefore, all claims for breach of contract not asserted by 1979 for failure to comply with the 1910 Act of Sale have since prescribed and any related reversionary clause is unenforceable.
Mr. Eric P. Duplantis Assistant District Attorney Office of the District Attorney 16th Judicial District Court Courthouse Bldg. Franklin, LA 70538
Dear Mr. Duplantis:
Your request for an opinion has been forwarded to me for research and reply. You have asked for an opinion from this office concerning the procedure to be followed should the St. Mary Parish School Board (School Board) decide to transfer ownership of the following two pieces of property to the Town of Baldwin: (1) Baldwin Elementary School and (2) a parcel of land adjacent to the school. The Town of Baldwin entered into a 2008 Intergovernmental Agreement with the School Board in which it agreed to pay $100,000.00 to the School Board in order to "aid in the costs of obtaining certain infrastructure, particularly utilities." The parties also agreed that in the event the School Board ever divested itself of the school, the Town of Baldwin "would be given due consideration to obtain ownership." The School Board obtained the adjacent parcel of land through a 1984 Act of Sale with the Baldwin Volunteer Fire Department. The Act of Sale required that the property could not be sold without giving the Town of Baldwin the right of first refusal.
The School Board has recently voted that its Baldwin Elementary School and Land adjacent to the school are no longer used or needed to operate the schools within its jurisdiction and desires to transfer the school and property to the Town of Baldwin. Your concern is whether any statutes, particularly La.R.S. 41:891, La.R.S. 41:892, or La.R.S. 33:1321, establish a mandatory procedure (i.e., public bid requirement) for the transfer of the property from the School Board to the Town of Baldwin. You also seek guidance on a proper interpretation of Attorney General Opinion 08-0352 regarding illegal and unenforceable reversionary conditions conditioned on segregation.
I. Under What Authority May the St. Mary Parish School Board Transfer Ownership of the Baldwin Elementary School Property to the Town of Baldwin?
The primary purpose of your request is to ensure that all laws are followed in transferring ownership of Baldwin Elementary to the Town of Baldwin. It is our opinion that your office would not need to advertise for bids in order to sell the property to the Town of Baldwin relying on prior opinions of our office.
Initially, it is important to note that there is no indication in your opinion request that the property at issue involves 16th Section lands (lands held in trust by the State and managed by School Boards); therefore, the sale of this property is not subject to any statutory provisions applicable to 16th Section lands.
Therefore, other statutory provisions governing non-16th section property, such as La.R.S. 17:87.6 and La.R.S. 41:891 are applicable in this matter.
La.R.S. 17:87.6 provides as follows:
Any city, parish, or other local public school board may sell, lease, or otherwise dispose of, at public or private sale, for cash or on terms of credit, any school site, building, facility, or personal property which is not used and, in the judgment of the school board, is not needed in the operation of any school or schools within its jurisdiction. Any such sale, lease, or disposal of such school property shall be on such terms and conditions and for such consideration as the school board shall prescribe.
(West 2010).
Whereas, La.R.S. 41:891 states:
Whenever the school board of any parish or city determines that any school lands or other immovable property under its control are no longer needed for school purposes and the best interest of the public school system would be served by the sale of such lands, the school board shall have the authority to dispose of such lands at public auction or under sealed bids in accordance with the procedure set forth in this subpart; provided that this subpart shall not apply to the sale of sixteenth section lands, school indemnity lands or any other school lands for the sale of which the law already has provided a procedure in Chapter 6 of Title 41 of the Louisiana Revised Statutes or elsewhere in the law.
(West 2010).
Our office has analyzed the operation of the foregoing statutes in tandem in La. Atty. Gen. Op. No. 06-0285, in which we cited and affirmed our prior reasoning in La. Atty. Gen. Op. No. 01-0321:
Consequently, LSA-R.S. 17:87.6 authorizes any parish or city school board to sell, lease or otherwise dispose of, at public or private sale, for cash or on terms of credit, any school site, building, facility or personal property which is not used and, in the judgment of the school board, is not needed in the operation of any school or schools within its jurisdiction. Any such sale, lease or disposal of such school property shall be on such terms and conditions and for such consideration as the school board shall describe.
We take cognizance of the fact that LSA-R.S. 41:891 et seq. partially repealed LSA-R.S. 17:87.6 as a more recent expression of legislative will, but this office has previously concluded that the repeal is with regard to sales of school board property, not exchanges, and LSA-R.S. 17:87.6 remains viable relative to dispositions other than sales, more specifically, exchanges of property or leases. (See Atty. Gen. Op. Nos. 75-1261; 80-275; and 93-130).
(emphasis original).
As mentioned in your opinion request, the School Board has determined that Baldwin Elementary and land adjacent to the school are no longer needed for the operation of the schools within its jurisdiction and have been declared surplus. We adopt the sound legal reasoning of Atty. Gen. Op. Nos. 01-0321 and 06-0285, whereby La.R.S. 41:891 controls the "sale" of school board property by partially repealing La.R.S. 17.87.6. However, because the sale of immovable property is between two local public entities, the bid and notice provision of La.R.S. 41:891 does not apply. La.R.S. 33:1321 et seq. is the applicable statute in this instance pursuant to our reasoning in La. Atty. Gen. Op. No. 95-325.
La.R.S. 33:1321 et seq. pertains to the Local Services Law. In La. Atty. Gen. Op. 95-325 we reasoned that La.R.S. 33:1321 et seq., the Local Services Law, does not require adherence to the public bid requirements of La.R.S. 17:87.6 and La.R.S. 41:891 when the property in question is not being transferred out of the public domain. In this same opinion, we also emphasized how the Local Services Law favors transfers with other public entities and that its intent is to "provide greater economy and efficiency in the operation of local services and the benefits of such services." La. Atty. Gen. Op. 95-325. Therefore, we conclude that the School Board and the Town of Baldwin do not need to adhere to the public bid law requirements because the properties are not being transferred out of the public domain.
However, the transfer must be accomplished within the constraints of La.Const. Art. VII, Sec. 14, "which precludes the use of 'funds, credit, property or things of value of the state or of any political subdivision' for the purpose of loans, pledges or donations 'to or for any person, association, or corporation, public or private.'" La. Atty. Gen. Op. 95-325.
