Summary
In Rider v. Cooney (1933), 94 Mont. 295, 23 P.2d 261, the Court determined that when a lease is granted upon the public lands of the state, an interest or estate in the lands has been alienated, and therefore the leasing of the lands of the state for a term of years is the disposal of an interest or estate in the lands within the provisions of our Constitution.
Summary of this case from Montanans v. Bd. of Land CommOpinion
No. 7,134.
Submitted April 20, 1933.
Decided May 16, 1933.
Injunction — State Lands — Leasing Grazing Lands — "Market Value" — Fixing Value a Legislative Function — Constitutional Law — Statutes. State Lands — Disposal — Constitution a Limitation on Power of Legislature. 1. The provisions of section 1, Article XVII, Constitution, relative to the disposal of public lands of the state, are limitations upon the power of the legislature in that behalf. Constitution — Validity of Statutes — Rule. 2. Where a statute is attacked on the ground of unconstitutionality, the question presented is not whether it is possible to condemn but whether it is possible to uphold it, and it must be upheld unless its unconstitutionality appears beyond a reasonable doubt. Public Lands — Constitution — Leasing of Lands Constitutes Disposal of Interest Therein. 3. An estate for years is an interest in land and the alienation of an interest by lease for a number of years is a disposal of such interest; hence the prohibition of section 1, Article XVII, Constitution, that none of the state lands "nor any estate or interest therein" shall be disposed of unless the full market value thereof be paid, applies to the leasing of state grazing lands. Same — Constitution — Disposal of Lands at "Market Value" Means Actual Value. 4. The "market value" of a thing is its fair value as between one desiring to purchase and another desiring to sell; it and the term "value" are often used interchangeably and as being the equivalent of "actual value"; therefore the provision of section 1, Article XVII, of the Constitution that state lands shall not be disposed of except for their full "market value" means their actual value. Constitution — Words Used Presumably Employed in Ordinary Sense. 5. Words used in the Constitution are presumed to have been employed in their natural, ordinary sense, unless the context in which used requires that they be assigned a different meaning, or unless other provisions on the same subject limit or enlarge their scope. State Lands — Leasing — Absence of Competition not Evidence of Absence of Market With Relation to Value. 6. Property may have a value notwithstanding there is no market for it, and the absence of competition in the leasing of any tract of state lands is not conclusive evidence that there is no market for it; it is only evidence that in all probability there is no competitive or active demand for the particular tract. Legislature has Plenary Power — Power not Deemed Circumscribed by Implication. 7. The legislative department of the state government has plenary power, except so far as it is abridged by the federal and state Constitutions; it will not be deemed circumscribed by mere implication. Legislature — Legislative Policies Presumed Adopted With Knowledge of Facts — Judiciary cannot Interfere. 8. The legislature is presumed to have acted, so far as mere questions of policy are concerned, with full knowledge of the facts upon which its legislation is based, and its conclusions thereon are beyond judicial consideration. State Lands — Method of Determining Market Value of Lands for Leasing a Legislative Function. 9. As against the contention that the function is an executive and not a legislative one, held, that the legislature may by regulation and restriction declare the policy pursued in determining the market value of leases of state lands, and any policy which correctly determines such value is within the constitutional provision. (Sec. 1, Art. XVII.) Same — Leasing of Grazing Lands — Legislative Classification of Lands — Considerations Entering into Determination of Market Value. 10. In determining the value of grazing lands of the state the most important factor is the amount of pasturage they will afford; distance from market, while important in determining the value of agricultural land, being of comparatively little importance; hence contention that section 3, Chapter 42, Laws of 1933, improperly classifies grazing lands because based only upon the amount of grass produced thereon may not be sustained in the absence of facts showing that the state does not realize the market value of the lands. Same — Statute Fixing Rental Value of Land — Constitutionality of Statute Held to Involve Determination of Question of Fact Under Proper Pleadings. 11. While it is the general rule that the constitutionality of a statute is not to be determined on a question of fact, there are exceptions to the rule, the question whether or not in leasing state lands for grazing purposes the state under the policy adopted by the legislature in enacting section 3, Chapter 42, Laws of 1933, classifying such lands and fixing their rental value, realizes their market value, being one of such questions. Statutes — Constitutionality — Test — Who may not Raise Question. 12. The constitutionality of a statute may be tested, not by what has been done but by what may be done thereunder; however, no one will be heard to question its validity unless his interests have been, or are about to be, prejudicially affected by its operation.
