DANILSON, J.
Farmland landlords appeal from the denial of this forcible entry and detainer action. Where the farm tenant cured his material breach by restoration of wetlands and the landlords
George Mart previously owned the leased property at issue here-240 acres of farmland in Dickinson County. Dennis Mart, Thomas Mart, Cheryl Mart, and Mike Mart are the children of George.
On March 30, 1987, 8.7 acres (sitting in two different spots) of the farmland were determined to be "converted wetland" by the USDA.
On November 30, 1998, George leased the farmland to Mike for "$85.00 per acre for tillable acres as determined by Government survey." The lease was to end on February 28, 2018. The lease also provided:
Section twelve of the lease allowed either tenant or landlord to "pursue the legal and equitable remedies" if the other violated the terms of the lease.
George died in 1999, and the property at issue passed to his four children as joint tenants in common. Mike continued to farm the property. Mike was aware of the wetland designation since 1987 and the 8.7 acres of wetland were left in alfalfa and not farmed until the 2008 crop year when Mike tilled it and planted corn.
Mike informed the USDA office that he had planted corn on the wetland, and the Dickinson County Farm Service Agency (FSA) found Mike's actions violated the Swampbuster provisions of the Food Security Act of 1985 (16 U.S.C. §§ 3801, 3821-3824).
In a letter dated September 11, 2008, sent to Mike and the landlords, the USDA Natural Resources Conservation Service (NRCS) stated there had been a preliminary technical determination that "you have converted wetlands" and "[p]roduction of an agricultural commodity or further manipulation of Converted Wetlands (CW) can cause ineligibility for Farm Program benefits." A subsequent letter from the NRCS, dated October 22, 2008, informed the parties that a final technical determination had been reached concluding that the Swampbuster law had been violated by the conversion of the wetlands.
Mike restored the wetlands for the 2009 crop year.
In April 2009, Dennis, Thomas, and Cheryl each received notice from the FSA that the violation of Swampbuster made them ineligible to receive USDA benefits. Thomas was directed to refund $152,093.38 in 2008 government farm payments and loans he had received. Dennis was directed to refund the 2008 CRP payment he had received in the amount of $385. Cheryl was advised she would be ineligible for USDA program benefits for all subsequent program years until the wetland was restored. Dennis, Thomas, and Cheryl all appealed the benefit ineligibility determination, contending they had no knowledge of and did not consent to the planting of the converted wetlands. Ultimately, on June 4, 2009, the FSA "determined Good Faith on your behalf and the Landlord Exemption" applied and the 2008 benefits were reinstated. However, "to avoid loss of benefits for future years, the Converted Wetlands must be established and maintained in a way that complies with wetlands standards and requirements for a converted wetland classification." Dennis, Thomas, and Cheryl were thus each required to ensure future compliance.
On August 31, 2009, Mike received a notice to quit and vacate the farmland on or before March 1, 2010,
A notice of termination of farm tenancy was served on Mike.
On May 4, 2010, Dennis, Thomas, and Cheryl filed a petition for forcible entry and detainer (FED) against Mike.
A FED action is tried in equity and our review is therefore de novo. Iowa R.App. P. 6.907; Petty v. Faith Bible Christian Outreach Ctr., Inc., 584 N.W.2d 303, 306 (Iowa 1998). We give weight to the trial court's findings, especially with regard to witness credibility, but we are
Our discussion is guided by these general principles.
Dickson v. Hubbell Realty Co., 567 N.W.2d 427, 430 (Iowa 1997) (citations omitted).
The general rule is that "substantial compliance with the terms of a lease will avoid a forfeiture." Beck v. Trovato, 260 Iowa 693, 150 N.W.2d 657, 659 (1967); see also Jack Moritz Co. Mgmt. v. Walker, 429 N.W.2d 127, 130 (Iowa 1988) (noting that forfeitures are not favored in law or equity).
