Kiplinger v. Nebraska Dept. of Nat. Resources

To the extent the Workers’ Compensation Court has author-
ity to foreclose an injured worker’s right to benefits under the
Act, that authority was not (and could not have been) appro-
priately exercised in this case. And as we understand EMC’s
arguments, all of its assignments of error rest on the premise
that the court’s March 28, 2008, order could and did dismiss
Hofferber’s petition with prejudice. We find no merit to that
premise, so we correspondingly find no merit to EMC’s assign-
ments of error.
v. ConClusion
We find no merit to Hofferber’s argument on cross-appeal
that the trial court lacked jurisdiction to enter the March 28,
2008, order in an improper venue. But we also find no merit to
EMC’s arguments that the March 28 order effectively dismissed
Hofferber’s claim for benefits with prejudice. Therefore, we
affirm the judgment of the review panel remanding the cause to
the trial court for further proceedings.
A ffirmed.
Wright, J., not participating.
tom K iplinger et Al ., AppellAnts And cross -Appellees , v.
nebrAsKA depArtment of nAturAl resources et Al .,
Appellees And cross -AppellAnts , And
scott olson et Al ., Appellees.
803 n.W.2d 28
Filed september 16, 2011. 	no. s-10-296.
1. Judgments: Collateral Estoppel: Res Judicata. The applicability of the doc-
trines of res judicata and collateral estoppel is a question of law.
2. Judgments: Appeal and Error. on questions of law, an appellate court is obli-
gated to reach a conclusion independent of the determination reached by the
court below.
3. Constitutional Law: Statutes: Appeal and Error. Whether a statute is constitu-
tional is a question of law; accordingly, the nebraska supreme Court is obligated
to reach a conclusion independent of the decision reached by the court below.
4. Res Judicata. The doctrine of res judicata, or claim preclusion, bars the reliti-
gation of a matter that has been directly addressed or necessarily included in
a former adjudication if (1) the former judgment was rendered by a court of
competent jurisdiction, (2) the former judgment was a final judgment, (3) the
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	237
Cite as 282 neb. 237
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:43 AM CST

former judgment was on the merits, and (4) the same parties or their privies were
involved in both actions.
5. ____. The doctrine of res judicata bars relitigation not only of those matters actu-
ally litigated, but also of those matters which might have been litigated in the
prior action.
6. Judgments: Actions: Parties. in the context of whether a prior judgment has
preclusive effect with respect to a subsequent action, privity requires, at a mini-
mum, a substantial identity between the issues in controversy and a showing that
the parties in the two actions are really and substantially in interest the same.
7. Constitutional Law: Statutes: Presumptions. A statute is presumed to be consti-
tutional, and all reasonable doubts are resolved in favor of its constitutionality.
8. Constitutional Law: Statutes: Proof. The burden of establishing the unconstitu-
tionality of a statute is on the one attacking its validity.
9. ____: ____: ____. The unconstitutionality of a statute must be clearly established
before it will be declared void.
10. Taxation: Property: Valuation. generally, a property tax is levied on real or
personal property, with the amount of the tax usually dependent upon the value
of the property.
11. ____: ____: ____. property taxes, by their very nature, target the value of that
which is being taxed.
12. Taxation. An excise tax is imposed upon the performance of an act.
13. ____. A tax imposed upon the doing of an act, including a business or license tax,
is an excise tax and not a property tax.
14. Judgments: Collateral Estoppel. under the doctrine of collateral estoppel, also
known as issue preclusion, an issue of ultimate fact that was determined by a
valid and final judgment cannot be litigated again between the same parties or
their privities in any future litigation.
15. ____: ____. Collateral estoppel is applicable where (1) an identical issue was
decided in a prior action, (2) the prior action resulted in a judgment on the merits
which was final, (3) the party against whom the doctrine is to be applied was
a party or was in privity with a party to the prior action, and (4) there was an
opportunity to fully and fairly litigate the issue in the prior action.
16. Constitutional Law: Statutes: Special Legislation. The focus of the prohibi-
tion against special legislation is the prevention of legislation which arbitrarily
benefits or grants special favors to a specific class. A legislative act constitutes
special legislation if (1) it creates an arbitrary and unreasonable method of clas-
sification or (2) it creates a permanently closed class.
17. Special Legislation: Words and Phrases. A “closed class” is one that limits the
application of the law to a present condition and leaves no room or opportunity
for an increase in the numbers of the class by future growth or development.
18. Statutes: Special Legislation. in deciding whether a statute legitimately classi-
fies, the court must consider the actual probability that others will come under the
act’s operation. if the prospect is merely theoretical, and not probable, the act is
special legislation.
19. Constitutional Law: Taxation: Public Purpose. A tax levy does not equal a
commutation merely because the taxing district is broadened to reflect the actual
benefits to the public. so long as all taxpayers receive the benefit of the taxes
238 	282 nEBrAsKA rEporTs

they remit, the taxing district passes constitutional muster without offending the
prohibition against commutation.
Appeal from the district Court for lancaster County: robert
r. otte, Judge. Affirmed.
Jeanelle r. lust and Katherine s. vogel, of Knudsen,
Berkheimer, richardson & Endacott, l.l.p., for appellants.
Jon Bruning, Attorney general, Justin d. lavene, and Marcus
A. powers for appellees nebraska department of natural
resources and its director.
donald g. Blankenau and Thomas r. Wilmoth, of Blankenau
Wilmoth, 	l.l.p., 	for 	appellees 	upper 	republican 	natural
resources 	district, 	Middle 	republican 	natural 	resources
district, and lower republican natural resources district.
heAvicAn, c.J., Wright, gerrArd, stephAn, mccormAcK,
and miller-lermAn, JJ., and cAssel, J.
stephAn, J.
in Garey v. Nebraska Dept. of Nat. Resources,1 we held that
a property tax levy authorized by l.B. 701, enacted in 2007,2
was a property tax for a state purpose and therefore unconstitu-
tional, in violation of neb. Const. art. viii, § 1A. in this case,
we are presented with the question of whether an occupation
tax authorized by l.B. 701 violates the same constitutional
provision or, alternatively, the constitutional prohibitions of
special legislation3 and commutation of taxes.4 The landowners
who commenced this action appeal from an order of the district
court for lancaster County upholding the constitutionality of
the occupation tax. We affirm.
1 Garey v. Nebraska Dept. of Nat. Resources, 277 neb. 149, 759 n.W.2d
919 (2009).
2 2007 neb. laws, l.B. 701.
3 neb. Const. art. iii, § 18.
4 neb. Const. art. viii, § 4.
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	239
Cite as 282 neb. 237