Mr. S.C. Ford and Mr. Ralph L. Arnold, for Plaintiff, submitted an original and a reply brief; Mr. Ford argued the cause orally.
Mr. Raymond T. Nagle, Attorney General, and Mr. Jeremiah J. Lynch, First Assistant Attorney General, for Defendants, submitted a brief; Mr. Lynch argued the cause orally.
Mr. T.B. Weir, Mr. W.H. Hoover, Mr. Rudolph Nelstead, Mr. W.G. Gilbert, Mr. S.P. Wilson and Mr. Harry P. Bennett, Amici Curiae, submitted a brief; Mr. Weir argued the cause orally.
Where the manner of disposition of state lands is provided by the Constitution, it is not within the power of the legislature to change it. This principle of law has been announced by numerous cases where the control, sale or leasing of school lands is exercised, or attempted to be exercised by an officer or individual other than those named in the Constitution. ( In re Canal Certificates, 19 Colo. 63, 34 P. 274; State v. Tanner, 73 Neb. 104, 102 N.W. 235; State v. Cunningham, 88 Wis. 81, 57 N.W. 1119, 59 N.W. 503; 50 C.J. 973, note 70, 71; In re Leasing of State Lands, 18 Colo. 359, 32 P. 986.)
It is the duty of the State Board of Land Commissioners by reason of the trust created in the grant of federal lands to the state for school purposes, to obtain the highest possible price for such lands, whether at a sale or lease. This obligation is recognized and called attention to by the legislature in section 3, Chapter 60, Laws of 1927, which revised the whole law with regard to the leasing, sale or other disposition of the lands of the state or of any interest or estate therein. (See Hammond v. Alexander, 31 Idaho, 791, 177 P. 400; In re Canal Certificates, supra; State ex rel. Reid v. Scott, 18 Neb. 597, 26 N.W. 386.)
A leasehold interest is an estate or interest in land within the meaning of section 1 of Article XVII, of the Constitution. (See Wheeler v. McIntyre, 55 Mont. 295, 301, 175 P. 892; Willard v. Federal Surety Co., 91 Mont. 465, 8 P.2d 633; Hyatt v. Vincennes Nat. Bank, 113 U.S. 408, 5 Sup. Ct. 573, 28 L.Ed. 1009; German-American Sav. Bank v. Gollmer, 155 Cal. 683, 102 P. 932, 24 L.R.A. (n.s.) 1066; sec. 6723, Rev. Codes 1921; sec. 6727 as amended by Chap. 49, Laws 1931.)
Under the foregoing statutes and decisions as well as the common law, a lease of state land creates an "estate or interest therein" which cannot be disposed of either by the State Board of Land Commissioners or the legislature "unless the full market value of the estate or interest disposed of, to be ascertained in such manner as may be provided by law, be paid or safely secured to the state."
The next question then under this section of the Constitution (sec. 1, Art. XVII) is, Does the clause "to be ascertained in such manner as may be provided by law" authorize the legislature to provide an arbitrary maximum annual grazing price for such "estate or interest" in state lands? To ask the question is to answer it. To provide an arbitrary rental price is not "ascertaining" in a "manner" of fixing the "full market value"; it is rather a manner of disposing of the necessity of ascertaining any value as well as destroying all effect of the preceding words, "full market value." A restriction fixing a maximum rental not only violates the trust reposed in the state by Congress in the Enabling Act, but also violates section 1, Article XVII, of the Constitution. ( State v. Stewart, 48 Mont. 347, 137 P. 854.) The legislature is powerless to fix values under the guise of a "regulation" or "restriction." The provision for the "full market value" was intended to secure the "maximum possible amount" for the benefit of the trust fund. "Full market value" means nothing less than the highest market value. The legislature cannot fix anything less than is required by the Constitution as the full market value of such lands without transgressing its powers.
It is evident that section 3 of Chapter 42 classified grazing lands for no other purpose than that of fixing a maximum rental value for grazing lands. It classifies land into five classes and undertakes to fix a maximum rental for each class. Full market value cannot be determined by classification, since many elements enter into the value of lands in the same class. ( State ex rel. Schoonover v. Stewart, 89 Mont. 257, 297 P. 476; Johnson v. Johnson, 92 Mont. 512, 15 P.2d 842.)
