IN THE SUPREME COURT OF IOWA

No. 10–1291

Filed June 22, 2012

PEOPLES TRUST & SAVINGS BANK,

Appellee,

vs.

SECURITY SAVINGS BANK,

Appellant.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Boone County, William C. 

Ostlund, Judge.

Appellant asserts the court of appeals erred in granting appellee’s 

motion to dismiss appeal and the district court erred in granting 

summary judgment. DECISION OF COURT OF APPEALS VACATED; 

DISTRICT COURT JUDGMENT AFFIRMED.

Steven W. Hendricks of Kersten Brownlee Hendricks L.L.P., Fort 

Dodge, for appellant.

Gary A. Norton of Whitfield & Eddy, P.L.C., Des Moines, for 

appellee.
2

APPEL, Justice.

This case presents a battle between banks over the proceeds of the 

sale of cattle by a financially strapped borrower who had financial 

dealings with both banks. When Security Savings Bank (Security) 

obtained the proceeds of the sale, Peoples Trust and Savings Bank 

(Peoples) claimed a security interest in the proceeds and sued for 

conversion.

Peoples filed a motion for summary judgment. The district court 

found that under the undisputed facts, Peoples had a security interest in 

the proceeds of the sale of cattle superior to that of Security. The district 

court further held that the undisputed facts established that Peoples had 

not waived its superior security interest by course of conduct. As a 

result, the district court granted summary judgment in favor of Peoples 

on its conversion claim and entered judgment in the amount of 

$299,353.94.

Security appealed. After the filing of the notice of appeal, Peoples 

commenced garnishment proceedings against Security to enforce its 

judgment. Faced with the prospect of garnishment, Security paid the 

underlying judgment. Peoples then moved to dismiss the appeal, 

claiming that by paying the judgment, Security had waived its right to 

appeal.

We ordered that the motion to dismiss the appeal be considered 

along with the underlying merits of the case and transferred the case to 

the court of appeals. The court of appeals determined that Security had 

waived its right to appeal and dismissed the case. We granted further 

review.

At the outset, we first consider whether Security waived its 

pending appeal by paying an underlying judgment when Peoples had 
3

commenced garnishment proceedings to enforce the judgment it obtained 

in the district court. Based on the most persuasive modern authority, we 

conclude that a defendant faced with postjudgment garnishment does 

not waive a pending appeal by paying the judgment in order to avoid 

further enforcement proceedings.

We next turn to the underlying merits of the case. We conclude 

that under the undisputed facts of the case, the district court correctly 

determined that Peoples had a security interest in the cattle proceeds 

superior to Security’s interest and that Peoples did not waive its superior 

position through its course of conduct. As a result, we affirm the 

judgment of the district court.

I. Factual and Procedural Background. 

A. The Underlying Transactions. Jeffrey Gilley was a feeder 

cattle and cow calf operator with a long-term relationship with Peoples. 

Gilley and his spouse borrowed substantial funds from Peoples over time, 

including $235,000 on January 17, 2003; $100,000 on January 5, 2004; 

$54,200 on April 1, 2004; $30,340 on January 10, 2005; and $120,000 

on January 11, 2005. 

As security for the loans, Peoples obtained from the Gilleys a 

security interest in “Farm Products,” which specifically covered 

“livestock” and “cattle.” Peoples filed UCC-1 financing statements with 

the Iowa Secretary of State on January 3, 2000 and on December 16, 

2003. By 2007, however, Peoples was concerned about the state of its 

credit line with Gilley and determined not to make additional loans to 

Gilley.

Beginning in January 2007, Gilley and Ray Wilson obtained 

financing from Security to finance additional purchases of cattle. Wilson 

had known Gilley for a long time, had been a customer of Security for 
4

many years, and was a cattle buyer for Swift & Co. Security agreed to 

provide financing for cattle purchases but required both Gilley and 

Wilson to be cosigners on the loan. Both Gilley and Wilson also signed 

security agreements, which were filed with the Secretary of State. Wilson 

would buy the cattle. The invoices listed Gilley as the purchaser and 

also charged Gilley a commission for Wilson’s services. Wilson passed on 

the invoices to Gilley, who would write a check on Gilley’s solely owned 

personal account at Security. The invoice would also be presented to 

Security, which would deposit funds in Gilley’s personal account to cover 

the purchase. Gilley raised the cattle purchased with loan proceeds on 

his farm. When they were ready for sale, Wilson sold them to Swift & Co. 

The proceeds were generally payable to Gilley. During the spring of 

2008, however, Wilson became suspicious that Gilley was selling cattle 

outside their agreed upon process. As a result, Wilson instructed buyers 

of the cattle to make checks out to Gilley and Security or to Wilson 

himself.

Peoples was unaware of the financial relationship between the 

Gilleys and Security until early 2008, when an employee of Peoples 

conducted a UCC search on Gilley and found the UCC financing 

statement filed by Security. The officer in charge of the Gilley line at 

Peoples, Jamie Brant, contacted Gilley and was told that the Security 

UCC filing was based on custom feeding occurring on his property. 

Gilley claimed that he was being paid for his custom feeding in cattle and 

that the cattle so obtained were subject to Peoples’ security interest. 

Gilley stated that when the cattle were sold, he would pay down the 

Peoples indebtedness. On March 30 and April 1, 2008, Peoples sent 

notices to buyers and Gilley under the Food Security Act of 1985,

informing them of Peoples’ security interest in cattle owned by Gilley. 
5

Gilley sold the cattle as represented to Peoples, but he paid the 

proceeds to Security. When Peoples learned of these facts, it filed in 

March 2009 a conversion action against Security seeking to recover the 

proceeds of the cattle sales. Peoples filed a motion for summary 

judgment, which the district court granted. The district court then 

entered a judgment against Security in the amount of $299,353.94, plus 

interest. Security filed a notice of appeal on July 23, 2010.

B. Events Related to Potential Waiver of Appeal. After Security 

filed its notice of appeal, the parties engaged in correspondence regarding 

the appeal status.1 On August 2, 2010, Security asked Peoples what its 

position was regarding staying levy and execution pending appeal. 

Without specifically answering the inquiry, Peoples commenced 

garnishment proceedings against Security on August 16. On August 20, 

Security inquired of Peoples why garnishment was necessary, noting that 

Security would prefer to set up an escrow arrangement but would pay 

the judgment in full. Peoples responded on August 20 by stating that if 

Security paid the judgment in full with certified funds, “then doing so will 

consequently make the garnishment unnecessary.” Peoples further 

indicated on August 20 that it would accept payment of the sum of 

$301,430.73 “to fully satisfy the judgment” and that “[o]nce the payment 

is received, the garnishment procedure will be withdrawn.” Security 

 1We have stated that in rare circumstances, when facts relevant to a motion to 

dismiss cannot be shown in any other manner, application should be made to the 

supreme court for appointment of a commissioner to receive evidence and propose 

findings of fact upon which the court may base its findings and conclusions in relation 

to a motion to dismiss. Johnson v. Johnson, 301 N.W.2d 750, 753 (Iowa 1981). In this 

case, both parties have submitted exhibits in support of their respective positions 

without objection on appeal. We further note that no party seeks an opportunity to 

develop any additional evidentiary record related to the motion to dismiss. Under these 

circumstances, we treat the exhibits submitted by the parties as a stipulated record 

upon which we may consider the merits of the motion to dismiss.
6

responded on August 23 by stating that “[s]o there [is] no 

misunderstanding, this payment is made as a result of a demand to 

satisfy the judgment pending appeal.” Security further stated that it 

would “prepare a pleading to be filed acknowledging payment of the 

judgment without waiving the pending appeal.”

