# Holzhauser v. Iowa State Tax Commission > Supreme Court of Iowa · December 15, 1953 · 245 Iowa 525 URL: https://www.frixlaw.com/law-library/cases/9656108 ## Case - **Full name:** Denver Holzhauser, Appellee, v. Iowa State Tax Commission, Appellant; Lewis Walker, Appellee, v. Iowa State Tax Commission, Appellant - **Court:** Supreme Court of Iowa - **Decided:** December 15, 1953 - **Citations:** 245 Iowa 525; 62 N.W.2d 229; 1953 Iowa Sup. LEXIS 380 - **Precedential status:** Published - **Opinion:** Dissent by Mulroney - **Judges:** Bliss, Garfield, Hats, Larson, Mulroney, Oliver, Smith, Thompson, Wennerstrum - **Cited by:** 12 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9656108 ## How later opinions describe it (automated extraction) - explaining that a will may direct land to be sold and the beneficiaries’ interest is then turned into money ## Opinion text Mulroney, J. (dissenting) — -I respectfully dissent. The question in this case is the interpretation that is to be placed on a definition statute. Chapter 425, Code, 1950, grants a tax credit to the “owner” who occupies as a homestead and section 425.11, paragraph 2, undertakes to define the word “owner.” The simple question is whether the statutory definition of “owner” includes the “life tenant.” As I understand-the majority opinion it means the legislature defined the word “owner” to include the life tenant where the life estate was created by a will with the further limitation that the life estate must be followed by an equitable conversion of the realty or no named remainderman. It could not even be argued that the definition statute would include a life estate created by deed — save as that might be *537 included in another portion of the statute, which is not here involved, and which I shall discuss later. I. Such a decision that would give the tax credit to the life tenant based on how the tenancy was created and what occurs after the tenancy is over needs to be thoughtfully examined. Surely the first reaction one would have after reading this statute would be that if the legislature intended to give the tax credit to a life estate it would have said so. It cannot be said the legislature was not familiar with the term “life estate.” It used such terms as “fee simple title” and “contract of purchase” and it broadened the term “owner” to include the person occupying as surviving spouse. The majority finds the life estate included in the words “the person occupying the homestead under devise or by operation of the inheritance laws where the whole interest passes * * These words, the majority holds, mean and include the devise of a life tenancy when the will creates a following equitable conversion. I can see no argument for such an interpretation in the first four divisions of the majority opinion which are all devoted to a quotation of the statute and statements of general principles and rules governing equitable conversion. Nor is there much argument in the fifth and last division for this interpretation except the approval of the trial court’s statement that each plaintiff “owns a life estate in the entire homestead tract which he is occupying and each appellant acquired such life estate by devise.” It is not quite clear to me that the majority means the plaintiffs would be entitled to the credit because they occupy as life tenants created by a devise regardless of the disposition of the remainder. There is too much talk in the majority opinion about the equitable conversion that followed the life tenancy. I can only conclude the majority holds the plaintiffs were entitled to the credits here because, as the majority states, they “were devised all of the existing realty rights which the testatrix owned at her death. * * * [and] * * * •any remainder or reversionary interest in those farms was converted into personalty the instant testatrix died.” The majority cites Ahrweiler v. Board of Supvrs., 226 Iowa 229, 235 , 283 N.W. 889, 892 , and points to our holding in that case that the purpose of the Homestead Tax Credit law *538 “was to encourage the acquisition and ownership of homesteads, as [this] would generate a healthier and more prosperous condition.” Presumably the majority feels this purpose would be served by a statute that lessened the tax burden for life tenants when the life estate was created by devise instead of a deed and particularly served when the after estate was an equitable conversion and not an estate in remainder. I fail to follow the majority reasoning. We held very definitely in the Ahrweiler case that the “credit is to the property, as distinguished from the owner.” It cannot be argued there is any difference in property interest of a life tenant based upon whether the life estate is created by deed or will and surely no difference between property interests of a life tenant, where the estate is created by will, based upon whether the after estate is epnverted to personalty or passed on to a remainderman. Probably the phrase “where the whole interest passes” was inserted to exclude the situation where the deceased only owned an undivided interest but in any event the interpretation placed on the language by the majority opinion is so utterly foreign to the design of the legislation and so discriminating in its classification as to render it vulnerable to an attack on its constitutionality under Article I, section 6, and Article III, section 30, of the Iowa Constitution. This is a real-estate tax exemption statute. It frees certain land from a portion of the tax burden based on its ownership and occupancy during the tax year. The legislature is in the exercise of its taxing power for the power to tax includes the power to exempt, and both must be exercised to serve some public purpose and the classifications must be designed to carry out that purpose. We can admit the encouraging of home ownership is a public purpose but it is difficult to see how any exemption to life tenants would serve this purpose. But assuming it would, there could be no justification in saying discrimination between life estates could be made, so some, but not all, life estates that are created by will could be relieved of a portion of the tax burden, and all the rest, including all that are created by deed, must pay full tax. In Keefner v. Porter, 228 Iowa 844, 850 , 293 N.W. 501, *539 503 , we said by way of quotation from Essex County Park Comm. v. West Orange, 77 N.J.L. 575, 577 , 73 A. 511 , 512: “‘That property of a class may be exempted from taxation is not to be denied, provided always that the classification is a proper one; but it is well settled that all members of a class shall be included in the taxing act whether for purpose of imposition of or exemption from taxation * * *. ’ ” There is no use launching into any extended discussion of the constitutionality of the statute. But it is proper to test the interpretation placed on the statute by the majority to see if such an interpretation would render it unconstitutional. This being a tax exemption statute it should, if there be any ambiguity, be construed strictly against the exemption and in any event to uphold its constitutionality. Tt is obvious it would be flagrantly unconstitutional as interpreted by the majority. What possible difference could there be between life estates created by will and those created by deed? And what possible difference could there be between life estates created by will where there is a following equitable conversion and where there is a named remainderman? In all instances the life tenant is possessed of the same estate in realty. The majority interpretation means the legislature named a small group, within the general classification of life estate holders, to receive the exemption. I do not feel the majority interpretation is sustained by reason or authority. II. It will be noticed that the statute, section 425.11, paragraph 2, Code, 1950, quoted in Division I of the majority opinion, includes within the definition of “owner” the person who occupies the homestead as the owner of a “divided interest”, acquired through a will, inheritance tax laws, or deed, where the other interests are “owned by blood relatives or by legally adopted children.” I cannot see how this portion of the statute has anything to do with this case. The trial court held: * * there was no divided interest which passed under the will within the meaning of section 425.11, subdivision (2) of the Code of 1950.” But the majority cites Eysink v. Board of Supvrs., 229 Iowa 1240 , 296 N.W. 376 . That was a case where the plaintiff who occupied the property as a home *540 stead owned an undivided one-half interest and the remaining interest was owned by blood relatives. The only question was whether the plaintiff was entitled to a full credit on a one-half ownership under the “divided interest” clause, and we held he was. That ease has no application here. If it be thought “divided interest” would include life estate interest and remainder interest it would still have no application here where there was no remainder interest in blood relatives of the occupying life tenant. I do not understand the majority bases its decision to any extent on the “divided interest” clause and I only mention this because of the presence of the citation of the Bysink case in the majority opinion. The Eysink case is admittedly a divided interest (between tenants in common) case and it did not involve any interpretation of the portion of the statute involved in this case. I would reverse. Oliver, J., joins in this dissent. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9656108. Public record. Not legal advice.