Iowa Arboretum, Inc. v. Iowa 4-H Foundation , 2016 Iowa Sup. LEXIS 95 ( 2016 )

IN THE SUPREME COURT OF IOWA
No. 15–0740
Filed October 28, 2016
IOWA ARBORETUM, INC.,
Appellee,
vs.
IOWA 4-H FOUNDATION,
Appellant.
Appeal from the Iowa District Court for Boone County, Steven J.
Oeth, Judge.
Defendant appeals the district court’s order denying its motion for
summary judgment and granting summary judgment in favor of the
plaintiff on its petition for declaratory judgment. AFFIRMED.
David H. Skilton of Cronin, Skilton & Skilton, P.L.L.C., Nashua,
and Thaddeus Cosgrove of Cosgrove Law Firm, Holstein, for appellant.
Ryan G. Koopmans and Kristina M. Stanger of Nyemaster Goode,
P.C., Des Moines, for appellee.
2
ZAGER, Justice.
We are asked to determine whether the district court properly
granted summary judgment on the plaintiff’s petition for declaratory
relief and properly denied the defendant’s motion for summary judgment.
Iowa Arboretum, Inc. (Arboretum) and Iowa 4-H Foundation (4-H
Foundation) entered into an agreement to develop an arboretum on 300
acres of land owned by the 4-H Foundation and located in Boone County,
Iowa. Later, the parties entered into a ninety-nine-year lease agreement
for the same tract of land, some of which included land suitable for
agriculture. The majority of the land is used by the Arboretum as an
arboretum open to the public. The landowner, 4-H Foundation, now
alleges the land is agricultural for purposes of article I, section 24 of the
Iowa Constitution and the ninety-nine-year lease is void as it violates the
constitutional proscription on agricultural leases exceeding a term of
twenty years. The 4-H Foundation served the Arboretum with a notice of
termination of tenancy based on this constitutional provision. The
Arboretum responded by filing a petition for declaratory judgment and
injunctive relief to establish the validity of the lease. The parties filed
competing motions for summary judgment. The district court granted
declaratory relief to the Arboretum and determined the subject land was
not agricultural, declared the lease valid, and ordered the 4-H
Foundation to comply with the terms of the lease. The 4-H Foundation
appeals from the denial of its motion for summary judgment. For the
reasons set forth below, we affirm the decision of the district court.
Since the land in question is not agricultural land for purposes of article
I, section 24 of the Iowa Constitution, the lease is valid and enforceable.
3
I. Background Facts and Proceedings.
The Arboretum owns a forty-acre tract of land in rural Boone
County, located south of the city of Boone and northwest of the town of
Madrid. The 4-H Foundation owns a 300-acre tract of land immediately
south of the land owned by the Arboretum, which is the subject of this
case. The legal description of the land is:
NE 300 acres of the Iowa 4-H Camping Center (the SE1/4 of
SE1/4 of Section 3; the NE1/4 and SE1/4 of NE1/4 of
Section 3; all of the SW1/4 of Section 2 and Lot 1 of NW1/4
of NW1/4 of Section 11; all in Township 82 North, Range 26
West of the 5th Principal Meridian, Douglas Township,
Boone County, Iowa.
The property is zoned as agricultural. The Arboretum has rented the
300-acre tract of land since 1969 and utilizes it and its own forty-acre
tract of land to maintain a public arboretum.
On July 1, 1969, the parties signed a Memorandum of
Understanding (MOU). The document begins by providing its purpose:
It is the mutual desire of the Arboretum and the 4-H
Foundation that 300 acres of land belonging to the 4-H
Foundation . . . and adjacent to 40 acres of land owned by
the Arboretum be utilized for public arboretum development
by the Arboretum.
In pertinent part, the Arboretum agreed “[t]o develop the NE 300 acres of
the Iowa 4-H Camping Center . . . as part of the arboretum for use by the
4-H Camp participants, without charge, and the general public.” The
Arboretum also agreed to allow “the 4-H Foundation to continue to farm
the present crop acres . . . until the Arboretum is ready to develop any of
the crop areas for arboretum purposes.”
The 4-H Foundation agreed to “lease the 300 acre tract . . . to the
Arboretum, Inc. for development into an arboretum.” It further agreed
that, because the tract of land is adjacent to land already owned by the
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Arboretum, it would “be a continuous and unified arboretum under the
operation of the Arboretum.”