Security paid the judgment in full through a wire transfer on 

August 23. Security did not file a pleading acknowledging payment of 

the judgment without waiving the pending appeal as stated in its e-mail 

correspondence. Upon receipt of the funds, Peoples dismissed its 

garnishment summons and complaint. 

Peoples filed a motion to dismiss this appeal, asserting Security 

waived its right of appeal by voluntarily paying the judgment in lieu of 

seeking a supersedeas bond pursuant to Iowa Rule of Appellate 

Procedure 6.601. Security resisted the motion to dismiss, arguing the 

payment was not voluntary because payment was tendered “only as a 

result of the garnishment and only because the judgment could not be 

stayed.” Security also asserted that a party does not waive its right to an 

appeal if payment is made after the notice of appeal is filed. In an 

affidavit attached to Security’s resistance, the attorney for Security 

stated that he “advised Security Savings Bank that an appeal did not 

stay proceedings under a judgment or order unless the Appellant 

executed a bond, which was not available.” The attorney also stated, 

After the Notice of Garnishment was served on 

Bankers Bank, I contacted [the attorney for Peoples Trust] to 

let him know that the Notice of Garnishment was 

embarrassing to my client and that we would like to make 

arrangements to get the judgment paid. The wire transfer 

was made as a result of the Notice of Garnishment. The 

payment was not voluntary but caused by the garnishment.
7

Also attached to Security’s resistance were copies of the notice for entry 

of foreign judgment filed in Wisconsin, the e-mail correspondence quoted 

above, and the acceptance of service of the garnishment summons and 

complaint signed by Security’s attorney. 

The court of appeals dismissed the appeal. The court first rejected 

Security’s argument that an appeal is not waived when judgment is paid 

after a notice of appeal is filed. The court relied on Credit Industrial Co. 

v. Bendixen, 255 Iowa 1020, 1022, 125 N.W.2d 262, 263 (1963), which 

held a party waives appeal when it satisfies a judgment before or 

simultaneously with a notice of appeal. The court found no “distinction 

of merit” between payment of judgment before or simultaneously with 

filing the notice of appeal. Id.

The court of appeals also rejected the argument that the 

garnishment proceedings rendered the payment involuntary. The court 

of appeals observed that Security could have filed a supersedeas bond to 

stay execution of the judgment. The court of appeals also noted that the 

e-mail correspondence confirmed that Security considered filing a 

supersedeas bond but ultimately rejected the idea in favor of paying the 

judgment to avoid the embarrassment caused by the garnishment. We 

granted further review.

II. Discussion of Merits of Motion to Dismiss.

A. Iowa Approach to Appellate Waiver. The precise issue before 

us in connection with the motion to dismiss the appeal is whether 

Security lost its right to appeal when, after filing a notice of appeal, 

Security paid the district court judgment in response to the threat of 

Peoples to commence garnishment proceedings to collect on the district 

court judgment but did not avail itself of the opportunity to file a 

supersedeas bond. 
8

Our early cases established the general principle that the 

“voluntary” payment of a judgment leads to a loss of the right to appeal. 

For instance, in Hipp v. Crenshaw, 64 Iowa 404, 405, 20 N.W. 492, 492 

(1884), overruled by Yeager v. Durflinger, 280 N.W.2d 1, 4 (Iowa 1979), 

we held that satisfaction of a judgment in order to allow the defendant to 

borrow money on land upon which the judgment was a lien amounted to 

a voluntary satisfaction and not payment under duress.

While Hipp did not address the issue of payment when faced with 

execution of the underlying judgment, that issue was squarely raised in 

Manning v. Poling, 114 Iowa 20, 83 N.W. 895 (1900). In Manning, the

plaintiff sought to enforce a judgment by obtaining a sheriff’s deed on the 

defendant’s land. Manning, 114 Iowa at 22, 83 N.W. at 896. The 

defendant then paid the amount of the judgment to redeem the property. 

Id. After canvassing decisions from other jurisdictions discussing 

voluntariness, the court concluded:

The result of all the authorities is that the party making 

payment must be put to his choice between the comparative 

evils of the inconvenience and loss by the detention of his 

property, and the payment of an unjust and illegal demand. 

Id. at 24, 83 N.W. at 896. The Manning court explained that “if there be 

other adequate means of escaping the imminent infringement of property 

rights, these should be resorted to, rather than that litigation be

postponed by the payment of the controverted claim.” Id. at 24, 83 N.W. 

at 896–97. The Manning court held that, because the party could have 

obtained a restraining order from the court to stay execution of the 

judgment, payment of the amount necessary to redeem the property in 

dispute was voluntary. Id. at 27, 83 N.W. at 897; see also In re Hoyt’s 

Estate, 182 Iowa 876, 878–79, 166 N.W. 297, 298 (1918) (citing Manning 

with approval and stating that “[i]f the mere order to pay coerces 
9

payment, then every affirmance on the ground that a judgment had been 

complied with before enforcement or threat of enforcement was 

erroneous”). In a series of later cases, we held that the Manning principle 

applied regardless of whether the notice of appeal was filed before, after, 

or simultaneously with the payment of the judgment. See Bendixen, 255 

Iowa at 1022, 125 N.W.2d at 263 (simultaneous); Bates v. Nichols, 223 

Iowa 878, 880, 274 N.W. 32, 35 (1937) (after); A.E. Shorthill Co. v. Des 

Moines Dep’t Store Co., 151 N.W. 65, 66 (Iowa 1915) (before).

In recent years, however, decisions of this court have chipped and 

cracked the foundation of the appellate waiver doctrine. Three cases 

illustrate the development.

In Vermeer v. Sneller, 190 N.W.2d 389 (Iowa 1971), this court 

considered whether the payment of court costs led to loss of the right to 

appeal. In Vermeer, the plaintiffs lost in the district court and were

assessed court costs. Vermeer, 190 N.W.2d at 395. The plaintiffs

appealed. Id. The plaintiffs, however, paid court costs in order to get a 

clear title opinion on real estate in which the plaintiffs sought a loan. Id.

The question arose whether the payment of the court costs resulted in 

loss of the right to appeal.

The Vermeer court said no. Id. at 396. Of course, the case 

involved the payment of court costs rather than a judgment. But the 

rationale in Vermeer was noteworthy. The Vermeer court emphasized 

that it would be ignoring the realities of the situation to say that by 

paying minimal costs below, the plaintiffs “knowingly and intelligently” 

waived their right to appeal. Id. at 395. In considering whether a party 

waived rights on appeal through payment of costs or judgments, the 

Vermeer court began a shift away from a “voluntariness” test to a 

knowing and intelligent waiver test that is more favorable to a party 
10

seeking to avoid dismissal of the appeal. See id. at 395–96. The Vermeer 

court also emphasized public policy reasons for encouraging the payment 

of court costs, a concept that resounds even more strongly today. Id. at 

396.

Three years after Vermeer, we decided Hegtvedt v. Prybil, 223 

N.W.2d 186 (Iowa 1974). In Hegtvedt, the successful plaintiff initiated 

garnishment proceedings to collect on the judgment. Hegtvedt, 223 

N.W.2d at 188. The district court ordered payment of the judgment and 

the defendant made payment in accordance with the court order. Id. 

Although the Hegtvedt court noted that the defendant had failed to 

obtain a supersedeas bond to stay execution of the judgment, the 

payment was still under compulsion because it was made in compliance 

with a court order. Id. at 188–89. While Hegtvedt did not expressly 

overrule Manning, the decision undercut its rationale as the defendant 

had an available remedy that would have prevented the entry of the 

district court’s enforcement order, namely, the filing of a supersedeas 

bond. 