It will no doubt be contended that where there is not competitive bidding there is no market value within the meaning of the constitutional provision, and that in such case the price fixed by section 3, being the amount an applicant for lease is willing to pay, becomes the market value. Such cannot be the law and no authorities can be found to support such a contention. "Full market value" cannot mean less than "market value," and the courts have never placed such a limited and restricted meaning upon "market value." The market value of land is the price that would in all probability result from fair negotiations when the seller is willing to sell and the buyer desires to buy. ( Sharpe v. United States, 112 Fed. 893, 50 C.C.A. 597, 57 L.R.A. 932; Edmands v. City of Boston, 108 Mass. 535.) The market value of lands may be established by the opinion of witnesses who know the character of that land, its availability, fertility, situation and the character of similar and adjacent property. ( Montana Ry. Co. v. Warren, 6 Mont. 275, 12 P. 641.) The true test of the "market value" of land is the price for which it could be sold by a person desirous of selling it to a person wishing to buy, neither acting under compulsion and both exercising intelligent judgment. ( Portland O.C.R. Co. v. Sanders, 86 Or. 62, 167 P. 465; Ham, Yearsley Ryrie v. Northern P. R. Co., 107 Wn. 378, 181 P. 898; McCall v. Glouchester Lumber Co., 196 N.C. 597, 146 S.E. 579; Louisville N.R. Co. v. R.E. DeMontluzin Co., 166 La. 211, 116 So. 854; Kansas City, W. N.W.R. Co. v. Fisher, 49 Kan. 17, 30 S.W. 111; Guyandot Valley R. Co. v. Buskirk, 57 W. Va. 417, 50 S.E. 521, 110 Am. St. Rep. 785.)
The fixing of value is a judicial or quasi-judicial function, not a legislative one. The land board has quasi-judicial powers and is the proper agency or department of the state for fixing value of state lands. Section 3 of Chapter 42 deprives it of its constitutional powers in this regard, and therefore violates section 1 of Article IV of the Constitution, which provides for the division of the powers of the state into three distinct departments.
The whole plan and manner of leasing grazing lands as provided by Chapter 42 is contrary to the rule laid down by this court and the principle and declaration of section 3, Chapter 60, Laws of 1927, that these state lands constitute a trust and must be administered accordingly. Where a legislative assembly enacts legislation it should be so designed as to obtain for the beneficiary of the trust the full market value of these lands. Here Chapter 42 is designed, planned and framed to fix and maintain rentals on state lands at arbitrary figures irrespective of the full market value and contrary to the requirements of the Constitution and the intent of the Enabling Act, and deprives the state board of any discretion in the leasing of such lands.
The plaintiff has attacked Chapter 42, Laws of 1933, and section 20 of Chapter 60, Laws of 1927, on constitutional grounds. The rule is that a legislative enactment is presumed to be valid and that such presumption must be refuted beyond a reasonable doubt before the court will declare the enactment invalid. ( State ex rel. Powell v. State Bank of Moore, 90 Mont. 539, 4 P.2d 717, 80 A.L.R. 1494; Herrin v. Erickson, 90 Mont. 259, 2 P.2d 296; 1 Cooley's Constitutional Limitations, 371; 12 C.J. 791-798.)
The legislature has plenary power to pass any law not prohibited by the Constitution of the United States, the treaties made and statutes enacted pursuant thereof, or the Constitution of this state. The litigant who seeks to limit the power of the lawmakers must be able to point out the particular provision of the Constitution which contains the limitation expressed in no uncertain terms. ( State ex rel. Evans v. Stewart, 53 Mont. 18, 161 P. 309; Great Northern Utilities Co. v. Public Service Com., 88 Mont. 180, 293 P. 294.)
