Leah N. Hinderks, Individually and as Administrator of the Estate of Larry H. Hinderks, and Core Business Leasing LLC, Russell Naden F/D/B/A Naden Industries, and Custom Applications Ag, LLC v. Luella E. Hinderks and Wade Hinderks ( 2016 )

IN THE COURT OF APPEALS OF IOWA
No. 15-2165
Filed November 9, 2016
LEAH N. HINDERKS, Individually and as Administrator of the Estate of
Larry H. Hinderks, deceased, and CORE BUSINESS LEASING LLC,
RUSSELL NADEN f/d/b/a NADEN INDUSTRIES, and CUSTOM
APPLICATIONS AG, LLC,
Plaintiffs-Appellees,
vs.
LUELLA E. HINDERKS and WADE HINDERKS,
Defendants-Appellants.
________________________________________________________________
Appeal from the Iowa District Court for Hamilton County, James A.
McGlynn, Judge.
The defendants in an action for replevin appeal from the district court’s
ruling. AFFIRMED.
Darren Robinson and Adam R. Triplett of McEnroe, Gotsdiner, Brewer,
Steinbach & Rothman, P.C., West Des Moines, for appellants.
Joseline L. Greenley, Webster City, for appellees.
Considered by Potterfield, P.J., and Mullins and McDonald, JJ.
2
POTTERFIELD, Presiding Judge.
Luella and Wade Hinderks, defendants in an action for replevin, appeal
from the district court’s ruling in favor of the plaintiffs.
I. Background Facts and Proceedings.
The decedent, Larry, and his father, Dennis, farmed together at the family
homestead for a number of years. During those years, each bought machinery
and tools and often kept them in buildings on the family property.
When Dennis died in 2001, he was survived by his wife, Luella. Luella
would have inherited all of Dennis’s land and possessions, but she executed a
disclaimer “of all my interest in the farm equipment described in Exhibit A,” which
had the effect of allowing the equipment to pass to Larry. Luella filed a second
disclaimer for one-half interest in the family farmland, which also then passed to
Larry.
Larry died intestate in September 2014. At the time, he was survived by
his third wife, Leah, and his sons from previous marriages, Wade and Jay. Wade
Hinderks is a named defendant in this action.
Leah was named the administrator of Larry’s estate. As such, she took
steps to collect his property, and she contacted a local auctioneer to arrange for
a sale to take place on the family farm. The auction was set to take place on
February 28, 2015. In the days leading up to it, Luella put up “No Trespass”
signs around the farm, put a chain across the driveway entrance, and sent out
notices that she was denying entry to the farmstead. Luella and Wade told Leah
they were disputing ownership over some of the items listed for sale. The
3
auction had to be postponed, with the items eventually transported to a different
site for sale.
In March, the plaintiffs filed this action for replevin. The action claimed
more than 230 items that the defendants were preventing the plaintiffs from
recovering from the farmstead.
Leading up to the trial, the parties were able to reach agreements on more
than 130 of the items in dispute, and two stipulations were filed with the court.
The trial took place on September 30 and October 1, 2015. In its written
ruling, the court found almost completely in favor of the plaintiffs, ordering all but
three items returned to the plaintiffs. Additionally, the court awarded the plaintiffs
damages: $748.10 in lost advertising expenses for the cancellation of the first
auction; $22,824.89 in reduced proceeds due to the fall in the market between
the planned sale and the actual sale; $2,000 in expenses for the removal and
storage of property; and “such further expenses and losses which will be suffered
by the estate in selling the remaining assets which would have been sold on
February 28.”
The defendants appeal.
II. Standard of Review.
Replevin is an action at law. First Trust & Sav. Bank v. Guthridge, 445
N.W.2d 401, 402 (Iowa Ct. App. 1989). We review for correction of errors at law.
Ankeny Cmty. Sch. Dist. v. Van Gorp, 501 N.W.2d 506, 507 (Iowa 1993).
III. Discussion.
The defendants maintain the district court made several errors in its ruling.
They maintain the court wrongly determined Luella’s disclaimer was all-
4
encompassing and wrongly included certain items affixed to the property as
“trade fixtures” removable by Larry. Additionally, they maintain the court’s
determination the estate had the right to hold the February 28 auction on the
farmstead and the award of the corresponding damages—for having to move the
site of the auction and transport the equipment and tools—was in error.
