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serious crime victims who do not have the attachment remedy. 

Similarly, there is no substantial difference between the public 

employees subject to the remedy and those who commit many 

other serious crimes yet retain their privilege from attachment. 

Accordingly, the Legislature’s preferential treatment of the 

favored groups and exclusion of others that are similar in circumstance runs afoul of the Constitution’s prohibition against 

special legislation.

Affirmed.

Wright and Cassel, JJ., not participating.

Sam Christiansen, an individual, appellee and

cross-appellant, v. County of Douglas, a political

subdivision of the State of Nebraska, et al., 

appellants and cross-appellees.

Rich McShane, on behalf of himself and all similarly

situated persons, appellee and cross-appellant, v. 

County of Douglas, a political subdivision

of the State of Nebraska, et al., 

appellants and cross-appellees.

___ N.W.2d ___

Filed July 18, 2014. Nos. S-13-689, S-13-691.

1. Jurisdiction: Appeal and Error. The question of jurisdiction is a question of 

law, which an appellate court resolves independently of the trial court.

2. Equity: Appeal and Error. Although in many contexts the traditional distinctions between law and equity have been abolished, whether an action is 

one in equity or one at law controls in determining an appellate court’s scope 

of review.

3. Actions: Pleadings. Whether a particular action is one at law or in equity is 

determined by the essential character of a cause of action and the remedy or relief 

it seeks.

4. Injunction: Equity. An action for injunction sounds in equity.

5. Declaratory Judgments. An action for declaratory judgment is sui generis; 

whether such action is to be treated as one at law or one in equity is to be determined by the nature of the dispute.

6. Equity: Appeal and Error. On appeal from an equity action, an appellate 

court decides factual questions de novo on the record and, as to questions of 

both fact and law, is obligated to reach a conclusion independent of the trial 

court’s determination.
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7. Evidence: Appeal and Error. When credible evidence is in conflict on material issues of fact, an appellate court considers and may give weight to the fact 

the trial court observed the witnesses and accepted one version of the facts 

over another.

8. Wages: Words and Phrases. Deferred compensation is defined as compensation 

which is earned in exchange for services rendered.

9. Statutes: Words and Phrases. The word “may” when used in a statute will be 

given its ordinary, permissive, and discretionary meaning unless it would manifestly defeat the statutory objective.

10. ____: ____. As a general rule, the word “shall” in a statute is considered mandatory and is inconsistent with the idea of discretion.

11. Equity: Estoppel. The doctrine of equitable estoppel applies where, as a result 

of conduct of a party upon which another person has in good faith relied to his 

detriment, the acting party is absolutely precluded, both at law and in equity, 

from asserting rights which might have otherwise existed.

12. Political Subdivisions: Equity: Estoppel. Although the State and its political 

subdivisions can be equitably estopped, the doctrine of equitable estoppel will not 

be invoked against a governmental entity except under compelling circumstances 

where right and justice so demand; in such cases, the doctrine is to be applied 

with caution and only for the purpose of preventing manifest injustice.

13. Estoppel. Equitable estoppel does not create a new right or give a cause of 

action; rather, it serves to protect rights already acquired.

14. Contracts: Ratification: Words and Phrases. Ratification is the acceptance of a 

previously unauthorized contract.

15. Ratification: Agents. Ratification of an agent’s unauthorized acts may be made 

by overt action or inferred from silence and inaction.

16. Contracts: Counties: Administrative Law. A county enters into contracts by a 

majority vote of its board of commissioners.

17. Principal and Agent: Contracts: Ratification. A principal may ratify what he 

could have authorized.

18. Principal and Agent: Ratification. Essential to a valid and effective ratification 

of an unauthorized act is the principal’s complete knowledge of the unauthorized 

act and all matters related to it.

19. Appeal and Error. An appellate court is not obligated to engage in an analysis 

that is not necessary to adjudicate the case and controversy before it.

Appeals from the District Court for Douglas County: Gary

B. Randall, Judge. Affirmed in part, and in part reversed and 

remanded with direction.

Donald W. Kleine, Douglas County Attorney, and Bernard J. 

Monbouquette for appellant.

Joel Bacon, Gary L. Young, Jefferson Downing, and Thomas 

P. McCarty, of Keating, O’Gara, Nedved & Peter, P.C., L.L.O., 

for appellees.
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Heavican, C.J., Wright, Connolly, Stephan, McCormack, 

Miller-Lerman, and Cassel, JJ.

Cassel, J.

INTRODUCTION

For many years, a county’s retired employees paid the 

same amount as active employees paid for health insurance 

coverage. After the county began to charge retirees a different 

and greater premium, they sued the county. We must decide 

whether the retirees had a contractual right to the previous 

practice and, if not, whether equitable estoppel or ratification 

affords them relief. We conclude that there was no contract 

and that the alternative doctrines provide no basis for relief. 