i. BACKground
1. republicAn river compAct
The states of Colorado, Kansas, and nebraska, and the
united states are signatories to the republican river Compact
(Compact), which was authorized by federal legislation in 1943
and ratified by the legislatures of the three states.5
As we stated in Garey, the primary purposes of the Compact
are to
“provide for the most efficient use of the waters of the
republican river Basin . . . for multiple purposes; to pro-
vide for an equitable division of such waters; to remove
all causes, present and future, which might lead to contro-
versies; to promote interstate comity; to recognize that the
most efficient utilization of the waters within the [b]asin
is for beneficial consumptive use; and to promote joint
action by the states and the united states in the efficient
use of water and the control of destructive floods.”6
under the terms of the Compact, each signatory state is
allotted a specific number of acre-feet of water per year
from designated sources for “beneficial consumptive use.”7
pursuant to this allocation, nebraska receives 49 percent of the
annual water supply, Kansas receives 40 percent, and Colorado
receives the remaining 11 percent.
on december 15, 2002, representatives of the three signa-
tory states entered into a stipulation to settle litigation initi-
ated by Kansas in the u.s. supreme Court regarding their
respective rights under the Compact. nebraska’s governor
and Attorney general sent letters to water users in the upper,
Middle, and lower republican natural resources districts
(republican nrd’s) advising of the settlement and stating that
the republican nrd’s would be developing management plans
to address water allocation and usage.
5 see, pub. l. no. 78-60, 57 stat. 86 (1943); 2A neb. rev. stat. appx.
§ 1-106 (reissue 2008). Colo. rev. stat. Ann. § 37-67-101 (West 2004);
Kan. stat. Ann. § 82a-518 (1997).
6 Garey v. Nebraska Dept. of Nat. Resources, supra note 1, 277 neb. at 151,
759 n.W.2d at 922, quoting § 1-106, art. i.
7 § 1-106, art. iv.
240 	282 nEBrAsKA rEporTs

2. l.b. 701
on May 1, 2007, l.B. 701 was enacted with an emergency
clause. According to its introducer, l.B. 701 was “designed
to address the water problem in the republican river Basin”
and “[p]rovide a way to guarantee that nebraska stays in com-
pliance with the . . . Compact . . . with Kansas on an annual
basis.”8 As originally enacted and in effect on the dates relevant
to this action, l.B. 701 authorized a natural resources district
“with jurisdiction that includes a river subject to an interstate
compact among three or more states and that also includes one
or more irrigation districts within the compact river basin” to
issue “river-flow enhancement bonds.”9 The proceeds of these
bonds could be used only for specified purposes, including
acquisition of water rights, acquisition or administration and
management of canals and other works, vegetation manage-
ment, and augmentation of riverflows.10 riverflow enhance-
ment bonds authorized by l.B. 701 are payable from three
funding sources: “(a) funds granted to [an issuing natural
resources] district by the state or federal government for one
or more qualified projects, (b) the occupation tax authorized
by section 2-3226.05, or (c) the levy authorized by section
2-3225.”11 in a press release announcing the enactment of
l.B. 701, the governor’s office stated that the legislation
would “‘help our state make substantial progress in our goal
of achieving sustainable water use throughout nebraska,’” and
further, that l.B. 701 “‘addresses both our short-term issues
in the republican river Basin and creates a framework for
addressing our long-term water challenges.’”12
in May and June 2007, the republican nrd’s entered into
an “interlocal Cooperation Agreement” to create the republican
8 introducer’s statement of intent, l.B. 701, natural resources Committee,
100th leg., 1st sess. (Feb. 28, 2007).
9 neb. rev. stat. § 2-3226.01(1) (Cum. supp. 2008).
10 see neb. rev. stat. § 2-3226.04 (reissue 2007).
11 § 2-3226.01(1).
12 press release, office of the governor, governor Heineman signs landmark
Water legislation into law (May 1, 2007), http://www.governor.nebraska.
gov/news/2007_05/01_landmark.html (last visited sept. 9, 2011).
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	241
Cite as 282 neb. 237

river Basin Coalition. The purpose of the coalition was to
take actions necessary to ensure that the republican nrd’s
remained in compliance with the Compact and to “specifically
act within the authorities granted by lB 701.”
3. G arey v. Nebraska D ept. of Nat. resources
Garey involved a constitutional challenge to the property
tax levy authorized by l.B. 701 as codified at neb. rev. stat.
§ 2-3225(1)(d) (Cum. supp. 2008). under that statute, a natural
resources district “with jurisdiction that includes a river sub-
ject to an interstate compact among three or more states and
that also includes one or more irrigation districts within the
compact river basin” was authorized to “annually levy a tax
not to exceed ten cents per one hundred dollars of taxable
valuation of all taxable property in the district.” The use of the
proceeds of this levy was restricted to repayment of riverflow
enhancement bonds and repayment of funds disbursed by the
department of natural resources from the Water Contingency
Cash Fund created by l.B. 701.13
The nine individual plaintiffs in Garey were residents and
taxpayers of the republican nrd’s. The defendants included
the department of natural resources and its acting director,
the republican nrd’s, and various other governmental offi-
cials and entities responsible for collection of property taxes in
the counties situated within the republican nrd’s. The Garey
plaintiffs challenged the levy authorized under § 2-3225(1)(d)
on three grounds. They claimed that it constituted a property
tax levy for state purposes, in violation of neb. Const. art. viii,
§ 1A; that it resulted in a commutation of taxes in violation of
neb. Const. art. viii, § 4; and that the statute authorizing the
levy constituted special legislation, in violation of neb. Const.
art. iii, § 18.
The district court rejected the first two claims, but con-
cluded that the statutory authorization of the levy constituted
special legislation, in violation of neb. Const. art. iii, § 18.
The defendants appealed, contending that the district court
13 see § 2-3225(1)(d) and neb. rev. stat. §§ 2-3226.07 and 2-3226.08 (Cum.
supp. 2008).
242 	282 nEBrAsKA rEporTs

