Lindburg v. Bennett
| Citation | 219 N.W. 851,117 Neb. 66 |
| Decision Date | 28 May 1928 |
| Docket Number | 25640 |
| Parties | OTTO E. LINDBURG, APPELLEE, v. JOHN R. BENNETT ET AL., APPELLANTS |
| Court | Supreme Court of Nebraska |
APPEAL from the district court for Lancaster county: JEFFERSON H BROADY, JUDGE. Reversed, with directions.
REVERSED.
Hainer Flansburg & Lee, Peterson & Devoe, Max G. Towle, A. Farley Young, George I. Craven and C. J. Campbell, for appellants.
Clark Jeary, Clarence G. Miles and J. C. McReynolds, contra.
Heard before GOSS, C. J., ROSE, DEAN, GOOD, and THOMPSON, JJ., and LANDIS, District Judge.
This is an equity suit in which the district court decreed that a 99-year lease of certain real property made by the county to two of the individual defendants was invalid. The county and the lessees appealed.
The suit to enjoin the performance of the lease was brought by a taxpayer, who alleged, in substance, that the county of Lancaster has long owned in fee lots four (4), five (5) and six (6), block ninety (90), Original Plat to the city of Lincoln, and that said property is commonly known as the "City Auditorium;" that on July 7, 1925, the defendant county commissioners entered into a written lease of said premises for the term of 99 years with the defendants O'Shea and Rogers; that the same is in effect a sale of said premises, that such a sale cannot be made without a vote of the electors of the county, but that the matter has never been submitted to such a vote. Plaintiff prayed for an injunction preventing the lessees from entering upon the premises and for a decree declaring the acts of the county commissioners void and quieting the title in the county. The defendants, O'Shea and Rogers, answered, alleging that the county took the lots as part settlement of the shortage of a county treasurer in 1896, has ever since held the fee simple title, has, on occasions specified in the answer, leased the premises to other parties, with the history thereof, that it was leased to these answering defendants as shown by the copy of the lease attached to the petition, that they intend to carry out the provisions of the lease, and praying for a dismissal. Lincoln Post No. 3 of the American Legion, hereinafter called the Legion, as intervening defendant and cross-petitioner, pleaded that on February 19, 1925, the county, "the same not being its public grounds," leased the premises to it for a term of five (5) years from August 13, 1924, that the written lease gave the Legion a valid option during its term to buy the property at the price and on the terms of any contemplated sale to other parties, that it elected to exercise its option to take over the property on the terms of the O'Shea and Rogers "contemplated sale," as described in the petition, that the county commissioners and others seek by fraud and collusion to avoid cross-petitioner's contractual rights, and prayed specific performance of its option agreement. The Legion's pleading included W. Bruce Shurtleff and Charles Olson in its title as defendants and so refers to them in the body of the cross-petition, but we are unable to discover from the transcript in what manner they were made actual and formal parties to the suit in the lower court, but they participated as defendants in some of the pleadings; and the amended praecipe filed by appellants lists them as defendants, as does also the praecipe of the cross-appellant Gee. George S. Gee also intervened somewhere along the line, also not shown by the transcript, as a citizen and taxpayer, in opposition to the O'Shea-Rogers lease. He alleged, among other things, that the real estate in question has become and is public grounds and cannot be sold or otherwise disposed of without a vote of the electors, alleged collusion to prevent bidding and competition, and prayed either that the Legion's prayer for a right to purchase under its option be confirmed, or that the O'Shea-Rogers agreement be declared void. The county commissioners answered separately, setting up the acquirement of the property, the history of its uses and income, that the property was never used for governmental purposes, that the lease to O'Shea-Rogers was expressly made subject to the existing lease of the Legion and is not a sale of the property, and prayed a dismissal. The foregoing merely sketches the main points of the voluminous pleadings in order to give a view of the issues as raised by the various parties.
