City of Waterloo v. Bainbridge

• Decision Date: 23 May 2008
• Docket Number: No. 06-2076.,06-2076.
• Citation: 749 N.W.2d 245
• Parties: CITY OF WATERLOO, Appellee, v. Lee BAINBRIDGE, Irene Bainbridge, Ronald Wood, and Joyce Wood, Defendants, HLS U.S. Bank, Appellant.
• Court: Iowa Supreme Court

749 N.W.2d 245

CITY OF WATERLOO, Appellee, v. Lee BAINBRIDGE, Irene Bainbridge, Ronald Wood, and Joyce Wood, Defendants HLS U.S. Bank, Appellant.

No. 06-2076.

Supreme Court of Iowa.

May 23, 2008.

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.

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 U.S. 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).

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 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:

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).

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.

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...