              IN THE SUPREME COURT OF IOWA
                              No. 09–0651

                        Filed February 11, 2011


ROLFE STATE BANK,

      Appellant,

vs.

CHARLES A. GUNDERSON and GLORIA K.
GUNDERSON, MARGARET GUNDERSON MOORE,
CLARA GUNDERSON HOOVER and HAROLD M.
HOOVER, HELEN D. GUNDERSON, DEANE C.
GUNDERSON and MARTHA G. CARLSON,

      Appellees.


      Appeal from the Iowa District Court for Pocahontas County,

Kurt L. Wilke, Judge.



      Bank appeals district court’s refusal to apply valuation discounts

under Iowa Code section 524.1406 in the event of a reverse stock split.

AFFIRMED.


      Mark McCormick, Robert A. Mullen, Michael R. Reck, and Kelsey

J. Knowles of Belin McCormick, P.C., Des Moines, for appellant.


      Charles A. Gunderson, Rolfe, pro se and for remaining appellees.
                                          2

APPEL, Justice.

      In this case, the court is confronted with an issue of first

impression regarding minority appraisal rights of the shareholders of a

state bank in a reverse stock split. Specifically, we address whether Iowa

Code section 524.1406(3)(a) (2009) 1 applies to state banks in a reverse

stock split.      The district court concluded that Rolfe State Bank

[hereinafter the Bank] erroneously interpreted Iowa law to require the

consideration of valuation factors recognized for federal tax purposes,

including minority status and lack of marketability discounts, in

appraising the value of minority shares in a reverse stock split.                 On

appeal, the Bank argues that the district court ignored both the plain

meaning of the statute and its legislative history.               For the reasons

expressed below, we affirm the decision of the district court and hold

that section 524.1406(3)(a) does not apply to state banks in a reverse

stock split.

      I. Factual and Procedural History.

      The Bank is an Iowa chartered state bank with its principal office

in Rolfe, Iowa.      Prior to the reverse stock split that gave rise to the

litigation in this case, the vast majority of shares were held by Dixon

Bankshares, Inc. The Gundersons were among thirty other shareholders

who held a minority interest in the Bank.

      Prior to a meeting of the board of directors to consider approval of

a reverse stock split, the Bank’s management hired BCC Advisors to

provide an independent appraisal of the value of the Bank’s common

stock held by minority shareholders. The independent appraisal by BCC

Advisors concluded that the fair market value of the shares as of

      1Unless   otherwise specified, all citations to the Iowa Code reference the 2009
Iowa Code.
                                           3

June 30, 2008, was $1857 per share.                 In reaching this figure, BCC

Advisors applied certain discounts to the value of the stock, including a

minority discount and a discount for lack of marketability.                       These

discounts amounted to a thirty-three percent reduction in the value of

the common stock compared to the value of shares owned by Dixon

Bankshares, the controlling shareholder.

       Based upon the independent appraisal, the board of directors

approved a reverse stock split, subject to shareholder approval.                    The

board determined that, if the reverse stock split were approved, each

minority shareholder whose ownership interests would be liquidated

would be paid $2000 per share of common stock. The board based the

$2000     figure   on    the   appraisal     made     by   BCC     advisors. 2      The

shareholders, and subsequently the regulatory authorities, approved the

reverse stock split.

       As a result of the reverse stock split, the Gundersons were forced

to surrender their minority shares to the Bank, and they filed a notice of

their exercise of appraisal rights pursuant to Iowa Code section

490.1323.       The Gundersons asserted that the fair value of their

surrendered common stock was $2700 per share. In response, the Bank
paid the Gundersons $2000 per share, plus interest. The Gundersons

responded by demanding payment in the amount of $2700, plus interest,

less any prior payments by the Bank.

