In the Matter of the Estate of Marrian M. Newhall

• Court: Court of Appeals of Iowa
• Decided: March 6, 2019
• Docket: 18-0583
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 18-0583 Filed March 6, 2019

IN THE MATTER OF THE ESTATE OF MARRIAN M. NEWHALL, Deceased.

RUSSELL L. NEWHALL, Plaintiff-Appellant,

vs.

MARCIA E. NEWHALL ROLL, Defendant-Appellee. ________________________________________________________________

Appeal from the Iowa District Court for Butler County, Rustin T. Davenport,

Judge.

A brother appeals the district court’s order on his motion to enforce a

settlement agreement with his sister. AFFIRMED.

Andrew B. Howie of Shindler, Anderson, Goplerud & Weese, PC, West Des

Moines, for appellant.

Thomas D. Hanson of Dickinson, Mackaman, Tyler & Hagen, PC, Des

Moines, for appellee.

Considered by Tabor, P.J., and Mullins and Bower, JJ. 2

TABOR, Presiding Judge.

Who gets the grain? That’s the question raised by Russell Newhall’s

challenge to the ruling on his motion to enforce a settlement agreement with his

sister Marcia Roll dividing property from their mother’s estate. Newhall insists

because he received the grain bins under the agreement, the grain inside the bins

belonged to him. Roll contends because she took “all other personal property”

under the agreement, the grain belonged to her. The district court sided with Roll,

and Newhall now appeals. Because the court properly applied contract principles

in resolving the dispute, we affirm.

I. Facts and Prior Proceedings

Newhall and Roll are the biological children of Lowell and Marrian Newhall.1

Lowell died in 2011, and Marrian died in 2014. These siblings are not new to

Iowa’s appellate courts. In December 2016, our supreme court decided two cases

touching on their inherited property. In Roll v. Newhall, 888 N.W.2d 422, 424 (Iowa

2016), the court rejected Roll’s assertion Newhall could not inherit under Marrian’s

will because he was adopted in 2007, after the will was executed but before

Marrian died. In Newhall v. Roll, 888 N.W.2d 636, 637 (Iowa 2016), the court

decided a partition action brought by Newhall over two farms he and Roll owned

as tenants in common—a Butler County tract gifted inter vivos by their parents;2

and a Hardin County acreage, a testamentary gift from their aunt.3

1 We say “biological” because Newhall, as an adult, was adopted by his paternal aunt. 2 In the partition action, the court noted grain bins on the Butler County land were purchased and installed by Newhall. Newhall, 888 N.W.2d at 638. 3 The attorney fees from the partition action are the subject of a fourth appeal, Newhall v. Roll, No. 18-0490 (also filed today). 3

After years of haggling over division of the estate property, Newhall and Roll

entered into a settlement agreement “to resolve their differences.” As relevant to

this appeal, the settlement agreement provided Newhall was

the owner of, and/or shall receive through the probate or otherwise the following list of tangible personal property: a. Grain dryer assembly b. Two Galloway gasoline engines c. One Waterloo Boy gasoline engine d. One Sears and Roebuck gasoline engine e. One International gasoline engine f. Two miscellaneous gasoline engines of unknown brand g. Green Ford truck h. Red Ford truck i. Caterpillar bulldozer j. Donohoe/John Deere flatbed trailer k. Five bottom Oliver plow l. Five bottom International Harvester plow m. 30-foot bin, 36-foot bin, 48-foot bin, and attached augers.

The agreement then stated Roll was

[T]he owner of, and/or shall receive through the probate, or otherwise the following listed items of tangible personal property: a. lH model H tractor, which previously belonged to Lowell Newhall b. All other personal property of every kind and description whether it is part of Marrian’s probate estate, or not, whether located in the house on Linde Avenue in Dumont, Iowa, whether located on the jointly owned properties legally described above, or located elsewhere in the farmhouse, the farmyard or in any of the ancillary buildings or structure related thereto.

In the next paragraph, the agreement clarified “it is the intent of the parties

that other than the items specifically identified as going to [Newhall], [Roll] shall

receive all other items of tangible personal property located on the real estate

which is the subject of the partition action.” The agreement gave the parties until

March 1, 2018, to remove “their respective items of tangible personal property”

from the real estate or “such property will be deemed to have been abandoned.” 4

The parties signed the settlement agreement in June 2017. Later that

summer, Roll had the corn removed from four bins4 on the Butler County farm.

She acknowledged “holes were cut in a couple of the bins” to get the corn out, but

the panels were repaired “better than it was before because the bins are rotten.”

The parties agreed the value of the corn removed from the bins was $148,199.68.

In September 2017, Newhall filed a motion to enforce the settlement

agreement and a claim for damages. He alleged, “[Roll] broke into the bins by

having holes drilled into them and removed [Newhall]’s corn.” Roll insisted the

corn belonged to her under the settlement agreement. In November 2017, the

court held a hearing on Newhall’s motion. Both Newhall and Roll testified. Newhall

also called John Coonley as a witness; Coonley was executor and attorney for

Marrian’s estate and drafted the settlement agreement. Coonley testified he

“wasn’t aware there was any corn” in Newhall’s bins.

