Court Opinion

ID: 9658385
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:57:36.030719+00
Date Added: 2024-06-11T18:13:54.329237
License: Public Domain

White, C. J.,
dissenting.
As early as 1894 and as recently as 1962 this court has stated and reaffirmed the principle that the constitutional authority and power to sell, lease, and manage the educational lands of the state is conferred upon a distinct board and that the authority thus conferred, the Legislature is powerless to take away. At the present time the Board of Educational Lands and Funds has sole power under the Constitution to manage and control school lands. State ex rel. Crounse v. Bartley, 40 Neb. 298, 58 N. W. 966; State v. Kidder, 173 Neb. 130, 112 N. W. 2d 759.
This constitutional function conferred upon the board “under the direction of the legislature” has been present since 1875. Nebraska Constitution of 1875, Article VIII, section 1; Nebraska Constitution of 1920, Article VII, section 1. In light of the above language it is clear that the responsibility, duty, and discretion to sell, lease, and manage the school lands is in the board and not the Legislature. Thus the word “direction” in the phrase “under the direction of the Legislature,” cannot be construed to mean command. Rather, the word “direction” must be defined as meaning care and superintendence; a guidance or supervision of action, conduct, or operation. Town of Palatine v. Canajoharie Water Supply Co., 90 App. Div. 548, 86 N. Y. S. 412; Webster’s Third New International Dictionary, p. 640 (1968). The prevailing minority states that “under the direction of the Legislature” authorizes the Legislature to direct the sale of school lands and also that whether the sale of the lands should prove to be a wise decision or not, it is a decision which the people have constitutionally vested in the Legislature.
One instance is sufficient to emphasize {he fallacy in this reasoning. As pointed out by Carter, J., in the present case, and Spencer, J., in his previous opinion, the *286statute does not provide, for, and the legislative intent was to prohibit, giving the board any right to reject or confirm bids. State ex rel. Belker v. Board of Educational Lands & Funds, 184 Neb. 621, 171 N. W. 2d 156. It cannot be denied that the right to confirm or reject bids at a sale of land is the very essence of discretion. Thus, without any consideration of applicable trust law, it is clear under our previous decisions that the Legislature has usurped the constitutional duty of the board. Such usurpation is itself unconstitutional. The prevailing minority blithely permits this by stating that it is the will of the people with total disregard, or possibly disdain, for the previous interpretations this court has placed upon the stated will of the people. The direction to sell, while reserving no discretion in the board to confirm or reject bids, is- more than a guidance or supervision of action, conduct, or operation. It is the arbitrary assumption of duties constitutionally placed upon the board by the will of the people and thus must fail as being unconstitutional.
This reasoning is also supported by the fact that Article VII, section 8, of the Constitution, pursuant to a 1920 amendment, states that school lands shall not be sold except at public auction under such conditions as the Legislature shall provide. This power to set the conditions of sale is a function of guidance or supervision and cannot be looked at as giving the Legislature the power to command sale of the school lands. The language used here clearly infers that the Legislature is not vested with the power to command sale of the school lands.
The prevailing minority states that there has been no ■present abuse of the trustee’s discretion and that if an abuse is present when the land is sold an action on behalf of the beneficiaries may then be brought. As pointed out by Carter, J., this is in effect, no remedy at all as individual benefits would-be grossly dispropor*287tionate to the costs of such an action by a trust beneficiary.
Aside from the ability of the Legislature to make such a command, the command itself is clearly a blatant violation of the trustee’s discretion. The Legislative command in 1965 to sell all of the school lands as the leases expire, with over half of the land going on the market in 1975, shows total disregard for what future market conditions in a volatile economy may be. The lands are required to be sold without regard to the possibility of a depressed economy, a glutted market, or the availability and cost of money to purchase the land. Such a policy is clearly not prudent and is an abuse of the trustee’s discretion. As such, it should be stopped in its gestation rather than aborted on a piecemeal basis as the expiration of each lease gives birth to a sale. As pointed out by Carter, J., the latter alternative is a totally inadequate remedy. I submit that the 1965 command is a present violation of the trustee’s discretion as it governs sale of all the land, not just the sale of an isolated tract which may or may not be wise at the time sold.