The parties mutually decided that the “Memorandum of
Understanding shall comprise an agreement of long term intent for
development and maintenance of the arboretum.” The MOU
contemplated that it would be implemented by consecutive five-year
leases. The leases would be reviewed at the end of every fourth year and
revised as appropriate before the parties entered into the next five-year
lease. The MOU would “remain in force continuously and as modified by
the detailed five year leases.” In the event that either party decided to
sell their land, the other was entitled to the right of first refusal to
purchase the property. Finally, if the MOU was terminated, the
Arboretum was required to “restore as nearly as practical the premises to
the same condition as that existing at the time of entering into this
Memorandum of Understanding.”
On March 1, 1980, the parties entered into a cash-rent lease
intended to supplement the MOU. The 4-H Foundation leased “to the
Arboretum for development as part of the Arboretum, the 300 acre tract
of property” described in the MOU. In contrast to the consecutive five-
year leases contained in the MOU, the parties agreed to a lease for a term
of ninety-nine years. The 300-acre tract included 250 acres of
timberland, which the Arboretum leased for $1.00 per year. In addition,
with respect to the remaining fifty acres which consisted of tillable land,
the Arboretum was given, in effect, an option to lease any portion thereof.
If the Arboretum chose to exercise this option, the lease provided a
formula for determining compensation for the tillable cropland. This
formula was based on the accrual net farm income that the 4-H
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Foundation earned on the land prior to the Arboretum exercising the
lease option.
The parties have been operating under the MOU since 1969 and
the lease since 1980. In 1983, the Arboretum’s board of directors voted
to renew the lease with no changes. In 1990, the Arboretum notified the
4-H Foundation that it intended to lease a portion of the tillable cropland
to restore it to native prairie grasses. In 1992, the Arboretum’s board
again approved the lease. In 2004, the property committees of the 4-H
Foundation and the Arboretum met to discuss the lease. The members
recommended meeting again in 2009. The 4-H Foundation board and
the Arboretum board met in 2005 to discuss the terms of the lease but
made no further changes. At that time, one of the 4-H Foundation’s
trustees suggested meeting again in five years to review the lease.
However, the parties did not meet again, and neither party ever
requested a meeting to review the lease. The Arboretum made its rental
payments through 2013. It tendered rent payments in 2014 and 2015
while this action was pending, but the 4-H Foundation did not cash the
rent payments.
The Arboretum developed the majority of the land for use as an
arboretum. It also paid an “annual cash rent” for tillable cropland every
year. Of the 300-leased acres, 250 acres function as the arboretum.
Another 7.1 acres are billed under the tillable cropland formula
contained in the 1980 lease. Although this land is billed as tillable crop
land, the Arboretum actually uses it as a restored prairie and a parking
lot for the public visiting the arboretum. Of the remaining 39.9 acres, all
but three acres remains in the possession of the 4-H Foundation under
the USDA’s Conservation Reserve Program (CRP). Prior to being in the
CRP, Hertz Farm Management (Hertz) farmed the acres as row crop.
6
Hertz currently farms the three acres that are not in the CRP for the 4-H
Foundation.
On or around August 28, 2013, the 4-H Foundation served a
notice of termination of tenancy on the Arboretum. The notice listed the
effective termination date as February 28, 2014. On February 28—the
date the termination was to take effect—the Arboretum filed a petition
and motion for writ of injunctive relief. The petition alleged the 4-H
Foundation termination resulted in a breach of the 1980 lease. The
Arboretum sought injunctive relief in the form of a temporary injunction,
declaratory judgment establishing the validity of the lease, and specific
performance of the lease. The Arboretum also requested attorneys’ fees.
The district court scheduled a hearing on the petition for March 31. On
March 8, the 4-H Foundation served the Arboretum with a notice to quit,
asserting that the Arboretum was an unlawful holdover tenant. The
notice demanded the Arboretum immediately vacate the premises. 1
On March 24, the 4-H Foundation filed a forcible entry and
detainer (FED) action in Boone County small claims court. In the FED
action, the 4-H Foundation stated that the Arboretum was served with a
notice of termination of lease and a notice to quit, but had failed to
vacate the premises and was holding over. The 4-H Foundation did not
include any information about the pending action before the district
court to determine the validity of the lease between the parties. The
small claims court set a hearing for April 7.
