Opinion ID: 2133109
Heading Depth: 2
Heading Rank: 1

Heading: The Moratorium Agreement

Text: The involuntary petition at issue here seeks to have Carlisle annex West Carlisle. Carlisle has a moratorium agreement with DSM agreeing to refrain from annexing West Carlisle. Statutory authority for a moratorium agreement is found in Iowa Code section 368.4. This provision states: A city, following notice and hearing, may by resolution agree with another city or cities to refrain from annexing specifically described territory for a period not to exceed ten years and, following notice and hearing, may by resolution extend the agreement for subsequent periods not to exceed ten years each. Notice of a hearing shall be served on the board, and a copy of the agreement and a copy of any resolution extending an agreement shall be filed with the board within thirty days of enactment. If such an agreement is in force, the board shall dismiss a petition or plan which violates the terms of the agreement. Id. § 368.4 (emphasis added). Anderson argues that section 368.4 does not prevent West Carlisle from petitioning to be involuntarily annexed by Carlisle because it is not a party to the moratorium agreement. It is true that section 368.11 gives a territory the right to file an involuntary petition. However, when a territory's involuntary petition is granted, the city would then be required to annex the territory. As such, by forcing Carlisle to annex West Carlisle, Carlisle would likewise be forced to violate the moratorium agreement. Anderson places great emphasis on the general contract premise that those not a party to a contract cannot be bound by its terms. See Herington Livestock Auction Co. v. Verschoor, 179 N.W.2d 491, 494 (Iowa 1970). However, this premise is not applicable here. Under the above interpretation, the moratorium agreement does not bind a nonpartyit binds Carlisle to refrain from annexing the prohibited territory. If the Board had granted West Carlisle's petition, Carlisle could not have kept its agreement with DSM. Under the authority of section 368.4, the Board was required to dismiss West Carlisle's petition. The effect of a moratorium agreement can be analogized to that of a covenant not to compete. A valid covenant not to compete does not allow a party to it to do business with those he might otherwise have utilized had no agreement existed. This is not the same thing as binding a nonparty to the agreementthe party to the agreement is simply not able to make himself available for the benefit of a nonparty. This may have a negative impact on a nonparty, but it does not have a binding effect. Here, Carlisle is not able to avail annexing procedures to benefit West Carlisle without violating the moratorium agreement. The district court's conclusion, that dismissal of West Carlisle's petition would impermissibly bind a nonparty to the moratorium agreement, is incorrect. The district court felt a contrary interpretation would deprive a territory of its statutory right to seek involuntary annexation and that section 368.11 would be useless whenever a moratorium agreement was present. It concluded that the legislature could not have intended such a result. An examination of the legislative history of section 368.4 reveals that the legislature purposely broadened its language in 1972. 1972 Iowa Acts ch. 1088, § 28. The moratorium agreement provision previously read: After the adoption of such resolutions and the execution of such agreement by all of such agreeing cities and towns, no agreeing city or town shall commence any annexing proceedings under the provisions of this section as to any specifically described territory which is the subject of said agreement.... Iowa Code § 362.26(7) (1971) (emphasis added). This language was changed to read as it does today: If such an agreement is in force, the board shall dismiss a petition or plan which violates the terms of the agreement. Iowa Code § 368.4 (1997). The language is no longer limited to a restriction on the actions of the parties to the agreement, but also requires dismissal of any petitions that would offend the agreement. The intent to preclude involuntary petitions that force a city to violate its agreement is clear. Perhaps realizing that the petition might be barred by the moratorium agreement, Anderson endeavors to recharacterize the petition as an attempt by West Carlisle to annex Carlisle. This prompts the question whether a territory has the power to annex a city. Iowa Code section 368.11 gives a territory the authority to seek involuntary annexation, i.e., to force a city to annex the territory. However, no section in chapter 368 provides West Carlisle with the authority to annex Carlisle. In fact, chapter 368 provides a definition of annexation: `Annexation' means the addition of territory to a city. Id. § 368.1(2). This definition does not include the addition of a city to a territory. As such, this characterization of West Carlisle's petition cannot provide relief.