In order to comply with this particular constitutional provision, the School Board must receive adequate consideration from the Town of Baldwin for the property which would require a sale of the property for a price not less than the property's fair market value. "Fair market value means the price at which property would change hands between a willing buyer and a willing seller when neither party is under any compulsion to buy or sell and both parties have a reasonable knowledge of relevant facts." See La. Atty. Gen. Op. No. 09-0293, a copy of which is enclosed herein. However, since the Town of Baldwin, the purchaser, is also a public entity, the sale of the property should not be for a price that exceeds the fair market value as that could be deemed to be a donation in direct contravention of the constitution. See La. Atty. Gen. Op. No. 09-0293. Additionally, if the properties have a value greater than $3,000.00, then La.R.S. 33:4712.10 requires an appraisal of the immovable property by a qualified appraiser before the sale or transfer because the purchaser, the Town of Baldwin, is a public entity.
According to the Intergovernmental Agreement between the St. Mary Parish School Board and the Town of Baldwin, the Town paid $100,000.00 "toward the cost of providing utilities, specifically water and sewerage to the new school facility." (emphasis added). In consideration of the $100,000.00, "the Board agree[d] to construct, maintain, and operate the school, and give the TOWN due consideration as to the future use of the BOARD'S facilities located within the Town of Baldwin, which may become vacant upon the opening of this new school." (emphasis original). The Town has already paid $100,000.00 to the Board to assist with the costs for water, sewerage, and utilities of the School in the past. This past payment may not be used now as consideration for the contemplated sale. Instead, the Town will need to pay an additional amount to the Board representing fair value in order to ensure that article II of Section 14 of the Louisiana Constitution is not violated. Rendering an opinion as to what the fair value amount should be, would require a factual determination in direct contravention with our Office's long-standing policy against rendering opinions on issues of fact.
La. Op. Att'y. Gen. 445 (1918-19).
As for the Act of Sale between the Baldwin Fire Department and the St. Mary Parish School Board for the parcel of property adjacent to Baldwin Elementary, the contractual language contains a right of "first privilege" or right of first refusal provision. This provision provides that in consideration of the sale, the St. Mary Parish School Board "binds and obligates itself, its heirs, and assigns not to sell, assign, or transfer the . . . property without giving the Town of Baldwin the first privilege of purchasing the same, at a price to be determined in an appraisal by a registered M.A.I. appraiser, which privilege shall expire after fifteen (15) days prior notice of such intention to sell, if not exercised during that time." Therefore, according to the contractual language, the St. Mary Parish School Board is obligated to offer the land adjacent to Baldwin Elementary to the Town of Baldwin first, after an appraisal has been performed and the Town has been put on notice of the intent to sell. Because the St. Mary Parish School Board and the Town of Baldwin are both public entities, such a condition of the sale or transfer of the property would not be prohibited, as public bids and advertisements would not be required in this particular instance pursuant to the foregoing discussion. Hence, the Town of Baldwin has the first right of refusal on the land adjacent to the Baldwin Elementary subject to compliance with La.R.S. 33:4712.10.
Therefore, pursuant to the reasoning in La. Atty. Gen. Op. 95-325, it is our office's opinion that St. Mary Parish School Board is not required to advertise for bids in order to sell Baldwin Elementary School and its adjacent property to the Town of Baldwin. It is further the opinion of this office that the School Board must receive fair value and an appraisal of the properties for the sale if the purchase price exceeds $3,000.00.
II. The Implications of the Contractual Language Restricting the Use of the Property as a "White Public School".
Your second question pertains to language contained in an act of sale between Rosanna Baldwin Walker John Baldwin, Jr., to the Parish Board of School Directors for St. Mary Parish, Louisiana. The parties entered the contract in 1910. In exchange for $2,000.00, the Baldwins sold a certain area of property comprising eighty-nine hundredths of an acre, with all buildings and improvements in the Town of Baldwin to the Parish Board of School Directors. As part of the sale, the parties agreed to the following:
It is understood and agreed between the parties hereto that, [wh]ile the cash consideration moving between the parties is $2,000.00, . . . named in said deed, the value of the property conveyed is in [ex]cess of this sum by some three to four thousand dollars,; and that . . . prime and other consideration, therefore, is that the Parish [Bo]ard of School Directors for the Parish of St. Mary will maintain and operate a white public school ipon [sic] the said premises, and that the [sa]id conveyed property shall not be used for any other purpose except . . . purpose of maintaining a white public school.
See Opinion Request, Exhibit C.
In summary, as a condition of the act of sale, the property was to be used solely for the purpose of maintaining a white public school. This clause or provision is not a "reversionary clause" such as the provision at issue in La. Atty. Gen. Op. No. 08-0352. In this case, there is no language expressing that if the property is used for a different purpose it "shall revert" back to the sellers or their heirs. Nonetheless, La. Atty. Gen. Op. Nos. 08-0352 and 08-0353 copies of which are enclosed herein, offer sound guidance that should be followed in this instant matter regardless of whether the language is a reversionary clause or not. Based upon these prior opinions, although the desegregation of Baldwin Elementary School in 1969 was required by law, it was also a clear breach of the terms of the 1910 contract of sale. However, under Louisiana law, the heirs of the original sellers had ten years from 1969 to assert a breach of contract claim for failure to adhere to the terms of the contract. Now, approximately forty years later, the heirs are prohibited from asserting such claims as these claims prescribed in 1979. See La. Atty. Gen. Op. Nos. 08-0352 and 08-0353. Accordingly, it is the opinion of our office that the language of the 1910 Act of Sale in the building and on the premises included in the sale is unenforceable.
On February 1, 2010, the requestor informed our office that Baldwin Elementary School was desegregated in 1969.
We hope that this information sufficiently answers your inquires. If we can be of further assistance, please do not hesitate to contact us.
Very truly yours,
JAMES D. "BUDDY" CALDWELL ATTORNEY GENERAL
By:__________________________ KATHERINE K. GREEN Assistant Attorney General
JDC:KKG:jv
MAY 01 2009
OPINION 08-0352
Hon. J. Phil Haney District Attorney Sixteenth Judicial District Courthouse Building 300 Iberia Street Suite 200 New Iberia, LA 70560-4583
62 LEASES
97 SCHOOLS SCHOOL DISTRICTS — Property
La.C.C. Arts. 478, 1767, 1813, 1968, 3499 La.R.S. 41: 1338; 49:251 La. Atty. Gen. Op. 07-0111
Pursuant to Louisiana law, provisions in a real estate sale document requiring that a school be segregated are illegal and unenforceable and such a clause should be severable from the document. In addition, should the prior owner attempt to enforce such a provision, that action has prescribed.