Certain matters and things are alleged in the complaint on the theory apparently that if admitted by the defendants in their answer or established by evidence at a hearing, they would affect the validity of the statutes in question, but the general rule is that the constitutionality of a law is not to be determined on a question of fact to be ascertained by the court or on admissions of the parties of which the court may not take judicial notice. ( Iowa Motor Vehicle Assn. v. Board of Railroad Commissioners, 202 Iowa, 85, 209 N.W. 511; Nakwosas v. Western Paper Stock Co., 260 Ill. 172, 102 N.E. 1041; Stavig v. Van Camp, 46 S.D. 472, 193 N.W. 731; Pittsburgh, C.C. St. L.R. Co. v. State, 180 Ind. 245, 102 N.E. 25, L.R.A. 1915D, 458; State v. Thomason, 142 Tenn. 527, 221 S.W. 491; Stevenson v. Colgan, 91 Cal. 649, 27 P. 1089, 25 Am. St. Rep. 230, 14 L.R.A. 459; Peay v. Nolan, 157 Tenn. 222, 7 S.W.2d 815, 60 A.L.R. 408; Allen v. City of Los Angeles, 210 Cal. 235, 291 P. 393; Barker v. State Fish Com., 88 Wn. 73, 152 P. 537, Ann. Cas. 1917D, 810; Stubbe v. Adamson, 220 N.Y. 459, 116 N.E. 372; Greene County v. Clay County, 135 Ark. 301, 205 S.W. 709; Gibson v. Spikes, 143 Ark. 270, 220 S.W. 56; Kinney v. City of Astoria, 108 Or. 514, 217 P. 840; State v. Miller, 149 Wn. 545, 271 P. 826; State v. Cantwell, 179 Mo. 245, 78 S.W. 569; 12 C.J. 786, 787; 59 C.J. 632, 633; 6 R.C.L. 112-117; 1 Cooley's Constitutional Limitations, 379-382; 1 Lewis' Sutherland on Statutory Construction, sec. 79; 2 Id., sec. 479.)
The inhibitions of the Constitution and of the Enabling Act with reference to "disposing of an estate or interest" have no application to the leasing of state lands, but are confined to acts tending to the alienation of the fee. These grants of public lands to the state are grants in trust. The very clear purpose of the trust is that the lands be sold, the proceeds to create a permanent fund to be invested and the income to be applied to the maintenance of the public schools of the state; that pending the time of sale the trust lands be made to produce income by leasing them for terms not to exceed five years, this rental money not to become a part of the permanent fund, but to be used, like other income from the trust property, for the maintenance of public schools. ( State ex rel. Koch v. Barret, 26 Mont. 62, 66 P. 504; State ex rel. Galen v. District Court, 42 Mont. 105, 112 P. 706; State ex rel. Gravely v. Stewart, 48 Mont. 347, 137 P. 854.) It is the corpus of the trust — the fee in the lands and the permanent fund, and not the rents and income — which is sought to be safeguarded by this injunction. Congress has not, nor has the state Constitution, undertaken either to fix a minimum rate of interest at which the permanent fund may be loaned nor a minimum rental at which the lands may be leased. ( State ex rel. Koch v. Barret, supra.)
The words "dispose of" imply "completeness" and "finality." It is in the sense of parting with an interest in the fee that the prohibition is laid, and not to a putting of the trust lands to a use designed to produce rents and income.
The term "market value" as used in section 1 of Article XVII of the Constitution, is used in its popular sense, and has no application to a lease of state lands to the one person willing to take it at any price, and in the absence of any "market" or competition.
"The term 'market' assumes the existence of trade, implying competition. So buying and selling are necessary incidents, to 'market.'" (38 C.J. 1258, and cases.) "As in the case with 'market value,' to make a 'market price' there must be buying and selling, purchase and sale. Other property of the same or like kind must have been the subject of purchase or sale to so great an extent and in so many instances that the value becomes a measure fixed." (38 C.J. 1261, sec. 16, 1262, sec. 18.) These authorities establish our point, that where there is no competition for the lease of a section of land, then there is no "market" and no means of measuring "full market value," and therefore in such cases there could not possibly be any room for holding that the Constitution prohibited leasing merely because there was no market value established by which to determine what the lawful rental should be. The framers of the Constitution meant no more than that one man should not secure a lease (through influence, or favoritism or otherwise) as against another applicant willing to pay more.
The legislation attacked by the complaint provides for leasing of the state lands by public auction in all cases where there is any competition — any market — and beyond that the Act only provides an "asking price," — a price at which the owner is willing to lease in the absence of an active demand for the lease. If there is any market, the Act is framed to secure to the state the best value that market will produce. We are not here dealing with "measure of damages" or actual or speculative value, but the term used is "full market value," and from the very nature of the situation, an active market is contemplated.
Who is to be the judge of how these lands are to be handled so as to produce that larger return — the executive or the legislative department? We say the legislature; from the complaint we take it plaintiff favors the executive department.
