Bill Fennelly, Scott County Treasurer Vs. A-1 Machine & Tool Co.

IN THE SUPREME COURT OF IOWA
No. 73 / 04-1232
Filed October 6, 2006
BILL FENNELLY, SCOTT COUNTY
TREASURER,
Appellant,
vs.
A-1 MACHINE & TOOL CO.,
Appellee.
________________________________________________________________________
Appeal from the Iowa District Court for Scott County, John Nahra,
Judge.
The Scott County Treasurer appeals from an adverse summary
judgment holding that some of his claims for delinquent property taxes
were barred by the statute of limitations, and the remaining claims failed
due to failure to perform a condition precedent. AFFIRMED IN PART,
REVERSED IN PART, AND REMANDED.
Thomas C. Fritzsche, Assistant County Attorney, for appellant.
John T. Flynn of Brubaker, Flynn & Darland, P.C., Davenport, for
appellee.
2
CADY, Justice.
In this appeal, we must primarily decide if an action by a county
treasurer to collect delinquent property taxes is subject to the statute of
limitations, and if a tax sale certificate is a condition precedent to such
an action when the parcels for which taxes are delinquent consist of
machinery and equipment. The district court granted summary
judgment to the taxpayer, and the treasurer appealed. Upon our review,
we conclude the action is not barred by the statute of limitations, and a
tax sale certificate was not a condition precedent to bringing this action.
We affirm the district court in part, reverse in part, and remand for
further proceedings.
I. Background Facts and Proceedings
A-1 Machine & Tool Co. (“A-1”) is an Iowa corporation. It owned or
leased certain industrial metalworking machinery, which was treated as
a taxable real property parcel by the Scott County Assessor from 1989 to
2001. The Scott County Auditor levied taxes on the parcel each of those
years. A-1 never paid the taxes. Its president, Alvin Roggenkamp,
claimed the corporation never received any tax bills or notices that taxes
were owed. The taxes were deemed delinquent by the Scott County
Treasurer, Bill Fennelly (the “Treasurer”). He eventually obtained a tax
sale certificate for the taxes from 1989 to 1996, but did not obtain a
certificate for the taxes from 1997 to 2001.
The Treasurer did not file an action to collect the delinquent taxes
until July 18, 2003. At that time, he filed a petition in district court to
recover a personal judgment against A-1 under Iowa Code section 445.3
(2003).
A-1 answered the petition and alleged a variety of defenses to the
claim. These defenses included: (1) the property composing the taxed
3
parcel was personal property, not real property, and thus the
Treasurer could not collect taxes on the parcel; 1 (2) a personal judgment
1In Iowa, all real property not exempt is subject to property tax. Iowa Code
§ 427.13. Importantly, “real property,” for purposes of taxation, encompasses more
than is covered by the traditional definition of real property—land and fixtures. See
Black’s Law Dictionary 1234 (7th ed. 1999) (“Land and anything growing on, attached
to, or erected on it, excluding anything that may be severed without injury to the
land.”). The statutory definition of “real property” encompasses these things, see Iowa
Code § 427A.1(1)(a) (“Land and water rights.”), (b) (“Substances contained in or growing
upon the land . . . .”), (c) (“Buildings, structures or improvements, any of which are
constructed on or in the land, attached to the land . . . .”), (d) (“Buildings, structures,
equipment, machinery or improvements, any of which are attached to the buildings,
structures, equipment, machinery or improvements defined in paragraph “c” . . . .”), but
it also includes other items, such as “[m]achinery used in manufacturing
establishments,” id. § 427A.1(1)(e), and “computers,” id. § 427A.1(1)(j)(1). The latter two
categories of property have had a special valuation scheme since 1995, see id.
§ 427B.17, but they are still defined as real property. Personal property is not subject
to property tax in Iowa. See id. § 427A.2.
The County claimed in its petition that A-1 owed delinquent taxes on a parcel
consisting of “machinery and equipment.” In its answer, A-1 claimed, as an affirmative
defense, that the machinery and equipment described by the County was not taxable as
real property because it was not “attached” to the building. See id. § 427A.1(1)(d)
(“Buildings, structures, equipment, machinery or improvements, any of which are
attached to the buildings, structures, equipment, machinery or improvements defined in
paragraph “c” . . . .” (Emphasis added.)); id. § 427A.1(2) (“ ‘[A]ttached’ means any of the
following: a. Connected by an adhesive preparation. b. Connected in a manner so
that disconnecting requires the removal of one or more fastening devices, other than
electric plugs. c. Connected in such a manner so that removal requires substantial
modification or alteration of the property removed or the property from which it is
removed.”); id. § 427A.1(3) (“Notwithstanding the definition of “attached” in subsection
2, property is not “attached” if it is a kind of property which would ordinarily be
removed when the owner of the property moves to another location.”). The County then
shifted gears in its motion for summary judgment and argued that even if this were so,
the property making up the parcel was still taxable as “computers” under section
427A.1(1)(j). The definition of “computers” does not require the computer to be attached
to the land or building in order to be taxable as real property. Id. § 427A.1(1)(j).
We note these arguments must usually be made initially before the board. See
id. § 441.37(1)(c) (stating a taxpayer may protest the assessment of property to the
board of review on the grounds that “the property is not assessable, is exempt from
taxes, or is misclassified”); Read v. Hamilton County, 231 Iowa 1255, 1265, 3 N.W.2d
597, 602 (1942) (“ ‘The failure of a person aggrieved by the assessment of his property
to appear before the board of review and make complaint waives his right to
subsequently complain of any irregularity in the listing and assessment thereof. The
attempt of the county treasurer to collect a void tax may, however, be enjoined by a
court of equity.’ ” (emphasis added) (quoting Griswold Land & Credit Co. v. Calhoun
County, 198 Iowa 1240, 1242-44, 201 N.W. 11, 12 (1924))). We will refer to the
property composing the subject parcel as machinery and equipment in this opinion.
4
could not be entered for delinquent taxes levied prior to 1992 because
the statute authorizing a personal judgment for delinquent property
taxes did not go into effect until that year; (3) all the Treasurer’s claims
were barred by laches and estoppel; (4) claims for taxes that became
delinquent prior to 1997 were barred by the statute of limitations; and (5)
the claims for the 1997–2001 taxes were barred because the Treasurer
did not first obtain a tax sale certificate.
Both parties filed motions for summary judgment. A-1 sought to
have the petition dismissed based on the strength of its defenses. The
Treasurer also sought to adjudicate the viability of the defenses so that
the action could proceed to judgment on its claim.
The district court granted summary judgment for A-1. It held the
claims by the Treasurer for taxes levied prior to 1997 were barred by the
five-year statute of limitations. It further held that the claims for taxes
after 1997 were required to be dismissed because the Treasurer failed to
obtain a tax sale certificate prior to instituting the action. Although
these holdings disposed of all of the tax claims, the district court further
held that the defense of laches was not available to A-1, and that the
estoppel defense asserted by A-1 relied upon disputed facts that made it
improper for adjudication by summary judgment. The district court
subsequently dismissed the petition.
