Mart v. Mart

• Decision Date: 17 October 2012
• Docket Number: No. 11–0658.,11–0658.
• Citation: 824 N.W.2d 535
• Parties: Dennis MART, Thomas G. Mart, and Cheryl Mart, Plaintiffs–Appellants, v. Mike MART, Defendant–Appellee.
• Court: Iowa Court of Appeals

824 N.W.2d 535

Dennis MART, Thomas G. Mart, and Cheryl Mart, Plaintiffs–Appellants,
v.
Mike MART, Defendant–Appellee.

No. 11–0658.

Court of Appeals of Iowa.

Oct. 17, 2012.

[824 N.W.2d 537]

Michael R. Bovee of Montgomery, Barry, Bovee & Barry, Spencer, for appellants.

Dan Connell of Dan Connell P.C., Storm Lake, for appellee.

Heard by DOYLE, P.J., and DANILSON and MULLINS, JJ.

DANILSON, J.

Farmland landlords appeal from the denial of this forcible entry and detainer action. Where the farm tenant cured his material breach by restoration of wetlands and the landlords¹ incurred no damages, the landlords are not entitled to forcible entry and detainer.

I. Background Facts and Proceedings.

George Mart previously owned the leased property at issue here–240 acres of farmland in Dickinson County. Dennis Mart, Thomas Mart, Cheryl Mart, and Mike Mart are the children of George.

On March 30, 1987, 8.7 acres (sitting in two different spots) of the farmland were determined to be “converted wetland” by the USDA.² On March 14, 1988, George received the “Highly Erodible Land and Wetland Conservation Determination,”

[824 N.W.2d 538]

which stated, “Drainage of Wetlands in Fields 2, 3 and planting to commodity crops would constitute a violation of Swampbuster.” ³

On November 30, 1998, George leased the farmland to Mike for “$85.00 per acre for tillable acres as determined by Government survey.” The lease was to end on February 28, 2018. The lease also provided:

2. Rent....

... Participation of this farm in any offered program by the U.S. Department of Agriculture or any state or crop production control or soil conservation, the observance of the terms and conditions of this program, and the division of farm program payments requires Landlord's consent....

....

4. Input Costs and Expenses.... Tenant shall only be entitled to pasture or till those portions of the Real Estate designated by landlord....

5. Proper Husbandry; Harvesting of Crops; Care of Soil, Trees, Shrubs and Grass. Tenant shall farm the Real Estate in a manner consistent with good husbandry, seek to obtain the best crop production that the soil and crop season will permit, properly care for all growing crops in a manner consistent with good husbandry, and harvest all crops on a timely basis.... Tenant shall comply with all terms of the conservation plan and any other required environmental plans for the leased premises. Tenant shall do what is reasonably necessary to control soil erosion including, but not limited to the maintenance of existing watercourses, waterways, ditches, drainage areas, terraces and tile drains, and abstain from any practice which will cause damage to the Real Estate.

Section twelve of the lease allowed either tenant or landlord to “pursue the legal and equitable remedies” if the other violated the terms of the lease.

George died in 1999, and the property at issue passed to his four children as joint tenants in common. Mike continued to farm the property. Mike was aware of the wetland designation since 1987 and the 8.7 acres of wetland were left in alfalfa and not farmed until the 2008 crop year when Mike tilled it and planted corn.

Mike informed the USDA office that he had planted corn on the wetland, and the Dickinson County Farm Service Agency (FSA) found Mike's actions violated the Swampbuster provisions of the Food Security Act of 1985 (16 U.S.C. §§ 3801, 3821–3824).

In a letter dated September 11, 2008, sent to Mike and the landlords, the USDA Natural Resources Conservation Service (NRCS) stated there had been a preliminary technical determination that “you have converted wetlands” and “[p]roduction of an agricultural commodity or further manipulation of Converted Wetlands (CW) can cause ineligibility for Farm Program benefits.” A subsequent letter from the NRCS, dated October 22, 2008, informed the parties that a final technical determination had been reached concluding that the Swampbuster law had been violated by the conversion of the wetlands.

[824 N.W.2d 539]

Mike appealed, and he and his siblings—as co-owners of the land Mike farmed—were notified the Dickinson County FSA Committee⁴ would review the determination on February 9, 2009. Letters from the FSA dated February 17, 2009, were sent to each of the siblings informing them the wetlands determination was correct and informed them of appeal options.

Mike restored the wetlands for the 2009 crop year.

