Burlington and Summit Apts. v. Manolato

I am unable to concur in the majority opinion herein and respectfully dissent from the conclusion reached in division III thereof.

The question there decided is stated thus: "Is the provision of section 6432 that no rent is recoverable where a certificate of conformity has not been issued an unreasonable, arbitrary, and oppressive exercise of the police power, in violation of due process?" The majority answer the question in the negative. Asapplied to the record herein, I would answer in the affirmative.

One difficulty presented by the record herein is that the question comes before us on the pleadings. The facts are not fully stated. They are left largely to inference. The picture is somewhat obscure. The question becomes more difficult accordingly.

At the outset, I do not think that it is necessary to determine whether or not section 6432 of the Code is unconstitutional as written, if applied to a situation coming reasonably within the contemplation of the terms used. For the purposes of this dissent, I would assume that the statute is constitutional. I do not think that such concession, however, means that the effect appellant seeks to give to the statute should be sustained by this court. The facts here before us present, in my judgment, an extreme case and, when we limit ourselves to the facts before us, I think the trial court was right.

It is difficult to find an analogous situation. The thought I wish to express seems to be illustrated by the case of St. Louis, I.M. S.R. Co. v. Wynne, 224 U.S. 354, 359, 32 S. Ct. 493, 494,56 L. Ed. 799, 42 L.R.A., N.S., 102. In that case, the railroad was sued in the courts of Arkansas and, pursuant to an Arkansas statute, judgment was entered for double the amount of damages awarded by the jury, together with an attorney's fee. (90 Ark. 538, 119 S.W. 1127, 17 Ann. Cas. 631.) On appeal to the Supreme Court of the United States, the judgment was reversed, the court holding that, although the judgment was entered in accordance with the letter of the Arkansas statute, as applied to the facts of that case, the railroad was deprived of its property without due process of law because the demand made upon it was excessive, the supreme court stating:

"We think the conclusion is unavoidable that the statute, as so construed and applied, is an arbitrary exercise of the powers of government and violative of the fundamental rights embraced within the conception of due process of law. It does not merely provide a reasonable incentive for the prompt settlement, without suit, of just demands of a class admitting of special treatment by the legislature, as was the case with the statute considered in Seaboard Air Line Railway Co. v. Seegers, 207 U.S. 73 [28 S. Ct. 28, 52 L. Ed. 108], but attaches onerous penalties to the non-payment of extravagant demands, thereby making submission to them the preferable alternative. Thus, it takes property from one and gives it to another, not because of a breach by the former of a duty to the latter or to the public, but because of a lawful exercise of an undoubted right. Plainly this cannot be done consistently with due process of law."

The foregoing decision was expressly followed by this court in the case of Pierce v. Chicago N.W.R. Co., 180 Iowa 1385,164 N.W. 182 (superseding 157 N.W. 141). In that case, the plaintiff's colt was killed by one of defendant's trains in consequence of defendant's failure to maintain a sufficient fence along its right of way. Acting pursuant to section 2055 of the Code of 1897, plaintiff served a notice and affidavit on the defendant within thirty days fixing the value of the colt at $200 and, payment being refused, suit was instituted. The jury fixed the value of the colt at $190. Pursuant to said section 2055, similar to the Arkansas statute above referred to, judgment was entered for $380. On appeal, the judgment was reversed, this court stating, at page 1387 of 180 Iowa, page 183 of 164 N.W., as follows:

"The statute has been upheld as constitutional (Minneapolis St. L.R. Co. v. Beckwith, 129 U.S. 26 [32 L. Ed. 585]), and evidently was enacted to assure to the owners of live stock prompt payment of actual damages for the loss or injury thereof consequent on the failure of railroad corporations to maintain a sufficient fence along their right of ways. Nothing contained therein, however, evidences a purpose of aiding the owner to exact anything in excess of the reasonable value of stock destroyed or the fair remuneration for injuries done. The object is to induce prompt, not excessive, payment. The fair implication is that the amount demanded in order to exact payment within 30 days, is the fair and reasonable measure of the loss or injury suffered, and if more is claimed, the penalty of doubling the damages will not be enforced. In refusing to pay an excessive claim, the company is guilty of no wrong. On the contrary, it is to be commended for not paying it and thereby encouraging efforts at extortion."