erred in determining that the statute which authorized the levy
constituted special legislation. plaintiffs cross-appealed, con-
tending that the district court erred in not concluding that the
challenged levy was not an unconstitutional property tax for
state purposes and a commutation of taxes. We found merit in
one issue raised on cross-appeal and concluded on the bases of
the legislative history and plain language of l.B. 701 that “the
controlling and predominant purpose behind the property tax
provision in § 11(1)(d) of l.B. 701 is for the purpose of main-
taining compliance with the Compact, which we conclude is a
state purpose.”14 Based upon the severability clause included
in l.B. 701, we severed the offending provision and affirmed
the judgment of the district court, albeit on different reason-
ing. We specifically noted that our decision had “no bearing
on the remaining provisions of l.B. 701” and that because of
our resolution of the case, we did not reach or consider “the
remaining assignments of error.”15
4. current Action
This case presents a constitutional challenge to the occupa-
tion tax levied pursuant to l.B. 701 as codified at neb. rev.
stat. § 2-3226.05 (Cum. supp. 2008). The statute provides in
pertinent part:
(1) The district may levy an occupation tax upon the
activity of irrigation of agricultural lands within such
district on an annual basis, not to exceed ten dollars per
irrigated acre, the proceeds of which may be used for the
purpose of repaying principal and interest on any bonds
or refunding bonds issued pursuant to section 2-3226.01
for one or more projects under section 2-3226.04 or for
the repayment of financial assistance received by the dis-
trict pursuant to section 2-3226.07.
(2) Acres classified by the county assessor as irrigated
shall be subject to such district’s occupation tax unless,
on or before July 1, 2007, and on or before March 1 in
14 Garey v. Nebraska Dept. of Nat. Resources, supra note 1, 277 neb. at 160,
759 n.W.2d at 928.
15 Id. at 161, 759 n.W.2d at 928.
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	243
Cite as 282 neb. 237

each subsequent year, the record owner certifies to the
district the nonirrigation status of such acres.
in 2007, the boards of the republican nrd’s voted to levy
the occupation tax authorized by § 2-3226.05. This resulted in
the taxation of the appellant landowners, who are residents and
taxpayers of natural resources districts in the republican river
basin who have ownership interests in agricultural land situated
in various counties within the boundaries of the republican
nrd’s which is assessed as irrigated. in August 2008, the land-
owners’ representatives made written requests to the boards of
the republican nrd’s to cease levying the occupation tax and
to refund any taxes paid, on the grounds that the occupation tax
was unconstitutional and illegal.
unsuccessful in this effort, the landowners brought this
action for declaratory and injunctive relief seeking to have
the occupation tax declared unconstitutional and its levy and
collection enjoined. The appellees, defendants below, include
the department of natural resources and its director, the
republican nrd’s, the state property Tax Administrator, and
a number of county officials responsible for imposing and col-
lecting the occupation tax in the various counties where the tax
has been levied.
The landowners alleged in their complaint that the occu-
pation tax was in fact a “‘property tax for state purposes’”
prohibited by neb. Const. art. viii, § 1A; that the occupa-
tion tax resulted in a commutation of taxes in violation of
neb. Const. art. viii, § 4; and that § 2-3226.05 was special
legislation in violation of neb. Const. art. iii, § 18, because it
created two closed classes—the republican nrd’s, to which
it granted the privilege of levying the occupation tax, and
nebraska irrigators outside the republican nrd’s who were
exempted from the occupation tax. They further alleged that
the judgment of the district court in Garey collaterally estopped
the named defendants from relitigating the issue of whether
l.B. 701 created an unconstitutional, closed class consisting of
the republican nrd’s.
The county officials filed answers generally denying the
allegation that the occupation tax was unconstitutional and
asserting certain affirmative defenses. upon stipulation of the
244 	282 nEBrAsKA rEporTs

parties, the action was stayed pending our resolution of the
appeal in Garey. When the stay was lifted, the department
of natural resources and its director, the state property Tax
Administrator, and the republican nrd’s filed a motion to
dismiss, which was overruled by the district court. Those par-
ties then filed an answer generally denying that the occupa-
tion tax was unconstitutional and asserting various affirma-
tive defenses.
The case proceeded to trial on stipulated facts. in addition
to the facts summarized above, the parties stipulated to the
maximum ground water allocations per acre permitted under
the former and current integrated management plans of the
republican nrd’s, and various factors which affect the avail-
ability of both ground water and surface water for irrigation.
The parties further stipulated that the department of natural
resources had proposed options for amending the integrated
management plans of the republican nrd’s for dry years.
Also, the parties stipulated that land within various irrigation
districts which is classified as “irrigated” had not received sur-
face water for irrigation during some or all of the preceding 10-
year period; that there are lands within each of those irrigation
districts which have supplemental ground water wells avail-
able during years when surface water was not received; that
the republican river Basin in nebraska has been determined
by the state to be “fully appropriated” and, as such, no new
surface water rights will be granted so long as such determina-
tion remains in place; and that each of the republican nrd’s
named as defendants has placed a moratorium on the drilling of
new irrigation wells within its jurisdiction.
The district court entered an order on March 12, 2010,
upholding the constitutionality of the occupation tax. The court
determined that the occupation tax was not a property tax, but,
rather, an excise tax levied “‘upon the activity of irrigation,’”
and therefore did not violate neb. Const. art. viii, § 1A. The
court rejected the landowners’ claim that the occupation tax
resulted in a commutation of taxes in violation of neb. Const.
art. viii, § 4, after it concluded that any funds raised from the
imposition of the occupation tax would benefit the taxpayers
of the republican nrd’s rather than divert taxes raised by
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	245
Cite as 282 neb. 237