Significantly, Hegtvedt also stated that payment by compulsion 

does not amount to a “voluntary relinquishment of a known right.” Id. at 

188. The Hegtvedt court’s use of a waiver, rather than a voluntariness 

test, embraced a policy of protecting unsophisticated litigants from 

unintended loss of a valued right—the right of appeal. See also Johnson 

v. Johnson, 301 N.W.2d 750, 753 (Iowa 1981) (acceptance of small 

benefit not adequate to demonstrate party “voluntarily and knowingly 

waived her right to appeal”); Millsap v. Cedar Rapids Civil Serv. Comm’n, 

249 N.W.2d 679, 683 (Iowa 1977) (acceptance of benefits of pay and 

reinstatement in employment case was not “relinquishment of a known 
11

right” made “knowingly and intentionally, with knowledge of the 

circumstances”).

Four years after Hegtvedt, we decided a case that pounded another 

crack in the appellate waiver doctrine. In Yeager, the defendant’s lender,

for reasons not described in the opinion, refused to provide a 

supersedeas bond to stay enforcement of the judgment. Yeager, 280 

N.W.2d at 4. The plaintiff took steps to enforce his judgment, including 

subjecting the defendant to a debtor’s examination and transcribing the 

Wapello County judgment into the records of Jefferson County, where 

the defendant owned real estate. Id. The Wapello County sheriff levied 

upon some of the defendant’s personal property, including grain, hogs, 

and cattle. Id. The defendant then sought a loan from his lender. Id. 

After pocketing a $10,000 nonrefundable commitment fee, the lender 

refused to approve the loan unless the judgment lien was removed. Id. 

The lender further refused to accept the posting of a supersedeas bond. 

Id. The defendant then suggested to the plaintiff that a fund 

representing the judgment be placed in escrow in exchange for release by 

the plaintiff, but the plaintiff refused to go along. Id. At this point, the 

defendant paid the judgment in full and obtained a release from the 

plaintiff. Id. 

Under the circumstances, the Yeager court refused to apply the 

appellate waiver doctrine. Id. The Yeager court noted that the 

requirements of the lender and the intransigence of the plaintiff forced 

the defendant to satisfy the judgment or face larger losses. Id. Citing 

cases from Illinois, Ohio, and Missouri, the Yeager court concluded that

Hipp was “not in accord with recent developments” in the area of 

appellate waiver. Id. The Yeager court further concluded that the result 

was in conflict with Hipp, which was specifically overruled. Id.
12

The posture of this case is somewhat different than that in 

Vermeer, Hegtvedt, or Yeager. Vermeer may be distinguished from the 

present case in that it involved merely payment of court costs, not a 

judgment. In Hegtvedt, the defendant paid the judgment pursuant to a 

court order, not simply as a result of a threatened garnishment. This 

case is in some ways more similar to Yeager, where the judgment was 

satisfied without a court order requiring payment. Unlike Yeager, 

however, Security did not face a lender who refused to accept a 

supersedeas bond as adequate protection from a judgment lien. Thus, 

although Vermeer, Hegtvedt, and Yeager represent a distinct trend, they 

do not mandate a result in this specific case. These cases do raise the 

important question, however, of whether the recognized exceptions so 

swallow the traditional approach to appellate waiver that we should take 

this occasion to give the traditional approach a substantive overhaul.

B. Caselaw from Other States on Appellate Waiver. As we often 

do, we canvass cases in other jurisdictions in our effort to determine the 

best approach to Iowa law. Cases from other jurisdictions have also 

struggled with the appellate waiver issues raised in this case. See 

generally E. H. Schopler, Annotation, Defeated Party’s Payment or 

Satisfaction of, or Other Compliance with, Civil Judgment As Barring His 

Right to Appeal, 39 A.L.R.2d 153 (1955). The state courts are divided on 

the question of whether payment or failure to file a supersedeas bond 

results in loss of appellate rights and on whether the threat of

garnishment is sufficient to allow for payment of a judgment without 

losing the right of appeal.

Even recently, some state courts have adhered to a traditional 

per se rule holding that payment of a judgment under any circumstances 

bars an appeal in light of the availability of obtaining a stay by posting 
13

an appellate bond. For example, in Lyon v. Ford Motor Co., 604 N.W.2d 

453 (N.D. 2000), the North Dakota Supreme Court emphasized both 

theoretical and practical reasons for enforcing the rule. The Lyon court 

noted that, from a theoretical point of view, a cause of action giving rise 

to a judgment ceases to exist when the judgment is paid. Lyon, 604 

N.W.2d at 457. Further, the Lyon court emphasized the availability of 

bond pending appeal. The Lyon court stated:

Although [staying the enforcement of a judgment] is [not] a 

jurisdictional prerequisite to an appeal, we see no utility in 

judicially authorizing yet another avenue for protection from 

judgment collection efforts during the pendency of an appeal, 

which would result in little more than a rash of restitution 

suits for recovery of voluntary payments on later-reversed 

judgments.

Id.; see also Hermesch v. Haverkamp, 381 P.2d 360, 362 (Kan. 1963) 

(payment of a judgment, even if pursuant to execution, cuts off the right 

to appeal where no request for bond was made); Kelm v. Hess, 457 

N.E.2d 911, 911–12 (Ohio Ct. App. 1983) (threat of garnishment did not 

render the payment involuntary in light of the defendant’s opportunity to 

obtain a stay of the trial court judgment by posting an adequate appeal 

bond).

Other state courts are only slightly less stringent. For example, 

the Court of Appeals of Arkansas has held that while the failure to post 

an appellate bond often may result in loss of appellate rights, a party 

might avoid dismissal by showing that a supersedeas bond was 

unavailable. See Lytle v. Citizens Bank of Batesville, 630 S.W.2d 546, 

547 (Ark. Ct. App. 1982).

A third group of state courts have moved further away from the 

traditional rule by emphasizing the requirement of a “knowing and 

intelligent waiver” of rights free of coercion before appellate rights are cut 

off. For example, in Wheeler Springs Plaza, LLC v. Beemon, 71 P.3d 
14

1258, 1261 (Nev. 2003), the Beemon court took the view that “actual or

potential threat of garnishment or execution is sufficient coercion to 

avoid a mootness challenge based upon payment of the judgment.”

An approach similar to Beemon was taken by an appellate court in 

Florida in Consortion Trading International, Ltd. v. Lowrance, 682 So. 2d 

221 (Fla. Dist. Ct. App. 1996). In that case, the appellee filed a motion to 

dismiss the appeal after the appellant paid the final judgment. 

Lowrance, 682 So. 2d at 222. The appellee argued that the appellant 

should have attempted to stay enforcement by posting a supersedeas 

bond. Id. The court rejected this argument. The Florida court explained 

the fact that the appellant “could have obtained a stay of execution 

pending appeal by posting [a supersedeas bond] but did not is of no legal 

import. . . . Appellant’s right to appeal is not conditioned upon the 

posting of a supersedeas bond.” Id. at 222–23 (citation and internal 

quotation marks omitted).

Finally, in Grand River Dam Authority v. Eaton, 803 P.2d 705, 709 

(Okla. 1990), the Oklahoma Supreme Court overruled prior precedent in 

holding that failure to post a supersedeas bond is “immaterial” to the 

question of whether an appellant waives the right to appeal by paying the 

judgment. The Eaton court cited with approval Hayes v. Nourse, 14 N.E. 

508, (N.Y. 1887), in which the New York Court of Appeals stated: 

“The defendant’s practice in paying the judgment 

before appealing from it is not to be condemned. It is rather 

to be encouraged. A party who recovers at the trial term . . . 

might fairly be deemed entitled to the fruits of his action 

without further delay. The law, however, allows [an] appeal; 

but, although it is taken, the successful party may 

nevertheless enforce his judgment by execution, and so 

collect its award, unless the defeated party secures its 

ultimate payment by a deposit of money or an undertaking. 