In April 2009, Dennis, Thomas, and Cheryl each received notice from the FSA that the violation of Swampbuster made them ineligible to receive USDA benefits. Thomas was directed to refund $152,093.38 in 2008 government farm payments and loans he had received. Dennis was directed to refund the 2008 CRP payment he had received in the amount of $385. Cheryl was advised she would be ineligible for USDA program benefits for all subsequent program years until the wetland was restored. Dennis, Thomas, and Cheryl all appealed the benefit ineligibility determination, contending they had no knowledge of and did not consent to the planting of the converted wetlands. Ultimately, on June 4, 2009, the FSA “determined Good Faith on your behalf and the Landlord Exemption” applied and the 2008 benefits were reinstated. However, “to avoid loss of benefits for future years, the Converted Wetlands must be established and maintained in a way that complies with wetlands standards and requirements for a converted wetland classification.” Dennis, Thomas, and Cheryl were thus each required to ensure future compliance.

On August 31, 2009, Mike received a notice to quit and vacate the farmland on or before March 1, 2010,

for reason that you breached the provisions of the Farm Lease dated November 30, 1998, ... by failing to comply with the terms of the conservation plan and other required environmental plans for the real estate; by failing to maintain waterways and drainage areas, and by failing to abstain from practices which damaged the real estate. See Final Technical Determination issued by the Natural Resources Conservation Service and NRCS Notice attached hereto and incorporated herein by this reference.

A notice of termination of farm tenancy was served on Mike.

On May 4, 2010, Dennis, Thomas, and Cheryl filed a petition for forcible entry and detainer (FED) against Mike.⁵ Trial was held on January 11, 2011, following which the district court dismissed the petition for FED. The court rejected the contention of Dennis, Thomas, and Cheryl (landlords) that the undisputed Swampbuster violation also constituted a violation of the farm lease. The landlords appeal.

II. Scope and Standard of Review.

A FED action is tried in equity and our review is therefore de novo. Iowa R.App. P. 6.907; Petty v. Faith Bible Christian Outreach Ctr., Inc., 584 N.W.2d 303, 306 (Iowa 1998). We give weight to the trial court's findings, especially with regard to witness credibility, but we are

[824 N.W.2d 540]

not bound by those findings. Petty, 584 N.W.2d at 306.

III. Analysis.

Our discussion is guided by these general principles.

A lease is both a contract and a conveyance. Therefore, we look to ordinary contract principles when construing a lease.

We recognize “in the construction of written contracts, the cardinal principle is that the intent of the parties must control; and except in cases of ambiguity, this is determined by what the contract itself says.” The intent of the parties may be determined from the terms of the lease, what is necessarily implied from the terms, and the circumstances surrounding the formation and execution of the lease.

Dickson v. Hubbell Realty Co., 567 N.W.2d 427, 430 (Iowa 1997) (citations omitted).

The general rule is that “substantial compliance with the terms of a lease will avoid a forfeiture.” Beck v. Trovato, 260 Iowa 693, 150 N.W.2d 657, 659 (1967); see also Jack Moritz Co. Mgmt. v. Walker, 429 N.W.2d 127, 130 (Iowa 1988) (noting that forfeitures are not favored in law or equity).

A. Was section four of the lease violated?

The landlords contend Mike's actions in tilling and planting corn on the wetlands violated section four of the farm lease. The landlords point to the following language: “Tenant shall only be entitled to pasture or till those portions of the Real Estate designated by Landlord.” The landlords argue that in as much as they have never designated the wetland for tilling, and in light of Mike's historical behavior in not planting the wetland from 1989 to 2008, it can be inferred that the wetlands were not to be tilled. Mike responds that the term “designated” used in the lease has an ordinary meaning of “stated.” The district court ruled that there was “no evidence that any landlord actually designated land to be pastured or tilled.”

There was evidence presented that 8.7 acres of the leased farmland had been designated wetlands by the USDA and had not been tilled since the designation in 1987. The landlords assert this extrinsic evidence shows George “designated” portions of the land for “pasture or tilling.” We acknowledge that extrinsic evidence might assist us in interpreting the lease where there is an ambiguity. See Dickson, 567 N.W.2d at 430 (“Proof of the circumstances may make a meaning plain and clear when in absence of such proof some other meaning may also have seemed plain and clear.” (internal citations omitted)). Here, Mike was well aware that the farming practice on this land was not to till the wetland parcels. He was fully aware that the wetlands had been certified by the USDA and a failure to comply with the Swampbuster law meant he was denied other governmental benefits provided by farm programs.

To “designate” is “to indicate or specify; point out.” American Heritage College Dictionary 384 (4th ed. 2004). The lease identifies the farmland by legal description and states it “contain[s] 240 (total)(tillable) acres, more or less.” We question whether a landlord must personally instruct a farm tenant what would seem obvious to even a novice farmer—which portions...