Dear Mr. Haney:
You have requested an opinion from this Office regarding the ownership status of certain school board property in Iberia Parish. Specifically, you provide the following facts:
The Iberia Parish School Board ("the Board") acquired property, upon which is located one school, by a sale in 1926. The 1926 sale documents, which you have provided for our review, contain reversionary language that states that:
It is agreed and distinctly understood that the said property purchased by said Iberia Parish School Board shall be used for the purpose of erecting and maintaining a colored School only; and should at any time it be abandoned for such purposes, that then and in that event the said tract of land without improvements shall revert back to Vendor upon Vendor paying to the said Iberia Parish School Board, the sum of $800.00 the purchase price herein, within one year after the date of abandonment for school purposes.
Act of Sale dated June 15, 1926, COB 107/202/40931, Iberia Parish, Louisiana. Copy on file with the Louisiana Department of Justice.
The Canal Street Elementary School was erected on the property. The subject school was integrated in 1969. In addition, according to information provided by your office, the school ceased being used for school purposes on February 6, 2008, due to the expansion of another school in the area. The original Vendor has made demand for the property pursuant to the above-quoted reversionary clause. However, in light of the triggering conditions of the reversionary clause, you have the following questions regarding the Board's rights and duties with respect to the land:
It is important to note that this integration was required by law. Brown v. Board of Ed. of Topeka, Shawnee County, Kan., 347 U.S. 483 (1954).
1. Is the Board obligated to return the property?
2. If the answer to question 1 is "yes", can the Board return it without improvements upon receipt of $800.00 cash, as stated in the deed, or must it have the appraised value?
3. To avoid the cost of demolitions (estimated to be approximately $50,000) can the Board legally offer to return the property with the improvements (the old school building) for the appraised value of the land without improvements?
For the reasons set forth below, it is the opinion of this Office that the Board is not under any obligation to return the subject property. Because we are of the opinion that the Board is the owner of the property and that the reversionary language is not actionable or enforceable, we need not address questions two and three, above.
Is the Board obligated to return the property?
The implications and effects of reversionary clauses in property transfers was recently succinctly addressed by the Louisiana Fifth Circuit in the matter of City of Harahan v. State of Louisiana, 08-106 (La.App. 5 Cir. 5/27/08), 986 So.2d 755. In this case, the court held that once the terms of a reversionary clause ceased to be met, the clause is activated and the property at issue was to return to the original owner. Thus, as a general principle, the language of a reversionary clause in a property transfer, if clear, will result in the return of the property if the clause is triggered.
As an initial matter, we find La.C.C. Art. 478 of particular import to this question. That article provides, in pertinent part (emphasis added), that:
The right of ownership may be subject to a resolutory condition, and it may be burdened with a real right in favor of another person as allowed by law.
Because we are of the opinion that the reversionary clause in the 1926 deed is properly classified as a resolutory condition, we believe that La.C.C. Art. 478 is relevant to this situation. That law requires that the resolutory condition be one that is "allowed by law." As noted above, because school segregation is no longer legal in the United States, the resolutory condition in the 1926 deed would not be a condition that is allowed by law. However, because the condition was allowed by law at the time that it was executed (1926), we are doubtful that the requirements of La.C.C. Art. 478 can be used to retroactively strip this provision from the deed.
It is important to note the definition of resolutory conditions and how they work in Louisiana. That definition comes from La.C.C. Art. 1767, which states (emphasis added):
A conditional obligation is one dependent on an uncertain event.
If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive.
If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the condition is resolutory.
In this situation, because the obligation was immediately enforceable (i.e., the sale) and the failure of the sale is conditioned on the integration of the school, we are of the opinion that the segregation language in the deed is clearly a resolutory condition.
The courts of this State have looked disfavorably upon conditions in the acquisition of property by one elected body that will bind subsequent bodies as to the use of the property. See e.g., Anderson v. Thomas, 117 So. 573 (La. 1928); Landry v. Council of East Baton Rouge Parish, 220 So.2d 795 (La.App. 1 Cir. 1969). Thus, as an initial matter, the resolutory condition contained in the deed that you have provided to this Office is suspect in that it would bind the current Board based upon the morals and judgment of the Board in 1926. However, because the conditions complained of by the courts in the above-cited cases were added by the purchasers (the public entities) and not the sellers, the holdings of those courts that such conditions are not binding on future uses of the property are not determinative of the questions that you raise.
The next obvious question in this matter is: Can the above-quoted clause be stricken from the deed? In a recent opinion, Judge Lemelle of the Eastern District of Louisiana wrote the following concerning whether particular provision of a contract could be stricken due to their violations of public policy:
The Louisiana Supreme Court has held that the dissolution of a contractual provision because it goes against public policy does not necessarily dissolve the entire contract. The court stated, "It is not necessary that the entire agreement containing the stipulation against public order or policy be declared null." Morse v. J. Ray McDermott Co., Inc., 344 So.2d 1353, 1358 (La. 1976). See also Henderson Implement Co., Inc. v. Langley, 707 So.2d 482 (La.App. 3rd Cir. 1998) (lt is not necessary that the entire agreement containing a provision against public policy be declared null and void; courts are free to recognize, by interpretation of will of the parties, that a provision inserted the in the agreement is only an accessory clause to which the agreement was not subject for its existence, and delete the offending provision while enforcing the remainder of the agreement); Wilson Warehouse Company of Texas Inc. v. Maryland Casualty Co., 269 So.2d 562 (La.App. 1st Cir. 1972) (ln order to avoid inequities, courts will sever the illegal and unenforceable provisions of the contract from the remainder of the contract rather than declare the entire contract void.); Starke Taylor Sons, Inc., v. Riverside Plantation, 301 So.2d 676, 680 (La.App. 3rd Cir. 1974) (lf the enforceable provision of a contract can be severed from the unenforceable provisions, courts should, in order to avoid inequities, sever the enforceable from the unenforceable portion rather than declare the entire contract void).
Rathborne Land Co., LLC v. Ascent Energy, Inc., 2006 WL 2726367, 3 (E.D.La. 2006). Thus, it is clear that the Louisiana courts have recognized the need to sever offending portions from contracts from time to time in the greater interest of letting those contracts stand. The line of cases cited in Rathborne would seem to suggest that the segregation clause of the Canal Street Elementary School deed is severable from the remaining document, as it would now be illegal to enforce. However, because the cases cited in the Rathborne opinion rely on "the will of the parties" to determine severability, we believe that severance of the offending language herein raises substantial fact questions regarding the importance of the condition that are not proper for this Office to address. That said, the prominence of the condition in the deed raises the substantial possibility that the segregatory nature of the school was a major cause for the sale. Although such a fact-laden question would properly be a matter for judicial determination, for the reasons set forth below, we do not believe that such questions need to be answered.