1. Replevin Generally.
“Replevin is an action to recover specific personal property that has been
wrongfully taken or wrongfully detained, with an incidental right to damages
caused by reason of such detention.” Flickinger v. Mark IV Apartments, Ass’n,
315 N.W.2d 794, 796 (Iowa 1982). “A wrongful taking need not be by forcible
dispossession; any unlawful interference with, or assertion of control over, the
property is sufficient.” Id. “A wrongful detention occurs when the defendant
wrongfully withholds or retains the possession of the property sought to be
recovered.” Id. “Once there has been a wrongful taking or detention, possession
does not become rightful until some form of redelivery occurs. Wrongful
possession of property does not become rightful merely by agreeing to allow
recovery by the party entitled to possession.” Id. at 797.
If the plaintiffs satisfy the burden of proving a wrongful taking of property,
the burden then shifts to the defendants to show they no longer have possession.
See id. If the defendants are unable to do so, it is presumed that possession
continued. Id. The court may also award damages, as follows:
(1) The injured party may demand the return of [their]
property plus damages for its wrongful detention.
(2) [They] may seek judgment for the money value of the
property, treating the conversion as complete either at the time it
was taken or at the time of trial.
5
(3) If the former, [they] may have interest on the value as
determined by the trier of fact from the date of the seizure until the
date of judgment and nothing more. The judgment itself, of course,
bears interest thereafter.
(4) If [they] elect[ ] under (2) above to rely on a conversion
as of the time of trial, [they] may have the money value of the
property as of that date, plus damages for loss of use from the time
it was seized until the time of trial.
Id. (citation omitted).
2. Disclaimer.
Here, the district court determined Larry’s estate was entitled to possess
everything in the shops on the farmstead. The court found Luella had intended
to disclaim all of the farm-related personal property owned by Dennis and any
other unaccounted-for property was either already owned by Larry at the time of
Dennis’s death or purchased by Larry afterward.
The defendants claim this finding is in error, but we agree with the district
court. The list of farm equipment and tools in the probate inventory was the
exact same list Luella used in the disclaimer that she filed. Before Dennis’s
death, Luella and Dennis consistently filed depreciation schedules, which
included farm equipment and tools. After Dennis died and Luella filed the
disclaimer, her depreciation schedules no longer appeared to contain any items
that would be used for the farming operation. Instead, Larry claimed the items
and the depreciation.
Luella claimed at trial, and she argues again on appeal, that the probate
inventory was not a complete list. But as the district court noted, the probate
inventory was certified as a complete list—under the penalty of perjury—at the
time it was filed. And Luella never suggested that the list was anything other
6
than complete before this litigation began. Some of the items she argued were
accidentally left off the probate list but purposely left off the disclaimer were large
items—such as tractors—that have been on the property since the time of her
husband’s death. We believe this belies her testimony that the items were
accidentally left off the probate inventory. Furthermore, in the years since his
father’s death, Larry appears to have sold and traded items at will—even items
that were not explicitly listed in the disclaimer. As the district court summarized,
“For 14 years, neither defendant questioned Larry’s right to possess, use,
control, or even sell any of the items on the farmstead.”
We agree with the district court that the disclaimer filed by Luella was
meant to be all-encompassing in regards to the machinery and tools necessary
to farm. As such, Larry’s estate had the right to possess those items.
3. Trade Fixtures.
“‘Trade fixtures’ is a term usually employed to describe the property which
a tenant has placed on rented real estate to advance the business for which it is
leased and which may, as against the lessor, be removed at the end of the
tenant’s term.” Winnike v. Heyman, 169 N.W. 631, 632 (Iowa 1918). To
determine if something is a trade fixture, we consider “the intention of defendant
in putting them in, the manner of their attachment to the building, and the manner
and the purpose of their use in connection therewith.” Id. at 633. The question
of intent is one for the factfinder. See id. (“The issue[ ] as to intent . . . should
have been submitted to the jury.”).
7
Here, the district court held that each of the items1 claimed by the
defendants as fixtures are trade fixtures, which the tenant—now Larry’s estate—
had the right to remove. The defendants maintain this ruling is in error because
(1) it is not clear Larry was the person to bring and attach the items on to the
realty, and (2) Larry was unable to testify about his intent regarding the items.