Thus, we affirm the district court’s summary judgment denying the contract claim and reverse the court’s decree granting 

injunctive relief, damages, and attorney fees, on the alternative grounds.

BACKGROUND

The Douglas County Board of Commissioners (Board) is 

the governing body of Douglas County, Nebraska (County). 

Only the Board can enter into contractual agreements on the 

County’s behalf.

Health Insurance

The Board has the responsibility and authority to determine 

who participates in the Douglas County health insurance plan 

(Plan) and the premiums to be paid by participants. Each 

year, the Board votes on a resolution to set premium rates for 

the Plan.

In December 1974, the Board passed a resolution which 

allowed employees of the County who retired between the ages 

of 55 and 65 to participate in the Plan until attaining age 65. 

This resolution applied only to employees who were qualified 

to participate in the County’s pension plan. The December 

1974 resolution did not specify the amount of premiums to 

be charged annually or promise that the amount would be the 

same as that charged to active employees.
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Since that time, retired employees have paid the same premiums to participate in the Plan as active employees. Each 

year when the Board voted on a resolution to set premium 

rates, the resolution did not draw any distinction between 

active employees and retired employees; rather, the resolution 

merely referred to “employees.”

Increased Charges

to Retirees

In 2008 and 2009, the County was in a fiscal crisis. The 

County considered numerous alternatives to respond to rising 

costs in health insurance. One alternative was requiring retired 

employees to pay a different rate for health insurance than that 

paid by active employees. Other options included eliminating 

the “Rule of 75,” which is an early retirement option; raising 

deductibles; raising copayments; establishing a wellness program; and raising premiums for all employees.

In September 2009, the Board voted unanimously to adopt 

resolution No. 596, which changed the amount retired employees paid toward premiums for the Plan in order to “adequately address the significantly increased health care costs 

impacting Douglas County’s health insurance budget, and the 

Government and Accounting Standards Board . . . rules relating to the unfunded liability of employer health insurance for 

retirees.” The resolution provided that the change would be 

effective January 1, 2010.

Resolution No. 596 set a rate for participating retired 

employees that was higher than the rate paid by active 

employees. For retired employees who had employee-only 

coverage, the change meant that they were required to pay 

25 percent of the total premium, whereas an active employee 

had to pay only 7 percent. As a result, in fiscal year 2010, 

a retired employee’s premium was $1,001.04 more per year. 

For retired employees who had dependents, the change 

meant they were required to pay 35 percent of the total premium, compared to the 15 percent an active employee was 

required to pay. Depending upon the number of dependents 

a retired employee had, the change resulted in the retired 
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employee’s paying $2,040.36 to $2,750.04 more per year than 

an active employee.

Litigation

Shortly before the change was to take effect, Sam 

Christiansen, a retired employee of the County under age 65 

who participated in the Plan, filed a complaint against the 

County and each commissioner of the Board, seeking injunctive and declaratory relief. Later, Rich McShane, also a retired 

employee of the County under age 65 who participated in 

the Plan, filed a similar complaint “on behalf of himself and 

all similarly situated persons.” He identified the class as “all 

retired employees who are participants in the [Plan], who have 

retired prior to January 1, 2010, and who are not 65 years of 

age prior to January 1, 2010.” We refer to the plaintiffs in these 

actions collectively as “the retirees.”

The retirees sought an order temporarily and permanently 

enjoining the County and each commissioner of the Board 

from implementing resolution No. 596 and any change in the 

manner of assessing health care premiums. They also sought 

attorney fees as permitted by 42 U.S.C. § 1988(b) (2012), a 

declaration of the rights of the retirees under the U.S. and 

Nebraska Constitutions, and any monetary losses suffered.

The district court later consolidated the cases and certified 

the class. The court stated that commonality was established 

by the fact that all employees of the County received information regarding premiums to be paid for participation in the Plan 

postemployment. Thus, the court stated, the claims of all class 

members would be based on the same legal theory of breach 

of contract.

Partial Summary

Judgment

Upon the County’s motion, the district court granted a partial summary judgment. The court determined that health insurance did not qualify as deferred compensation. Accordingly, 

the court ruled that the County’s practice of treating retired 

employees the same as active employees for purposes of setting health insurance premiums did not create contractual rights 
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protected by the Contracts Clauses of the U.S. Constitution1

and the Nebraska Constitution.2

The district court denied the motion for summary judgment 

as to whether applying the doctrines of ratification or estoppel 

to the County’s practice gave rise to a contractual obligation.

Evidence at Trial

Kathy Goodman, the County’s pension and insurance coordinator since 1997, had the obligation to inform employees 

about their retirement benefits. She understood that employees 

relied upon this information and that it was important for the 

information to be accurate. She also understood that the Board 

had the sole authority to determine the premiums for participation in the Plan each year.

