Helmke v. Board of Adjustment, City of Ruthven

• Decision Date: 20 January 1988
• Docket Number: No. 86-809,86-809
• Parties: Allen E. HELMKE and Juanita Helmke, Appellants, v. BOARD OF ADJUSTMENT, CITY OF RUTHVEN, et al., Defendants, Farmers Cooperative Elevator Company, Ruthven, Iowa, Intervenor-Appellee.
• Court: Iowa Supreme Court

Page 346

418 N.W.2d 346

Allen E. HELMKE and Juanita Helmke, Appellants, v. BOARD OF ADJUSTMENT, CITY OF RUTHVEN, et al., Defendants, Farmers Cooperative Elevator Company, Ruthven, Iowa, Intervenor-Appellee.

No. 86-809.

Supreme Court of Iowa.

Jan. 20, 1988.

Rehearing Denied Feb. 12, 1988.

Donald J. Bormann, Emmetsburg, and Griff Wodtke of Barrett & Trott, Des Moines, for appellants.

Harold W. White, Fitzgibbon Brothers, Estherville, for intervenor-appellee.

Considered en banc.

NEUMAN, Justice.

Appellants Allen and Juanita Helmke petitioned for a writ of certiorari to challenge the legality of a zoning decision made by the City of Ruthven Board of Adjustment (board). The object of the controversy is a 66 X 300 foot grain storage facility built across the street from Helmkes' rural Ruthven home by intervenor Farmers Cooperative Elevator Company (co-op). Although initially denied a construction permit for the building, the co-op prevailed on its subsequent appeal to the board of adjustment. The board found that no permit was required under the "agricultural purpose" exemption of the Ruthven zoning ordinance and, alternatively, that grain storage is a permitted use in an A-1 agricultural district under the Ruthven ordinance.

On certiorari to the district court, plaintiffs claimed the board erred as a matter of law in its interpretation of the pertinent zoning ordinance and, further, that the board members' membership in the co-op created a conflict of interest invalidating their decision. The district court annulled the writ, concluding that plaintiffs failed to prove any conflict of interest or illegality in the board's decision. We affirm.

I. Scope of Review. Helmkes commenced their certiorari action in district court under Iowa Code section 414.15 (1985) which allows

[a]ny person ... aggrieved by any decision of the board of adjustment ... [to] present to a court of record a petition ... setting forth that such decision is illegal, in whole or in part, specifying the grounds of the illegality.

Section 414.18 provides that the proceedings before the district court "shall be tried de novo" and the court "may reverse or affirm, wholly or partly, or may modify the decision brought up for review." In Grandview Baptist Church v. Zoning Bd. of Adjustment, 301 N.W.2d 704, 706 (Iowa 1981) we noted that this de novo review by the district court is "somewhat unusual," and cited with approval the observation we made in Weldon v. Zoning Bd., 250 N.W.2d 396 (Iowa 1977) which bears repeating here:

[I]n a certiorari proceeding in a zoning case the district court finds the facts anew on the record made in the certiorari proceeding. That record will include the return to the writ and any additional evidence which may have been offered by the parties. However, the district court is not free to decide the case anew. Illegality of the challenged board action is established by reason of the court's findings of fact if they do not provide substantial support for the board decision. If the district court's findings of fact leave the reasonableness of the board's action open to a fair difference of opinion, the court may not substitute its decision for that of the board.

Weldon, 250 N.W.2d at 401 (citations omitted) (emphasis added).

Under Iowa Rule of Civil Procedure 318, this court's scope of review on appeal from a trial court judgment in a certiorari proceeding is "governed by the rules applicable to appeals in ordinary actions." Thus we are limited to correction of errors at law and we are bound by the findings of the trial court if supported by substantial evidence in the record. Iowa R.App.P. 14(f)(1). In other words, "our review is the same as from judgment following a special verdict by a jury." Grandview Baptist Church, 301 N.W.2d at 707 (citing Weldon, 250 N.W.2d at 401); Johnson v. Board of Adjustment, 239 N.W.2d 873, 888 (Iowa 1976); Deardorf v. Board of Adjustment, 254 Iowa 380, 383-84, 118 N.W.2d 78, 80 (1962).

With this limitation on our review in mind, we turn first to appellants' challenge to the court's findings on the conflict of interest issue and then consider its claim of error in the interpretation and application of the Ruthven zoning ordinance.

