State, Board of Educational Lands & Funds v. Haberman

Per Curiam.

This is an action for a declaratory judgment to ascertain the relative rights of a tenant of school lands and the Board of Educational Lands and Funds in certain improvements placed on the land by the tenant. Judgment was entered for the defendant-tenant. We affirm.

Involved are buildings of various types, wells, fences, and land leveling. Several of the buildings, including a house and three metal grain bins, were on permanent-type concrete foundations. All the improvements were made prior to September 14, 1953, with the exception of one 4,300 bushel-capacity grain bin erected without plaintiff’s approval or consent in 1964.

The law pertaining to pre-1953 improvements has vacillated in recent years. See, Banks v. State, 181 Neb. 106, 147 N. W. 2d 132; State v. Bardsley, 185 Neb. 629, 177 N. W. 2d 599; State v. Rosenberger, 187 Neb. 726, 193 N. W. 2d 769. The latter case discloses that a majority of the present membership of this court is of the opinion that tenants of school lands have a compensable interest in pre-1953 improvements, notwithstanding the unconstitutionality of the former statute. See Watkins v. Dodson, 159 Neb. 745, 68 N. W. 2d 508. No distinction is made between permanent and temporary-type structures. These cases appear to be determinative of rights in the pre-1953 improvements, exclusive of a tenant’s personal property, and to vest a compensable interest in the tenant.

A somewhat different situation appears with reference to the grain bin erected after 1953. It is a fundamental rule of law that contracts, including leases, are to be construed according to laws in existence at the time the contracts are entered into. The lease here in question was entered into as of January 1, 1943, expired December 31, 1967, but was then extended from year to year. “Every contract is made with reference to, and subject to, existing law, and every law affecting the contract is read into it and becomes a part thereof. This is true between individuals dealing between themselves by contract, express or implied, and likewise true between individuals and the government. * * *

“The rights of a lessee of school land are determined by the law as it was at the time the lease was made and the lessee may not be deprived of any substantial right resulting from the lease in his favor by subsequent legislation.” Pfeifer v. Ableidinger, 166 Neb. 464, 89 N. W. 2d 568. See, also, Stoller v. State, 171 Neb. 93, 105 N. W. 2d 852.

Section 72-240.07, R. R. S. 1943 (Laws 1953, c. 255, § 2, p. 863), provided that improvements placed on school lands without written approval by the Board of Educational Lands and Funds would be “considered improvements of the land and the lessee shall not be entitled to reimbursement therefor.” This statute was in effect when the grain bin was erected on a permanent-type concrete foundation. Is it applicable?

Under the 1943 laws in effect at the time of the execution of the lease, no such permission was required or forfeiture provided for. Article I, section 16, Constitution of Nebraska, forbids and makes ineffective any “law impairing the obligation of contracts.” A statute may not operate retroactively where it would impair the obligation of a contract or interfere with a vested right. See Travelers Ins. Co. v. Ohler, 119 Neb. 121, 227 N. W. 449. As seen in the Stoller and Pfeifer cases, supra, the rule serves to protect the vested rights of tenants of school lands. Since the Legislature cannot give away vested interests in school lands, it also serves to protect the trust property held by the State. See Lassen v. Arizona ex rel. Arizona Highway Dept., 385 U. S. 458, 87 S. Ct. 584, 17 L. Ed. 2d 515.

At the time the lease was executed, a tenant had the right to place any improvements he desired upon school lands without specific permission. Under our decisions in Banks and Rosenberger, supra, the tenant had a compensable interest in the improvements. The right thus acquired was a substantial property right which cannot be affected by the later 1953 statutory restriction. We therefore conclude that defendant had a compensable interest in the grain bin and the judgment of the District Court is affirmed.

Affirmed.

Adopted by the court before January 1, 1974.