By the provisions of the Constitution and the Enabling Act, the will of the legislative department is superior to that of the executive department, and the legislature having acted in a matter within its discretion and fixed the schedule of lease rentals at which the state is willing to lease in the absence of a market or competition, the judicial department will not interfere in the absence of a fraud showing.
This is an original proceeding, brought against the State Board of Land Commissioners and the commissioner of state lands by the plaintiff, who seeks an injunction against the defendants prohibiting their leasing state lands pursuant to the provisions of Chapter 42 of the Laws of 1933, and section 20 of Chapter 60 of the Laws of 1927. The case is before us on the complaint of plaintiff and the answer of defendants, admitting certain allegations of the complaint and denying others. Under the stipulation of counsel, the facts which were denied by defendants' answer are not before us, and likewise questions raised on such disputed facts are eliminated from our consideration.
The plaintiff is a qualified resident, tax-paying freeholder, and elector of the state. The defendants are the elected constitutional members of the State Board of Land Commissioners and the Commissioner of State Lands and Investments. The federal government granted to the state, for the public schools and various educational institutions, in excess of 5,500,000 acres of land to be sold, the proceeds to be held inviolate as a permanent fund, and the interest from the investment of this fund to be expended in the support of the public schools and other educational institutions. The terms of the grant are found in the Act of Congress approved February 22, 1889 (25 Stat. 676), which Act was amended by Congress and approved May 7, 1932. The terms of the original grant were accepted by the state. (Sec. 7 of Ordinance 1.) The amendment of the grant was accepted by Act of the Twenty-Third Legislative Assembly (Chap. 84, Laws of 1933).
Section 4 of Article XI of the state Constitution provides: "The governor, superintendent of public instruction, secretary of state and attorney general shall constitute the state board of land commissioners, which shall have the direction, control, leasing and sale of the school lands of the state, and the lands granted or which may hereafter be granted for the support and benefit of the various state educational institutions, under such regulations and restrictions as may be prescribed by law."
Section 1 of Article XVII of the same document provides: "All lands of the state * * * shall be held in trust for the people; * * * and none of such land, nor any estate or interest therein, shall ever be disposed of except in pursuance of general laws providing for such disposition, nor unless the full market value of the estate or interest disposed of, to be ascertained in such manner as may be provided by law, be paid or safely secured to the state."
Section 3 of Chapter 42, Laws of 1933, provides: "The minimum annual rental for agricultural purposes shall be 5 per centum of the appraised valuation of such lands but in no case less than fifty cents (50c) per acre. The maximum annual grazing rental for state land shall not exceed fifty dollars ($50.00) per section, except where the leasing price is increased above this sum by competitive bidding. For the purpose of determining the rental price of grazing lands they shall be classified as follows:
"Class 1. Extra good grazing land, Thirty-five Dollars ($35.00) to Fifty Dollars ($50.00).
"Class 2. Good grazing land, well sodded with grass, Thirty Dollars ($30.00).
"Class 3. Fair grazing land, with medium grass, Twenty-five Dollars ($25.00).
"Class 4. Poor grazing land, thinly grassed, Twenty Dollars ($20.00).
"Class 5. Any other grazing land, such amount as may be fixed by said board.
"Valuations for purposes of leasing shall be made from plats, records and information now on file in the office of the Commissioner of State Lands and Investments, by competent persons, qualified for this work."
Section 20 of Chapter 60, Laws of 1927, provides that in all cases where there is only one qualified person offering to lease any tract of state land, the lease must issue at the minimum rental, and, by the amendment of 1933, supra, as specified therein.
Plaintiff contends that the Acts supra are in violation of the constitutional provisions noted above; that unless the defendants are restrained and enjoined they will, pursuant to the provisions of Chapter 42, supra, proceed to lease the public lands of the state at a much lower rental than heretofore received; and that, consequently, there will result for the support of the public schools and the other educational institutions of the state a reduction in revenue which will increase the burden upon the plaintiff and all other taxpayers similarly situated.
Chapter 42 of the Laws of 1933 under its express terms does not attempt to limit the rental for state grazing lands where more than one person has made application to lease a given tract or tracts of land. The legislative Act classifies grazing lands into five classes and determines the rentals to be paid in all cases where only one person is desirous of leasing lands of the state.
