City Loses Unused Property to Residents

On December 5, 2018, the Iowa Court of Appeals issued a decision regarding the ownership rights of land located in Clayton County. The court held that the City of Garber was estopped from asserting ownership over the property because it never developed, used, or maintained it; the previous owners had acquired it through adverse possession; and the current owners would suffer unfair damages if they gave up the property.

Background

In 1873, the City of East Elkhart was platted. The original platting documents included a Fifth Street on the western edge of the city. Fifth Street is the property at the center of this case. It has never been used as a street, graded, drained, surfaced, or cared for by the City.

In 1901, a majority of Fifth Street was vacated by the district court along with other parts of the original plat. In 1904, the City was renamed the City of Garber and was incorporated. Today, Garber has fewer than 100 residents. Garber’s original incorporation documents included only the borders of the incorporated area. There is no record of a platted Fifth Street since the 1873 plat.

In 1959, a family purchased property at 501 Fifth Street, which was thought to include Fifth Street itself. This was the only property located on Fifth Street. They accessed their property through a driveway at the end of an alley. The family used Fifth Street to plant a garden, place their septic system, and plant trees. The family openly used this land to farm and even grew native wildflowers as part of a Farm Service Agency program.

In 2012, the plaintiffs purchased the property. After closing, the bank found that the legal description and the county plat conflicted. The plaintiffs asked the City of Garber for a quit claim deed. Garber refused and instead claimed ownership of the street.

Trial Court

The plaintiffs brought suit against Garber in Clayton County District Court. Garber counterclaimed for quiet title of Fifth Street. Before this action was brought, neither the original owners nor the city council members knew Fifth Street was platted. There is no record of a platted Fifth Street since the City’s incorporation.

Garber does not have any intention of using the street, but claimed it needed the street for fire protection, EMS calls, and utility access. At one point the County had attempted to have the City install a water or sewer system, but no action was taken after a major flood in 2004.

In August of 2017, the district court found in favor of the plaintiffs. The court found the plaintiffs had proven an equitable estoppel claim and were entitled to the land. Garber appealed the ruling and the case was heard by the Court of Appeals. 

Equitable Estoppel

The doctrine of equitable estoppel prevents a party from unfairly profiting from another party. To prove equitable estoppel in property disputes, the claimant must show abandonment, ownership through adverse possession, and unfair damage to the claimant.

The element of abandonment requires proof that the land has not been used for more than ten years and an intent to abandon. Here, the court found that the land had never been used by the City therefore meeting the ten years requirement. In regards to the intent element, the court acknowledged that “the failure of a small town to improve a street ‘before public convenience requires it,’ will not amount to either an abandonment or an estoppel.” Stecklein v. City of Cascade, 693 N.W.2d 335, 345 (quoting Keuhl v. Town of Bettendorf, 161 N.W. 28, 31 (Iowa 1917)). However, the court found the elimination of Fifth Street from any plats since the city’s incorporation and the lack of action to assert any right or ownership to Fifth Street would qualify as abandonment.

To prove adverse possession, the claimant must show they in good faith had continuous, hostile, actual, open, and exclusive possession for at least ten years. Between the plaintiffs and the prior owners, there was nearly sixty years of ownership. Both the current and previous owners had cared for the land and treated Fifth Street the same as their own property. Once the plaintiffs learned Fifth Street was not included in the purchased land, they immediately began to acquire the land in good faith.

Finally, to prove equitable estoppel, claimants must show they suffered unfair damages due to the opposing party’s action. The plaintiffs in this case bought the property in good faith believing Fifth Street was included in the sale. This error was not realized until after the sale had closed. Because of these facts, the Court of Appeals found it would cause unfair damage to the plaintiffs if they were forced to give up Fifth Street after they thought they had purchased it.

Conclusion

Here, the elements of equitable estoppel were met. In the hundred years since the City’s incorporation, it had made no effort nor showed intent to develop Fifth Street. The original owners treated the property as the own and met all the elements of adverse possession. Additionally, depriving the plaintiffs of Fifth Street would cause them to suffer unfair damages. Therefore, title of Fifth Street was given to the plaintiffs.