text:
    2000 SD 86
    Terry G. LEKANIDIS, Plaintiff and Appellant, v. Anthony M. BENDETTI, Defendant and Appellee.
    No. 21246.
    Supreme Court of South Dakota.
    Considered on Briefs May 30, 2000.
    Decided July 5, 2000.

      Bruce A. Hubbard of Hansen, Hubbard & Swanson, Sturgis, South Dakota, Attorneys for plaintiff and appellant.
    Benjamin J. Eicher of Wallahan & Eicher Rapid City, South Dakota, Attorneys for defendant and appellee.

      . Despite the complaint seeking only $50,000 in damages, the default damage award consisted of $300,000 in compensatory damages and $10,447.64 in special damages.

   AMUNDSON, Justice.

[¶ 1.] Terry Lekanidis (Lekanidis) appeals the dismissal with prejudice of his personal injury action. We affirm.

FACTS

[¶ 2.] On August 7, 1995, while attending the Sturgis Motorcycle Rally in Sturgis, South Dakota, Anthony Bendetti (Bendet-ti), a resident of New York, drove his motorcycle out of a parking lot at a high rate of speed and collided with another motorcycle driven by Lekanidis, a resident of West Virginia. Sturgis Police Officer Hardman investigated the incident and prepared an accident report.

[¶ 3.] The accident report listed Bendet-ti’s home address as “RD1 Box 53E. Nassu N.Y.” The report further listed the estimated damage to Bendetti’s motorcycle as $5,000 and the damage to Lekanidis’ motorcycle as' approximately $15,000. Hard-man also stated in his report the name of each parties’ insurer and the. corresponding insurance policy number. Neither party required medical attention at the time of the accident and no traffic or criminal citations were written.

[¶ 4.] Approximately two years later, Lekanidis began experiencing neck and back problems which he alleged were the result of his accident with Bendetti. As a result, Lekanidis sought chiropractic treatment in West Virginia for .his injuries.

[¶ 5.] On October 7, 1997, Lekanidis retained South Dakota counsel who prepared a summons and complaint. Since Bendet-ti was not a resident of South Dakota, counsel completed service of process pursuant to SDCL 15-7-6 and SDCL 15-7-7, South Dakota’s non-resident motorist statutes, by serving Secretary of State Joyce Hazeltine (Hazeltine) with a copy of the summons and complaint. Hazeltine signed an admission of service acknowledging her receipt of the documents and the required two dollar fee.

[¶ 6.] On October 8, 1997, counsel mailed a copy of the summons and complaint to Bendetti using the address:

Mr. Anthony M. Bendetti

RD1, Box 53E

Nassau, N.Y. 12123

In the belief that the accident report prepared by Officer Hardman misspelled the city name “Nassau” as “Nassu” and contained no zip code, counsel looked up the proper spelling of the city and found the zip code for “Nassau” to include on the mailing. On that same day, counsel executed an affidavit of compliance with SDCL 15-7-7, but did not include it in the mailing to Bendetti.

[¶ 7.] The letter to Bendetti containing the summons and complaint was ultimately returned to sender as “Attempted-Not Known.”

[¶ 8.] On April 8, 1998, the summons, complaint, admission of service, and affidavit of compliance were filed with the Meade County Clerk of Courts. The complaint claimed Bendetti was negligent in causing the personal injury of Lekanidis and sought damages in the amount of $50,000. On April 24, 1998, an affidavit of default was filed and a hearing on the default judgment was scheduled for July 31, 1998. On June 24, 1998, a notice of hearing on the default judgment was mailed to Bendetti at the same address. Once again, the letter was returned “Attempted Not-Known.”

[¶ 9.] A default judgment hearing was held on July 31, 1998 and a default judgment in the amount of $310,447.64 was entered on August 4, 1998. Notice of entry of default judgment was prepared and mailed to Bendetti on August 7, 1998, at the same address Lekanidis utilized on the prior mailings. As before, this was returned undelivered.

[¶ 10.] After the notice of entry of judgment was returned, counsel for Lekanidis had a “skip trace” done to find Bendetti’s address. The trace determined Bendet-ti’s address was “763 Central Nassau Road, East Nassau, New York 12062.” This address was also known as “R.R.l Box 53, East Nassau, New York 12062.” On September 22, 1998, counsel prepared another notice of entry of judgment and mailed it to the address found in the trace. The letter was delivered successfully.

[¶ 11.] On October 1, 1998, Bendetti’s counsel filed an answer and motion to vacate the default judgment and allow the answer and other relief. A hearing was held before Judge Moses on October 8, 1998. On November 23, 1998, Judge Moses found that service on Bendetti was insufficient and granted Bendetti’s motion to vacate and allowed him to file an answer.

[¶ 12.] On December 14, 1998, Bendetti filed a motion to dismiss the action with prejudice, arguing that the statute of limitations had expired. On February 24, 1999, Bendetti filed a “Motion for Summary Judgment, Dismissal and/or Judgment on the Pleadings.” Judge Eckrich held motion hearings on February 5 and March 22, 1999. On August 23, 1999, Judge Eckrich ruled that Lekanidis had not complied with SDCL 15-7-7 by failing to “mail the affidavit of compliance or proof of service” to Bendetti. Judge Eck-rich also found that Lekanidis had failed to use Bendetti’s “last known address” as required by the statute, but instead, utilized his “own last known address” by correcting the spelling of “Nassau” and including a zip code. Finally, because Lekanidis failed to commence this action within the applicable three year statute of limitations period, the action was dismissed with prejudice.

[¶ 13.] Lekanidis appeals, raising the following issue:

1. Whether the trial court erred in dismissing the action with prejudice.

Bendetti filed a notice of review, raising the following issues:

2. Whether the trial court should have only determined whether the complaint should have been dismissed.
3. Whether the trial court erred regarding whether the “last known address” for substituted service of process can be erroneous.
4. Whether the trial court erred in Finding as Fact that the return envelope could be fairly read as being either “refused” or “attempted-not known.”

STANDARD OF REVIEW

[¶ 14.] In the present case, counsel for Bendetti filed motions to dismiss including as grounds for said motion: summary judgment, dismissal and judgment on the pleadings. The trial court, although failing to specify the grounds for the dismissal, could only have granted a motion to dismiss for insufficiency of process under SDCL 15 — 6—12(b).

[¶ 15.] In reviewing the granting of a motion to dismiss, our standard of review is well settled. We have often stated that “ ‘[o]ur standard of review of a trial court’s grant or denial of a motion to dismiss is the same as our review of a motion for summary judgment — is the pleader entitled to judgment as a matter of law?’ ” White Eagle v. City of Fort Pierre, 2000 SD 34, ¶ 4, 606 N.W.2d 926, 928 (quoting Risse v. Meeks, 1998 SD 112, ¶ 10, 585 N.W.2d 875, 876 (quotation omitted)). Further, because the issue of the validity of service of process is a question of law, “we review the trial court’s decision de novo, with no deference given to the trial court’s legal conclusions.” Yankton Ethanol, Inc. v. Vironment, Inc., 1999 SD 42, ¶ 6, 592 N.W.2d 596, 598 (citing Thompson v. Summers, 1997 SD 103, ¶ 5, 567 N.W.2d 387, 390 (citing City of Colton v. Schwebach, 1997 SD 4, ¶8, 557 N.W.2d 769, 771)).

[¶ 16.] This case also requires us to apply our rules of statutory construction to South Dakota’s nonresident motorist statute, which is set forth under SDCL 15-7-6. We have often stated,

[questions of law such as statutory interpretation are reviewed by the Court de novo.... The purpose of statutory construction is to discover the true intention of the law which is to be ascertained primarily from the language expressed in the statute. The intent of a statute is determined from what the legislature said, rather than what the court thinks it should have said, and the court must confine itself to the language used. Words and phrases in a statute must be given their plain meaning and effect. When the language in a statute is clear, certain and unambiguous, there is no reason for construction, and the Court’s only function is to declare the meaning of the statute as clearly expressed. Since statutes must be construed according to their intent, the intent must be determined from the statute as a whole, as well as enactments relating to the same subject.

Dahn v. Trownsell, 1998 SD 36, ¶ 14, 576 N.W.2d 535, 539 (quoting Moss v. Guttormson, 1996 SD 76, ¶ 10, 551 N.W.2d 14, 17 (citation omitted)).

DECISION

[¶ 17.] 1. Whether the trial court erred in dismissing the action with prejudice.
[¶ 18.] Under South Dakota law,
[t]he use and operation by a resident of this state or his agent, or by a nonresident or his agent of a motor vehicle within the state of South Dakota, shall be deemed an irrevocable appointment ... by such nonresident or his agent at any time, of the secretary of state of South Dakota to be his true and lawful attorney upon whom may be served all legal process in any action or proceeding against him or his executor, administrator or personal representative growing out of such use and operation of a motor vehicle within this state, resulting in damages or loss to person or property, whether the damage or loss occurs on a highway or on abutting public or private property.... Such use or operation of a motor vehicle by such ... nonresident is a signification of his agreement that any such process in any action against him or his executor, administrator, or personal representative which is so served, shall be of the same legal force and validity as if served upon him personally or on his executor, administrator, or personal representative.

SDCL 15-7-6 (1984). Under this statute, if a nonresident causes any damage as a result of operating his or her motor vehicle in South Dakota, the damaged party can serve all legal documents on the South Dakota Secretary of State. See id.

[¶ 19.] The process of serving the documents on the Secretary of State is governed by SDCL 15-7-7. The statute provides:

Service of process as authorized by § 15-7-6 shall be made by serving a copy thereof upon the secretary of state, or by filing such copy in the office of said secretary of state, together with payment of a fee of two dollars, and such service shall be sufficient service upon the ... nonresident or his executor, administrator, or personal representative; provided that notice of such service and a copy of the process are within ten days thereafter sent by mail by the plaintiff to the defendant at his last-knoum address and that the plaintiff’s affidavit of compliance with the provisions of this section is attached to the summons. The secretary of state shall keep a record of all such process so served which shall show the day and hour of such service. The fee of two dollars paid by the plaintiff to the secretary of state at the time of service of process shall be taxed in his cost if he prevails in the suit.