The Treasurer appeals from the decision by the district court.
First, he claims a treasurer is immune from the statute of limitations
when bringing an action on behalf of a county to collect delinquent real
property taxes. Second, he claims a tax sale certificate is not a condition
precedent to an action for a personal judgment for delinquent property
taxes. Finally, he claims the district court erred by failing to adjudicate
the other defenses asserted by A-1 as requested in his motion for
5
summary judgment. A-1 requests the case be remanded to the district
court for consideration of common law attorney fees for defending the
action in district court and on appeal. Alternatively, A-1 requests an
award for appellate attorney fees.
II. Standard of Review
Our review in summary-judgment appeals is for correction of
errors at law. Stewart v. Sisson, 711 N.W.2d 713, 715 (Iowa 2006) (citing
Otterberg v. Farm Bureau Mut. Ins. Co., 696 N.W.2d 24, 27 (Iowa 2005)).
A motion for summary judgment should only be granted if,
viewing the evidence in the light most favorable to the
nonmoving party, “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law.”
Otterberg, 696 N.W.2d at 27 (quoting Iowa R. Civ. P. 1.981(3); citing
Wernimont v. Wernimont, 686 N.W.2d 186, 189 (Iowa 2004)).
We normally review the district court’s decision to award or not to
award attorney fees for an abuse of discretion. In re Marriage of Sullins,
715 N.W.2d 242, 247 (Iowa 2006). However, “[t]he standard of review for
an award of common-law attorney fees is de novo.” Wolf v. Wolf, 690
N.W.2d 887, 896 (Iowa 2005) (citing Hockenberg Equip. Co. v.
Hockenberg’s Equip. & Supply Co. of Des Moines, Inc., 510 N.W.2d 153,
158 (Iowa 1993)).
III. Statute of Limitations
Limitations on the time to bring an action in Iowa are generally
governed by chapter 614 of the Code. This chapter provides a number of
special limitation periods for various types of actions, and includes
section 614.1(4), which provides:
6
Actions may be brought within the times herein
limited, respectively, after their causes accrue, and not
afterwards, except when otherwise specially declared:
....
4. Unwritten contracts—injuries to property—fraud—
other actions. Those founded on unwritten contracts, those
brought for injuries to property, or for relief on the ground of
fraud in cases heretofore solely cognizable in a court of
chancery, and all other actions not otherwise provided for in
this respect, within five years, except as provided by
subsections 8 and 10.
Iowa Code § 614.1(4). 2 None of the special limitations provisions in
chapter 614 applies to a claim to collect delinquent taxes. See id.
(stating the limitations period, “except when otherwise specifically
declared” for “all other actions not provided for in this respect”). See
generally id. ch. 614. Additionally, the parties agreed that the chapter of
the Code governing tax collection does not contain a special limitations
period. See id. § 445.3 (stating an action by the county treasurer for the
collection of delinquent taxes “shall be in all respects commenced, tried,
and prosecuted to final judgment the same as provided for ordinary
actions”). See generally id. ch. 445. Without a special limitation period
provided by a statute, the “default” five-year statute of limitations found
in section 614.1(4) normally applies. See id. § 614.1(4) (stating “all other
actions not otherwise provided for” shall be brought within five years).
A-1 claims this statute precludes the Treasurer from bringing claims for
delinquent taxes levied prior to 1997.
The Treasurer asserts the statute of limitations does not apply to
this action under the doctrine of nullum tempus occurrit regi. The literal
translation of this ancient maxim is “no time runs against the King.”
2Subsections 8 and 10 govern claims for wages and malpractice, respectively,
and thus are not applicable in this case. Iowa Code § 614.1(8), (10).
7
Black’s Law Dictionary 1669 (7th ed. 1999). The doctrine originated
in the English common law as a declaration that the statute of
limitations could not be applied against the Crown. See United States v.
Thompson, 98 U.S. 486, 489 (1878) (“The rule of nullum tempus occurit
regi has existed as an element of the English law from a very early
period. . . . The common law fixed no time as to the bringing of actions.
Limitations derive their authority from statutes. The king was held never
to be included, unless expressly named. No laches was imputable to
him. These exemptions were founded upon considerations of public
policy. It was deemed important that, while the sovereign was engrossed
by the cares and duties of his office, the public should not suffer by the
negligence of his servants.”). The rationale for the doctrine was that
public rights should not be lost by the oversight or neglect of
governmental representatives to whom the rights have been entrusted.
Id. The idea was to make the sovereign immune from the statute of
limitations in order to preserve public rights. 51 Am. Jur. 2d Limitation
of Actions § 78, at 500–01 (2000).
The doctrine was promptly imparted to our American justice
system as one of the incidents of sovereignty, see Thompson, 98 U.S. at
489–90 (“When the colonies achieved their independence, each one took
these prerogatives, which had belonged to the crown; and when the
national Constitution was adopted, they were imparted to the new
government as incidents of the sovereignty thus created.”), and has been
a fixture in our jurisprudence in Iowa for over 130 years, see Des Moines
County v. Harker, 34 Iowa 84, 85 (1871) (“[W]e do not understand
counsel upon either side to controvert the propositions that a statute of
limitations will not apply to the State unless expressly so stated in it,
following the common-law maxim, ‘nullum tempus occurrit regi.’ ”). Thus,
8
in Iowa, it is well recognized that a statute of limitations does not run
against the state unless specifically provided by statute. 3 See, e.g., In re
3While the language of the default limitations period in section 614.1(4) applies
to “all other actions,” we must interpret the statute to determine whether the legislature
intended to include actions by the state or a subdivision. See Worth County Friends of
Agric. v. Worth County, 688 N.W.2d 257, 264 (Iowa 2004) (“Our primary concern in
interpreting a statute is to determine and effectuate the legislature’s intent.” (citing
Grundmeyer v. Weyerhaeuser Co., 649 N.W.2d 744, 750 (Iowa 2002))). The “all other
actions” catchall has been in the statute since 1851. See Iowa Code § 1659(3) (1851)
(“The following actions may be brought within the times herein limited respectively after
their causes accrue, and not afterwards except when otherwise specially declared, that
is to say: . . . Five years. Those founded on unwritten contracts, those brought for
injuries to property or for relief on the ground of fraud in cases heretofore solely
cognizable in a court of chancery, and all other actions not otherwise provided for in
this respect.”). This court’s contemporaneous interpretations of the statute interpreted
the phrase to exclude actions by the state, following the common-law doctrine of nullum
tempus. See Schaer v. Webster County, 644 N.W.2d 327, 336 (Iowa 2002) (“We will not
interpret a statute to be inconsistent with our common law principles absent a clear
intent.” (citing State v. Carter, 618 N.W.2d 374, 377 (Iowa 2000); State v. Pace, 602
N.W.2d 764, 771 (Iowa 1999))); accord Rieff v. Evans, 630 N.W.2d 278, 285 (Iowa 2001)
(“ ‘We are obliged . . . to interpret statutes in conformity with the common law wherever
statutory language does not directly negate it.’ ” (quoting Rowedder ex rel. Cookies Food
Prods., Inc. v. Lakes Warehouse Distrib., Inc., 430 N.W.2d 447, 452 (Iowa 1988)));
Woodbury County v. City of Sioux City, 475 N.W.2d 203, 205 (Iowa 1991) (“[W]e are
obligated ‘to interpret statutes in conformity with the common law wherever statutory
language does not directly negate it.’ ” (Citation omitted.)); 2B Norman J. Singer,
Statutes and Statutory Construction § 50:1, at 140 (6th ed. 2000) (“Absent an indication
that the legislature intends a statute to supplant common law, the courts should not
give it that effect.”).