       Pursuant to Iowa Code section 490.1330, the Bank filed a petition

with the district court to determine the fair value of the shares of

common stock formerly owned by the Gundersons.                      Relying, in part,

        2The board increased the value per share from $1857 to $2000 by (1) adding

$70 to account for the estimated amount of earnings per share that would occur in the
period of time between the appraisal date and the closing of the reverse stock split, and
(2) adding an additional $73 to round the value of each share up to $2000.
                                     4

upon Iowa Code section 524.1406(3)(a), the Bank requested that the

district court determine that: (1) the $2000 per share, plus interest, was

the fair value of the shares the Gundersons had surrendered; (2) the

Gundersons acted arbitrarily, vexatiously, and not in good faith with

respect to their appraisal rights; and (3) the court assess all the costs of

the proceeding, including the reasonable compensation and expenses of

any appraisers appointed by the court, as well as plaintiff’s attorneys’

fees, against the Gundersons.

      The Gundersons answered and filed motions for partial summary

judgment    and   for   summary     judgment,    which   presented    three

independent bases.      First, the Gundersons asserted that Iowa Code

section 524.1406(3)(a) does not apply to the appraisal rights of minority

shareholders of banks in a reverse stock split. Second, the Gundersons

argued that, even if Iowa Code section 524.1406(3)(a) applied to reverse

stock splits of banks, it did not apply to transactions where the shares of

stock were acquired prior to July 1995. Third, the Gundersons argued

that if Iowa Code section 524.1406(3)(a) did apply, the result would be an

unconstitutional taking without compensation in violation of the state

and federal constitutions.

      The district court sustained the Gundersons’ motion for partial

summary judgment.        The district court determined that, while the

language in Iowa Code section 524.1406(3)(a) could be literally applied to

all transactions involving appraisal rights, it also could reasonably be

interpreted to apply only in the context of mergers, consolidations, and

conversions because of the statutory context in which the provision was

found. The Bank filed an application for interlocutory appeal, which we

granted.
                                    5

      II. Standard of Review.

      This court reviews issues of statutory interpretation for correction

of errors at law. State v. Sluyter, 763 N.W.2d 575, 579 (Iowa 2009). To

the extent constitutional issues are raised, review is de novo. State v.

Groves, 742 N.W.2d 90, 92 (Iowa 2007).

      III. Discussion.

      A. The Question of Ambiguity.          The question posed by this

interlocutory appeal is whether Iowa Code section 524.1406(3)(a)

authorizes a bank to consider valuation factors recognized for federal tax

purposes,   including    minority   and    marketability   discounts,   in

determining the fair value of extinguished shares in a reverse stock split.

Before engaging in statutory construction, we examine whether the

language of the statute is ambiguous. State v. Tesch, 704 N.W.2d 440,

451 (Iowa 2005). If the statute is unambiguous, we look no further than

the statute’s express language. Id.; IBP, Inc. v. Harker, 633 N.W.2d 322,

325 (Iowa 2001).    If, however, the statute is ambiguous, we inquire

further to determine the legislature’s intent in promulgating the statute.

Harker, 633 N.W.2d at 325; United Fire & Cas. Co. v. Acker, 541 N.W.2d

517, 519 (Iowa 1995); see Iowa Code § 4.6.

      A statute is ambiguous “if reasonable minds could differ or be

uncertain as to the meaning of a statute.” Holiday Inns Franchising, Inc.

v. Branstad, 537 N.W.2d 724, 728 (Iowa 1995).         Ambiguity not only

arises from the meaning of particular words, but also “from the general

scope and meaning of a statute when all its provisions are examined.”

Id.; accord State v. Wiederien, 709 N.W.2d 538, 541 (Iowa 2006). Words

are often chameleons, drawing their color from the context in which they

are found. See Carolan v. Hill, 553 N.W.2d 882, 887 (Iowa 1996). The

overall structure of a statute can have strong influence on the meaning of
                                             6

particular words and phrases. See AOL LLC v. Iowa Dep’t of Revenue,

771 N.W.2d 404, 409 (Iowa 2009).                   As a result, courts should be

circumspect regarding narrow claims of plain meaning and must strive to

make sense of our law as a whole. Karl N. Llewellyn, Remarks on the

Theory of Appellate Decision and the Rules or Canons About How Statutes

Are to Be Construed, 3 Vand. L. Rev. 395, 399 (1950) (discussing the

need to interpret words in context); 2A Norman J. Singer & J.D. Shambie

Singer,    Statutes      and   Statutory     Construction,    §   46.1,   at   151–53