SDCL 15-7-7 (1984) (emphasis added). The statute requires that for valid service of process under the nonresident motorist statute, the party shall (1) file a copy of the process on the secretary of state or the office of the secretary of state; (2) pay a two dollar fee; and (3) mail a copy of the notice of service, the affidavit of compliance attached to the summons, and copy of the process to the defendant’s “last-known address” within ten days of service on the secretary of state. See id.

[¶ 20.] In the present case, there is no dispute that Lekanidis failed to attach the affidavit of compliance to the summons before mailing it to Bendetti, or that he failed to send the legal documents to Ben-detti’s “last known address.” The court concluded that these omissions constituted a failure to comply with SDCL 15-7-7.

[¶ 21.] Lekanidis contends that he “substantially complied ” with the requirements of SDCL 15-7-7, therefore, the service of process should have been held valid. The only support Lekanidis cites for his argument is Wagner v. Truesdell, 1998 SD 9, 574 N.W.2d 627. In Wagner, this Court dealt with the plaintiffs substantial compliance with SDCL 15 — 6— 4(d)(10), a statute which governs service of process to the “defendant personally.” Id. ¶ 6, 574 N.W.2d at 629.

[¶ 22.] We find Lekanidis’ reliance on Wagner misplaced. The present case is not a “personal service” of process case, but rather, involves “substituted service” of process. Despite the fact that we have allowed “substantial compliance” with personal service of process statutes as in Wagner, we have never previously addressed this issue in regards to “substituted service” cases such as this. The Eighth Circuit Court of Appeals case of Marshall v. Warwick, 155 F.3d 1027 (8th Cir.1998) involved a substituted service dispute.

[¶ 23.] In Marshall, the court was faced with substituted service of process under South Dakota law where the trial court had granted a motion for dismissal. On appeal, Marshall contended that there was substantial compliance “with the requirements of substituted service” under SDCL 15-6-4(e). 155 F.3d at 1030. In support of her argument, as Lekanidis does in the present case, Marshall cited to Wagner as authority for her “substantial compliance” argument. Id. The Eighth Circuit Court noted that “while it is clear from Wagner that the South Dakota Supreme Court has adopted the substantial compliance standard for personal service of process, it is not clear that the South Dakota Supreme Court would extend the substantial compliance standard to substituted service of process.” Id. (emphasis in original). The court further opined:

Moreover, there are several compelling reasons to limit the application of the substantial compliance standard to personal service of process. In cases of personal service of process, a court can be reasonably certain that the defendant had notice of the impending suit because the defendant was present for the service. Substituted service of process, in contrast, carries the risk that the defendant never received notice. Allowing only substantial compliance with the requirements for substituted service of process further increases the risk involving an unsuspecting defendant in a lawsuit about which the defendant did not have notice. Arguably, only strict compliance ivith the requirements of substituted service of process will sufficiently reduce this risk.

Id. at 1031 (emphasis added).

[¶ 24.] Other jurisdictions have also held that strict compliance is required when dealing with “substituted service.” See, e.g., Messmer v. Olstad, 529 N.W.2d 873, 875-76 (N.D.1995) (addressing a nonresident motorist statute and holding that “[w]hen a statute sets out requirements for making service, parties must strictly comply with the provisions authorizing and permitting such service”); Wood v. Martin, 328 N.W.2d 723, 726 (Minn.1983) (noting that there had “not been strict compliance with the [nonresident motorist] statute as required by our case law”); Wilson v. Smith, 193 Neb. 433, 227 N.W.2d 597, 598 (1975) (concluding that the plaintiff did not strictly comply with the requirements of the nonresident motorist statute); Jenkins v. Hill, 240 Ark. 197, 398 S.W.2d 679, 682 (1966) (emphasizing that the nonresident motorist statute “must be strictly construed”). We hold that substituted service must be made in strict compliance with the statute to ensure that the defendant will receive notice of the action.

[¶ 25.] We must now turn to whether Lekanidis failed to “strictly comply” with the statute by not attaching the affidavit of compliance to the original documents sent to Bendetti and by not sending the documents to Bendetti’s “last known address.”

Failure to Attach Affidavit of Compliance with Mailings to Bendetti

[¶ 26.] Under SDCL 15-7-7, the plaintiff is required to send “notice of such service and a copy of the process” within ten days to the defendant and “that plaintiffs affidavit of compliance with the provisions of this section is attached to the summons.” (Emphasis added). The statute clearly and unambiguously requires the affidavit of compliance be attached to the summons and mailed to the defendant along with the notice of service and copy of process. Lekanidis failed to attach the affidavit of compliance with his mailings to Bendetti; therefore, he has failed to strictly comply with SDCL 15-7-7.

The “Last Known Address” Requirement

[¶ 27.] As previously noted, the trial court also dismissed Lekanidis’ action based upon his failure to use the “last known address” of Bendetti, but instead, “supplied his own last known address” by correcting the spelling of “Nassau” and providing a zip code.

[¶ 28.] Lekanidis argues that Bendetti was at fault in providing the incorrect address to Officer Hardman and Lekanidis should not be punished for the fault of Bendetti in not clearly providing his correct address to Officer Hardman. Lekani-dis contends that the last known address “was the address on the police report, whether correct or incorrect,” and he did in fact mail to the address on that report. Lekanidis’ sole support for his argument is Dahn, 1998 SD 36, 576 N.W.2d 535.

[¶ 29.] In Dahn, this Court was faced with a tax deed sale of realty and the subsequent mailing of a written tax bill to the taxpayer’s last known address. Id. ¶ 3, 576 N.W.2d at 537. The county treasurer had utilized Trownsell’s address which was on file with the county as the last known address to which to mail Trownsell’s “Notice to Take a Tax Deed.” Id. The issue before this Court was to interpret the meaning of “last known address” and determine whether Dahn complied with that requirement. Id. ¶ 17, 576 N.W.2d at 539. Lekanidis argues that Dahn applies because there we noted the plaintiffs reliance upon the address in the records of the county treasurer constituted compliance with the meaning of “last known address,” therefore, Dahn did not have to conduct any further independent inquiry to determine Trownsell’s correct current address. While we agree with Lekanidis’ interpretation of our holding in Dahn, we do not agree that it is controlling in this case. In the present case, Lekanidis did not rely on the accident report, but rather, attempted further investigation to determine the correct spelling of the city name and located the zip code for Nassau, New York.

[¶ 30.] Bendetti argues that use of an incorrect address by Lekanidis does not satisfy the statutory requirement of mailing to the defendant’s “last known address.” Bendetti argues that Lekanidis should have taken other measures to assure service of notice after receiving the letters back marked “Address-Not Known.” In support of his argument, Bendetti cites Permenter v. Feurtado, 541 So.2d 1331 (Fla.Dist.Ct.App.1989).

[¶ 31.] In Permenter, Feurtado filed suit against Permenter, a Michigan resident, for damages sustained in an automobile accident in Florida. 541 So.2d at 1332. The accident report contained Permenter’s Michigan address which was utilized by Feurtado to mail service of process to Permenter. The service was returned undeliverable, yet Feurtado moved for and was granted a default judgment. On appeal, the Florida Court of Appeals vacated the default judgment and held that “the record reveals a complete absence of diligence on the part of plaintiffs’ counsel in perfecting service of process” pursuant to Florida statutes. Id. The court further held that “[i]t was incumbent upon the plaintiffs to diligently seek out the proper address of the defendant!!]” Id.

[¶ 32.] Lekanidis further contends that our decision in Dahn eliminates any duty on Lekanidis to make an independent inquiry into Bendetti’s correct address. In Dahn, we noted that a holder of a tax deed could reasonably rely on the last known address of the property owner which was contained in the records of the county treasurer and was not required to make independent inquiry to determine the correct address of the property owner because the property owner had a duty to insure that his address on file with the county was correct. See Dahn, 1998 SD 36, ¶ 24, 576 N.W.2d at 542. Therefore, any duty was on the property owner, not the tax deed holder. See id. This case is not applicable to the present situation because, unlike Dahn, where a plaintiff has knowledge that the address to which they are mailing may not be the correct address for the defendant, they cannot blindly turn away and immediately run to court and get a default judgment. Such conduct would violate the purpose of the service of process, which is to provide notice to the defendant of the impending lawsuit. In this case, Lekanidis discovered that the address provided on the accident report was invalid due to the misspelling of the city name and lack of zip code. Lekanidis also received several mailings returned “Address-Not Known.” Clearly Lekanidis had knowledge that this address was not Bendetti’s correct address. It certainly did not take Lekanidis long to find the correct address once the default judgment was entered. With only minor effort and diligence, Lekanidis could have discovered the correct address of Bendetti. He could have utilized the “skip trace” or the name of Bendetti’s insurance company and policy number listed on the accident report to locate his current address long before seeking a default judgment. Based upon this lack of diligence, Lekanidis has failed to show that he strictly complied with the requirement under SDCL 15-7-7 by mailing all legal documents to defendant’s “last known address.”

[¶ 33.] We have often stated that “ ‘[without valid service of process the trial court has no jurisdiction to act.’ ” Wagner, 1998 SD 9, ¶ 17, 574 N.W.2d at 631 (quotations omitted) (Gilbertson, J., concurring in result). Due to invalid service of process on Bendetti by Lekanidis, the trial court had no jurisdiction to hear the case and properly dismissed the action. See, e.g., Nolan v. Nolan, 490 N.W.2d 517, 521 (S.D,1992) (noting that because the service of process was invalid, “the decree was void ab initio and the trial court had no alternative but to vacate the decree”).

[¶ 34.] It is well settled that “an action is commenced in this jurisdiction by the service of a summons” on the defendant. See Meisel v. Piggly Wiggly Corp., 418 N.W.2d 321, 323 (S.D.1988) (citing SDCL 15-2-30). The applicable statute of limitations in this case is SDCL 15-2-14. The statute requires that for “[a]n action for personal injury,” the civil action “can be commenced only within three years after the cause of action shall have accrued.” The motorcycle accident occurred on August 7, 1995 and the case was not dismissed until December 3, 1998. By the time of the dismissal, the statute of limitations had since expired. Due to the invalid service of process on Bendetti, Lekanidis did not commence his personal action within the applicable three year statute of limitations; therefore, Lekanidis’ claim against Bendetti is now barred and the action was properly dismissed with prejudice.

