Glen D. Hanson v. Mark Maeder and Maeder Mgt., Limited Liability Company

IN THE COURT OF APPEALS OF IOWA
No. 19-1903
Filed January 21, 2021
GLEN D. HANSON,
Plaintiff-Appellant,
vs.
MARK MAEDER and MAEDER MGT., LIMITED LIABILITY COMPANY,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Adair County, John D. Lloyd, Judge.
Glen Hanson appeals the district court’s denial of his breach of contract
claim. AFFIRMED.
Jeff W. Wright and Allyson C. Dirksen, Sioux City, for appellant.
Jami J. Hagemeier of Williams & Hagemeier, P.L.C., Des Moines, for
appellees.
Considered by Bower, C.J., and May and Ahlers, JJ.
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MAY, Judge.
Glen Hanson and Mark Maeder1 made oral agreements concerning
Hanson’s farmland and cattle. In this appeal, Hanson challenges the district
court’s determinations that (1) Hanson was not entitled to repurchase certain cattle
and (2) Hanson contracted with Maeder’s company—Maeder MGT., LLC—rather
than Mark Maeder individually. We affirm.
I. Background Facts and Proceedings
Hanson is a physician who owns farmland and a cattle operation. Maeder
has his own farmland and cattle operation in the same area. In March 2012,
Hanson was injured. He claims his injuries prevented him from caring for his farm
and cattle. From approximately March 2012 to February 2013, Maeder cared for
Hanson’s farming operation. And Hanson paid Maeder $100,180 for his services.
By February 2013, Hanson entered into two new oral agreements with
Maeder. One agreement concerned rental of Hanson’s farmland for a set cash
rate. The second agreement concerned the care of Hanson’s cattle. As part of
this second agreement, Hanson sold Maeder a one-half interest in his cattle herd
at the agreed upon price of $204,800, which Maeder paid in full. No specific
animals were identified as being sold to Maeder. As will be discussed further,
Hanson contends he and Maeder also agreed that Hanson would have the option
to repurchase some or all of Maeder’s interest in the herd at the same price within
the next five years.2 Meanwhile, the parties agree, Maeder would care for the joint
1 Mark Maeder owns Maeder MGT., LLC. For ease of reference, we often refer to
both entities as Maeder.
2 Hanson believed he would know within five years whether he would fully recover
from his injuries and be able to resume caring for his own operation.
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herd and Hanson’s farm operations. In exchange, Maeder would receive (1) the
calves from his half of the herd plus (2) two-thirds of the calves from Hanson’s half
of the herd. All told, then, Maeder would receive five-sixths of the calves born in
the joint herd. This left Hanson with one-sixth of the calves.
We emphasize Hanson and Maeder’s agreements were all verbal. The only
document signed by both parties to reflect their arrangement was executed on July
13, 2014—fifteen months after their arrangement started. It includes the provisions
outlined above—but it does not mention any option to repurchase cattle.
On August 31, 2015, Hanson mailed a written termination notice to Maeder.
It stated:
This letter is to terminate my present cattle sharing and farm rental
agreement with you and/or Maeder Management LLC. I will be
discussing a future contract with my financial advisors and then
discuss their recommendation with you. . . . Termination date for our
present arrangement is March 1, 2016.
In December 2015, Maeder split the herd in half and placed his half on his
property. No cash or cattle changed hands between Hanson and Maeder on or
before March 1, 2016, the termination date specified in Hanson’s August 2015
letter. In April 2016, Maeder commingled his half of the herd with his own cattle.
On April 25, Hanson sent Maeder a letter that read in part:
Per our written contract of 3/1/2012[3] I am buying back your share
of our cattle herd. As you recall, I can exercise this option within 5
years from 3/1/2012 if I am physically able to care for the cattle again.
I notified you last fall that it was my intent to buy back most if not all
of your share of our herd. I asked you for an audit of cattle numbers,
calving records, and sale receipts . . . . These were not forthcoming.
3 As already mentioned, all of Hanson and Maeder’s agreements were verbal.
There was no written contract. Additionally, Hanson testified at trial that the date
reflected in the letter is wrong. The correct date is March 1, 2013.
4
Hanson then brought this suit against Maeder. After a bench trial, the
district court awarded Hanson $16,640.36 against Maeder MGT., LLC for property
damages incurred during the parties’ agreements. The court dismissed all claims
against Mark Maeder individually because, in the court’s view, Hanson’s
agreements were with Maeder MGT., LLC. The court also denied Hanson’s claim
for breach of contract to repurchase cattle. Hanson appeals.