Several commissioners acknowledged that employees were 

not going to approach the commissioners in order to ascertain 

the employees’ retirement benefits. Similarly, the commissioners did not expect employees to look through old Board 

resolutions. These commissioners testified that it was reasonable for employees to rely on Goodman and on the documents 

produced by Goodman and the human resources department.

Each year, after the Board set a rate structure for the 

Plan, Goodman provided rate sheets to employees during open 

enrollment. Before adoption of resolution No. 596, the rate 

sheets did not draw a distinction between retired and active 

employees; they merely listed the premiums for “employees.” 

The retirees concluded this meant there was no difference 

between active employees and retired employees with regard 

to the cost of insurance.

Before an employee retired, Goodman provided the 

employee with a letter regarding retirement benefits. Before 

adoption of resolution No. 596, the letter stated that “[a]s an 

early retiree you will continue to be eligible for our group 

insurance plans until you become Medicare-eligible at age 

65.” This language was phrased as a representation about 

what would happen in the future until an employee turned age 

1 U.S. Const. art. I, § 10.

2 Neb. Const. art. I, § 16.
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65. The letter stated that premiums were subject to change 

with the upcoming year’s renewal increases, but it did not 

state that retired employees would be treated differently than 

active employees.

In 2000, Goodman began conducting seminars on retirement 

benefits. She held the seminars at each of the County’s departments and offered an open session for all employees. Most 

employees attended the seminars.

In connection with the seminars, Goodman created and 

distributed a document entitled “Douglas County Employees’ 

Retirement Trust Fund” (Retirement Handout) to help 

employees understand their future retirement benefits. The 

Retirement Handout contained a list of frequently asked questions, including the following concerning health insurance: 

“Would the medical insurance premium be the same?” and 

“Upon retirement, are you still considered an employee as 

far as benefits?” Goodman included the questions because 

they were asked “about 90 percent of the time from employees.” The Retirement Handout contained the following answer 

in part under the heading “Medical/Dental/Life Benefits as 

a Retiree”:

You are still considered an employee of Douglas 

County with regard to the benefit package. As an early 

retiree, you can continue under the medical, dental and 

life plan for yourself and your eligible dependents until 

age sixty-five (65) when you become Medicare eligible. 

You will have the benefits as an active employee for the 

premiums, changes, and Open Enrollment.

Goodman obtained approval for the Retirement Handout. 

According to Goodman, “[a]dministration” and the Douglas 

County Pension Committee approved it. Goodman believed 

that she presented a copy of the Retirement Handout to all of 

the commissioners, because they are the “governing body” and 

she “would present [to them] anything that is going to come 

from my office that has any affect [sic] on any of the benefit information.”

Goodman continued to make the Retirement Handout 

available to employees after the seminars. The County also 

made the Retirement Handout available upon request to all 
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of its employees until January 1, 2010, when the language 

was changed. The payroll coordinator at the Douglas County 

Health Center distributed the Retirement Handout to approximately 400 employees who were eligible for retirement in 

2000 and also continued to make it available for employees 

at the health center who “needed to look at how the insurance 

was figured.”

Three commissioners and the human resources director testified to the effect that the language was phrased as a promise 

about how employees would be treated in the future, after they 

retired. The retirees understood the language to mean that after 

retirement and until age 65, they would pay the same premiums as an active employee. But Goodman testified that she 

was referring to the present time when making a representation about the share of premiums to be paid by a retiree. The 

County’s chief administrative officer testified that she spoke 

at two seminars in 2000 and that she told the attendees there 

was no guarantee that benefits would be provided to them 

upon retirement. No one asked her whether the premiums 

would always be the same cost. Her understanding of written representations about the share of premiums to be paid by 

retired employees was that they spoke to the present time only, 

because the premiums could change every year and there was 

nothing in the union contracts or in the pay plan in regard to 

postemployment benefits.

On approximately November 1, 2007, the Douglas County 

Pension Committee posted a Web site containing a “Frequently 

Asked Questions” page. The page included the following question, which dealt with health insurance for retirees: “Would 

the medical insurance premium be the same?” The answer 

was: “Current eligible retirees can continue under the Douglas 

County benefit plan at the same monthly rate as active employees until age 65. Payments are sent directly to the benefit office 

by the first of each month.” This question was included because 

it was asked 90 percent of the time by employees considering 

retirement. Prior to being posted, each page of the proposed 

Web site was reviewed by the pension committee. The pension 

committee included a commissioner, the chief administrative 

officer, the human resources director, and the County’s fiscal 
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director. No one objected to the content. The Web site was 

removed after the Board approved resolution No. 596.

Evidence was adduced regarding oral representations concerning a retired employee’s participation in the Plan. During 

employee orientations at the health center, employees often 

asked about their ability to participate in the Plan postretirement for the same premiums as active employees, and the 

payroll coordinators told them they would be able to do so 

until age 65. One class member testified that before retirement, he began “crunching numbers” to see how feasible it 

was for him to retire. He specifically asked Goodman about 

insurance, and he testified that she confirmed he would “get 

to continue paying for County health insurance as if [he] were 

still working” until he reached age 65. Several other retirees 

testified similarly.