Why may he not simplify the matter by placing the funds at 

once in the hands of the party who, if the appeal fails, will be 

ultimately entitled to them? By so doing he will save the 
15

costs of execution, and do no harm to his creditor. We think 

he should not, by a temporary submission to the decision of 

the court, be placed in a worse position than if he awaited 

execution and settled it with sheriff’s fees.”

Id. (quoting Hayes, 14 N.E. at 508). The Eaton court took the 

opportunity to “clear up any confusion” and held that an appeal is not 

waived by payment of judgment unless the payment by a judgment 

debtor “is shown to be made with the intent to compromise or settle the 

matter and, thus, to abandon the right to appeal or the payment in some 

way . . . makes relief impossible in case of reversal.” Eaton, 803 P.2d at

707, 709.

There are also cases that consider the impact of a mere threat of 

institution of enforcement proceedings on appellate waiver. In Highland 

Church of Christ v. Powell, 640 S.W.2d 235, 236–37 (Tex. 1982), the 

Texas Supreme Court held that payments made “to prevent the taxing 

authorities from taking steps to collect the taxes before the appeal was 

determined” were involuntary, even though the taxing authorities had 

not actually attempted execution on the judgment at the time of 

payment. The court reasoned that the judgment debtor was “justifiably 

anxious to avoid the penalties and interest which would accrue while the 

case was on appeal.” Powell, 640 S.W.2d at 237. Also, in this case, it 

was noted that “it would have been very embarrassing for this religious 

institution to have execution issued against it.” Id.; see also Reitano v. 

Yankwich, 237 P.2d 6, 8 (Cal. 1951) (attorney’s threat to levy execution 

unless the judgment was paid amounted to coercion as to render 

payment involuntary); Carlucci v. Duck’s Real Estate, Inc., 257 S.E.2d 

763, 765 (Va. 1979) (payment following issuance of execution on 

judgment and filing of garnishment was involuntary).
16

C. Federal Caselaw on Appellate Waiver. The federal approach 

to appellate waiver is well established and unambiguous. In Dakota 

County v. Glidden, 113 U.S. 222, 224, 5 S. Ct. 428, 429, 28 L. Ed. 981, 

982 (1885), the United States Supreme Court considered whether an 

appeal becomes moot when the parties enter into a settlement following 

judgment. According to the Supreme Court, “[t]here can be no question 

that a debtor against whom a judgment for money is recovered, may pay 

that judgment, and bring a writ of error to reverse it, and if reversed can 

recover back his money.” Glidden, 113 U.S. at 224, 5 S. Ct. at 429, 28 

L. Ed. at 982. The Supreme Court observed that a party who “merely 

submitted to perform the judgment of the court” does not lose his right to 

seek reversal of that judgment on appeal. Id. When an agreement 

follows judgment, however, whether the cause of action has been 

extinguished “must stand or fall on the terms of the compromise.” Id. at 

225, 5 S. Ct. at 429, 28 L. Ed. at 982. The Glidden rule remains good 

federal law today. See Cahill v. N.Y., New Haven, & Hartford R.R., 351 

U.S. 183, 184, 76 S. Ct. 758, 759, 100 L. Ed. 1075, 1077 (1956); Dale M. 

ex rel. Alice M. v. Bd. of Educ., 237 F.3d 813, 815 (7th Cir. 2001).

D. Analysis of Whether Payment of Judgment Under Threat of 

Execution Waives Right of Appeal. After reviewing the trend in our 

own cases and the authorities from other jurisdictions, we conclude that 

the approach in Glidden is the best approach. The Glidden rule is clearer 

than other approaches and in most cases will not thrust the court into a 

multifactor voluntariness determination that lacks standards and 

produces conflicting results. We think that in the modern economic and 

business environment, a party ought to be able to avoid unnecessary 

costs and expenses by simply paying a judgment without losing a right to 

appeal.
17

We also think that when a judgment debtor elects to avoid the 

hassles resulting from execution, there should be no inference that the 

party does not intend to prosecute an appeal. The payment of a 

judgment under threat of execution is not freely given in any realistic 

way, but it is given under the coercion of law arising from the assertion 

of creditors’ remedies. A decision to pay a judgment when faced with the 

unattractive choice of allowing the disruption to its business affairs 

resulting from creditors’ remedies cannot be considered a voluntary 

choice that cuts off important legal rights.

We are also persuaded by the line of cases holding that the mere 

availability of a supersedeas bond or other mechanism to stay 

enforcement does not mean that payment of a judgment results in waiver 

of the right to appeal. See Lowrance, 682 So. 2d at 222–23; Eaton, 803 

P.2d at 709. This approach is consistent with our holding in Hegtvedt

and the trend in our caselaw away from a rigid application of the 

appellate waiver doctrine. We agree with the New York Court of Appeals 

in Nourse that payment of a judgment during the pendency of appeal is 

to be encouraged, not condemned. See Nourse, 14 N.E. at 508.

In light of the above review, we hold that the payments made by 

Security in this case do not cut off the right to appeal. We overrule 

Manning and any other caselaw to the contrary.

III. Discussion of Merits of Summary Judgment.

A. Introduction. Because we have determined that Security has 

not waived its appeal, we now proceed to consider the merits of the 

district court’s entry of summary judgment in favor of Peoples on its 

conversion claim. Security claims that the trial court erred in granting 

summary judgment because there was a triable issue on the question of 

whether the cattle were owned by Gilley, and thereby subject to Peoples’
18

security interest, or owned jointly by Gilley and Wilson, in which case, 

according to Security, Peoples’ security interest would not attach. 

Security also asserts that even if Peoples had a security interest in the 

cattle, it waived its security interest through the course of conduct 

between Peoples and its borrower, Gilley. 

B. Standard of Review. With respect to the district court’s grant 

of summary judgment, our review is for errors at law. Iowa R. App. P. 

6.907; Hlubek v. Pelecky, 701 N.W.2d 93, 95 (Iowa 2005). Under our 

caselaw, the moving party has the burden of showing facts that entitle it 

to summary judgment. Teague v. Mosley, 552 N.W.2d 646, 648 (Iowa 

1996); Farm Bureau Mut. Ins. Co. v. Milne, 424 N.W.2d 422, 423 (Iowa 

1988); Steinbach v. Cont’l W. Ins. Co., 237 N.W.2d 780, 783 (Iowa 1976). 

Once that burden is met, the nonmoving party must present competent 

evidence to generate a genuine issue of material fact. Iowa R. Civ. P. 

1.981(5); Hoefer v. Wis. Educ. Ass’n Ins. Trust, 470 N.W.2d 336, 339 

(Iowa 1991). “Speculation is not sufficient to generate a genuine issue of 

fact.” Hlubek, 701 N.W.2d at 96.

C. Adequacy of Description in UCC Financing Statement. 

1. Position of the parties. Security asserts that the security 

agreement between Peoples and Gilley did not provide a security interest 

in the cattle involved in this case. Security argues that because the 

language of the Peoples/Gilley security agreement did not expressly 

apply to jointly owned property, a security interest does not attach to 

such property. See In re Hunerdosse, 85 B.R. 999, 1005 (Bankr. S.D. 

Iowa 1988).

Security then asserts that there was a substantial factual question 

as to whether the cattle in this case were jointly owned by Gilley and 

Wilson. Security argues it offered evidence that the relationship between 
19

Gilley and Wilson was a joint venture and that the cattle purchased with 

funds borrowed from Security were owned by the joint venture and not 

by Gilley. According to Security, if the cattle were owned by the joint 

venture, Peoples’ security interest would not attach.

