Keokuk State Bank v. Eckley

Citation354 N.W.2d 785
Decision Date22 May 1984
Docket NumberNo. 83-728,83-728
PartiesKEOKUK STATE BANK, Plaintiff-Appellee, v. Dallas ECKLEY, Karen Eckley, and Scott Eckley, Defendants-Appellants.
CourtCourt of Appeals of Iowa

Stephen C. Gerard II, Iowa City, for plaintiff-appellee.

D.W. Harris and R. Kurt Swaim, Bloomfield, for defendants-appellants.

Considered by OXBERGER, C.J., and HAYDEN, and SACKETT, JJ.


Defendants, Dallas, Karen, and Scott Eckley, appeal from a judgment on a forcible entry and detainer action for the plaintiff, Keokuk Bank. The trial court granted the Keokuk Bank possession of Dallas and Karen Eckleys' 27-acre homestead. They had purchased the property on contract from Downey in 1972. In 1981, Downey sold his vendor's interest in the contract to the Keokuk Bank. Defendant Scott Eckley is the 18-year-old son of Dallas and Karen. Scott lived with his parents and maintained a hog operation on one and one-half acres of the 27-acre tract.

The Eckley/Downey contract provided for a total purchase price of $33,800, payable at the rate of $200 on or before the first of each month commencing September 1, 1971. The payments were to apply first to principal and then to interest. The Eckleys were to pay real estate taxes and insure the property from fire, wind, and other casualties. They were also to maintain life insurance on Dallas. The insurance coverage in both cases was to be in an amount equal to the contract balance. At the time of trial the fair market value of the homestead was $97,435. The balance due under the contract was $22,639.85. The contract provided for forfeiture under Chapter 656 of the Iowa Code in the event the buyers failed to comply with the terms of the contract.

At about noon on November 1, 1982, Dallas and Karen were served with a notice of forfeiture of real estate contract which provided as follows:


                1.  You're in default for ailing to make six
                monthly installment payments: January, February
                March, April, May, and November
                1982.                                     $1,200.00
                2.  You have failed to pay real estate taxes
                when due for the revenue fiscal year 1980-81
                including penalty.                        $1,026.39
                Interest at 18% per annum from 6-22-82 to
                11-1-82 on advancement to pay real estate
                taxes.                                 $66.81 1
                3.  You have failed to pay real estate taxes
                when due for the revenue fiscal year 1981-82
                first half, plus penalty.                   $528.49
                Interest at the rate of 18% per annum from
                10-11-82 to 11-1-82 on advancement to pay real
                estate taxes.                                 $5.21
                4.  You have failed to keep the property insured
                and/or to deposit such insurance policy with
                Vendors Successor.
                5. You have failed to maintain life insurance
                and/or to deposit the policy with Vendors
                6. Vendors Successor has incurred attorneys
                fees in this action to collect the above sums
                payable or secured herein.                  $100.00
                Vendors Successor will incur the costs of
                serving this notice.
                    TOTAL AMOUNT DUE
                    (plus costs of service)               $2,926.90

The forfeiture notice was not directed to Scott, and Scott was not served with a copy of the notice.

In order to avoid forfeiture under the contract, the Eckleys had thirty days after service of notice to perform the terms and conditions in default. Iowa Code § 656.2(3) (1981). Dallas and Karen Eckley learned on the 30th day they would be unable to tender the alleged deficiencies. On December 7, 1982, the Keokuk Bank filed an affidavit, pursuant to Iowa Code section 656.5 (1981), in support of forfeiture of the real estate contract. On December 10, 1982, Scott offered to tender all deficiencies alleged by the bank. Scott's tender was rejected by the bank on December 14, 1982.

A notice to quit was served, and a forcible entry and detainer action was commenced against all three defendants. The trial court, after hearing the evidence, found that the bank had complied with all forfeiture requirements and therefore now had valid title to the real estate in question. The trial court further found that Scott was a nonparty, unemancipated minor living with his parents when the forfeiture occurred and that he therefore was not entitled to notice.


Defendant Scott appeals, contending that he was a party in possession and therefore entitled to a notice of forfeiture.

This action is in equity and we therefore find the facts anew. Lett v. Grummer, 300 N.W.2d 147, 148 (Iowa 1981); Freese Leasing Inc. v. Union Trust and Savings Bank, 253 N.W.2d 921, 925 (Iowa 1977). Equity abhors forfeitures. Lett v. Grummer, 300 N.W.2d at 149; Roshek Realty Co. v. Roshek Brothers Co., 249 Iowa 349, 358, 87 N.W.2d 8, 13 (1957).

In 1979 Scott received a loan from the Farmers Home Administration which enabled him to go into the hog business. At that time he opened a joint account with Farmers Home at the Keokuk Bank. Scott bought fencing and fenced off one and one-half acres of the 27-acre tract. He put up one hog house and three hog shades. He poured a permanent concrete slab. He did wiring and put up a trouble light. These improvements were paid for with checks drawn on Scott's account at the Keokuk Bank. Scott helped his parents with chores in exchange for use of the property.

Iowa Code section 656.2, with reference to service of a notice of forfeiture of real estate contract, provides:

Such forfeiture and cancellation shall be initiated by the vendor or by his or her successor in interest, by serving or causing to be served on the vendee or his or her successor in interest, and on the mortgagee or assignee for security purposes of the vendee or his or her successor in interest, if the interest of such mortgagee or assignee for security purposes is of record, and on the party in possession of real estate, ... [emphasis added]

Forfeiture is not effective if no notice has been served on the party in possession. Fulton v. Chase, 240 Iowa 771, 37 N.W.2d 920 (1949).