Oral representations concerning the premiums to be paid by 

a retired employee were also made during negotiations of labor 

contracts. During the 1990’s, Christiansen, who was president 

of one of the labor unions, was involved in negotiations with 

the County. He testified that the negotiator for the County and 

the chief administrative officer said that retired employees 

would be able to continue to participate in the Plan and that 

the premiums would be the same as that of an active employee. 

While negotiating, Christiansen met with commissioners and 

discussed health insurance. He testified:

They knew that the insurance would be the same, the 

premium would be the same and that people were going 

to retire earlier. They also understood that that was going 

to be an added liability to the County and were concerned, but they certainly were willing to continue with 

the health benefits.

While health insurance and pensions were discussed during 

negotiations, the terms were never set forth in the contracts, 

but “[i]t was assured that those benefits would not change.” 

Gary Kratina, a class member who also served on the union’s 

negotiating team, heard at least two representatives of the 

County make the same representation.

Testimony was adduced that representations about postretirement participation in the Plan were used to recruit new 
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employees. McShane was involved in recruiting new employees for the sheriff’s department, and based on materials he was 

provided, he told prospects that upon retirement, they would be 

able to participate in the Plan, and that retired employees were 

paying the same rate as active employees. Kratina testified 

that when he was hired in 1975, a commissioner at that time 

told him employees “would have insurance, and the insurance 

would be the same always as the employees up to age 65.” 

Kratina heard multiple sheriffs and captains and the chief deputy sheriff tell new employees, as a “recruiting element,” that 

upon retirement they would be able to participate in the Plan 

and “would have the same payments as you would as a regular 

employee.” He testified that this was said “over and over” to 

recruit new employees and was included in “written literature” 

distributed to recruits.

The retirees viewed the representations as part of the 

compensation package they were receiving in exchange for 

the work they were performing. Several retirees testified it 

was important to them to know that when they retired, they 

would be treated the same as active employees with regard to 

health insurance.

Commissioner Mike Boyle, who had been a commissioner 

since 1997, characterized the Plan as a form of compensation 

to County employees. He felt that the County had promised its 

employees that they would be able to participate in the Plan 

for the same premiums as active employees and that this promise was something that the Board renewed each year when it 

voted on premiums. He testified that while a commissioner, he 

had spoken to 25 to 30 active employees and told them that 

upon retirement, they would be able to participate in the Plan 

for the same premiums as an active employee. He testified that 

he had seen the Retirement Handout “for quite a long time, for 

years, I believe.”

Commissioner Kyle Hutchings testified that retired employees were allowed to participate in the Plan as a benefit of 

employment and not as deferred compensation. He characterized it as a gratuity because he did not feel that the County 

had a requirement to provide that insurance to retired employees. Hutchings was unaware of communications of any type 
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that the County made to its employees telling them that upon 

retirement, they would be able to continue in the Plan at the 

same monthly premium rates as active employees. Although 

a member of the pension committee, Hutchings testified that 

he first became aware of the content of the “Frequently Asked 

Questions” page on the pension committee Web site sometime 

after adoption of resolution No. 596.

Commissioner Clare Duda, who had been a commissioner 

for 20 years, testified that because retired employees are not 

covered by any union contract, they could participate in the 

Plan at the pleasure of the Board and at the rates set by 

the Board. Duda recalled discussions with Christiansen and 

other members of the union in the late 1990’s about the need 

for health insurance coverage of younger retired employees. 

Duda testified that the Board wanted to include them in the 

Plan, but that the Board “would never have represented that 

it would be at the same rate.” Prior to the vote on resolution 

No. 596, Duda had never visited the pension committee Web 

site and had not attended any seminars or read any document 

prepared by Goodman concerning health insurance costs for 

retired employees. He testified that he first saw the Retirement 

Handout shortly before trial and that he was confused when he 

testified in his deposition that he reviewed it annually.

Commissioner Mary Ann Borgeson testified that the Board 

prepared a budget every year and talked about continuing to 

provide the health insurance benefit to retired employees. She 

recalled negotiations with Christiansen and his fellow union 

members, but denied stating that retired employees would 

always be able to participate in the Plan at the same cost as 

active employees.

Commissioner Marc Kraft testified that at the time resolution No. 596 was adopted, he had no knowledge of any representations made by Goodman to County employees about the 

amount of health insurance premiums they would have to pay 

in order to participate in the Plan during retirement. He never 

read any handouts prepared by her that contained anything 

dealing with health insurance for retired employees, nor did he 

attend any seminars that she presented. He never read the pension committee Web site. Prior to September 2009, Kraft was 
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unaware that health insurance was offered to retired employees. Similarly, Commissioner Pam Tusa testified that she “had 

no understanding” about the ability of retired employees under 

age 65 to participate in the Plan.