During the course of our research, we have not been able to identify any cases that directly address the questions that you present. However, two United States Supreme Court cases were identified that do merit some attention: Evans v. Abney, 396 U.S. 435 (1969) and Evans v. Newton, 382 U.S. 296 (1966). Both of these cases stem from a dispute in Georgia regarding a restrictive covenant in a donation mortis causa of property to be used as a segregated park that is similar to the reversionary clause in the Canal Street Elementary School deed. In these cases, the Court found that, in light of the Fourteenth Amendment restrictions against segregation, it would be unconstitutional for the City of Macon to accept the donation of the property for a park and to then enforce the segregation requirements of the donor. However, the court also held that the covenant expressed by the donor was a substantial basis for the donation and that, although it would be illegal to give it effect today, it was not severable from the act of donation under Georgia law. Thus, the City's only option was to decline the donation. Although these cases dealt with the Georgia law of successions, they may be indicative of a tendency for the United States Supreme Court to disagree with the Rathborne-type holdings of the Louisiana courts. It is important to note that, although both of the Evans cases can be said to have been rendered during the Civil Rights Movement of the 1960s, they are subsequent to the overruling of the Plessy v. Fergusson, 163 U.S. 537 (1896), separate but equal rule ( see, Brown v. Board of Ed. of Topeka, Shawnee County, Kan., 347 U.S. 483 (1954)). Thus, these cases appear to present the most recent pronouncement of the U.S. Supreme Court on such matters in a post-Plessy environment.
We believe that the fact that the segregation clause is illegal rather than just a violation of public policy as are the offending clauses in the cases cited in Rathborne makes the Canal Street Elementary School situation an even stronger candidate for severance.
La.R.S. 49:251 (A) states that "the attorney general shall give his opinion in writing upon all questions of law" to elected and appointed state officers as required by statute. It is the policy of this office that we will not seek out the facts or infer the questions from the opinion request. The Attorney General will not furnish opinions on questions of fact; nor will the Attorney General issue an opinion on questions scheduled for determination by the courts, or where the prospect of litigation appears imminent. See, La. Atty. Gen. Op. No. 07-0111.
However, it is unclear that this major cause was the only or primary cause. This is an important distinction, as the failure of a primary cause would result in the failure of the contract. Saul Litvinoff, Still Another Look at Cause, 48 LA. L REV. 3, 18 (1987) ("A cause may exist at the inception of an obligation and then fail. When such is the case the obligation ceases to exist when its cause fails.").
Because the questions that you ask relate to the cause of the contract (the 1926 deed), a consideration of the enforceability of an illegal cause is warranted. In this regard, La.C.C. Art. 1968 states that,
[t]he cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy.
Because the subject cause in this matter is both illegal and in violation of public policy, we have no qualms about labeling it unenforceable. In addition, unlike the "as allowed by law" provision of La.C.C. Art. 478, the unenforceability language of La.C.C. Art. 1968 is triggered at the time when the cause is attempted to be enforced, not at the time when the contract is entered into. Thus, there would be no problem of the retroactive impairment of contracts when a violation of the law and of public policy would occur by now failing to enforce the segregation requirement in the 1926 deed, as, at the time of its enforcement (now), it is a violation of the law and public policy.
See also, La.C.C. Art. 1813.
Nonetheless, if the "obligation" is the entire sale (the 1926 deed), we believe that this option would obtain the same result as in the Evans cases: the failure of the cause would result in the failure of the contract. On the other hand, if, as we here opine, the "obligation" is merely the obligation to give effect to the resolutory condition, then the failure of the cause would not result in the failure of the contract, but rather just severing of the offending clause. Nonetheless, although we are unable to definitively opine that the Canal Street Elementary School property can remain the property of the Board because of the unenforceability of the segregation clause, for the reasons discussed below, we are of the opinion that such a determination is unnecessary, as the property appears to have vested in the Board's ownership for other reasons that rest on a clearer legal basis.
It is the opinion of this Office that the basis for the Board's full ownership of the Canal Street Elementary School property, with no obligation to return the property for the failure to keep the school segregated, lies in the Louisiana law of prescription. When Canal Street Elementary School was integrated in 1969, this action was, while required by law, a clear and open breach of the 1926 sale contract.
The prescriptive period for bringing a breach of contract claim in Louisiana is ten years. La.C.C. Art. 3499; Babkow v. Morris Bart, P.L.C., 1998-0256 (La.App. 4 Cir. 12/16/98), 726 So.2d 423. Thus, an action against the Board based upon its legally required breach of contract prescribed in 1979, some 30 years ago.
In addition to the unenforceability of the reversionary clause for the reasons discussed above, there is yet another reason that the Canal Street Elementary School property remains in the ownership of the Board. There is a charge to the original owner of the Canal Street Elementary School property in the reversionary clause that requires it to take some action to avail itself of the terms of the reversionary clause. This language is as follows:
. . .that then and in that event the said tract of land without improvements shall revert back to Vendor upon Vendor paying to the said Iberia Parish School Board, the sum of $800.00 the purchase price herein, within one year after the date of abandonment for school purposes.
Act of Sale dated June 15, 1926, COB 107/202/40931, Iberia Parish, Louisiana (emphasis added). Copy on file with the Louisiana Department of Justice.
This sub-clause of the reversionary clause requires the original owner to tender the $800.00 to the Board "within one year after the date of abandonment [of the property] for school purposes" in order to trigger the reversion. Thus, in this situation, it is the opinion of this Office that the reversionary clause was not automatically triggered at either the integration of the school or the cessation of use of the property for school purposes. Rather, it has not been triggered at all because the $800.00 has never been tendered. Because more than one year has passed since the time that the property ceased to be used for school purposes, the original owner no longer has an option to tender the funds to trigger the reversion. Thus, it is the opinion of this Office that for the further reason that it is too late to trigger the reversionary clause as to the Canal Street Elementary School property, the said property remains in the full ownership of the Board.
Id.
Accordingly, in answer to your first question, it is the opinion of this Office that, although the Board breached the segregation terms of the deed, that clause is now inoperable as a means to rescind the sale, as all actions that might be brought for said breach have prescribed and as the reversionary clause was never triggered. Therefore, the Board does not have an enforceable duty to return the Canal Street Elementary School property for its failure to adhere to the segregation requirement. The Board now owns that property without any strings attached.
