Sheeder v. Jamison

• Court: Iowa Court of Appeals
• Writing for the Court: VOGEL, Presiding Judge.
• Citation: Sheeder v. Jamison, 888 N.W.2d 680(Table) (Iowa App. 2016)
• Decision Date: 28 September 2016
• Docket Number: No. 15–1120.,15–1120.
• Parties: Steven SHEEDER, Plaintiff–Appellee/Cross–Appellant, v. James JAMISON, Individually, and d/b/a Jamison & Sons, a/k/a J & S Ag Services, Defendant–Appellant/Cross–Appellee.

888 N.W.2d 680 (Table)

Steven SHEEDER, Plaintiff–Appellee/Cross–Appellant,

v.James JAMISON, Individually, and d/b/a Jamison & Sons, a/k/a J & S Ag Services, Defendant–Appellant/Cross–Appellee.

No. 15–1120.

Court of Appeals of Iowa.

Sept. 28, 2016.

John P. Roehrick of Roehrick Law Firm, P.C., Des Moines, for appellant/cross-appellee.

Steven P. Wandro, Kara M. Simons, and Brian J. Lalor of Wandro & Associates, P.C., Des Moines, for appellee/cross-appellant.

Heard by VOGEL, P.J., and VAITHESWARAN and McDONALD, JJ.

VOGEL, Presiding Judge.

James Jamison appeals, and Steven Sheeder cross-appeals, the district court's decision adjudicating the parties' dispute over a custom farming agreement. Jamison asserts there is a lack of substantial evidence to support the district court's decision that he converted grain-sale proceeds by overcharging for services and products under the custom farming agreement. He also asserts the court erred in awarding punitive damages because he claims his breach of the parties' contract did not rise to the level of an intentional tort. Sheeder contends the court correctly discerned Jamison converted the proceeds from the grain sales and correctly awarded punitive damages in light of Jamison's conduct. However, Sheeder cross-appeals the district court's decision, claiming the court erred in failing to find Jamison stole grain from Sheeder's 2011 harvest. For the reasons stated below, we affirm the district court's decision.

I. Background Facts and Proceedings.

In the winter of 2010–2011, Sheeder discovered that while he had rented over 1500 acres of farm land for the 2011 growing season and paid most of the rent in advance, he was without the financing needed to secure the seed and other inputs necessary for a crop. Sheeder was introduced to Marvin Mitchell, an employee of Jamison.¹ Thereafter, Mitchell, Jamison, and Sheeder worked out a custom farming agreement whereby Jamison would provide the seed, other inputs, and labor through Mitchell to plant and harvest the crop. In return, Jamison would have a lien on the crop harvest in the amount of the services provided under the agreement during the growing season. The contract, initially signed on March 31, 2011, and later amended, was drafted by Jamison's employee, Mitchell. Mitchell also negotiated a line of credit with Agriland FS for the operating funds for anhydrous ammonia, chemicals, and spraying. Jamison was required by Agriland FS to personally guarantee the line of credit for Sheeder, and in light of his guarantee, Jamison demanded that the only people who could make purchases on the line of credit included himself or his agent.

Mitchell and Jamison performed the planting of the various tracts of land Sheeder had rented, and by all accounts prior to harvest, the crop looked good. Mitchell also prepared invoices for Sheeder for the work done during the planting season, though these invoices would await payment from the proceeds of the harvest.

The relationship between the parties soured during harvest. Sheeder believed the yields Jamison was reporting were too low, leading Sheeder to believe Jamison was stealing grain from the harvest. The harvest was recorded on digital devices in the harvesting equipment, and the district court noted the parties agreed the record of the harvest from the equipment roughly equaled the amount of grain sold in Sheeder's name at the grain elevators. However, Jamison admitted the digital devices could be turned off or otherwise manipulated. Sheeder also testified Jamison loaded some of the harvested grain into a bin against Sheeder's wishes. Sheeder placed locks on the grain bin to ensure the grain was not removed without his consent. Those locks were repeatedly cut, and the grain removed without Sheeder's knowledge or consent.

Sheeder asked Jamison to leave "test strips" of grain if the yield on the field seemed low so that an insurance agent could ascertain the average yield after which claims could be submitted. Jamison failed to leave any test strips. Jamison also commingled grain while harvesting from various fields, but the district noted the digital records indicated how much grain was removed from each field.

During the settling up of the account after harvest, it was discovered Agriland FS had intermingled Jamison's various accounts. Jamison and Mitchell met with Agriland FS to review the accounts and adjustments were made. However, there remained a $16,296.79 fuel charge to Sheeder that could not be explained, and Mitchell had improperly directed Agriland FS to credit $4000 of Sheeder's harvest money toward Mitchell's personal account at Agriland FS.

