Pig Pro Nonstock Co-op. v. Moore

• Decision Date: 29 August 1997
• Docket Number: No. S-95-1163,S-95-1163
• Citation: 253 Neb. 72,568 N.W.2d 217
• Parties: PIG PRO NONSTOCK COOPERATIVE, a Nebraska Nonstock Cooperative Corporation, Appellee, v. Scott MOORE, Secretary of State of Nebraska, and Donald B. Stenberg, Attorney General of Nebraska, Appellants.
• Court: Nebraska Supreme Court

Page 217

568 N.W.2d 217

253 Neb. 72

PIG PRO NONSTOCK COOPERATIVE, a Nebraska Nonstock Cooperative Corporation, Appellee, v. Scott MOORE, Secretary of State of Nebraska, and Donald B. Stenberg, Attorney General of Nebraska, Appellants.

No. S-95-1163.

Supreme Court of Nebraska.

Aug. 29, 1997.

Syllabus by the Court

1. Constitutional Law: Courts. The construction and interpretation of the Constitution is a judicial function.

2. Statutes. Interpretation of a statute presents a question of law.

3. Declaratory Judgments: Appeal and Error. When a declaratory judgment action presents a question of law, an appellate court has an obligation to reach its conclusion independent from the conclusion reached by the trial court with regard to that question.

4. Constitutional Law. A constitution represents the supreme written will of the people regarding the framework for their government.

5. Constitutional Law: Initiative and Referendum: Appeal and Error. The Constitution of Nebraska specifically recognizes the right of the people to amend their Constitution, independent of any action by the Legislature, by passing a ballot initiative. In a case involving such a constitutional amendment, it is not the province of the Nebraska Supreme Court to judge the wisdom or the desirability of the amendment.

6. Constitutional Law. Constitutional provisions, like statutes, are not open to construction as a matter of course; construction is appropriate only when it has been demonstrated that the meaning of the provision 7. Constitutional Law: Initiative and Referendum: Intent. The intent of the voters in adopting an initiative amendment to the Nebraska Constitution must be determined by the words of the initiative amendment itself, because there is no meaningful way to determine the motivations for submitting the initiative to the electorate or to determine the intent of those voting for its enactment.

is not clear and therefore that construction is necessary.

8. Constitutional Law: Courts: Intent. In ascertaining the intent of a constitutional provision from its language, the words must be interpreted and understood in their most natural and obvious meaning unless the subject indicates or the text suggests that they are used in a technical sense. The court may not supply any supposed omission, or add words to or take words from the provision as framed. It must be construed as a whole, and no part will be rejected as meaningless or surplusage, if it can be avoided. If the meaning is clear, the court will give to it the meaning that obviously would be accepted and understood by the layman.

9. Constitutional Law. The language of a constitutional provision is to be interpreted with reference to established laws, usage, and customs of the country at the time of its adoption, but its terms and provisions are constantly expanded and enlarged by construction to meet the advancing affairs of humankind.

10. Corporations: Words and Phrases. A nonprofit corporation is commonly defined as a corporation no part of the income of which is distributable to its members, directors, or officers.

11. Constitutional Law: Words and Phrases. An entity formed pursuant to the Nonstock Cooperative Marketing Act is not a nonprofit corporation within the meaning of article XII, § 8(1)(B), of the Nebraska Constitution.

Donald Stenberg, Attorney General, and L. Jay Bartel, Lincoln, for appellants.

Theodore L. Kessner and D. Bryan Wickens, of Crosby, Guenzel, Davis, Kessner & Kuester, for appellee.

Robert V. Broom, of Broom, Johnson & Clarkson, and Allen H. Olson, of University of Arkansas School of Law, for amci curiae David L. Hansen, Everett Holstein, and Friends of the Constitution.

WHITE, C.J., and CAPORALE, WRIGHT, CONNOLLY, GERRARD, STEPHAN, and McCORMACK, JJ.

STEPHAN, Justice.

The Nebraska Constitution restricts corporate ownership of farm and ranch land but excepts "non-profit corporations" from those restrictions. The issue of first impression before us in this case is whether a corporation formed pursuant to Nebraska's Nonstock Cooperative Marketing Act, Neb.Rev.Stat. § 21-1401 et seq. (Reissue 1991 & Cum.Supp.1996), falls within this exception. Based upon our independent review of this issue of law, we conclude that a nonstock cooperative corporation is not a "non-profit corporation" as that term is used in article XII, § 8(1)(B), of the Nebraska Constitution, because it exists and operates for the economic benefit of its members. We, therefore, reverse the judgment of the district court for Lancaster County and remand the cause with directions.