The day after filing the FED action, the 4-H Foundation filed a
motion in district court to continue the hearing on the Arboretum’s
1The 4-H Foundation served an amended notice to quit on March 18 because the
first incorrectly asserted that the basis for the eviction was the Arboretum’s failure to
pay rent.
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motion for a temporary injunction. The Arboretum resisted the motion to
continue on the grounds of urgency created by the 4-H Foundation filing
the FED action. The Arboretum also requested that, if the district court
ordered a continuance, it also order a continuance of the FED action
until after it decided the declaratory judgment action. 2 The district court
denied the 4-H Foundation’s motion to continue.
The district court held a hearing on March 31 to consider the
Arboretum’s request for a temporary injunction and the 4-H
Foundation’s motion to dismiss. At the hearing, the 4-H Foundation
argued the lease between the parties violated the Iowa Constitution
because of its length of years and therefore its termination of tenancy
was proper. The 4-H Foundation further argued that the Arboretum had
no right of recovery. The Arboretum argued the terms of the lease were
for nonagricultural purposes and the constitutional provision did not
apply.
On April 4, the district court issued its ruling denying the motion
to dismiss and granting a temporary injunction. The district court noted
that the terms of the MOU and the lease both state that the purpose is to
develop the land for use as an arboretum. The district court granted the
temporary injunction because it concluded the Arboretum demonstrated
a sufficient showing of the likelihood of success on the underlying claim
for the injunction to be granted. The terms of the injunction prohibited
the 4-H Foundation from unlawfully interfering with the Arboretum’s
control of its business on the premises, terminating the lease until the
action before the district court was concluded, trespassing upon the
2The Arboretum requested the continuance of the FED action because the small
claims court would have to consider the right to possession—the same question before
the district court in the declaratory judgment action.
8
premises, or interfering with the Arboretum’s nonparty contracts. The
district court also ordered the Arboretum to post a $10,000 bond as
required by the Iowa Rules of Civil Procedure. 3
On April 9, the 4-H Foundation filed its answer to the Arboretum’s
original petition. It resisted the injunction and requested that the
declaratory judgment action be dismissed. The 4-H Foundation alleged
counterclaims for mediation and breach of contract.
The 4-H Foundation filed a motion for summary judgment on
February 19, 2015, and the Arboretum filed a competing motion for
summary judgment on February 20. The 4-H Foundation requested that
the district court declare the lease between the parties void because the
ninety-nine-year lease term was unconstitutional. The Arboretum
requested that the district court declare the lease valid because the
purpose of the lease was nonagricultural and thus, it did not fall under
the constitutional restriction. The Arboretum also asked the district
court to uphold its claims for an injunction to enforce the lease and
breach of the lease, and to dismiss the 4-H Foundation’s breach-of-
contract counterclaim. 4
A hearing was held on March 27, and the district court issued its
ruling on April 14. The district court held that, although the tract of
3The rule provides, in part,
The order directing a temporary injunction must require that before the
writ issues, a bond be filed, with a penalty to be specified in the order,
which shall be 125 percent of the probable liability to be incurred. Such
bond with sureties to be approved by the clerk shall be conditioned to
pay all damages which may be adjudged against the petitioner by reason
of the injunction.
Iowa R. Civ. P. 1.1508.
4The 4-H Foundation voluntarily dismissed its claim for mediation and only the
breach-of-contract claim remained.
9
land is suitable for agricultural purposes, it was not being used as such.
It was being used for the agreed upon purpose of a public arboretum.
Further, only a minimal amount of the 300-acre tract was actually
utilized as agricultural land.
The district court granted the Arboretum’s request for declaratory
judgment, finding the lease was not constitutionally infirm and ordering
the 4-H Foundation to comply with the terms of the lease. The district
court found that the 4-H Foundation had breached the terms of the lease
agreement and the Arboretum was entitled to specific performance as a
remedy. Because the district court granted the request for declaratory
judgment, declared the lease valid, and ordered the 4-H Foundation to
comply with the terms of the lease, the court dismissed the injunction as
moot. The district court held that the 4-H Foundation was barred from
asserting its breach-of-contract counterclaim under the doctrine of
estoppel by acquiescence. Finally, the district court denied the
Arboretum’s request for attorneys’ fees. The district court denied the 4-H
Foundation’s motion for summary judgment. The 4-H Foundation
appealed, and we retained the appeal.