In March 2018, the district court issued its order, interpreting the settlement

agreement as a contract. The court reviewed Iowa case law treating “matured,

shocked, and threshed” grain as “personal property.” See Starits v. Avery, 213

N.W. 769, 771 (Iowa 1927). So the court read the contract term “personal property”

as encompassing the stored corn. The court reasoned under the agreement Roll

received “all other personal property” so Roll “apparently gets the grain.” Newhall

challenges that ruling on appeal.

4 The parties agree three of the bins belonged to Newhall under the settlement agreement; the agreement was silent on another 36-foot bin on the property that also contained corn. 5

II. Scope and Standards of Review and Jurisdiction

Newhall contends our review is de novo, citing Waechter v. Aluminum Co.

of America, 454 N.W.2d 565, 568 (Iowa 1990), and Iowa Code section 633.33

(2017). But the district court discussed the difference between hearing the case

in law or equity, cited section 633.33, and concluded, “To try this matter as an

equitable matter, to me, doesn’t make a whole lot of sense because we’re

essentially talking about a breach of contract which, from all standard analyses,

would be a trial at law where I have to rule on the objections.” In its written order,

the district court stated:

Although this is a probate case, the Court finds it must apply the rules that apply to a case proceeding under a breach of contract claim or pursuant to the civil legal docket. An action on a contract is generally considered to be an action at law. Phone Connection, Inc. v. Harbst, 494 N.W.2d 445, 448 (Iowa Ct. App. 1992). This case is a matter at law and the principles of law should apply to the Court’s analysis. The Court finds that the Court is sitting as a fact finder in a breach of contract action and will apply similar principles to the action as though it was tried to the Court without a jury.

Because the district court tried the matter at law, we review to correct legal

error. See Iowa R. App. P. 6.907; Crawley v. Price, 692 N.W.2d 44, 48 (Iowa App.

2004) (noting scope of review is determined by nature of trial proceedings); cf. In

re Conservatorship of Alessio, 803 N.W.2d 656, 659–60 (Iowa 2011) (stating

review was for correction of errors at law to the extent arguments raised issues of

statutory interpretation). If supported by substantial evidence, the district court’s

findings of fact bind us on appeal. Iowa R. App. P. 6.904(3)(a).

Before reaching the merits, we turn briefly to the question of jurisdiction.

The district court, on its own accord, mulled whether it was proper to decide this

matter on its probate docket. Relying on In re Young’s Estate, the district court 6

concluded it had jurisdiction to resolve Newhall’s motion. 273 N.W.2d 388, 392

(Iowa 1978) (“If no motion is made to transfer to another docket the district court,

sitting in probate, may hear and determine litigation which could or should have

been brought at law or in equity.”). On appeal, the parties do not challenge the

jurisdiction of the district court. We agree Young’s Estate is on point.

III. Analysis

A. Contract Interpretation

Newhall contends the district court misinterpreted the settlement

agreement. In Newhall’s view, his ownership of the bins meant ownership of the

grain inside, and thus, the court erred in deciding the grain fell into the category of

“all other personal property” awarded Roll. Newhall argues Roll breached the

settlement agreement by selling the corn she had removed from his bins.

In essence, a settlement agreement is a contract, so we apply general

principles of contract interpretation. Zaber v. City of Dubuque, 902 N.W.2d 282,

289 (Iowa Ct. App. 2017). Our law favors voluntarily settling legal disputes and to

encourage that behavior courts do not “inordinately scrutinize” the terms of

settlement. Fees v. Mut. Fire & Auto. Ins. Co., 490 N.W.2d 55, 58 (Iowa 1992).

“[A] court has no authority to rewrite the terms of the settlement agreement based

on its perception of the merits of the settlement terms.” City of Dubuque v. Iowa

Tr., 587 N.W.2d 216, 223 (Iowa 1998).

Here, the terms of the settlement did not mention the grain in the bins. The

siblings’ agreement deemed Newhall the owner of three bins, the attached augers,

and the grain dryer assembly, but it did not say he would receive the contents of

the bins. Under the next paragraph of the agreement, Roll broadly received “all 7

other personal property of every kind and description,” whether or not part of her

mother’s probate estate, and regardless of whether the personal property was

located in houses on the property or “in any of the ancillary buildings or structure

[sic] related thereto.” The following paragraph emphasized “tangible personal

property,” not specifically identified as going to Newhall, went to Roll.

The district court started with the definition of “personal property.”

Historically, the term has been “susceptible of more than one meaning.” See In re

Estate of Thompson, 511 N.W.2d 374, 377 (Iowa 1994) (comparing In re Estate of

Chadwick, 78 N.W.2d 31, 34 (Iowa 1956) (“personal property” referred to tangible

personal property) with In re Scheiner’s Will, 247 N.W. 532, 533–34 (Iowa 1933)

(“personal property” included both tangible and intangible property)). The district

court then focused on the key question—did grain fall into the category of “personal

property”? Citing Starits, the court decided harvest grain was “personal property.”