the republican nrd’s to the sole use and benefit of another
district. Finally, the court rejected the claim that § 2-3226.05
was special legislation in violation of neb. Const. art. iii, § 18,
concluding that the landowners had not met their burden of
proving that the statute created a closed class. in reaching this
conclusion, the court first rejected the defendants’ argument
that the provision of neb. Const. art. iii, § 18, prohibiting
legislation “[g]ranting to any corporation, association, or indi-
vidual any special or exclusive privileges, immunity, or fran-
chise whatever” does not apply to political subdivisions such
as natural resources districts.
The landowners appealed from this order, and the department
of natural resources, its director, and the republican nrd’s
(hereinafter appellees) have cross-appealed. We moved the case
to our docket on our own motion.
ii. AssignMEnTs oF Error
The landowners assign, renumbered and restated, that the
district court erred in (1) concluding that the appellees were
not collaterally estopped by the district court’s judgment in
Garey from litigating whether the occupation tax permitted
under § 2-3226.05 based on the classification of districts found
in § 2-3226.01(1) was unconstitutional special legislation under
neb. Const. art. iii, § 18; (2) concluding that the occupation
tax permitted under § 2-3226.05 based on the classification of
districts found in § 2-3226.01(1) was not unconstitutional spe-
cial legislation under neb. Const. art. iii, § 18; (3) concluding
that the occupation tax permitted under § 2-3226.05 was not
a property tax for state purposes in violation of neb. Const.
art. viii, § 1A; and (4) concluding that the occupation tax per-
mitted under § 2-3226.05 was not a commutation of taxes in
violation of neb. Const. art. viii, § 4.
in their cross-appeal, the appellees assign, restated, that
the district court erred in (1) concluding that the landowners’
claims in this action were not barred by the doctrine of res
judicata or claim preclusion, because the landowners failed to
raise constitutional objections to the occupation tax at the earli-
est practical opportunity when they challenged the property tax
provisions of l.B. 701 in Garey, and (2) concluding that the
246 	282 nEBrAsKA rEporTs

provision of neb. Const. art. iii, § 18, prohibiting legislation
“[g]ranting to any corporation, association, or individual any
special or exclusive privileges, immunity, or franchise what-
ever” applies to natural resources districts.
iii. sTAndArd oF rEviEW
[1,2] The applicability of the doctrines of res judicata and
collateral estoppel is a question of law.16 on questions of law,
an appellate court is obligated to reach a conclusion indepen-
dent of the determination reached by the court below.17
[3] Whether a statute is constitutional is also a question of
law; accordingly, we are obligated to reach a conclusion inde-
pendent of the decision reached by the court below.18
iv. AnAlYsis
This case, like Garey, is concerned with the language of
§ 2-3226.01(1) as originally enacted in 2007. The parties
note in their briefs that in 2010, the legislature amended
§ 2-3226.01(1), effective July 15, 2010,19 and that this action
involves only the validity of occupation taxes levied and col-
lected through that date.
1. res JudicAtA
[4,5] We first address the potentially dispositive issue raised
by the cross-appeal of whether, under the doctrine of res judi-
cata, this action is barred by the final judgment in Garey. The
doctrine of res judicata, or claim preclusion, bars the relitiga-
tion of a matter that has been directly addressed or necessarily
included in a former adjudication if (1) the former judgment
was rendered by a court of competent jurisdiction, (2) the for-
mer judgment was a final judgment, (3) the former judgment
was on the merits, and (4) the same parties or their privies were
16 Eicher v. Mid America Fin. Invest. Corp., 270 neb. 370, 702 n.W.2d 792
(2005).
17 Id.
18 Yant v. City of Grand Island, 279 neb. 935, 784 n.W.2d 101 (2010); Garey
v. Nebraska Dept. of Nat. Resources, supra note 1.
19 2010 neb. laws, l.B. 862, § 1.
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	247
Cite as 282 neb. 237

involved in both actions.20 The doctrine bars relitigation not
only of those matters actually litigated, but also of those mat-
ters which might have been litigated in the prior action.21
Garey was a final judgment on the merits by a court
of competent jurisdiction. The defendants in that case were
essentially the same persons and entities as the defendants in
this case. But only three of the plaintiffs in Garey are named
as plaintiffs in this case. six of the Garey plaintiffs are not
parties to this case, and 88 of the landowners in this case were
not plaintiffs in Garey. While acknowledging that there is not
an identity of plaintiffs in the two cases, appellees argue that
for purposes of application of the doctrine of res judicata, the
landowners who brought this action are in privity with the
Garey plaintiffs.
[6] in the context of whether a prior judgment has preclusive
effect with respect to a subsequent action, privity requires, at
a minimum, a substantial identity between the issues in con-
troversy and a showing that the parties in the two actions are
really and substantially in interest the same.22 Appellees argue
on cross-appeal that because all the landowners who brought
this action were subject to the property tax challenged in Garey,
they are in privity with the Garey plaintiffs. But the landowners
argue that because occupation tax applies only to land which
is classified as irrigated, the occupation tax is levied against a
small subset of the real estate subject to the property tax chal-
lenged in Garey.
We agree that because of this distinction, the plaintiffs in
the two cases are not “really and substantially in interest the
same” and are therefore not in privity.23 The plaintiffs in Garey
shared the trait of being residents of the republican nrd’s
whose land would be subject to the property tax imposed by
l.B. 701, while the landowners in this case shared the trait of
20 Jensen v. Jensen, 275 neb. 921, 750 n.W.2d 335 (2008); Ichtertz v.
Orthopaedic Specialists of Neb., 273 neb. 466, 730 n.W.2d 798 (2007).
21 Id.
22 see, Risor v. Nebraska Boiler, 274 neb. 906, 744 n.W.2d 693 (2008);
Torrison v. Overman, 250 neb. 164, 549 n.W.2d 124 (1996).
23 see id.
248 	282 nEBrAsKA rEporTs

