Finch v. State

Decision Date01 December 1960
Docket Number3 Div. 871
CourtAlabama Supreme Court
PartiesPeggy FINCH v. STATE of Alabama.

Garet Van Antwerp, III, Van Antwerp & Rector, Mobile, for appellant.

MacDonald Gallion, Atty. Gen., and Jas. T. Hardin, Jos. D. Phelps and Bert S. Nettles, Asst. Attys. Gen., for appellee.

LAWSON, Justice.

The appeal is by Peggy Finch from a final decree of the Circuit Court of Montgomery County, in Equity, entered on March 3, 1959, which set aside, cancelled and held for naught a contract which the State of Alabama entered into with Peggy Finch on September 23, 1958, whereby certain State property was leased to her.

The decree under review was entered in a cause instituted on October 15, 1958, by the State of Alabama on the relation of its then Attorney General, John Patterson, against the then Governor of Alabama, James E. Folsom; the then Director of Conservation, Robert Folsom; and the lessee, Peggy Finch.

The property covered by the lease adjoins the causeway which links Baldwin County on the east of Mobile Bay with Mobile County on the west. The lease describes a parcel which fronts 95 feet on the north side of the causeway and another parcel which fronts 650 feet on the south side of the causeway. Both parcels have a depth of 200 feet. Some of the parcel on the north side of the causeway is filled land. It was filled at no expense to the State by the father of Peggy Finch, F. H. Wooley, who was a former lessee of that parcel. The 650-foot-wide parcel on the south side of the causeway consists of open water. It cannot be used by Peggy Finch unless she fills it at a cost which will not be less than $31,525. Any land which the lessee makes or constructs by filling or dredging operations becomes the property of the State.

The rental provided for in the lease is $150 per year for the first five years, $200 per year for the next five years, and $350 per year for the last ten years of the twenty-year term. On a front footage basis the lessee is to pay an amount ranging from approximately twenty cents a front foot per year during the first five years to approximately forty-seven cents a front foot per year during the last ten years of the term covered by the lease.

Lessee is given the right to renew the lease for a term of twenty years at an annual rental 'in line with rent being paid for similar property.'

Within constitutional limitations, the legislature has the power to provide for the leasing of State property, the length of the term for which leases may be made, and the general policy relating thereto.

That the legislature has conferred on the Director of Conservation the right to lease the property here involved is conceded. §§ 3 and 6, Title 8, Code 1940; Act 341, approved July 9, 1945, General Acts 1945, p. 554.

In § 3 of Title 8, supra, the legislature provided:

'* * * The department of conservation shall have full power and authority to sell, exchange, or lease lands under its jurisdiction when in its judgment it is advantageous to the state to do so in the orderly development and management of state forests and state parks and parkways; provided, however, said sale, lease or exchange shall not be contrary to the terms of any contract which it has entered into. * * *'

In § 6 of Title 8, supra, it is provided that:

'All functions and duties of the department of conservation shall be exercised by the director of conservation, by himself or by and through such administrative divisions or such officers or employees as he may designate. * * *'

The lease in question is not contrary to any contract previously entered into by the Department of Conservation. There is no contention that the lease is not in proper form or that it was not executed in the proper manner or that it was not approved by the Governor, as is provided in the 1945 Act, supra.

The bill alleged among other things that the lease is 'fraudulent and collusive on its face.'

A court of equity would, of course, have the right to vacate a State contract which was a result of actual fraud. McGehee v. Lindsay, 6 Ala. 16; Driscoll et al. v. Burlington-Bristol Bridge Co. et al., 8 N.J. 433, 86 A.2d 201.

But the decree under review cannot be sustained on the theory that there was direct evidence of actual fraud on the part of any person connected with the execution of the lease. There was no direct evidence to support a finding that there was any intentional wrongdoing or that either the Director of Conservation or the person who represented the lessee was in any way financially interested in the transaction. With commendable candor the Assistant Attorney General who represented the State at the time the appeal was argued and submitted in this court admitted that there was no direct evidence to support a finding of corruption or intentional wrongdoing going to show a moral of actual fraud.

If we understand correctly the position of the State, it would have us affirm the decree vacating the lease on the theory that the consideration expressed in the lease is so greatly inadequate as to shock the conscience and that the inadequacy of consideration amounts in itself to conclusive and decisive evidence of fraud. Juzan v. Toulmin, 9 Ala. 662; Mahone v. Williams, 39 Ala. 202; Cleere v. Cleere, 82 Ala. 581, 3 So. 107; Chance v. Chapman, 195 Ala. 513, 70 So. 676.

No case has been cited by the State and none has come to our attention where an equity court has been called upon to cancel a conveyance of State property on the ground of inadequacy of consideration. The only case cited by the State wherein a contract of a governmental agency was cancelled by a court is Driscoll et al. v. Burlington-Bristol Bridge Co. et al., supra. As we have indicated above, the action of the court in that case was based on the direct evidence going to show fraud and corruption on the part of public officials and others connected with the contract.

Evidence was produced by the State going to show that the monetary consideration expressed in the lease at hand is greatly less than the consideration expressed in leases of other property adjoining the causeway.

The Director of Conservation had rented two similar parcels to separate oil companies for a consideration of $2.00 per front foot per year. A Mobile real estate broker expressed the opinion that the property covered by the lease in question, as well as that leased to the two oil companies, should have brought a rental price of not less than $7.50 per front foot per year. A lesser figure, according to this witness, is unfair to the private individuals who own property adjacent to the causeway.

But we are not willing to say that this disparity in consideration justifies a decree of cancellation by a court of equity of the lease in question.

The evidence shows that on October 11, 1944, the then Director of Conservation leased to one Spaulding for a term of ten years some property on the north side of the causeway. This lease was approved by the then Governor and the then Attorney General. On February 1, 1945, the same Director of Conservation leased to Spaulding for a term of ten years a parcel of property on the south side of the causeway. This lease was apparently approved by the then Governor and the then Attorney General. On ...

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