Although we have spent a considerable amount of time examining the cause for the sale in this matter, and have noted that a failure of cause would mean a failure of the contract (deed), we also are of the opinion that the failure of the vendor or his heirs or assigns to bring an action for breach of contract based upon the failure of cause is also subject to the prescriptive periods outlined above, all of which have lapsed.
If the answer to question 1 is "yes", can the Board return it without improvements upon receipt of $800.00 cash, as stated in the deed, or must it have the appraised value?
Your second question is rendered moot by the answer to the first question and is thus considered no further.
To avoid the cost of demolitions (estimated to be approximately $50,000) can the Board legally offer to return the property with the improvements (the old school building) for the appraised value of the land without improvements?
The answer to your third question is moot based upon the answer to your first question.
Is there an "offer back" provision that the Board can use to sell the property back to the original owners?
During telephone conversations subsequent to your opinion request, you inquired whether the Board could offer the subject property back to the original owners in the event that the Board was the owner of the property. Because we have determined that the Board is the owner of the subject property, we address your question regarding whether, under the Public Bid Law, the Board can offer the property back to the original owners before putting it up for bid (assuming that the Board wants to divest itself of the property).
To answer this question, we refer you to La.R.S. 41:1338. Generally, that law requires that property no longer needed by the State (in this case, including school boards) be offered first to the original vendor of the property before the property is offered for sale to other third parties. However, La.R.S. 41:1338(C) provides that this mandatory "offer back" provision does not apply to school board owned property. Thus, it is our opinion that, while permissible, there is no legal requirement that the Board offer the subject property back to the original vendors. Further, should the Board decide to offer the subject property back to the original vendor, the price must be one of fair market value. La.R.S. 41:1338. The procedures for such sales are provided, in detail, in La.R.S. 41:1338, and we refer you to them should the Board decide to divest itself of the subject property via this mechanism.
We hope this sufficiently answers your inquiry; however, if we may be of further assistance please do not hesitate to contact our office.
Sincerely yours,
JAMES D. "BUDDY" CALDWELL ATTORNEY GENERAL
By:__________________________
RYAN M. SEIDEMANN Assistant Attorney General
JDC/RMS/tp
MAY 01 2009
OPINION 08-0353
Hon. J. Phil Haney District Attorney Sixteenth Judicial District Courthouse Building 300 Iberia Street Suite 200 New Iberia, LA 70560-4583
62 LEASES 97 SCHOOLS SCHOOL DISTRICTS — Property
La.C.C. Arts. 478, 493, 1767, 1813, 1968, 2315, 2695, 3499
Pursuant to Louisiana law, provisions in a real estate sale document requiring that a school be segregated are illegal and unenforceable and such a clause should be severable from the document. In addition, should the prior owner attempt to enforce such a provision, that action has prescribed. However, there is no deficiency with the Peebles Elementary School lease that ends in 2010.
Dear Mr. Haney:
You have requested an opinion from this Office regarding the ownership status of certain school board property in Iberia Parish. Specifically, you provide the following facts:
The Iberia Parish School Board ("the Board") acquired two parcels of property, upon which is located one school, one by sale in 1906 and one by fifty-year lease in 1960. The 1906 sale documents, which you have provided for our review, contain reversionary language that states that:
It is agreed and understood that this lot, presently sold, is specially for the purposes of a White Public School for no other purposes, that should said Public School be discontinued there in that case the said lot shall return to present Vendor free from encumbrances.
Act of Sale dated July 19, 1906, COB 58/546/18932, Iberia Parish, Louisiana. Copy on file with the Louisiana Department of Justice.
The Peebles Elementary School was erected on the property. The subject school was integrated in 1969. In addition, the school was vacated in 2005 due to damage caused by Hurricane Rita. The Board now desires to sell the property upon which this school sits. However, in light of the above-quoted reversionary clause, you have the following questions regarding the Board's rights and duties with respect to the land:
It is important to note that this integration was required by law. Brown v. Board of Ed. of Topeka, Shawnee County, Kan., 347 U.S. 483 (1954)
1. Does the Board have an enforceable obligation to return the properties?
2. If the answer to question 1 is "yes", has prescription tolled on any reversionary language in the respective deeds?
3. If the answer to question 2 is "yes", can the Board legally demand the appraised value with all improvements (are improvements considered encumbrances)?
Each of these questions, to the extent that they are necessary, are addressed, in turn, below.
I. The Deeded Property
Because the total piece of property upon which the Peebles Elementary School is situated is actually comprised of two separate tracts — one purchased and one leased — there are necessarily two answers to each of your questions. The first portion of this opinion considers your questions with respect to the property that the Board acquired by deed in 1906.
A. Does the Board have an enforceable obligation to return the properties?
The implications and effects of reversionary clauses in property transfers was recently succinctly addressed by the Louisiana Fifth Circuit in the matter of City of Harahan v. State of Louisiana, 08-106 (La.App. 5 Cir. 5/27/08), 986 So.2d 755. In this case, the court held that once the terms of a reversionary clause ceased to be met, the clause is activated and the property at issue was to return to the original owner. Thus, as a general principle, the language of a reversionary clause in a property transfer, if clear, will result in the return of the property if the clause is triggered.
As an initial matter, we find La.C.C. Art. 478 of particular import to this question. That article provides, in pertinent part (emphasis added), that:
The right of ownership may be subject to a resolutory condition, and it may be burdened with a real right in favor of another person as allowed by law.
Because we are of the opinion that the reversionary clause in the 1906 deed is properly classified as a resolutory condition, we believe that La.C.C. Art. 478 is relevant to this situation. That law requires that the resolutory condition be one that is "allowed by law." As noted above, because school segregation is no longer legal in the United States, the resolutory condition in the 1906 deed would not be a condition that is allowed by law. However, because the condition was allowed by law at the time that it was executed (1906), we are doubtful that the requirements of La.C.C. Art. 478 can be used to retroactively strip this provision from the deed.
It is important to note the definition of resolutory conditions and how they work in Louisiana. That definition comes from La.C.C. Art. 1767, which states (emphasis added):
A conditional obligation is one dependent on an uncertain event.
If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive.
If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the condition is resolutory.
In this situation, because the obligation was immediately enforceable (i.e., the sale) and the failure of the sale is conditioned on the integration of the school, we are of the opinion that the segregation language in the deed is clearly a resolutory condition.