Moreover, in over 130 years of our applying nullum tempus to our statute of
limitations, the legislature has never taken action to abrogate this interpretive approach
or otherwise contradict the doctrine or make the limitation period specifically applicable
to the sovereign. See 2B Singer § 49:10, at 112 (“A number of decisions have held that
legislative inaction following a contemporaneous and practical interpretation is evidence
that the legislature intends to adopt such an interpretation.”). This is, of course, not
conclusive of legislative intent, but it is some evidence. The fact that the legislature has
left the statute of limitations untouched is, however, very persuasive evidence given that
the legislature has been active in taking steps to put the state on the same level as
private litigants by, for example, abrogating the doctrine of sovereign immunity except
as provided in the Iowa Tort Claims Act. See Hawk v. Jim Hawk Chevrolet-Buick, Inc.,
282 N.W.2d 84, 91 (Iowa 1979) (LeGrand, J., dissenting) (“Legislative inaction following
an opinion placing judicial interpretation on a statute is some evidence that the
legislature accepts our view as correct. When the legislative silence continues in an area
of legislative activity, the presumption becomes stronger and stronger as time
advances.”). This discussion, in part, reveals that the doctrine of nullum tempus in Iowa
is actually a rule of statutory construction.
9
Peers’ Estate, 234 Iowa 403, 411, 12 N.W.2d 894, 898 (1944) (“[A]
general statute of limitations does not apply to the State of Iowa.” (citing
Des Moines County, 34 Iowa at 84; Kellogg v. Decatur County, 38 Iowa
524 (1874); Manatt v. Starr, 72 Iowa 677, 34 N.W. 784 (1887))); State ex
rel. Weede v. Iowa S. Utils. Co., 231 Iowa 784, 838, 2 N.W.2d 372,
400 (1942) (“It is well established that neither the plea of laches, nor that
of the statute of limitation is of any avail against the general
government.” (citing Young v. Charnquist, 114 Iowa 116, 86 N.W. 205
(1901))); Perley v. Heath, 201 Iowa 1163, 1165, 208 N.W. 721, 722 (1926)
(“Where an action is brought for the sole benefit of the state, . . . the
defense of the statute of limitations cannot be made.” (Citations
omitted.)); Payette v. Marshall County, 180 Iowa 660, 662, 163 N.W. 592,
593 (1917) (“[S]tatutes of limitations do not operate against the sovereign
or the government, whether state or federal.”).
________________________
We reject the approach of some other courts, see, e.g., Shootman v. Dep’t of
Transp., 926 P.2d 1200, 1205 (Colo. 1996); State ex rel. Condon v. City of Columbia, 528
S.E.2d 408, 413 (S.C. 2000), that have held the abrogation of sovereign immunity alone
was the death knell of nullum tempus. Nullum tempus is an independent doctrine from
sovereign immunity, with independent supporting policy considerations. See Guaranty
Trust Co. v. United States, 304 U.S. 126, 132, 58 S. Ct. 785, 789, 82 L. Ed. 1224, 1228
(1938) (“Regardless of the form of government and independently of the royal
prerogative once thought sufficient to justify it, the rule is supportable now because its
benefit and advantage extend to every citizen, including the defendant, whose plea of
laches or limitation it precludes; and its uniform survival in the United States has been
generally accounted for and justified on grounds of policy rather than upon any
inherited notions of the personal privilege of the king.” (Citations omitted.)); City of
Shelbyville v. Shelbyville Restorium, Inc., 451 N.E.2d 874, 875-76 (Ill. 1983) (“While
sovereign immunity from liability and governmental immunity from statutes of
limitation shared a philosophical origin and have the similar effect of creating a
preference for the sovereign over the ordinary citizen, we do not believe that the
abolition of the first of these doctrines requires abandonment of the second.”); Dep’t of
Transp. v. Sullivan, 527 N.E.2d 798, 800 (Ohio 1988) (“[T]he abolition of sovereign
immunity by R.C. Chapter 2743 and recent decisions of this court did not serve to strip
the state of all the privileges of sovereignty and place it in absolute parity with all other
litigants.”); Dep’t of Transp. v. J.W. Bishop & Co., 439 A.2d 101, 104 (Pa. 1981) (holding
the abrogation of sovereign immunity did not require abrogation of nullum tempus).
10
The same considerations that support immunity from
limitation periods for the state, however, do not necessarily support
immunity for political subdivisions of the state. See Payette, 180 Iowa
at 664, 163 N.W. at 593 (“The county is not the state, and the reasons
upon which the rule ‘nullum tempus occurrit regi’ is supposed to rest have
little or very restricted application to the minor municipalities of the
state.” (citing Perry County v. Selma, Marion & Memphis R.R., 58 Ala. 546
(1877))). Cities and counties are not sovereign bodies, but in many
aspects, are agencies of the state. See Reynolds v. Sims, 377 U.S. 533,
575, 84 S. Ct. 1362, 1388, 12 L. Ed. 2d 506, 535 (1964) (“Political
subdivisions of States—counties, cities, or whatever—never were and
never have been considered as sovereign entities. Rather, they have been
traditionally regarded as subordinate governmental instrumentalities
created by the State to assist in the carrying out of state governmental
functions.”); Mandicino v. Kelly, 158 N.W.2d 754, 758 (Iowa 1968)
(“Political subdivisions of states, such as counties, are not sovereign
entities; they are subordinate governmental instrumentalities created by
the state to assist in carrying out state governmental functions.”
(Citations omitted.)). 4 Thus, a different immunity rule applies to political
subdivisions of the state. See Joseph Mack, Nullum Tempus:
Governmental Immunity to Statutes of Limitation, Laches, and Statutes of
Repose, 73 Def. Couns. J. 180, 188 (2006) (noting that many courts
“extend nullum tempus to political subdivisions on a limited basis,
refusing to grant the immunity unless the suit is on behalf of the
sovereign in a public fashion, rather than in a private or proprietary
4We recognize our home rule doctrine in Iowa gives a county those powers not
reserved by the state. Iowa Const. art. III, § 39A. Yet, this authority to self-govern
those areas not governed by the state does not enervate a county’s role as an agency of
the state.
