United Community Services v. Omaha Nat. Bank

• Decision Date: 15 June 1956
• Docket Number: No. 33912,33912
• Citation: 162 Neb. 786,77 N.W.2d 576
• Parties: UNITED COMMUNITY SERVICES, a Corporation, Appellee, v. The OMAHA NATIONAL BANK, a Corporation, Appellee. Impleaded with Omaha Public Power District, a Corporation, Appellant.
• Court: Nebraska Supreme Court

Page 576

77 N.W.2d 576

162 Neb. 786

UNITED COMMUNITY SERVICES, a Corporation, Appellee, v. The OMAHA NATIONAL BANK, a Corporation, Appellee Impleaded with Omaha Public Power District, a Corporation, Appellant.

No. 33912.

Supreme Court of Nebraska.

June 15, 1956.

Syllabus by the Court.

1. Eleemosynary means relating or devoted to charity; given in charity; having the nature of alms.

2. Charity is a gift for the benefit of an indefinite number of persons by bringing their hearts under the influence of education or religion; by relieving their bodies from disease, suffering, or constraint; by assisting them to establish themselves for life; or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government.

3. Generally a gift of its property by a corporation not created for charitable purposes is in violation of the rights of its stockholders and is ultra vires however worthy of encouragement or aid the object of the gift may be.

4. A public corporation, authorized by the Legislature and organized pursuant thereto to carry out functions that have been determined to be for a public purpose and the general welfare of the people, is an arm or branch of the government for this purpose and under the plenary control of the Legislature and therefore a governmental subdivision of the state within the terms of Article VIII, section 2, of the Constitution of Nebraska, as amended in 1920.

5. Public corporations chartered for the purpose of supplying the public with electricity have such lawful rights and powers as are clearly and expressly granted, together with such implied powers as are reasonably necessary to enable them to exercise those expressly conferred, and to enable them to accomplish the objects of their creation. All rights and powers not thus granted are withheld.

6. The authority given a public corporation to engage in the operation of a business enterprise carries with it the power to conduct it in the same manner in which a private corporation would deal with its property under similar circumstances.

7. The state Constitution is not a grant but a restriction of legislative power, consequently courts can enforce only those limitations which the Constitution imposes.

8. Every legislative act comes before this court surrounded with the presumption of constitutionality and this presumption continues until the act under review clearly appears to contravene some provision of the Constitution.

9. The constitutional validity of an act of the Legislature is to be tested and determined, not by what has been or possibly may be done under it, but by what the law authorizes to be done under and by virtue of its provisions.

10. The Legislature cannot circumvent an express provision of the Constitution by doing indirectly what it may not do directly.

11. The rights and franchises of a public corporation never become vested rights as against the state, and its charter constitutes no contract in the sense of the constitutional provision which prohibits the obligation of contracts being violated.

12. Article XIII, section 3, of the Constitution of Nebraska is intended to prevent the state from extending its credit to private enterprises.

13. It is the province of the Legislature to determine matters of policy. In appropriating the public funds, if there is reason for doubt or argument as to whether the purpose for which the appropriation is made is a public or a private purpose, and reasonable men might differ in regard to it, it is generally held that the matter is for the Legislature.

14. The vital point, in all such appropriations, is whether the purpose is public. If it is, it does not matter whether the agency through which it is dispensed is public or not since the appropriation is not made for the agency but for the object which it serves. The test is in the result, not in the means.

15. The Legislature may make a reasonable classification of persons, corporations, and property for purposes of legislation concerning them, but the classification must rest upon real differences of situation and circumstances surrounding the members of the class relative to the subject of legislation which render appropriate its enactment.

16. The Legislature may legislate in regard to a class of persons, but they cannot take what may be termed a natural class of persons, split that class in two, and then arbitrarily designate the dissevered fractions of the original unit as two classes and enact different rules for the government of each.

17. An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; and it is, in legal contemplation, as inoperative as though it had never been passed.

Fraser, Connolly, Crofoot & Wenstrand, Omaha, for appellant.

