Southeast Rural Volunteer Fire Dept. v. Nebraska Dept. of Revenue, Charitable Gaming Div.

• Decision Date: 28 February 1997
• Docket Number: No. S-95-431,S-95-431
• Citation: 560 N.W.2d 436,251 Neb. 852
• Parties: SOUTHEAST RURAL VOLUNTEER FIRE DEPARTMENT, a Nebraska nonprofit corporation, et al., Appellants, v. NEBRASKA DEPARTMENT OF REVENUE, CHARITABLE GAMING DIVISION, and M. Berri Balka, Nebraska State Tax Commissioner, Appellees.
• Court: Nebraska Supreme Court

Page 436

560 N.W.2d 436

251 Neb. 852

SOUTHEAST RURAL VOLUNTEER FIRE DEPARTMENT, a Nebraska nonprofit corporation, et al., Appellants, v. NEBRASKA DEPARTMENT OF REVENUE, CHARITABLE GAMING DIVISION, and M. Berri Balka, Nebraska State Tax Commissioner, Appellees.

No. S-95-431.

Supreme Court of Nebraska.

Feb. 28, 1997.

Syllabus by the Court

1. Administrative Law: Statutes: Appeal and Error. The interpretation of statutes and regulations presents questions of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below, according deference to an agency's interpretation of its own regulations, unless plainly erroneous or inconsistent.

2. Statutes: Legislature: Intent. In construing a statute, a court must determine and give effect to the purpose and intent of the Legislature as ascertained from the entire language of the statute considered in its plain, ordinary, and popular sense.

3. Statutes. Statutory language is to be given its plain and ordinary meaning; the courts will, if possible, try to avoid a construction which would lead to absurd, unconscionable, or unjust results.

4. Statutes. In construing a statute, a court must look to the statutory objective to be accomplished, the evils and mischiefs sought to be remedied, and the purpose to be served, and then must place on the statute a reasonable or liberal construction that best achieves the statute's purpose, rather than a construction that defeats the statutory purpose.

5. Statutes. When a challenged statute is susceptible of more than one reasonable construction, a court uses the construction that will achieve the purposes of the statute and preserve the statute's validity.

6. Administrative Law: Words and Phrases. A decision is arbitrary when it is made in disregard of the facts or circumstances and without some basis which would lead a reasonable person to the same conclusion.

7. Administrative Law: Words and Phrases. A capricious decision is one guided by fancy rather than by judgment or settled purpose; such a decision is apt to change suddenly; it is freakish, whimsical, humorsome.

8. Administrative Law: Statutes. Administrative bodies have only that authority specifically conferred upon them by statute or by construction necessary to achieve the purpose of the relevant act.

Barry L. Hemmerling, of Jeffrey, Hahn, Hemmerling & Zimmerman, P.C., Lincoln, for appellants.

Don Stenberg, Attorney General, and L. Jay Bartel, Lincoln, for appellees.

WHITE, C.J., CAPORALE, WRIGHT, CONNOLLY, and GERRARD, JJ., and BUCKLEY, District Judge.

CAPORALE, Justice.

I. STATEMENT OF CASE

These consolidated appeals arise under the provisions of the Administrative Procedure Act, Neb.Rev.Stat. §§ 84-901 through 84-920 (Reissue 1994 & Cum.Supp.1996), the Nebraska Bingo Act, Neb.Rev.Stat. §§ 9-201 through 9-266 (Reissue 1991 & Cum.Supp.1996), and the Nebraska Pickle Card Lottery Act, Neb.Rev.Stat. §§ 9-301 through 9-356 (Reissue 1991 & Cum.Supp.1996). In the first appeal, enrolled at docket 505, page 241, in the records of the district court, and styled therein as "Southeast Rural Volunteer Fire Department, a Nebraska non-profit Corporation; Joseph Booth, Utilization of Funds Member; Ronald E. Olson, Gaming Manager, Plaintiffs, v. Nebraska Department of Revenue, Charitable Gaming Division, and M. Berri Balka, Nebraska State Tax Commissioner, Defendants," the appellee department, after an evidential hearing, denied, for the license period 1992-93, the applications of the appellant Southeast Volunteer for the renewal of a charitable gaming license, of the appellant Booth for a utilization of funds member's license, and of appellant Olson for a gaming manager's license. In the second appeal, enrolled at docket 514, page 230, in the records of the district court, and styled therein as "Southeast Rural Volunteer Fire Department, a volunteer fire department; Joseph Booth, Utilization of Funds Member; Ronald E. Olson, Gaming Manager, Plaintiffs, v. Nebraska Department of Revenue, Charitable Gaming Division, and M. Berri Balka, Nebraska State Tax Commissioner, Defendants," the appellee department, by summary judgment, denied, for the license period 1993-94, the applications of the appellants Southeast Volunteer, Booth, and Olson for the renewal of like licenses. The district court affirmed the decision of the department in each of the cases, and the applicants-appellants appealed to the Nebraska Court of Appeals, asserting, in summary, that the district court erred in (1) failing to find, with respect to the first appeal, that the department's rulings were erroneous and (2) ruling, with respect to the second appeal, that summary judgment was an appropriate remedy. We, on our own motion, under our authority to regulate the caseloads of the Court of Appeals and this court, removed the matter to our docket. We now affirm the judgment of the district court in the first appeal and reverse its judgment with respect to the second appeal, and remand that matter with direction.

