Opinion ID: 1894224
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Heading: Relationship Between the Two Transactions.

Text: This court recognized long ago that the right to become the owner of ... land is as subject to sale as the land itself.... Durband v. Ney, 196 Iowa 574, 579, 191 N.W. 385, 388 (1923) (emphasis added). This view has been accepted in other jurisdictions as well. See 77 Am.Jur.2d Vendor and Purchaser § 387 & nn. 27 & 28, at 533 (1975) (It is generally recognized that a purchaser of real estate, ... prior to full performance on his part, has by virtue of his contract an interest which he may assign or transfer, or contract to transfer....). In his agreement with Hammers, McBride did what these authorities allow: he sold to Hammers his right to become owner of the property. In doing so, we think McBride formed a contract with Hammers separate and distinct from the 1981 agreement. We come to this conclusion for several reasons. First, McBride had a substantial equity in the property approximately equal to the lump sum amount of $45,300. He would most assuredly want to protect this equity from loss in the event Hammers defaulted. We note that Hammers paid nothing down and that Hammers was required to pay McBride the $45,300 approximately three months from the date of their agreement. Under the court of appeals' reasoningthat one rather than two contracts existedHammers had little to lose by defaulting on the obligation to Schoening because Schoening would probably forfeit and eliminate the lump sum obligation. See Gray v. Bowers, 332 N.W.2d 323, 325 (Iowa 1983) (forfeiture extinguishes purchaser's liability for balance of unpaid purchase price); Abodeely v. Cavras, 221 N.W.2d 494, 497-98 (Iowa 1974); First Nat'l Bank v. LeBarron, 201 Iowa 853, 856, 208 N.W. 364, 366 (1926). We think it is reasonable to conclude that McBride, to guard against loss of his equity, insisted on, and Hammers assented to, an agreement separate and distinct from the 1981 contract. Under such a separate agreement McBride could, as he has here, sue for damages to protect his equity without being affected by Schoening's forfeiture. See Risken v. Clayman, 398 N.W.2d 833, 838 (Iowa 1987). Our conclusion is buttressed by the insertion of a forfeiture clause into the second agreement. Forfeiture is not an available remedy under land contracts unless the contract specifically provides for it. Schwab v. Roberts, 220 Iowa 958, 963, 263 N.W. 19, 21 (1935); Iowa Code § 656.1. Here, it is reasonable to conclude the parties specifically provided for forfeiture as an additional safeguard of McBride's equity against default by Hammers. Second, the form of agreement McBride and Hammers chose to accomplish the sale supports a finding here of two separate contracts. Had the parties intended one contract, or had they intended their agreement to be completely subordinate to the 1981 contract, they could have used a simple assignment form. See 1 F. Messer & M. Volz, Iowa Practice § 380, at 232 (1954). Instead, they used a detailed agreement that provided for rights and obligations distinct from and independent of those set out in the earlier contract. Third, the addendum to the 1984 agreement, despite its specific reference to the 1981 contract, emphasizes the independence of the two. The addendum expresses McBride's disavowal of any further relationship with Schoening. Had McBride and Hammers intended otherwise, we assume they would not have agreed that Hammers should take McBride's place with respect to forfeiture by Schoening. Considering the relevant authorities and the intention of the parties as expressed in their written agreement, we hold that two separate contracts exist here. See Mopper v. Circle Key Life Ins. Co., 172 N.W.2d 118, 124 (Iowa 1969).