It is alleged in the complaint, and denied in the answer, that the schedules of prices found in the Act are much less than the market prices for the leasing of lands for grazing purposes within the state. These allegations are under stipulation of counsel eliminated from our consideration, but we mention them, as it may become necessary for us to consider whether they might be considered in any event.
This court, in the case of State ex rel. Gravely v. [1] Stewart, 48 Mont. 347, 137 P. 854, 855, said: "The grant of lands for school purposes by the federal government to this state constitutes a trust ( State ex rel. Bickford v. Cook, 17 Mont. 529, 43 P. 928; State ex rel. Dildine v. Collins, 21 Mont. 448, 53 P. 1114; State ex rel. Koch v. Barret, 26 Mont. 62, 66 P. 504); and the State Board of Land Commissioners, as the instrumentality created to administer that trust, is bound, upon principles that are elementary, to so administer it as to secure the largest measure of legitimate advantage to the beneficiary of it."
These constitutional provisions are limitations upon the power of disposal by the legislature. ( In re Beck's Estate, 44 Mont. 561, 121 P. 784, 1057; Newton v. Weiler, 87 Mont. 164, 286 P. 133.)
Where a legislative Act is attacked on the ground of its [2] unconstitutionality, the question presented is not whether it is possible to condemn it, but whether it is possible to uphold it, the presumption being in favor of its validity, and it must be upheld unless its unconstitutionality appears beyond a reasonable doubt. ( Herrin v. Erickson, 90 Mont. 259, 2 P.2d 296; Martien v. Porter, 68 Mont. 450, 219 P. 817; State ex rel. Diederichs v. State Highway Com., 89 Mont. 205, 296 P. 1033; Arps v. State Highway Com., 90 Mont. 152, 300 P. 549.)
The public lands of the state may be leased for a period of [3] not in excess of five years. (Sec. 23, Chap. 60, Laws of 1927.) It becomes important to determine whether or not leases of state lands for such period or less, for grazing purposes, is the disposing of an estate or interest therein.
Section 6723, Revised Codes 1921, provides that "estates in real property, in respect to the duration of their enjoyment, are either: * * * 3. Estates for years." This section was amended by Chapter 48 of the Laws of 1931, but the amendment merely added an additional class of estates and in nowise affected the classification of estates for years. An estate for years has been held by this court to be an interest in land. ( Wheeler v. McIntyre, 55 Mont. 295, 175 P. 892; Williard v. Federal Surety Co., 91 Mont. 465, 8 P.2d 633.)
It is contended that even though the leasing of the state lands grants an interest in the land, nevertheless, because at the end of the term the state is re-invested with title and possession, no disposal of the lands is made, and that, therefore, the constitutional prohibition is inapplicable in the circumstances under consideration. It is said that the word "dispose" means "to get rid of, to put out of the way, to finish with, to alienate, to part with." (Webster's Dictionary.) If the constitutional prohibition ran only against disposal of the lands and was silent upon the question of the disposal of an interest or estate in the lands, there would be merit to the contention. The constitutional prohibition, however, is against the disposal of the lands, or an interest or an estate therein. When a lease is granted upon the public lands of the state, an interest or estate in the lands has been alienated, and therefore the leasing of the lands of the state for a term of years is the disposal of an interest or estate in the lands within the provisions of our Constitution.
It is contended that in view of the fact that the Acts of the [4] legislature under consideration apply only to those cases where one applicant is desirous of leasing a tract of land, no market exists, hence there is no market value; and that therefore the provision requiring lands of the state, or an interest therein, to be disposed of at the full market value, does not apply.
"Value" means the price which property could command in the market. By "value," in common parlance, is meant "market value," which is no other than the fair value of property as between one desiring to purchase and another desiring to sell; and the words "value" and "market value" are often used interchangeably, and both as being the equivalent of "actual value" and "salable value." ( James v. Speer, 69 Mont. 100, 220 P. 535. See, also, State v. Hoblitt, 87 Mont. 403, 288 P. 181; State ex rel. Snidow v. State Board of Equalization, 93 Mont. 19, 17 P.2d 68.)