II. Standard of Review.
Generally, our standard of review for cases tried in equity is de
novo. Bank of Am., N.A. v. Schulte, 843 N.W.2d 876, 880 (Iowa 2014).
However, when an equitable proceeding is before us on a motion for
summary judgment, our review is for correction of errors at law. See,
e.g., McKee v. Isle of Capri Casinos, Inc., 864 N.W.2d 518, 525 (Iowa
2015).
“Summary judgment is appropriate when there is no genuine issue
of material fact and the moving party is entitled to judgment as a matter
of law.” Id. (quoting Rosauer Corp. v. Sapp Dev., L.L.C., 856 N.W.2d 906,
10
908 (Iowa 2014)). Summary judgment is proper only when “the
pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact.” Iowa R. Civ. P. 1.981(3). A question of
material fact exists “if reasonable minds can differ on how the issue
should be resolved.” Cemen Tech, Inc. v. Three D Indus., L.L.C., 753
N.W.2d 1, 5 (Iowa 2008) (quoting Walker v. Gribble, 689 N.W.2d 104, 108
(Iowa 2004)). We view the record in the light most favorable to the
nonmoving party. Id. However, if the only question is the legal
consequence of undisputed facts, it is proper to resolve on summary
judgment. Griffin v. Pate, 884 N.W.2d 182, 185 (Iowa 2016).
III. Analysis.
On appeal, the 4-H Foundation argues the district court erred in
finding that the Iowa Constitution was inapplicable to the lease between
the parties and thus denying its motion for summary judgment. The 4-H
Foundation also contends that the district court erred in granting the
Arboretum’s motion for declaratory judgment establishing the validity of
the lease. Last, the 4-H Foundation asserts the district court erred in
applying the doctrine of estoppel by acquiescence when it had not been
pled by either party. We address each issue in turn.
A. Article I, Section 24 of the Iowa Constitution. The 4-H
Foundation argues that the 300-acre tract of land it leases to the
Arboretum is agricultural land under article I, section 24 of the Iowa
Constitution. Because the constitution prevents agricultural leases that
are longer than a period of twenty years, the 4-H Foundation argues the
ninety-nine-year lease is void as unconstitutional. See Iowa Const. art. I,
§ 24. The Arboretum responds that the tract is not agricultural land
11
because the parties agreed that its purpose is for an arboretum, and
therefore the lease is valid for the full ninety-nine year term.
1. History of article I, section 24 of the Iowa Constitution. The Iowa
Constitution provides that “[n]o lease or grant of agricultural lands,
reserving any rent, or service of any kind, shall be valid for a longer
period than twenty years.” Id. When we interpret this provision, our aim
is to ascertain the intent of the framers of our constitution. See Howard
v. Schildberg Constr. Co., 528 N.W.2d 550, 553 (Iowa 1995). To do so, we
examine the provision’s history and “the object to be attained or the evil
to be remedied as disclosed by circumstances at the time of adoption.”
Id. (quoting Redmond v. Ray, 268 N.W.2d 849, 853 (Iowa 1978)).
Nonetheless, as we stated in Gansen v. Gansen, the application of a
broadly framed constitutional provision is not limited to the specific
mischief that motivated the framers. 874 N.W.2d 617, 626 (Iowa 2016).
This provision was not included in the Iowa Constitution of 1846.
Id. at 624. It was added to the Iowa Constitution of 1857 and was based
on a similar provision in the New York Constitution of 1846. 5 See Casey
v. Lupkes, 286 N.W.2d 204, 205–06 (Iowa 1979); 1 Debates of the
Constitutional Convention of the State of Iowa 213 (W. Blair Lord rep.
1857), www.statelibraryofiowa.org/services/collections/law-library/
iaconst (“I have copied [the provision], in substance, from the
constitution of the State of New York.”). New York enacted the restriction
on the length of leases for agricultural lands to prevent oppressive, long-
5The New York Constitution used to include a provision that stated “No lease or
grant of agricultural land, for a longer period than twelve years, hereafter made, in
which shall be reserved any rent or service of any kind, shall be valid.” N.Y. Const. art.