[¶ 35.] Based upon our disposition of this issue, we need not address the issues contained in Bendetti’s notice of review.

[¶ 36.] We affirm.

[¶ 37.] MILLER, Chief Justice, and KONENKAMP and GILBERTSON, Justices, concur.

[¶ 38.] SABERS, Justice, concurs in result.

SABERS, Justice

(concurring in result).

[¶ 39.] I agree that due diligence must be used to obtain a correct last known address when presented with a facially incomplete or inaccurate address.

[¶ 40.] This case is a good reminder to do things as soon, not as late, as possible, especially when flawed or defective in procedures. Had counsel erred earlier, he could have corrected his mistakes before the statute of limitation ran.

      . Lekanidis retained this same counsel for this appeal.

      . The parties disputed whether or not the letter was returned “refused” or "atlempted-not known.” The trial court made a finding of fact that "[a] fair reading of the ‘For reason checked’ is either ‘Refused’ or ‘Attempted Not Known.’ ” (Emphasis in original). It clearly appears to this Court that the check mark is located on the “Attempted-Not Known” line.

      . "Skiplracing” is a "[sjervice which assists creditors in locating delinquent debtors or persons who have fled to avoid prosecution.” Black’s Law Dictionary 1387 (6thEd 1990).

      . The trial court further held,
      [Lekanidis] did not use the address on the report whether supplied by [Bendetti] or not. The report address was an error - but the Defendant [sic] affirmatively compounded the error by independently determining the and [sic] erroneously determining that "Nassu” meant Nassau and [Lekanidis] supplied the (erroneous) zip code. [Lekani-dis] did not rely on the erroneous “last known address” - Which [Lekanidis] must have known was erroneous because he did not use the address supplied by the report. -He supplied his own last known address. (Emphasis in original.)


source: Caselaw Access Project

author: MILLER, Chief Justice.

license: Public Domain

text:
    2000 SD 90
    Lillian HERR, Claimant and Appellee, v. DAKOTAH, INC., Employer and Appellant, and CNA Insurance Company, Insurer and Appellant.
    No. 21424.
    Supreme Court of South Dakota.
    Considered on Briefs May 30, 2000.
    Decided July 12, 2000.

      Ronald L. Schulz, Thomas J. Linngren of Green, Schulz, Roby, Oviatt, Cummings & Linngren, Watertown, South Dakota, Attorneys for appellee.
    Kenneth L. Chleborad of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, Rapid City, South Dakota, Attorneys for appellants.
   MILLER, Chief Justice.

[¶ 1.] In this workers’ compensation case we hold that the circuit court committed reversible error by dismissing an appeal on the basis of res judicata prior to receiving either a statement of issues or the parties’ briefs. We further hold that the issue raised on appeal was not res judicata. Finally, we hold that it was error for the circuit court to assert jurisdiction over the case, since the Department of Labor had retained continuing jurisdiction over all unsettled compensation issues.

FACTS

[¶ 2.] A similar aspect of this workers’ compensation case was previously considered by this Court. On October 25, 1999, we summarily affirmed both the circuit court’s entry of judgment in favor of Herr for accrued workers’ compensation benefits, and the denial of Dakotah, Inc.’s, and its insurer CNA’s (collectively “Dakotah”) motion for relief from judgment. See Herr v. Dakotah, Inc., 604 N.W.2d 868 (S.D. 1999) (aff'd. mem). The convoluted history of this case is summarized below.

[¶ 3.] The action began when Herr filed claims for workers’ compensation benefits against Dakotah for work-related injuries to her elbow, neck and shoulder. A hearing was held before the South Dakota Department of Labor, Division of Labor and Management, (Department) to adjudicate the claims. On February 24, 1998, Department issued its first set of findings and conclusions in connection with Herr’s claim. It found that her elbow and neck problems arose out of and in the course of her employment at Dakotah. Accordingly, it concluded that Dakotah was responsible for any benefits to which she was entitled.

[¶ 4.] The findings and conclusions did not specify the amount of workers’ compensation benefits to which Herr was entitled. Because of this omitted information, she petitioned Department requesting the issue be reconsidered in order to make such a determination. Department granted the petition and heard the matter a second time with respect to the issues of Herr’s average weekly wage, corresponding benefit rate, and interest. It entered a second set of findings and conclusions on August 25,1998.

[¶ 5.] Pursuant to SDCL 62-7-31, Herr obtained a judgment in. circuit court based on Department’s second findings and conclusions. Dakotah filed a motion for relief from the judgment, raising factual issues already settled. The circuit court denied the motion on the basis of res judicata, and we summarily affirmed.

[¶ 6.] In November 1999, after our summary affirmance, Dakotah filed a petition with Department, requesting “that a determination be made that [Herr] has reached maximum medical improvement as of July 26, 1996 [the date of one medical report that allegedly established Herr had reached maximum medical improvement], and for a . determination of benefits owed to [Herr].” In response, Herr filed a motion to dismiss the petition under SDCL 15-6-12(b)(5) on the basis of res judicata.

[¶ 7.] Contemporaneous with the proceedings at the administrative level, Herr obtained entry of a second judgment in circuit court for benefits accrued since the first judgment had been entered. In response, Dakotah filed a motion to set aside the second judgment. The circuit court granted Dakotah’s motion, pending a resolution of issues before Department. However, the court reserved the right to reenter the judgment depending on the outcome of the issues being considered at the administrative level.

[¶ 8.] On January 13, 2000, Department granted Herr’s motion to dismiss Dako-tah’s petition for hearing, concluding that the issues presented therein were res judi-cata. Based on Department’s decision, Herr filed an affidavit in circuit court requesting that the previously vacated judgment be reinstated. At the same time, the court received a notice of appeal from Da-kotah. Herr countered Dakotah’s notice of appeal with a motion to dismiss on the basis of res judicata.

[¶ 9.] After a hearing on all these issues, the circuit court reinstated the previously vacated judgment in favor of Herr, granted her motion to dismiss Dakotah’s notice of appeal, and dismissed Dakotah’s notice of appeal under SDCL 15-6-12(b)(5) on the basis of res judicata.

[¶ 10.] Dakotah appeals, raising three issues:

1. Whether the circuit court erred in dismissing the appeal on the basis of res judicata prior to briefing.
2. Whether the circuit court erred in concluding that the issue raised on appeal was res judicata.
3. Whether the circuit court had jurisdiction to enter the second judgment for accrued benefits.

STANDARD OF REVIEW

[¶ 11.] SDCL 1-26-37 governs our review of agency decisions. This Court “shall ‘give the same deference to the findings of fact, conclusions of law and final judgment of the circuit court as it does other appeals from the circuit court.’ ” Wernke v. State of South Dakota Dep’t of Soc. Servs., 1999 SD 32 ¶4, 590 N.W.2d 260, 262 (quoting SDCL 1-26-37). When the issue is a question of fact, the actions of the agency are judged by the clearly erroneous standard. Rasmussen v. South Dakota Dep’t of Labor, 510 N.W.2d 655, 657 (S.D.1993). “If after careful review of the entire record we are definitely and firmly convinced a mistake has been committed, only then will we reverse.” Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 6, 575 N.W.2d 225, 228 (citing Spitzack v. Berg Corp., 532 N.W.2d 72, 75 (S.D.1995) (citations omitted)). When the issue is a question of law, the actions of the agency are fully reviewable. In re State & City Sales Tax Liab., 437 N.W.2d 209, 211 (S.D.1989). Mixed questions of law and fact are also fully reviewable. Permann v. Department of Labor, Unemp. Ins. Div., 411 N.W.2d 113, 119 (S.D.1987).

DECISION

[¶ 12.] 1. The circuit court erred in dismissing Dakotah’s appeal on the basis of res judicata prior to briefing.

[¶ 13.] Department entered its order dismissing Dakotah’s petition for hearing on January 20, 2000. Four days later Dako-tah filed a notice of appeal in the circuit court, which was quickly countered with another motion to dismiss by Herr. Dako-tah did not file a statement of issues or a brief in support of its appeal. (The statutory time limits to do so had not expired. See SDCL 1-26-31.4; 1-26-33.2.) On January 26, 2000, the court heard oral arguments in the matter. The following day it dismissed Dakotah’s appeal, stating in its order: “The Court has considered the pleadings and the file in this matter and has heard the oral arguments of counsel and the Court finds that the basic issues raised by [Dakotah] on appeal have been previously adjudicated.”

[¶ 14.] On appeal, Dakotah contends that “[i]t is impossible to perceive how the [c]ir-cuit [c]ourt could, from the bare language of the [n]otice of [a]ppeal, have determined the existence of the elements of res judica-ta.” We agree.

[¶ 15.] SDCL 1-26-32.1 makes the rules of civil appellate procedure applicable to administrative actions “so far as the same may be consistent and applicable.” Herr’s motion to dismiss was pursuant to SDCL 15 — 6—12(b)(5). That statute provides in pertinent part:

Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion:
(5) Failure to state a claim upon which relief can be granted;
... If, on a motion asserting the defense numbered (5) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in § 15-6-56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by § 15-6-56.

[¶ 16.] A motion to dismiss looks to the pleadings to determine whether a claim for relief has been properly asserted. In order to constitute a pleading, the document must contain (1) a short plain statement of the claim showing that the pleader is entitled to relief, and (2) a demand for judgment for the relief to which he deems himself entitled. SDCL 15-6-8(a).

[¶ 17.] Dakotah’s notice of appeal contained neither of the elements required by SDCL 15 — 6—8(a). It therefore cannot be deemed a pleading sufficient to determine whether a claim for relief has been properly asserted. Since there was no pleading, dismissal under SDCL 15 — 6—12(b)(5) for failure to state a claim was error.

[¶ 18.] For sake of argument, even were we to conclude that the notice of review constituted a pleading, the trial court’s written order indicated that it considered matters outside the pleadings, including the file and oral arguments, in ruling on the motion to dismiss. As we stated in Richards v. Lenz:

Under SDCL 15 — 6—12(b)(5), where one moves to dismiss for failure to state a claim and “matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in § 15-6-56, and all parties shall be given the reasonable opportunity to present all material made pertinent to such a motion by § 15-6-56.”

