Bly, Matter of

• Decision Date: 23 May 1990
• Docket Number: No. 89-311,89-311
• Citation: 456 N.W.2d 195
• Parties: In the Matter of Property Seized from John Joseph BLY and Judy Ann Bly, Husband and Wife. Appeal of John Joseph BLY and Judy Ann Bly.
• Court: Iowa Supreme Court

Page 195

456 N.W.2d 195

In the Matter of Property Seized from John Joseph BLY and Judy Ann Bly, Husband and Wife Appeal of John Joseph BLY and Judy Ann Bly.

No. 89-311.

Supreme Court of Iowa.

May 23, 1990.

Brian J. Kane and Michael J. Gau of O'Connor & Thomas, P.C., Dubuque, for appellants.

Thomas J. Miller, Atty. Gen., Sarah J. Coats, Asst. Atty. Gen., Fred H. McCaw, Co. Atty., and Timothy Gallagher, Asst. Co. Atty., for appellee State of Iowa.

Considered by McGIVERIN, C.J., and HARRIS, SCHULTZ, CARTER and LAVORATO, JJ.

McGIVERIN, Chief Justice.

The question presented here is whether a legitimately acquired homestead may be forfeited to the State under Iowa Code chapter 809 (1987) when it has been used by its owner to facilitate the commission of a criminal offense. We think that it may not. Accordingly, we reverse the district court's order of forfeiture.

I. Background facts and proceedings. John Joseph Bly and Judy Ann Bly (Blys), and their two minor children, live in the house at 1606 Butterfield Road, Dubuque, Iowa. The house and lot upon which it is built are owned by Blys, subject to a mortgage. This real property is Blys' homestead within the meaning of Iowa Code chapter 561.

Pursuant to a valid search warrant, Blys' house was searched by officers of the Dubuque police department on March 17, 1988. The search turned up numerous items indicative of drug trafficking in virtually every room of the house. From various places in plain view, the officers seized cocaine, methamphetamine and marijuana together with items of drug paraphernalia, including scales, razor blades, trays and straws. Many of the items of paraphernalia were found to have cocaine and methamphetamine residue on them. The officers also seized cigarette papers, marijuana cigarette butts, marijuana pipes, marijuana seeds, plastic tubes, plastic sandwich bags, a strainer with cocaine residue, and a bottle of inositol (a white powder chemical commonly used to dilute cocaine before sale). Some of the marijuana found in the living room had been divided into quarter-ounce packages.

The search warrant for Blys' house specifically directed the officers to search for a tan suitcase full of marijuana. The officers found the suitcase in a cubbyhole underneath the basement stairs. The suitcase was found to contain several quarter-ounce packages of marijuana and a brown paper bag which, in turn, contained a large plastic bag of "uncut" marijuana.

On March 23, the State "seized" Blys' homestead by serving and filing notice of forfeiture of the homestead. See Iowa Code §§ 809.7, 809.8. The sole ground alleged in support of forfeiture was that set forth in Iowa Code section 809.1(2)(b), which makes forfeitable any:

Property which has been used or is intended to be used to facilitate the commission of a criminal offense or to avoid detection or apprehension of a person committing a criminal offense.

The State did not seek forfeiture on any other statutory ground and, in fact, conceded that the homestead was legitimately acquired. The State did not attempt to evict Blys from their homestead.

On March 28, Blys filed an application for return of their homestead under Iowa Code section 809.9, claiming that it was illegally seized and that it was not forfeitable for several reasons. Among those reasons was the argument that a homestead protected by Iowa Code chapter 561 may not be forfeited under Iowa Code section 809.1(2)(b). This argument was rejected by the district court in a pretrial ruling. The court also denied Blys' request that an attorney be appointed to represent them in the forfeiture proceeding at the State's expense. ¹

A forfeiture hearing was held pursuant to Iowa Code sections 809.10 and 809.11. In addition to testimony from three of the police officers who searched the home on March 17, the State presented evidence from three witnesses who stated that they had purchased, sold, traded and consumed controlled substances at the Bly homestead on numerous occasions over the preceding three years. These three witnesses also testified that they had observed numerous other illegal drug transactions at the Bly homestead. Blys called no witnesses.

In its findings of fact and conclusions of law, the district court ruled that the State had carried its burden of proving by a preponderance of the evidence that Blys' homestead had been used to facilitate the commission of a criminal offense, namely, the possession, use, and sale or distribution of controlled substances. ² The court ordered Blys' interest in their homestead forfeited to the State.

Blys appealed. Our review is for correction of errors at law. In the Matter of Property Seized from Rush, 448 N.W.2d 472, 477 (Iowa 1989).

