Opinion
No. 6-035 / 05-1356
Filed March 1, 2006
Appeal from the Iowa District Court for Plymouth County, Robert J. Dull, District Associate Judge.
A landlord appeals the district court's finding that he is responsible for the cost of improvements to the leased property. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Judy L. Freking of Oostra, Bierma Van Engen, P.L.C., Sioux Center, for appellant.
Scott L. Bixenman of Murphy, Collins Bixenman, P.L.C., Le Mars, for appellee.
Considered by Vaitheswaran, P.J., and Eisenhauer, J., and Brown, S.J.
Senior Judge assigned by order pursuant to Iowa Code section 602.9206 (2005).
I. Background Facts Proceedings
In April 2004, Josh Brower, doing business as Brower Farms, L.L.C., purchased about 160 acres of farmland in Plymouth County. Part of the land had been used as a pasture since the 1950's, and was very rough. Old terraces had washed out and there were cattle paths up to eight feet deep. Brower was interested in qualifying for a government program that would help pay to rebuild the terraces. The land needed to be planted in crops for one year before Brower could qualify for that program.
Consequently, Brower entered into a farm lease with Joseph Loutsch on April 23, 2004. Loutsch informed Brower that because of the roughness of the pasture ground it needed some work so he could drive a tractor across it. Loutsch testified:
Q. So what did you discuss the morning of April 23rd? A. Discussed — let Josh know that, I had a — a bulldozer guy that did some work for me, and that he could come in. And we talked about fixing some cattle paths up out there, getting it so I could drive over it, get across it and farm it. So, I had mentioned my bulldozer guy to him, and he said go ahead and get him.
Brower admitted that he authorized Loutsch to hire a bulldozer operator, but testified that he only authorized work on a single cattle path. Both agree they did not discuss cost.
Loutsch contacted Gregory Cornish, who had done work for him in the past. Cornish got the land to a point where it could be tilled which involved filling in several cattle paths, but did not rebuild the terraces. Cornish spent 65.5 hours moving dirt on the farm, and charged ninety dollars per hour, creating a bill of $5895 for his services.
Cornish sent the bill to Brower, who refused to pay the full amount. Brower informed Cornish that he had only approved fixing one cattle path. Brower estimated this would cost $1000, and paid Cornish this amount. Loutsch paid Cornish $4895, the remainder of the bill. Loutsch then deducted $4895 from his rent payment to Brower. Brower claimed Loutsch had not paid his rent in full, and placed a landlord's lien on his crops. Brower later terminated the lease.
Loutsch filed a small claims action against Brower, asking for a judgment of $4895. Actually, however, Loutsch was only seeking to have the lien removed from his crops. Brower filed a counterclaim, claiming Loutsch had breached the rental agreement by not paying the full amount of the rent. The case was then transferred to district court. During the trial, Loutsch conceded he was not seeking a money judgment against Brower. Brower filed a motion for a directed verdict based on the fact Loutsch was not seeking a judgment against him and because Loutsch was not the real party in interest. The district court ruled that Loutsch's evidence would be considered a defense to the counterclaim, and denied the motion.
The district court found:
The facts before the Court clearly show that an agreement was made between [Loutsch] and [Brower] wherein [Brower] authorized [Loutsch] to hire dirt work done to his property. It also cannot be disputed that [Loutsch] performed under that agreement in accord with the terms as he understood them. It was necessary to put [Brower's] ground into condition allowing it to be tilled for one year prior to the installation of terraces in the fall. The only issue is whether the services performed were within the reasonable contemplation of the parties.
. . . Nothing before the Court other than [Brower's] speculations and assumptions based upon a lack of proficiency in agriculture shows anything done not to have been appropriate, necessary, and reasonable. [Brower] stood by and allowed the work to be performed and has benefited by it. He is responsible for the reasonable cost thereof, and that reasonable cost is all that [Loutsch] prays for.
The court then entered judgment against Brower for $4895. The court also found for Loutsch on Brower's counterclaim. Brower appeals.
II. Standard of Review
This case was tried at law and our review is for the correction of errors at law. Iowa R. App. P. 6.4. Findings of fact in a law action, which means generally any action triable by ordinary proceedings, are binding upon the appellate court if supported by substantial evidence. Iowa R. App. P. 6.14(6)( a).
III. Motion to Dismiss A.
Brower contends he was entitled to a directed verdict because Loutsch admitted he was not seeking a money judgment against him. Loutsch asserts that Brower did not preserve error on this issue because he did not renew his motion at the close of the evidence.
When an action is tried before a court without a jury, a motion for directed verdict should actually be designated as a motion to dismiss. Iowa Coal Mining Co., Inc. v. Monroe County, 555 N.W.2d 418, 438 (Iowa 1996). A motion to dismiss during trial, however, is the equivalent of a motion for directed verdict. Id. The district court must consider whether the nonmoving party has presented substantial evidence on each element of the claim. Balmer v. Hawkeye Steel, 604 N.W.2d 639, 640 (Iowa 2000). If the evidence is not substantial, then the claim should be dismissed. See id. Failure to renew a motion to dismiss, initially made at the close of plaintiff's evidence, at the close of all evidence waives any error in the court's ruling on the motion. Thomas Truck Caster Co. v. Buffalo Caster Wheel Corp., 210 N.W.2d 532, 535 (Iowa 1973).