11
fashion”). This rule provides that the nullum tempus doctrine does
not exempt actions by municipalities and counties in Iowa from a general
statute of limitations unless the action involves a public or governmental
activity, as opposed to a private or proprietary activity. See Chi. & Nw.
Ry. v. City of Osage, 176 N.W.2d 788, 791 (Iowa 1970) (“General statutes
of limitations run against municipalities when they are engaged in
proprietary activities. They only enjoy sovereign immunity from general
limitation statutes when acting in their governmental capacities.”
(Citations omitted.)).
The public-private distinction applicable to counties and
municipalities is easily stated, but like many other rules, is not always
easily applied. The distinction can be difficult to make because, in a
sense, every right to sue possessed by a municipality or a county is a
public right. See City of Chi. v. Chi. & Nw. Ry., 163 Ill. App. 251 (1911)
(“In a sense, every right possessed by a municipal corporation is a public
right, and every class of property held by it is held in its public capacity,
and for public use.”). Thus, most every action by a county or
municipality can broadly be viewed as a public or governmental activity.
See Thomas R. Young, A Morass of Confusion and Inconsistency: The
Application of the Doctrine of Nullum Tempus Occurrit Regi in North
Carolina, 28 Campbell L. Rev. 251, 257 (2006) (“Defining exactly what
one means when declaring a certain action ‘governmental’ as opposed to
‘proprietary’ has not come easily, leading to what one commentator has
termed ‘a morass of confusion and inconsistency.’ ” (quoting William L.
Prosser et al., Torts 626 (8th ed. 1988))).
In Iowa, however, a fairly clear line has been drawn between
governmental and proprietary actions. Early in our judicial development
of the nullum tempus doctrine, we began to focus on the nature and
12
character of the action to determine if the political
subdivision was assisting in the welfare of the state, or merely regulating
its internal affairs for the benefit of those within its own boundaries. In
doing so, we have formed the distinction between public or governmental
activities vis-à-vis private or proprietary activities as a means to
determine if the doctrine of nullum tempus applies to make a subdivision
of the state immune from the general statute of limitations. In Great
Western Insurance Co. v. Saunders, 223 Iowa 926, 932, 274 N.W. 28, 32
(1937), we rejected a claim by a city that it was immune from the general
statute of limitations because it was exercising a governmental function
by bringing a law suit to collect municipal court costs. Instead, we found
the action was proprietary in nature because it merely involved a
collection of a debt that would be placed in the city treasury and used for
the benefit of the public within the city boundaries. Great W. Ins. Co.,
223 Iowa at 932, 274 N.W. at 31-32. Similarly, in Payette, we held that a
county was subject to the statute of limitations because its right of action
benefited only those within the county. See Payette, 180 Iowa at 663,
163 N.W. at 593 (“[W]here the claim made by the county is in its own
right or interest, and not in the interest of the state or general public, the
limitation is applicable to the same extent as if the action were brought
by an individual. . . . The county in this instance is seeking the
enforcement of the Payette judgments, not for the use or benefit of the
state, nor for the use or benefit of the general public of the state, but
solely in its own interest and in the interest of that particular part or
fraction of the public within its local jurisdiction.”). Likewise, in one of
our very early nullum tempus cases, we held that the statute of
limitations did run against the state, because the state was only a
13
nominal party, and the action brought was for the ultimate
benefit of the county. State v. Henderson, 40 Iowa 242, 245 (1875).
On the other hand, when an action by a political subdivision
benefits the state, not just the public within the boundaries of the
subdivision, the nullum tempus doctrine applies, and the county or
municipality is not subject to a general statute of limitation as other
litigants. In another early nullum tempus case extending the doctrine to
political subdivisions, we held that the statute of limitations did not
apply to an action by a county to collect money owed to a “school fund”
because the nature of the action was in effect one by the state. Des
Moines County, 34 Iowa at 86-87. Along the same lines, we held that an
action by a city to remove a squatter from a public street involved the
enforcement of rights that benefited the state because the city was
exercising its authority over streets and highways delegated by the state.
State ex rel. Schlegel v. Munn, 216 Iowa 1232, 1237-38, 250 N.W. 471,
473 (1933). Thus, these cases as a whole reveal that the primary issue
in determining whether a political subdivision is engaged in
governmental or proprietary activity is whether it is seeking to vindicate
rights of the state or the citizens of the state as a whole, as opposed to
only the citizens within its own jurisdiction.
These cases also reveal that the mission behind the doctrine is to
extend immunity from a statute of limitations to a political subdivision
when the subdivision is acting in the nature of an arm or instrumentality
of the state. See Payette, 180 Iowa at 663, 163 N.W. at 593 (stating that
when “the county is to be regarded as a mere arm or instrument of the
state’s sovereignty,” nullum tempus applies, and the county is “therefore
entitled to an exemption from the effect of the statute of limitations”). In
such an instance, the sovereign powers of the state are implicated, and
14
the need to protect rights of the public entrusted to the state comes
into focus. See generally 51 Am. Jur. 2d Limitations on Actions § 86, at
507 (2000) (“An action by a municipality is brought for public purposes
only if it is a municipal action arising out of powers that are traceable to
sovereign powers of the state that have been delegated to the
municipality.”). Thus, the distinction between public or governmental
and private or proprietary does not focus on whether the enforcement of
the right will benefit the public, as opposed to its own corporate
enterprise, but on whether it will benefit the public within the state, not
just the public within its corporate limits.
A-1 asserts it is unnecessary to quibble over the application of the
rule because we have previously determined in one of our early nullum
tempus cases that an action by a county or municipality to collect taxes
does not assert a public or governmental right, and a political
subdivision is therefore subject to the general statute of limitations when
it brings an action to collect taxes. City of Burlington v. B. & M. R.R., 41
Iowa 134, 141 (1875). In City of Burlington, we held that an action by a
city to collect taxes was not an action to assert a public or governmental
right. Id. Instead, we said the city was asserting a proprietary right
when it sought to collect a debt from a taxpayer. See id. (“The right of
the city to maintain this action can only be supported upon the ground
that the taxes are debts, property held by it in its proprietary character.
It appears in this action in that character, claiming to recover on the
ground that the defendant is its debtor upon an obligation created by the
assessment and levy of the taxes. In the debt thus created, it has a right
of property in its proprietary character.”).
However, the City of Burlington case cannot be read as a broad
declaration that the collection of taxes by a city or county is not a public
15
activity under the nullum tempus doctrine. The collection of taxes in
that case was a proprietary activity because of the particular underlying
circumstances. In that case, the city only sought to collect taxes levied
for municipal purposes, something that benefited the city, but not the
state. Id. at 138. Thus, the character of the action was to satisfy its own
proprietary interests, not the public’s interests as a representative of the
state. Id. at 141; see also Fitzgerald v. Sioux City, 125 Iowa 396, 403,
101 N.W. 268, 271 (1904) (holding statute of limitations barred city’s
claim for municipal grading, paving, and curbing taxes); Brown & Sully v.