Although Blys raise several issues on appeal, we need address only the question of law set forth above: whether a legitimately acquired homestead may be forfeited to the State under Iowa Code chapter 809 when it has been used by its owner to facilitate the commission of a criminal offense.

II. The homestead exemption and the Iowa forfeiture statute. Iowa Code section 809.1(2) defines "forfeitable property" as any:

a. Property which is illegally possessed.

b. Property which has been used or is intended to be used to facilitate the commission of a criminal offense or to avoid detection or apprehension of a person committing a criminal offense.

c. Property which is acquired as or from the proceeds of a criminal offense.

d. Property offered or given to another as an inducement for the commission of a criminal offense.

The definition does not distinguish between real and personal property. We have no doubt that under this statute, real property is generally forfeitable to the same extent and for the same reasons that personal property is forfeitable. ³ The real property sought by the State in this case, however, is also a homestead under Iowa Code chapter 561. ⁴

Iowa Code section 561.16 provides, in relevant part:

The homestead of every person is exempt from judicial sale where there is no special declaration of statute to the contrary....

Blys argue that this statute precludes forfeiture of their homestead under Iowa Code chapter 809.

Resolution of this claim requires a two-step inquiry. First, is an order of forfeiture a "judicial sale" from which homestead property is generally exempt? If not, our analysis ends and the property is forfeitable; if so, we must then decide whether Iowa Code section 809.1(2)(b) is a "special declaration of statute to the contrary," so that property used to facilitate the commission of a criminal offense would be forfeitable notwithstanding its homestead character.

A. Is an order of forfeiture a "judicial sale" within the meaning of Iowa Code section 561.16? ⁵ "Judicial sale" is not defined in the Iowa Code. The term generally refers to a sale by authority of a court of competent jurisdiction, carried out by a person legally appointed and commissioned by the court for that purpose, and subject to confirmation by the court. See Sturdevant v. Norris, 30 Iowa 65, 71 (1870); 47 Am.Jur.2d Judicial Sales § 1 (1969). It is usually said that it is judicial participation which gives a sale the character of a judicial sale. See 47 Am.Jur.2d Judicial Sales § 2 (1969). ⁶

Notwithstanding the general understanding of the term, in Sturdevant we held that a foreclosure sale carried out without proceedings in court was a "judicial sale" as that term was used in the dower statute then in effect. Sturdevant, 30 Iowa at 71-72. A contrary holding would have frustrated the foreclosure law, which was intended to insulate purchasers of land at nonjudicial foreclosure sales from title challenges by previous mortgagors and mortgagees. See id. Likewise, in Lucas v. Purdy, 142 Iowa 359, 120 N.W. 1063 (1909), we held that a tax sale accomplished without judicial proceedings was a "judicial sale" under the dower statute; a contrary holding would have frustrated the tax law. In light of these cases, it fairly may be said that in the absence of statutory definition, the term "judicial sale" is always given a meaning dependent upon the context in which it is used and the policies to be furthered or frustrated by the meaning assigned the term.

In considering whether an order of forfeiture is a judicial sale within the meaning of Iowa Code section 561.16, we are guided by well-established principles. In this state, homestead statutes are broadly and liberally construed in favor of exemption. See, e.g., Millsap v. Faulkes, 236 Iowa 848, 852, 20 N.W.2d 40, 42 (1945). "Regard should be had to the spirit of the law rather than its strict letter." Id. The homestead exemption is not "for the benefit of the husband or wife alone, but for the family of which they are a part." Swisher v. Swisher, 157 Iowa 55, 65, 137 N.W. 1076, 1080 (1912). Further still, we have recognized that the exemption is not only "for the benefit of the family, but for the public welfare and social benefit which accrues to the state by having families secure in their homes." In re Estate of McClain, 220 Iowa 638, 644, 262 N.W. 666, 669 (1935). The policy of our law is to jealously safeguard homestead rights. Merchants Mut. Bonding Co. v. Underberg, 291 N.W.2d 19, 21 (Iowa 1980).

With these principles in mind, we think that the term "judicial sale" as used in chapter 561 was intended to encompass any judicially compelled disposition of the homestead, whether denominated a "sale" or not. Cf. 40 Am.Jur.2d Homestead § 92 (1968) (any compulsory disposition of the homestead is contrary to the homestead exemption); Lanahan v. Sears, 102 U.S. 318, 322, 26 L.Ed. 180, 181 (1880) ("A forced dispossession [of a homestead] in ejectment is as much within the prohibition [of forced sale of a homestead] as a forced sale under judicial process."). Although an order of forfeiture is less a sale to the State than a commandeering by the State, it cannot be denied that the benevolent purposes of the homestead...