Commissioner Chris Rodgers testified that in 2009, he was 

aware that retired employees under the age of 65 were allowed 

to participate in the Plan but was not aware of any representations made by the County’s representatives, including 

Goodman, to employees about the amount of premiums they 

would pay during retirement. He never attended a seminar 

in which retirement benefits were discussed and never read 

documentation of any type that mentioned health insurance for 

retired employees. He did not read the pension committee Web 

site while a commissioner.

As of January 1, 2010, there were 250 to 275 retirees participating in the health insurance plan. At that time, between 

1,850 and 2,300 active full-time employees were eligible for 

the benefit. If the County spread costs equally across all participants, the increase in premium costs for the retirees would 

not have been as significant. Although the retirees knew that 

insurance costs would increase incrementally every year, the 

amounts were not “staggering.” McShane testified that subjecting the active employees to a substantial increase in premium 

rates would cause an “uproar.” The payroll coordinator testified 

that “the employees would be raising Cain” if the County had 

attempted to raise active employees’ rates to the same level it 

raised them for the retirees.

District Court Order

and Judgment

On March 8, 2013, the district court entered an order following trial. The court found that equitable estoppel barred the 

County from denying the existence of a contractual obligation 

to treat retired employees under age 65 the same as active 

employees for the purpose of setting health insurance premiums. The court also stated that “[a]lthough there is likely sufficient evidence to find a contractual obligation arose via ratification, the Court will only make the finding that the Board had 

sufficient knowledge for ratification given all of the evidence 
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supporting [the retirees’] equitable estoppel claim.” Having 

found the existence of a contractual obligation, the court determined that resolution No. 596 violated the Contracts Clauses 

of the U.S. and Nebraska Constitutions because it constituted 

a substantial impairment on the contractual obligation. In finding that the County’s actions were not a legitimate exercise of 

sovereign powers, the court noted that there was no evidence 

that the disadvantages to the retirees were offset by any new 

comparable advantages and that other options were available 

to achieve the same amount of cost savings.

The district court subsequently entered a permanent injunction, enjoining the County from treating the retirees differently 

than active employees in determining the amount of premiums 

to be paid for participation in the Plan. It ordered the County 

to repay over $1 million in premiums. Because the court found 

liability under 42 U.S.C. § 1983 (2012) for the violation of 

the Contracts Clauses, it awarded $178,703.94 in attorney fees 

pursuant to 42 U.S.C. § 1988.

The County timely appealed, and the retirees filed a crossappeal. Pursuant to statutory authority, we granted the County’s 

petition to bypass the Nebraska Court of Appeals.3

ASSIGNMENTS OF ERROR

The County assigns that the district court erred in (1) exercising jurisdiction even though the retirees failed to comply 

with the county claims statute, (2) finding sufficient evidence 

of equitable estoppel to create a binding legal contract concerning the amount of health insurance premiums the retirees 

would pay after retirement, (3) finding that the Board ratified 

certain representations by County employees concerning the 

amount of premiums retirees would pay in order to participate 

in the Plan after retirement, (4) finding that various representations concerning health insurance premiums created a vested 

contractual obligation of the County to its retirees, (5) finding 

that resolution No. 596 violated the Contracts Clauses of the 

U.S. and Nebraska Constitutions, (6) finding that the resolution impaired the County’s obligation to its retirees and was a 

3 See Neb. Rev. Stat. § 24-1106(2) (Reissue 2008).
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violation of the Contracts Clauses, and (7) finding commonality and certifying a class.

On cross-appeal, the retirees assign that the district court 

erred in (1) granting summary judgment to the County on the 

retirees’ claim that a contractual obligation arose under Halpin 

v. Nebraska State Patrolmen’s Retirement System,

4

 (2) failing 

to find a contract arose under Halpin, and (3) failing to rule 

that a contract arose via ratification.

STANDARD OF REVIEW

[1] The question of jurisdiction is a question of law, which 

an appellate court resolves independently of the trial court.5

[2-5] Although in many contexts the traditional distinctions between law and equity have been abolished, whether an 

action is one in equity or one at law controls in determining an 

appellate court’s scope of review.6 Whether a particular action 

is one at law or in equity is determined by the essential character of a cause of action and the remedy or relief it seeks.7

The retirees claimed violations of the Contracts Clauses of the 

U.S. and Nebraska Constitutions. They sought injunctive relief 

and declaratory relief, as well as monetary damages incident 

to such relief. An action for injunction sounds in equity.8 An 

action for declaratory judgment is sui generis; whether such 

action is to be treated as one at law or one in equity is to be 

determined by the nature of the dispute.9

[6,7] Although the retirees’ actions had elements of both 

an action in equity and one at law, we conclude that the primary objective was equitable relief, not monetary damages. 