I, § 14 (1846). New York has since removed this provision from its constitution. See
N.Y. Const. art. I, § 10 (repealed 1962) (repealing the provision on agricultural leases
which had been renumbered in 1958).
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term agricultural leases. Howard, 528 N.W.2d at 553. At the time of
enactment, many of the manorial lands in New York were under
agricultural leases for long periods of time. J.W. Tarbox, Annotation
Construction and Effect of Statutes Limiting Duration of Agricultural
Leases, 17 A.L.R. 2d 566, at 567 (1951). “Experience proved that this
mode of settling the country was prejudicial to the prosperity and
interests of the state . . . .” Stephens v. Reynolds, 6 N.Y. 454, 457 (1852).
These long-term agricultural leases resulted in significant unrest
between lessors and lessees, with disputes sometimes becoming violent.
Gansen, 874 N.W.2d at 624. As stated by the New York Court of
Appeals, “[t]he evil aimed at by the constitution is long leases of farming
lands for farming purposes.” Mass. Nat’l Bank v. Shinn, 57 N.E. 611,
613 (N.Y. 1900).
Consistent with this stated purpose, the New York Court of
Appeals originally concluded it was the character of the land, rather than
the purpose for which the lease was made, that made a lease agricultural
for purposes of the state’s constitutional provision. Odell v. Durant, 62
N.Y. 524, 525 (1875). In Odell, the court was faced with land that was fit
for agricultural use but which was leased for the purposes of mining
rather than farming. Id. However, the parties did not include a provision
prohibiting the lessee from farming on the land. Id. Thus, the court
determined that a lease made solely for the purpose of mining, but which
did not include a provision in the lease precluding the lessee from using
the land for agricultural purposes, fell under the constitutional provision
and was invalid because it exceeded the constitutional term-of-years
restriction. Id.
The court was faced with a similar question years later, in which
the parties entered into a lease for mining on land suitable for
13
agriculture. Mass. Nat’l Bank, 57 N.E. at 613. In this case, the court
held that a lease for the purpose of mining but which encumbered land
suitable for farming was not an agricultural lease that fell under the
constitutional restriction. Id. The court reached this conclusion even
though a portion of the land was used for agricultural purposes to the
extent it was not being used for mining. Id. The rationale behind this
conclusion was that the small amount of farming being done was “merely
incidental” to the stated purpose of the lease and did not convert a lease
for mining into a lease for farming. Id.
This court reached a similar, though not identical, conclusion in
Howard, 528 N.W.2d at 554. In that case, the lessor owned a large
family farm. Id. at 552. They leased a portion of the family farmland to
the Missouri Valley Limestone Company under a “limestone and gravel
lease” that was for the sole purpose of mining. Id. at 551–52. The
remainder of the family farmland was leased to other lessees for an
agricultural purpose. Id. at 552. We concluded that that our
constitutional provision limiting agricultural leases to a length of time no
longer than twenty years does not apply to land suitable for agricultural
purposes but leased for purely nonagricultural purposes. Id. at 554.
Other states that have similar constitutional or statutory
provisions have reached the same conclusion. Michigan also based their
original constitutional agricultural provision on the New York
Constitution. Mich. Const. art. 18, § 12 (1850); De Grasse v. Verona
Mining Co., 152 N.W. 242, 250 (Mich. 1915) (per curiam). The Michigan
Supreme Court held that a lease for the sole purpose of mining, though it
encompassed land suitable for agricultural purposes, did not violate the
constitutional provision limiting agricultural leases to twelve years. Id.
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This particular lease included a provision that expressly prevented the
mining company from using the land for agricultural purposes. Id.
In Montana, a statutory provision prevented leases of agricultural
land longer than ten years. See Lerch v. Missoula Brick & Tile Co., 123 P.
25, 26 (Mont. 1912) (citing Mont. Revised Codes § 4465). In Lerch, a
lessor owned a large tract of land and leased a portion of it for the
purpose of manufacturing brick and tile. Id. at 25. While the land was
fit for agricultural purposes, the terms of the lease were that the land
would be used for manufacturing purposes. Id. at 25–26. The lease did
not contain an express provision prohibiting the brick company from
engaging in agricultural activity. Id. at 27. The court rejected the
argument that the lease needed to expressly prohibit agricultural
purposes in order for it to be a valid. Id. Instead, the court reasoned,
When a lease of land is made ostensibly for purposes other
than agricultural and the land so leased cannot by the terms
of the lease, either express or implied, be put to agricultural
uses by the lessee, the purpose of the statute has been
satisfied, and the land in effect ceases to be agricultural land
within the meaning of the law, although susceptible of use
for agricultural purposes.
