City of Des Moines v. Geller Glass & Upholstery, Inc.

• Decision Date: 19 May 1982
• Docket Number: No. 66330,66330
• Citation: 319 N.W.2d 239
• Parties: CITY OF DES MOINES, Appellant, v. GELLER GLASS & UPHOLSTERY, INC., Appellee, and Jerome and Barbara Rose GELLER, Appellees, v. CITY OF DES MOINES, Appellant.
• Court: Iowa Supreme Court

Page 239

319 N.W.2d 239

CITY OF DES MOINES, Appellant, v. GELLER GLASS & UPHOLSTERY, INC., Appellee and Jerome and Barbara Rose GELLER, Appellees, v. CITY OF DES MOINES, Appellant.

No. 66330.

Supreme Court of Iowa.

May 19, 1982.

Nelda Barrow Mickle, Asst. City Atty., Des Moines, for appellant.

John R. Ward, Des Moines, for appellees.

Considered by REYNOLDSON, C. J., and UHLENHOPP, McCORMICK, ALLBEE and McGIVERIN, JJ.

McGIVERIN, Justice.

This is an appeal by condemner City of Des Moines (City) from an adverse judgment in a condemnation proceeding which awarded the proceeds of a rent escrow account to condemnees, Jerome and Barbara Rose Geller (Gellers) and Geller Glass & Upholstery, Inc., (GGU). The appeal raises a single controlling issue of whether the condemnee or the condemner is entitled to possession of a condemned property interest if the condemner fails to make a deposit of damages pursuant to section 472.25, The Code, or additional deposits pursuant to section 472.30. We find that trial court's resolution of this issue in the favor of the condemnees was correct under the record in this case and affirm, with modification, its ruling.

This eminent domain case arose in 1978. At that time Gellers were owners of record of a parcel of real property located at 417-27 East Walnut and 228 East Fifth in Des Moines. There were several structures on the property which were used by GGU and other tenants for various commercial enterprises. On September 22, 1978, the City filed an application to acquire and condemn the fee simple interest Gellers held in the property. § 472.3, The Code. The compensation commission convened on October 17, 1978, assessed damages at $64,000, and subsequently filed a written report of its appraisement with the Polk County sheriff. §§ 472.4, .14.

Gellers appealed the award to the Polk District Court. § 472.18. On November 22, the City deposited the $64,000 award with the Polk County sheriff pursuant to section 472.25. Gellers applied for and the court ordered disbursement of these funds to Gellers. § 472.25.

During the pendency of Gellers' appeal, it came to the attention of the City that GGU held an oral leasehold interest in the property. On March 13, 1979, the City filed an application to condemn this leasehold. § 472.3. The compensation commission assessed damages at $37,000 on April 3, 1979. § 472.4, .14. The City did not deposit the $37,000 award with the sheriff pursuant to section 472.25.

Both the City and GGU appealed the leasehold award to Polk District Court. § 472.18. The fee simple and leasehold appeals were consolidated and proceeded to jury trial. The jury returned a verdict of $90,000 for Gellers' fee simple interest and $42,500 for GGU's leasehold. Trial court entered judgment on June 27, 1979. Upon condemnees' motion, trial court awarded Gellers and GGU attorneys' fees on August 8, 1979. Also, trial court awarded the condemnees interest on the awards: 1) to Gellers, seven percent per annum on $90,000 from October 17, 1978, to November 22, 1978, and seven percent per annum on $26,000 from November 22, 1978; 2) to GGU, seven percent per annum on $42,500 from October 17, 1978. The City made no deposit of these additional damages pursuant to section 472.30.

The City appealed and we transferred the case to the court of appeals. Supreme Court Rule 4(b).

In an opinion filed on April 29, 1980, the court of appeals affirmed the $90,000 award to Gellers, the $42,500 award to GGU and interest thereon and the attorneys' fees awards. ¹ City of Des Moines v. Geller Glass and Upholstery Inc., 297 N.W.2d 385 (Iowa Ct.App.1980) (table). After further review was denied, procedendo issued on July 1, 1980. Iowa R.App.P. 29. On July 23, 1980, the City deposited with the Polk County sheriff the amounts required by all the preceding judgments, including interest. §§ 472.25, .30.

