Court Opinion

ID: 4250034
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:22:45.359738+00
Date Added: 2024-06-11T14:44:07.711965
License: Public Domain

IN THE SUPREME COURT OF IOWA
                            No. 37 / 06–2076

                           Filed May 23, 2008

CITY OF WATERLOO,

      Appellee,

vs.

LEE BAINBRIDGE, IRENE BAINBRIDGE,
RONALD WOOD, AND JOYCE WOOD,

      Defendants,

HLS US BANK,

      Appellant.

      Appeal from the Iowa District Court for Black Hawk County, James

C. Bauch, Judge.

      A purchaser of a tax sale certificate appeals a district court order

eliminating its tax lien on property to which the city obtained title under

Iowa Code section 657A.10A (2005). AFFIRMED.

      Deana K. Walocha, Omaha, Nebraska, for appellant.

      David R. Zellhoefer, Assistant City Attorney, Waterloo, and Jared

R. Knapp of Clark, Butler, Walsh & Hamann, Waterloo, for appellee.
                                     2

WIGGINS, Justice.

      A purchaser of a tax sale certificate appeals a district court order

eliminating its tax lien on property to which the city obtained title under

Iowa Code section 657A.10A (2005).        We affirm the judgment of the

district court because we agree section 657A.10A(5) defeats the

certificate holder’s lien.

      I. Background Facts and Proceedings.
      Pursuant to Iowa Code section 657A.10A, the City of Waterloo filed

a petition in May 2006 requesting ownership of an abandoned piece of

property located in Waterloo.     HLS US Bank had an interest in the

property because it purchased the tax sale certificate to the property at a

Black Hawk County public bidder sale in June 2003.

      In its answer, HLS claimed section 657A.10A is unconstitutional

on its face. At the bench trial HLS did not challenge the characterization

of the property at issue as being abandoned pursuant to section

657A.10A(3). HLS argued if section 657A.10A is interpreted as the city

suggests, the statute will be in direct contradiction with section 445.28.

During the trial, HLS failed to make its constitutional argument.

      The trial court granted the city title to the properties free and clear
of any claims, liens, or encumbrances held by HLS. In one sentence of

its ruling, without providing any analysis or authority, the district court

also held section 657A.10A constitutional.

      HLS appeals.

      II. Scope of Review.

      The district court tried this case in equity. We apply a de novo

review to cases tried in equity. In re Marriage of Beecher, 582 N.W.2d
510, 512–13 (Iowa 1998).
                                            3

         III. Issues.

         HLS raises three issues on appeal:           (1) whether the legislature

intended section 657A.10A(5) to override the lien created by section

445.28; (2) whether section 657A.10A(5) applies to tax liens created

before     its   effective   date;    and   (3)   whether   section   657A.10A   is

constitutional under the Iowa Constitution.

         Although HLS claimed section 657A.10A is unconstitutional on its
face, it failed to cite any provision of either the United States or Iowa

Constitutions in support of its position.             At trial HLS presented no

evidence or arguments to support its constitutional claims.                  Even

without any evidence or argument, the district court found the statute to

be constitutional. However, the district court did so without any analysis

or citation to authority.            In its brief on appeal, HLS claims section

657A.10A violates the due process clause of the Iowa Constitution, but it

fails to cite to any authority in support of its position.

         HLS’s failure to make a record during the trial and its failure to

cite any authority in this appeal precludes us from deciding the

constitutional issue. See Olson v. Sumpter, 728 N.W.2d 844, 849 (Iowa

2007) (holding the failure of a party to cite authority for an issue on
appeal precludes us from reviewing that issue); State v. Tobin, 333
N.W.2d 842, 844 (Iowa 1983) (stating “[t]he general rule is that issues,

including constitutional issues, which are not raised in the trial court

cannot be raised on appeal”). Therefore, we will only reach the first two

issues.