In law, the term [possession] is defined as meaning an act, fact, or condition of a person having such control of property that he may legally enjoy it to the exclusion of others having no better right than himself; the physical control of a thing which belongs of right to unqualified ownership in such a manner as to exclude control by other persons. [emphasis added]

Warren v. Yocum, 223 N.W.2d 258, 261 (Iowa 1974) (quoting 72 C.J.S. at 234).

Possession is further defined as:

That condition of facts under which one can exercise his power over a corporeal thing at his pleasure to exclusion of all other persons.

Warren v. Yocum, 223 N.W.2d at 261.

The term "possession" means the control or custody of a thing for occupation and enjoyment. As said in Redfield v. Utica & S.R. Co., 25 Bar. (N.Y.) 54:

Possession is the detention or enjoyment of a thing which a man holds or exercises by himself, or by another who keeps or exercises it in his name. Occupancy or possession, by one, implies the exclusion of every other individual from the occupancy and possession.

Starits v. Avery, 204 Iowa 401, 403, 213 N.W. 769 (1927).

Scott lived with his parents and used a small portion of the farm for his hog operation. There is no evidence that he used the premises to the exclusion of others; namely, his parents, who were the parties in possession.

This position is consistent with the holding in Eastman v. De Frees, 235 Iowa 488, 491, 17 N.W.2d 104, 105 (1945), where neither the tenants occupying an apartment house nor the wife who assisted with the apartment business were determined to be parties in possession; Hansen v. Chapin, 232 N.W.2d 506, 511 (Iowa 1975), where service on wife of vendee who lived with vendee on the premises was not necessary for forfeiture; and Warren v. Yocum, 223 N.W.2d 258, 261 (Iowa 1974), where persons who parked three or four vehicles on premises at various times were determined not to be parties in possession.

Scott was not the party in possession. He was merely a family member living on the premises. He was not a necessary party to the forfeiture notice. We agree with the trial court's finding that Scott was not a party in possession entitled to notice under Iowa Code section 656.2 (1981), and that the forfeiture was therefore not ineffective because of faulty notice.

There are several items on the forfeiture notice, however, which do not provide a basis for forfeiture.


The Keokuk Bank, in its notice of forfeiture, alleged that the November 1, 1982, payment of $200 had not been made.

The forfeiture notice was served shortly after 12 o'clock noon on November 1, 1982. The November payment was due on November 1 and would not be delinquent until November 2nd. The November payment was tendered to the bank on the afternoon of November 1 and was refused. The bank cannot forfeit the contract on the basis of the November payment. The alleged default had not occurred at time of service of notice. "[C]ontracts involving a forfeiture cannot be extended beyond the strict and literal meaning of the words used." Lane v. Crescent Beach Lodge and Resort, Inc., 199 N.W.2d 78, 81-82 (Iowa 1972). Because there was no default with respect to the November, 1982, payment, it cannot form a basis for forfeiture of the contract.


The Keokuk Bank, in its forfeiture notice, claimed attorney fees for the action to collect the sums payable therein. The requested attorney fees cannot be charged against Dallas and Karen. The cost of attorney fees, even if established as reasonable and necessary, are not included as part of the reasonable costs of serving notice under section 656.4. The statute makes no mention of attorney fees, and the court assumes the omission was deliberate.

A vendee, in order to comply with notice and avoid forfeiture under section 654.4, need not pay for preparation of the notice, only the reasonable costs of serving it. Miller v. American Wonderlands, Inc., 275 N.W.2d 399, 401 (Iowa...

To continue reading

Request your trial
7 cases
  • Peoples Bank & Trust Co. of Cedar Rapids v. Lala, 84-1564
    • United States
    • Court of Appeals of Iowa
    • June 4, 1986 precious property and should only be encumbered when the encumbrance meets statutory requirements. Keokuk State Bank v. Eckley, 354 N.W.2d 785, 792 (Iowa App.1984); Iowa Code § 561.13 (1985). See Brown v. Vonnahme, 343 N.W.2d 445 (Iowa 1984). A customer who seeks financial advice from a ......
  • Scheib Trust, Matter of, 88-1247
    • United States
    • Court of Appeals of Iowa
    • March 27, 1990
    ...give rise to an estoppel claim, the facts before us in this matter fall far short of the target. See Keokuk State Bank v. Eckley, 354 N.W.2d 785, 792 (Iowa App.1984). As mentioned above, after Poffenberger's letter of August 18, there was no reason for Rona to inform anyone that she would n......
  • Goodale v. Bray, 94-927
    • United States
    • United States State Supreme Court of Iowa
    • April 17, 1996
    ...contract is sufficient to demonstrate possession of nonagricultural commercial real estate); see also Keokuk State Bank v. Eckley, 354 N.W.2d 785, 788 (Iowa App.1984) (minor who lived with his parents and used a small portion of their farm for a hog operation but did not use the premises to......
  • Rolling Hills Bank v. Mossy Creek Farms Ltd., 12–0489.
    • United States
    • Court of Appeals of Iowa
    • January 9, 2013
    ...their course, when to allow them to proceed further would be a greater wrong than to enjoin them permanently.Keokuk State Bank v. Eckley, 354 N.W.2d 785, 792 (Iowa Ct.App.1984). In support of its equitable estoppel claim, the Bank alleges Southwest overpaid Mossy Creek in the amount of $320......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT