Pedersen v. Westroads, Inc., 38446

• Decision Date: 17 November 1972
• Docket Number: No. 38446,38446
• Citation: 202 N.W.2d 198,189 Neb. 236
• Parties: Ed PEDERSEN, Appellant, v. WESTROADS, INC., a Nebraska corporation, et al., Appellees.
• Court: Nebraska Supreme Court

Page 198

202 N.W.2d 198

189 Neb. 236

Ed PEDERSEN, Appellant, v. WESTROADS, INC., a Nebraska corporation, et al., Appellees.

No. 38446.

Supreme Court of Nebraska.

Nov. 17, 1972.

Syllabus by the Court

1. Statutory provisions may cut across issue and claimpreclusion at common law.

2. An Omahan as such has no derivative right greater than the right the City of Omaha possesses.

3. A resident taxpayer's derivative claim on behalf of the City of Omaha may come within the spirit of a statutory provision for derivative defenses, although it is not technically referable to threatened expenditure of public funds.

4. A consent decree transferring assets and liabilities of a sanitary and improvement district to the City of Omaha upon annexation of the land of the district may be insufficient to constitute waiver or claim preclusion of beneficiary rights of Omaha under private covenants relating to rezoning.

Lathrop, Albracht & Dolan, Daniel G. Dolan, August Ross, Omaha, for appellant.

Fraser, Stryker, Marshall & Veach, Herbert M. Fitle, City Atty., Frederick A. Brown, Edward M. Stein, James E. Fellows, Allen L. Morrow, Kent N. Whinnery, George S. Selders, Jr., Verne W. Vance, Roger G. Stanway, Richard A. Cerveny, Thomas F. Dowd, Omaha, for appellees.

Heard before WHITE, C.J., and SPENCER, BOSLAUGH, SMITH, McCOWN, NEWTON, and CLINTON, JJ.

SMITH, Justice.

Plaintiff, a resident taxpayer, for the benefit of the City of Omaha and on behalf of all taxpayers alleged fraud and breach of covenant on the part of Westroads, Inc., in development of Westroads Shopping Center. Defendants Omaha and Sanitary and Improvement District No. 130 of Douglas County allied themselves with Westroads. The district court at the close of all the evidence rendered judgment for defendants. Plaintiff appeals.

Plaintiff asserts that district No. 130 foisted upon Omaha obligations that Westroads ought to have assumed. He also asserts breach of covenants that were a condition of extraterritorial rezoning by Omaha at Westroads' request. Other assignments of error are resolved against him.

Defendants contend: (1) Plaintiff has no standing to sue; (2) Omaha possessed no power to covenant to curtail exercise of its authority; (3) a consent decree transferring general obligations of district No. 130 on annexation of the land by Omaha barred Omaha from reapportioning special benefits to Westroads' property; and (4) by the consent decree Omaha waived the benefits of the covenants.

In 1959 the land in question was subject to the jurisdiction of Omaha over zoning within 3 miles outside the city boundaries. Rezoning was necessary for the construction of a shopping center, but opposition formed. Neighbors protested and the Omaha planning board disapproved, but the Omaha council recommended reconsideration by the board. In July 1960 the Omaha council resolved (1) to prepare ordinances for the rezoning that Westroads and the president and majority stockholder, John Wiebe, were requesting, and (2) to require submission of covenants to insure fulfillment of certain representations by Westroads and Wiebe to Omaha.

On October 3, 1960, Westroads and other private parties agreed upon protective covenants for the use and benefit of Omaha. An explanatory provision read: 'To secure the requested rezoning . . . (Westroads and Wiebe) represented to . . . Omaha . . . that grade-separated access would be provided without cost to . . . Omaha to eliminate left turns across Dodge Street by vehicular traffic moving into and out from the regional shopping center.' The agreement under the subtitle 'Covenants' read: 'Wiebe and Westroads . . . covenant . . . for the use and benefit of . . . Omaha . . . as follows: . . . e. The regional shopping center . . . may not be opened to the public . . . unless . . . a traffic grade-separated access approved by the Department of Roads of the State of Nebraska has been constructed without cost to . . . Omaha to carry vehicular traffic . . . to and from . . . (the shopping center and parking lot) in such a manner as to eliminate the necessity for left turns across the surface of . . . Dodge Street . . ..'

The two subsequent ordinances effecting the rezoning were targets of litigation. Wiebe there testified that he and Westroads on April 20, 1960, had represented to the Omaha planning director the payment for cost of the interchange and two loops as follows: Wiebe and Westroads would pay the cost approximated at $600,000, less any aid that state government might furnish; and they would also pay construction costs of some public streets. The district court declared the ordinances void, but on appeal we reversed the judgment and directed dismissal of the suit. See Bucholz v. City of Omaha, 174 Neb. 862, 120 N.W.2d 270 (1963).

In the trial of the present case Wiebe conceded having stated in effect to the Omaha council that he and Westroads 'would find a way to build it free of cost to the City.'

To meet the requirement that only public entities were eligible for financial aid from the State, lawyers advised Wiebe to petition the district court for formation of defendant district No. 130. To qualify four representatives of Wiebe Enterprises, Wiebe caused Westroads to convey 1,000 square feet of the land to each of the four. Westroads possessed options to repurchase. The district was formed, and the engineer of Westroads was engaged as engineer of the district. General and special benefits were apportioned after a hearing on a date not expressly stated in the record. The district did not notify Omaha of the hearing, and we assume that a statute required such notification. See, former § 31--749, R.R.S.1943, as amended by Laws 1961, c. 142, § 7, p. 415, Laws 1965, c. 157, § 1, p. 504, and Laws 1967, c. 190, § 1, p. 524.

The designs for the interchange street improvements, and the two loops in the Bucholz case were approved in substance by Omaha and the State. The district's share of the cost of construction, $230,992.66, 66, was assessed as general beenfits by the district. Special assessments out of $1,152,223,20, the cost of all improvements that the district made, totaled only $137,465.59.

The district in June 1968 petitioned the district court for approval of a bond issue of $1,600,000, and it duly notified Omaha of the petition. In June the court in a default decree approved the issue and confirmed all proceedings relating to the validity of the bonds.

Effective May 15, 1969, an Omaha ordinance annexed the land of Westroads, and in June the district court with consent of Omaha decreed transfer of the assets and liabilities of district No. 130 to Omaha. No one appealed from the decree. No one brought an...