II. Standard of Review
We review a breach of contract action for correction of errors at law. Iowa
Mortg. Ctr., L.L.C. v. Baccam, 841 N.W.2d 107, 110 (Iowa 2013). We will affirm if
substantial evidence supports the district court’s findings of fact. Id. But we are
not bound by the court’s conclusions of law or application of legal principles. Id.III. Analysis
Hanson claims the district court erred in holding that (1) Maeder was not
required to sell Maeder’s interest in the herd back to Hanson according to an oral
repurchase option and (2) Hanson’s agreements were with Maeder MGT., LLC.
We address each argument in turn.
A. Oral Repurchase Option Contract
Hanson argues Maeder breached an oral contract by failing to sell and
deliver one-half of the herd to him. To prevail on this claim, Hanson has to prove:
(1) the contract existed; (2) the contract’s terms and conditions; (3) Hanson
performed all the terms and conditions required; (4) Maeder breached the contract
in some particular way; and (5) Hanson suffered damages as a result of Maeder’s
breach. See id. at 110–11; Anderson v. Douglas & Lomason Co., 540 N.W.2d
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277, 283 (Iowa 1995) (“As with any contract, the party who seeks recovery . . . has
the burden to prove the existence of a contract.”).
The first two elements—the existence of a contract and its terms—are
closely related. Ordinarily, a contract cannot exist unless there is a “meeting of
[the] minds” about the core terms of the contract. Harris v. Manning Indep. Sch.
Dist., 66 N.W.2d 438, 442 (Iowa 1954). Put another way, there is usually no
contract unless both parties express their agreement—their “mutual assent”—to
the essential terms. Schaer v. Webster Cnty., 644 N.W.2d 327, 338 (Iowa 2002).
For example, “[i]f there is a misunderstanding . . . [as] to the object of the
agreement so that ‘one party [understands] [it] is buying one thing and the other
party thinks [it] is selling another thing, no meeting of the minds occurs, and no
contract is formed.’” Id. (third, fourth, and fifth alterations in original) (quoting Hill-
Shafer P’ship v. Chilson Fam. Tr., 799 P.2d 810, 814 (Ariz. 1990)).
Here, the district court found Hanson failed to prove the alleged contract—
or, put differently, the terms of the contract—because there was no meeting of the
minds as to what Hanson would have the right to repurchase. There was no
agreement, the court found, as to whether (a) Hanson had a right to repurchase
“particular animals at [Hanson’s] election” or (b) Hanson only had a right to
“repurchase [Maeder’s] entire half-interest” in the joint herd.
We find no reason to reverse. Hanson points to no definitive evidence of
what cattle—or interest in cattle—the parties mutually agreed to resell. And
Hanson himself made contradictory statements as to whether he had the right to
repurchase individual cattle of his choosing or, instead, the mere right to
repurchase an undivided one-half of the joint herd.
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To be clear, though, we agree with Hanson on several points. For instance,
we agree a contract for the sale of cattle is governed by Article 2 of the Uniform
Commercial Code (UCC), which is codified as Iowa Code chapter 554 (2017).
See, e.g., Kanzmeier v. McCoppin, 398 N.W.2d 826, 831 (Iowa 1987); Flanagan
v. Consol. Nutrition, L.C., 627 N.W.2d 573, 577 (Iowa Ct. App. 2001) (holding
Article 2 governed purported contract “to buy and sell . . . pigs”). And we agree
“Article 2 relaxes many of the legal formalisms and technicalities of contract
formation associated with the common law of contracts.” Flanagan, 627 N.W.2d
at 578. Indeed, as Hanson points out, under Article 2’s “open terms” principle:
If the parties intend to enter into a binding agreement, this subsection
recognizes that agreement as valid in law, despite missing terms, if
there is any reasonably certain basis for granting a remedy. The test
is not certainty as to what the parties were to do nor as to the exact
amount of damages due the plaintiff. Nor is the fact that one or more
terms are left to be agreed upon enough of itself to defeat an
otherwise adequate agreement. Rather, commercial standards on
the point of “indefiniteness” are intended to be applied, this Act
making provision elsewhere for missing terms needed for
performance, open price, remedies and the like.