The courts of this State have looked disfavorably upon conditions in the acquisition of property by one elected body that will bind subsequent bodies as to the use of the property. See e.g., Anderson v. Thomas, 117 So. 573 (La. 1928); Landry v. Council of East Baton Rouge Parish, 220 So.2d 795 (La.App. 1 Cir. 1969). Thus, as an initial matter, the resolutory condition contained in the deed that you have provided to this Office is suspect in that it would bind the current Board based upon the morals and judgment of the Board in 1906. However, because the conditions complained of by the courts in the above-cited cases were added by the purchasers (the public entities) and not the sellers, the holdings of those courts that such conditions are not binding on future uses of the property are not determinative of the questions that you raise.
The next obvious question in this matter is: Can the above-quoted clause be stricken from the deed? In a recent opinion, Judge Lemelle of the Eastern District of Louisiana wrote the following concerning whether particular provision of a contract could be stricken due to their violations of public policy:
The Louisiana Supreme Court has held that the dissolution of a contractual provision because it goes against public policy does not necessarily dissolve the entire contract. The court stated, "It is not necessary that the entire agreement containing the stipulation against public order or policy be declared null." Morse v. J. Ray McDermott Co., Inc., 344 So.2d 1353, 1358 (La. 1976). See also Henderson Implement Co., Inc. v. Langley, 707 So.2d 482 (La.App. 3rd Cir. 1998) (lt is not necessary that the entire agreement containing a provision against public policy be declared null and void; courts are free to recognize, by interpretation of will of the parties, that a provision inserted the in the agreement is only an accessory clause to which the agreement was not subject for its existence, and delete the offending provision while enforcing the remainder of the agreement); Wilson Warehouse Company of Texas Inc. ., v. Maryland Casualty Co., 269 So.2d 562 (La.App. 1st Cir. 1972) (ln order to avoid inequities, courts will sever the illegal and unenforceable provisions of the contract from the remainder of the contract rather than declare the entire contract void.); Starke Taylor Sons, Inc., v. Riverside Plantation, 301 So.2d 676, 680 (La.App. 3rd Cir. 1974) (lf the enforceable provision of a contract can be severed from the unenforceable provisions, courts should, in order to avoid inequities, sever the enforceable from the unenforceable portion rather than declare the entire contract void).
Rathborne Land Co., LLC v. Ascent Energy, Inc., 2006 WL 2726367, 3 (E.D.La. 2006). Thus, it is clear that the Louisiana courts have recognized the need to sever offending portions from contracts from time to time in the greater interest of letting those contracts stand. The line of cases cited in Rathborne would seem to suggest that the segregation clause of the Peebles Elementary School deed is severable from the remaining document, as it would now be illegal to enforce. However, because the cases cited in the Rathborne opinion rely on "the will of the parties" to determine severability, we believe that severance of the offending language herein raises substantial fact questions regarding the importance of the condition that are not proper for this Office to address. That said, the prominence of the condition in the deed raises the substantial possibility that the segregatory nature of the school was a major cause for the sale. Although such a fact-laden question would properly be a matter for judicial determination, for the reasons set forth below, we do not believe that such questions need to be answered.
During the course of our research, we have not been able to identify any cases that directly address the questions that you present. However, two United States Supreme Court cases were identified that do merit some attention: Evans v. Abney, 396 U.S. 435 (1969) and Evans v. Newton, 382 U.S. 296 (1966). Both of these cases stem from a dispute in Georgia regarding a restrictive covenant in a donation mortis causa of property to be used as a segregated park that is similar to the reversionary clause in the Peebles Elementary School deed. In these cases, the Court found that, in light of the Fourteenth Amendment restrictions against segregation, it would be unconstitutional for the City of Macon to accept the donation of the property for a park and to then enforce the segregation requirements of the donor. However, the court also held that the covenant expressed by the donor was a substantial basis for the donation and that, although it would be illegal to give it effect today, it was not severable from the act of donation under Georgia law. Thus, the City's only option was to decline the donation. Although these cases dealt with the Georgia law of successions, they may be indicative of a tendency for the United States Supreme Court to disagree with the Rathborne-type holdings of the Louisiana courts. It is important to note that, although both of the Evans cases can be said to have been rendered during the Civil Rights Movement of the 1960s, they are subsequent to the overruling of the Plessy v. Fergusson, 163 U.S. 537 (1896), separate but equal rule (see, Brown v. Board of Ed. of Topeka, Shawnee County, Kan., 347 U.S. 483 (1954)). Thus, these cases appear to present the most recent pronouncement of the U.S. Supreme Court on such matters in a post-Plessy environment.
We believe that the fact that the segregation clause is illegal rather than just a violation of public policy as are the offending clauses in the cases cited in Rathborne makes the Peebles Elementary School situation an even stronger candidate for severance.
La.R.S. 49:251 (A) states that "the attorney general shall give his opinion in writing upon all questions of law" to elected and appointed state officers as required by statute. It is the policy of this office that we will not seek out the facts or infer the questions from the opinion request. The Attorney General will not furnish opinions on questions of fact; nor will the Attorney General issue an opinion on questions scheduled for determination by the courts, or where the prospect of litigation appears imminent. See, La. Atty. Gen. Op. No. 07-0111.
However, it is unclear that this major cause was the only or primary cause. This is an important distinction, as the failure of a primary cause would result in the failure of the contract. Saul Litvinoff, Still Another Look at Cause, 48 LA. L. REV. 3, 18 (1987) ("A cause may exist at the inception of an obligation and then fail. When such is the case the obligation ceases to exist when its cause fails.").
Because the questions that you ask relate to the cause of the contract (the 1906 deed), a consideration of the enforceability of an illegal cause is warranted. In this regard, La.C.C. Art. 1968 states that,
[t]he cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy.
Because the subject cause in this matter is both illegal and in violation of public policy, we have no qualms about labeling it unenforceable. In addition, unlike the "as allowed by law" provision of La.C.C. Art. 478, the unenforceability language of La.C.C. Art. 1968 is triggered at the time when the cause is attempted to be enforced, not at the time when the contract is entered into. Thus, there would be no problem of the retroactive impairment of contracts when a violation of the law and of public policy would occur now failing to enforce the segregation requirement in the 1906 deed, as, at the time of its enforcement (now), it is a violation of the law and public policy.
See also, La.C.C. Art. 1813.