Peoples counters that on the undisputed facts the relationship 

between Gilley and Wilson was not a joint venture. Relying largely on 

our decision in Pay-N-Taket, Inc. v. Crooks, 259 Iowa 719, 145 N.W.2d 

621 (1966), Peoples claims that a joint venture is not present when, as 

here, there is no partnership name, no partnership books or tax returns, 

no sharing of profits and losses, and no control over management. See 

Pay-N-Taket, 259 Iowa at 724–25, 145 N.W.2d at 625.

In any event, even if the relationship between Gilley and Wilson 

could be characterized as a joint venture, Peoples maintains that the 

cattle were still owned by Gilley. In support of its argument, Peoples 

cites a section of the Uniform Partnership Act, Iowa Code section 

486A.204(4) (2009), which provides that property acquired in the name 

of one or more partners without an indication in the instrument 

transferring title of the person’s capacity as a partner and purchased 

without use of partnership assets, is presumed to be separate property. 

Peoples emphasizes that the sales documentation indicates in this case 

that the purchaser of the cattle was Gilley, not some kind of joint venture 

or partnership.

In the alternative, Peoples argues that, even if the cattle were 

jointly owned property, it has a security interest in Gilley’s interest in the 

joint property and that, upon sale of the cattle, its security interest 

attaches to Gilley’s share of the proceeds.

2. Ownership of cattle. The parties concentrate their fire on the 

existence of a triable issue on the question of whether the relationship 
20

between Gilley and Wilson amounted to a joint venture. Under our law, 

a joint venture is very similar to a partnership. Johanik v. Des Moines 

Drug Co., 235 Iowa 679, 685–86, 17 N.W.2d 385, 389 (1945). The main 

difference between a partnership and a joint venture is that a joint 

venture exists to accomplish a specific goal or end, where a partnership 

ordinarily has broader scope. Id. Generally, the same substantive law 

applies to joint ventures as applies to partnerships. Id.; see also Brewer 

v. Cent. Constr. Co., 241 Iowa 799, 807, 43 N.W.2d 131, 136 (1950).

Whether a joint venture exists is a mixed question of fact and law. 

Determination of the characteristics of the relationship is a question of 

fact. Determination of the consequences of the proven facts is a matter 

of law. We have held that “no particular form of expression or formality 

of execution” is necessary to establish a joint venture, which may be 

implied “in whole or in part from the conduct of the parties.” Pay-NTaket, 259 Iowa at 724, 145 N.W.2d at 625.

We have characterized a joint venture in a number of ways. In 

Brewer, we said:

A joint adventure is defined as an association of two or 

more persons to carry out a single business enterprise for 

profit; also as a common undertaking in which two or more

combine their property, money, efforts, skill or knowledge.

Brewer, 241 Iowa at 806, 43 N.W.2d at 136. Similarly, in Pay-N-Taket we 

stated:

A partnership or joint adventure, a limited partnership, is 

usually a contract where two or more persons place their 

money, labor and skill in some business to be carried on by 

the partnership, with an agreement to divide the profits and 

share the losses.

Pay-N-Taket, 259 Iowa at 724, 145 N.W.2d at 625.

There is, perhaps, some question as to whether each and every 

feature of the above definitions must be shown in every case. See Farm-
21

Fuel Prods. Corp. v. Grain Processing Corp., 429 N.W.2d 153, 158 (Iowa 

1988). And, it is certainly true that a mere showing of sharing in profits 

alone is not necessarily enough to establish a joint venture. 

Nevertheless, a gateway requirement of a joint venture is a showing that 

the participants have agreed to share in the profits and losses. See 

Skemp v. Olansky, 249 Iowa 1, 7–8, 85 N.W.2d 580, 584 (1957) (joint 

venture not present where no showing of sharing of profits and losses 

and only assistance in obtaining a loan); Berry Seed Co. v. Hutchings, 

247 Iowa 417, 426, 74 N.W.2d 233, 239 (1956) (while participation in 

profits does not alone indicate partnership, mere payment as a 

percentage of profits, where defendant does not share in losses, does not 

establish joint venture); Brewer, 241 Iowa at 806, 43 N.W.2d at 136 

(stating general rule that joint venture usually requires an agreement, 

express or implied, to share losses). Where each participant does not 

share an upside and downside risk in profits and losses, we hold that a 

joint venture is not present.

In this case, it is undisputed that Wilson had no right to share in 

the profits of the cattle raising activities. Much as a real estate agent 

receives commissions on the sale of property, Wilson received his 

commissions on the purchase of cattle. He also received payment when 

the cattle were sold to Swift & Co. While Wilson could have lost money 

in the event that he was called upon to pay outstanding balances of the 

loan with Security, this potential liability is the result of his relationship 

with the lender and not his relationship with Gilley. We conclude, 

therefore, that on the undisputed facts a joint enterprise was not 

present.

3. Ownership notwithstanding lack of joint venture. Our holding 

that a joint venture was not present, however, is not the end of the 
22

matter. If Gilley owned the cattle outright, the parties seem to agree that 

Peoples’ security interest would attach to the cattle in question. If, 

however, the cattle were owned jointly by Gilley and Wilson, the issue 

becomes more problematic. The question thus arises, when two persons 

are coborrowers on a loan from a lending institution and the proceeds 

are used to buy property, whether the participants are joint owners of 

the property.

The documentation on the loans obtained from Security indicates

that Gilley and Wilson were both listed as borrowers. Also, they both

signed security agreements in connection with the loan. The mere fact 

that Wilson was a coborrower with respect to the underlying debt, 

however, is not determinative on the question of ownership of cattle 

purchased with the loan proceeds. Merely cosigning a note does not 

necessarily establish an ownership interest in the property obtained by 

loan proceeds. See In re Easton, 883 F.2d 630, 636 (8th Cir. 1989) 

(stating record did not establish ownership based on cosigning of note); 

Ingersoll v. Mason, 155 F. Supp. 497, 507 (D.C. Ark. 1957) (stating 

cosigning note to finance purchase of car does not establish ownership or 

right of control). The question of whether a coborrower has an ownership 

interest in property obtained with loan proceeds depends upon the 

parties’ intent. See In re Fischel, 103 B.R. 44, 47 (Bankr. N.D.N.Y. 1989); 

cf. In re Estate of Liike, 776 N.W.2d 662, 665 (Iowa Ct. App. 2009) (intent 

of parties determines whether property is held in partnership). When 

Wilson agreed to sign the loan documentation, was he doing it as an 

accommodation to Gilley, or instead as a coborrower who had a joint 

interest in the funds that traveled through to establish a joint property 

interest in the cattle purchased with the funds?
23

Gilley repeatedly stated in a sworn statement offered by Peoples in 

support of its motion for summary judgment that he was the owner of 

the cattle. Peoples’ evidence further showed that the money borrowed 

from Security was placed in an account at Security owned solely by 

Gilley. When cattle were purchased by Wilson, the invoices stated on 

their face that Gilley was the purchaser. The cattle were delivered to 

Gilley’s premises. Gilley honored the invoices by checks sent to the 

auction houses drawn on his personal account. The invoices included 

not only the price for the purchase of cattle, but a commission to be paid 

to Wilson in connection with the transactions. When the cattle were 

sold, Gilley was entitled to the proceeds, subject, of course, to any 

outstanding security interests. These undisputed facts all suggest that 

Gilley was the owner of the cattle. 

