Court Opinion

ID: 9729838
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:49:59.285929+00
Date Added: 2024-06-11T18:26:01.579383
License: Public Domain

NEUMAN, Justice
(dissenting).
The majority has fashioned a convenient bright-line test, marshalling the facts in favor of the producer and against the grain dealer to support reversal on public policy grounds. In my view, this black- and-white approach to enforceability disregards the inherently mutual obligations of such contracts, ignores economically sound remedies available to redress legitimate concerns over future performance, and scuttles the jury’s contrary fact-finding on the real issue — anticipatory breach. I therefore respectfully dissent.
The district court wisely recognized that this controversy is less about enforcing the contract between Mincks and Bell Farms than it is about sorting out their mutual obligations once Mincks’ ability to perform was called into question. Iowa Code section 203.12 makes plain that neither the revocation nor cancellation of a grain dealer’s license relieves the' dealer from liability to a producer for the purchase price of grain. In other words, a licensing violation may give rise to remedies for non-performance, but does not otherwise render the contract unenforceable. The statute effectively prevents a. dealer from unilaterally walking away -from ■ future commitments. ’Fairness dictates that a producer likewise not be permitted to unilaterally escape corresponding obligations, especially in a rising market.
Contracts for the sale of grain are governed by article 2 of the Iowa Uniform Commercial Code (UCC), Iowa Code chapter 554. S & S, Inc., 478 N.W.2d at 860; Nora Springs, 247 N.W.2d at 747. Pertinent here are sections 554.2609 and 554.2610. Read together, these sections address the precise concerns at issue here: the action required once insecurity develops in connection with future performance under a contract, and the remedies available upon repudiation by one of the parties.
Section 554.2609 states:
1. A contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until that party receives such assurance may if commercially reasonable suspend any performance for which that party has not already received the agreed return.
2. Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered *282shall be determined according to commercial standards.
4. After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.
Although section 554.2609 suggests that a demand for security be in writing, sufficiently egregious conduct by the offending party may justify dispensing with the need to make a written demand for assurances. S & S, Inc., 478 N.W.2d at 862-63. Whether the demanding party has reasonable grounds for insecurity is a question for the trier of fact. Id. at 863. So also are the inevitable questions concerning the notification sufficiency of any demand for adequate assurances and whether the assurances given, if any, are adequate. Id.
Section 554.2610 states:
When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may
a. for a commercially reasonable time await performance by the repudiating party; or
b. resort to any remedy for breach (section 554.2703 or 554.2711), even though the aggrieved party has notified the repudiating party that the aggrieved party would await the latter’s performance and has urged retraction; and
c. in either case suspend the aggrieved party’s own performance or proceed in accordance with the provisions of this Article on the seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (section 554.2704).
The official commentary to this section neatly ties section 554.2610 to the preceding section on adequacy of assurance:
With the problem of insecurity taken care of by [section 554.2609] ... anticipatory repudiation centers upon an overt communication of intention or an action which renders performance impossible or demonstrates a clear determination not to continue with performance .... Repudiation can result from action which reasonably indicates a rejection of the continuing obligation. And, a repudiation automatically results under [section 554.2609] on insecurity when a party fails to provide adequate assurance of due future performance within thirty days after a justifiable demand therefore has been made.
Iowa Code § 554.2610, cmts. 1, 2 (emphasis added). This statutory scheme mirrors the Iowa common law on anticipatory repudiation:
Anticipatory breach requires a definite and unequivocal repudiation of the contract. It is committed before the time for performance and is the outcome of words or acts evincing an intention to refuse performance in the future. It is not established by a negative attitude or one which indicates more negotiations are sought or that the party may finally perform.
Williams v. Clark, 417 N.W.2d 247, 250 (Iowa App.1987) (quoting Lane v. Crescent Beach Lodge & Resort, Inc., 199 N.W.2d 78, 82 (Iowa 1972)).
Bell Farms concedes on appeal that it never demanded assurance of performance from Mincks before selling its grain elsewhere. It asserts instead that no such demand was required because (1) Darrel Bell’s conversation with Tim Mincks in mid-July led Bell Farms to believe Mincks was going out of business, and (2) surrender of Mincks’ grain dealer’s license on September 1 confirmed that suspicion. The weakness in Bell’s argument is that it ignores disputed issues of fact surrounding both circumstances. Bell’s conversation with Mincks in mid-July may well have justified a request for assurance of performance. And Bell may have believed that *283his refusal to consider Oakville as an alternative signaled an understanding that he planned to take his grain elsewhere. But a jury could also infer from the record that, given the rise in market prices, Bell Farms jumped at the chance to negotiate a more favorable contract with another dealer. Seeking assurances from Mincks might have posed an obstacle to that strategy. The fact that Bell Farms renegotiated at a higher price before learning of Mincks’ license surrender further weakens its claim. A jury could have found that at no time was Mincks bankrupt, under investigation by the department of agriculture, or otherwise financially unable to fulfill the contracts.
It was within the unique province of the jury to pass on the credibility of these key witnesses. We are obliged on appeal to construe the evidence in the light most favorable to the verdict. Carson v. Mulnix, 263 N.W.2d 701, 705 (Iowa 1978).
Given this record, I find no error in the trial court’s refusal to grant judgment as a matter of law for Bell Farms.
LARSON and CARTER, JJ., join this dissent.