Most of the items listed by the defendants can be traced back to Larry’s
purchase through the depreciation schedules entered into evidence by the
plaintiffs. Both the parts washer and the tire machine are listed on Larry’s 1999
depreciation schedule—before he received anything from Dennis’s estate—and it
lists those items as going into service in June and August of 1980. The same is
true for one of the air compressors—put into service in July 1993—and the
Westfield auger—put into service in December 1996. The other two air
compressors are listed on Core Business Leasing LLC’s depreciation schedule
and were purchased for the business in 2010. Last, the grain dryer can be found
on Larry’s 2001 depreciation schedule, and the dryer is listed under “machinery
and equipment” as going into use in January 2000.
For these items that we have clear evidence that Larry purchased, we
cannot say the district court erred in finding that Larry intended them to be
attached to the realty only insofar as he used the buildings for his business
purposes. See In re Van Hove, 84 B.R. 567, 570 (Bankr. N.D. Iowa 1988) (“A
fixture may be a ‘trade fixture’ if the reason for the annexation was to aid the
1
Specifically, the defendants maintain the parts washer, Westfield auger, MC Grain
Dryer, the DMC Push pack, the unloading auger, three air compressors, and the tire
machine are fixtures. They also claim a storage container is a fixture, but we note that
storage container was included in the second stipulation as property belonging to Larry’s
estate.
8
tenant and making better use of the premises. As to a tenant, rules of removal
are more lenient and in general, trade fixtures are removable by a tenant at the
termination of the tenancy.” (citing Speer v. Donald, 207 N.W. 581, 582 (Iowa
1926); Ray v. Young, 142 N.W. 393, 395–96 (Iowa 1913))). Larry’s estate had
the right to remove these items from the premises as trade fixtures. See, e.g.,
Leslie Pontiac, Inc. v. Novak, 202 N.W.2d 114, 117 (Iowa 1972) (finding the
tenant had the right to remove a steel building that it placed on the premises);
Marty v. Champlin Ref. Co., 36 N.W.2d 360, 364 (Iowa 1949) (finding an
automobile lift, air compressors, tanks, and signs were trade fixtures of the filling
station that could be removed by the tenant).
That leaves only item #60, the DMC push pack, and item #74, the
unloading auger. We note the unloading auger was received by Larry as part of
the disclaimer, but we cannot find the DMC push pack on any of the depreciation
schedules in the record before us. According to testimony, both items are
connected to the grain dryer. Because we have already categorized the grain
dryer itself as a removal trade fixture, the push pack and the unloading auger
cannot be said to be attached to the realty of the defendants. Thus, we do not
believe either of the two items falls within the definition of fixtures. See Cornell
Coll. v. Crain, 235 N.W. 731, 732 (Iowa 1931) (stating that of the “three
requisites” is the “actual annexation to the realty or something appurtenant
thereto” and the “method of attachment to the soil is of significance”). That being
said, we do not find the district court erred in its determination that Larry’s estate
could remove the items. We believe the items either passed to Larry through the
9
disclaimer, as the unloading auger appears to have done, or were already the
property of Larry at the time of Dennis’ death.
4. Right of Entry.
Next we consider whether Larry’s estate had the right to enter and hold
the auction on the farmstead. The district court considered Larry’s rights under a
farm tenancy and determined that, because a termination notice had not been
given to Larry by September 1, 2014, his successor still had the right to use the
land and the buildings in February 2015. See Iowa Code § 562.7 (2015)
(requiring that written notice be provided upon either party by September 1 in
order to terminate lease); see also Iowa Code § 562.5 (requiring farm tenancies
to terminate on the first day of March). The defendants maintain the statutory
requirements for farm tenancies apply only to the land used for crops and the
district court’s inclusion of the buildings and shops on the farmstead was an
improper expansion of the statute.
Even if the buildings were not included in the farm tenancy, Larry was at
least a tenant at will.2 Larry had used the building for the farming operations and
his other businesses both during his father’s lifetime and in the fourteen years
after his death, and Luella clearly consented to such action. There was
testimony that Larry had entered into a verbal cash rent lease with Luella. See
Iowa Code § 562.4 (“A person in possession of real estate, with the assent of the
2
We note that in its ruling, the district court stated, “Luella disclaimed Dennis’s undivided
one-half interest in the family farm to Larry.” We do not have this second disclaimer in
the record before us, so we cannot confirm whether the disclaimer included only tillable
acreage or the entire farmstead. If Larry owned an undivided one-half interest in the
property, including the shops and outbuildings, his estate would clearly have had the
right to enter the property.