Security presents an affidavit from Wilson resisting summary 

judgment. In the affidavit, Wilson does not directly contest Gilley’s 

assertion that Gilley owned the cattle. Wilson states that he “agreed to 

be personally responsible for all loans for the purchase of cattle,” made 

“arrangements for the purchase of cattle,” and he claimed an 

“investment” in the cattle, apparently based upon his potential liability 

on the underlying debt. He does not, however, claim that the cattle were 

owned jointly by himself and Gilley. Instead, the thrust of his affidavit is 

that the relationship amounted to a joint venture, an assertion that we 

have already rejected.

Further, Peoples presented testimony by Wilson in a prior 

bankruptcy proceeding involving Gilley and his wife where Wilson flatly 

stated that he did not have an ownership interest in the cattle, that his 

arrangement with Security was one of helping Gilley get financing to buy 

the cattle, and that his benefit was the commission he would earn on 
24

cattle purchases.2 Against the backdrop of this unqualified testimony, 

we do not find that the evasive and guarded statements in the Wilson 

affidavit create a genuine issue of material fact on the ownership issue.

In resisting summary judgment, Security offers two additional 

pieces of evidence in its attempt to create a triable issue of fact on the 

question of ownership of the cattle. First, Security cites sales 

agreements signed by Wilson where the signature line identifies the 

signer as “purchaser or agent.” Second, Security notes that Wilson, after 

he became concerned that Gilley was not applying proceeds from cattle 

sold to the loan upon which Wilson was a coborrower, directed buyers of 

cattle to make checks out to Wilson or Security. 

Although it is true that the signature line on the sales agreements 

for “purchaser or agent” were signed by Wilson, the documents identify 

Gilley as the purchaser on the top of the front page of the invoices. The 

undisputed facts showed that Wilson was to purchase the cattle and be 

paid a commission on the purchases. Gilley in his sworn statement 

stated that Wilson signed such documents as his agent. Wilson did not 

contradict this factual assertion in his affidavit or in his testimony in the 

Gilley bankruptcy proceeding. As a result, the fact that Wilson signed 

invoices as “purchaser or agent” does not establish a genuine issue of 

material fact. Under the undisputed evidence, he signed the invoices as 

agent.

 2Prior testimony by a nonparty may be considered in support or opposition to a 

motion for summary judgment as a further affidavit under Iowa Rule of Civil Procedure 

1.981. Rohlin Constr. Co. v. Lakes, Inc., 252 N.W.2d 403, 405 (Iowa 1977). The test is 

whether the offered evidence, if given in the form of testimony at trial, would be 

admissible. See Gustason v. Ne. Nat’l Bank, 486 S.W.2d 596, 599 (Tex. Civ. App. 1972) 

(stating test is whether offered evidence, if given in the form of testimony from the 

witness stand, would be admissible); see also Saghin v. Romash, 258 N.E.2d 581, 583 

(Ill. App. Ct. 1970) (same).
25

Finally, although Security offered evidence that Wilson instructed 

buyers to make out checks to Wilson or to Security, such action does not 

make Wilson an owner of the underlying cattle. It established only that 

Wilson, as a selling agent with apparent authority, was able to instruct 

buyers regarding the manner of payment. As a result, Security has not 

raised a genuine issue of material fact on the ownership question based 

on this additional evidence.

D. Waiver by Course of Conduct. 

1. Position of Security. Assuming Peoples’ security interest does 

attach to the cattle in question, Security claims that Peoples waived its 

security interest because Peoples must have known that Gilley was 

selling cattle and applying the proceeds to pay down obligations to 

another creditor. See Folkers v. Britt, 457 N.W.2d 578, 581–82 (Iowa 

1990). Knowledge of such transactions, according to Security, can be 

used to establish waiver by course of conduct. See Perkins v. Farmers 

Trust & Sav. Bank, 421 N.W.2d 533, 536 (Iowa 1988). Security further 

claims that by waiving its preferred security position in its collateral, 

Peoples also waived its rights in the proceeds arising from the sale of the 

collateral. In support of its position, it cites C & H Farm Service Co. of 

Iowa v. Farmers Savings Bank, 449 N.W.2d 866, 875 (Iowa 1989), where 

we stated: “[W]here a secured party waives its security interest in 

collateral under the course of dealing waiver doctrine, the derivative 

security interest in proceeds of the collateral should be deemed waived to 

the same extent.”

Security supports its claims by noting that Peoples in September 

2007 informed Gilley that Peoples would not extend additional credit for 

the purchase of feeder cattle. Yet, Peoples visited Gilley’s lot in 2007 and 

2008 and would have had an opportunity to view the cattle, which 
26

Wilson claims were different in appearance and segregated from cattle 

financed by Peoples. Further, Security claims Peoples must have known 

that sales of cattle were occurring over a two-year period with proceeds 

being deposited in another bank. This is so, Security argues, because 

the loan balance on the Gilley line was not paid down during a period 

even though Gilley on his 2007 tax return showed gross receipts from 

cattle sales of $444,285.

2. Position of Peoples. Peoples claims the case involves a different 

legal framework than that offered by Security. Peoples maintains that 

there is a distinction between waiver of rights in collateral and waiver of 

rights in proceeds. In support of its position, Peoples cites Humboldt 

Trust & Savings Bank v. Entler, 349 N.W.2d 778 (Iowa Ct. App. 1984). In 

Humboldt, the court of appeals noted that a secured creditor may release 

its lien in collateral and retain a security interest in the identifiable 

proceeds. Humboldt, 349 N.W.2d at 782. Peoples maintains that the 

language cited by Security in C & H Farm Service is inaccurate and is in 

any event dicta. According to Peoples, its argument is strengthened by a 

change in the Iowa version of the UCC enacted in 2001, which now 

clearly distinguishes between waivers with respect to rights in collateral 

and waiver of rights in proceeds. See Iowa Code § 554.9315(1)(a)–(b).

On the issue of whether Peoples waived its right in the proceeds, 

Peoples argues that under C & H Farm Service, a creditor must have 

“actual knowledge” of the transaction giving rise to a waiver of a right. 

C & H Farm Serv. Co., 449 N.W.2d at 873.

In support of its legal position, Peoples notes that Security has 

offered no “direct” evidence that Peoples had knowledge of cattle sales in 

which the proceeds were deposited with Security. Jamie Brant, the 

responsible loan officer at Peoples, testified that he had no knowledge of 
27

the fact that Gilley was selling his cattle and depositing the proceeds 

elsewhere. Brant testified that he was aware of the Security UCC 

statement, but believed it related to cattle Gilley received as payment for 

custom feeding. Brant testified that Gilley advised him that these cattle, 

some two hundred head, were to be sold in the summer or fall of 2008 

for application on the debt due Peoples. According to Peoples, any waiver 

of security interest in the proceeds of the sale of cattle requires actual 

knowledge of the sale or actual knowledge of the use of the proceeds 

inconsistent with Peoples’ security interest.

3. Existing Iowa legal framework. We begin with a review of the 

provisions of the Iowa version of the Uniform Commercial Code (IUCC) 

that deal with the question of whether a lender may waive its perfected 

security interest in collateral or identifiable proceeds through a course of 

dealing between the lender and the borrower. Prior to 2001, Iowa had 

adopted section 9-306(2) of the Uniform Commercial Code, which 

provided:

(2) Except where this Article otherwise provides, a 

security interest continues in collateral notwithstanding sale, 

exchange or other disposition thereof unless the disposition 

was authorized by the secured party in the security 

agreement or otherwise, and also continues in any 

identifiable proceeds including collections received by the 

debtor.

