Opinion ID: 2123936
Heading Depth: 1
Heading Rank: 3

Heading: Implied Contract/Quasi-Contract Rights.

Text: The Hunters' third contention rests on the notion that section 524.910(2) somehow created some form of implied or quasi-contract between the parties that the bank breached through its actions. According to the Hunters, this alleged contract required the bank to offer the 360 acres at issue to the Hunters in one parcel, as opposed to piecemeal. The bank and Kniep dispute this theory, arguing that the language of section 524.910(2) implies no such agreement imposing such a requirement. A review of our decisions construing section 524.910(2) and defining implied and quasi-contracts clarifies this point in favor of the bank and Kniep. Under section 524.910(2) the right of repurchase given the former owner is preemptive with respect to the disposition of the land by the bankthe current owner. See Black v. First Interstate Bank, 439 N.W.2d 647, 650 (Iowa 1989). This preemptive right or right of first refusal ripens into an option when the bank decides to sell the land and the former owner decides to purchase it. Id. Accord Knepper v. Monticello State Bank, 450 N.W.2d 833, 836 (Iowa 1990). There is a crucial difference between a preemptive right and an option. That difference is that the holder of a preemption has no right to compel the landowner to sell, while the holder of an option does. Knepper, 450 N.W.2d at 836-37. Contracts are either express or implied. A contract is express if the parties reach it by words. In contrast, a contract is implied if the parties manifest it by their conduct. Duhme v. Duhme, 260 N.W.2d 415, 419 (Iowa 1977). There are two types of implied contracts: implied in fact and implied in law. Robert A. Hillman, Contracts, Remedies, Equity, and Restitution in Iowa § 3.2(c), at 61 (1979) [hereinafter Hillman]. We have already spoken of the implied in fact contract. As to these, all of the traditional rules of contract lawoffer and acceptance, consideration, and breachapply. Hillman at 61. In contrast, implied in law contractsalso known as constructive or quasi-contracts rest on a legal fiction arising from considerations of justice and the equitable principle of unjust enrichment. Id. Such contracts do not arise from bargaining. And so, they are not real contracts. For that reason, the general rules of contracts do not apply to them. Id. In short, a quasi-contract is simply a rule of law that requires restitution to the plaintiff of something that came into the defendant's hands but belongs to the plaintiff. Dan B. Dobbs, Handbook on the Law of Remedies § 4.2, at 235 (1973). Applying these principles here, we find there was no express contract between the bank and the Hunters to sell back the 360 acres. Nor do we find any facts to support an implied in fact contract to do so. Quasi-contract principles do not apply because the bank did not enjoy any unjust enrichment at the expense of the Hunters. Nothing came into the bank's hands that belonged to the Hunters. The bank obtained the land by foreclosure, a statutory remedy. We agree with the bank and Kniep that to apply contract or quasi-contract principles to these facts would be at odds with the preemption or right of first refusal principles we announced in Black and Knepper. The district court had it exactly right: The purpose of [section 524.910(2) ] is to reduce foreclosure losses by making it possible for the former owners to get their farms back. [ Knepper, 450 N.W.2d at 836.] From this statement of purpose the Hunters discern a legislative mandate that the bank dispose of the property in one tract rather than in parcels. Of course the statute itself makes no such requirement. The obvious reason the bank elected this procedure was to minimize its loan loss. This is not contrary to the letter or spirit of the statute. Rather, the legislative scheme contemplates the bank will accept from the original owner the same terms it was willing to take from another. No gain or loss to the bank, by virtue of the preemption, is anticipated. The original owners are deprived of nothing. They may still acquire all of the land [statute requires the bank to dispose of all the land within five years]. A piecemeal disposition may even benefit them by affording an opportunity to reacquire part of the land if they could not afford all of it. The court concludes that the good faith disposition of foreclosed farmland by the bank in parcels of less size than the original acquisition is not prohibited by the statute.