Id.
In South Dakota, a tract of land was leased to the Sioux Gun Club
“for Club purpose, recreational and social purposes, and not as and for
agricultural purposes.” Ryan v. Sioux Gun Club, 2 N.W.2d 681, 682 (S.D.
1942). At the time the parties entered into the lease, the property was
used primarily as a pasture, but had a small growth of timber. Id. After
the Sioux Gun Club came into possession, it cleared the land to make it
suitable for a gun club. Id. At various points, the club allowed sheep to
graze on the land and grew and sold alfalfa. Id. Both of these activities
were undertaken in order to hasten the clearing of the land for use as a
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gun club. Id. The court concurred with the reasoning of the New York,
Montana, and Michigan courts and concluded that the lease did not
violate the state statutory provision because it provided that the purpose
of the lease was to establish a gun club and expressly precluded
agricultural activity on the land. Id. at 683 (interpreting S.D. Code
§ 38.0403.
In North Dakota, the owners of a farm leased a four-acre parcel of
their land to a broadcasting company for the purpose of installing and
maintaining a radio transmitter tower. Berry-Iverson Co. of N.D. v.
Johnson, 242 N.W.2d 126, 127–28 (N.D. 1976). Although the land was
suitable for agricultural purposes, it was leased for the intended purpose
of building a radio transmitter and was actually used as a site for a radio
transmitter. Id. at 132. The court held that the lease did not violate the
statutory prohibition on agricultural leases longer than ten years. Id.
(interpreting N.D. Cent. Code § 47-16-02.
2. Whether the denial of the 4-H Foundation’s motion for summary
judgment was appropriate. In order to find that the lease between the
Arboretum and the 4-H Foundation violates article I, section 24 of the
Iowa Constitution, three factors must be established: that a lease exists
between the parties, that the lease is for a term longer than twenty years,
and that the lease is for agricultural purposes. See Casey, 286 N.W.2d
at 206. The parties entered into a cash rent lease in 1980, and the term
was for a period of ninety-nine years. The first two elements are clearly
satisfied.
As to the third element, we have previously held that land suitable
for agricultural use but used solely for nonagricultural purposes does
not fall under the constitutional restriction contained in article I, section
24. Howard, 528 N.W.2d at 554. We have not yet addressed the
16
question of whether incidental agricultural use of land leased for a
nonagricultural purpose makes land agricultural for purposes of our
constitutional restriction on the length of agricultural leases. 6
Other states whose constitutional or statutory provisions have also
been based on the New York Constitution of 1846 have faced the
question of land that is suitable for agriculture but actually used for a
different purpose. Those states have concluded that the lease did not fall
under the term of years exclusion. See, e.g., Mass. Nat’l Bank, 57 N.E. at
613; Lerch, 123 P. at 27; Ryan, 2 N.W.2d at 682. In some of those
states, the lessee engaged in farming that was merely incidental to the
stated purpose of the lease. See Mass. Nat’l Bank, 57 N.E. at 613; Ryan,
2 N.W.2d at 682. In others, the lessee’s activities were solely
nonagricultural. Lerch, 123 P. at 28; Berry-Iverson Co., 242 N.W.2d at
127–28.
Here, the MOU and 1980 lease both contemplate that the purpose
of the lease is to establish and maintain an arboretum. The MOU begins
by stating an express purpose:
It is the mutual desire of the Arboretum and the 4-H
Foundation that 300 acres of land . . . be utilized for public
arboretum development by the Arboretum. It is the belief of
both parties that the development of this land for use as an
arboretum is for the mutual benefit of each organization and
the Iowa public.