On appeal from an equity action, an appellate court decides 

factual questions de novo on the record and, as to questions 

4 Halpin v. Nebraska State Patrolmen’s Retirement System, 211 Neb. 892, 

320 N.W.2d 910 (1982).

5 In re Estate of McKillip, 284 Neb. 367, 820 N.W.2d 868 (2012).

6 State ex rel. Wagner v. Amwest Surety Ins. Co., 274 Neb. 121, 738 N.W.2d 

813 (2007).

7 Id.

8 Obermiller v. Baasch, 284 Neb. 542, 823 N.W.2d 162 (2012).

9 Vlach v. Vlach, 286 Neb. 141, 835 N.W.2d 72 (2013).
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of both fact and law, is obligated to reach a conclusion independent of the trial court’s determination.10 But when credible 

evidence is in conflict on material issues of fact, an appellate 

court considers and may give weight to the fact the trial court 

observed the witnesses and accepted one version of the facts 

over another.11

ANALYSIS

Noncompliance With County

Claims Statute

We first address the County’s jurisdictional argument. The 

County contends that the district court lacked jurisdiction over 

this matter because the retirees filed their complaints with the 

court and not with the county board as required by the county 

claims statute.12 The county claims statute provides, in pertinent part, that “[a]ll claims against a county shall be filed 

with the county clerk within ninety days from the time when 

any materials or labor, which form the basis of the claims, 

have been furnished or performed . . . .”13 The purported contract at issue in this case concerns health insurance benefits. 

Compliance with § 23-135 was not required. We conclude 

that the district court properly exercised jurisdiction over 

the matter.

Contract Under Halpin

Before addressing the County’s other assignments of error, 

we consider the retirees’ claim on cross-appeal that the district court erred in failing to find a contract arose under 

Halpin14 and in granting summary judgment to the County 

on that claim. The retirees argue that postretirement health 

insurance is a form of deferred benefit subject to Halpin and 

that the County’s long practice of providing the retirees with 

10 See United States Cold Storage v. City of La Vista, 285 Neb. 579, 831 

N.W.2d 23 (2013).

11 See id.

12 See Neb. Rev. Stat. § 23-135 (Reissue 2012).

13 § 23-135(1).

14 Halpin, supra note 4.
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health insurance benefits gave rise to a contractual obligation. The retirees assert that under Halpin, when an employee 

relies upon an administrative pattern and practice regarding a 

deferred benefit to the employee’s detriment and to the benefit 

of the employer, the employee has expectations protected by 

contract law.

Halpin involved a case decided under the Contracts Clause 

of the U.S. Constitution. For 10 years, the computation of a 

retiring patrolman’s final average monthly salary included a 

lump-sum payment received for accumulated but unused vacation and sick leave. Effective January 4, 1979, that lump-sum 

payment was excluded. A retired member of the patrol brought 

a class action suit seeking a declaratory judgment that the final 

average monthly salary of a retiring patrolman should include 

the lump-sum payment. The trial court determined that the 

lump-sum payment should not be included in the final average 

monthly salary because the administrative policy of including 

such payments did not create contractual rights. On appeal, 

we reversed. We recognized that employee pensions were not 

gratuities, but, rather, were deferred compensation for services rendered. We stated that employees’ rights with regard 

to their pensions were contractual in nature. Thus, we found 

that the change in calculating pension annuities resulted in an 

unconstitutional impairment of the retiring members’ contractual rights.

[8] More recently, we considered whether an employee had 

a contractual right to a long-term disability policy for purposes 

of the Contracts Clause. In Livingston v. Metropolitan Util. 

Dist.,

15 a disabled employee relied upon Halpin in arguing 

that his contractual rights were interfered with when the portion of long-term disability coverage that provided for lifetime 

benefits was eliminated. We considered whether the long-term 

disability policy was akin to a pension or deferred compensation such that the disabled employee had a contractual right 

for purposes of the Contracts Clause. We reasoned that it did 

not meet the definition of deferred compensation, i.e., it was 

15 Livingston v. Metropolitan Util. Dist., 269 Neb. 301, 692 N.W.2d 475 

(2005).
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not “compensation which is earned in exchange for services 

rendered.”16 We noted that enrollment in the plan was purely 

voluntary and that the accrual of coverage depended upon the 

payment of premiums and the occurrence of an injury rather 

than on the rendering of services. And because the policy was 

not a pension or deferred compensation, we concluded that the 

employee had no contractual right in the policy for purposes of 

the Contracts Clause.