This court quoted with approval the statement above quoted from the case of St. Louis, I.M. S.R. Co. v. Wynne, supra, referred to other authorities along the same line and concluded, at pages 1390, 1391 of 180 Iowa, page 183 of 164 N.W., as follows:

"These decisions seem conclusive on the proposition that to penalize defendant on its failure to satisfy the demand in the notice and affidavit, found by the jury to have been excessive, by enforcing payment of double the actual damages, would be taking property without due process of law, and denying defendant the equal protection of the law, as exacted by the Fourteenth Amendment to the Constitution of the United States. * * * To hold otherwise would, as we think, and as held in the cases from which we have quoted, punish the defendant for no breach of duty, and thereby deny it the equal protection of the law, and take its property without due process of law. It follows that the motion for judgment for the actual damages, as found by the jury, or $190, should have been sustained."

It will be noted that in the Pierce case, supra, this court recognized that section 2055, Code, 1897, had been held to be constitutional. By the same token, the Arkansas statute was constitutional. However, in the Wynne case, the supreme court held that the statute, "as so construed and applied" by the Arkansas court, was an arbitrary exercise of the powers of government and a denial of due process of law. Such is the holding of this court in the Pierce case. Similarly, granting that section 6432, Code, 1939, is constitutional, nevertheless, as construed and applied by the majority opinion to the facts here before us, it constitutes an arbitrary exercise of the powers of government in violation of due process of law.

The purpose of section 6432 is to secure compliance with the Housing Law, to declare premises which do not comply with the law to be "unfit for human habitation," to make it unlawful to occupy them and to make any rent therefor uncollectible. In the pleadings before us, there is no allegation that the requirements of the Housing Law have not been met. There is no allegation that the premises are in fact unfit for human habitation because of violation of the Housing Law. The only violation of that law asserted is the rather indefinite statement that plaintiff and its assignors in title failed and refused to procure the issuance of a certificate that the apartment building conformed to the requirements of chapter 323 of the Code, as required by section 6431. The word "certify" is defined in the new Century Dictionary as to "give certain or reliable information of; vouch for; also, to testify to or vouch for in writing." In other words, the certificate is evidence that the law has been complied with. The compliance with the law as to the housing requirements is the substance of the matter. The issuance of the certificate is a matter of form vouching for the substance of the inquiry. The majority opinion seizes upon this matter of form and makes it the basis for confiscating the plaintiff's rent.

It is asserted in the answer that the apartment house was constructed in the year 1926, and it is admitted in the answer that the lease related to a term beginning September 20, 1941, fifteen years after the building had been erected. The answer does not allege who owned the building when it was constructed. The inference seems to be inescapable that plaintiff's "assignors in title" or some of them erected the building and that plaintiff acquired the property after it had been erected. Accordingly, there is no basis for saying that the plaintiff was guilty of any violation of the law in connection with the construction of the building, nor is it asserted that the building was not constructed strictly in accordance with the Housing Law. The statute provides for annual inspections. It may be reasonable to assume that the inspections are made and that, were the law not complied with, plaintiff would not be permitted to operate the building. Accordingly, there is nothing alleged in the answer to warrant a finding that the building is not constructed and maintained in accordance with the standards fixed by the Housing Law. Every legitimate inference is that the building was so constructed and is so maintained.

Thus, we come to the narrow question whether the fact that the former owner of the building, some fifteen years prior to the execution of defendant's lease, neglected to procure a certificate of compliance works a forfeiture and confiscation of the rent of this apartment building. In line with the holding in the Wynne case, which was approved and followed by this court in the Pierce case, I think the conclusion is unavoidable that, when the statute is so construed and applied, it is an arbitrary exercise of the powers of government, an unreasonable and improper exercise of the police power which constitutes the taking of property without due process of law. The confiscation of plaintiff's rent is not justified by any of the facts stated in the answer. There is no basis for saying that the failure to get the certificate was a failure of the plaintiff. The only logical inference is that the oversight was the act of someone other than the plaintiff. For aught that appears from the answer, plaintiff has been guilty of no wrongful act, no willful disregard of the provisions of the statute, and apparently is the victim of an oversight occurring perhaps years before it had acquired title to the property and concerning which it had no information, knowledge, or warning. The statute is clearly penal in character. Such being the case, it must be strictly construed. Clark v. American Express Co., 130 Iowa 254, 258, 106 N.W. 642, and cases cited therein.

In view of the foregoing considerations, I think the trial court was right in holding that to forfeit plaintiff's rent under the allegations of the answer would amount to denial of due process of law. I would affirm.

WENNERSTRUM, C.J., joins in this dissent.