Paragraph two of the 1980 lease establishes that the 4-H Foundation
agrees to lease “to the Arboretum for development as part of the
6We recently heard another case arising under article I, section 24. In Gansen,
we considered a dispute regarding two five-year leases that automatically renewed for
four additional five-year terms. 874 N.W.2d at 618. In the event the leases did
automatically self-renew, the lessor and lessee would be locked into a binding twenty-
five-year contract. Id. at 626. We held that the leases were valid for the first twenty
years but invalid once the twenty-year time limit expired. Id. We also held that both
lessors and lessees could enforce article I, section 24 of the Iowa Constitution. Id.
17
Arboretum” the 300-acre tract of land in question. While neither the
MOA nor the lease expressly prohibits the Arboretum from engaging in
farming activities, the terms of the lease indicate that neither party
expected that the Arboretum would utilize the land as farmland. This is
demonstrated most clearly in the terms establishing rates of
compensation for leasing the areas of tillable cropland. In the event the
Arboretum chooses to exercise its option to lease portions of the tillable
cropland, “[c]ompensation for leasing the tillable crop land will be based
on the accrual net farm income earned per tillable acre on the remaining
tillable crop land the 4-H Foundation presently owns.” Compensation is
based, therefore, on the profit the 4-H Foundation would have earned if
the land were being used for agricultural production.
Further, the Arboretum uses all of the land it has elected to lease
for nonagricultural purposes. This land is used for the arboretum, a
restored prairie, and a parking lot. Of the 300-acre tract, 250 acres
comprise the arboretum itself. The Arboretum has exercised its option to
lease 7.1 acres of tillable cropland, which it utilizes for a restored prairie
and a parking lot for visitors. Of the remaining land, 36.9 acres are in
the 4-H Foundation’s possession under the CRP. Hertz farms the
remaining three acres for the 4-H Foundation.
Further, this lease is not “[t]he evil aimed at” by the constitutional
provision preventing long leases of farming lands for agricultural
purposes. Mass. Nat’l Bank, 57 N.E. at 613. The provision was enacted
to prevent lengthy leases that led to oppression of tenants and violent
unrest. Gannon, 874 N.W.2d at 624; Howard, 528 N.W.2d at 553. The
framers intended to prevent long-term leases of agricultural land that led
to stagnation and alienation of those parcels of land. Stephens, 6 N.Y. at
457; see also Howard, 528 N.W.2d at 553. In contrast, this lease was
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entered into by two parties who contemplated establishing an arboretum
on a parcel of land. The parties further anticipated that farmland would
be converted for the use of the Arboretum and included a provision for
calculating compensation if and when this occurred.
We conclude that the district court did not err in concluding that
the Iowa Constitution was inapplicable to the lease between the parties.
We reiterate that when land that can be used for agricultural purposes
is, however, leased and used for nonagricultural purposes, the lease does
not fall under the constitutional restriction contained in article I, section
24 of the Iowa Constitution.
B. Validity of Lease. The 4-H Foundation argues the district
court erred in granting the Arboretum’s motion for declaratory judgment
establishing the validity of the lease. It contends that there is an issue of
material fact as to whether the property is agricultural that precludes the
granting of the Arboretum’s motion for summary judgment. The district
court held that the land was nonagricultural and did not fall under the
constitutional term-of-years restriction, therefore making the lease valid.
A determination of the validity of the lease necessarily relies on a
resolution of whether the lease falls under the constitutional restriction
on agricultural leases. Because we find that the lease does not fall under
the constitutional restriction contained in article I, section 24 of the Iowa
Constitution, we likewise find that the lease is valid.
C. The 4-H Foundation Breach-of-Contract Claim. The district
court dismissed the 4-H Foundation’s counterclaim for breach of
contract under the doctrine of estoppel by acquiescence. The 4-H
Foundation claims the Arboretum breached the lease by not meeting
every four years to approve the terms. The Arboretum did not plead
estoppel by acquiescence as an affirmative defense; rather, it argued that
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the breach-of-contract counterclaim was barred by estoppel, unclean
hands, waiver, and laches. The district court raised the doctrine of
estoppel by acquiescence sua sponte and rejected the counterclaim on
that ground.
We can uphold the district court’s ruling on appeal on an
alternative ground, so long as that ground was presented to the district
court. Fennelly v. A-1 Machine & Tool Co., 728 N.W.2d 163, 176 (Iowa
2006). Here, the Arboretum moved for summary judgment on the
alternative ground that it had not breached the contract between the
parties. Generally, to establish a claim for a breach of contract, the 4-H
Foundation must show
(1) the existence of a contract; (2) the terms and conditions
of the contract; (3) that it has performed all the terms and
conditions required under the contract; (4) the defendant’s
breach of the contract in some particular way; and (5) that
plaintiff has suffered damages as a result of the breach.