The present appeal involves a dispute over rent payments put into escrow by GGU for the period from July 1, 1979, to July 23, 1980. In order to retain possession of the condemned premises, GGU paid the City $5,836.70 in rent to cover the period from November 22, 1978 (when the City's initial section-472.25 deposit of the $64,000 compensation commission award to Gellers was made) to June 30, 1979, three days after the entry of judgment of higher awards by the district court. Because the City did not make additional deposits pursuant to section 472.30 after the June 27, 1979, judgment, GGU refused to pay the City rent from July 1, 1979, until July 23, 1980, when the City finally made the requisite deposits after its appeals failed. GGU did, however, pay $10,204.90 into a rent escrow account for that period of time. This sum is the subject of the current dispute.

After hearing on an application by the parties for determination of their rights to the rent escrow fund, the district court ruled on rents and other issues. It found, inter alia : 1) GGU was precluded from seeking the return of $5,836.70 paid as rent to the City from November 22, 1978, to June 30, 1979; and 2) GGU was entitled to the $10,204.90 deposited in the rent escrow account.

The City again appealed.

The City contends trial court erred in finding condemnees were entitled to possession of their property interests from July 1, 1979, to July 23, 1980, due to condemner City's failure to make deposits pursuant to section 472.25 or additional deposits pursuant to section 472.30. In this case, the contention affects the question of entitlement to rents. We find no error in trial court's resolution of this issue.

Iowa Const.Art. I, § 18, is the basic law governing the exercise of the power of eminent domain in this state. It provides, in pertinent part:

Private property shall not be taken for public use without just compensation first being made, or secured to be made to the owner thereof, as soon as the damages shall be assessed by a jury, who shall not take into consideration any advantages that may result to said owner on account of the improvement for which it is taken.

Chapter 472, "Procedure Under Power of Eminent Domain," governs the procedure to be followed in condemnation proceedings and helps to protect "the citizen in the quiet and proper enjoyment of his property." See Virginia Manor, Inc. v. City of Sioux City, 261 N.W.2d 510, 516 (Iowa 1978); Henry v. The Dubuque & Pacific Railroad Co., 10 Iowa 540, 544-45 (1860).

Section 472.25 provides:

Upon the filing of the commissioners' report with the sheriff, the applicant may deposit with the sheriff the amount assessed in favor of a claimant, and thereupon the applicant shall, except as otherwise provided, have the right to take possession of the land condemned and proceed with the improvement. No appeal from said assessment shall affect such right, except as otherwise provided. Upon appeal from the commissioners' award of damages the district court, wherein said appeal is pending, may direct that such part of the amount of damages deposited with the sheriff, as it finds just and proper, be paid to persons entitled thereto. If upon trial of said appeal a lesser amount is awarded the difference between the amount so awarded and the amount paid as above provided shall be repaid by the person or persons to whom the same was paid and upon failure to make such repayment the party entitled thereto shall have judgment entered against the person or persons who received such excess payment.

Section 472.30 provides:

If, on the trial of the appeal, the damages awarded by the commissioners are increased, the condemner shall, if he is already in possession of the property, make such additional deposit with the sheriff, as will, with the deposit already made, equal the entire damages allowed. If the condemner be not already in possession, he shall deposit with the sheriff the entire damages awarded, before entering on, using, or controlling the premises.

The statutory provisions regulating the exercise of the power of eminent domain must be strictly complied with and they are construed strictly to protect the constitutional property rights of the owner. Virginia Manor, 261 N.W.2d at 515; State v. Johann, 207 N.W.2d 21, 24 (Iowa 1973); Bourjaily v. Johnson County, 167 N.W.2d 630, 633 (Iowa 1969).

"[A] 'taking' does not necessarily mean the appropriation of the fee. It may be anything which substantially deprives one of the use and enjoyment of his property or a portion thereof." Phelps v. Board of Supervisors of County of Muscatine, 211 N.W.2d 274, 276 (Iowa 1973). An oral leasehold is a property interest that is compensable when taken through the exercise of the right of eminent domain. Fritz v. Iowa State Highway Commission, 270 N.W.2d 835, 837-41 (Iowa 1978). See Batcheller v. Iowa State Highway Commission, 251 Iowa 364, 368, 101 N.W.2d 30, 33 (1960). In the present case both Gellers and GGU suffered a taking in the constitutional sense when the City finally compensated them on July 23, 1980. Peterson v. Ferreby, 30 Iowa 327, 329-30 (1870).

The City's right to collect rent from GGU for its use of the premises after November 22, 1978, depends on the City's right to possess the fee interest of Gellers. After the November 22 deposit of $64,000 with the sheriff, the City had the right of...