U.C.C. § 9-306(2), 3B U.L.A. 33–34 (2002) (emphasis added) (former 

U.C.C. article 9); see also Iowa Code § 554.9306(2) (1999). The thrust of 

former section 9-306(2) was that after sale a security interest continues 

in the collateral and in the proceeds, unless the sale was either 

authorized (1) by the secured party in the security agreement, or (2) 

“otherwise.” See U.C.C. § 9-306(2).

There was a split in authority regarding whether the “otherwise” 

language should be interpreted to allow a course of dealing between a 
28

lender and borrower to override an express requirement in the security 

agreements that a borrower first obtain written consent before selling the 

collateral. See, e.g., Garden City Prod. Credit Ass’n v. Lannan, 186 

N.W.2d 99, 104 (Neb. 1971) (no waiver of express provision of security 

agreement through course of conduct), overruled by Farmers State Bank 

v. Farmland Foods, Inc., 402 N.W.2d 277, 282 (Neb. 1987); Clovis Nat’l 

Bank v. Thomas, 425 P.2d 726, 730 (N.M. 1967) (course of conduct could 

authorize sale notwithstanding requirement of written consent in 

security agreement); see generally Janet Fairchild, Annotation, What 

Constitutes Secured Party’s Authorization to Transfer Collateral Free of 

Lien Under UCC § 9-306(2), 37 A.L.R.4th 787 (1985).

In Lisbon Bank & Trust Co. v. Murray, 206 N.W.2d 96, 99 (Iowa 

1973), we held that a course of dealing between the debtor and the 

borrower could give rise to authorization to sell cattle free of the security 

interest where the security agreement did not contain a requirement of 

written consent. We also held in Lisbon Bank that the failure of a party 

to live up to a condition that it account to the secured party for the 

proceeds did not affect the implied authorization to sell. Lisbon Bank, 

206 N.W.2d at 99. In Hedrick Savings Bank v. Myers, 229 N.W.2d 252, 

256 (Iowa 1975), we joined the Clovis line of cases in deciding that a 

course of conduct could authorize sale of collateral in contradiction to an 

express prohibition in the security agreement. 

The principles of Lisbon and Hedrick have been followed in a series 

of cases. See, e.g., First State Bank v. Shirley Ag Serv., Inc., 417 N.W.2d 

448, 453 (Iowa 1987) (failure of seller to abide by agreement with lender 

does not affect rights of purchaser to collateral); Ottumwa Prod. Credit 

Ass’n v. Keoco Auction Co., 347 N.W.2d 393, 396 (Iowa 1984) (failure of 

secured party to remit proceeds does not vitiate authority to sell hogs 
29

established through course of dealing). The theory in these cases is that 

an innocent third party should not bear the loss resulting from 

inadequate collection practices of the secured party. Keoco, 347 N.W.2d 

at 397; Lisbon Bank, 206 N.W.2d at 99. We have further noted that a 

lender may reassert previously waived rights by giving reasonable notice 

to the debtor that the creditor intends to do so. See FS Credit Corp. v. 

Troy Elevator, Inc., 397 N.W.2d 735, 738 (Iowa 1986).

We revisited the law of secured interests in C & H Farm Service. In 

C & H Farm Service, the lender learned of the sale but did not veto it. 

C & H Farm Serv. Co., 449 N.W.2d at 872. Instead, the lender advised 

the debtor to get the lender’s name on the check resulting from the sale. 

Id. Although the debtor proceeded with the sale, the debtor did not 

follow the lender’s instructions. Id. Instead of instructing the buyer to 

make the check out to the lender, the debtor obtained the proceeds and 

deposited the funds in an overdrawn bank account. Id. at 875.

In determining whether the lender waived its security interest in 

the collateral through its course of dealings with the debtor, we observed 

“a secured party must have actual knowledge of its debtor’s sales of 

collateral without prior written consent before the secured party may be 

deemed to have waived its right to such consent by course of dealing.” 

Id. at 873. We concluded under the facts of the case that the lender 

knew of the sale. Id. The fact that the debtor did not take steps to 

ensure that the proceeds were paid to the lender did not affect the waiver 

of the bank’s security interest in the collateral. Id.

We next turned to the question of whether the creditor continued 

to have a security interest in the proceeds. We noted that because the 

debtor’s bank account was overdrawn, there were not identifiable 

proceeds that might be subject to the creditor’s security interest. Id. at 
30

876. We also observed, in apparent dicta, that ordinarily, when the 

creditor waives its security interest in the collateral, the derivative 

security interest in the proceeds is also waived. Id. at 875. This dicta 

was inconsistent with the earlier court of appeals decision in Humboldt, 

which was not cited in the opinion. 

In 2000, the legislature revised the IUCC. In place of Iowa Code 

section 554.9306(2), the legislature enacted Iowa Code section 554.9315.

See 2000 Iowa Acts ch. 1149, §§ 26, 35 (codified at Iowa Code 

§§ 554.9306, .9315 (Supp. 2001)). The amendment adopted the 

revisions made in 2000 of Article 9 of the Uniform Commercial Code. See 

U.C.C. § 9-315, 3 U.L.A. 289–90 (2010); H.F. 2513, Explanation, 78th 

G.A., Reg. Sess. (Iowa 2000) (stating “[t]his bill adopts revisions to Article 

9 of the Uniform Commercial Code . . . as proposed by the national 

conference of commissioners on uniform state laws”); H.F. 2513, Fiscal 

Note, 78th G.A., Reg. Sess. (Iowa 2000) (same). This provision states, in 

relevant part, except as otherwise specifically provided in exceptions not 

applicable here:

a. a security interest or agricultural lien continues in 

collateral notwithstanding sale, lease, license, exchange, or 

other disposition thereof unless the secured party authorized 

the disposition free of the security interest or agricultural 

lien; and

b. a security interest attaches to any identifiable 

proceeds of collateral.

Iowa Code § 554.9315(1)(a)–(b) (2009).

The new UCC provision allows a lender to “authorize[] the 

disposition [of collateral] free of the security interest,” but when such 

authorization occurs, a security interest attaches “to any identifiable 

proceeds of the collateral.” Id. The new provision clearly separates a 

security interest in the collateral, which is addressed under subsection 
31

(a), from a security interest in identifiable proceeds, which is addressed 

by subsection (b). The clear import of the legislative action is that waiver 

of rights in collateral does not necessarily mean waiver of rights in the 

proceeds.

4. Resolution of legal issues. The parties raise two legal issues 

that require resolution in determining this appeal. The first legal issue is 

whether the waiver of a secured interest in collateral necessarily results 

in a similar waiver of the creditor’s interest in the proceeds. In short, we 

must resolve whether the approach of the court of appeals in Humboldt is 

correct, or whether the dicta in C & H Farm Service is the better 

approach.

A second legal issue is the standard to be applied in determining 

whether a creditor has waived rights in proceeds. Must a party 

challenging creditor’s rights on waiver grounds show that the creditor 

had “actual knowledge” of the application of identifiable proceeds in a 

fashion contrary to the creditor’s interests? Or, can waiver arise on a 

lesser showing?

On the first issue, we conclude that Peoples has the better 

argument. It is true that in C & H Farm Service we used language that 

seemed to imply that a creditor who waived rights in collateral also 

waived rights in proceeds. See C & H Farm Serv. Co., 449 N.W.2d at 875. 