Painter, 44 Iowa at 368, 369 (1876) (holding statute of limitations ran
against tax-deed-holders in action to recover the price tax-deed-holders
paid for delinquent taxes after the tax deed was declared invalid).
Our cases reveal that the distinction between governmental and
proprietary functions largely depends upon the facts of each case, and it
is dangerous to apply the distinction with broad strokes. Instead, the
true nature and character of the action in each case must be identified.
Many factors can be considered, including any constitutional provisions
or statutes that address the type of powers exercised by a city or a
county in bringing an action, as well as the inherent nature of such
power or the underlying activity engaged in by the subdivision. The
nullum tempus doctrine will apply when the city or county is exercising
powers as an agent of the state to promote the interests of the citizens of
Iowa.
In this case, a portion of property taxes collected by a county goes
to support the public schools within its school districts. See Iowa Code
§§ 257.3(1) (“[A] school district shall cause to be levied each year, with
the school general fund, a foundation property tax equal to $5.40 per
$1000 of assessed valuation on all taxable property in the district. The
16
county assessor shall spread the foundation levy over all taxable
property in the district.”), 257.4(1) (“A school district shall cause an
additional property tax to be levied each year. The rate of the additional
property tax levy in a school district shall be determined by the
Department of Management and shall be calculated to raise the
difference between the combined district cost for the budget year and the
sum of the products of the regular program foundation base per pupil
times the weighted enrollment in the district and the special education
support services foundation base per pupil times the special education
support services weighted enrollment in the district.”); see also Iowa
Dep’t of Revenue, An Introduction to Iowa Property Tax (2006),
http://www.state.ia.us/tax/educate/78573.html (noting that 45% of
property taxes collected in fiscal year 2005 went to K-12 schools); Lori
Reynolds, Skybox Schools: Public Education as Private Luxury, 82 Wash.
U. L.Q. 755, 756 (2004) (“In most states, in spite of the widespread
litigation and legislative reform, the most important single source of
revenue for elementary and secondary schools is still the local property
tax.” (citing Nat’l Ctr. for Educ. Statistics, U.S. Dep’t of Educ., Financing
Elementary and Secondary Education in the States: 1997-98, at tbl. A-1
(1997))). The source of school funding is important because the duty and
authority to educate Iowans rests with the state. The duty of the state to
establish and supervise a state system of education not only has
constitutional origins, but it has been an inherent aspect of state
government from the inception of our state. See Iowa Const. art. IX, § 12
(“The Board of Education shall provide for the education of all the youths
of the State . . . .”). Moreover, a comprehensive statutory scheme exists
that defines the role of the state and the state department of education to
provide a public education to Iowa’s young people. See generally Iowa
17
Code ch. 256. Thus, an action by a county to collect delinquent
property taxes benefits the state school system and helps the state in
carrying out its mission to provide education to Iowans. In this light, the
county, when collecting delinquent property taxes, is engaged in a public
or governmental activity. See 78 C.J.S. Schools and School Districts § 9,
at 46 (1995) (“The financial maintenance of the public schools is the
carrying out of a state, and not a local or municipal, purpose . . . .”). In
assisting the state, the county provides a benefit that extends well
beyond its borders, and its efforts contribute to an important public
mission affecting all of Iowa. Public rights are at stake, which gives rise
to immunity from the statute of limitations that would otherwise prevent
the exercise of those rights.
In summary, we conclude that the district court erred in refusing
to apply the common-law doctrine of nullum tempus occurrit regi and in
holding the statute of limitations ran against the Treasurer in this tax-
collection action. We hold the district court erred in granting summary
judgment to A-1 on the claims for delinquent taxes for the years 1989
through 1996 based on a finding that the claims were precluded by the
statute of limitations.
IV. Tax Sale Certificate
We turn to consider whether the district court properly dismissed
the collection claims for the tax years 1997 to 2001 because the
Treasurer failed to obtain a tax sale certificate prior to instituting its
action. The district court determined the statutory scheme for collecting
delinquent property taxes requires the Treasurer to obtain a tax sale
certificate as a condition precedent to bringing an action to collect taxes
in all cases except those in which the subject parcel is land, and the
Treasurer is unable to offer the land for tax sale. Because the parcel in
18
this case consists of machinery and equipment, not land, the
district court found a tax sale certificate was a condition precedent to an
action for a personal judgment for taxes on the parcel.
As previously noted, the taxation structure in Iowa includes a tax
on real property. Iowa Code § 427.13. The taxation process begins with
the county assessor, who values each item of taxable property in the
county. Id. §§ 441.18–.21. Each taxable item is called a “parcel.” Id.
§ 445.1(4). After the property is valued, the taxpayer has an opportunity
to protest the assessment to the board of review. Id. §§ 441.23, .37. The
department of revenue then equalizes the assessments, id. § 441.47, and
taxing authorities (e.g., cities, counties, school districts, and townships)
establish their budgets based on the valuations in the assessments and
determine the rate of tax, based on the value of the property, needed to
fund their budgets, id. §§ 444.1–.3. The county auditor then delivers a
tax list computing the total amount due, id. § 443.2, to the county
treasurer to collect the taxes, id. § 443.4.
The taxes generally become delinquent if the first installment is not
paid by October 1, and the second installment is not paid by April 1. Id.
§§ 445.36–.37. If the taxes remain delinquent, the treasurer must offer
the parcel at the annual tax sale. See id. § 446.7 (“Annually, on the third
Monday in June the country treasurer shall offer at public sale all
parcels on which taxes are delinquent.”). The purpose of the sale is to
collect the taxes, interest, fees, and costs due by means of the sale of the
parcel to a bidder, or by subsequent redemption. See generally id. chs.
446–48. If a bid is received in an amount equal to the total amount due,
then the sale ultimately provides a means for the treasurer to collect the
delinquent taxes. See id. § 446.16(1) (“The person who offers to pay the
total amount due, which is a lien on any parcel, for the smallest
19
percentage of the parcel, is the purchaser . . . .”). If no person
bids on the parcel, the county treasurer offers it for sale again
periodically (at least every two months) until the next annual tax sale.
Id. § 446.25. If the parcel remains unsold at the time of the next annual
tax sale, the treasurer then offers the parcel at the “public bidder sale,”
formerly known as the “scavenger sale.” Id. § 446.18. If no person bids
on the parcel at the public bidder sale, or the only bid received is for less
than the total amount due, “the county in which the parcel is located,
through its county treasurer, shall bid for the parcel a sum equal to the
total amount due.” Id. § 446.19. In this way, the treasurer becomes the
purchaser, and receives a tax sale certificate. Id. § 446.29. This
certificate allows the county to pursue many avenues, including
assigning the certificate, id. § 446.31, entering into a compromise or
abatement agreement, id. § 445.16, or assigning the certificate for
redevelopment of the parcel as housing in exchange for the amount due,
id. § 446.19A. Alternatively, the owner of the parcel may redeem the
parcel by paying the total amount due. Id. § 447.1. If the parcel is not
redeemed, the county may acquire title to the parcel through a tax deed.