539 N.W.2d 80, 83 (S.D.1995) (quoting Norwest Bank Black Hills v. Rapid City Teachers Fed. Credit Union, 433 N.W.2d 560, 562 (S.D.1988)). See also Jensen Ranch, Inc. v. Marsden, 440 N.W.2d 762, 764 (S.D.1989); In re P.A.M., 505 N.W.2d 395, 396 n. 1 (S.D.1993); Wasserburger v. Consolidated Management Corp., 459 N.W.2d 561, 565 (S.D.1990). Where the court elects to treat a motion to dismiss as a motion for summary judgment, it must notify the parties of its intent and give them an opportunity to present matters pertinent to summary judgment. Olson v. Molko, 86 S.D. 365, 367, 195 N.W.2d 812 (1972).

[¶ 19.] There is no evidence in the record that the circuit court followed such a procedure, even though it is mandatory. Therefore, it was error to treat the motion to dismiss as one for summary judgment, and it was error to grant such a motion.

[¶ 20.] 2. The circuit court erred in finding that the issue raised on appeal was res judicata.

[¶ 21.] In its November 1999 petition for hearing, Dakotah stated and alleged, inter alia, that one physician found Herr reached maximum medical improvement as of July 1996, but that Department had not yet adjudicated such issue. Therefore the petition prayed that “a hearing be held on this matter, that a determination be made that [Herr] has reached maximum medical improvement as of July 26, 1996, and for a determination of benefits owed to [Herr].”

[¶ 22.] Department dismissed the petition, explaining in its letter decision that Dakotah had not seized the opportunity to raise the issue of maximum medical improvement during previous adjudications, therefore the request was res judicata. As previously discussed, the circuit court dismissed Dakotah’s appeal of the denial, simply stating that “the basic issues raised by [Dakotah] on appeal have been previously adjudicated.”

[¶ 23.] Dakotah argues on appeal that the circuit court erred in concluding that the issue of maximum medical improvement had been adjudicated. In doing so, it concedes in its brief that the November 1999 petition was far from crystal clear in requesting a determination of maximum medical improvement: “It appears that both [Department] ... and the [e]ireuit [c]ourt itself may have been misled into their rulings by the language of that [petition’s request for a determination ...” Despite the misleading language, Dakotah strenuously asserts that its intent in filing the petition was simply to invoke its right to a determination of whether, and when, Herr reached maximum medical improvement. We agree that the issue of maximum medical improvement for Herr’s elbow problems was left open by Department in its previous adjudications, therefore we hold the circuit court erred in dismissing the appeal as res judicata.

[¶ 24.] Workers’ compensation awards are res judicata as to all matters considered unless Department has reserved continuous jurisdiction over one or more questions. Larsen v. Sioux Falls Sch. Dist. 49-5, 509 N.W.2d 703, 706 (S.D. 1993) (citations omitted). If Department’s order continues jurisdiction over an award, it does not achieve finality. Call v. Benevolent & Protective Order of Elks, 307 N.W.2d 138, 139 (S.D.1981).

[¶ 25.] When considering claims involving res judicata, we apply four factors to determine if the doctrine applies:

(1) was the issue decided in the former adjudication identical to the present issue; (2) was there a final judgment on the merits; (3) are the parties in the two actions the same or in privity; and (4) was there a full and fair opportunity to litigate the issues in the prior adjudication?

D.G. v. D.M.K., 1996 SD 144, ¶27, 557 N.W.2d 235, 240; Springer v. Black, 520 N.W.2d 77, 79 (S.D.1994).

[¶ 26.] There is ample evidence in the record showing that, although previously raised by Dakotah, the issue of maximum medical improvement for Herr’s elbow problems has not been adjudicated. First, the briefs submitted in the prior appeal to this Court show that the narrow issue presented was whether the circuit court’s first entry of judgment was proper based on Department’s August 1998 findings and conclusions. That appeal involved the amount of Herr’s weekly benefit entitlement, not whether she had reached maximum medical improvement. Indeed, at page 6 of Herr’s brief to this Court in that appeal, she affirmatively stated that “[t]o date, no administrative determination has been made regarding whether Herr has achieved maximum medical improvement or impairment with respect to her elbow.” In that same brief at page 7, she suggested that Dakotah undertake the exact course of action that it subsequently followed:

Therefore, [Dakotah’s] mechanism for terminating temporary benefits is to schedule Herr for a medical exam to determine the status of her condition and, if she is believed to have reached maximum medical improvement, to bring a motion on for hearing seeking termination of temporary benefits. To date, [Dakotah] has not attempted to take either of these steps.

[¶ 27.] Additional evidence that the issue of maximum medical improvement was not adjudicated can be found in Department’s August 1998 findings and conclusions, which provided in pertinent part:

Findings of Fact
1. Claimant’s injury report of February 15, 1993, establishes a compen-sable injury to her elbow and the February 3, 1995, injury report was an injury to Claimant’s neck and shoulder.
2. As to Claimant’s neck and shoulder injury, Dr. Malek, Claimant’s treating physician for her neck and shoulder problems, found Claimant to have reached maximum medical improvement in those areas and rated Claimant for permanent impairment on January 30,1995.
5. Dr. Malek did not make determinations of maximum medical improvement or impairment for claimant’s elbow problems.
Conclusions of Law
3. CNA shall pay to Claimant weekly compensation of $181.34 a week beginning January 23, 1995, and continuing each week thereafter until claimant reaches maximum medical improvement or impairment for her elbow problems plus interest at 10% per annum computed from and after January 23, 1995, on all compensation due Claimant until paid.
4.The South Dakota Department of Labor shall maintain continuing jurisdiction until all issues of compensation are finalized.

(emphasis added).

[¶ 28.] Thus, although the parties are the same as in previous adjudications, the issue of whether Herr’s elbow problems have achieved maximum medical improvement has not been decided. Moreover, by its own declaration Department retained jurisdiction over this case “until all issues of compensation are finalized,” thereby precluding final judgment on the merits of whether, and when, Herr reached maximum medical improvement. Call, 307 N.W.2d at 139.

[¶ 29.] Were we to accept Herr’s position, the result would be a perpetual award of temporary disability benefits, because Dakotah would be foreclosed on the basis of res judicata from ever raising the issue with Department. Surely the doctrine does not intend such an absurd result. Cf. Salmon v. Denhart Elevators, 72 S.D. 110, 116, 30 N.W.2d 644, 647 (1948) (stating that temporary workers’ compensation benefits are to be terminated upon complete recovery, or when a specific loss becomes ascertainable). For all these reasons, we hold that the circuit court erred in dismissing Dakotah’s appeal on the basis of res judicata.

[¶ 30.] 3. The circuit court did not have jurisdiction to enter the second judgment for accrued benefits.

[¶ 31.] We have already concluded that the trial court erred in dismissing Dakotah’s appeal before briefing, and we have concluded that the issue of maximum medical improvement is not res judicata. Because Department expressly retained jurisdiction over all issues of compensation until finalized, (see previous discussion) the circuit court was without jurisdiction to enter the second judgment awarding benefits for the period of December 4, 1998, to January 19, 2000.

[¶ 32.] We reverse and remand the circuit court’s dismissal of Dakotah’s appeal. The circuit court is directed to remand this case to Department for a hearing on the issue of Herr’s maximum medical improvement in accordance with this holding.

[¶ 33.] SABERS, AMUNDSON, KONENKAMP, and GILBERTSON, Justices, concur.


author: CADY, Justice.

text:
    Philip H. SWARTZENDRUBER, Appellant, v. Mel SCHIMMEL and Holiday Foods, Employer, and State Farm Insurance, Insurance Carrier, Appellees.
    No. 98-1998.
    Supreme Court of Iowa.
    June 1, 2000.

      Mary K. Hoefer of Mears Law Office, Iowa City, for appellant.
    James M. Peters and Allison M. Heffern of Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, for appellees.
   CADY, Justice.

In this action for workers’ compensation, we review a decision by the court of appeals reversing a decision by the district court which affirmed summary judgment entered by the industrial commissioner based on a failure of the employee to file a petition for benefits within two years of the injury. We vacate the decision of the court of appeals and affirm the district court.

I. Background Facts and Proceedings.

Philip Swartzendruber has had a long history of serious hip problems. He has Legg-Calvé-Perthes disease which resulted in a total replacement of his left hip in 1985. He was twenty-nine years old at the time. Swartzendruber walks with a limp and has had hip and back pain for years.

On January 7, 1994, Swartzendruber was employed by a grocery store in North Liberty called Mel’s Holiday Foods. He worked from 3:00 p.m. to 9:00 p.m. As a part of his job duties, Swartzendruber was required to stock and face the grocery shelves. This required him to place products from the stockroom on the shelves and move the products on the shelves from the back to the front of the shelves. At times, it was necessary for Swartzendru-ber to perform the work while on his hands and knees. By the time his work shift ended, Swartzendruber was experiencing pain in his hip and back. The pain was more intense than he had experienced for some time. Notwithstanding, he went to a local tavern after leaving the grocery store for a period of time before retiring to his home for the evening.

Following a restless night, Swartzendru-ber awoke early in the morning on January 8 with intense pain in his back and hip. He struggled to walk. It was Saturday, and Swartzendruber was not scheduled to return to work until Monday, January 10. Swartzendruber promptly went to the emergency room at the University of Iowa Hospitals.

Swartzendruber was examined at the hospital by a doctor and x-rays were taken of his back and hip. The emergency room doctor told Swartzendruber the x-rays showed his artificial hip socket was loose. Swartzendruber was then released from the hospital with instructions to see his orthopedic specialist for further evaluation.

Swartzendruber telephoned his employer on January 8 after returning home from the hospital and informed him of his injury. He also told his employer he did not know if his condition would allow him to report to work on Monday. At the time, Swartzendruber understood the nature of the injury and believed it was related to his work on January 7. However, he claimed he did not understand the seriousness of his injury and did not know if it would actually require him to miss work.

