Hagarty v. Dysart-Geneseo Community School Dist.

• Citation: 282 N.W.2d 92
• Decision Date: 25 July 1979
• Docket Number: No. 62466,DYSART-GENESEO,62466
• Parties: Marilyn Anne HAGARTY, Appellant, v.COMMUNITY SCHOOL DISTRICT et al., Appellees.
• Court: United States State Supreme Court of Iowa

Page 92

282 N.W.2d 92

Marilyn Anne HAGARTY, Appellant, v. DYSART-GENESEO COMMUNITY SCHOOL DISTRICT et al., Appellees.

No. 62466.

Supreme Court of Iowa.

July 25, 1979.

James L. Sayre and Mark R. Adams, of Dreher, Wilson, Adams & Jensen, Des Moines, for appellant.

Marsha K. Ternus and William F. Fanter, of Bradshaw, Fowler, Proctor & Fairgrave, Des Moines, for appellees.

Considered by REYNOLDSON, C. J., and UHLENHOPP, HARRIS, McCORMICK and LARSON, JJ.

McCORMICK, Justice.

Plaintiff Marilyn Anne Hagarty brought a declaratory judgment action seeking to establish her right to a teaching position with defendant Dysart-Geneseo Community School District. The school board and its members were also defendants. The trial court sustained defendants' motion to dismiss a division of plaintiff's petition requesting declaration of her contractual rights and entered judgment on the merits against her on separate divisions based upon fraud and equitable estoppel. We affirm the trial court.

The questions are whether the trial court erred in ruling against plaintiff on the merits of either her fraud or equitable estoppel claims and in dismissing her request for declaratory judgment on her contract claim. The case was tried in equity and our review is therefore de novo.

Many of the facts were stipulated although the record was supplemented by testimony of plaintiff, superintendent Charles Liston and school board chairman Robert W. Higgins. The parties agree on the sequence of events but differ as to the inferences to be drawn from them and their legal effect. Plaintiff has bachelor's and master's degrees in music education. She was employed by the defendant district as a vocal music instructor for grades kindergarten through eighth grade from 1970 through the 1976-1977 school year.

In the spring of 1977 superintendent Liston determined that state aid would be reduced for the ensuing school year because of declining enrollment and concluded that staff reduction would be necessary. After consulting with his three principals, he decided that plaintiff's position should be eliminated and so advised the school board. The board adopted the superintendent's recommendation. Procedures were initiated to eliminate plaintiff's position and terminate her contract in accordance with the provisions of the amendment to section 279.13, The Code 1975, effected by 1976 Session, 66th G.A., ch. 1151, section 1.

Plaintiff received a notice of recommendation to terminate contract from superintendent Liston on March 4, 1977, informing her that her contract was being recommended for termination because her position would be eliminated due to budgetary constraints caused by declining enrollment. Upon plaintiff's request a private hearing was held with the board and superintendent as provided in the statute. Following the hearing, the board decided to accept the superintendent's recommendation for the reasons given by him. Written findings of fact and conclusions of law setting forth the decision terminating plaintiff's contract effective at the end of the then current school year were filed April 1, 1977. Plaintiff did not appeal the decision.

Independent of these events a high school history teacher resigned February 14, 1977, and his resignation was formally accepted March 14, 1977. On March 1, 1977, a middle school social studies teacher applied for that position and it was given to him by board action on April 11, 1977.

The board offered the middle school social studies position to plaintiff by contract tendered to her on April 15, 1977. The board offer was made pursuant to its interpretation of a written staff reduction policy which it had adopted in 1973 at the request of the district teachers' association. As originally adopted the policy provided:

Any teachers who have their contracts terminated under this policy, other than probation status teachers, will have recall rights to positions for which they are qualified for a period of one year from the date of their termination, and shall be recalled to that position in reverse order of termination.

In 1976 the board amended the policy by adding:

These recall rights will be extended only once to the qualified personnel.

On May 4, 1977, the contract for the social studies teaching position was returned by plaintiff unsigned.