10
owner, is presumed to be a tenant at will until the contrary is shown . . . .”).
Moreover, neither Luella nor Wade presented any evidence that notice of
termination was ever given. Id. (“[T]hirty days’ notice in writing must be served
upon either party or a successor of the party before termination of the tenancy.”).
Because Larry’s tenancy had not terminated, his estate had the right to
enter the property and use it for the auction.
5. Damages.
Last, the defendants maintain the district court erred in determining the
amount of damages. They argue the court incorrectly relied on the figures
provided by someone not properly designated as expert. Additionally, they
assert that the court’s award of “such further expenses and losses which will be
suffered by the estate in selling the remaining assets which would have been
sold on February 28” was improper.
A. Expert. The defendants maintain the plaintiffs failed to disclose their
expert witness, Jason Hallberg, and that their failure precludes the court’s
reliance on his testimony to determine damages. The plaintiffs respond that they
substantially complied with the requirements of Iowa Rule of Civil Procedure
1.500(2), so the court’s reliance was proper.
Both parties listed Hallberg on their initial disclosures of witnesses. The
plaintiffs’ disclosure stated that Hallberg was expected to testify about the
“description and location of property; valuation; valuation for damages.” The
plaintiffs listed their “computation of each category of monetary damages” and
included both the advertising costs and estimate of reduced sale proceeds with
the note “documentation from Jason Hallberg.” Additionally, in the plaintiffs’
11
answers to the defendants’ interrogatories, they were asked to state any and all
facts upon which they based their valuations of items listed in the replevin action
and their claim the sale proceeds were reduced. For each, the plaintiffs
answered they were basing their claims on the input of Hallberg, who had years
of experience selling similar equipment at auction.
“We hold a liberal view on the admissibility of expert testimony in this
state.” Quad City Bank & Trust v. Jim Kircher & Assocs., P.C., 804 N.W.2d 83,
92 (Iowa 2011). See also Yates v. Iowa W. Racing Ass’n, 721 N.W.2d 762, 774
(Iowa 2006) (“This court has long been ‘committed to a liberal rule [that] allows
opinion testimony if it is of a nature which will aid the jury and is based on special
training, experience, or knowledge [as] to the issue in question.’” (alterations in
original) (citation omitted)). Considering the broad discretion given to district
courts in determining whether to admit expert testimony, here we do not believe
the district court abused its discretion by allowing the witness to testify and
considering his testimony in reaching its decision. See Klein v. Chicago Cent. &
Pacific R.R. Co., 596 N.W.2d 58, 60 (Iowa 1999) (“We accord the trial court
broad discretion in the admissibility of expert testimony. We interfere only if clear
abuse is shown.” (citation omitted)).
B. Indefinite Damages. The district court ordered that, after the plaintiffs
sold the items returned following the replevin action, “the estate shall file its proof
of the amounts received” and that “total shall be divided by .91 to arrive at the
likely amount which would have been received had the sale occurred on
February 28, 2015.” The court awarded the difference between the two as the
amount of lost sale proceeds suffered by the estate.
12
The defendants maintain the court’s action is improper. They rely, in part,
on the argument that “given the right market conditions, it is possible that the
property could be sold for more than it was valued on the date the petition was
filed.” While the defendants‘ assertion may be true, it has no bearing on the
issue at hand. In an action for replevin, the district court has the power to award
damages that exceed the value of the property that was detained. See Universal
C.I.T. Credit Corp. v. Jones, 227 N.W.2d 473, 479 (Iowa 1975). Additionally, we
see no error in waiting for more information to determine the proper amount of
damages. See Barry v. State Sur. Co., 154 N.W.2d 97, 101 (Iowa 1967) (“What
we have said indicates that all damages which were known or ascertainable at
the time the replevin action was tried must be included in that judgment. It does
not follow that a separate action for damages may never be maintained. There
are instances in which a litigant cannot determine his damages until after the
replevin action.”).
For the foregoing reasons, we affirm the district court’s ruling and
judgment in favor of the plaintiffs.
AFFIRMED.