Lynch v. Metropolitan Utilities District

218 N.W.2d 546, 192 Neb. 17, 1974 Neb. LEXIS 645
CourtNebraska Supreme Court
DecidedMay 23, 1974
Docket39290
StatusPublished
Cited by3 cases

This text of 218 N.W.2d 546 (Lynch v. Metropolitan Utilities District) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lynch v. Metropolitan Utilities District, 218 N.W.2d 546, 192 Neb. 17, 1974 Neb. LEXIS 645 (Neb. 1974).

Opinions

McCown, J.

This is an action by plaintiff, as representative of a class, against the Metropolitan Utilities District, Ne[18]*18braska Methodist Hospital, and the City of Omaha, seeking to quiet title to certain real property in the City of Omaha, and to obtain for the city a portion of the proceeds of the sale of certain real estate similarly acquired. The District Court quieted the title to certain portions of the property in the defendant, Nebraska Methodist Hospital; quieted the title to the remaining property in the defendant, Metropolitan Utilities District; and dismissed plaintiff’s petition and the City’s cross-petition. Plaintiff has appealed.

All the facts are stipulated. Hereafter, Metropolitan Utilities District will be referred to as MUD; the Nebraska Methodist Hospital, as Hospital; and the City of Omaha, as City. The property in question here, a gas plant, was acquired by the City between 1918 and 1920, by eminent domain proceedings from the Omaha Gas Company, a private utility. The City issued $5 million in bonds to pay the condemnation award, and on July 1, 1920, the Omaha Gas Company executed and delivered a quit claim deed to the City covering the gas plant property.

Chapter 187, Laws 1919, provided that upon acquisition of the gas plant by the City, the Metropolitan Water District should immediately take over control and have “supreme and paramount authority” as to the possession and operation of such a gas plant. That act also provided that the funds arising from the operation of the gas plant, over and above certain operating expenses, were to be set apart as a sinking fund to be first applied in payment of interest and principal of any bonds issued for the acquisition of the gas plant. Upon its acquisition by the City, the gas plant was immediately taken over by the Metropolitan Water District.

In 1921, MUD was created by the Legislature and became the successor of the Metropolitan Water District. Chapter 111, Laws 1921, extended all the powers [19]*19which had been conferred upon a metropolitan water district to apply to gas plants and also vested all the powers, obligations, rights, and authority formerly exercised by the water district in MUD.

The interest and principal of the bonds issued by the City for the acquisition of the gas plant property were paid in full by MUD, entirely from funds from the operation of the gas plant. The bonds were liquidated on January 23, 1956.

Under MUD operation, various additions and extensions were made to the gas plant from time to time, some of which were constructed and located on adjoining land, which had been acquired and held by MUD in its own name.

Pursuant to resolution, the City executed a quit claim deed on September 4, 1968, conveying to MUD any interest of the City in all the parcels constituting any part of the gas plant, including the real estate originally acquired in the condemnation action of 1920, as well as all real estate adjoining it which had been later acquired and held by MUD1 in its own name. The quit claim deed reserved “any claim the City may have as against the proceeds of the sale of any of said property by reason of any interest said City may have in said properties * * In making the quit claim deed to MUD, the City did not comply with the provisions of its charter dealing with the sale and disposition of unneeded real property. The City has not received any payment from the sale of property to the Hospital to be referred to later. Proceeds of that sale have been retained and are held by MUD. [20]*20from $145,000 to approximately $181,000 were rejected. A subsequent bid of $200,000 by the defendant, Hospital, was also rejected. Another offer of $275,000 was accepted by MUD and the surplus property was conveyed by MUD to the Hospital by warranty deed dated June 25, 1970. The parties have stipulated as to the proportionate values attributable to the original gas plant property.

In 1972, the Legislature enacted section 14-1115, R. S. Supp., 1972, effective on July 6, 1972. That statute provides: “Whenever any of the property of a utility under the control of a metropolitan utilities district, whether real property or personal property, shall no longer be required for the operation of such utility, the district may sell and convey such surplus property, whether such property was acquired directly by the district or as a part of the utility plant or system acquired by the metropolitan city or any municipality or other political subdivision constituting a part of the district. Proceeds of the sale of such surplus property shall be credited to the utility of which such property was a part, or, where funds of more than one utility have been invested in property involved in a consolidated operation of the district, proceeds of such sale shall be apportioned among the utilities involved in such consolidated operation upon some reasonable basis determined by the board of directors of the district.”

The surplus property originally conveyed by MUD to the Hospital, by warranty deed in 1970, was again conveyed pursuant to resolution from MUD to the Hospital by warranty deed dated September 8, 1972.

Plaintiff commenced this action against the defendants, MUD and Hospital, on January 22, 1971. Thereafter, the City became a party defendant. On August 2, .1973, the trial court entered its judgment and decree dismissing plaintiff’s petition and the cross-petition of the City, and quieting title in the Hospital as to the land conveyed to-[21]*21it by MUD; and in the defendant, MUD, as to all other property.

Some relevant background history is of importance. MUD “is a municipal corporation created by statute to take over, control and operate the water-plant, formerly owned by the city of Omaha, and certain other public utilities.” Keystone Investment Co. v. Metropolitan Utilities District, 113 Neb. 132, 202 N. W. 416. MUD’s predecessor, a metropolitan water district, was a body corporate with all the usual powers of a corporation for public purposes, including the power to purchase, hold, and sell personal property and real estate. It had the sole management and control of its assets, including all waterworks property “real and personal, now or hereafter owned by said metropolitan city * * See § 14-1002, R. R. S. 1943.

In 1921, the Metropolitan Utilities District, as a separate and independent entity, became the successor of the Metropolitan Water District and succeeded to the property and powers and assumed the obligations of the water 'district. All the powers conferred upon metropolitan water districts were extended to gas plants and all such powers, obligations, rights, and authority became and were vested in MUD. See Laws 1921, chapter 111, sections 2 and 3, now §§ 14-1102 and 14-1103, R. R. S. 1943.

It is important to note also that the quit claim deed from the City to MUD in 1968 did not alter or affect the public purpose for which the properties were held. The transfer of bare legal title would have no effect upon the public for whom the property is held, whether they were in the class of taxpayers or of rate payers, so long as the property remained dedicated to the purposes of operating a gas plant.

Obviously, the statutory intermingling of rights, powers, and title as between MUD and the City created uncertainty and ambiguity as to the authority of MUD to sell and convey surplus property formerly acquired in the name of the City, but held and used by MUD in the opera[22]*22tion of the gas plant. Section 14-1115, R. S.

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Bluebook (online)
218 N.W.2d 546, 192 Neb. 17, 1974 Neb. LEXIS 645, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lynch-v-metropolitan-utilities-district-neb-1974.