         IV. Discussion and Analysis.

         A. Statutory Framework. Our analysis requires us to interpret

and apply two separate provisions of the Code.                  The first section

implicated in this appeal is section 445.28, which provides in relevant
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part, “Taxes upon a parcel are a lien on the parcel against all persons

except the state.” Iowa Code § 445.28. A similar provision has appeared

in our Code since 1851. See Iowa Code § 495 (1851) (stating “taxes upon

real property are hereby made a perpetual lien thereupon against all

persons except the United States and this state”). We have interpreted

section 445.28 to create a tax lien superior to all liens except those of the

state. Merv E. Hilpipre Auction Co. v. Solon State Bank, 343 N.W.2d 452,
455 (Iowa 1984). HLS, as purchaser of a tax certificate, held the tax lien

on the property at the time the court awarded title to the property to the

city. Iowa Code § 446.29.

        Section 657A.10A allows a city the opportunity to obtain title to

property containing an abandoned building. Iowa Code § 657.10A(1). To

do so the city must file a petition naming the owner, mortgagees of

record, lienholders of record, and other known persons who have an

interest in the property as respondents. Id. The city is required to give

these parties notice of the petition. Id. No sooner than sixty days after

filing its petition, the city may request a hearing on the petition.      Id.

§ 657A.10A(2).    If a person with an interest in the property does not

make a good faith effort to comply with an order of a local building
inspector or the city proves the property has been abandoned, the court

will award title to the city free and clear of any claims, liens, and

encumbrances held by the respondents.         Id. § 657A.10A(5).     Section

657A.10A became effective on May 17, 2004. 2004 Iowa Acts ch. 1165,

§ 11.

        B.   Whether the Legislature Intended Section 657A.10A(5) to

Override the Lien Created by Section 445.28. When confronted with

the task of determining the meaning of a statute, we have stated:
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      The goal of statutory construction is to determine legislative
      intent. We determine legislative intent from the words
      chosen by the legislature, not what it should or might have
      said.   Absent a statutory definition or an established
      meaning in the law, words in the statute are given their
      ordinary and common meaning by considering the context
      within which they are used.           Under the guise of
      construction, an interpreting body may not extend, enlarge,
      or otherwise change the meaning of a statute.

Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590 (Iowa 2004)

(citation omitted).
      HLS urges us to use the principles of statutory construction to

determine section 657A.10A(5) does not override the lien created by

section 445.28.       We apply the rules of statutory construction when a

statute is ambiguous.       In re N.V., 744 N.W.2d 634, 637 (Iowa 2008).

When the language of a statute is plain and its meaning is clear, the

rules of statutory construction do not permit us to search for a meaning

beyond the statute’s express terms. Id. A statute or rule is ambiguous if

reasonable minds could differ or be uncertain as to the meaning of the

statute. Carolan v. Hill, 553 N.W.2d 882, 887 (Iowa 1996). In this case,

the language of the statute is plain, clear, and susceptible to only one

meaning.

      Section 657A.10A(5) clearly mandates that if the court awards title
of the property to the city, title to the property “shall be free and clear of

any claims, liens, or encumbrances held by the respondents.” There is

no room in the language of the statute for us to exempt a tax lien from

this mandate.

      Our interpretation of section 657A.10A(5) is also consistent with its

legislative history.    The legislative history of a statute is instructive of

legislative intent.     State v. Dohlman, 725 N.W.2d 428, 431–32 (Iowa

2006).
                                      6

      Prior to the enactment of section 657A.10A, the city could petition

the court to appoint a receiver to take possession and control of a

building considered to be a public nuisance. Iowa Code § 657A.4. The

receiver would then be able to manage the property and take the

necessary steps to abate the nuisance and bring the building into

compliance with housing and building regulations and ordinances. Id.

§ 657A.6. If the receiver’s mortgage is properly perfected, the receiver’s
mortgage constitutes a first lien on the property and is superior to all

prior or subsequent liens on the property except those for taxes and

assessments. Id. § 657A.7.

      The legislature enacted section 657A.10A to give the city an

opportunity to obtain title to the property rather than have a receiver

appointed to manage the property.         H.F. 2291 Explanation, 80th Gen.

Assemb., Reg. Sess. (Iowa 2004). In order to accomplish this goal, the

city must take title free and clear of all liens. The legislature recognized

this by mandating the court to pass title of the property to the city free

and clear of all liens, including tax liens. Iowa Code § 657A.10A(5). This

mandate is in clear contrast to the legislature’s language in section

657A.7 that a receiver’s mortgage is subordinate to a tax lien.             Id.
§ 657A.7.