Swartzendruber did not report to work on Monday. In fact, he never returned to work at the grocery store. He was examined by his orthopedic physician on January 13, who informed him that his hip would require surgery. He was also told he may not fully recover from the condition. On the same day, Swartzendruber called his employer and reported his condition as a work injury. Swartzendruber understood his condition was serious at this time.

Mel’s Holiday Foods filed a first report of injury. Swartzendruber, however, was not paid weekly benefits.

Swartzendruber filed a petition for workers’ compensation benefits with the industrial commissioner on January 11, 1996. Mel’s Holiday Foods filed a motion for summary judgment. It asserted Swartzendruber’s petition was filed more than two years after the injury and was beyond the statute of limitations under Iowa Code section 85.26(1) (1995).

The industrial commissioner granted summary judgment and dismissed the petition. It determined Swartzendruber failed to file his petition for benefits within two years from the time of his injury. The commissioner found Swartzendruber knew he had a work-related injury on January 7, 1994, and should have known it was serious after he sought medical treatment the following day on January 8,1994.

Swartzendruber filed a petition for judicial review in the district court. He claimed the statute of limitations did not begin to run until January 13, 1994, when he was examined by the orthopedic specialist and learned that his condition would require surgery.

The district court affirmed the decision of the industrial commissioner. Swartzen-druber then filed this appeal. We transferred the case to the court of appeals. The court of appeals reversed the district court. It found summary judgment was improper because there was evidence to support a finding that Swartzendruber did not know of the seriousness of his injury, in view of the pre-existing hip problems which had caused him intermittent pain in the past, until the orthopedic surgeon told him he needed hip surgery. We granted further review.

II. Scope of Review.

A decision to grant summary judgment is reviewed for errors of law. Iowa Tel. Ass’n v. City of Hawarden, 589 N.W.2d 245, 250 (Iowa 1999). It is appropriate where the moving party shows no genuine issue of material fact and it is entitled to judgment as a matter of law. Iowa R.Civ.P. 237(c). We review the record in a light most favorable to the non-moving party. Wright v. American Cyanamid Co., 599 N.W.2d 668, 670 (Iowa 1999). Summary judgment is inappropriate if reasonable minds would differ on how the issue should be resolved. Keystone Elec. Mfg. v. City of Des Moines, 586 N.W.2d 340, 345 (Iowa 1998). However, where the evidence compels only one reasonable conclusion, the question presented is one of law. See Brammer v. Allied Mut. Ins. Co., 182 N.W.2d 169, 172 (Iowa 1970); Dailey v. Holiday Distrib. Corp., 260 Iowa 859, 874, 151 N.W.2d 477, 487 (1967); see also Schmitz v. Crotty, 528 N.W.2d 112, 115 (Iowa 1995) (reasonableness of attorney’s conduct ordinarily a question of fact, but where facts so compelling that no conflicting inferences available, then whether attorney performed duty is decided as a matter of law by the court).

III. Statute of Limitations.

A petition for benefits under our workers’ compensation statute must be filed “within two years from the date of the occurrence of the injury for which benefits are claimed.” Iowa Code § 85.26(1). The purpose of the statute of limitations in workers’ compensation cases is the same as in other types of cases. It provides protection for both the claimant and the employer. It gives the claimant time to investigate the claim and establish grounds to file a petition. See LeBeau v. DiMig, 446 N.W.2d 800, 803 (Iowa 1989). It provides the employer reasonable closure to potential liability for actions. See id. at 802-03; see also 51 Am.Jur.2d Limitations of Actions § 17, at 602-03 (1970).

A. Discovery Rule.

We have interpreted section 85.26(1) to mean the injury occurs when it is discovered. Ranney v. Parawax Co., 582 N.W.2d 152, 154 (Iowa 1998). This discovery rule is necessary because some injuries are not immediately known. See Orr v. Lewis Cent. Sch. Dist., 298 N.W.2d 256, 258-61 (Iowa 1980). The rule means the two-year limitation period does not begin to run until the employee discovers, or should discover in the exercise of diligence, the nature, seriousness, and probable compensable character of the injury or disease. Ranney, 582 N.W.2d at 154. Under this discovery rule, the claimant must have actual or imputed knowledge of all three characteristics of the injury or disease before the statute begins to run. Id. at 154-55.

We have identified two types of late-discovered injuries. LeBeau, 446 N.W.2d at 802. The first type is a pure latent injury. Id. This involves cases where the claimant is unaware of the injury or its cause until some time after the occurrence. Id. The second type of late-discovered injury involves a known traumatic event which produces both an immediately known injury and latent injury. Id. It is called “traumatic eventdatent manifestation.” Id.

The statute of limitations under section 85.26(1) does not begin to run for a pure latent injury until the injury is discovered. Id . Under the second group of late-discovered injuries, the statute of limitations begins to run from the initial injury, not when the injury is later discovered. Id. The discovery rule is actually applied to both groups of late-discovered injuries, but only to the first injury in “traumatic event/latent manifestation” cases.

In this case, Swartzendruber claims a pure latent injury. He also acknowledges it occurred on January 7, 1994. However, he asserts the statute of limitations did not begin to run under the discovery rule until January 13, 1994, because the seriousness component of the rule was not satisfied until he met with the orthopedic surgeon on that date and was told surgery would be necessary. He does not challenge the nature and probable compensability character components of the discovery rule.

Under the imputed knowledge prong of the discovery rule, the statute of limitations begins when a claimant gains information sufficient to alert a reasonable person of the need to investigate. Ran-ney, 582 N.W.2d at 155. Thus, a claimant’s knowledge is judged under the test of reasonableness. The need to investigate arises when a reasonable person has knowledge of the possible compensability of the condition. Id. This knowledge must include all three characteristics of the condition. As of that date, the duty to investigate begins and the claimant has imputed knowledge of all the facts that would have been disclosed by a reasonable diligent investigation. Id. Thus, a claimant has two years from that time to gather the facts and file a petition. Id. at 157.

B. Knowledge of Seriousness of Injury.

The seriousness component of the discovery rule exists so that “every minor ache, pain, or symptom” does not begin the statute of limitations. 2B Arthur Larson, Workers’ Compensation § 78.41(e), at 15-279 (1994). Thus, the failure to file a claim within two years of the occurrence of the injury may be excused if the claimant had no reason to believe the condition was serious. See id. at 15-281. If the injury is trivial or minor, or the symptoms indicate no serious trouble, the seriousness component is not met. See id.

On the other hand, exact knowledge of the seriousness of an injury is not required. See Ranney, 582 N.W.2d at 155. Furthermore, an expert medical opinion is not needed to establish knowledge of the characteristics of the injury. See id. Instead, the duty to investigate begins once the claimant is aware of the problem. Id. Under this standard, the degree of knowledge is based upon a possibility, not a probability. Id. Thus, if it is reasonably possible an injury is serious enough to be compensable as a disability, the seriousness component of the test is satisfied.

The legal resolution of the question of what constitutes recognition of the seriousness of an injury or disease is a fact specific inquiry. See Dillinger v. City of Sioux City, 368 N.W.2d 176, 182 (Iowa 1985). The facts, however, must satisfy the test of reasonableness.

Under the test of reasonableness, we refrain from pinpointing any specific event to establish the seriousness of an injury, such as going to a physician or missing work. Although these events are relevant, we consider all the facts and circumstances in resolving the issue.

We agree with Swartzendruber there is evidence that a reasonable person on January 7, 1994, may not have known the injury was serious enough to be compensable. A reasonable worker would not necessarily be charged with knowledge of a compensa-ble injury after experiencing back or hip pain following work which required bending. This is especially true for a worker, like Swartzendruber, who has encountered hip and back pain in the past but was able to continue work. The record also indicates Swartzendruber was able to complete his work assignment and go to a bar after leaving work. However, the absence of the seriousness component of the discovery rule on January 7, 1994 does not mean Swartzendruber did not have imputed knowledge of the seriousness of his injury until he was examined on January 13,1994 by the orthopedic surgeon.

Swartzendruber experienced intense pain and had a difficult time walking on January 8. His condition was serious enough for him to seek medical attention at an emergency room of a hospital on that date. He was also told by a doctor that his artificial hip was loose and he needed to see his orthopedic specialist. This type of information is entirely consistent with the possibility of a serious injury. When a worker is referred to a specialist by an examining physician, the specialist is not required to confirm the seriousness of an injury before knowledge of the seriousness of the injury may be imputed to the worker.

Nevertheless, Swartzendruber argues he cannot be charged with the knowledge of a serious injury on January 8 because he reported to his employer that he was uncertain if he would be able to report to work. He points out this statement reflects knowledge of the possibility that the injury was not serious enough to miss work. However, this uncertainty also reflects the possibility the injury was serious enough to prevent him from working. Accordingly, Swartzendruber’s argument is actually consistent with the duty to investigate.

Considering all the facts in a light most favorable to Swartzendruber, we agree with the district court that a reasonable person would have knowledge of all three components of the discovery rule on January 8, 1994. The evidence presented by Swartzendruber in response to the motion for summary judgment did not generate a contrary finding.

The petition filed on January 11, 1996 was untimely. We vacate the decision of the court of appeals and affirm the district court.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.

      . Schwartzendruber makes no claim that this injury is compensable as an aggravation of a pre-existing injury or a cumulative trauma.


author: CARTER, Justice.

text:
    HERITAGE BANK, Appellant, v. Terry LOVETT, Robert Lovett, and Roma Lovett d/b/a Culligan Water Conditioning of Ida Grove, Iowa, Appellees, Richard Bennett, Defendant.
    No. 98-0917.
    Supreme Court of Iowa.
    June 1, 2000.
    Rehearing Denied Aug. 10, 2000.

    Thaddeus E. Cosgrove of Cosgrove Law Firm, Holstein, for appellant.
    Michael J. Frey of Hellige, Lundberg, Meis, Erickson & Frey, Sioux City, for appellees.
    Deborah M. Tharnish of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines and Robert L. Hartwig, Iowa Bankers Association, Des Moines, for amicus curiae Iowa Bankers Association.

       McGiverin, C J., and Snell, J., not participating.

   CARTER, Justice.