(Thompson/West 7th ed. 2007) (describing difficulties in applying the

plain meaning rule); see NLRB v. Federbush Co., 121 F.2d 954, 957 (2d

Cir. 1941) (Judge Learned Hand explaining, “Words are not pebbles in

alien juxtaposition; they have only a communal existence; and not only

does the meaning of each interpenetrate the other, but all in their

aggregate take their purport from the setting in which they are

used . . . .”).

       We now turn to consideration of whether the language of the

applicable        Code   provision,   Iowa       Code   section   524.1406(3)(a),   is

ambiguous. This section provides:

       3. a. Notwithstanding any contrary provision in chapter
       490, division XIII, in determining the fair value of the
       shareholder’s shares of a bank organized under this chapter
       or a bank holding company as defined in section 524.1801 in
       a transaction or event in which the shareholder is entitled to
       appraisal rights, due consideration shall be given to
       valuation factors recognized for federal tax purposes,
       including discounts for minority interests and discounts for
       lack of marketability.

Iowa Code § 524.1406(3)(a) (emphasis added).

       The Bank contends that the plain language of Iowa Code section

524.1406(3)(a) is unambiguous.             The Bank argues that the phrase “a

transaction or event” is an open-ended provision that applies not only to
                                     7

bank mergers, but to any kind of transaction that triggers appraisal

rights under Iowa Code chapter 490, including reverse stock splits.

Under the Bank’s approach, the use of the broad phrase “a transaction

or event” requires this court to approve of the application of minority and

lack of marketability discounts in this reverse-stock-split case.

      The Bank’s approach, however, is not the only reasonable

interpretation of section 524.1406(3)(a).     Although “a transaction or

event,” viewed alone, appears to have broad application, the Gundersons

argue that the phrase “transaction or event” is found in the context of a

merger section of the Code and therefore applies only to transactions or

events that are mergers.     Further, the Gundersons suggest that the

clause in which the phrase “transaction or event” appears does not

modify the term “bank,” but only the term “bank holding company.”

      We conclude that reasonable minds could differ regarding the

meaning of the statute. While the language used by the legislature at

first blush appears to be broad, we have in many cases stated that broad

and even unqualified language must be evaluated in its context.        See

Acker, 541 N.W.2d at 520 (stating that the meaning of the unqualified

and broad term “any person” must be considered in its overall context);

Boone State Bank & Trust Co. v. Westfield Ins. Co., 298 N.W.2d 315, 317

(Iowa 1980) (stating that broad language of a statute is “not conclusive”

and is “affected by its context”). We agree with the Gundersons that it

seems odd that an important change in appraisal law with respect to

banks that covers a wide variety of transactions would be buried in a

section of the Code dealing with bank mergers. It is at least plausible

that the clause containing the phrase “transaction or event” is related

only to bank holding companies and not to banks.
                                       8

          The meaning of section 524.1406(3)(a), therefore, is ambiguous.

Because of the ambiguity, further inquiry into the legislature’s intent in

enacting and amending section 524.1406(3)(a) is necessary. Harker, 633

N.W.2d at 325; Acker, 541 N.W.2d at 519; see Iowa Code § 4.6.

          B. Legislative Intent and Section 524.1406(3)(a).              “ ‘The

polestar of statutory interpretation is to give effect to the legislative intent

of a statute.’ ” Klinge v. Bentien, 725 N.W.2d 13, 18 (Iowa 2006) (quoting

State v. Schultz, 604 N.W.2d 60, 62 (Iowa 1999)).              In determining

legislative intent, we avoid placing undue importance on isolated portions

of an enactment by construing all parts of the enactment together. Gen.