      If the city cannot obtain clear title, a city would have little incentive

to take title to the property. Once a city takes possession of the property,

it must expend time and money to make the property safe. If the city

had to pay the tax lien, there would be less money for the city to recoup

its costs when it eventually transferred the property for development. If

the city kept the property, the tax lien would add to the city’s own

development cost. Accordingly, we find the legislature intended section

657A.10A(5) to override the lien created by section 445.28.
                                   7

      C.     Does Section 657A.10A(5) Apply to Tax Liens Created

Before its Effective Date?    Statutes are generally presumed to apply

prospectively absent an expressed indication by the legislature to the

contrary. Iowa Code § 4.5. However, remedial or procedural statutes are

exceptions to this rule and may be applied retrospectively.          Iowa

Comprehensive Petroleum Underground Storage Tank Fund Bd. v. Shell Oil

Co., 606 N.W.2d 370, 375 (Iowa 2000).
      A substantive statute creates, defines, and regulates rights.

Schmitt v. Jenkins Truck Lines, Inc., 260 Iowa 556, 560, 149 N.W.2d 789,

791 (1967). A substantive statute also takes away a vested right. In re

Estate of Parsons, 272 N.W.2d 16, 18 (Iowa 1978). A procedural statute

affords the practice, method, procedure, or legal machinery by which a

person may enforce the substantive law.         State ex rel. Turner v.

Limbrecht, 246 N.W.2d 330, 332 (Iowa 1976). A remedial statute gives an

injured person a private remedy for a wrongful act. Baldwin v. City of

Waterloo, 372 N.W.2d 486, 491 (Iowa 1985).        Generally, a remedial

statute is designed to correct an existing law or redress an existing

grievance. Id.

      HLS argues section 657A.10A(5) is substantive because it takes
away its vested rights.   On the other hand, the city claims section

657A.10A(5) is not substantive and may be applied retrospectively.

      We have acknowledged that a tax sale certificate conveys vested

rights.    Where a person applied for a writ of mandamus to compel a

county treasurer to execute a tax deed when he purchased a tax

certificate and the redemption period had expired, our court held, “[t]he

moment the purchaser paid the tax he acquired certain vested rights.”

Jones v. Welsing, 52 Iowa 220, 221, 2 N.W. 1106, 1107 (1879). As holder

of the tax certificate, HLS did not have the right of possession over the
                                       8

property until after the expiration of the right of redemption. Witmer v.

Gibbs, 234 Iowa 725, 730, 13 N.W.2d 802, 804 (1944).            However, the

owner of the tax certificate has the right to be reimbursed the price the

owner paid for the tax certificate plus interest if the property is

redeemed.    Iowa Code § 447.1.        If the property is not redeemed, the

certificate holder is entitled to acquire the deed to the property.         Id.

§ 448.1. The holder of the tax certificate also has a lien on the property,
which is superior to all liens except those of the state. Id. § 445.25.

      In order for a certificate holder to receive any return on the tax sale

certificate, the purchaser must serve a notice of the right of redemption.

Id. § 447.9. If the holder of the certificate has not filed an affidavit within

three years from the time of the tax sale stating that it served the notice,

the treasurer shall cancel the sale. Id. § 446.37. If the sale is canceled,

the tax certificate expires. Id. The tax lien expires with the certificate.

Id. § 446.29.

      The passage of section 657A.10A(5) did not affect HLS’s right to file

a notice of redemption and begin the process of realizing a return on its

investment in the certificate.      HLS acquired the tax sale certificate in

June 2003. One year and nine months later in March 2005 HLS could
have served the notice of the right of redemption.        Id. § 447.9.    This

notice would have given the persons served an additional ninety days

from the completion of service to redeem the property. Id. If the property

was   redeemed     within    this    period,   HLS   would    have    received

reimbursement for the amount it paid for the certificate plus interest. Id.

§ 447.1. If the property was not redeemed, the county treasurer would

have made out a tax deed conveying the property to HLS. Id. § 448.1.

HLS would have received the deed upon its payment of the appropriate

fee to the treasurer. Id. After the issuance of the tax deed, HLS would
                                      9

have filed an affidavit with the county recorder. Id. § 448.15. All claims

not made against the title within 120 days from the date HLS filed the

affidavit would have been barred. Id. § 448.16. By December 2005 HLS

could have had clear title to the property. The city did not file its petition

until May 2006.      The court did not give the city title until November

2006.