Id. § 448.1. The county can then sell the property or dispose of it as
provided in section 331.361. Id. § 446.19A(4)(b).
Additionally, the county may pursue an action to convert the
amount due into a personal judgment against the parcel’s owner. See id.
§§ 445.3 (“In addition to all other remedies and proceedings now
provided by law for the collection of taxes, the county treasurer may
bring or cause an ordinary suit at law to be commenced and prosecuted
in the treasurer’s name for the use and benefit of the county for the
collection of taxes . . . .”), 446.20(1) (“Without limiting the county’s rights
under section 445.3, once a certificate is issued to a county, a county
20
may collect the total amount due by the alternative remedy provided
in section 445.3 by converting the total amount due to a personal
judgment.”). The tax-sale-certificate remedy and the personal-judgment
remedy may be pursued simultaneously until the total amount due has
been collected. Id. § 446.20(1).
However, as a condition precedent to pursuing the personal-
judgment remedy, normally, a tax sale certificate must first be issued.
See id. (stating a county may pursue a personal judgment “once a
certificate is issued” (emphasis added)); id. § 445.3 (“The commencement
of actions for ad valorem taxes authorized under this section shall not
begin until the issuance of a tax sale certificate under the requirements
of section 446.19.”). Thus, in order to obtain a personal judgment based
on delinquent property taxes, a treasurer must usually (1) offer the
parcel at the annual tax sale to collect the amount due, id. § 446.7; (2)
re-offer the parcel at least every two months until the next annual tax
sale (i.e., for one year), id. § 446.25; (3) offer the parcel at the public
bidder sale, id. § 446.19; and (4) bid the total amount due and obtain a
tax sale certificate, id. §§ 446.19, .29. Obviously, this can be a lengthy
process.
However, there is an exception to the requirement for the treasurer
to first obtain a certificate of sale before pursuing an action under
section 445.3. Section 445.3 provides:
Notwithstanding any other provisions in this section, if
the treasurer is unable or has reason to believe that the
treasurer will be unable to offer land at the annual tax sale
to collect the total amount due, the treasurer may
immediately collect the total amount due by the
commencement of an action under this section.
Id. § 445.3, para. 5. The district court read this exception as limited to
situations when the parcel consists of land that the treasurer is unable
21
to offer for sale at the annual tax sale. We think the exception has
broader application for two reasons.
First, the land limitation found by the district court is not derived
from the language of the statute. Instead, the limitation was created by
the district court from a presumption that the statutory language
concerning the inability “to offer land at the annual tax sale” means the
land must first exist. However, this presumption overlooks that a parcel
subject to taxation as real property can be not only land, but equipment,
machinery, computers, and many other types of property. See id.
§ 427A.1 (listing items of property taxed as real property); see also 1984
Op. Iowa Att’y Gen. 125 (“Given that real property taxes constitute a lien
against the assessed real property of a manufacturing real property unit,
any such delinquent taxes can be satisfied by the chapter 446 tax sale.
Depending upon the circumstances, the county treasurer may be able to
collect delinquent taxes attributable to the machinery by sale of the
machinery only.”). Given the broad definition of “real property” for
purposes of taxation, it is possible for an item of “real property” that is
not land to be assessed as a parcel separate from the land on which it
sits. Each parcel would then be separately taxed. Therefore, taxes on
the “non-land” parcel could become delinquent without the land parcel
also becoming delinquent. In this situation, the treasurer would be in a
position to offer the non-land parcel at tax sale, but would be “unable to
offer land at the annual tax sale to collect the total amount due.” Id.
§ 445.3, para. 5.
This situation may commonly occur in the case of leased land,
where the landowner remains responsible for paying the property taxes
on the land. See id. §§ 445.5(5) (stating the treasurer “shall deliver” the
statement of taxes due to the titleholder of the land); 445.5(2) (stating the
22
lessee, mortgagee, contract- purchaser, or financial institution
is entitled to a statement of taxes due “upon request”). It would not be
uncommon for a business owner to lease a building and land to operate
a business, but own the machinery, equipment, or computers located in
the building. Conversely, a business owner could own the building and
land and lease the machinery, equipment, and computers from another
person or entity. In both situations, the land and non-land real property
would have separate owners, and the property would be separately taxed.
Consequently, there would be separate parcels that could ultimately be
offered at a tax sale in the event of a delinquency.
This analysis reveals that a county treasurer is unable to sell land
at a tax sale when the parcel consists of real property other than land,
such as equipment, machinery, or computers. See id. § 445.3, para. 5
(“Notwithstanding any other provisions in this section, if the treasurer is
unable or has reason to believe that the treasurer will be unable to offer
land at the annual tax sale to collect the total amount due, the treasurer
may immediately collect the total amount due by the commencement of
an action under this section.”). Thus, the exception under the statute is
not limited by its language to situations in which the parcel is land. The
language itself applies to situations in which the parcel offered for sale
does not consist of land. This is the precise situation in this case.
Second, the exception would serve little purpose under the
interpretation by the district court. There is no readily apparent reason
why a county treasurer should be allowed to bypass the tax-sale-
certificate procedure in the case of land but not in the case of non-land
real property parcels. Conversely, it is clear why the legislature would
want to bypass the tax-sale-certificate procedure for non-land parcels
but not for land. A treasurer does not bid on a parcel, and obtain a tax
23
sales certificate for the parcel, until the parcel has been previously
offered at a tax sale for one year or more and remains unsold for want of
bidders. Id. § 446.18-.19. Thus, a substantial amount of time can pass
between the offer of a parcel at a tax sale and the issuance of a certificate
of sale to the county, which then enables the treasurer to bring a
collection action. This passage of time would normally have a greater
adverse impact on the value of equipment, machinery, and computers
than on land. Equipment, machinery, and computers can depreciate in
value much more rapidly than land. This type of property has a limited
life, while land does not. Moreover, land is a finite resource, so it always
has value. Thus, when a parcel does not include land, it is logical and
reasonable to allow the treasurer to dispense with the tax-sale
requirements and immediately proceed to file an action to collect the
amount due. Without the exception, a treasurer could very well invest
great time and effort into obtaining a tax sale certificate on a non-land
parcel only to end up with the county getting title to a worthless piece of
property in the end. This cannot be what the legislature intended.
We conclude a county treasurer may maintain an action to collect
a delinquency on a parcel without first obtaining a certificate of sale
when, as in this case, the parcel does not include land. Id. § 445.3, para.