Nonetheless, if the "obligation" is the entire sale (the 1906 deed), we believe that this option would obtain the same result as in the Evans cases: the failure of the cause would result in the failure of the contract. On the other hand, if, as we here opine, the "obligation" is merely the obligation to give effect to the resolutory condition, then the failure of the cause would not result in the failure of the contract, but rather just severing of the offending clause. Nonetheless, although we are unable to definitively opine that the Peebles Elementary School property can remain the property of the Board because of the unenforceability of the segregation clause, for the reasons discussed below, we are of the opinion that such a determination is unnecessary, as the property appears to have vested in the Board's ownership for other reasons that rest on a clearer legal basis.
It is the opinion of this Office that the basis for the Board's full ownership of the Peebles Elementary School property, with no obligation to return the property for the failure to keep the school segregated, lies in the Louisiana law of prescription. When Peebles Elementary School was integrated in 1969, this action was, while required by law, a clear and open breach of the 1906 sale contract.
The prescriptive period for bringing a breach of contract claim in Louisiana is ten years. La.C.C. Art. 3499; Babkow v. Morris Bart, P.L.C., 1998-0256 (La.App. 4 Cir. 12/16/98), 726 So.2d 423. Thus, an action against the Board based upon its legally required breach of contract prescribed in 1979, some 30 years ago.
Accordingly, in answer to your first question, it is the opinion of this Office that, although the Board breached the segregation terms of the deed, that clause is now inoperable as a means to rescind the sale, as all actions that might be brought for said breach have prescribed. Therefore, the Board does not have an enforceable duty to return the Peebles Elementary School property for its failure to adhere to the segregation requirement. The Board now owns that property without any strings attached.
Although we have spent a considerable amount of time examining the cause for the sale in this matter, and have noted that a failure of cause would mean a failure of the contract (deed), we also are of the opinion that the failure of the vendor or his heirs or assigns to bring an action for breach of contract based upon the failure of cause is also subject to the prescriptive periods outlined above, all of which have lapsed.
B. If the answer to question 1 is "yes", has prescription tolled on any reversionary language in the respective deeds?
Your second question, as to the deeded property, is answered by the answer to the first question and is thus considered no further.
C. If the answer to question 2 is "yes", can the Board legally demand the appraised value with all improvements (are improvements considered encumbrances)?
The answer to your third question, as to the deeded property, is moot based upon the answer to your first question.
D. Is there an "offer back" provision that the Board can use to sell the property back to the original owners?
During telephone conversations subsequent to your opinion request, you inquired whether the Board could offer the subject property back to the original owners in the event that the Board was the owner of the property. Because we have determined that the Board is the owner of the subject property, we address your question regarding whether, under the Public Bid Law, the Board can offer the property back to the original owners before putting it up for bid (assuming that the Board wants to divest itself of the property).
To answer this question, we refer you to La.R.S. 41:1338. Generally, that law requires that property no longer needed by the State (in this case, including school boards) be offered first to the original vendor of the property before the property is offered for sale to other third parties. However, La.R.S. 41:1338(C) provides that this mandatory "offer back" provision does not apply to school board owned property. Thus, it is our opinion that, while permissible, there is no legal requirement that the Board offer the subject property back to the original vendors. Further, should the Board decide to offer the subject property back to the original vendor, the price must be one of fair market value. La.R.S. 41:1338. The procedures for such sales are provided, in detail, in La.R.S. 41:1338, and we refer you to them should the Board decide to divest itself of the subject property via this mechanism.
II. The Leased Property
The second portion of this opinion considers your questions with respect to the property that the Board acquired by a fifty-year lease in 1960. It should be made clear at the outset that the 1960 lease does not contain any language that relates to the use of the property for a segregated school. Thus, none of the above discussion is applicable to the leased property.
A. Does the Board have an enforceable obligation to return the properties?
The operative language in the 1960 lease reads as follows:
It is agreed and understood that the property herein leased shall be used only for school purposes and the failure to put said property to such use for a period of one (1) year shall, ipso facto, terminate this lease.
Lease dated Dec. 14, 1960, COB 444/117593, Iberia Parish, Louisiana. Copy on file with the Louisiana Department of Justice.
It is the opinion of this Office that there is no facial deficiency or unenforceable portion of this lease. The lease term is for 50 years, which would mean that the lease would run its course on December 14, 2010. In direct answer to your questions, it is the opinion of this Office that on December 14, 2010, the Board has an obligation to return the leased property unless the lease has been extended or the property has been purchased by the Board before that time.
B. If the answer to question 1 is "yes", has prescription tolled on any reversionary language in the respective deeds?
Because there is no reversionary language in this lease, this question is inapplicable to the leased property. C. If the answer to question 2 is "yes", can the Board legally demand the appraised value with all improvements (are improvements considered encumbrances)?
Although it is clear that this question is more related to the sale document discussed in Part I of this opinion, there is some relevance of this question to the leased property. The relevant language in the leases states that:
At the termination of this lease for any cause, the lessee, Iberia Parish School Board, is specifically granted the right to remove from said property any buildings or improvements placed thereon by it.
ld.
It is apparent from your request letter that this language could pose a problem for the Board, as the structures currently in place on the purchased and leased property span both tracts. Thus, the removal of improvements from the leased property could well mean the destruction of the improvements on the property that the Board owns on the 1906 deeded property. Again, this reality strongly suggests that the Board should make all efforts to either purchase the leased property outright or to at least seek a lease extension from the land owner if it wishes to retain an interest in the currently-leased land.
We should note that the above-quoted language is essentially a contractual recapitulation of the provisions of the Civil Code relating to lessees rights and improvements. Specifically, La.C.C. Art. 2695 provides:
In the absence of contrary agreement, upon termination of the lease, the rights and obligations of the parties with regard to attachments, additions, or other improvements made to the leased thing by the lessee are as follows:
(1) The lessee may remove all improvements that he made to the leased thing, provided that he restore the thing to its former condition.
(2) If the lessee does not remove the improvements, the lessor may:
(a) Appropriate ownership of the improvements by reimbursing the lessee for their costs or for the enhanced value of the leased thing whichever is less; or
(b) Demand that the lessee remove the improvements within a reasonable time and restore the leased thing to its former condition. If the lessee fails to do so, the lessor may remove the improvements and restore the leased thing to its former condition at the expense of the lessee or appropriate ownership of the improvements without any obligation of reimbursement to the lessee. Appropriation of the improvement by the lessor may only be accomplished by providing additional notice by certified mail to the lessee after expiration of the time given the lessee to remove the improvements.
