Court Opinion

ID: 9715369
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:01:48.896606+00
Date Added: 2024-06-11T18:23:34.032970
License: Public Domain

CARTER, Justice
(dissenting).
I dissent. Wherever the issue of entitlement to PIK farm program payments would otherwise lead the court, the parties have elected to present that issue solely within the constructs of established real property law. It is stipulated by the parties that defendant’s right of possession following the forfeiture of the interest of the contract vendees (Huenekes) from whom he leased the farm is determinative of his right to receive the PIK payments. Based on that stipulation, plaintiff is clearly entitled to prevail under established real property law.
There is no claim that the facts did not entitle plaintiff to forfeit the interest of the Huenekes in the property as a result of their default under the contract. Nor is there any dispute that plaintiff took all steps required to effect a valid forfeiture, including serving a copy of the notice of default on defendant who, as Huenekes’ tenant, was the party in possession. It is well established that if a forfeiture is perfected against a contract vendee in accordance with the statutory requirements “then all interests in the real estate junior to the interests of the vendor are forfeited and cancelled.” Madsen, Marshall’s Iowa Title Opinions and Standards, at 456 (2d ed. 1978).
The cited treatise specifically discusses the rights of a lessee of the contract vendee following forfeiture of the vendee’s interest. The author states with respect to this situation:
In the question presented ... the vendor sold the property to a vendee and the vendee later executed leases on the property. ... It is only necessary strictly to comply with the service of notice in the manner and upon the persons named in the chapter [656] — i.e. “on the vendee or his successor in interest ... and on the party in possession of said real estate.” Junior lienors, tenants, judgment creditors, etc., have no rights that rise above the rights of the vendee, and if ... properly served, their rights are cut off by the forfeiture.
Id. at 461-62 (emphasis added). The foregoing commentary finds support in our decisions in the following cases. Nolan v. Wick, 218 Iowa 660, 254 N.W. 80 (1934) (mechanic’s lien for improvements made upon request of vendee does not survive forfeiture of contract even where vendor had knowledge of improvements and did not object); O’Bryon v. Weatherly, 201 Iowa 190, 206 N.W. 828 (1926) (chattel mortgage on improvements erected by vendee does not survive forfeiture); Sullivan v. Sullivan, 139 Iowa 679, 117 N.W. 1086 (1908) (vendee’s spouse entitled to dower interest in vendee’s estate but such dower interest does not survive forfeiture). It also appears from our cases that upon completion of a valid forfeiture the vendor becomes entitled to immediate possession as against the vendee and those parties claiming under the vendee. Cassiday v. Adamson, 208 Iowa 417, 224 N.W. 508 (1929); O’Bryon, 201 Iowa at 195, 206 N.W. at 830-31.
The effects of the vendor’s paramount title with respect to lessees of the vendee is discussed in 49 Am.Jur.2d Landlord and Tenant § 12, at 56 (1970):
[A] lessor cannot create any greater interest in the lessee than he himself has; a lessee, unless protected by some special statute or equity, take subject to all claims of title which were enforceable against his lessor.
This concept is recognized and discussed as “eviction by paramount title” in Restatement (Second) Property § 4.3 (1977). It is the Restatement position that the tenant’s remedy in such situations is to seek recov*758ery from the vendee for breach of covenant of quiet enjoyment. Id.
The district court and the majority of this court have sought to carve out an exception to the established rule in the case of farm tenancies. The principle upon which the rule is based, leaves no room for such an exception. The rule is based upon the premise that persons claiming under a contract vendee can have no greater rights than the party with whom they are dealing. While the majority suggests that there is a recognized public policy favoring farm tenants in lease termination situations, this is not a lease termination case. This is a forfeiture case involving the rights of one not a party to the lease, whose title is paramount to that of both the landlord and the tenant.
There is nothing in either the subject matter or the wording of Iowa Code sections 562.5-.7 (1983) which supports the distinction which the majority seeks to draw. The statute deals with procedural matters concerning the sufficiency of notice. The issue in the present ease involves an area of substantive law affecting the vendor’s paramount title. The statutes merely operate to continue a farm tenancy “upon the same terms and conditions” between the parties to the lease unless a statutorily prescribed notice of termination is served on the tenant. Those statutes in no way purport to affect the rights of the parties to the lease as against third persons.
The only significance in the fact that no chapter 562 notice of termination was served on defendant in the present case is that this circumstance means his tenancy with the Huenekes was valid and subsisting when the plaintiff’s forfeiture of Hue-nekes’ interest was completed. The viability of defendant’s lease with Huenekes is not determinative of his right to possession against the plaintiff. The established rule that interests derived through the vendee are extinguished upon forfeiture of the vendee’s interest and the vendor is entitled to immediate possession necessarily assumes that those interests are valid against the vendee. There would be no occasion to apply such a rule if the interests derived from the vendee are otherwise ineffectual.
As in most instances involving the acquisition of an interest in real estate, the protection of farm tenants in situations such as the present case must lie in the recording acts and the opportunity to discover the extent of the interest of the person with whom they are dealing. I would reverse ,the judgment of the district court and hold that under the stipulation of the parties plaintiff is entitled to the PIK proceeds.
McCORMICK, SCHULTZ and WOLLE, JJ., join this dissent.