See 213 N.W. at 771 (deciding matured oats and wheat that had been “cut and

threshed” were not “part and parcel” of the real estate but constituted “purely

personal property”).5 From that premise, the district court reasoned, as personal

property, the corn belonged to Roll under the express terms of the settlement

agreement.

Newhall does not quibble with classifying grain as personal property.

Instead, he faults the district court for not first analyzing whether the grain was

actually “part of the bins” awarded to him. Newhall analogizes his situation to a

5 Later cases also hold matured corn is personal property. See, e.g., Jensma v. Allen, 81 N.W.2d 476, 479 (Iowa 1957) (citing Durflinger v. Heaton, 258 N.W. 543, 546 (Iowa 1935) (collecting cases)). 8

use-tax statutory interpretation case, where our supreme court found bottles

containing beer were an “integral part” of the “tangible personal property” sold at

retail. See Zoller Brewing Co. v. State Tax Comm’n, 5 N.W.2d 643, 645 (Iowa

1942). Following that logic, Newhalll contends the grain bin was an “integral part”

of the grain.

We are not persuaded the use-tax statute presents an apt analogy to the

settlement agreement. For starters, the use-tax act specifically states “tangible

personal property including containers [through various means] become an

integral part of” the property ultimately sold. Iowa Code § 423.6(3)(a) (emphasis

added). By contrast, the siblings’ agreement did not contemplate merging two

distinct pieces of property into one whole. Plus, Newhall’s integral-part analogy

breaks down when we look at what actually happened—Roll sold the grain without

the bins. Cf. Dial Corp. v. Iowa Dep’t of Revenue, 634 N.W.2d 643, 648 (Iowa

2001) (finding cardboard container holding individual food items was not integral

part of tangible personal property because it was not sold with the items). Further,

unlike beer in bottles, corn stored in a bin is valued separately from its container.

See, e.g., In re Marriage of Prendergast, 380 N.W.2d 431, 434–36 (Iowa Ct. App.

1985) (valuing grain bins and grain separately in dissolution review).

We find no error in the district court’s interpretation of the settlement

agreement. The agreement was precise in its award of three bins and their

attached augers to Newhall; if the parties intended Newhall to receive the contents 9

of the bins, it would have been easy to add language to that effect.6 Instead, the

agreement was sweeping in its award of “all other personal property of every kind

and description” to Roll. The agreement emphasized property not specifically

identified as belonging to Newhall was personal property awarded Roll. Given the

overall context, finding Newhall should receive the unmentioned grain would be

inconsistent with the expressed intent of the settlement agreement. See Sierra

Club v. Wayne Weber LLC, 689 N.W.2d 696, 704 (Iowa 2004) (inferring prohibition

from the context of the agreement). We affirm the award of the grain to Roll.

B. Mutual Mistake

As an alternative argument, Newhall claims the parties committed a mutual

mistake in the expression of the settlement agreement. He relies on State ex rel.

Palmer v. Unisys Corp., which explained a mistake in expression occurs “when the

parties reach an agreement but fail to accurately express it in writing.” 637 N.W.2d

142, 151 (Iowa 2001). “When the understanding of the parties was not correctly

expressed in the written contract, equity exists to reform the contract to properly

express the intent of the parties.” Id.

Newhall frames the mistake as follows: “[Newhall] thought the express

terms regarding the three grain bins included the grain; [Roll] thought the general

terms of ‘personal property’ awarded her the grain while knowing [Newhall]

received the bins.” From this framing, Newhall contends the district court should

have reformed the contract and awarded the grain to him.

6 Our conclusion is bolstered by Newhall’s claim to ownership of the grain in a fourth bin not awarded to him under the settlement agreement. That claim undermines his position the bins were an “integral part” of their contents. 10

Contrary to Newhall’s claim, he does not describe a mistake in the

expression of the parties’ agreement—instead, he styles a more fundamental

failure to reach a meeting of the minds on who owns the corn. Newhall’s scenario

would be a mistake in the formation of the settlement agreement. “Mistakes in the

formation of contracts include mistakes in an underlying assumption concerning

matters relevant to the decision to enter into a contract. In this category of mistake,

the agreement was reached and expressed correctly, yet based on a false

assumption.” Palmer v. Unisys Corp., 637 N.W.2d at 151. When the mistake is in

the formation of the contract, “avoidance is the proper remedy.” Nichols v. City of

Evansdale, 687 N.W.2d 562, 571 (Iowa 2004).

In rejecting Newhall’s mutual-mistake argument, the district court noted

Newhall did not seek to void the contract. Because Newhall’s proposed solution

did not match the kind of mistake alleged, the court denied his “theory of relief

based upon mistake.”7 Again on appeal, Newhall asks only for reformation, not

rescission, of the settlement agreement. Because Newhall is not entitled to the

relief he seeks, we affirm the district court’s ruling.

AFFIRMED.

7 The district court also found Newhall failed to offer sufficient evidence to show a mutual mistake in the formation of the settlement agreement. We agree with that finding.