II. SCOPE OF REVIEW

There being no substantial dispute with respect to the facts, these appeals involve the interpretation of statutes and regulations, which presents questions of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below, according deference to an agency's interpretation of its own regulations, unless plainly erroneous or inconsistent. See Inner Harbour Hospitals v. State, 251 Neb. 793, 559 N.W.2d 487 (1997).

III. FACTS

Southeast Volunteer provided personnel to Southeast Rural Fire Protection District, which was organized pursuant to statute for the purpose of providing fire protection to certain residents of Lancaster County, Nebraska. Southeast Volunteer also assisted Southeast District by raising money as the result of conducting bingo games and selling pickle cards. Southeast Volunteer held licenses to conduct bingo games and a lottery by the sale of pickle cards for the period from October 1, 1989, through September 30, 1990. It sold pickle cards at the location at which it conducted its bingo games in Lincoln and also marketed pickle cards through licensed pickle card operators in the state. Although the bingo games did not produce a profit, the revenue derived from the sale of pickle cards during the games did. These activities provided the major source of Southeast Volunteer's revenue. That revenue was placed first in either the bingo bank account, the pickle card bank account for pickle cards sold at the bingo game, or the pickle card bank account for pickle cards sold to pickle card operators. The revenue was then transferred to Southeast Volunteer's general bank account, from which it was used to make expenditures on behalf of Southeast Volunteer or Southeast District.

Southeast District's board of directors, consisting of five publicly elected members, had oversight authority over Southeast Volunteer. Four of these board members, including Olson and Booth, were firefighters with Southeast Volunteer and had been such for periods ranging from approximately 18 to more than 20 years. Olson was president and Booth was secretary-treasurer of Southeast District during the time Southeast Volunteer held its gaming licenses, and its gaming activities were managed by Olson, who was licensed as a gaming manager, and by Booth, who was licensed as a utilization of funds member.

Southeast District and Southeast Volunteer decided that in order to encourage firefighters to remain with Southeast Volunteer and develop a pool of competent and experienced firefighters, Southeast District would institute a retirement plan for the firefighters. The plan became effective July 1, 1990, and provided that firefighters with at least 5 years of service could draw their share of the account to use upon retirement (at 591/2 years of age) or upon becoming disabled, and that their families could draw the firefighter's share upon the firefighter's death. Those drawing money under the plan could take their share in installments, a lump sum, or a combination of their choice. The firefighters participating in the plan could choose how their portion would be invested. Southeast Volunteer funded the plan retroactively and donated general fund money to the plan in the sums of $90,000 on July 1, 1990, and $44,999.96 on July 1, 1991.

Southeast Volunteer also made other expenditures. From July 1, 1990, to March 26, 1992, Olson received $47,560.97 in salary from Southeast Volunteer, paid out of the general fund of the organization. Olson was the only member of Southeast Volunteer who was paid a salary on a yearly basis; he received $36,000 annually for operating and managing the bingo facility. Olson's duties as operations manager were as follows: making the facility ready for the game; ensuring that the rent and bills were paid; hiring and overseeing the gaming workers; keeping records and reporting on the gaming activities, including preparing tax returns and payroll; accepting deliveries; preparing food; keeping inventory of bingo paper and pickle cards; getting the cash register drawers ready; overseeing the conduct of the bingo games and pickle card sales; cleaning up the facility at the end of a bingo occasion (such an occasion being a single gathering or session at which a series of bingo games are played); repairing and maintaining the building; and renting the bingo facility to third parties. In addition, Olson and Booth had authority to sign checks on Southeast Volunteer's accounts.

On February 15, 1992, Olson, with the approval of Booth, received a check from Southeast Volunteer's general fund in the amount of $30,060. That payment was characterized by Southeast Volunteer as an advance on Olson's salary as operations manager. Olson used the payment to consolidate debts and refinance his home mortgage at a...