Vitalix, Inc. v. Box Butte Cty. Bd. of Equal.

Viewing the evidence favorably to the nonmoving party as we
must, appellants may be entitled to prevail, and we cannot say
on this record that appellee, solely on the basis of the invalidity
of the M & I Bahensky Trust, as the moving party, was entitled
to judgment.
CONCLUSION
Because we determine there are genuine issues of material
fact, the order of the district court granting appellee’s motion
for summary judgment and quieting title in the name of Irene is
reversed and the cause remanded for further proceedings.
R eveRsed and Remanded foR
fuRtheR pRoceedings.
vitalix , inc., appellant, v. Box Butte county
BoaRd of equalization, appellee .
786 N.W.2d 326
Filed July 9, 2010. 	No. S-09-1074.
1. Taxation: Judgments: Appeal and Error. Appellate courts review decisions
rendered by the Tax Equalization and Review Commission for errors appearing
on the record.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appearing
on the record, an appellate court’s inquiry is whether the decision conforms to
the law, is supported by competent evidence, and is neither arbitrary, capricious,
nor unreasonable.
3. Taxation: Appeal and Error. Questions of law arising during appellate review
of Tax Equalization and Review Commission decisions are reviewed de novo on
the record.
4. Stipulations. Parties cannot stipulate to legal conclusions.
Appeal from the Tax Equalization and Review Commission.
Affirmed.
Gerard T. Forgét III, of Forgét Firm, P.C., L.L.O., for
appellant.
No appearance for appellee.
heavican, 	c.J., 	WRight, 	connolly, 	geRRaRd, 	stephan,
mccoRmack , and milleR-leRman, JJ.
186 	280 NEBRASkA REPORTS
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:47 AM CST

heavican, c.J.
I. INTRODUCTION
The Box Butte County assessor set the valuation for improve-
ments to property made by the appellant, Vitalix, Inc. Vitalix
protested the valuation, arguing that the property was exempt
from taxation because it was public land being used for a
public purpose. The Box Butte County Board of Equalization
affirmed the county assessor’s valuation, essentially deny-
ing an exemption. Vitalix appealed that decision to the Tax
Equalization and Review Commission (TERC), which affirmed
the board of equalization’s decision. Vitalix appeals to this
court. We affirm.
II. FACTUAL BACkGROUND
Vitalix manufactures nutritional supplements for livestock.
Its plant is located on a parcel of real property owned in fee
simple by the City of Alliance, Nebraska (City). The opera-
tive lease was signed by the City and Vitalix on December 17,
2004. At that time, the lease provided for the lease of the real
property along with three buildings, identified as buildings
Nos. 3000, 3001, and 3101, located on the real property.
Subsequently, an addition was built connecting buildings
Nos. 3000 and 3001 to form a U-shaped contiguous structure.
The lease between the City and Vitalix was amended in June
2005 to provide for this addition (referred to as the “Warehouse
Addition”). The Warehouse Addition was constructed using
community redevelopment funds obtained from the State of
Nebraska by the City.
In 2007, the county assessor assessed the Warehouse Addition
and certain other improvements to Vitalix in the amount of
$897,051. The Warehouse Addition 	had 	been 	assessed 	at
$570,935; the other property was assessed at $326,116. Only
improvements were assessed to Vitalix; the land was assessed
at zero and is exempt from taxation as property owned by the
City. In addition, buildings Nos. 3000 and 3001 are exempt
from taxation and have been since an exemption was granted to
the City by the board of equalization in May 2005.
The issue on appeal is whether the Warehouse Addition
is exempt from taxation as public property used for a public
VITALIx, INC. v. BOx BUTTE CTy. BD. OF EQUAL. 	187
Cite as 280 Neb. 186

purpose. Vitalix is not contesting the assessment of the other
improvements to the parcel.
III. ASSIGNMENTS OF ERROR
On appeal, Vitalix assigns that TERC erred in (1) rejecting a
stipulation of facts entered into by the parties and (2) denying
an exemption from taxation for the Warehouse Addition.
IV. STANDARD OF REVIEW
[1-3] Appellate courts review decisions rendered by TERC
for errors appearing on the record.1 When reviewing a judgment
for errors appearing on the record, an appellate court’s inquiry
is whether the decision conforms to the law, is supported by
competent evidence, and is neither arbitrary, capricious, nor
unreasonable.2 Questions of law arising during appellate review
of TERC decisions are reviewed de novo on the record.3
V. ANALySIS
1. paRties’ stipulation
In its first assignment of error, Vitalix argues that TERC
erred in rejecting the stipulation of facts entered into by the
parties. At issue is the parties’ stipulation stating that the parcel
of land in question, “together with any appurtenant structure
(‘Warehouse Addition’), is owned in fee simple by the City . . .
subject only to the leasehold interest of Vitalix.” TERC notes
that “[i]f only the land is described as the ‘Warehouse Addition’
for purposes of the stipulation, the stipulation conforms to the
evidence. If ‘Warehouse Addition’ also refers to the warehouse
constructed in 2004, it is contrary to the evidence.”
[4] Because the ownership of the warehouse has bearing
on whether it is exempt from taxation, TERC’s concern with
this stipulation is well founded. The above language—“[the]
parcel of land . . . together with any appurtenant structure
1 Fort Calhoun Bapt. Ch. v. Washington Cty. Bd. of Eq., 277 Neb. 25, 759
N.W.2d 475 (2009).
2 Id.
3 Id.
188 	280 NEBRASkA REPORTS