Plaintiff, Heritage Bank (Heritage), appeals from an adverse summary judgment in an action seeking to recover funds obtained through the unauthorized use of an ATM card. The defendants, Terry Lovett, Robert Lovett, and Roma Lovett d/b/a Culligan Water Conditioning of Ida Grove, Iowa (Culligan), are the employers of Richard Bennett, the person who illegally obtained money from an ATM using an ATM card that Heritage had issued to Donald and Luella Buell. Heritage seeks to recover from Culligan on a theory of negligent hiring. After reviewing the record and considering the arguments presented, we agree with the conclusions of the district court that Culligan owed no duty to protect Heritage from Bennett’s criminal action and that Heritage is not subrogated to any claim of the Buells against Culligan.

On December 5, 1995, Bennett, while working for Culligan, went to the residence of Donald and Luella Buell to perform services. While there he stole a wallet containing an ATM card issued in regard to the Buells’ bank account with Heritage. Bennett subsequently used this card at various ATMs to misappropriate approximately $10,000. Heritage commenced this action based on two theories of recovery, respondeat superior and negligent hiring.

In ruling on successive motions for summary judgment filed by Culligan, the district court concluded that (1) Bennett’s activities were not within the scope of his employment with Culligan so as to give rise to the doctrine of respondeat superior, (2) the loss for which Heritage seeks to recover was its own direct loss and not a loss suffered by the Buells to which Heritage is now subrogated, and (3) Culligan owed no duty to Heritage to protect it from Bennett’s criminal acts. The legal consequence of these rulings was a total denial of Heritage’s claims against Culli-gan.

I. The Bank’s Common-Law Subrogation Claim.

Heritage does not seek review of the district court’s rejection of its respondeat superior theory. It posits its appeal on the claim that the loss occasioned by Bennett’s use of the ATM card fell in the first instance on the Buells by way of diminution of their account and that Heritage became subrogated to the Buells’ rights against Culligan by restoring all but fifty dollars of the Buells’ loss. Heritage argues that because Culligan did owe a duty to protect the Buells from Bennett’s actions it may assert the Buells’ rights against Culligan in the role of a subrogee. We disagree with this contention.

As the district court correctly concluded, except for the sum of fifty dollars, the loss occasioned by Bennett’s criminal acts was from its inception entirely that of the bank. The Buells never suffered any loss apart from the fifty dollars that was debited to their account. A subrogee may acquire no claim, security, or remedy that the subrogor does not have. Central Nat’l Ins. Co. v. Insurance Co. of N. Am., 522 N.W.2d 39, 44 (Iowa 1994).

A bank deposit without reservation transfers the title of the funds from the depositor to the bank. Huston v. Exchange Bank, 376 N.W.2d 624, 626 (Iowa 1985); Andrew v. Union Sav. Bank & Trust Co., 220 Iowa 712, 715, 263 N.W. 495, 497 (1935). The relationship that thereafter follows is one of debtor (the bank) and creditor (the depositor). Huston, 376 N.W.2d at 626; Andrew, 220 Iowa at 715, 263 N.W. at 497. In the latter case, we expressed this relationship as follows:

The applicable rules of law are well settled and do not appear to be seriously in dispute between the parties. It is well established that in the ordinary transaction where a depositor puts money in a bank, the money becomes the bank’s money and the bank owes the depositor a debt. The relation of debtor and creditor is created between the bank and the depositor.

Id.

A deposit agreement is subject to all applicable statutes that govern the relationship between the depositor and the bank to the same extent as if written in the agreement. Clinton Nat’l Bank v. Saucier, 580 N.W.2d 717, 719 (Iowa 1998); Priest v. Whitney Loan & Trust Co., 219 Iowa 1281, 1287, 261 N.W. 374, 378 (1935). Federal law sharply limits the extent to which a bank may debit a depositor’s account as the result of an unauthorized electronic funds transfer. The applicable statute provides:

A consumer shall be liable for any unauthorized electronic fund transfer involving the account of such consumer only if the card or other means of access utilized for such transfer was an accepted card or other means of access and if the issuer of such card, code, or other means of access has provided a means whereby the user of such card, code, or other means of access can be identified as the person authorized to use it, such as by signature, photograph, or fingerprint or by electronic or mechanical confirmation. In no event, however, shall a consumer’s liability for an unauthorized transfer exceed the lesser of—
(1) $50; or
(2) the amount of money or value of property or services obtained....

15 U.S.C. § 1693g (1994). The foregoing rules may be altered if the bank can establish that the loss was increased as a result of a delay by the depositor in reporting either a stolen ATM card or an unauthorized entry on a statement that the bank has .sent to the depositor. Even in such instances, however, the bank may not debit the depositor’s account for more than $500.

In the present case, the Buells promptly reported the unauthorized transactions to the bank. Consequently, due to the proscriptions contained in this federal statute, Heritage, notwithstanding any contrary provision in its depositors agreement, could not debit the Buells’ account for a sum greater than fifty dollars as a result of Bennett’s unauthorized use of their ATM card.

We have recognized that subrogation may exist by agreement between the parties or may be based on equitable principles that permit one who has satisfied an obligation owed by another to a third party to be placed in the obligee’s position vis-a-vis the primary obligor. Kent v. Bailey, 181 Iowa 489, 493-94, 164 N.W. 852, 853 (1917). The latter type of subrogation, which is the type involved in the present case, is granted to a person secondarily liable for a debt who has paid it and is designed to allow that party to enforce the creditor’s right of exoneration against one that has been unjustly enriched. Baker v. American Sur. Co., 181 Iowa 634, 638-40, 159 N.W. 1044, 1045-46 (1916). The need for the doctrine exists because ordinarily the subrogee does not possess a personal cause of action against the unjustly enriched party.

Heritage’s attempt to claim against Cul-ligan as a subrogee of the Buells must fail for two reasons. First, based upon the principles we have previously set forth, Heritage suffered the loss of the funds sought to be recovered in its own right and not as a result of satisfying any loss sustained by the Buells. Consequently, its entitlement to bring the present claim against Culligan should be based on its own relationship to that defendant rather than the Buells’ relationship. In addition, and of equal significance, is the fact that the rights to which a subrogee succeeds are the same as and no greater than those of the person for whom the subrogee seeks to be substituted. Central Nat’l Ins. Co., 522 N.W.2d at 44.

Prior to Bennett’s criminal acts, the Buells’ right to draw against their account at Heritage was measured by the balance of funds that they had on deposit at that time. Immediately following Bennett’s criminal acts the Buells’ rights vis-a-vis then- bank account at Heritage were precisely the same except for the fifty-dollar debit transaction. The Buells sustained no injury for which they could maintain an action against either Bennett or Culligan apart from the fifty-dollar item, which is not an issue in the litigation.

We have considered Heritage’s attempt to challenge our analysis based on language contained in 15 U.S.C. § 1693g and conclude that its effort is flawed. The language upon which Heritage relies provides “reimbursement need not be made to the consumer for losses which the financial institution establishes would not have occurred but for the failure of the consumer to report [the unauthorized use or theft].” Heritage contends that this language is a recognition that the loss, in the first instance, falls on the depositor. This contention is inaccurate because the depositor’s rights vis-á-vis the bank are at all times determined by the law governing the transaction. As a practical matter in automated transactions of this type the account will almost always be debited on the bank’s electronic records when an unauthorized electronic transfer occurs, but this does not change the depositor’s legal entitlement from the bank. If the depositor sued the bank for a declaratory judgment as to the status of the depositor’s account, the result would be the same irrespective of whether the bank had restored an improperly debited item. Consequently, a statute requiring reimbursement has exactly the same legal significance as a statute that prohibits the debiting of the depositor’s account.

II. The Bank’s Statutory Subrogation Claim.

As an alternative to its common-law subrogation claim, Heritage relies on the subrogation provisions contained in Iowa Code section 554.4407. That statute provides in part:

If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank is subrogated to the rights
c. of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.

Iowa Code § 554.4407(c).

It is at once apparent that this statute pertains to checks or other bills of exchange drawn on banks. It has no operative language governing electronic funds transfers. Nor may Heritage make a col-orable argument involving this statute by way of analogy. Section 554.4407(c) only grants a right of subrogation against a payee or other holder of the check improperly paid by the bank. In framing an analogy that might be applied to the electronic transfer situation based on the statutory directive involving checks, the analogous persons to be claimed against would be those persons obtaining the cash or to whom the cash might be traced. Such an analogy would not permit a subrogation claim against an employer of one of those persons based on negligent hiring.

In Sunshine v. Bankers Trust Co., 34 N.Y.2d 404, 358 N.Y.S.2d 113, 314 N.E.2d 860 (1974), the New York Court of Appeals discussed the application of section 554.4407(c) in situations in which the customer’s account has not in fact been debited. It recognized that subrogation in that situation did not track with common-law theory but was a creature of statute. Sunshine, 358 N.Y.S.2d 113, 314 N.E.2d at 866 n. 6. Because there is no statute granting subrogation to a bank in Heritage’s situation, it must depend on the common law, which grants it no rights as a subro-gee.

We have considered all issues presented and conclude that the judgment of the district court should be affirmed.

AFFIRMED.

All justices concur except SNELL, J., who takes no part.

      . Although the Buells were included as plaintiffs in the action, it is not clear whether they were seeking recoupment of their fifty-dollar loss. This makes no difference now, for they have not joined in the appeal.


author: PER CURIAM.

text:
    IOWA SUPREME COURT BOARD OF PROFESSIONAL ETHICS AND CONDUCT, Complainant, v. Ray SULLINS, Respondent.
    No. 99-1663.
    Supreme Court of Iowa.
    June 1, 2000.
    Rehearing Denied Aug. 10, 2000.

    Norman G. Bastemeyer and David J. Grace, Des Moines, for complainant.
    Ray Sullins, Des Moines, pro se.

       McGiverin, C.J., and Snell, J., not participating.

   PER CURIAM.

The lawyer in this disciplinary case is unwilling or unable to discharge the duties required in the practice. Because of his repeated failures to face up to these responsibilities, we suspend his license for not less than one year. We also direct that his license shall not be reinstated until he makes the showing we hereinafter describe.