Elec. Co. v. Iowa State Bd. of Tax Review, 702 N.W.2d 485, 489 (Iowa

2005). In the end, the object of our inquiry is to seek a result “ ‘that will

advance, rather than defeat, the statute’s purpose.’ ” Klinge, 725 N.W.2d

at 18 (quoting Schultz, 604 N.W.2d at 62).

          We begin our analysis of legislative intent by reviewing the

legislative history related to reverse stock splits and to marketability and

minority discounts. The trail begins with our decision in Security State

Bank v. Ziegeldorf, 554 N.W.2d 884 (1996). In Ziegeldorf, we considered

the meaning of the term “fair value” under Iowa Code section

490.1301(4), which applied in cases involving dissenters to reverse stock

splits.     554 N.W.2d at 888.     We held in Ziegeldorf that minority and

marketability discounts could not be applied in determining “fair value”

of dissenters’ shares in reverse stock splits. Id. at 889–90.

          In 1999, the legislature responded to our decision in Ziegeldorf as

to bank mergers by amending the Iowa Banking Act through the

enactment of House File 445. 1999 Iowa Acts ch. 162, § 1 (codified at

Iowa Code § 524.1406 (Supp. 1999)).          This legislation amended Iowa

Code section 524.1406, a provision of the Iowa Banking Act dealing with
                                          9

bank mergers, by adding a new subsection.                 Id.   The new subsection

provided that in determining the fair value of shareholder’s shares

“under this section,” due consideration was required to be given to a

number of valuation factors, “including discounts for minority interests

and for lack of marketability.” Id. Because section 524.1406 dealt solely

with bank mergers, the use of the term “in this section” indicated a

legislative intent to limit the application of marketability and minority

discounts to bank mergers. See id. Consistent with this interpretation,

the explanation to the bill stated that it related to “the determination of

fair value of a dissenting shareholder’s shares in a state or national bank

which is a party to a merger.”            H.F. 445, 78th G.A., Reg. Sess.,

explanation (Iowa 1999) (emphasis added). The 1999 statutory change

did not apply to bank holding companies and did not apply to

transactions that were not mergers.

        In 2000, the legislature revisited the issue of marketability and

minority discounts in the context of bank holding companies by enacting

House File 2197. 2000 Iowa Acts ch. 1211, §§ 1–3 (codified at Iowa Code

§§ 490.1301, 490.1330, 524.1406 (2001)).             House File 2197 contained

three    interrelated   sections   that       must   be    examined   carefully   to

understand the legislative intent behind the enactment.

        The first section of House File 2197 added a new provision to the

dissenter’s rights provisions of the Iowa Business Corporation Act by

amending Iowa Code section 490.1330. Id. § 1. Section one included a

new provision stating that fair value of shares of a bank holding company

could be determined as provided in section 524.1406(3). Id. Thus, in

section one, the legislature clearly intended to expand the applicability of

marketability and minority discounts as allowed in Iowa Code section

524.1406(3) beyond banks to include bank holding companies. See id.
                                    10

       The second section of House File 2197 amended the definition of

“fair value” in Iowa Code section 490.1301(4) of the Iowa Business

Corporation Act by adding the following language:

       With respect to a dissenter’s shares that are shares of a
       corporation that is a bank holding company as defined in
       section 524.1801, the factors indentified in section
       524.1406, subsection 3, paragraph “a”, shall also be
       considered.

Id. § 2. This language in House File 2197, like section one, applied only

to bank holding companies. Id. It expanded the use of marketability and

minority discounts to include not only mergers, but other transactions in

which shareholders of bank holding companies had the rights of

dissenting shareholders under the Iowa Business Corporation Act,

including reverse stock splits. See Iowa Code § 490.1302(1)(a), (d).

