Tax Sales, Treasurer’s Deeds and Coal Mining

This case stems from a change in the coal-mining industry in Iowa.  Here, an Iowa coal mining company and the county where the mining operation was located had strained business relations for several decades. When the coal mining industry became less lucrative as competition grew in the mid-1980’s, the mining company attempted to add new business ventures, such as a landfill operation, to their strip mining activities. Despite state approval for their new business ventures, the county enacted a zoning ordinance in the 1980’s to make the new ventures impossible and a lengthy takings battle ensued. During that time, the coal mining company stopped paying real estate taxes on two parcels of land situated in the county. The county moved to satisfy the tax liens by sale of the parcels at public auction in 1994. The county received no bidders at the public sale. Thus, the county itself bid on the parcels for the amount owed and acquired the tax certificates. The county took no further action until 2005 when they obtained a treasurer’s tax deed on the parcels. The county served the mining company with a 90-day notice of redemption in February of 2005. The mining company claimed that it never received notice from the county that the parcels were sold in 1994.

At the time, the coal mining company was in negotiations with the Iowa DNR to complete the sale of one of the parcels. The company was able to redeem that parcel of property and paid the associated taxes, penalties, and interest to the county to preserve their right to sell to the DNR. The mining company attempted to block the issuance of a treasurer’s deed to the county on the other parcel. The company applied for  temporary and permanent injunctions against the county, claiming that the county was self-dealing in issuing itself the deed, that the redemption amount for the parcel was excessive and unfair, and that the court order reimbursement for overpayment of interest and penalties for the redeemed property. 

At trial, the court ordered that the county would be unjustly enriched if it was allowed to collect interest and penalties from 1994 to 2008 for the unredeemed property. But, the court also ordered that the coal company should not be reimbursed for the payment of interest and penalties on the redeemed property. The trial court noted that the coal company, based upon their previous contentious relationship with the county, was entitled to some relief on the property tax issue. 

On appeal, the county contended that the trial court’s finding ignored state law for collecting unpaid property taxes and that the ruling would set a bad precedent. The Iowa Court of Appeals addressed the issue of unjust enrichment and whether it would be unjust to allow Monroe County to obtain the benefit of payment of interest and penalties on the unredeemed parcel in this case over such a long time period.  The court noted that the company intentionally decided to stop paying their property taxes on both parcels of land, and that the evidence showed that they had numerous opportunities and notices to pay the tax and redeem the property.  Furthermore, a county is required under Iowa Code §446.19 to bid at a tax sale for the parcel in the amount of tax due when no bid is received. The county was not legally required to take any action to seek a treasurer’s deed and the mining company never questioned the fact that they were not receiving delinquent tax notices on the property. The court found that the county would not be unjustly enriched by requiring the mining company to pay what they owed, along with penalties and interest. Iowa Coal Mining Co. v. Monroe County, No. 0-058/09-0403, 2010 Iowa App. LEXIS 377 (Iowa Ct. App. May 12, 2010).