A brief history of the case, condensed from the extended evidence, will help us to diagnose the case and will aid the reader to understand it. On March 24, 1896, a shortage of $ 36,000 was discovered in the official accounts of one who was then and for some time had been treasurer of Lancaster county. Soon thereafter he died. The claim of the county against his estate was allowed in full. Suit was brought in the district court against the bondsmen of the treasurer, naming also the representative of his estate as a defendant, to recover the shortage, and a settlement was made, with the approval of the county court, by which notes held by the treasurer and secured by mortgage on the lots in question were turned over to the county. Thereupon, and as a part of the settlement, the holder of the title conveyed the lots to the county, to satisfy his debt evidenced by the notes and secured by this mortgage. In the settlement the liability of the estate on the shortage was credited in the sum of $ 13,546.56, which was the agreed value of the notes for the purpose of settlement. The county obtained a fee simple title by which it has ever since held and still holds the lots. The county has never used this real estate for any purpose other than to lease it for whatever revenue it could obtain in the ways hereinafter set forth. On September 5, 1899, the county executed a written lease, with the Lincoln Auditorium Association as lessee, to run 25 years from September 1, 1899, by the terms of which the lessee agreed to erect upon the lots an auditorium seating 3,400 people, at a cost of $ 15,000, to pay all special taxes, to furnish the auditorium free for all county and district political conventions and at cost to all city political conventions, to share equally with the county the net profits, divisible each three years, and at the end of the term all buildings, improvements and fixtures were to be turned over to the county, free of incumbrance. There were no profits and, the county consenting, the lease was surrendered in writing on February 20, 1903. On February 19, 1903, the county commissioners leased the premises to the Union Commercial Club for 50 years at $ 350 a year, the county board having on the same day, by a resolution, decided that the property was worth $ 8,000 and that the rental named would produce a higher rate of income than the county had to pay on bonds for borrowed money. The written lease provided that the club might erect on the premises a brick building for the use of the Commercial Club and at the termination of the lease the brick building, the auditorium, and all other buildings constructed on the premises by the lessee, its successors or assigns, should remain the property of the lessee and be removed. In 1904 the Union Commercial Club transferred this lease to the Lincoln Commercial Club. In 1919 the Commercial Club made a settlement with the county on account of its unpaid rent, and, by resolutions both of the county and of the club, the lease of 1903 was canceled. On August 13, 1919, the county leased the property in writing to the city of Lincoln for the term of five years, at an annual rental of $ 350. On February 19, 1924, the county of Lancaster leased the premises in writing to Lincoln Post No. 3, American Legion, of Lincoln, Nebraska, for the term of five years from August 13, 1924, at a rental of $ 350 a year, to be paid on February 1 of each year, the lessee to pay all special taxes or assessments before delinquency. The lease contained, among other things, this provision:
"It is further agreed that the party of the first part (the county) shall have the right to sell the premises herein described, provided, however, that notice of such contemplated sale shall be given in writing to the party of the second part (the Legion) at least one year prior to the time fixed for the vacation of said premises by the party of the second part, and provided, further, that during such period the party of the second part shall have option to itself take over and buy the premises at the price and on the terms of such contemplated sale."
An examination of all the leases of this property ever made by the county prior to the one in suit shows that they all contained reservations of permission to use the premises by political conventions and that none of them required the payment by the lessees of any general taxes. The evidence shows that the gross rentals received from the property from the time it was acquired in 1896 up to July 7, 1925, amounted to $ 5,954.60, and during that period the amount paid out on account of the property a total of $ 928.50. It may be remarked that the spirit of the leases, and the uses for which they required the property to be reserved in part, did not look toward revenue as a main end. On July 7, 1925, the county, by its commissioners, leased said premises to the defendants, E. M. O'Shea and R. H. Rogers, for a full term of 99 years, beginning on the 7th day of July, 1925 (subject to the Legion lease, which will expire August 13 1929), for a yearly rental of $ 4,000 from and after the expiration of the Legion lease. The written lease was duly executed and acknowledged by all parties thereto and was filed, all on July 7, 1925. The lessees covenanted to pay all rates, taxes and assessments of every kind, that on or before 18 months after the...
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