       The third section of House File 2197 amended Iowa Code section

524.1406.    2000 Iowa Acts ch. 1211, § 3.     Section three contains the

language that is the focus of the dispute in this case.       This section

enacted the following changes into law:

       3. a. Notwithstanding any contrary provision in chapter
       490, division XIII [the Iowa Business Corporation Act
       division dealing with rights of dissenting shareholders], in
       determining the fair value of shareholder’s shares under this
       section of a bank organized under this chapter or a bank
       holding company as defined in section 524.1801 in a
       transaction or event in which the shareholder is entitled to
       the rights and remedies of a dissenting shareholder, due
       consideration shall be given to valuation issues
       acknowledged and authorized by the Internal Revenue Code,
       as defined in section 422.3 factors recognized for federal and
       estate tax purposes, including discounts for minority
       interests and discounts for lack of marketability.

Id.   Aside from technical changes, the remaining language in section

three largely ensures that the procedural provisions of Iowa Code section
                                      11

524.1406 apply to “a bank organized under this chapter or a bank

holding company as defined in section 524.1801.” Id.

      The explanation of House File 2197 states, “This bill provides for

determination of value of the shares of a dissenting shareholder of a

bank holding company.” H.F. 2197, 78th G.A., Reg. Sess., explanation

(Iowa 2000).    The explanation also notes that the bill provides “a

corporation that is a bank holding company may elect to have fair value

of the bank holding company’s shares determined under Code section

524.1406, notwithstanding the provisions of Code chapter 490 relating to

corporations.” Id. The explanation does not contain any suggestion that

the applicability of marketability and minority discounts to banks has

been affected in any way by the legislation. Id.

      In light of this legislative history, we view the gist of the issue

before us as this:    Did the legislature in House File 2197 intend to

expand   the   applicability   of   valuation   factors,   including   lack   of

marketability and minority discounts, to transactions—other than bank

mergers—involving banks? We conclude that the legislature intended in

House File 2197 to expand the availability of the valuation factors,

including lack of marketability and minority discounts, to bank holding

companies, but the legislature did not intend to affect the preexisting law

with respect to banks. We reach this conclusion for several reasons.

      At the outset, we regard it as unlikely that the legislature would

place a significant expansion of the application of minority and

marketability discounts with respect to a wide variety of transactions in a

division of the Iowa Banking Act dealing solely with bank mergers.

Although such an approach is conceivable, it defies logical drafting and

would be a trap for the unwary. Instead, if the legislature intended to

broadly apply marketability and minority discounts to banks in all
                                     12

transactions in which shareholders are entitled to appraisal rights, it

would have more likely placed this language in the general provisions of

the Iowa Business Corporation Act.

      Indeed, this is exactly what the legislature did with respect to bank

holding companies.    In section two of House File 2197, the legislature

announced in the Iowa Business Corporation Act in straight-forward

language that “fair value” with respect to all appraisals involving

dissenter’s rights in the context of bank holding companies required

consideration of minority and marketability discounts. 2000 Iowa Acts

ch. 1211, § 2. The Iowa Business Corporation Act division on appraisal

rights is precisely where one would expect such a broad provision to be

placed. Interestingly, however, section two did not include references to

banks, but only to bank holding companies. Id. The express inclusion of

bank holding companies in section two implies the exclusion of banks.

Kucera v. Baldazo, 745 N.W.2d 481, 487 (Iowa 2008) (applying the canon

expressio unius est exclusio alterius, which recognizes that “ ‘legislative

intent is expressed by omission as well as by inclusion, and the express

mention of one thing implies the exclusion of others not so mentioned.’ ”

(quoting Meinders v. Dunkerton Cmty. Sch. Dist., 645 N.W.2d 632, 637

(Iowa 2002))). When the legislature provides for expanded application of

marketability and minority discounts for bank holding companies in the

bright sunshine of Iowa Code section 490.1301, we do not think it very

easy to imply that the legislature intended the same result to occur with

respect to banks in the shadows of the merger provisions of Iowa Code

chapter 524.