5. When a treasurer is not able to sell land at a tax sale to collect
delinquent taxes on a parcel, or when the treasurer reasonably believes
the treasurer will be unable to sell land, the treasurer may immediately
commence an action to collect the amount due on the parcel. Id. The
district court erred in granting summary judgment for A-1 on this issue.
V. Remaining Issues
The district court determined the defense of laches could not be
applied in this case, and that the defense of estoppel was not amenable
24
to adjudication because of the existence of disputed facts.
However, it did not address the viability of the remaining defenses
asserted by A-1.
Generally, error is not preserved for appeal on issues submitted to
the district court but not decided, if the appellant failed to file a posttrial
motion requesting the court to rule on the matter. Teamsters Local Union
No. 421 v. City of Dubuque, 706 N.W.2d 709, 713 (Iowa 2005). Under
this rule, the Treasurer failed to preserve error on those issues not
decided by the district court. Thus, we will not discuss A-1’s defenses at
his request.
However, there is another legal principle that permits us to review
the viability of the remaining defenses. We may uphold a district court
ruling on appeal on grounds not relied upon by the district court if the
grounds were presented to the district court. DeVoss v. State, 648
N.W.2d 56, 61 (Iowa 2002). Here, A-1 asserted all of its defenses in
support of its motion for summary judgment, but the district court only
relied upon the statute-of-limitations and tax-sale-certificate defenses.
A-1 now seeks affirmance based on the defenses not relied upon by the
court. Thus, we must proceed to determine if we can uphold, or partially
uphold, the summary judgment based upon the other defenses asserted
by A-1.
A. Effect of Iowa Code Section 427A.10 on Tax Years Prior to
July 1, 1994
A-1 claims we can partially uphold the summary judgment
because the property assessed by the Treasurer was not subject to
taxation for the tax years prior to July 1, 1994. It claims the legislature
repealed the tax on personal property during this period of time.
However, A-1’s reliance on the legislative changes regarding Iowa
25
property tax from 1987 to 1995 is misplaced. In 1985 the legislature
amended section 427A.10 to repeal personal property taxes after July 1,
1987. 1985 Iowa Acts ch. 32, § 105 (codified at Iowa Code § 427A.10
(1987)). Then in 1994 this section was repealed, 1994 Iowa Acts ch.
1173, § 42, and in 1995 the legislature passed “An Act Relating to
Nonsubstantive Code Corrections” and enacted, inter alia, new section
427A.2, see S.F. 87, 76th G.A., Reg. Sess. § 33 (Iowa 1995). Section
427A.2 affirmatively repealed the personal property tax in Iowa. 1995
Iowa Acts ch. 67, § 33 (codified at Iowa Code § 427A.2 (1997)). Whether
in 1987, 1995, or any time between or after those dates, however, all
tangible property defined as real property under section 427A.1 was
subject to taxation. See, e.g., Iowa Code § 427A.1 (1987). The personal
property not subject to taxation was only that tangible property not
defined as real property under section 427A.1. Id. This factual
argument is not before us.
B. Prospective Application of Personal-Judgment Remedy
Prior to 1992, a claim for delinquent taxes in Iowa was only in rem.
Hiskey v. Maloney, 580 N.W.2d 797, 799 (Iowa 1998). Such claims could
not become a personal obligation of any person. Id. In 1992, our
legislature amended sections 445.3 and 446.20 to create an action for
personal judgments. 1991 Iowa Acts ch. 191, § 28. The statutes became
effective on April 1, 1992. Id. A-1 argues this statutory amendment only
applies prospectively, and taxes levied prior to April 1, 1992, the effective
date of the statute, cannot be converted to a personal judgment against
A-1.
In Hiskey, we held that sections 445.3 and 446.20(1) “do not apply
to delinquent taxes included in tax sale certificates acquired by a county
prior to April 1, 1992.” 580 N.W.2d at 799. We reasoned that because
26
section 445.3 created a new personal liability, it could not be
applied retroactively. Id. (citing Iowa Code § 4.5 (“A statute is presumed
to be prospective in its operation unless expressly made retrospective.”)).
The Hiskey holding is not directly apposite to this case. In Hiskey, the
dispute concerned taxes that were both levied, and for which a tax sale
certificate was issued, before the effective date of the statutes. Id. at 797.
In contrast, in this case, the tax sale certificate was acquired after the
effective date of the statutes, but the 1989-1992 taxes were levied before
the effective date of the statutes. A-1 urges us to answer the question we
left open in Hiskey: “whether the statutes are inapplicable to all
delinquent real estate taxes levied before their effective date (April 1,
1992).” Id. at 799. Although we determined the personal judgment
statutes applied prospectively in Hiskey, we did not decide which event
was relevant in the prospective application of the statute. A-1 claims the
relevant event is the date the delinquent taxes were levied, while the
Treasurer claims the personal judgment statutes apply to delinquent
taxes levied prior to 1992 as long as the tax sales certificate was issued
after 1992. We left the question open in Hiskey, because it was not
necessary to the decision, given that both events occurred before 1992 in
that case.
In deciding this question, we turn to the underlying rationale that
led us in Hiskey to declare that the statute operates prospectively.
Statutes that create new rights or obligations, such as personal liability
for property taxes, are applied prospectively “as a matter of fairness, so
that people have opportunities to know what the law is and to conform
their conduct accordingly.” 2 Norman J. Singer, Statutes and Statutory
Construction § 41:4, at 396–97 (6th ed. 2001 rev.); see also id. § 41:2, at
375–76 (“It is a fundamental principle of jurisprudence that retroactive
27
application of new laws is usually unfair. There is general consensus
that notice or warning of the rule should be given in advance of the
actions whose effects are to be judged. The hackneyed maxim that
everyone is held to know the law, itself a principle of dubious wisdom,
nevertheless presupposes that the law is at least susceptible of being
known. But this is not possible concerning law that has yet to exist.”).
Prior to 1992, property owners in Iowa felt secure in the law that
delinquent property taxes levied on real estate could not be converted
into a personal judgment against the person. When the law was changed
in 1992, this security was lost. From that point in time, a delinquency in
taxes levied on real estate could result in a personal judgment. Yet,
having found in Hiskey that the personal judgment statute must only be
applied prospectively, it is clear that the purpose of the prospective
application could only be served by using the time when the tax was
levied as the commencement date of the statute for the purposes of
applying it prospectively. It would be unfair to apply the statute
prospectively, but then allow it to reach back in time to collect delinquent
taxes levied prior to the effective date of the statute by obtaining a tax
sale certificate after the effective date of the statute. The important event
is when the tax becomes an obligation. When this occurs, a property
owner deserves to know whether or not the obligation can result in a
personal judgment. Property owners knew prior to 1992 that the
obligation to pay taxes levied on property could not be collected as a
personal judgment. This is the important event that prospective
application of the statute was intended to protect. It would be contrary
to the rationale supporting prospective application of this statute to
permit a county treasurer to circumvent the prospective operation of this
statute and make ancient taxes the basis of a personal judgment after
28
the effective date of the statute by merely obtaining a tax sale
certificate after the effective date of the statute. The operative action of
the taxpayer—nonpayment of taxes—occurred prior to the effective date
of the statute. Thus, today we take the next logical step from Hiskey and
hold that a county treasurer may not obtain personal judgments against
defendants for taxes levied before the effective date of the personal
judgment statute, April 1, 1992. 5
C. Equitable Estoppel
Finally, we turn to consider the claim by A-1 that the Treasurer
was estopped to collect delinquent taxes on the property under the
defense of equitable estoppel. A-1 claimed that the Treasurer was
estopped to collect taxes because it failed to provide A-1 with adequate
notice of the assessment and an opportunity to provide information to
contest it at the time.