An additional consideration is the fact that the available investments for proceeds of the sales are limited. In considering the wiseness of a sale it cannot be isolated from what will become of the proceeds. Land has been on a general rise in value for some time, the same is not true of legally permitted investments. The investments permitted by statute, section 72-202, R. R. S. 1943, are generally of the type considered as income investments rather than capital appreciation investments. To some extent the opposite is true of land. The possibility of increased income for the use of common schools is attractive, but it should not be used to close our eyes to the fact that in this age of inflation most investment analysts would advise a balanced portfolio which would also provide for capital appreciation. This might well be impossible if all of the school lands were sold and the *288proceeds invested pursuant to section 72-202, R. R. S. 1943. A trustee is required to dispose of trust property upon the most advantageous terms which it is possible for him to secure for the benefit of the cestui que trust whom he represents. State ex rel. Ebke v. Board of Educational Land & Funds, 154 Neb. 244, 47 N. W. 2d 520. To be prudent embraces foresight to the extent that reinvestment of the proceeds is predetermined, as it is under section 72-202, R. R. S. 1943. This, among other things, is indicative of the trustee’s violation of discretion and the consequent invalidity of the act.
Article IV, section 3, of the Constitution of 1866, gave exclusive chancery and common law jurisdiction to the district courts and Supreme Court. This theme has continually been carried forward and is presently stated in Article V, section 9. The Legislature is powerless to take away the equity jurisdiction conferred by the Constitution. Lacey v. Zeigler, 98 Neb. 380, 152 N. W. 792. Jurisdiction over the administration of trusts and supervisory jurisdiction over charitable trusts are inherent in equity courts of this state and in this court, and the Legislature has no power to limit or control this jurisdiction. John A. Creighton Home v. Waltman, 140 Neb. 3, 299 N. W. 261.
The framers of the original Constitution placed the school lands in trust with the fund to remain inviolate and undiminished. The creation of a trust and provision that the funds remain inviolate clearly shows the intent of the framers that the courts, through their equity jurisdiction, should retain control and supervision over the fund to prevent or remedy any and all violations of the trustee’s duty.
The gift of this land under the Enabling Act and the acceptance and constitutional provisions for it are in the nature of a trust deed forming a solemn compact with the federal government. The state, in its generic sense, is the trustee with all branches of government participating in the administration of the trust. The Board *289of Educational Lands and Funds, executive branch, has the power to sell, lease, and manage under the direction of the Legislature and subject to the supervisory powers of the equity courts. It cannot be argued but that the creation of this trust under such a system of checks and balances was to guard against any violation of the trustee’s discretion. Should the fact that a 1920 constitutional amendment will allow a legislative act to be overturned only by five votes of this court be permitted to disrupt this system of checks and balances? The answer must be an unequivocal no. A review of the history of the 1920 Constitutional Convention reveals not the slightest intent to invade or impede this court’s jurisdiction to control and administer, in a proper case, the provisions of this trust and to protect the school children of the State of Nebraska against any type of state action whether by the people directly or by legislative action.
It is the duty of the courts to reconcile and harmonize, if reasonably possible, conflicting statutory or constitutional provisions. State ex rel. Johnson v. Marsh, 149 Neb. 1, 29 N. W. 2d 799; Swanson v. State, 132 Neb. 82, 271 N. W. 264; Elmen v. State Board of Equalization & Assessment, 120 Neb. 141, 231 N. W. 772; 16 C. J. S., Constitutional Law, §§ 16, 23, 25, 26, and 38, pp. 72, 91, 98, 99, and 117. In a literal context the 5-2 provision would seem to apply to any act of the Legislature. However, when we examine the context of the school lands trust, its origin, its formulation in the constitutional provisions, and the duties of this court in enforcing the administration of this trust, it seems to me that “an act of the Legislature” can never mean administrative actions by the Legislature in behalf of the state in the exercise of its power as a trustee of the school lands. To otherwise hold would give the Legislature a power superior to that of the judicial or executive branch and clearly defeat the careful system of checks and balances formulated by the drafters of the Constitution to protect this trust. The compact establishing this trust was *290in form a constitutional provision, but in substance a trust deed. If the fundamental nature of the administrative power over the school land trust is to be circumscribed by independent judicial control, it cannot be transcended by such state action taking the form of an exercise of the general law-making power.
Under the original compact and its acceptance by the people of the State of Nebraska, no state action whether in the guise or form of legislative action or constitutional amendment of any nature whatsoever can assume to the Legislature the arbitrary and unreviewable power to manage the corpus of this trust as it sees fit.