(‘Warehouse Addition’), is owned in fee simple by the City”—
suggests that the parties could be attempting to stipulate that
the Warehouse Addition is owned by the City. Such is a legal
conclusion and cannot be the subject of a stipulation between
the parties.4 We conclude that TERC did not err by refusing to
consider the parties’ stipulation. Vitalix’s first assignment of
error is without merit.
2. teRc’s decision
In its second assignment of error, Vitalix argues that TERC
erred in affirming the decision of the board of equaliza-
tion. Vitalix contends that Neb. Rev. Stat. § 77-202(1)(a)
(Cum. Supp. 2006) provided an exemption for the Warehouse
Addition. Section 77-202(1) provided in relevant part that
“[t]he following property shall be exempt from property taxes:
. . . [p]roperty of the state and its governmental subdivisions
to the extent used or being developed for use by the state or
governmental subdivision for a public purpose.” Vitalix argues
that upon its construction, the Warehouse Addition became a
part of the real estate and thus was owned by the City and not
by Vitalix. And because the land was used for a public purpose,
namely because it was built upon using community redevelop-
ment funds, it was exempt from taxation.
(a) Property of State or Governmental Subdivision
We turn first to TERC’s finding that the Warehouse Addition
was owned by Vitalix and thus not “[p]roperty of the state” or
a governmental subdivision as required by § 77-202(1)(a).
The record in this case shows that the Warehouse Addition
was included in a list of assets reported by Vitalix to the fed-
eral government for tax purposes. The lease between the City
and Vitalix provided that “[w]ith prior permission of [the City,
Vitalix] may make alterations or additions to the premises,”
but that “[i]n the absence of consent of [the City], all additions
and alterations to the premises, including fixtures, made by
4 See, e.g., Roberts v. Roberts, 349 S.W.3d 886 (Ark. 2009); 73 Am. Jur.
2d Stipulations § 4 (2001). Cf. Mischke v. Mischke, 253 Neb. 439, 571
N.W.2d 248 (1997).
VITALIx, INC. v. BOx BUTTE CTy. BD. OF EQUAL. 	189
Cite as 280 Neb. 186

[Vitalix] shall become property of [the City] upon termination
of the lease.” Finally, the lease provided that “[a]ny fixtures,
equipment or supplies not removed from the premises by
[Vitalix] upon termination of the lease shall become property
of [the City].” Neither of these exceptions is relevant in this
case, as the City granted consent for the Warehouse Addition
and the lease has not yet been terminated.
An addendum to the same lease specifically notes that
Vitalix, and not the City, had constructed, on the real prop-
erty that is the subject of the lease, a warehouse building.
The record also includes a deed of trust between Vitalix, the
institutions which financed the project, and the City. Both the
addendum and the deed indicate that Vitalix is responsible for
the repayment of all funds.
Vitalix’s primary argument is that as a general rule, when
improvements are made to leased real estate, the improvements
become a part of the real estate and are owned by the land-
owner, not the tenant. And this is indeed the general rule.5 But
the general rule does provide for the converse upon agreement
of the parties. And this lease, as is noted above, makes such
provision: Any improvements become the City’s property only
under certain circumstances not at issue here. More impor-
tantly, the addendum to the lease does not include any language
suggesting otherwise.
Neb. Rev. Stat. § 77-1374 (Reissue 2003) also supported
the general conclusion that improvements do not necessarily
become part of the underlying real estate, at least for taxation
purposes. That section provided, in part, that “[i]mprovements
on leased public lands shall be assessed, together with the
value of the lease, to the owner of the improvements as real
property.” Indeed, besides the Warehouse Addition, Vitalix has
been assessed for other improvements to the leasehold interest
in question, and it is not protesting that assessment.
5 See, Schmeckpeper v. Koertje, 222 Neb. 800, 388 N.W.2d 51 (1986);
Lienemann v. Lienemann, 201 Neb. 458, 268 N.W.2d 108 (1978); State
v. Bardsley, 185 Neb. 629, 177 N.W.2d 599 (1970), overruled in part
on other grounds, State v. Rosenberger, 187 Neb. 726, 193 N.W.2d 769
(1972).
190 	280 NEBRASkA REPORTS