(c) Until such time as the lessor appropriates the improvement, the improvements shall remain the property of the lessee and the lessee shall be solely responsible for any harm caused by the improvements.
We do not believe that the lease provision modifies this law in any way, but rather simply memorializes it as part of the lease. Thus, should the lease terminate without an extension, the lessor would have the option of keeping the improvements if the Board does not elect to remove them. The exercise of this option would require some reimbursement to the Board as provided by La.C.C. Art. 2695. Thus, although the Board clearly owns the improvements on the leased property, there appears to be no way for the Board to acquire an ownership interest in that property short of negotiating a sale with the current owner. Accordingly, it is the opinion of this Office that the Board is subject to the lessor's rights with respect to improvements under La.C.C. Art. 2695 as set forth above. Because of this opinion, we again strongly suggest that the Board make every effort to acquire either ownership of the footprint of the structure as it extends onto the leased property or to extend the lease of the property if it wishes to retain an interest in the currently-leased land.
However, as is noted by Resweber, if the thing was constructed with the consent of the lessor, it remains the property of the lessee even after the termination of the lease. Brad R. Resweber, Opening the Can of Worms and Putting Them Back In: An Analysis of New Louisiana Civil Code Article 2695, 67 LA. L REV. 571, 592-593 (2007) (commenting that, for the ownership of improvements, one must look to La.C.C. Art. 493 and the law of accession, while La.C.C. Art. 2695 provides for the rights and duties of the parties with respect to how to handle such improvements in the case of lease). See also, Peter S. Title, Alterations — Improvements, additions and trade fixtures and the revisions effective January 1, 2005, 2 LA. PRAC. REAL EST. § 18:49 (2d ed.) (2008-2009). Because it is clear from the lease that the intended use of the property was for the construction of a school, it can easily be said that the lessor consented to the building that now rests on the property. Thus, it is the opinion of this Office that the School Board clearly owns the portion of the Peebles Elementary School that is situated on the leased property. Accordingly, this supports the notion that the Board should be due reimbursement should the lessor elect to retain the improvements. All of this is, however, subject to the allowances in La.C.C. Art. 2695 that permit the lessor to demand the removal of the improvements.
It is important to note that we can find no Louisiana case in which a court has considered such a scenario. It seems doubtful that a court would permit the destruction of a building that partially overlaps some formerly leased property if the parties cannot reach an agreement as to the disposition of the improvements or the underlying property.
Finally, concerning your question of whether an improvement constitutes an encumbrance on a piece of property, it is the opinion of this Office that it does not. An encumbrance is defined by Black's Law Dictionary (8th ed.) as:
A claim or liability that is attached to property or some other right and that may lessen its value, such as a lien or mortgage; any property right that is not an ownership interest.
Thus, it is clear that an encumbrance is an inchoate right that attaches to a piece of property and not a tangible thing such as a property improvement. Accordingly, it is our opinion that an improvement is not the same as an encumbrance.
We hope this sufficiently answers your inquiry; however, if we may be of further assistance please do not hesitate to contact our office.
Sincerely yours,
JAMES D. "BUDDY" CALDWELL ATTORNEY GENERAL
By:__________________________ RYAN M. SEIDEMANN Assistant Attorney General
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DEC 22 2009
OPINION 09-0293
Mr. Billy Hebert Terrebonne Parish Council Post Office Box 3485 Houma, LA 70361
90 — A — 1 PUBLIC FUNDS CONTRACTS
It is permissible for the parish to purchase property without first seeking proposals from other property owners; however, the property must be appraised per La.R.S. 33:4712.10 and the political subdivision may not pay a price that exceeds the appraised value.
Dear Mr. Hebert,
You have requested an opinion of this office regarding a proposal by the Terrebonne Parish President to purchase 70 acres of property in the north part of the parish to construct a local government development, which would include a category 5 office for the Homeland Security Department, a new juvenile detention center, an animal shelter, and other government related offices. According to your request, the parish president picked out the site for the project and would like to purchase the property based on an appraisal obtained by the seller. Certain council members were approached by property owners in the area asking why their property was not considered. Thus, you ask whether it is permissible for the parish to purchase property without first seeking proposals from other property owners.
Article VI, § 23 of the Louisiana Constitution authorizes political subdivisions to acquire property. It provides:
Subject to and not inconsistent with this constitution and subject to restrictions provided by general law, political subdivisions may acquire property for any public purpose by purchase, donation, expropriation, exchange, or otherwise.
Once the determination has been made by a political subdivision to purchase a particular piece of property, there is nothing in the law that requires it to obtain appraisals from owners of different properties. See La. Atty. Gen. Op. No. 94-342 (stating "[t]here are no state constitutional or statutory provisions which dictate methods which must be used when school boards or other political subdivisions of the state purchase land."); see also La. Atty. Gen. Op. No. 95-514. The law only requires that the property the political subdivision purchases be appraised. This requirement is set forth in La.R.S. 33:4712.10 and provides:
Notwithstanding any other provision of law to the contrary, no political subdivision shall purchase immovable property with a value greater than three thousand dollars unless prior to such purchase the property has been appraised by a qualified appraiser. No such appraisal shall include the value of improvements proposed to be made to the property after purchase by the political subdivision.
The purchase of immovable property for a price that exceeds the appraised value of the property would be tantamount to a donation of public funds; and therefore, a violation of Article VII, § 14(A) of the 1974 Constitution. La. Atty. Gen. Op. Nos. 08-0226, 99-251, 89-581.
We note that the parish council has the responsibility to act as a prudent manager of the public fisc. Thus, the council must closely scrutinize the appraisal obtained by the seller to ensure it is reasonable, was properly conducted and reflects the fair market value of the property. Fair market value means the price at which property would change hands between a willing buyer and a willing seller when neither party is under any compulsion to buy or sell and both parties have a reasonable knowledge of relevant facts. La. Atty. Gen. Op. Nos. 08-0226, 06-0236. If the council believes the appraisal is too high, it may wish to have its own appraisal done on the property.
Accordingly, it is the opinion of this office that it is permissible for the parish to purchase property without first seeking proposals from other property owners; however, the property must be appraised per La.R.S. 33:4712.10 and the political subdivision may not pay a price that exceeds the appraised value.
We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.
Yours very truly,
JAMES D. "BUDDY" CALDWELL Attorney General
By:__________________________ Lindsey K. Hunter Assistant Attorney General
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