Although other highly disturbing misconduct is hinted, the central theme in this exasperating case is “stonewalling,” a stubborn refusal to address a clear duty. Ray Sullins, the respondent attorney, seems to have raised procrastination to a high art. He plays no favorites. He has consistently spurned the inquiries of our board of ethics and conduct in exactly the same manner demonstrated with his clients.

He is no neophyte procrastinator. In this proceeding he faces his fourth similar sanction since 1986: a public reprimand in 1986; a public reprimand in 1996; and the reprimand in Iowa Supreme Court Board of Professional Ethics & Conduct v. Sullins, 556 N.W.2d 456, 456 (Iowa 1996). This is enough. We now suspend his license to practice law in the courts of this state. We will consider no application for reinstatement until one year following the date of this opinion and will not grant any application unless Sullins demonstrates an ability and willingness to deliver competent legal services with reasonable promptness, and to comply with the deadlines imposed in our rules of practice.

Though the facts here are much more egregious, we recently described the nature of Sullins’ problem this way:

This lawyer disciplinary case involves profuse neglect in performing professional duties. Often, though certainly not routinely, we see discipline cases where the inattention reaches epic proportions. Neglected matters, each nagging for attention, add up. Exasperated clients demand attention. The clamor, which might be expected to prompt a lawyer to act, sometimes has an opposite, freezing effect. In extreme cases the lawyer seems powerless either to attend to the obvious professional responsibilities, or to respond to the entreaties of our ethics board when it inquires into the neglect. Our experience in a number of these strange cases enables us to trace these situations, and somewhat explain the misconduct. This does not mean though, that we can or will tolerate it.

Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Scieszinski, 599 N.W.2d 472, 473 (Iowa 1999).

The present proceeding revolves around four professional relationships. They each fit within the typical neglect pattern. In one count, the Pals v. Beverly Baltzley case, Sullins failed to file a timely response to the ethics board and failed to cooperate with its investigation. In a second case, the Kotz case, Sullins was negligent in not prompting his client to deliver answers to interrogatories. These procrastinations cost the client $750 in a federal court sanction. He later failed to render an adequate financial accounting as to how he spent the retainer. His sloppy record keeping resulted in a nonexistent case file. Finally, Sullins procrastinated in responding to the local bar association’s ethics committee.

In the third matter, the Hauf case, Sul-lins refused to render an accounting of services said to have been performed according to a written fee agreement. Sul-lins also failed to comply with an oral agreement to settle the fee dispute with the local bar association’s ethics committee. In the fourth matter, the Hupp case, Sullins neglected to file suit even though the petition was prepared and the client had paid the filing fee. Sullins refused to return phone calls or respond to letters requesting return of the client’s materials. When pressed by subsequent counsel, Sul-lins eventually returned some of the paperwork but not the original papers and photographs necessary to proceed in the suit. Finally, Sullins failed to return unearned fees after being discharged by the client. All this conduct was in gross violation of DR 6 — 101(A)(3) (neglect of client’s legal matter). His abominable record keeping was a clear violation of DR 9-102(B).

It should be unnecessary to again remind Sullins that our ethics board is an arm of this court, a point we tried oúr best to make clear in Sullins, 556 N.W.2d at 457. Sullins should consider the matter seriously if he is ever again asked to respond to our board’s investigations because any future for him in the profession will be at stake.

We direct that Ray Sullins’ license to practice law in the courts of this state, as that term is defined in Iowa Supreme Court Rule 118.12, be suspended indefinitely with no possibility of reinstatement for one year from the date of this opinion. No application for reinstatement will be granted without the showing already mentioned. The costs of this action are assessed against Sullins in accordance with Iowa Supreme Court Rule 118.22.

LICENSE SUSPENDED.

All justices concur except LAVORATO, J., who takes no part.


author: LARSON, Justice. CADY, Justice

text:
    Robert E. HEER and Mary Diana Heer, Appellees, v. Robert J. THOLA, Appellant.
    No. 98-2282.
    Supreme Court of Iowa.
    July 6, 2000.
    Rehearing Denied Aug. 10, 2000.

    Bradley L. Norton and Brian T. Fair-field of Norton & Norton, P.C., Lowden, for appehant.
    Mark Lawson of Mark R. Lawson, P.C., Maquoketa, for appellees.

       McGiverin, C J., and Snell, J., not participating.

   LARSON, Justice.

Adjoining landowners in Jackson County disagree over the ownership of a strip of land between them. The plaintiffs argue they acquired title to the land by acquiescence under Iowa Code chapter 650 (1997). The defendant contends the plaintiffs’ chapter-650 action was barred by the special statute of limitation of Iowa Code section 614.14(5)(b) (one-year limitation on actions challenging title conveyed by trustee’s deed). The district court ruled the statute of limitation was inapplicable and held the Heers had acquired the land by acquiescence. The defendant appealed, and the court of appeals affirmed. We vacate the decision of the court of appeals and reverse the judgment of the district court.

I. Facts and Prior Proceedings.

In 1973 Lawrence and Mildred Schilling purchased a two-acre parcel of land with the intention of building a house on it for themselves and giving part of it to their daughter, Mary Heer, for a house. Mary and her husband, Robert, built their house on the southern portion of the Schilling land and moved into it in September 1973. At that time, the Schillings still owned the entire two acres, including the land occupied by the Heers’ house. In the fall of 1973, Lawrence Schilling and Robert Heer met to discuss the location of the boundary between their properties, they noticed two utility poles, one on the west side and the other on the east, and decided to locate the boundary “about two or three feet” south of the poles. Shortly thereafter, a fence running from west to east was placed in this area, attached with a wood corner post to an already-existing north-south fence along the western boundary. The fence was anchored at the east end by another corner post. The Heers seeded their yard up to the new fence, while the property north of the new fence remained in agricultural use.

In June 1974 the Schillings deeded the southern portion of the tract to Mary and her husband and retained the northern part for themselves. Over the next five years, the Schilling property remained in agricultural use. The Heers mowed and maintained the property south of the east-west fence.

In the summer of 1978, the Schillings began construction of a house for themselves on the north part of the tract and moved into it in 1979. As the Schilling house was being constructed, the east-west fence was removed, but the west corner post was left in place. Robert Heer testified that in approximately the same area where the east corner post had been there was a telephone pedestal. He considered the pedestal to mark the east end of the boundary line.

Upon completion of the Schilling house, Mr. Schilling seeded his yard to where the fence had been, and from 1979 until his death in 1991, he mowed and maintained it.

In 1990 Schilling established the Lawrence N. Schilling trust, naming himself as the original trustee and Mary Heer, his daughter, as successor trustee. (Mr. Schilling's wife was then deceased.) Schilling conveyed his property to the trust by a quitclaim deed. In 1994 Mary executed the trustee’s deed at issue here, conveying the Schilling house and property to the defendant, Robert J. Thola. At the time of the transfer, the location of the boundary between the Heer and Thola properties was not discussed.

Shortly after Thola took possession of the property, he asked Robert Heer where the property line was; Heer told him it was “approximately from high line pole to high line pole.” At trial Heer testified “I knew the boundary line was somewhere right around those [utility] poles.” (Emphasis added.) About two years after Tho-la took possession, he again asked Robert Heer about the location of the property line. At that time, Thola and Heer walked around the yard, and Heer said the boundary was from the western corner post to the telephone pedestal. Thola moved some trees to this line and put in fence posts but never completed the fence.

In August 1997 Thola had his property surveyed and learned his recorded property line was approximately twenty-two feet south of where he had understood it to be. In other words, the Heers had been maintaining an approximately twenty-two-foot strip of land that, according to the title records, had been conveyed to Thola by the trustee’s deed.

The Heers had their own survey, which was consistent with Thola’s. The Heers, however, relied on the fact the property owners had recognized the boundary as the western corner post since 1973. In November 1997 they filed a petition to establish a boundary line, based on acquiescence under chapter 650, at the west corner post. This was approximately twenty-two feet into the property conveyed to Thola.

The district court initially dismissed the Heers’ petition as barred by the statute of limitation under Iowa Code section 614.14(5)(b) (one-year limitation on challenge to trustee’s deed). In response to the Heers’ rule 179(b) motion, however, the court entered judgment for the Heers, concluding that they had acquired the strip by acquiescence and “now permanently established as [the boundary] the line that runs from the black fence post on the west side of the parties’ property to the telephone pedestal on the east side.” The court of appeals affirmed the district court, and we granted further review.

II. The Issues.

Thola claims: (1) the court erred in ruling the Heers’ claim was not time-barred by section 614.14(5)(b), (2) the Heers were estopped from asserting their cause of action under chapter 650, and (3) the court erred in ruling the Heers had established a boundary line by acquiescence under chapter 650. Because the first issue, the statute-of-limitation defense, is dispositive of this appeal, it is unnecessary to address the last two issues.

III. The Statute-of-Limitation Defense.

Thola claims the Heers’ acquiescence claim is barred by this statute of limitation applicable to trustees’ deeds:

An action based upon an adverse claim arising on or after January 1, 1992, by reason of a transfer of an interest in real estate by a trustee, or a purported trustee, shall not be maintained either at law or in equity, in any court to recover or establish any interest in or claim to such real estate, legal or equitable, against the holder of the record title to the real estate, legal or equitable, more than one year after the date of recording of the instrument from which such claim may arise.

Iowa Code § 614.14(5)(b).

Thola argues any action to challenge his title to the property must have been initiated within one year from the date of the trustee’s deed or it would be barred. The Heers concede their action was not brought within that year. However, they contend their claim is not time-barred because (1) they obtained title through acquiescence prior to Mr. Schilling’s transfer of the property to the trust, (2) their claim is not an “adverse claim” to which section 614.14(5)(b) applies, and (3) their claim does not “arise by reason of a transfer” by a trustee.

A. The effective date of the establishment of title by acquiescence. The Heers argue section 614.14(5)(b) is inapplicable. They contend, and the district court held, that the land in question could not have been deeded by the trustee because the trust did not have title to it; according to them, Schilling had lost title by acquiescence before he attempted to deed it to the trust. Also, according to the Heers, the acquiescence claim was not covered by the limitation provision of section 614.14(5)(b) because the claim did not “aris[e] ... by reason of a transfer of an interest in real estate by a trustee” but by reason of Schilling’s acquiescence under chapter 650.