On June 4, 1977, a second grade teacher resigned for health reasons. Superintendent Liston subsequently recommended to the board that the second grade be reduced from three to two sections, eliminating the vacated position, thus freeing funds which he suggested be used to reinstate the position of elementary vocal music teacher and hire a part-time librarian. The board agreed with the recommendation in a decision made June 14, 1977, and advertised the positions.

Plaintiff applied for the music teaching position, but the board gave the job to another applicant who would commence employment lower on the salary schedule, permitting the district to fill both the music and library positions for what it would have cost to employ plaintiff alone.

Plaintiff then commenced this declaratory judgment action.

I. The fraud claim. Plaintiff's fraud claim is framed in equity. She acknowledges the elements of the cause of action are those stated in Wilden Clinic, Inc. v. City of Des Moines, 229 N.W.2d 286, 289 (Iowa 1975):

(1) representation, (2) falsity,

(3) materiality, (4) scienter,

(5) intent to deceive, (6) reliance,

(7) resulting injury and damage.

She had the burden to prove her claim by a preponderance of clear and convincing evidence. Hall v. Wright, 261 Iowa 758, 766, 156 N.W.2d 661, 666 (1968).

The representation which plaintiff alleges was false is the statement by the superintendent that her position was to be eliminated. This representation occurred during the sequence of events culminating in the board decision to eliminate her position and terminate her contract on April 1, 1977. As a statement of intention to eliminate the position, the representation was a statement of intention to perform a future act. As such it is actionable if made with an existing real intention not to perform. Grefe v. Ross, 231 N.W.2d 863, 867 (Iowa 1975).

In holding the evidence insufficient to establish fraud, the trial court found this representation was not false when it was made. In contending fraud was proved, plaintiff alleges there is "no question that such representation, in fact, was not true, inasmuch as the position was reinstated shortly after the decision to terminate was made."

In order to prove the "falsity" element of a fraud action, it is necessary to establish that the representation was false at the time it was relied upon. Joanette Juniors v. Board of Home Missions of Congregational and Christian Churches, 197 Misc. 291, 94 N.Y.S.2d 753 (1949); Pasko v. Trela, 153 Neb. 759, 46 N.W.2d 139 (1951); 37 C.J.S. Fraud § 17c (1943). See also Workman v. Sharp, 192 Iowa 864, 868-869, 185 N.W. 920, 922 (1921).

In this case plaintiff asserts she did not appeal her termination to an adjudicator because of the assurances in the private hearing of March 29, 1977, that the position would be eliminated. Under the statute she had ten days after the board's April 1, 1977, decision within which to appeal. See 1976 Session, 66th G.A., ch. 1151, § 1(7). If the representation was still true at the expiration of that time, it is not actionable. Without deciding whether her reliance might be deemed complete prior to that time, it was certainly complete when the termination became final.

Fraud may be established by circumstantial evidence, and the rules in equity are not so strict as those at law. Wilden Clinic, Inc., 229 N.W.2d at 292. However, the fact that the vocal music position was reinstated subsequently is not alone sufficient to show that the earlier representation was false. Like the trial court, we do not find sufficient evidence to hold plaintiff met her burden to prove the representation was false at the time of the events ending in termination of her contract.

Relevant here is the testimony of superintendent Liston:

Q. Now, going back to Marilyn, isn't it true that at the time this position was eliminated you were not aware of anything that was going to happen in the future, that was going to allow you to put it back in? A. I'll swear on a stack of Bibles a hundred feet high that I did not know.

Q. As far as you were concerned it was out? A. Yes, I had two goals that had to be satisfied; we had to cut the budget, and I wanted the best for the school, and that had been accomplished.

Also relevant is plaintiff's testimony on this point:

Q. Now, a couple of other things I want to visit with you about was at the time that Mr. Liston visited with you and told you that he did not believe there would be an opening or that the music position would be reinstated at least for the next year, do you have any reason to believe that he had an idea that it was going to be put back in? . . . A. I know what you're talking about. This woman with the eye trouble. I don't know if it was there had been some thought she would probably retire because she was having such difficulty. First it was that she was coming back and then it was that she was not coming back, so probably in his mind there could have been the idea that she had quit,...