Iowa Mortgage Ctr., L.L.C. v. Baccam, 841 N.W.2d 107, 110–11 (Iowa
2013) (quoting Molo Oil Co. v. River City Ford Truck Sales, Inc., 578
N.W.2d 222, 224 (Iowa 1998)). Offering evidence of damages is required
to demonstrate a claim for breach of contract. Sutton v. Iowa Trenchless,
L.C., 808 N.W.2d 744, 753 (Iowa Ct. App. 2011).
The 4-H Foundation claims that the Arboretum breached the terms
of the 1969 MOU by failing to review the agreement every four years and
enter into a new lease every five years. The Arboretum responds that the
1980 cash-rent lease is the controlling document. While the parties
entered into the lease to supplement the MOU, they also agreed that the
lease would continue for a term of ninety-nine years rather than a
number of consecutive, five-year leases.
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The 4-H Foundation is unable to demonstrate that the Arboretum
breached the contract. The 1980 cash-rent lease states that “[t]he intent
of the parties hereto is to continue the lease for a term of ninety-nine
years. The lease will be subject to review at the end of four years as per
Section IV–B of the memorandum.” This section of the MOU states that
it will be “implemented by detailed leases for consecutive five-year terms.
Each five-year lease is to be reviewed at the end of the fourth year and
revisions as appropriate made in the next detailed lease.”
We must determine how to reconcile and give effect to these
seemingly conflicting terms. See, e.g., Alta Vista Props., LLC v. Mauer
Vision Center, PC, 855 N.W.2d 722, 729 (Iowa 2014).
Parties may modify the terms of their agreement and if
the terms of a subsequent agreement contradict the earlier
agreement, the terms of the later agreement prevail, and
supersede those of the earlier contract. Where two contracts
are made at different times, but where the later is not
intended to entirely supersede the first, but only to modify it
in certain particulars, the two are to be construed as parts of
one contract, the later superseding the earlier one wherever
it is inconsistent.
17A Am. Jr. 2d Contracts § 489, at 469–70 (2016) (footnotes omitted).
We have generally recognized when the parties modify a contract, a new
contract arises. See, e.g., Chapman’s Golf Ctr. v. Chapman, 524 N.W.2d
422, 426 (Iowa 1994). The parties to a contract may supersede or modify
the contract at any time. Recker v. Gustafson, 279 N.W.2d 744, 754
(Iowa 1979). They “may by a new and later agreement rescind it in whole
or in part, alter or modify it in any respect, add to or supplement it, or
replace it by a substitute.” Id. (quoting Am. Jur. 2d Contracts § 462, now
found at 17A Am. Jur. 2d Contracts § 489, at 469)). When the parties to
a contract modify the terms, there must be some new and valid
consideration. Margeson v. Artis, 776 N.W.2d 652, 657 (Iowa 2009). We
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generally presume that a written and signed contract is supported by
consideration. Id. at 656.
Here, the terms of the lease and the MOU are inconsistent with
regard to the length of the lease. A lease cannot be both for a term of
ninety-nine years and made in multiple, recurring, five-year periods. The
language used by the parties substitutes the consecutive five-year lease
period for a new, long-term lease of the property. Adequate consideration
was given for the modification because the lease was in writing and, prior
to the 1980 cash-rent lease, the parties were under no obligation to
continue with a long-term lease past each five-year period. To the extent
that the ninety-nine-year term conflicts with the terms of the MOU, the
1980 cash-rent lease controls. We hold that the 4-H Foundation has
failed to demonstrate that the Arboretum breached the terms of the
lease. The district court was correct in denying summary judgment to
the 4-H Foundation. 7
IV. Conclusion.
For the foregoing reasons, we hold that the district court was
correct in granting the declaratory relief to the Arboretum. The district
court was also correct in denying summary judgment to the 4-H
Foundation on its breach of contract claim. We accordingly affirm the
decision of the district court.
AFFIRMED.
7Because we decide that there was no breach of the contract as a matter of law,
it is not necessary for us to decide the other affirmative defenses raised by the
Arboretum.