In the Matter of Sanitary and Improvement District 65 Ofsarpy County, Nebraska.edmund W. Hollstein and Other Individuals Similarlysituated, Appellants, v. First National Bank of Aurora, Appellee, 873 F.2d 209 (8th Cir. 1989)Annotate this Case
Appeal from the United States District Court for the District of Nebraska; Lyle E. Strom, Chief Judge.
Gary J. Nedved, Lincoln, Neb., for appellants.
William R. Hadley, Omaha, Neb., for appellee.
Prior report: 79 B.R. 877.
Before LAY, Chief Judge, BROWN,* Senior Circuit Judge, and WOLLMAN, Circuit Judge.
At issue before the court is the interpretation of Nebraska law concerning the relative repayment rights the Nebraska legislature intended for bondholders and warrantholders in situations where tax revenues are insufficient to fully satisfy both. Specifically, the issue concerns the claims of bondholders of a Sanitary and Improvement District (District) under the Nebraska statutes, Neb.Rev.Stat. Secs. 31-701, et seq. (Reissue 1984), and whether they are superior to the claims of warrantholders of the District thereby requiring the debtor to treat the claims of bondholders with a priority over claims of warrantholders in a bankruptcy plan of adjustment. The bankruptcy court1 and the district court2 held that the statutes did create a superior right in bondholders over warrantholders for repayment purposes.
After briefing and oral argument, pursuant to Neb.Rev.Stat. Sec. 24-219 (Reissue 1985), this court certified the following question to the Nebraska Supreme Court:
Whether the Nebraska statutes governing sanitary and improvement districts, Neb.Rev.Stat. Secs. 31-701, et seq. (Reissue 1984), grant a priority of payment in favor of bonds over warrants so as to require that bonds be fully paid prior to utilizing revenues for payment of warrants.
On March 31, 1989, the Nebraska Supreme Court filed its opinion, holding that "the statutes of the State of Nebraska do grant a priority in favor of bonds over warrants so as to require that bonds be fully paid according to their terms prior to utilizing revenues for payment of warrants." Hollstein v. First Nat'l Bank of Aurora, 231 Neb. 711, 718, 437 N.W.2d 512, 516 (1989).
Accordingly, the judgment of the district court is affirmed. Each party shall bear its own costs on appeal.
The HONORABLE JOHN R. BROWN, Senior Circuit Judge for the United States Court of Appeals for the Fifth Circuit, sitting by designation
The Honorable Timothy J. Mahoney, Chief Judge, United States Bankruptcy Court for the District of Nebraska
The Honorable Lyle E. Strom, Chief Judge, United States District Court for the District of Nebraska