The landlords contend Mike's actions in tilling and planting corn on the wetlands violated section four of the farm lease. The landlords point to the following language: "Tenant shall only be entitled to pasture or till those portions of the Real Estate designated by Landlord." The landlords argue that in as much as they have never designated the wetland for tilling, and in light of Mike's historical behavior in not planting the wetland from 1989 to 2008, it can be inferred that the wetlands were not to be tilled. Mike responds that the term "designated" used in the lease has an ordinary meaning of "stated." The district court ruled that there was "no evidence that any landlord actually designated land to be pastured or tilled."
There was evidence presented that 8.7 acres of the leased farmland had been designated wetlands by the USDA and had not been tilled since the designation in 1987. The landlords assert this extrinsic evidence shows George "designated" portions of the land for "pasture or tilling." We acknowledge that extrinsic evidence might assist us in interpreting the lease where there is an ambiguity. See Dickson, 567 N.W.2d at 430 ("Proof of the circumstances may make a meaning plain and clear when in absence of such proof some other meaning may also have seemed plain and clear." (internal citations omitted)). Here, Mike was well aware that the farming practice on this land was not to till the wetland parcels. He was fully aware that the wetlands had been certified by the USDA and a failure to comply with the Swampbuster law meant he was denied other governmental benefits provided by farm programs.
To "designate" is "to indicate or specify; point out." American Heritage College Dictionary 384 (4th ed. 2004). The lease identifies the farmland by legal description and states it "contain[s] 240 (total)(tillable) acres, more or less." We question whether a landlord must personally instruct a farm tenant what would seem obvious to even a novice farmer — which portions of the land had been tilled in the past and may be tilled in the future. Otherwise an unscrupulous tenant could immediately till up wetlands, pastures, or any other areas not previously tilled by the landlord unless the landlord pointed out the obvious. Thus, section four could be interpreted that any fields or parcels not previously
However, that issue need not be resolved here because Mike was fully aware that the two small parcels were wetlands, that the wetlands had been formally certified and determined to be wetlands under the Swampbuster law in 1987, and could not be tilled and used to produce an agricultural commodity such as corn.
The landlords contend that Mike violated section five of the lease because he did not "comply with all terms of the conservation plan and any other environmental plans for the leased premises." They also argue that his actions were not in compliance with the "good husbandry" standard of care imposed by that same section.
The district court was not convinced that the Swampbuster Act was a conservation plan or environmental plan for the leased premises. It also found that Mike's farming practices demonstrated "an above average standard that conforms to the principles of good husbandry." The landlords argue both findings were erroneous.
B & D Land & Livestock Co. v. Veneman, 332 F.Supp.2d 1200, 1208 (N.D.Iowa 2004) (citations omitted).
We acknowledge the terms of the lease did not specifically require the tenant to comply with the Swampbuster law or specifically comply with any farm program rules or regulations. Notwithstanding, there is no dispute that Mike knew of the wetlands designation and understood that to till and plant those acres disqualified
We disagree that a farm tenant who generally uses good farming practices cannot be in breach of the good husbandry clause. See Quade v. Heiderscheit, 391 N.W.2d 261, 265-66 (Iowa Ct. App.1986) (concluding tenant followed acceptable farming practices in part, but awarding damages for reduction in crop in violation of good farming practices). Furthermore, whether damages were sustained does not entirely resolve the issue of whether Mike's actions constitute a breach. Rather, the lack of damages more appropriately relates to what relief, if any, should be afforded.
The landlords claim that "[g]ood husbandry practices do not include placing your landlord at risk to lose eligibility for government farm program benefits and Federal Crop Insurance." In support of this argument they rely in part on the testimony of John Cowan, a federal crop insurance agent, who testified,
George Moriarty also "absolutely" believed that a tenant should consult with their landlord before tearing up a wetland and planting an agricultural commodity.