We choose to bypass the error preservation issue and consider the merits of the problem. The court's ruling stated:
It is the opinion of the Court that the Plaintiff has not made a case for a money judgment, but he has made a defense to the counterclaim. So if I grant your motion I am still going to consider all of this evidence, unless you dismiss your counterclaim.
Brower refused to dismiss the counterclaim. The court then declined to dismiss the case.
Based on the evidence in the case, we conclude the court erred by entering judgment against Brower for $4895. As noted above, Loutsch specifically testified he was not seeking a money judgment against Brower because he had withheld $4895 from the rental payment due to Brower. We reverse this portion of the court's ruling.
B.
As a second ground in his motion to dismiss, Brower claimed Loutsch was not the real party in interest. Every action must be prosecuted in the name of the real party in interest. Iowa R. Civ. P. 1.201; In re Estate of Boyd, 634 N.W.2d 630, 637 (Iowa 2001).
Loutsch was the real party in interest for purposes of the counterclaim. Brower was seeking payment from Loutsch because Loutsch had failed to pay the full amount of the rent that was due under the parties' rental agreement. We conclude the court properly refused to dismiss the action because Loutsch was not the real party in interest.
IV. Loutsch's authority as agent.
Brower contends that Loutsch's authority as his agent was limited to the amount necessary to repair one cattle path and that he did not have authority to approve the amount of work actually done, and which cost $5895. He states that he was only a partially disclosed principal, and because of this Loutsch, as the agent, should be held responsible for the cost of Cornish's work. Loutsch maintains he was granted authority to hire Cornish and to incur the charges made by Cornish. Loutsch also claims Brower would be unjustly enriched if he were not required to pay the balance of Cornish's bill.
An agent's principal is bound by the agent's actions which are done within the scope of the agent's actual authority. Gabelmann v. NFO, Inc., 571 N.W.2d 476, 481 (Iowa 1997). The supreme court has stated:
Actual authority to act is created when a principal intentionally confers authority on the agent either by writing or through other conduct which, reasonably interpreted, allows the agent to believe that he has the power to act. Actual authority includes both express and implied authority. Express authority is derived from specific instructions by the principal in setting out duties, while implied authority is actual authority circumstantially proved.
Dillon v. City of Davenport, 366 N.W.2d 918, 924 (Iowa 1985) (citations omitted). The burden of showing that an agent acted within the scope of the agent's actual authority is on the party claiming that such authority existed. Hendricks v. Great Plains Supply Co., 609 N.W.2d 486, 493 (Iowa 2004).
In the present case, Brower admitted he gave Loutsch the authority to hire Cornish to perform work on his property. Brower also conceded Cornish's charges were reasonable for the work actually performed. The only issue is the extent of the work authorized. The district court did not find credible Brower's claim that he gave specific instructions to only fix one cattle path. As the court found, "[i]t was necessary to put [Brower's] ground into a condition allowing it to be tilled for one year prior to the installation of terraces in the fall." If only one cattle path had been fixed, Loutsch would still not have been able to drive his tractor across the land in order to plant crops. Loutsch reasonably interpreted Brower's statements and conduct as allowing him to have authority to hire Cornish to make the land suitable to be tilled.
We think the evidence establishes Loutsch had express authority to engage Cornish to repair the land, and the implied authority to determine and authorize the amount of work required and incur the reasonable and necessary charges for doing so. See Grismore v. Consolidated Prods. Co., 232 Iowa 328, 337, 5 N.W.2d 646, 652 (1942) ("The extent of an agent's authority is usually to be ascertained by fair implication, from the relations of the parties, the nature of the business of the agency, the service to be rendered, the purpose or transaction to be consummated, and the surrounding circumstances."). Brower is bound by Loutsch's actions because they were done within his actual authority as an agent.
Although we are inclined to think Brower's claim that he was an undisclosed principal has no application in this case as the issue is not whether Cornish can hold Loutsch responsible but rather the extent of Loutsch's authority, the district court did not address Brower's claim in this respect. Therefore we conclude this issue has not been preserved for our review. Meier v. Senecaut, 641 N.W.2d 532, 540 (Iowa 2002) (noting that we do not consider issues raised for the first time on appeal).
Likewise, we do not consider Loutsch's unjust enrichment claim as we have concluded Brower is responsible for the total of Cornish's bill on agency principles.
An agent who incurs authorized expense on behalf of his principal is entitled to be indemnified for that expense. See Horrabin v. City of Des Moines, 198 Iowa 549, 554, 199 N.W. 988, 990 (1924); 3 Am. Jur. 2d Agency § 250, at 748 (1986). We conclude Brower was responsible to pay Cornish the full amount, $5895, for work on his property. Brower paid Cornish $1000, and Loutsch paid him $4895. Brower was then liable to pay $4895 to Loutsch. Loutsch offset Brower's debt of $4895 to him against his rental payment to Brower. We determine the district court did not err in finding against Brower on his counterclaim for the full amount of the rental payment claimed to be due from Loutsch. We affirm this part of the district court's decision.
We have reversed, however, the district court's judgment in favor of Loutsch against Brower for $4895, plus interest, because due to the adjustment of the rental payment, this amount has already essentially been paid by Brower.
We remand for entry of an order in accordance with his opinion. Costs of this appeal are assessed to Brower.