being residents of the republican nrd’s whose land is “agri-
cultural land assessed as irrigated” that would be subject to the
occupation tax. While the three persons who were plaintiffs in
each case would be subject to the occupation tax, it is unknown
whether the other plaintiffs in Garey owned land that would be
subject to the occupation tax. different interests appear to bind
the group of plaintiffs in each case.
We are aware that in Nolles v. State Com. Reorganization
School Dist.,24 the Eighth Circuit Court of Appeals concluded
that if presented with the issue, that court would “consider the
doctrine of virtual representation in determining whether a
subsequent party was in privity with a party to an earlier suit”
for purposes of res judicata. virtual representation is “‘an equi-
table theory rather than . . . a crisp rule with sharp corners and
clear factual predicates, such that a party’s status as a virtual
representative of a nonparty must be determined on a case-by-
case basis.’”25 As the nebraska Court of Appeals subsequently
noted in Haskell v. Madison Cty. Sch. Dist. No. 0001,26 this
court has never adopted the “expansive definition of privity”
embodied in the doctrine of virtual representation, and we
decline to do so on the facts and legal arguments presented by
this case.
Based upon our de novo review of this question of law, and
applying the traditional notion of privity reflected by our juris-
prudence, we conclude that at least some of the landowners
who brought this action have not been shown to be in privity
with the plaintiffs in Garey. Because this is so, we need not
and indeed cannot consider whether the substantive issues in
this case could have been presented in Garey. We therefore
conclude that the judgment in Garey does not bar this action
under the doctrine of res judicata.
24 Nolles v. State Com. Reorganization School Dist., 524 F.3d 892, 903 (8th
Cir. 2008).
25 Id. at 902, quoting Gonzalez v. Banco Cent. Corp., 27 F.3d 751 (1st Cir.
1994). see, also, Haskell v. Madison Cty. Sch. Dist. No. 0001, 17 neb.
App. 669, 771 n.W.2d 156 (2009).
26 Haskell v. Madison Cty. Sch. Dist. No. 0001, supra note 25, 17 neb. App.
at 673, 771 n.W.2d at 162.
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Cite as 282 neb. 237

2. constitutionAl clAims
[7-9] We proceed, therefore, to the merits of the constitu-
tional challenges to the occupation tax authorized by l.B. 701,
as codified at § 2-3226.05. We are guided by familiar general
principles governing the degree of deference which must be
given to a legislative enactment alleged to be unconstitutional.
A statute is presumed to be constitutional, and all reasonable
doubts are resolved in favor of its constitutionality.27 The bur-
den of establishing the unconstitutionality of a statute is on the
one attacking its validity.28 The unconstitutionality of a statute
must be clearly established before it will be declared void.29
(a) is occupation Tax “a property tax
for state purposes” in violation of
neb. Const. Art. viii, § 1A?
neb. Const. art. viii, § 1A, provides: “The state shall be
prohibited from levying a property tax for state purposes.” To
determine whether the occupation tax at issue here violates this
prohibition, we must determine whether it constitutes a “prop-
erty tax.”
[10-13] generally, a property tax is levied on real or per-
sonal property, with the amount of the tax usually dependent
upon the value of the property.30 property taxes, by their very
nature, target the value of that which is being taxed.31 An excise
tax, on the other hand, is imposed upon the performance of an
act.32 Thus, a tax imposed upon the doing of an act, including
a business or license tax, is an excise tax and not a property
27 Yant v. City of Grand Island, supra note 18; Pavers, Inc. v. Board of
Regents, 276 neb. 559, 755 n.W.2d 400 (2008).
28 Id.
29 Yant v. City of Grand Island, supra note 18. see, also, State ex rel. Stenberg
v. Omaha Expo. & Racing, 263 neb. 991, 644 n.W.2d 563 (2002).
30 see, State v. Garza, 242 neb. 573, 496 n.W.2d 448 (1993); State v.
Galyen, 221 neb. 497, 378 n.W.2d 182 (1985); Black’s law dictionary
1596 (9th ed. 2009).
31 see State v. Garza, supra note 30.
32 see, id.; State v. Galyen, supra note 30; Black’s law dictionary, supra
note 30 at 646.
250 	282 nEBrAsKA rEporTs

tax.33 Applying these principles, we have held that a tax stamp
imposed on the sale of marijuana,34 a statutory fee per head of
cattle sold within the state,35 a tax per gallon of motor vehicle
fuel sold within the state,36 and a tax imposed as an annual
charge upon the right to continue corporate existence37 were
excise taxes, not property taxes.
Applying the same principles, the district court concluded
that the occupation tax was an excise tax, because it was unas-
sociated with the value of the property being taxed and was
levied “upon the activity of irrigation.”38 But the landowners
argue on appeal that the occupation tax is a “property tax in
disguise,” because the tax is levied against property which is
“‘classified by the county assessor as irrigated’” without regard
to whether the “‘activity of irrigation’” is actually occurring.39
We reject this argument for two principal reasons. First, it does
not address the fact that the occupation tax is not dependent
upon the value of the land being taxed. Although two tracts,
both classified as irrigated, may have vastly different value
based upon various other factors, the levy of the occupation
tax does not take the differing values into account. second, the
fact that land is “classified . . . as irrigated” would seem to be a
reasonable indicator that the “activity of irrigation” is actually
occurring on the land. And if that were not the case, the land-
owner can avoid the occupation tax by certifying to the natural
resources district “the nonirrigation status” of the land on a
year-by-year basis.40 We therefore conclude that the occupation
tax authorized by l.B. 701 and codified at § 2-3226.05 is not
a “property tax for state purposes” prohibited by neb. Const.
art. viii, § 1A.
33 see State v. Galyen, supra note 28.
34 State v. Garza, supra note 30.
35 State v. Galyen, supra note 30.
36 Burke v. Bass, 123 neb. 297, 242 n.W. 606 (1932).
37 Licking v. Hays Lumber Co., 146 neb. 240, 19 n.W.2d 148 (1945).
38 § 2-3226.05(1).
39 Brief for appellants at 23-24 (emphasis omitted). see, also, § 2-3226.05(1)
and (2).
40 see § 2-3226.05(2).
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	251
Cite as 282 neb. 237

