Opinion ID: 558657
Heading Depth: 2
Heading Rank: 1

Heading: Interest Under Iowa Code Sec. 535.3

Text: 5 Bernadine argues that the district court erred in determining that she was not entitled to interest on the $405,454 lien. Bernadine bases her claim on Iowa Code Sec. 535.3 (Supp.1990), which provides: Interest shall be allowed on all money due on judgments and decrees of courts at the rate of ten percent per year.... She contends that the $405,454 lien on Brady Street resulting from her divorce decree was a judgment or decree of court and that because Leroy did not free the Rathjen Farm of its mortgage, she is entitled to interest on the lien dating from when she lost the use of the farm. 6 For Bernadine to be entitled to interest under Sec. 535.3, she must possess a judgment or decree of court in her favor. We do not believe that Bernadine's lien against Brady Street constitutes such a judgment or decree as contemplated by the statute. As an initial matter, at this point in time Bernadine possesses merely the lien, and has not attempted to reduce it to judgment. Furthermore, at the time of the divorce decree, whether Bernadine would ever be entitled to foreclose on the lien was contingent on Leroy's failure to deliver Rathjen Farm free and clear. Such contingent awards are not entitled to interest under Sec. 535.3. In Dillon v. City of Davenport, 366 N.W.2d 918 (Iowa 1985), the state supreme court expressly held that Sec. 535.3 did not apply to a decree enforcing a settlement agreement for $150,000 because the money award was contingent: 7 The instant judgment is not the equivalent of a money judgment.... Before this [agreement] would become the equivalent of a money judgment, another condition must occur--the approval of the Industrial Commissioner.... We cannot state with a degree of certainty that this will occur. Thus, we conclude that even if we liberally construe section 535.3, interest on this judgment and decree is not proper. 8 Id. at 927; see also Arnold v. Arnold, 258 Iowa 850, 140 N.W.2d 874, 879 (1966) (holding that Sec. 535.3 cannot be so extended as to embrace awards ... which are uncertain, indefinite and conjectural). Therefore, the contingent nature of Bernadine's lien award argues against the application of Sec. 535.3 in this case. 9 Further militating against the application of Sec. 535.3 to Bernadine's situation is the Iowa Supreme Court's statement that a divorce decree's property settlement cannot be considered the equivalent of a money judgment as contemplated under section 535.3. In re Marriage of Baculis, 430 N.W.2d 399, 403 (Iowa 1988) (emphasis added). We also note that in Iowa, whether to award interest in dissolution proceedings is a matter of discretion based on equitable principles. Id. at 405. This points up another flaw in Bernadine's argument. Bernadine claims she is due interest under Sec. 535.3, but interest under Sec. 535.3 is not discretionary. See Sheer Constr., Inc. v. W. Hodgman & Sons, Inc., 326 N.W.2d 328, 334 (Iowa 1982). 10 In sum, the bankruptcy and district courts correctly refused to award Bernadine interest under Sec. 535.3. Her claim is not premised on the type of judgment or decree the Iowa Supreme Court has found necessary to justify awarding interest under the statute. 3