The Treasurer, in its motion for summary judgment, argued this
defense was not available in an action at law, and it did not apply to
statutory tax collection actions. See 31 C.J.S. Estoppel and Waiver
§ 176, at 668 (1996) (“Taxation being a governmental rather than a
proprietary function, ordinarily there can be no estoppel against a
government or governmental agency with reference to the enforcement of
taxes; and statutory tax collection procedure should not be frustrated
through the application of the doctrine of equitable estoppel.”). The
district court denied the Treasurer’s motion for summary judgment on
5
Under this standard, the summary judgment granted by the district court
would be proper for those tax years in which the taxes were levied prior to April 1,
1992. Under the evidence, this would include the tax claims from 1989 and 1990.
However, the parties did not have the benefit of our ruling at the time of the summary
judgment proceedings to determine when the taxes for the years 1991 and 1992 were
actually levied. On remand, we leave it for the district court to determine which claims
for delinquent taxes were levied prior to April 1, 1992 and to enter judgment
accordingly.
29
this point, holding there were genuine issues of material fact on
whether the Treasurer “had the duty to collect information from [A-1]
concerning this equipment and whether [the Treasurer] provided notice
to [A-1] concerning the accrual of these alleged taxes.” See Markey v.
Carney, 705 N.W.2d 13, 21 (Iowa 2005) (listing elements of equitable
estoppel as: “ ‘(1) a false representation or concealment of material facts;
(2) lack of knowledge of the true facts on the part of the actor; (3) the
intention that it be acted upon; and (4) reliance thereon by the party to
whom made, to his prejudice and injury’ ” (quoting ABC Disposal Sys.,
Inc. v. Dep’t of Natural Res., 681 N.W.2d 596, 606 (Iowa 2004))). The
Treasurer seeks reversal of this ruling on appeal.
“We have consistently held equitable estoppel will not lie against a
government agency except in exceptional circumstances.” ABC Disposal
Sys., Inc., 681 N.W.2d at 607 (citing Bailiff v. Adams County Conference
Bd., 650 N.W.2d 621, 627 (Iowa 2002)). We have explained that “[a]
person seeking to invoke the doctrine of equitable estoppel against a
government body ‘bears a heavy burden, particularly when the
government acts in a sovereign or governmental role rather than a
proprietary role.’ ” Id. (quoting Bailiff, 650 N.W.2d at 627). The
“exceptional circumstances” under which equitable estoppel will lie
against the government include instances when, “in addition to the
traditional elements of estoppel, the party raising the estoppel proves
affirmative misconduct or wrongful conduct by the government or a
government agent.” 28 Am. Jur. 2d Estoppel and Waiver § 140, at 559
(2000).
To determine the viability of this defense, we must examine the
specific grounds upon which it is based. In resisting the Treasurer’s
motion for summary judgment, A-1 explained that its equitable estoppel
30
defense was based on the failure of the Davenport city assessor’s office
“to communicate with Alvin W. Roggenkamp to obtain information upon
which to obtain a valid tax assessment.” It claimed the city assessor’s
conduct could be imputed to the Treasurer because the assessor acts as
an agent.
Even assuming the truth of A-1’s factual allegation, and the legal
validity of its vicarious-liability theory, A-1’s equitable estoppel defense
fails as a matter of law. A failure by the assessor to communicate with
A-1 does not establish “ ‘a false representation or concealment of
material facts,’ ” Markey, 705 N.W.2d at 21 (quoting ABC Disposal Sys.,
Inc., 681 N.W.2d at 606), let alone an “exceptional circumstance” that
would allow the application of equitable estoppel against the government,
see ABC Disposal Sys., Inc., 681 N.W.2d at 607 (“We have consistently
held equitable estoppel will not lie against a government agency except in
exceptional circumstances.” (Citation omitted.)). This defense is not
available to A-1 in this proceeding as a matter of law.
D. Attorney Fees
A-1 requests the case be remanded to the district court for
consideration of common law attorney fees for defending the action in
district court and on appeal. Alternatively, A-1 requests an award for
appellate attorney fees.
There is no statute providing for attorney fees in a tax-collection
action, so any award would have to be for common-law attorney fees.
See Capital Fund 85 Ltd. P’ship v. Priority Sys., LLC, 670 N.W.2d 154,
160 (Iowa 2003) (“We have repeatedly stated that, as a general rule in
Iowa, attorney fees are not allowed in the absence of a statute or contract
authorizing such an award.” (Citations omitted.)); Hockenberg Equip. Co.,
510 N.W.2d at 158 (“A party generally has no claim for attorney fees as
31
damages in the absence of a statutory or written contractual
provision allowing such an award. Courts have recognized a rare
exception to this general rule, however, ‘when the losing party has acted
in bad faith, vexatiously, wantonly, or for oppressive reasons.’ ”
(Citations omitted.)). The standard for an award of common-law attorney
fees is as follows:
A plaintiff seeking common-law attorney fees must
prove that the culpability of the defendant’s conduct exceeds
the punitive-damage standard, which requires “willful and
wanton disregard for the rights of another.” Instead, “such
conduct must rise to the level of oppression or connivance to
harass or injure another.” Put another way, the standard
“envisions conduct that is intentional and likely to be
aggravated by cruel and tyrannical motives.”
Wolf, 690 N.W.2d at 896 (quoting Hockenberg Equip. Co., 510 N.W.2d at
159–60).
Our resolution of this case on appeal reveals any claim for attorney
fees is inappropriate. This case is far removed from the rare exception to
the general rule against an award for attorney fees. Accordingly, we deny
the request for appellate attorney fees made by A-1. Additionally, a claim
for trial attorney fees is untimely when made for the first time on appeal.
See Meier v. Senecaut III, 641 N.W.2d 532, 537 (Iowa 2002) (“It is a
fundamental doctrine of appellate review that issues must ordinarily be
both raised and decided by the district court before we will decide them
on appeal.”).
VI. Conclusion
The district court erred in granting summary judgment to A-1,
except with respect to the Treasurer’s claim for a personal judgment on
taxes levied prior to April 1, 1992. We reverse the decision of the district
court and remand the case for further proceedings.
32
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
All justices concur except Carter, J., who concurs in result only.