        For some unknown reason, HLS sat on its rights and did not serve
a notice to redeem the property. HLS did this knowing the legislature

passed a law, effective May 17, 2004, making its lien inferior to that of

the city if the city began a procedure to obtain title to the property under

section 657A.10A.      HLS also knew it had until June 2006 to file an

affidavit stating it served a notice of redemption, or the treasurer would

cancel the tax sale and it would lose its lien. Instead of protecting its

interest in the property by serving a notice of redemption, it took a

chance that the city would not exercise its rights under section

657A.10A.

        It is possible HLS did not pursue title to the property because if it

had taken title and left the property in the condition it was in at the time

the city filed its petition, the action filed by the city would have divested
HLS of title to the property. HLS’s failure to give notice of the right of

redemption should not put it in a better position than if it had given

notice.

        The facts of this case are analogous to our rule when the

legislature shortens a statute of limitations to enforce a right. In that

situation the rule is “ ‘that the period of limitation in effect at the time

suit is brought governs in an action even though it may lengthen or

shorten an earlier period of limitation.’ ” In re Estate of Weidman, 476
N.W.2d 357, 363–64 (Iowa 1991) (citation omitted).        The enactment of
                                          10

section 657A.10A(5) did not in and of itself defeat HLS’s interest in the

property.     Prior to the enactment of section 657A.10A, the outside

limitation to preserve its interest in the property was three years. The

passage of section 657A.10A shortened that period if the property was or

became abandoned under the terms of the statute. After the passage of

section 657A.10A, HLS should have known the condition of the property

and realized that if it was or became abandoned pursuant to the statute,
there was a chance the city would step in and remedy the situation.

Therefore, the consequence of passing section 657A.10A(5) was that HLS

was not allowed to hold on to the tax certificate while the property’s

condition deteriorated.       The passage of section 657A.10A(5) had the

effect, like a statute of limitations, of shortening the time for HLS to

exercise its option to give notice of the right of redemption.1 Therefore,

section 657A.10A(5) is not a substantive statute.

       To determine whether a procedural or remedial statute is applied

retrospectively, we apply a three-part test. Shell Oil Co., 606 N.W.2d at

375.

       First, we look to the language of the new legislation; second,
       we consider the evil to be remedied; and third, we consider
       whether there was any previously existing statute governing
       or limiting the mischief which the new legislation was
       intended to remedy.

Emmet County State Bank v. Reutter, 439 N.W.2d 651, 654 (Iowa 1989).

       In applying the first part of the test, the language of the statute

requires the statute to be applied to all properties that meet the

definition of “abandoned” contained in section 657A.10A(3). The statute

does not require the conditions in section 657A.10A(3) to exist after the

       1Under  this record, if HLS did not take any action the tax sale would have been
cancelled in June 2006, approximately one month after the city began its action. The
record does not indicate if the tax sale was cancelled.
                                     11

date of the statute’s enactment. The statute does not limit the city’s right

to obtain title only to property abandoned after the effective date of the

statute, but allows the city to obtain title to property that has been

abandoned at any time.

      Secondly, the evil to be remedied is the existence of unsafe

abandoned buildings. A building abandoned before the effective date of

the statute creates the same unsafe condition as a building abandoned
after the effective date of the statute. The unsafe condition created by

abandoned buildings, regardless of when they became abandoned, is the

evil to be remedied.

      Finally, there are no other statutes that allow the city to obtain

title to abandoned property in this manner.       Thus, if we give section

657A.10A a retrospective application, the application would not be

repugnant to any existing statute.

      Accordingly, section 657A.10A fits squarely within the three-part

test for retrospective application. Therefore, section 657A.10A(5) applies

to tax liens created before its effective date. Consequently, the district

court was correct when it awarded title of the property to the city free

and clear of HLS’s tax lien.
      V. Disposition.

      Because Iowa Code section 657A.10A(5) overrides the lien created

by   section   445.28    and   section    657A.10A(5)    can     be   applied

retrospectively, we affirm the judgment of the district court.

      AFFIRMED.

      All justices concur except Baker, J., who takes no part.