      The language in section three of House File 2197 may be

interpreted in a fashion consistent with this approach.          The new

language of section three appears to have been designed to blend the
                                        13

preexisting law found in Iowa Code section 524.1406(3) with respect to

banks with the change in law for bank holding companies contained in

section two. See 2000 Iowa Acts ch. 1211, § 3. Section three altered

524.1406(3)(a) by striking the phrase “under this section” and replacing

it with the phrase “of a bank organized under this chapter or a bank

holding company as defined in section 524.1801.”          Id.   The drafters

apparently elected in the amended version of section 524.1406(3)(a) to

describe both banks and bank holding companies by the provisions of

the Code authorizing their existence.        See id.   A change from “this

section” to “under this chapter” may be construed as a technical change

designed to ensure definitional consistency and parallel structure.

      Our approach is supported by the explanation of House File 2197.

It is striking that the explanation of the bill is expressed solely in terms

of expanding valuation discounts to bank holding companies. See H.F.

2197, explanation. The explanation does not mention the expansion of

the applicability of these discounts to banks. Id. We think it unlikely

that the legislature would have intended to significantly expand the

applicability of these discounts with respect to banks in an ambiguous

legislative provision that fails to mention the expansion in the

explanation. See City of Cedar Rapids v. James Props., Inc., 701 N.W.2d

673, 677 (Iowa 2005) (“We give weight to explanations attached to bills as

indications of legislative intent.”).

      The Bank asserts that the title of House File 2197, as enacted by

the legislature, suggests that the legislature intended to apply valuation

discounts equally to banks and bank holding companies. See State v.

Iowa Dist. Ct., 630 N.W.2d 778, 781 (Iowa 2001) (explaining that the

statute’s title may be considered in determining legislative intent). House

File 2197 was entitled, “An Act relating to the determination of fair value
                                    14

of the shares of dissenting shareholders of a bank or bank holding

company.” 2000 Iowa Acts ch. 1211. The Bank argues that the title’s

reference to banks and bank holding companies is evidence of the

legislature’s intent to alter substantive provisions within the Iowa

Banking Act with respect to valuation of a bank’s shares.

      House   File   2197,   however,    included   both   substantive   and

procedural aspects.     The inclusion of banks in the title does not

necessarily mean that the substantive provisions of prior law regarding

the applicability of minority and marketability discounts were affected.

      Finally, the first two sections of House File 2197 both explicitly

cross-reference section 524.1406.        Id. §§ 1–2.     Section one, which

amended section 490.1330, provided that a bank holding company may

elect to have fair value “determined as provided in section 524.1406,

subsection 3.” Id. § 1 (emphasis added). Similarly, section two, which

amended section 490.1301(4), provided that “[w]ith respect to a

dissenter’s shares that are the shares of a corporation that is a bank

holding company as defined in section 524.1801, the factors identified in

section 524.1406, subsection 3, paragraph ‘a,’ shall also be considered.”

Id. § 2 (emphasis added). Yet, House File 2197 failed to include a similar

cross-reference to any provision within the Iowa Banking Act, or the Iowa

Business Corporation Act for that matter, to manifest an intent to extend

the valuation discounts to reverse stock splits of banks. See id. §§ 1–3.

In fact, House File 2197 cross-references provisions of the Iowa Code

that exclusively deal with bank holding companies. Id.

      In sum, the statutory context and legislative history of section

524.1406(3)(a) lead us to conclude that the legislature did not intend to

extend minority and lack of marketability discounts to the valuation of

shares of a bank in a reverse stock split.             Instead, applying the
                                    15

established rules of statutory construction, we conclude that the

amendment to section 524.1406(3)(a) was intended to effectuate the

extension of the discounts to bank holding companies. If the legislature

wishes to amend Iowa Code chapter 490 to apply the discounts to banks

in a wide variety of appraisal rights contexts, including a reverse stock

split, it is free to do so.

       IV. Conclusion.

       We conclude that the minority and lack of marketability discount

provisions of Iowa Code section 524.1406(3)(a) do not apply to reverse

stock splits of banks. As a result, the district court judgment is affirmed.

Because we find in favor of the Gundersons on the issue of statutory

interpretation, we need not consider the other issues the Gundersons

raise on this appeal.

       AFFIRMED.