In the interpretation of Constitutions the cardinal rule to [5] be observed is that words are presumed to have been employed in their natural, ordinary sense, and are to be taken and understood in such sense, unless the context in which they occur requires that they be assigned a different meaning, or that other provisions on the same subject limit, qualify or enlarge their scope. ( State ex rel. Rowe v. Kehoe, 49 Mont. 582, 144 P. 162; Buffalo Rapids Irr. Dist. v. Colleran, 85 Mont. 466, 279 P. 369.) There is nothing in the Constitution to indicate that the expression under consideration was used in a sense other than that expressed by it, as the ordinary person [6] would understand it. The absence of competition in the leasing of any tract of state land is not conclusive evidence that there is no market for the land, but only evidence that in all probability there is no competitive or active demand for the particular tract. Furthermore, property may have a value notwithstanding there is no market for it. ( Durocher v. Myers, 84 Mont. 225, 274 P. 1062.)
Since "market value" is synonymous with actual value, the constitutional provision under consideration prohibits the leasing of state lands unless the actual value is paid or secured.
It is urged the legislature is without power to determine the [7-9] value of a lease on grazing lands — that such function is executive. The legislative department of our government has plenary power, except so far as it is abridged by the state Constitution or the supreme law of the land; such legislative authority will not be deemed to be circumscribed by mere implication. ( Goodell v. Judith Basin County, 70 Mont. 222, 224 P. 1110.)
The constitutional provision, section 1, Article XVII, provides that the market value is "to be ascertained in such manner as may be provided by law." Section 4 of Article XI, provides that the state land board "shall have the direction, control, leasing and sale of the school lands of the state * * * under such regulations and restrictions as may be prescribed by law." The limitation, if any, upon the power of the legislature to determine the market value of grazing lands must be found in these provisions. Clearly, the power is left with the legislature to enact laws for the regulation and restriction of the leasing of state lands. It must, in adopting regulations for that purpose, provide a system that will secure the market value — that is, the actual value — of these lands for grazing purposes.
The legislature is presumed to act, so far as mere questions of policy are concerned, with full knowledge of the facts upon which its legislation is based, and its conclusions on matters of policy are beyond judicial consideration. ( Chicago, M. St. P.R. Co. v. Tompkins, 176 U.S. 167, 20 Sup. Ct. 336, 44 L.Ed. 417.) It is for the legislature by regulation and restriction to declare the policy to be pursued in determining the market value of leases on the grazing lands of the state, and any policy which correctly determines this value is within the constitutional provision.
It is urged that the classification of lands based on the [10] amount of grass which they produce, is an improper method of arriving at the actual market value of leases on the same. It is said that one of several important factors in arriving at such valuation is thereby disregarded, namely, the distance from market. This classification, however, is a subclassification of lands valuable only for grazing purposes. The lands of the state are classified generally into four classes. (Sec. 1, Art. XVII, Constitution.) Distance from market is an important factor in determining the valuation of agricultural lands (which are not here under consideration), but is of comparatively little importance in determining the value of grazing lands.
Plaintiff relies, in support of this contention, on certain statements found in the opinion of this court in the case of State ex rel. Schoonover v. Stewart, 89 Mont. 257, 297 P. 476. The court there condemned a classification of irrigated lands and lands susceptible of irrigation into one class, at the same valuation, for purposes of taxation. It was there observed that the true value of such lands depended upon many factors, as the existence or lack of an appurtenant water right, its priority and sufficiency, the nature of the soil, etc. Here the classification is of lands valuable only for grazing; lands otherwise valuable are excluded from this class.
The most important factor in determining the value of grazing lands is that of the amount of pasturage they will afford, which is entirely dependent upon the condition and growth of the grass thereon. Other factors enter into the valuation of leases on grazing lands in certain instances, among which are the existence of water on the land or the proximity of the land to an adequate water supply, their location with reference to forest reserves, etc. But we are not advised as to whether the lands now owned by the state include those wherein these additional factors may be of vital consideration in the determination of their market value for grazing purposes. The members of the legislature, coming, as they do, from every county in the state, could not be without information as to the facts on these subjects. The determination of market value where there is no active competition for the leasing of such lands, by whomsoever it may be made, is at best only a matter of opinion. In such a situation errors in judgment will result in some instances. A perfect determination of the true market value of the use of these grazing lands is therefore impossible in every case.