(b) does statute Authorizing occupation Tax
Constitute special legislation prohibited
by neb. Const. Art. iii, § 18?
(i) Effect of garey v. nebraska
dept. of nat. resources
The landowners argue that the district court erred in reject-
ing their contention that Garey resolved the special legislation
claim in their favor under principles of collateral estoppel. in
Garey, the district court held that § 2-3225(1)(d) as it existed
was unconstitutional as special legislation, in violation of neb.
Const. art. iii, § 18, because it limited the authority to levy an
ad valorem property tax for payment of fund riverflow enhance-
ment bonds to “‘a district with jurisdiction that includes a river
subject to an interstate compact among three or more states
and that also includes one or more irrigation districts within
the compact basin.’”41 in this appeal, the court found that this
constituted a closed class, based upon its finding that it was
“‘highly improbable’” that the state would ever again enter
into an interstate compact of this nature.42 As noted, this deter-
mination was assigned as error in the Garey appeal, but we did
not reach it because we concluded that the property tax vio-
lated neb. Const. art. viii, § 1A. in this appeal, the landowners
argue that because the statutory authority to levy an occupation
tax is similarly limited,43 the appellees are collaterally estopped
from contesting their special legislation argument.
[14,15] under the doctrine of collateral estoppel, also known
as issue preclusion, an issue of ultimate fact that was deter-
mined by a valid and final judgment cannot be litigated again
between the same parties or their privities in any future litiga-
tion.44 Collateral estoppel is applicable where (1) an identi-
cal issue was decided in a prior action, (2) the prior action
41 Garey v. Nebraska Dept. of Nat. Resources, supra note 1, 277 neb. at 152,
759 n.W.2d at 923.
42 see Haman v. Marsh, 237 neb. 699, 467 n.W.2d 836 (1991).
43 see §§ 2-3226.01(1) and 2-3226.05.
44 In re Margaret Mastny Revocable Trust, 281 neb. 188, 794 n.W.2d 700
(2011); Amanda C. v. Case, 275 neb. 757, 749 n.W.2d 429 (2008).
252 	282 nEBrAsKA rEporTs

resulted in a judgment on the merits which was final, (3) the
party against whom the doctrine is to be applied was a party
or was in privity with a party to the prior action, and (4) there
was an opportunity to fully and fairly litigate the issue in the
prior action. For purposes of collateral estoppel, we conclude
that the final judgment in Garey was our order denying the
appellants’ motion for rehearing. As noted, our resolution of
Garey did not reach the question of whether the district court
erred in its analysis of the special legislation claim because we
affirmed on other grounds. Accordingly, there was not a final
judgment on the merits of that claim, and Garey therefore has
no preclusive effect on this case under the doctrine of collat-
eral estoppel.
(ii) Legislative Classification of
Political Subdivisions
neb. Const. art. iii, § 18, prohibits the legislature from
passing “local or special laws” in 21 enumerated circum-
stances. The landowners here focus on the last of these, which
prohibits a local or special law “[g]ranting to any corporation,
association, or individual any special or exclusive privileges,
immunity, or franchise whatever . . . . in all other cases where
a general law can be made applicable, no special law shall
be enacted.”
in their cross-appeal, appellees contend that the district
court erred in rejecting their claim that this prohibition is
inapplicable to legislative classifications of political subdivi-
sions, including natural resources districts. They argue that
the principle of ejusdem generis “precludes the Constitution’s
explicit limitation to corporations, associations, and individu-
als from being expanded to implicitly include cities, counties,
and [natural resources districts].”45 But as the district court
observed, our cases have applied this constitutional provision
to legislative classifications involving political subdivisions.
in State, ex rel. Campbell, v. Gering Irrigation District,46 this
45 Brief for appellees on cross-appeal at 48.
46 State, ex rel. Campbell, v. Gering Irrigation District, 114 neb. 329, 334,
207 n.W. 525, 527 (1926).
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	253
Cite as 282 neb. 237

court held that an amendment was special legislation prohib-
ited by neb. Const. art. iii, § 18, because it authorized the
board of directors of one irrigation district to impose upon
landowners certain burdens and expenses and the amendment
was “so framed that it cannot in the future become of general
application” and limited “its application as clearly as though
it had by name designated the district to which it was to
apply.” similarly, in Axberg v. City of Lincoln,47 this court held
that a statute violated the special legislation clause because
it exempted “one city of the first class . . . from the special
obligations and burdens of the firemen’s pension law, while
others in the same class [were] required to submit to such
obligations and burdens.” in State ex rel. Douglas v. Marsh,48
we held that a statute which prevented a county from moving
from one classification to another for purposes of receiving
state aid constituted unconstitutional special legislation by cre-
ating a “frozen classification into which no other county may
enter even though it may subsequently acquire the very same
characteristics which afforded the first county the benefits it
receives.” And we have held: “The law is unmistakably clear
that a statute classifying cities for legislative purposes in such
a way that no other city may ever be added to the class violates
the constitutional provision forbidding special laws where gen-
eral laws can be applicable.”49
While the appellees’ argument would have some logical
appeal if we were writing on a clean jurisprudential slate, we
are not persuaded to depart from long-established precedent
applying the constitutional prohibition against special legisla-
tion to legislative classifications involving political subdivi-
sions. We therefore proceed to the merits of the landowners’
argument that the district court erred in concluding that the
statute in question did not violate this constitutional provision.
47 Axberg v. City of Lincoln, 141 neb. 55, 64, 2 n.W.2d 613, 617 (1942).
48 State ex rel. Douglas v. Marsh, 207 neb. 598, 606, 300 n.W.2d 181, 186
(1980).
49 City of Scottsbluff v. Tiemann, 185 neb. 256, 261, 175 n.W.2d 74, 79
(1970).
254 	282 nEBrAsKA rEporTs