The language, however, was dicta. We also recognize that there is some 

authority supporting the approach in C & H Farm Service. See United 

States v. Sec. State Bank, 686 F. Supp. 733, 736 (N.D. Iowa 1988) (citing 

general rule that consent to sale through normal sales channels rather 

than through UCC enforcement procedure waives right to collateral and 

proceeds). The majority of courts and commentators has accepted the 

contrary view, however, and maintain that a secured party who 
32

authorizes the disposition of collateral free of the security interest 

continues to have a security interest in the identifiable proceeds of the 

collateral, unless, of course, the secured party relinquishes or waives the 

security interest in the proceeds as well. See, e.g., In re Bumper Sales, 

Inc., 907 F.2d 1430, 1440 (4th Cir. 1990); Dixie Ag Supply, Inc. v. Nelson, 

500 So. 2d 1036, 1040 (Ala. 1986); Producers Cotton Oil Co. v. Amstar 

Corp., 242 Cal. Rptr. 914, 922 (Ct. App. 1988); Vacura v. Haar’s Equip., 

Inc., 364 N.W.2d 387, 392 (Minn. 1985); Farmers & Merchants Nat’l Bank 

v. Sooner Coop., Inc., 766 P.2d 325, 329 (Okla. 1988); Dry Canyon Farms, 

Inc. v. U.S. Nat’l Bank of Or., 735 P.2d 620, 623 (Or. Ct. App. 1987); Cent. 

Wash. Bank v. Mendelson-Zeller, Inc., 779 P.2d 697, 700 (Wash. 1989); 

see also U.C.C. § 9-315 cmt. 2, 3 U.L.A. 290–91; 9B Frederick H. Miller & 

Neil B. Cohen, Hawkland UCC Series §9-315:2[Rev] (2008) (“Regardless of 

whether the disposition of the collateral is authorized, the security 

interest continues in identifiable proceeds unless the secured party also 

either relinquishes or waives the security interest in the proceeds.”); 

D. Fenton Adams, Sales of Personal Property As Secured Transactions 

Under Article 9 of the Uniform Commercial Code, 31 U. Ark. Little Rock L. 

Rev. 1, 62 (2008) (stating under former Article 9 secured interest in 

proceeds served as substitute collateral if the secured party authorized 

disposition of the collateral); William Stoddard, Tracing Principles in 

Revised Article 9 § 9-315(B)(2): A Matter of Careless Drafting, or An 

Invitation to Creative Lawyering?, 3 Nev. L.J. 135, 136–37 (2002) (noting 

secured party who authorizes sale of collateral retains secured interest in 

proceeds). 

Our position is reinforced by the recent legislative change to the

IUCC. The amendment now reflected in the language of Iowa Code 

section 554.9315 demonstrates a decoupling of waiver of interest in 
33

collateral from waiver of interests in proceeds. See U.C.C. § 9-315 cmt. 

2, 3 U.L.A. 290–91 (stating “[i]n many cases, a purchaser or other 

transferee of collateral will take free of a security interest, and the 

secured party’s only right will be to proceeds”).

On the question of appropriate legal standard required to establish 

waiver, we do not believe actual knowledge of the details of a particular 

transaction is always required, particularly when through a course of 

conduct a lender has knowingly waived its security interest through 

acquiescence in transactions of similar scope and import. We note that 

the language in C & H Farm Service suggesting that actual knowledge 

was required was only a proposition advanced for purposes of argument 

rather than a holding of the court. We do believe, however, that a waiver 

can be established only upon showing that the creditor knowingly and 

intentionally waived his rights in the proceeds. See Churchhill Bus.

Credit, Inc. v. Pac. Mut. Door Co., 49 F.3d 1334, 1337 (8th Cir. 1995); 

Vermillion Cnty. Prod. Credit Ass’n v. Izzard, 249 N.E.2d 352, 354 (Ill. 

App. Ct. 1969); N. Cent. Kan. Prod. Credit Ass’n v. Wash. Sales Co., 577 

P.2d 35, 41 (Kan. 1978); Hauenstein & Bermeister, Inc. v. Met-Fab. Indus., 

Inc., 320 N.W.2d 886, 892 (Minn. 1982); Bank of E. Or. v. Griffith, 792 

P.2d 1210, 1213 (Or. Ct. App. 1990); Cent. Wash. Bank v. MendelsonZeller, Inc., 779 P.2d 697, 701 (Wash. 1989). Further, in order to 

establish implied waiver by conduct, there must exist clear, unequivocal, 

and decisive conduct demonstrating intent to waive. Cent. Wash. Bank, 

779 P.2d at 701; see also Vogel v. Carolina Int’l, Inc., 711 P.2d 708, 711–

12 (Colo. App. 1985); Fleming v. Carroll Publ’g Co., 621 A.2d 829, 833

(D.C. 1993); Washburn v. Union Nat’l Bank & Trust Co. of Joliet, 502 

N.E.2d 739, 742 (Ill. App. Ct. 1986); Five Points Bank v. Scoular-Bishop 

Grain Co., 350 N.W.2d 549, 552 (Neb. 1984); Russell L. Wald, 
34

Annotation, Secured Transactions—Waiver of Security Interest, 29 Am. 

Jur. Proof of Facts 2d 711, 731 (1982) (stating “to constitute waiver other 

than by express agreement there must be unequivocal acts or conduct 

evincing an intent to waive, inconsistent with any other intention”). It is 

not enough to show that a creditor was negligent or should have known 

that its security position was being undermined by actions of a debtor. 

Further, even when a creditor has knowingly and intentionally waived its 

rights in the collateral, it may rescind its waiver by conduct inconsistent 

with it. FS Credit Corp., 397 N.W.2d at 738.

5. Application of law to this case. For the sake of argument, it may 

be assumed that until Peoples sent its notices pursuant to the Food 

Security Act on March 30 and April 1, 2008, Peoples waived its security 

interest in cattle sold to third parties. The critical issue posed in this 

case, however, is not whether the bank surrendered its security interest 

in the collateral. The critical question is whether the bank surrendered 

its security interest in the proceeds.3 The only question before us is 

whether, on the summary judgment record, Security generated a fact 

issue on the question of whether Peoples knowingly and intentionally

waived its interest in the proceeds of the sale of Gilley’s cattle through 

clear, unequivocal, and decisive conduct. See Cent. Wash. Bank, 779 

P.2d at 701.

There is circumstantial evidence to suggest that while Peoples did 

not know of specific sales of cattle, it must have had some inkling that 

Gilley was selling cattle subject to its security interest. Further, Brant 

was told by Gilley in the summer of 2008 that Gilley planned to sell 

 3No claim has been made on appeal that the funds loaned by Security were 

perfected purchase money security interests or that the funds sought to be recovered in 

this case were not “identifiable proceeds.”
35

cattle and forward the proceeds to Peoples. Peoples did nothing to veto 

the sale. 

But Peoples offered evidence indicating that it had no knowledge of 

the sales and the diversion of proceeds to another bank. While it is 

arguable that Peoples, despite its denials, might have had knowledge of 

some cattle sales, there is no reason to believe that Peoples had 

knowledge that Gilley was forwarding proceeds in which Peoples had a 

security interest to another bank. The record indicates that Peoples 

became aware of a UCC filing by Security, but this filing was explained 

away by Gilley as related solely to cattle on his lot that were being 

custom fed. While the actions of Peoples may not have been a model of 

diligence, and even rather gullible, there is no triable issue on the 

question of an intentional and knowing waiver of Peoples’ interest in the 

proceeds through clear, unequivocal, and decisive conduct. As a result, 

we conclude that the district court did not err in granting summary 

judgment to Peoples.

IV. Conclusion. 

In summary, we conclude Security did not waive its right to appeal 

by paying the judgment under the circumstances presented in this case. 

Proceeding to the merits, however, we conclude that the district court 

properly determined that Peoples was entitled to summary judgment on 

its underlying conversion claim against Security. We therefore vacate the 

decision of the court of appeals and affirm the judgment of the district 

court.

DECISION OF COURT OF APPEALS VACATED; DISTRICT 

COURT JUDGMENT AFFIRMED.