II. Conflict of Interest. The parties stipulated that all but one of the members of the board of adjustment were "member-shareholders" of the co-op. None, however, were employees, members of the board of directors or otherwise involved in the co-op's management. The chairman of the board, employed as manager of the co-op lumberyard, abstained from voting on the permit at issue.

The record reveals that the co-op had over 600 members at the time of hearing. There are two types of co-op membership: class A for farmer-producers who store grain in co-op facilities, requiring a twenty-five dollar membership deposit; and class B for town residents doing business with the co-op's lumberyard, requiring a ten dollar membership deposit.

The co-op returns twenty percent of its profits to members, and the profits are distributed in proportion to the quantity of business done by each member with the various co-op operations. The co-op paid approximately $12,000 for the six acres upon which the grain storage building sits, and $122,000 for its construction. The co-op's annual gross revenue from all sources is approximately $12 million.

Aside from this general information, no evidence was introduced concerning the amount of business done by individual board members at the co-op. Nor was any evidence presented from which the court could determine the amount of dividends, if any, distributed to board members. Likewise, the record is devoid of reference to profits, if any, which might be generated by the storage building.

Because of the insufficiency of the evidence, the district court found that Helmkes failed to establish that the board members owned "a property or financial interest the value of which would be directly promoted or reduced by the decision made." Thus the court found no conflict of interest which would invalidate the board's vote.

On appeal, Helmkes assert that no direct evidence of personal interest or gain need be shown because the conflict inheres in the board members' dual roles as public officials and co-op members. They rely on the case of Wilson v. Iowa City, 165 N.W.2d 813 (Iowa 1969) in which we discussed at length the common-law foundation for the statutory conflict of interest prohibition contained in Iowa Code section 403.16, the urban renewal law. In Wilson, the issue was whether certain members of the city council were prohibited from voting on urban renewal resolutions because of conflicts of interest. The council members' alleged conflicts ranged from outright property ownership to control over small amounts of stock (five percent or less) in corporations which owned or had leasehold interests in real estate within the proposed project area.

Citing the salutory purpose of common-law and statutory conflict of interest rules which "demand complete loyalty to the public and seek to avoid subjecting a public servant to the difficult, and often insoluble, task of deciding between public duty and private advantage," we held in Wilson that any ownership interest, no matter how small, disqualified the vote of a council member. Id. at 822-24.

It is this strict standard with regard to stock ownership applied in Wilson that Helmkes raised before the board of adjustment, urged upon the trial court and now urge us to adopt on appeal. Our review of the subsequent legislative history of section 403.16, however, reveals that the legislature acted swiftly to neutralize the impact of Wilson by amending the statute to clarify its concern regarding conflict created by public servants' minority ownership interests. Section 403.16(5), enacted within one month after our decision was announced in Wilson, provides:

[s]tock ownership in a corporation having such an interest shall not be deemed an indicia of an interest or of ownership or control by the person owning such stock when less than five percent of the outstanding stock of the corporation is owned or controlled directly or indirectly by such person.

Iowa Code § 403.16 as amended by 1969 Iowa Acts ch. 238, § 1, eff. April 22, 1969 (emphasis added).

Similarly, Iowa Code section 362.5, which prohibits county officials from contracting with corporations in which they hold an interest, exempts from the prohibition contracts with corporations in which an official owns or controls, directly or indirectly, less than five percent of the outstanding stock. Applying this same standard to the general conflict of interest statute relied upon by Helmkes, section 362.6, we find a legislative intent to remove from the statute's purview those interests so remote as to be deemed insignificant.

We are persuaded that the trial court correctly discerned this legislative intent and properly applied it to the measure voted upon in the case before us. The only evidence of co-op ownership by the board members was the claim that each held one of the 600 outstanding membership shares. Such an interest obviously falls below the five percent ownership standard established by the legislature for voting on similar measures. In the absence of any other evidence pointing to bias or prejudice, the Helmkes failed to prove the existence of a conflict of interest and the district court was correct in so holding.

III. Compliance with the Ruthven Zoning Requirements. The Ruthven board of adjustment offered the following grounds for approval of a zoning compliance permit for the construction of the co-op's grain storage building: (1) the proposed facility would be a permitted use under article V, section 2, subsection 2.1 of the City of Ruthven Zoning Ordinance and (2) a permit would not be required under the "agricultural purpose" exemption of article II, section 2 of the Ruthven Zoning Ordinance. ¹ To understand the propriety of...