BACKGROUND

Plaintiff-appellee, Pig Pro Nonstock Cooperative (Cooperative), is a corporation organized pursuant to the Nonstock Cooperative Marketing Act. On August 22, 1994, the Cooperative filed a petition for declaratory judgment in the district court for Lancaster County in which it sought a judgment

declaring that it is a nonprofit corporation as identified in Article XII, Section 8 of the Constitution of Nebraska and as such that the Cooperative can acquire the agricultural land, facilities and livestock needed for its swine farrowing and nursery activities to provide feeder pigs to its members on a cost-of-production basis....

The original defendants were Allen J. Beermann, then the Secretary of State of Nebraska In July 1994, the Cooperative filed articles of incorporation signed by five individual incorporators. These individuals formed the Cooperative "so that together they [could] acquire feeder pigs, feed, and related products and services on a collective, cooperative, and cost-of-production basis." The articles include a provision that the Cooperative will have all powers and rights conferred by the Nonstock Cooperative Marketing Act.

                and Donald B. Stenberg, Attorney General of Nebraska, both of whom were sued in their official capacities.  Beermann and Stenberg filed an answer alleging that "the Cooperative is not a 'Non-profit corporation' exempt from the restrictions on nonfamily corporate farming or ranching as defined in Article XII, § 8, of the Nebraska Constitution."   Scott Moore, the incumbent Secretary of State, was later substituted for defendant Beermann.  The parties then filed a written stipulation of facts, which we now summarize
                

The articles of incorporation limit membership in the Cooperative to "persons actively engaged in the feeding of hogs for slaughter." Each member has one vote in the conduct of the affairs of the Cooperative. Initially, the five incorporators are the only members. The availability of additional memberships is limited by the number of pigs produced by the Cooperative.

Each member of the Cooperative holds base capital credits in the initial amount of $15,000, which constitute a "permanent investment" in the Cooperative. The amount of base capital credits is to be adjusted annually by unanimous vote of the members based upon the "patronage" of each member. Under its bylaws, the Cooperative must redeem the members' base capital credits for cash on a pro rata basis when funds are available. The Cooperative has a lien upon a member's base capital credits for any amounts which the member owes to the Cooperative, and the board of directors may "offset amounts owed the Cooperative from the Base Capital Credits of a defaulting member."

The bylaws provide that the board of directors, consisting of five members of the Cooperative, "shall have the general supervision and control of the business and the affairs" of the Cooperative. The bylaws authorize the board of directors to appoint a manager to be "the administrator of the Cooperative's activities" with responsibility for daily operations and the maintenance of financial records.

As required by § 21-1403, the articles and bylaws of the Cooperative contain a statement of the method to be followed in distributing earnings or savings. These documents provide that the Cooperative "shall conduct its activities on a nonprofit basis" and that "all savings from its activities shall belong to its members as producers of hogs for slaughter." On an annual basis, the Cooperative shall determine the amount of its "gross receipts," which shall include "income from all sources and activities of the Cooperative." From this amount, the Cooperative must deduct "all costs and expenses and other charges which are appropriately excludable or deductible" as well as the amount of "reasonable reserves for depreciation, obsolescence and contingencies, and any other necessary purpose." The resulting "net margins" of the Cooperative shall "belong to and be held for the members and shall be apportioned among them [on a patronage basis] at the close of each fiscal year." This distribution, characterized as a "patronage refund," is to be calculated "on the basis of and in proportion to the amount of the Cooperative's revenue produced by each member." It may be made in the form of cash, base capital credits, or both.

The members will pay the Cooperative the base price established by the Cooperative based upon its estimated cost of production of the feeder pigs. Annually, the Cooperative will determine its actual cost of production of the feeder pigs delivered to its members. If the actual cost is less than the base price, the difference will be apportioned among the members on a pro rata basis. If the actual cost exceeds the base price, the deficit will be assessed against the members on the basis of feeder pigs received. Each member will also contract to purchase from the Cooperative all feed and animal health supplies necessary to finish the feeder pigs The Cooperative plans to acquire and operate, for the exclusive benefit of its members, an existing swine farrowing and nursery facility, together with related equipment, situated on land near Farnam in Dawson County, Nebraska. The Cooperative has an option to purchase the land and facilities for $115,000 and expects that "an additional $25,000.00 will be...