U.C.C. § 2-204 cmt. (Am. L. Inst. & Unif. L. Comm’n 2011).4
And so it is true that, in some circumstances, Article 2 can “fill in” terms for
which the parties made no specific provision. For example, under
section 554.2308, if the parties’ agreement does not specify a place for delivery,
“the place for delivery of goods” is usually “the seller’s place of business or if the
seller has none the seller’s residence.” See e.g., Iowa Code § 554.2305 (providing
procedure to determine price where parties intended to “conclude a contract for
4 Section 2-204 of the Uniform Commercial Code is codified at Iowa Code
section 554.2204.
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sale even though the price is not settled”); id. § 554.2307 (providing for delivery
procedures that apply “[u]nless otherwise agreed”).
But Hanson has not cited, and we have not found, any part of Article 2 that
could specify what cattle must be sold—the very heart of this alleged contract of
sale—if there was no agreement on that issue. Rather, based on the current
record and briefing, we conclude that because Hanson failed to prove an
agreement as to what cattle he could repurchase, he failed to prove an enforceable
contract. See Flanagan, 627 N.W.2d at 578 (noting “if there be no basic
agreement, the code will not imply one”) (quoting Kleinschmidt Div. of SCM Corp.
v. Futuronics Corp., 363 N.E.2d 701, 702–03 (N.Y. 1977)); see also id. (“Article 2
does not, of course, entirely eliminate the common law of contracts. Significantly,
contracting parties like Flanagan and Consolidated must still reach an agreement
in order to have an enforceable contract.”(citation omitted)); Tubelite Co. v. Original
Sign Studio, Inc., 891 N.E.2d 820, 825 (Ohio Ct. App. 2008) (“However, in the
absence of some basic terms—such as the description and quantity of the goods—
a contract may not exist.”); A & A Mech., Inc. v. Thermal Equip. Sales, Inc., 998
S.W.2d 505, 509 (Ky. Ct. App. 1999) (“The requirement that there be a basis for
relief, however, necessitates that the contract provide a quantity term, for without
such a term that basis is lacking.”).
The record supports the district court’s conclusion that Hanson failed to
prove the existence of a contract or, at a minimum, the essential terms of the
contract. So the district court was right to deny recovery for breach of contract.
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B. Maeder
We turn next to Hanson’s argument that the district court “went against the
substantial weight of the evidence” by concluding Hanson’s agreements were with
Maeder MGT., LLC, rather than Mark Maeder. Before we consider the record,
though, we must clarify the standard of review. The question before us is not
whether “the substantial weight of the evidence” supports one finding or another.
Rather, the district court’s findings “have the force of a jury verdict and are binding
on the reviewing court if based upon substantial evidence.” Jackson v. Wesselink,
No. 10-0504, 2011 WL 649471, at *2 (Iowa Ct. App. Feb. 23, 2011).
A finding of fact is supported by substantial evidence if the finding
may be reasonably inferred from the evidence. In evaluating
sufficiency of the evidence, we view it in its light most favorable to
sustaining the court’s judgment. We need only consider evidence
favorable to the judgment, whether or not it was contradicted.
Keppy v. Lilienthal, 524 N.W.2d 436, 438 (Iowa Ct. App. 1994) (quoting Briggs
Transp. Co. v. Starr Sales Co., 262 N.W.2d 805, 808 (Iowa 1978)). And “[w]e are
prohibited from weighing the evidence or the credibility of the witnesses.” Id.With these principles in mind, we note the following: As the district court
correctly pointed out, Hanson’s own termination letter dated August 31, 2015,
stated he was terminating the “present cattle sharing and farm rental agreement
with you [Mark Maeder] and/or Maeder Management LLC.”5 And Hanson wrote a
check payable to “Maeder MGT.” Plus, Hanson later cashed a check from “Maeder
MGT.” Also—and perhaps most significantly—the only document signed by both
5Hanson testified at trial that he “was totally unaware” of the entity known as
Maeder Management, LLC or Maeder MGT., LLC “until these proceedings.” But
he does not explain how the LLC designation appeared in the termination letter.
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parties describes the parties as Glen Hanson and “Maeder MGT.,” with Mark
Maeder signing for “Maeder MGT.” Of course, not all these documents included
the initials “LLC.” But, viewed in the “light most favorable to sustaining the court’s
judgment,” all of these documents seem to refer to a business entity that is
separate from Mark Maeder the individual. See id. (citation omitted).
Viewing the record in the “light most favorable to sustaining the court’s
judgment,” we conclude substantial evidence supports the finding that Hanson
contracted with Maeder MGT., LLC, rather than Mark Maeder individually. See id.(citation omitted).
IV. Conclusion
We find no grounds for reversal.
AFFIRMED.