(iii) Merits
[16] The focus of the prohibition against special legisla-
tion is the prevention of legislation which arbitrarily benefits
or grants special favors to a specific class. A legislative act
constitutes special legislation if (1) it creates an arbitrary and
unreasonable method of classification or (2) it creates a perma-
nently closed class.50
The landowners contend that the statutes in question create
two closed classes, one “consisting of the [republican nrd’s]
to which the legislature has granted the privilege to levy an
occupation tax under § 2-3226.05”; and another consisting of
“nebraska property owners . . . possessing irrigated property
not located within the [republican nrd’s], who are exempt
from such taxation.”51
We have little difficulty in concluding that the second of
these is not a closed class. real property being alienable, the
makeup of any “class” consisting of owners of property located
outside the boundaries of the republican nrd’s is subject to
constant change.
[17,18] The landowners’ principal argument is that by con-
ferring the power to levy an occupation tax on natural resources
districts with jurisdiction that “‘includes a river subject to an
interstate compact among three or more states and that includes
one or more irrigation districts within the compact basin,’” the
legislature has created a permanently closed class consisting
of the republican nrd’s within the republican river Basin,
the only natural resources districts in the state which currently
have within their jurisdiction a river which is subject to an
interstate compact.52 A “closed class” is one that
“‘limits the application of the law to present condition,
and leaves no room or opportunity for an increase in the
numbers of the class by future growth or development . .
. .’” . . . “in deciding whether a statute legitimately clas-
sifies, the court must consider the actual probability that
50 Yant v. City of Grand Island, supra note 18; Hug v. City of Omaha, 275
neb. 820, 749 n.W.2d 884 (2008).
51 Brief for appellants at 15.
52 Id.
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	255
Cite as 282 neb. 237

others will come under the act’s operation. if the prospect
is merely theoretical, and not probable, the act is spe-
cial legislation.”53
The landowners do not dispute the possibility that the state
of nebraska could enter into future interstate compacts with
adjoining states relating to rivers other than the republican, but
based upon the legislative history of l.B. 701, they argue that
it is improbable that this would occur.
The introducer’s statement of intent states that l.B. 701 was
intended to “[p]rovide a way to guarantee that nebraska stays
in compliance with the . . . Compact . . . with Kansas on an
annual basis” and that the legislation would be restricted “to
the republican river Basin using appropriate open class lan-
guage.”54 in introducing amendments to the bill, counsel for the
natural resources Committee noted that the bonding authority
of natural resources districts “is restricted to those districts
that are subject to an interstate compact consisting of three or
more states, which at this time is the republic[an] river Basin
only.”55 in testimony before the committee, a special counsel to
the attorney general stated:
First, while everyone has talked about [how] this applies
to the republican river[,] and in fact the [republican
nrd’s] are the only ones that currently qualify, this is,
as written, an open class. All it takes is for the state to
negotiate a compact with two other states over water in
order for this provision to then apply . . . to have that
apply to them. That’s potentially the south platte, the
north platte, the Missouri river are all potential candi-
dates, so it is an open class and satisfies the constitutional
prohibition against special legislation. But to paraphrase
senator Wehrbein in a debate over the southeastern dairy
Compact a couple of years ago, no legislature in its right
53 City of Ralston v. Balka, 247 neb. 773, 781, 530 n.W.2d 594, 601 (1995)
(citations omitted).
54 introducer’s statement of intent, l.B. 701, natural resources Committee,
100th leg., 1st sess. (Feb. 28, 2007).
55 natural resources Committee Hearing, l.B. 701, 100th leg., 1st sess. 4
(Apr. 4, 2007).
256 	282 nEBrAsKA rEporTs

mind would ever enter into a compact again in this day
and age. so i think, while it is an open class, i think we’re
confident it will be a [sic] republican river that benefits
from this.56
during the floor debate, the introducer of l.B. 701 noted:
And right now, this is mostly focused on the [C]ompact
and mostly where you have a three-state compact and
it’s the only three-state compact that we have. And i’m
sure there won’t be anyone in the future that will want
to enter into another three-state compact. i think senator
Christensen outlined it quite well in his opening remarks
and when he went on the history of when the compact
started. it had to be done back in the early 40s. And
the reason for that was so that the federal government
would go in and build some of those dams and reservoirs
in there. And they had to have the three states on the
republican river agree to it because at that time that river
did run through three states, starting in Colorado, Kansas,
nebraska, and back into Kansas again. so that was, i
think, part of the focus has been to try and narrow it down
so that at the present time this amendment and this lB701
and everything directs most of the bonding authority and
the authority that we’re giving the [natural resources dis-
tricts] at the present time and the [republican nrd’s] in
the republican river project and agreement. so i think
that’s one of the concerns, that we tried to narrow it down
so it didn’t affect a lot of areas in the state. . . . But for
the most part, this was strictly focused and drafted so
that we could do some work, try to solve the problems
that are going on with the republican [nrd’s], and what
we can do to bring nebraska in compliance with Kansas
and on some of our surface water issues going down the
republican river.57
While we consider these statements as part of the pre-
enactment legislative history of l.B. 701, we agree with the
56 Id. at 71.
57 Floor debate, l.B. 701, natural resources Committee, 100th leg., 1st
sess. 31 (Apr. 10, 2007).
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	257
Cite as 282 neb. 237

