IN THE COURT OF APPEALS OF IOWA No. 15

- 0105 Filed October 14, 2015

VIRGIL JOHNSON and VIRGIL JOHNSON TRUCKING , Plaintiff s - Appell ants ,
vs. ASSOCIATED MILK PRODUCERS, INC. , Defendant

- Appell ee

.

________________________________________________________________ Appeal from the Iowa District Court for Allamakee County, Margaret L. Lingreen , Judge.

Plaintiffs appeal a district court decision granting summary judgment to defenda nt on their action for breach of contract. REVERSED AND REMANDED.

John S. Anderson and Stephen J. Belay of Anderson, Wilmarth, Van Der Maaten, Belay, Fretheim, Gipp & Zahasky , Decorah , for appellant s

. Matthew C. Berger of Gislason & Hunter, L.L.P. , New Ulm, Minnesota , for appellee.

Heard by Doyle , P.J., Eisenhauer , S.J., and Goodhue, S.J.*

* Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2015).2

GOODHUE, S enior J udge

. Virgil Johnson and Virgil Johnson Trucking filed a petition claiming a sum due, alleging that Associated Milk Products, Inc. (Associated) had breached its contract to pay specific sums for delivering milk to Associated’s Arlington plant. Associated filed a motion for summary judgment alleging that the contract had been modified or replaced beginning September 1, 2013, and that all sums due had been paid in full. The motion was granted. Johnson has appealed.
I. Background Facts In September 2001 , Johnson and Associated entered into an oral agreement whereby Johnson was to pick up milk from dairy farms and deliver it to Associated’s plant in Arlington. Johnson was paid so many cents per gallon for the milk delivered and $1 00 a trip for each load delivered. In a letter dated July 3 1, 2013, Associated advised Johnson that it was reducing the trip charge by twenty

- five dollars per month beginning September 1, and twenty

- five dollars more for each succeeding month until Dece mber 1, 2013, when the trip charge would be totally eliminated. There was no specific agreement in the original contract as to its duration or the method by which it could be amended or terminated. Neither party expressly or formally terminated the con tract. Instead, Johnson continued to deliver the milk and Associated continued to accept it. Johnson protested the amendment by continuing to bill Associated for the trip charge as well as the gallonage charge. Associated paid in accordance with its Jul y 31 letter. This arrangement continued until a formal written notice of termination was given by Associated on November 12, 2014, which terminated3

the agreement effective December 2, 2014. However, in January of 2014, Johnson had filed a petition claimi ng sums due as provided by the original contract. Associated filed a motion for summary judgment and it was granted.
II. Scope of Review Summary judgments are reviewed for errors of law. Phillips v. Covenant Clinic , 625 N.W.2d 714, 717 (Iowa 2001).
III. Error Preservation Issues must be raised in district court and ruled on before they will be considered on appeal. Meier v. Senecaut , 6 4 1 N.W.2d 532, 537 (Iowa 2002). Johnson filed a resistance to the motion, thereby preserving error

. See Bill Grunder’s Sons Constr

. , Inc. v. Ganzer

, 686 N.W.2d 193, 197

- 98 (Iowa 2004).
IV. Discussion When a motion for summary judgment is filed the burden is on the moving party to demonstrate he is entitled to judgment. Sabin v. Ackerman , 846 N.W.2d 835, 839 (Iowa 2014). On app eal the record is reviewed in the most favorable light to the nonmoving party. Id. Even if facts are un disputed , summary judgment is not appropriate if reasonable minds could reach different conclusions based on inferences that can be drawn from the undi sputed facts. Id. Generally , a modification to an existing contract requ ires a new consideration , while a revision or termination of an existing contract and a replacement with a new contract does not require a new consideration. Recker v. Gustafson , 279 N.W.2d 744, 755

- 56 (Iowa 1979). The problem is determin ing whether there has been a revision and a new contract formed or an ineffective attempt to modify a contract without consideration.4

I f a contract does not contain a n express or implied period of duration the court will generally construe the contract to be a contract termina b l e at will. Shelby Cnty

. Cookers, L.L.C. v. Util. Consultants Int’l, Inc. , 857 N.W.2d 1 86, 191 (Iowa 2014). The parties do not dispute that the initial contract could be termin at ed by either of them after providing a reasonable notice. Associated contends , and the district court agreed by granting the motion for summary judgment , that the contract between Johnson and Associated was terminated by the July 31 letter. John son , by continuing to deliver the milk, in effect consent ed to the termination and to a new contract that deleted the trip charges in accordance with the July 31 letter. There is no contention that any consideration supported the change in the payment sch edule or that either party specifically referenced revision or termination, either orally or in writing , until the letter of Decemb er 12. A very similar situation was addressed by our Supreme Court in Davenport Osteopathic Ho s pital Ass’n v. Hospital Se rvice, Inc. , 154 N.W.2d 153 (Iowa 1967). Hospital had agreed to provide services to Blue Cross subscribers. Davenport Osteopathic Hosp. Ass’n , 154 N.W.2d at 156. The contract between the parties had a ninety