Morsman, Maxwell, Fike & Sawtell, Omaha, for United Community Service.

Wells, Martin, Lane, Baird & Pedersen, Omaha, for Omaha Nat. Bank.

Kennedy, Holland, DeLacy & Svoboda, Omaha, amicus curiae.

C. S. Beck, Atty. Gen., Clarence A. H. Meyer, Deputy Atty. Gen., amicus curiae.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

WENKE, Justice.

The United Community Services, a corporation, brought this action in the district court for Douglas County against the Omaha Public Power District and the Omaha National Bank. The purpose of the action is to determine whether or not the Omaha Public Power District, which we shall hereinafter refer to as the district, had legal authority to make the pledges that it did to the plaintiff, which we shall hereinafter refer to as appellee. The trial court found that the pledges made were in the nature of business expenditures which the district had the right to make under its general powers. It entered a decree accordingly. Its motion for a new trial having been overruled, the district took this appeal therefrom.

When this court heard the case being orally argued the first time, it became apparent that all parties involved were interested solely in having the trial court's decree sustained. Such fact is evidenced by the briefs. It appeared to us then, as it still does, that the matter involved is of substantial public concern and should be fully presented by both sides in order to give this court a better opportunity of being informed as to the questions involved. For that purpose we continued the oral hearing thereof on February 8, 1956, and directed the Attorney General to appear and file a brief for that purpose. This he did on March 16, 1956. Appellee, in its reply to the brief so filed, is quite critical of the position taken therein by the Attorney General. In presenting a case to this, or any other court, counsel should confine their remarks to the facts thereof and the law applicable thereto. Language critical of one's adversary, or of a court, has no place in such procedure.

The nature of the case is one seeking a declaratory judgment to determine the right of a public power district to make contributions to a community chest operating within the boundaries of the territory served by such district; first, under its general statutory powers, and second, under a statute passed by the 1951 Legislature giving such district the specific power to do so under the conditions therein set forth. (Now §§ 14-1106 and 14-1107, R.R.S.1943.)

Appellee, United Community Services, a Nebraska corporation with its principal place of business in Omaha, is a nonprofit charitable organization without capital stock. It is successor to the Omaha Welfare Federation and Community Chest, a Nebraska corporation, and is commonly referred to as 'Community Chest.' It annually conducts a campaign in the city of Omaha to collect funds in support of numerous properly accredited and affiliated agencies engaged in charitable and eleemosynary purposes, which funds are used by these agencies to carry on their work exclusively within the limits of the city, a city of the metropolitan class, for the welfare of the people therein. As an example, in 1954 it collected $1,234,869 for this purpose.

Appellant is a public power district organized under Chapter 70 of the Nebraska statutes and has the usual powers of a public corporation. It is primarily engaged in the operation of an electrical utility, being the sole distributor of electrical energy, which it produces, to the residents of the district it serves, which includes the city of Omaha. It does not have power to tax, so none of its revenues are derived from that source.

For each of the years 1950 and 1951 the district, by separate resolutions of its board of directors, contributed and paid to appellee the sums of $28,000 and $32,000 respectively. However, before doing so, an indemnifying agreement was entered into by the parties with the Omaha National Bank, hereinafter referred to as the bank, whereby appellee deposited with the bank $75,000 in principal of United States securities to guarantee that a refund of these contributions would be made to the district if it should be judicially determined that the contributions were made without legal authority.

In each of the years 1952, 1953, and 1954 the district, by separate resolutions of its board of directors which contain findings and impose requirements to meet all the provisions of the law relating thereto as passed by the 1951 Legislature, authorized contributions to be made to appellee in the respective amounts of $36,800, $39,000, and $39,000. The evidence shows these amounts were not in excess of that authorized by the statute. However, these amounts were never paid to appellee.

It is to enforce these pledges, and to relieve itself from the continuance of its obligation to keep the securities on deposit with the bank under the indemnifying agreement hereinbefore referred to, that appellee brought this action. It thereby seeks to have determined whether or not the district was legally...