State can be sued over governor's mansion furnishings, Iowa Supreme Court rules

A legal dispute over who owns the furniture in Gov. Kim Reynolds' home can continue after the Iowa Supreme Court ruled the state has given up its immunity from being sued.

The case is part of a decade-long dispute between the Terrace Hill Commission, the state agency responsible for the Terrace Hill mansion that serves as the official governor's residence; and the Terrace Hill Society Foundation, a private group that says it owns many of the furnishings, artworks and other items in the home.

In its lawsuit filed in 2022, the foundation alleged the commission for years had been refusing the foundation access to the mansion to monitor and maintain its collection, and now was denying the foundation owned any of the items the group had supplied.

Although the foundation does not claim ownership of all of the contents in the historic manor, its attorney told the Register in 2022 that the collection encompasses hundreds of items of furniture, books, fine china and historical artifacts, many of them "irreplaceable," and collectively insured for hundreds of thousands of dollars.

In response to the suit, the commission asked the court to dismiss the case under the doctrine of sovereign immunity, which holds the state can only be sued over issues it has consented to. Iowa law specifically permits lawsuits against the states over real estate disputes, but not over personal property, suggesting the state has not waived its immunity under those circumstances, its attorneys argued.

But the district court decided, and the Supreme Court unanimously affirmed on Friday, that the state is not immune in this case. Justice Christopher McDonald wrote for the court that there are multiple ways states can waive their immunity, including not just explicitly in statute, but implicitly by entering contracts with private parties.

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In this case, the commission and foundation entered an agreement in 1996 governing the care of and access to the foundation's collection. While that agreement has since lapsed, McDonald wrote the state opened itself to a suit by entering that contract and failing to return the disputed items once the contract ended.

Despite the state's general immunity from lawsuits, McDonald wrote, prior caselaw makes clear that "the state is answerable for the legal relationships it voluntarily creates.”

The decision sends the case back to the district court, where the foundation has asked for a declaratory judgment that it owns and has a right to access its items in the mansion.

The Iowa Attorney General's Office did not immediately respond to a request for comment. The foundation, in a statement through its attorney Jason Casini, praised the decision.

"For almost 50 years, the foundation has accepted donations of hundreds of items that have been placed on display at Terrace Hill, known as the collection," it said in its statement. "... The foundation retains its position that the lawsuit was filed as a last resort and it will continue to try to resolve the ownership issues on an amicable basis if at all possible."

About Terrace Hill

According to the Terrace Hill website, Iowa's first millionaire, Benjamin Franklin Allen, hired Chicago architect William W. Boyington to design the home, where he lived from 1869 to 1884.

The Second French Empire-style mansion took three years to build and was the grandest residence in the city, with two towers, columned porches, balconies, sweeping views and conveniences like gas lighting, indoor plumbing and even hot and cold running water.

It cost $250,000 to build, but Allen, ruined in a banking crash, sold it for just $60,000 to real estate magnate Frederick Hubbell in 1884, The Hubbell family vacated the home in 1957, then donated it to the state in 1971.

The Legislature voted to renovate it to serve as the governor's mansion. But it didn't initially allocate any funds for the project, so the Terrace Hill Society, later to add "foundation" to its name, formed the following year to raise the funds and to collect fine furniture, art, carpets, books, silver, china and other items to decorate and equip the vast house, empty since the Hubbells moved out.

One potential source of the current disagreement about who controls the collection: From the beginning, the society was tied closely to the state. Though it was a nonprofit corporation, among it incorporators was then-Iowa state Treasurer Maurice Baringer,  and contributors to the society were directed to send their donations in care of the treasurer's office.

Then-Gov. Robert Ray and his family moved in in 1976. Reynolds is the fifth Iowa governor to live there. Her predecessor, Terry Branstad, lived there twice, first from 1983 to 1999 and again from 2011 to 2017.

William Morris covers courts for the Des Moines Register. He can be contacted at wrmorris2@registermedia.com or 715-573-8166.

This article originally appeared on Des Moines Register: Iowa Supreme Court lets suit over governor's mansion furnishings resume