In Livingston, we disapproved an earlier case to the extent 

that it was inconsistent. We stated that Omer v. Tagg17 “appears 

to hold, with little analysis, that health insurance is akin to 

deferred compensation.”18 In Omer, a retired patrolman sued 

after being told that he was ineligible to participate in the 

State’s group insurance program. When hired, the patrolman 

was told by the superintendent of the patrol or one of his designees that upon retirement, the patrolman would be allowed 

to continue to participate in the group health insurance upon 

payment of the premium. We stated in Omer that the State’s 

position that benefits were a gratuity was rejected in Halpin

and that “promises made at the time of employment were for 

compensation to be enjoyed at retirement and constituted a 

contract enforceable against the State.”19 Because this reasoning, as it pertains to health insurance, was inconsistent with our 

opinion in Livingston, it was disapproved.

We adhere to the reasoning expressed in Livingston. The 

Plan in the instant case is not a pension or deferred compensation. An employee’s participation in the Plan was purely voluntary, and obtaining coverage under the Plan was not contingent 

upon the rendering of services, but, rather, required the payment of premiums.

[9,10] Nebraska statutes differentiate between plans for 

health insurance for county employees and plans for retirement. 

A statute concerning employee benefit plans for a political 

16 Id. at 307, 692 N.W.2d at 480.

17 Omer v. Tagg, 235 Neb. 527, 455 N.W.2d 815 (1990).

18 Livingston, supra note 15, 269 Neb. at 308, 692 N.W.2d at 481.

19 See Omer, supra note 17, 235 Neb. at 530, 455 N.W.2d at 817.
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subdivision, such as a county, requires only that the political 

subdivision “may” establish benefit plans for its employees 

which will provide medical coverage.20 The word “may” when 

used in a statute will be given its ordinary, permissive, and 

discretionary meaning unless it would manifestly defeat the 

statutory objective.21 On the other hand, a county’s retirement 

system “shall be composed of all persons who are or were 

employed by member counties and who maintain an account 

balance with the retirement system,”22 and “[a]ll permanent 

full-time employees shall begin participation in the retirement 

system upon employment . . . .”23 As a general rule, the word 

“shall” in a statute is considered mandatory and is inconsistent 

with the idea of discretion.24 Members of the retirement system 

are vested after 3 years of participation.25 There is no similar 

statutory vesting in a health insurance plan.

Because the Plan is not a pension or deferred compensation, the retirees had no contractual right to participate in the 

Plan for the same premiums paid by active employees. As 

we concluded in Livingston, no analysis under the Contracts 

Clause is necessary. The district court did not err in determining that the County’s practice of allowing retirees to participate in the Plan for the same premiums as active employees 

did not create contractual rights protected by the Contracts 

Clause and in granting summary judgment to the County on 

that claim.

Equitable Estoppel

We next consider whether the district court erred in finding 

that equitable estoppel prohibited the County from increasing 

the premiums to be paid by the retirees above those paid by 

active employees. The County argues that equitable estoppel 

20 See Neb. Rev. Stat. § 13-1614 (Reissue 2012).

21 Conley v. Brazer, 278 Neb. 508, 772 N.W.2d 545 (2009).

22 See Neb. Rev. Stat. § 23-2306(1) (Supp. 2013).

23 § 23-2306(2)(a).

24 Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (2007).

25 See Neb. Rev. Stat. § 23-2319(3) (Supp. 2013).
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cannot apply to create a contractual obligation to treat the retirees the same as regular active employees. We agree.

[11,12] The doctrine of equitable estoppel applies where, 

as a result of conduct of a party upon which another person 

has in good faith relied to his detriment, the acting party is 

absolutely precluded, both at law and in equity, from asserting rights which might have otherwise existed.26 Although the 

State and its political subdivisions can be equitably estopped, 

the doctrine of equitable estoppel will not be invoked against 

a governmental entity except under compelling circumstances 

where right and justice so demand; in such cases, the doctrine 

is to be applied with caution and only for the purpose of preventing manifest injustice.27

[13] Equitable estoppel cannot create a contractual obligation where one does not otherwise exist. We have already concluded that the retirees had no contractual right to participate 

in the Plan at the same premiums as active employees. Here, 

the district court used estoppel to create a vested obligation 

on the part of the County. Equitable estoppel does not create a 

new right or give a cause of action; rather, it serves to protect 

rights already acquired.28 It may be urged for protection of a 

right, but it can never create a right.29

Because the retirees had no contractual right to pay the 

same premiums as active employees, we conclude that the 

district court erred in using estoppel to create such a contractual obligation. Accordingly, we reverse the district court’s 

judgment finding a contractual obligation based upon equitable estoppel.

Ratification

[14,15] We next consider whether a contractual obligation arose via ratification. Ratification is the acceptance of a 

26 Burns, supra note 24.

27 See Berrington Corp. v. State, 277 Neb. 765, 765 N.W.2d 448 (2009).

28 Commerce Sav. Scottsbluff v. F.H. Schafer Elev., 231 Neb. 288, 436 

N.W.2d 151 (1989).