If any of the grazing lands of the state have the above-mentioned unusual advantages in location tending to enhance their value, it would follow logically that the demand therefor is likely to become competitive, and, if so, the Acts under consideration by their express terms are inapplicable. If experience has demonstrated the existence of such additional factors and has led to the result of competitive bidding for leases on these lands, then this class of grazing lands might properly be excluded from consideration in devising a plan for the valuation of certain of the grazing lands of the state. We are not informed on this subject and are unable to say that the legislature was not so informed. The classification of the legislature is based on the one always important factor — the amount of pasturage these lands will produce. Therefore we cannot say that it appears from the pleadings before us beyond a reasonable doubt that the legislative policy of classification now being considered omits any important factor necessary to determine the market value of grazing lands where only one person desires to obtain their use.
We are concerned now, not with whether the policy adopted by the legislature was the best policy that could have been adopted, but only with whether or not under this policy the state receives the full market value for the leasing of its grazing lands. To determine whether or not the state will so realize the market value is a question of fact which is not before this court. The plaintiff in his complaint asserts that the state will not receive the market value; defendants by their answer deny such assertion. Counsel by their stipulation have excluded that question from our consideration as a question of fact.
It is here contended that the general rule is that the [11] constitutionality of a law is not to be determined on a question of fact to be ascertained by the court. Such we concede the general rule to be. (6 R.C.L. 112.) There are, however, certain exceptions to this rule, and sometimes questions of fact may be necessarily involved in a judicial determination as to the constitutionality of the statute, as where the validity of a law relating to the charges of a public service corporation depend upon whether the rates so established amount, under the particular circumstances of a case, to a taking of property without due process of law. (6 R.C.L. 113.) Another illustration: It is within the competency of the legislature to determine when and what property shall be taken for public use. That question is one of policy over which the courts have no supervision. But if, after determining that certain property shall be taken for public use, the legislature proceeds further and declares that only a certain price shall be paid for it, then the owner may contend that his property is taken without due compensation; and the legislative determination of value does not preclude an investigation on that subject in the proper judicial tribunal. ( Chicago, M. St. P.R. Co. v. Tompkins, supra.)
So in this case the legislature may determine the policy to be followed in the leasing of the state grazing lands, and that question may not be reviewed by the courts. But the question as to whether or not, under the policy adopted by the legislature, the market value for the grazing lands is being received, is a question of fact which may be investigated by a proper tribunal in an appropriate proceeding. It is our intention by this opinion not to in any manner foreclose the judicial investigation of this fact, but only to point out that the contention that it may not be investigated under proper pleadings and in a proper tribunal is without merit.
It is urged that owing to a possible increase in market value [12] of grazing lands to a point in excess of the values fixed in the Act of the legislature, leases then granted would of necessity violate the above constitutional provisions, and, therefore, the familiar rule in this jurisdiction that in certain cases the constitutionality of the law may be tested, not by what has been done, but by what may be done thereunder, is applicable. ( State ex rel. Holliday v. O'Leary, 43 Mont. 157, 115 P. 204.) This rule has been followed by this court in a number of cases.
Another rule obtains in this jurisdiction, i.e., that one will not be heard to question the validity of a statute unless his interests have been, or are about to be, prejudicially affected by the operation of the statute. These two rules are discussed and the cases supporting each are collected and harmonized, in the case of State ex rel. Brooks v. Cook, 84 Mont. 478, 276 P. 958, 963. It was said in that case, with reference to the rule sought herein to be invoked, that it "is applicable to all of those cases wherein by strict compliance with the statute the party raising the question of the validity of the statute" would be deprived of a right.
Under the conditions of the pleadings before us, the disputed questions of fact being eliminated, plaintiff is in no position to invoke the foregoing rule. The presumption being that the Act is constitutional, we are compelled to assume for the purpose of this opinion that the state will receive the market value for its grazing lands. However, if it should later appear that the valuations determined by the Act of the legislature have been arbitrarily fixed, and amount to a mere subterfuge to enable persons desiring to secure these grazing lands at less than their true value, or that the policy declared by this legislative Act results in a material portion of these lands being leased at a price less than their actual value, then clearly the Act is unconstitutional and cannot stand.
We are therefore unable on the record before us to declare the Act unconstitutional. No reason appears herein why the defendants should be enjoined from proceeding under the provisions of Chapter 42 of the Laws of 1933.
It is accordingly ordered that the complaint of the plaintiff be, and the same is hereby, dismissed.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES MATTHEWS, ANGSTMAN and STEWART concur.