The burden is on Vitalix6 to show that the Warehouse
Addition was “[p]roperty of the state.”7 Vitalix failed to meet
that burden. We conclude that TERC’s conclusion that Vitalix
and not the City owned the Warehouse Addition despite the fact
that the building was constructed on real property owned by the
City conforms to the law, is supported by competent evidence,
and is neither arbitrary, capricious, nor unreasonable.
(b) Public Purpose
Vitalix also argues that the construction of the Warehouse
Addition was for a public purpose under § 77-202(1)(a), which
provided in part:
For purposes of this subdivision, public purpose means
use of the property . . . to provide public services with or
without cost to the recipient, including the general opera-
tion of government, public education, public safety, trans-
portation, public works, civil and criminal justice, public
health and welfare, developments by a public housing
authority, parks, culture, recreation, community develop-
ment, and cemetery purposes . . . .
Vitalix contends that because the Warehouse Addition was con-
structed as part of community redevelopment, it is for a public
purpose. We disagree.
While community development was listed in § 77-202(1)(a),
that section also noted that “public purpose means use of the
property . . . to provide public services.” Vitalix fails to show,
and there is no other evidence to support the conclusion, that
by operating its business, Vitalix is providing a public serv-
ice. To the contrary, Vitalix is running a for-profit business
manufacturing nutritional supplements for livestock. Simply
purchasing the improvements with community redevelopment
funds is insufficient to make the improvements be for a “pub-
lic purpose.” We therefore reject Vitalix’s argument that the
Warehouse Addition is being used for a “public purpose.”
Vitalix’s second assignment of error is without merit.
6 See Neb. Rev. Stat. § 77-5016(8) (Reissue 2009).
7 See § 77-202(1)(a).
VITALIx, INC. v. BOx BUTTE CTy. BD. OF EQUAL. 	191
Cite as 280 Neb. 186

VI. CONCLUSION
The decision of TERC is affirmed.
affiRmed.
in Re complaint against kent e. floRom ,
county couRt Judge of the 11th Judicial
distRict of the state of neBRaska .
state of neBRaska ex Rel . commission on
Judicial qualifications , RelatoR, v.
kent e. floRom , Respondent.
784 N.W.2d 897
Filed July 9, 2010. 	No. S-35-090001.
1. Judges: Disciplinary Proceedings: Appeal and Error. In a review of the find-
ings and recommendations of the Commission on Judicial Qualifications, the
Nebraska Supreme Court shall review the record de novo and file a written opin-
ion and judgment directing action as it deems just and proper, and may reject or
modify, in whole or in part, the recommendation of the commission.
2. ____: ____: ____. In a review of the findings and recommendations of the
Commission on Judicial Qualifications, upon its independent inquiry, the Nebraska
Supreme Court must determine whether the charges against the respondent are
supported by clear and convincing evidence and which, if any, canons of the
Nebraska Code of Judicial Conduct and subsections of Neb. Rev. Stat. § 24-722
(Reissue 2008) have been violated.
3. ____: ____: ____. If violations of the Nebraska Code of Judicial Conduct and
subsections of Neb. Rev. Stat. § 24-722 (Reissue 2008) are found, the Nebraska
Supreme Court must then determine what discipline, if any, is appropriate under
the circumstances.
4. Judges: Disciplinary Proceedings. Conduct that clearly violates the Nebraska
Code of Judicial Conduct constitutes, at a minimum, a violation of Neb. Rev.
Stat. § 24-722(6) (Reissue 2008).
5. ____: ____. While the disciplinary recommendation of the Commission on
Judicial Qualifications is entitled to be given weight, it is incumbent upon the
Nebraska Supreme Court to independently fashion an appropriate penalty.
6. ____: ____. In a judicial discipline proceeding, the Nebraska Supreme Court
weighs the nature of the offenses with the purpose of the sanctions and examines
the totality of the evidence to determine the proper discipline.
7. ____: ____. In a judicial discipline proceeding, sanctions should be imposed
where necessary to safeguard the bench from those who are unfit.
8. ____: ____. The Nebraska Supreme Court disciplines a judge not for purposes of
vengeance or retribution, but to instruct the public and all judges of the impor-
tance of the function performed by judges in a free society.
192 	280 NEBRASkA REPORTS