Checks for the harvest were mailed to Sheeder from the grain elevators as multiparty checks. Sheeder would endorse the check and then deliver the check to Jamison. Jamison kept what he thought he was owed based on the invoices prepared. Unhappy with the profit from the 2011 harvest, Sheeder filed suit against Jamison and others alleging a number of causes of action. By the time the matter went to trial, only Jamison remained as a defendant, and Sheeder had confined his causes of action to conversion and breach of contract.

After hearing testimony over the course of five days, the district court filed its decision April 15, 2015. The court concluded Sheeder had failed to prove Jamison had converted grain, but it did find Jamison improperly billed Sheeder under the contract resulting in both a breach of contract and the conversion of grain proceeds. Based on these findings, the court awarded Sheeder $56,263 .62. Sheeder was also awarded $70,000 in punitive damages against Jamison because of Jamison's egregious conduct.

Both parties appeal.

II. Scope and Standard of Review.

A claim for the conversion of property is an action at law and is thus reviewable for correction of errors at law. Lewis v. Jaeger, 818 N.W.2d 165, 175–76 (Iowa 2012). Pursuant to this standard, the district court's factual findings have the force of a special verdict and are binding on appeal if supported by substantial evidence. Van Sloun v. Agans Bros. Inc., 778 N.W.2d 174, 179 (Iowa 2010). However, the district court's legal conclusions are not binding on us. Id.

A district court's decision to award punitive damages is likewise reviewed for errors at law. Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005). "Punitive damages are only appropriate when a tort is committed with ‘either actual or legal malice.’ " Id. (citation omitted).

III. Conversion—Grain–Sale Proceeds.

In his first claim on appeal, Jamison contends the improper billing that occurred, if it occurred at all, does not amount to a master plan to deprive Sheeder of the proceeds of the grain sale and thus does not amount to an intentional tort. Jamison contends the overbilling occurred over the course of several months as the invoices were prepared, only six of the twenty-five services billed were invoiced improperly, and the amount of the improper billing was minor when viewed from the perspective of the entire contract, which consisted of over $450,000 worth of products provided and services performed. Jamison also contends conversion cannot occur in this case because both he and Sheeder had a right of possession to the grain proceeds as Jamison had a first lien on all of the crop proceeds. While conceding there may have been a breach of the contract, Jamison maintains that his actions did not amount to conversion because the invoices were not prepared with a wanton disregard for Sheeder's rights.

"Conversion is ‘the wrongful control or dominion over another's property contrary to that person's possessory right to the property.’ " Blackford v. Prairie Meadows Racetrack & Casino, Inc ., 778 N.W.2d 184, 188 (Iowa 2010) (citations omitted). In order to prove conversion, a party "must establish a possessory interest in the property." Id. "[M]oney can be the subject of conversion if the specific money in question can be identified." Allen v. Gordon, 429 So.2d 369, 371 (Fla.Dist.Ct.App.1983). There is no dispute as to Sheeder's rights to the grain proceeds as the person who rented the land for the 2011 growing season. However, Jamison contends he likewise had a possessory interest in the property by virtue of his lien under the parties' contract. We agree Jamison had a possessory interest in the proceeds but only to the extent of the value of the services and products provided pursuant to the contract.

Conversion may be predicated upon any distinct act of dominion over another's personal property in denial of his right or inconsistent with it. It may be proved by showing (1) a tortious undertaking, or (2) any use or appropriation to the use of the person in possession indicating a claim of right in opposition to the rights of the real owner, or (3) by a refusal to surrender on demand. Even if the defendant in such proceeding came into possession of the property lawfully, yet if he afterward assumes the control of it as owner, asserting rights therein inconsistent with the rights of the owner, there is a conversion.

Lee v. Coon Rapids Nat'l Bank, 144 N.W. 630, 633 (Iowa 1913) (citations omitted).

The checks for the grain proceeds were multiparty checks. Sheeder endorsed the checks and turned them over to Jamison for payment of Jamison's lien under the contract. The conversion occurred in this case when Jamison retained more money from those checks than he was entitled to take under the parties' contract. While he was lawfully in possession of the grain proceeds, Jamison committed conversion when he failed to surrender to Sheeder the amount Sheeder was entitled to receive from those proceeds. By invoicing Sheeder for services above the agreed-upon rate in the contract and then retaining the money from the checks to satisfy the inflated invoices, Jamison unlawfully converted the grain proceeds to his own purposes, which was inconsistent with the rights of the lawful owner, Sheeder.

The court found ten services for which Sheeder was improperly...