- day termination clause. See i d. A few years later Blue Cross advised Hospital it was changing its payment formula which reduced the charges payable to Hospital. See i d. Hospital protested the new rate schedule but Blue Cross only reimbursed by the new schedule even though Hospital
cont inued to charge in accordance with the original agreement. See i d. Blue Cross contended that by failing to officially terminate or rescind the contract and instead accepting the reduced payment the hospital a greed to the modification.5

See i d. at 158. T he court noted that neither party elected to rescind and awarded Hospital recovery under the terms of the initial contract. See i d

. The court stated, “ T he law does not sanction breach of contract as a means of escape from its burdens ome terms nor will it re ward an offending party.” Id. Tindell v. Apple L ine s , Inc. , 478 N.W.2d 428 (Iowa Ct. App. 1991), is another similar case. Tindell had an operating lease with Apple in which he was paid so many cents per mile for hauling Apple’s freight. Tindell , 47 8 N.W.2d at 429. The agreement was subject to a thirty

- day notice of termination

. See i d. at 429

- 30. Apple prepared an addendum decreasing the rate but Tindell did not sign it and advised Apple he would not accept the rate change. See id. at 43 0

. Tind ell continued to haul and accept payments at the reduced rate. See i d. The court found Apple owed Tindell for the period in which it unilaterally reduced the
rate of pay. See i

d. at 431

- 32. Associated contends that Davenport Osteopathic and Tindell can be differentiated on the grounds that both contracts had termination clauses t hat required a notice and a lapse of time be fore the actual termination . Associated further contends in a case where an agreement requires a time lapse between the notic e an d the termination it is not a contract at will. Associated reasons that in a contract at will a request to change by either party is an automatic termination of the original contract. If the other party continues to perform, a new contract has been forme d in accordance with the requested modification

. It is true that both Davenport Osteopathic and Tindell have specific termination clauses, but all contracts at will can be terminated only after reasonable notice of termination. See H ess v. Iowa Light , Heat & Power Co. ,6

221 N.W. 194, 196

- 97 (Iowa 1928). There is no logical or rational reason that a
contract that in effect allows either party to terminate at will, but contains an agreed upon reasonable termination notice should be treated as a contract f or a specific term r ather than a contract at will. Associated has not directed the court to any Iowa case that has been based on that distinction. It is distinction without meaning as it relates to the factual situation under consideration

. Associated provided a reasonable notice when it finally terminated the cont ract. Associated and the district court liken the case under consideration to an employment at will contract. An employment contract is terminable at will and subject to modification at any time, leaving the other party with only the alternative s of accept ing t he modification or terminat ing the relationship. See
Willit s v. City of Creston , 433 N.W.2d 58, 62 (Iowa Ct. App. 1988); M oo dy v. Bog ue , 31 0 N.W.2d 655, 66 1 (Iowa Ct. App. 1981). There has been a long standing legal distinction between employees and inde pendent contractors. Harvey v. Care Initiatives, Inc. , 63 4 N.W.2d 681, 683

- 84 (Iowa 200 1 ). The concept of employment contracts as contrac t s at will is firmly rooted in Iowa law. Fogel v. Trustees of Iowa Coll

. , 446 N.W.2d 451, 45 5 (Iowa 1989). Employme nt contracts have been considered unilateral contracts where one party makes an express agreement and the other party mak es no promise but acce pts by rendering some performance. See Anderson v. Douglas & L o ma son Co. , 540 N.W.2d 277, 282

- 83 (Iowa 1995) ; Drake v. Block 74 N.W.2d 577 , 80 (Iowa 1956)

. Johnson entered into his relationship with Associated as a n independent subcontractor and not as an employee and that relationship continued. The contract between the two parties was a bilateral contract su bject to modification7

by agreement

. The fact t hat employment contracts a nd service contract s with an independent contractor are treated differently is exemplified by the cited cases. Assent to a modification may be implied from the acts of the other pa rty when a bilateral contract exists but w hether such a contract has been modified is ordinarily a question of fact. See Davenport Osteopathic Hosp. Ass’n , 154 N.W.2d at 157. The district court applied the rules applicable to contracts between an employe r and employee and concluded as a matter of law that Johnson accepted the terms of the proposed modified co ntract when he continued to hau l milk after the proposal was made

. The rule utilized is not
app ropriate when a service contractor as opposed to an e mployee is involved. Although t he facts are primarily undisputed , those facts do not support Johnson’s acceptance of Associated’s proposed modification as the only , or probable, conclusion that can be drawn from those facts. We therefore reverse and remand for further proceedings consistent with this opinion. REVERSED AND REMANDED.