The term "good husbandry" is not susceptible to a specific definition because it is dependent upon the facts and evidence as well as upon current farming
2 Neil E. Harl, Agricultural Law § 8.04(4)(a), at 8-43 (2005).
Another authority has noted the stewardship duty of today's farmers in respect to care of the land, stating: "When the parties use a written form lease including specific clauses on proper husbandry and care of the soil, there is little doubt the reasonableness and impact of the tenant's farming practices are subject to judicial scrutiny." Neil D. Hamilton, Feeding our Future: Six Philosophical Issues Shaping Agricultural Law, 72 Neb. L. Rev. 210, 230 (1993). Moreover, our supreme court has observed that "[t]he state has a vital interest in protecting its soil as the greatest of its natural resources, and it has a right to do so." Woodbury Cnty. Soil Conservation Dist. v. Ortner, 279 N.W.2d 276, 278 (Iowa 1979).
The lease at issue contains a good husbandry clause and imposes various other stewardship duties upon the tenant that are intended to protect the land. Under the facts and evidence presented, we have no difficulty concluding that tearing up a wetland without the landlord's approval, particularly where the wetland had been certified under the Swampbuster law and had not been tilled for over twenty years, is contrary to the good husbandry clause. For these reasons, we conclude Mike's actions in tilling the wetlands without the landlords' approval or consent constitutes a violation of the tenant's duty to use good husbandry practices as imposed under the lease.
Section twelve of the lease provides that a tenant who violates the terms of the lease is subject to legal and equitable remedies to which the landlord is entitled. Here, the landlords have sought termination of the leasehold rather than damages. Our supreme court has long
Mike testified he was not aware he had jeopardized the petitioners' benefits in tilling and planting the acres. Mike also restored the wetlands the next crop year. Pursuant to 16 U.S.C. § 3821,
(Emphasis added.) Here, Mike and the landlords were initially denied all federal farm program benefits. At the time this action was initiated, the land had been damaged by the conversion of the wetlands by Mike's tilling and planting corn, and the wetlands had not yet been restored. In light of the severity of the benefits that were initially denied, and the loss of the wetlands, at least before their restoration, we conclude the breach was a material breach by Mike's failure to substantially comply with the terms of the lease. See Beck, 150 N.W.2d at 659.
Mike urges that if his actions constituted a breach of the lease, termination of the lease and forfeiture are not equitable because the wetlands were restored and no financial cost was ultimately incurred by the landlords. We agree.
Even where a material breach exists, ordinarily a party may cure the failure. Restatement (Second) Contracts §§ 237(b) ("Even if the failure is material, it may still be possible to cure it by subsequent performance without a material failure."), 242 cmt a. ("Ordinarily there is some period of time between suspension and discharge, and during this period a party may cure his failure."), available at Westlaw (database current through April 2012). Our supreme court has similarly determined that although the commission of waste on leased properties "will work a forfeiture," where the acts complained of could be removed easily without damage to the building and the landlord incurred no expense, forfeiture was not justified. See Bentler v. Poulson, 258 Iowa 1008, 141 N.W.2d 551, 553 (1966) (concluding that tenant's installation of a dishwasher and a new furnace, which both required holes be cut into the roof for ventilation, may be repaired easily). Here, the landlords have not incurred any significant damages and have only sought a forfeiture of the lease. Although we appreciate their desire to terminate this lease due to its length and minimal cash rent, the facts reflect that the tenant has cured his material breach of the farm lease and equity does not support enforcing a forfeiture.
Our decision here is also consistent with cases in other jurisdictions where landlords have sought termination of a lease for a violation of law where the tenant cured or corrected the violation in a reasonable amount of time, and the courts held that the termination was not warranted. McNeece v. Wood, 204 Cal. 280, 267 P. 877, 879 (1928) (noting tenant took prompt action in removing bookmakers from leased property); Sherwood Med. Indus., Inc. v. Building Leasing Corp., 527 S.W.2d 407, 411 (Mo.Ct.App.1975) (finding lack of continuous or customary illegal use and prompt correction of violation); Lewis v. Clothes Shack, Inc., 67 Misc.2d 621, 322 N.Y.S.2d 738, 739 (N.Y.Sup.Ct.1971) (noting removal of illegal storefront in three days). Here, the restoration of the wetlands
In conclusion, upon our de novo review of the circumstances, and in light of the principle that "equity abhors a forfeiture," Jamison, 423 N.W.2d at 4, we find no error in the district court's dismissal of this FED petition.