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A legal public conveyance vs. an illegal private gift
By Michael Rainwater and Matt Hutsell
an outright gift that benefits only discrete in- dividuals. Arkansas Constitution, art. 12, § 5; Ark. Attorney General Opinion Nos. 94-397 and 93-211.
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Transfer of county property with no consideration is illegal: A county gift is a transfer of county property (including cash) unsupported by any consideration, and would be subject to an illegal exaction challenge. On the other hand, a county clearly has authority to convey county property for adequate con- sideration -- and adequate consideration can be merely a public advantage. See A.C.A. § 14-16-105; A.C.A. § 14-16- 109; Ark. Const. art. 12, § 5 and Ark. Const. art. 16, § 13.
Conveyance of county
property for consideration other than money is legal: Whether a particular convey- ance of county property (in- cluding cash) is supported by adequate consideration will depend upon the surround- ing facts.
See Ark. Attorney
county is allowed to make a pub- lic conveyance (including cash) for a reason that primarily ben- efits the public at large but not
to the Chamber of Commerce for “benefits to accrue to said county from the expenditure by said Chamber of Commerce of the fund raised for industrial and development purpos- es....” 113 Ark. at 441. Te court noted that the county clearly had the authority to “sell” county property, and the only question was whether the consideration was so inadequate as to constitute fraud. Te court noted that: “Tere is no limita- tion placed upon the county court, by statute or otherwise, in the exercise of its judgment as to the consideration upon which the disposi- tion of the county’s property must be based; therefore, nothing short of fraud, or such gross inadequacy as will be the equivalent to fraud, is sufficient to invalidate the order of the county court directing the conveyance. Te consideration may be in a form other than money, and the county court, in exercis- ing its power, may determine what is to the
f a county conveyance... is made for the welfare of the community and its in- habitants and the underlying consideration is that direct benefit results to the public, then such a conveyance is constitutional and legal.
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General Ops. 92-022 and 93-070. Te consideration is not required, however, to be in the form of money and, depending upon the facts, may be the “public advantage” flowing to county residents by virtue of the intended use of the conveyed property (including cash). In Little Rock Chamber of Commerce v.
Pulaski County, 113 Ark. 439, 168 S.W. 848 (1914), the Arkansas Supreme Court held that the county could convey a tract of land
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best interests of the county... Mere inad- equacy of consideration is not sufficient to establish fraud.” 113 Ark. at 443, 444.
In
Opinion No. 92-022, the Ark. Attorney Gen- eral said that a county could convey a nursing home property to a private nonprofit corpora- tion for adequate non-money consideration. In City of Blytheville v. Parks, 221 Ark. 734,
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255 S.W.2d 962 (1953) the Ark. Supreme Court held that “public advantage” con- stituted consid- eration supporting the city’s conveyance of land to the federal government because 1) there were many benefits which the city could receive in terms of increases in business and population and 2) the city included a reverter clause in the deed which required that the land be returned to the city if it ceased to be used for the purposes of the grant.
Underlying purpose makes the differ-
ence: If a county conveyance of money or land or equipment or other county property is made for “the welfare of the community and its inhabitants” and the underlying con- sideration for the contribution is that “direct benefit results to the public,” then such a conveyance is constitutional and legal – be- cause there is an underlying “public purpose.”
Ark. At-
torney General Opinion No. 94-397, quoting McQuillin, Municipal Corporations § 12, 190; Ark. Attorney General Opinion No. Opinion No. 93-211.
(Mike Rainwater, a regular contributor to County Lines and lead attorney for AAC Risk
Management, is principal shareholder of Rain- water, Holt, and Sexton, P.A., a state-wide per- sonal injury and disability law firm. Mr. Rain- water has been a lawyer for over 30 years, is a former deputy prosecuting attorney, and has de- fended city and county officials for over 25 years)
Mike Rainwater Risk Management Legal Counsel
County Law Update
COUNTY LINES, SUMMER 2011
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