The problem here is fundamental and it is also unique in trust law. It is unique because the trustee itself (the 'State) has embodied and integrated within itself the general law-making power through which the legislative will of the people must be expressed. Can this power be used to transcend its limitations? Is a declaration by the trustee state in the form of a legislative enactment necessarily an exercise of legislative power in any respect? Can the same power that administers the trust determine its extent? Can the original limitations incorporated by solemn compact be extended by the ordinarily overriding sovereignty of the state? Can the trustee pull itself up by its own boot straps?
Research reveals one case parallel, though not exactly in point, with the situation presented here. In Bridgeport Public Library & Reading Room v. Burroughs Home, 85 Conn. 309, 82 A. 582, the court was faced with the problem of a legislative act or resolution for the sale of real property held by a charitable public trust under the direction and control of the state Legislature. The parallelism to our case here was aptly stated by the Supreme Court of Connecticut as follows: “The decision of the Supreme Court of the United States in Stanley v. Colt, 5 Wall. (U. S.) 119, supported by others prior and subsequent, removes from the field of discussion any question as to the existence of a power in the sovereignty *291of the State fully adequate to bestow upon trustees administering a public charitable trust authority as to- its administration such as the General Assembly attempted to confer in the present instance. Perin v. Carey, 24 How. (U. S.) 465, 501; Ould v. Washington Hospital, 95 U. S. 303, 312; Jones v. Habersham, 107 U. S. 174, 183, 2 Sup. Ct. Rep. 336.”
That court disposed of the issue in that case without examining any question as to “constitutionality.” In its opinion the court held, in language self-explanatory as to its application here, as follows: “* * * there has remained no doubt that our Constitution is to be construed as a grant and not as a limitation of power, and that the exercise of judicial power is forbidden to the legislative branch of the government, as the legislative is to the judicial. * * * The legislative power must be found somewhere outside of the judicial domain, and within the legislative, or it is nonexistent. * * * It concerns a trust, which is emphatically a matter of conscience, and a charitable trust, which is peculiarly the subject of a court of equity’s care and solicitude. Bispham’s Principles of Equity (8th Ed.) § 8; Stanley v. Colt, 5 Wall. (U. S.) 119, 169. The power is one which has come into our American jurisprudence in conformity with the English original, and is an adjunct of the judicial power. Its exercise involves an appeal to the conscience of the chancellor through an application duly made, an inquiry, and a determination embodying the exercise of discretion. These are peculiarly judicial functions. The judicial power includes such power as the courts, under the English and American systems of jurisprudence, have always exercised in legal and equitable actions.”
That court continued: “We have no occasion to attempt to define the exact limits of either the judicial or the legislative power, or to draw the dividing line between the two. It is certain, wherever that dividing line may be or however indefinite it may be at points,*292that jurisdiction over this charitable trust, to see that it is properly and beneficially administered, that the purpose of the donor does not fail, and that the interests of the beneficiaries be subserved, under changing conditions and with the lapse of time, belongs to the judicial department of the government, and is in no respect an incident of the legislative.
“The resolution of the General Assembly in question, in so far as its purports to confer authority upon these trustees, must therefore fail of its purpose. The courts, in the exercise of their chancery povjers, are alone competent to confer such authority. That authority not having been obtained, any attempt on the part of the trustees to sell the property would be in excess of their powers.” (Emphasis supplied.)
This court has consistently held that a violation of the trustee’s duty is a violation of the Constitution itself. In this case, we are compelled to go one step further and hold that the Constitution itself and any agency purporting to act under its delegated powers may not violate this trust in the guise of a constitutionally exercised power. A majority of this court has determined that the legislative act is a violation of the trustee’s fiduciary duty. A majority now holds that the power sought to be exercised is subject to the supervisory control of the courts in their exclusive constitutional jurisdiction over the supervision of charitable trusts. A majority now holds that this supervisory control and jurisdiction may not be limited or changed by the trustee state (even though sovereign) by casting the extension of their powers or the violation of their trust duties in the form or the guise of a “constitutionally” exercised “legislative” power.
In conclusion it has been said that the protections of procedure are of the essence of due process. No better illustration could be made of that principle than in the context of this case. Our original Constitution and all subsequent Constitutions and amendments have created *293the procedural power necessary for the district and Supreme Courts to supervise and administer the school lands trust and to guard against invasions of the beneficiary’s rights by state action of any nature whatsoever. To hold that these basic powers enumerated and declared in the Constitution may be eroded, no matter in how infinitely small degree, is, in my opinion a violation of our constitutional mandate to protect and guard this sacred trust against invasion by either the Legislature or by the people themselves.
Carter, Spencer, and Newton, JJ., join in this dissent.