reasoning of the district court that they amount to nothing more
than speculation and opinion as to whether future nebraska
legislatures would authorize the state to enter into additional
interstate compacts with respect to rivers. in Haman v. Marsh,58
we concluded that it was “highly improbable” that a class
consisting of depositors of industrial loan investment compa-
nies insured by the defunct nebraska depository institution
guaranty Corporation would ever be expanded beyond the
depositors of three failed institutions, in light of changes in the
law which required such institutions to obtain federal deposit
insurance or post notice that they had no insurance at all. But
because of the complex nature of water policy in general and
interstate water management in particular, and the dynamic
natural conditions which they address, we cannot in any prin-
cipled manner declare the improbability that nebraska and its
neighboring states will ever again utilize a legal mechanism
for the management of riverflow which they have used in the
past. Moreover, we note that the statutory authority conferred
by l.B. 701 to issue riverflow enhancement bonds and levy
an occupation tax to provide revenue for their payment cannot
be fairly seen as a “special favor” bestowed upon an a natural
resources district. rather, it is an instrument to be utilized in
maintaining compliance with an interstate compact, which, in
Garey, we specifically determined to be “a state purpose.”59 For
these reasons, we conclude that these statutes do not constitute
special legislation prohibited by neb. Const. art. iii, § 18.
(iv) Is L.B. 701 Occupation Tax Commutation of Taxes
in Violation of Neb. Const. Art. VII, § 4?
The landowners contend that the occupation tax violates
neb. Const. art. viii, § 4, which provides in relevant part:
[T]he legislature shall have no power to release or dis-
charge any county, city, township, town, or district what-
ever, or the inhabitants thereof, or any corporation, or the
property therein, from their or its proportionate share of
58 Haman v. Marsh, supra note 42, 237 neb. at 718, 467 n.W.2d at 849.
59 Garey v. Nebraska Dept. of Nat. Resources, supra note 1, 277 neb. at 160,
759 n.W.2d at 928.
258 	282 nEBrAsKA rEporTs

taxes to be levied for state purposes, or due any munici-
pal corporation, nor shall commutation for such taxes be
authorized in any form whatever[.]
The constitutional proscription against commuting a tax pre-
vents the legislature from releasing either persons or prop-
erty from contributing a proportionate share of the tax.60 The
landowners argue that because the entire state benefits from
compliance with the Compact, requiring only irrigators within
the republican nrd’s subject to the Compact imposes a dis-
proportionate burden upon them.
[19] While it is true that compliance with an interstate
compact is a state obligation, it is likewise true that irrigators
within a river basin subject to an interstate compact have an
interest that is distinct from other taxpayers, in that they derive
a direct benefit from the riverflow. A tax levy does not equal
a commutation merely because the taxing district is broadened
to reflect the actual benefits to the public. so long as all tax-
payers receive the benefit of the taxes they remit, the taxing
district passes constitutional muster without offending the pro-
hibition against commutation.61 The landowners do not contest
that they derive a benefit from the water projects financed by
the occupation tax, but they argue that their burden is dispro-
portionate to that of taxpayers owning property outside the
republican nrd’s.
The record indicates that compliance with the Compact
implicates a variety of funding sources including but not lim-
ited to the occupation tax. indeed, § 2-3226.01(1)(a) specifi-
cally provides that riverflow enhancement bonds are payable
in part from “funds granted to [an issuing natural resources]
district by the state or federal government for one or more
qualified projects.” The record does not disclose the total cost
of compliance with the Compact or the percentage of the total
to be derived from the occupation tax. We conclude that the
landowners did not meet their burden of establishing that the
60 Jaksha v. State, 241 neb. 106, 486 n.W.2d 858 (1992).
61 Swanson v. State, 249 neb. 466, 544 n.W.2d 333 (1996); State, ex rel. City
of Omaha v. Board of County Commissioners, 109 neb. 35, 189 n.W. 639
(1922).
KiplingEr v. nEBrAsKA dEpT. oF nAT. rEsourCEs 	259
Cite as 282 neb. 237

occupation tax authorized by l.B. 701 violates the constitu-
tional prohibition against commutation.
v. ConClusion
For the reasons discussed, we conclude that the landowners
have not overcome the presumption of constitutionality with
respect to the challenged statutes, and we therefore affirm the
judgment of the district court.
A ffirmed.
connolly, J., not participating.
robert murrAy, speciAl A dministrAtor of the estAte of
mAry K. murrAy, And robert murrAy, individuAlly,
Appellees , v. unmc physiciAns , formerly KnoWn
As university medicAl A ssociAtes ,
A corporAtion, AppellAnt.
806 n.W.2d 118
Filed september 16, 2011. 	no. s-10-455.
1. Motions for New Trial: Appeal and Error. A motion for new trial is addressed
to the discretion of the trial court, whose decision will be upheld in the absence
of an abuse of that discretion.
2. Motions for New Trial. The discretion of a trial court in ruling on a motion for
new trial is only the power to apply the statutes and legal principles to all facts of
the case; a new trial may be granted only where legal cause exists.
3. Negligence: Evidence: Tort-feasors. While the identification of the applicable
standard of care is a question of law, the ultimate determination of whether a
party deviated from the standard of care and was therefore negligent is a question
of fact. To resolve the issue, a finder of fact must determine what conduct the
standard of care would require under the particular circumstances presented by
the evidence and whether the conduct of the alleged tort-feasor conformed with
that standard.
Appeal from the district Court for douglas County: JAmes
t. gleAson, Judge. reversed.
Jeffrey A. nix, Thomas J. shomaker, and Mary M. schott, of
sodoro, daly & sodoro, p.C., for appellant.
Christopher p. Welsh and James r. Welsh, of Welsh &
Welsh, p.C., l.l.o., for appellees.
260 	282 nEBrAsKA rEporTs