The application of section 614.14(5)(b), here, turns on when an establishment of title through acquiescence takes place. Is it when all of the underlying requirements, including the lapse of ten years, are met, as the Heers argue? Or is it when a court decrees it to be so, as Thola argues? The statute provides:

If it is found that the boundaries and corners alleged to have been recognized and acquiesced in for ten years have been so recognized and acquiesced in, such recognized boundaries and corners shall be permanently established.

Iowa Code § 650.14.

The Heers argue that title was established in them in 1983 because by that time the parties had acquiesced in the boundary for ten years. The district coiirt agreed; therefore, Schilling was not the owner of the land when he purported to convey it to the trust in 1990. Thola responds that, as of the time the land was deeded to the trust, there was no court order finding the elements of acquiescence had been established. That did not occur until 1998, when the district court found title by acquiescence as of 1988. In the meantime, according to Thola, any action to establish title by acquiescence became barred by Iowa Code section 614.14(5)(b).

The Heers rely on language in our prior cases that suggests to them that title by acquiescence is established, without court order, as soon as the prerequisite circumstances exist. See, e.g., Tewes v. Pine Lane Farms, Inc., 522 N.W.2d 801, 806 (Iowa 1994) (“[A] boundary line may be established by a showing that the two adjoining landowners or their predecessors in title have recognized and acquiesced in a boundary line for a period of ten years.”); Davis v. Hansen, 224 N.W.2d 4, 6 (Iowa 1974) (“[A] boundary by acquiescence may be established where ... adjoining owners ..., for ten or more consecutive years, have mutually acquiesced in a line definitely marked ... as a true boundary....”). These cases, and many others like them, discuss the factors that provide a basis for establishing title by acquiescence. However, none of them hold that a new boundary line is established by the mere existence of those circumstances without the intervention of a court.

The language of section 650.14 suggests judicial intervention is a requirement for establishing title by acquiescence. (“If it is found that the boundaries ... have been recognized and acquiesced in.... ” (Emphasis added.)) Practical considerations suggest that result as well. .For example, one requirement for establishing such a title by acquiescence is that a boundary line be established that is “sufficiently definite to run a line in accordance therewith.” De Viney v. Hughes, 243 Iowa 1388, 1394, 55 N.W.2d 478, 481 (1952). In the present case, as of the time the property was deeded to the trust, the boundary line was not definitely located. According to some of the testimony, the parties agreed the line would be “about” two or three feet south of the utility poles. Robert Heer testified “I knew the boundary line was somewhere around those [utility] poles” but had previously told Thola the boundary line was from the western corner post to a telephone pedestal. Therefore, while the parties had a general understanding about where the line was, it was not specifically located as of the time title by acquiescence was allegedly established in 1983.

The present case is similar to another in which the boundary line was only an approximation, which we described as follows:

This record shows an opening in a tile somewhere near the survey line and some undisclosed distance from Orleans Avenue. On Orleans Avenue, at a point some four feet east of the survey line, a tile empties. Presumably it is the same tile, but the course of the tile from one opening to the other is unknown — it may be straight; it may not. Only by opening the tile the entire length can the exact location be determined, so far as this record shows.

Id. We held the boundary line was too indefinite to establish title by acquiescence. Id. at 1393-94, 55 N.W.2d at 481.

This requirement for a specific line location is consistent with this general rule:

The line acquiesced in must be known, definite, and certain, or known and capable of ascertainment. The line must have certain physical properties such as visibility, permanence, stability, and definite location. The edge of a hayfield is not a sufficiently visible line, but a hedge or a roadway are visible lines.

12 Am.Jur.2d Boundaries § 86, at 487 (1997) (footnotes omitted). While landmarks such as fences or streams might not suffer from uncertainty as to their location, a fact question might still exist as to whether the parties intended that a fence or other marker was to be treated as a boundary rather than for some other purpose such as a barrier for livestock. See 12 Am.Jur.2d § 90, at 490-91; 11 C.J.S. Boundaries § 84, at 151 (1995).

Based on the wording of section 650.14 and these policy considerations, we hold that the establishment of title by acquiescence is effective only on a finding by the court that the requirements for acquiescence have been met. This finding must also establish a definite line'. De Viney, 243 Iowa at 1394, 55 N.W.2d at 481. This is so even if the prerequisites for title by acquiescence have been in existence for some time, as in this case. In the present case, the district court made the findings necessary for title by acquiescence, including a definite boundary line. It ruled that, as of 1983, title to the strip of land had passed by acquiescence to the Heers. However, even if these findings were correct, there is a practical problem in the present case if the action to establish title by acquiescence was barred by Iowa Code section 614.14(5)(b). That brings us to the next issue: whether the limitation section applies.

B. Application of section 6H.H(5)(b). The Heers resist application of the statute of limitation on two grounds: (1) their claim is not an “adverse claim” for the limitation statute, and (2) their claim does not “aris[e] ... by reason of a transfer” under the trustee’s deed but rather arises under chapter 650 (title by acquiescence).

An “adverse claim” under the statutory definition is

a claim that a transfer was or would be wrongful, a claim that a particular adverse person is the owner of or has an interest in the real estate, and a claim that would be disclosed by the examination of any document not of record.

Iowa Code § 614.14(3). The claim by the Heers is an adverse claim under this definition because they claim they are “the ownerfs] of or ha[ve] an interest in the real estate.”

In addition, the Heers contend their action does not “aris[e] ... by reason of a transfer of an interest in real estate by a trustee.” Rather, they claim, their action arises from the acquiescence of Tho-la and his predecessors. However, for the reasons already discussed, title by acquiescence could not be established until after the Heers filed their chapter 650 action. As of that time, the Heers did not have title to it; record title was still in Thola, as grantee under the trustee’s deed. The Heers’ claim was adverse and arose “by reason of’ the trustee’s deed. If it had not been for the trustee’s deed, this case would never have arisen. We hold the Heers’ claim “ar[ose] ... by reason of’ the trustee’s deed and was therefore barred at the time they filed their claim.

IY. Conclusion.

We conclude that plaintiffs’ claim of title by acquiescence could not have been established under chapter 650 prior to a court’s finding of the necessary elements of such a claim. Therefore, at the time Schilling deeded the land to the trust, he was still the owner of it. The Heers’ claim to establish title, having been brought more than a year following delivery of the trustee’s deed, was barred by Iowa Code section 614.14(5)(b).

We vacate the opinion of the court of appeals, reverse the judgment of the district court, and remand for dismissal of the petition.

DECISION OF COURT APPEALS VACATED; JUDGMENT OF DISTRICT COURT REVERSED; CASE REMANDED.

All justices concur except CADY, J., and McGIVERIN, C.J., who dissent, and NEUMAN, J., who takes no part.

CADY, Justice

(dissenting).

I respectfully dissent.

I would affirm the district court and the court of appeals. The Heers’ claim arose independent of the trustee’s deed and the statute of limitations under section 614.14(5) does not apply.

Under section 614.14(5), “an adverse claim arising ... by reason of a transfer of an interest in real estate by a trustee” must be brought within a year after the date of the recording of the deed “from which such claim may arise.” I agree with the majority that the claim of boundary by acquiescence falls within the legislative definition of an “adverse claim” under section 614.14(3). However, it fails to satisfy the further requirement of “arising ... by reason of a transfer” by a trustee. A claim of acquiescence does not arise by reason of a transfer of land by a trustee’s deed, but by conduct and consent of two adjoining property owners or their predecessors in interest. See Egli v. Troy, 602 N.W.2d 329, 332 (Iowa 1999). The nature of the underlying recorded title to the land is totally unrelated to a claim of acquiescence, and it cannot be said that the acquisition of land by a trustee’s deed gives rise to a claim of boundary by acquiescence. Acquiescence and title by deed are totally unrelated legal concepts.

Nevertheless, the majority maintains the claim of acquiescence in this case arose by reason of the trustee’s deed because the dispute between the parties would not have occurred if it had not been for the trustee’s deed. This may be true, but this type of factual analysis is contrary to the basic operation of a statute of limitations and has dangerous consequences.

A statute of limitations limits the filing of a legal claim to a period of time beginning with the act which gives rise to the claim. See 51 Am.Jur.2d Limitation of Actions § 107, at 679 (1970); see also Estate of Montag v. T.H. Agric. & Nutrition Co., 509 N.W.2d 469, 470 (Iowa 1993) (statute of limitations is the outer time limit to investigate claim and bring action which begins upon notice of potential action). The act is a form of notice. The majority, however, has interpreted the statute of limitations of section 614.14(5) to apply to a cause of action based on acts which do not give rise to the legal elements of the action. This is not only contrary to the basic operation of a statute of limitations, but has due process implications. A statute of limitations must only apply to the particular actions it recites, and no others. 51 Am.Jur.2d Limitation of Actions § 61, at 640.

The language “arising by reason of’ imparts not only a factual connection but a legal connection as well. It refers to the causal connection between the act and liability. See 2800 Corp. v. Fernandez, 528 N.W.2d 124, 128 (Iowa 1995) (the phrase “arising out of’ in our workers’ compensation law refers to the causal connection between injury and employment). The majority, however, has discarded the legal connection and would include any claim factually traced to the trustee’s deed. This broad interpretation could not have been intended by our legislature. Courts cannot, under the guise of construction, apply a statute of limitations to actions not within the provisions. 51 Am. Jur.2d Limitation of Actions § 61, at 640.

We are obligated to give statutes a reasonable interpretation. State ex rel. Schuder v. Schuder, 578 N.W.2d 685, 687 (Iowa 1998). Moreover, statute of limitations are not preferred and when faced with two possible interpretations, the preferred interpretation is the one which permits the action. In re Estate of Renwanz, 561 N.W.2d 43, 45 (Iowa 1997). I understand why our legislature would place a one-year statute of limitations on legal claims which are adverse to and arise from a trustee’s deed, but I cannot conceive of any reason our legislature would include claims with no legal connection to a deed, such as a claim for boundary by acquiescence. The statute should be interpreted to permit the Heers to pursue their claim.

McGIVERIN, C.J., joins this dissent.