29 See id.
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previously unauthorized contract.30 Ratification of an agent’s 

unauthorized acts may be made by overt action or inferred 

from silence and inaction.31

Both parties fault the district court’s determination regarding ratification. The court found that the Board had sufficient 

knowledge to ratify the representations made, but the court 

declined to specifically find a contractual obligation through 

ratification. The retirees argue that the court erred in failing to 

expressly rule that a contractual obligation arose through ratification. The County, on the other hand, argues that the court 

erred in concluding that the Board ratified previous representations concerning premiums to be paid by retirees.

[16,17] A county enters into contracts by a majority vote of 

its board of commissioners.32 For purposes of this opinion, we 

assume, without deciding, that the County had the power to 

contract for health insurance for the retirees. A principal may 

ratify what he could have authorized.33 Here, ratification of a 

contractual obligation could only occur by the act of a majority 

of the commissioners.

[18] But ratification by a majority of the Board is not supported by the evidence. Essential to a valid and effective 

ratification of an unauthorized act is the principal’s complete 

knowledge of the unauthorized act and all matters related to 

it.34 Thus, in order for there to have been a ratification of the 

representations concerning the premiums to be paid by retired 

employees participating in the Plan, a majority of the commissioners would have needed to know of them. But only one 

commissioner testified that he was aware of representations 

that retired employees would be treated as active employees 

for purposes of health insurance until age 65. A majority of 

the commissioners had not read the Retirement Handout and, 

30 Brook Valley Ltd. Part. v. Mutual of Omaha Bank, 285 Neb. 157, 825 

N.W.2d 779 (2013).

31 Id.

32 See Neb. Rev. Stat. §§ 23-103 and 23-104(6) (Reissue 2012).

33 Millett v. Miller, 135 Neb. 123, 280 N.W. 442 (1938).

34 Western Fertilizer v. BRG, 228 Neb. 776, 424 N.W.2d 588 (1988).
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thus, did not know of the representation contained therein. In 

a recent case involving a limited partnership, we stated that 

even if a majority of the limited partners had ratified the acts, 

there could be no ratification where the partnership agreements 

required consent of all of the limited partners.35 Similarly, 

the Board could not create a contractual obligation through 

ratification when a majority of the commissioners did not even 

know of the representations.

The district court imputed knowledge to the commissioners. 

The court recognized that four commissioners testified they 

had not read Goodman’s handouts or attended the retirement 

seminars, but the court stated that such inaction did not insulate the commissioners from knowledge. The court relied on 

Baxter v. National Mtg. Loan Co.,

36 where we stated:

“[T]he principal cannot be justified in wilfully closing his 

eyes to knowledge. He cannot remain ignorant where he 

can do so only through intentional obtuseness. He cannot refuse to follow leads, where his failure to do so can 

only be explained upon the theory that he preferred not 

to know what an investigation would have disclosed. He 

cannot shut his eyes where he knows that irregularities 

have occurred. In such a case, he will either be charged 

with knowledge, or with a voluntary ratification with all 

the knowledge which he cared to have.”

We decline to impute knowledge of the representations 

to the commissioners under the facts of this case. Evidence 

established that the commissioners receive many documents to 

review and that it is up to each commissioner to decide what 

to read in performing his or her duties. While information was 

available to them that employees were being informed they 

would pay the same premiums as active employees to participate in the Plan postemployment, there was no evidence that 

the commissioners knew irregularities were occurring or that 

they intentionally chose not to learn of the representations. 

Because the commissioners had no actual knowledge of these 

35 See Brook Valley Ltd. Part., supra note 30.

36 Baxter v. National Mtg. Loan Co., 128 Neb. 537, 558-59, 259 N.W. 630, 

640 (1935).
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representations before they passed the resolution at issue, the 

district court erred in finding that the Board had sufficient 

knowledge to ratify the representations. We conclude that no 

contractual obligation arose via ratification. Although the court 

imputed knowledge to the Board, it appears to have declined 

to grant relief on the basis of ratification. Understanding the 

court’s order to deny relief on that ground, we affirm its judgment on that issue.

Remaining Assignments

of Error

[19] We have determined that the retirees did not have a contractual right in the Plan for purposes of the Contracts Clauses 

and that no contractual obligations arose under the theories of 

equitable estoppel or ratification. Because the district court’s 

judgment must be reversed, we do not consider the County’s 

other assignments of error. An appellate court is not obligated 

to engage in an analysis that is not necessary to adjudicate the 

case and controversy before it.37

CONCLUSION

We conclude that the district court properly rejected the 

retirees’ claim that a contractual obligation arose under Halpin

and that the court did not err in declining to grant relief on 

the basis of ratification. We reverse the court’s determination 

that equitable estoppel created a contractual obligation, and 

we remand the cause with direction to enter judgment for the 

County on the retirees’ claims.

 Affirmed in part, and in part reversed

and remanded with direction.

37 Hall v. County of Lancaster, 287 Neb. 969, 846 N.W.2d 107 (2014).