Opinion
No. 1-1029 / 01-0437
Filed August 28, 2002
Appeal from the Iowa District Court for Bremer County, Jon Stuart Scoles, Judge.
Purchasers of Holstein dairy cattle appeal the district court's dismissal of their petition for breach of contract, breach of warranties, and negligence.
AFFIRMED.
Lloyd Bierma, Sioux Center, for appellant.
Kurt Leistikow, Reinbeck, for appellees.
Robert Thompson, Reinbeck, for appellees.
Larry J. Cohrt, of Roberts, Cohrt, Stevens, Lekar, P.L.C., Waterloo, for Walter and Rita Ruth.
Heard by Vogel, P.J. and Miller and Vaitheswaran, JJ.
Buyers of a herd of dairy cattle sued the sellers after discovering that some members of the herd were diseased. The district court ruled for the sellers. On appeal, the buyers contend there is insufficient evidence to establish that the sellers complied with relevant disclosure requirements. They also take issue with the court's rejection of their various breach of warranty claims. We affirm.
I. Background Facts and Proceedings
Robert and Debra Vander Veen contacted Alan Dykshorn, a dairy farmer and broker, about expanding their herd of Holstein dairy cattle. Dykshorn discovered that Walter and Rita Ruth, lifelong dairy farmers, were planning to retire from the business and were seeking buyers for their registered Holstein herd.
Dykshorn contacted the Ruths on behalf of the Vander Veens. After examining registration papers, he stated he was impressed with the pedigree of the animals in the herd and believed they would be a good addition to the Vander Veen herd. Pursuant to an oral contract, the Vander Veens bought ninety head of cattle from the Ruths for $108,000.
Soon, some of the herd became ill. Tests revealed they had Johne's disease, a chronic debilitating condition that causes scarring of the gut and prevents absorption of proteins.
The Vander Veens sued the Ruths, raising breach of contract, breach of warranty, and negligence claims. The Ruths answered and filed a cross-petition against Dykshorn. Following a bench trial, the district court ruled in favor of the Ruths and dismissed the petition and cross-petition. The court also denied the Vander Veens' Rule 1.904 motion for enlarged findings and conclusions. We review their appeal on error. Iowa R. App. P. 6.4.
II. Disclosure Requirements
Iowa Code section 554A.1 exempts a seller from certain implied warranties if the seller discloses to a prospective buyer or agent: (1) "[t]hat the animals to be sold have been inspected in accordance with existing federal and state animal health regulations" and (2) have been "found apparently free from any infectious, contagious, or communicable disease." Iowa Code § 554A.1(1)(a). In William C. Mitchell, Ltd. v. Brown, 576 N.W.2d 342 (Iowa 1998), our highest court held that the disclosures contemplated by this provision must be "truthful and accurate." Brown, 576 N.W.2d at 349. The court further held that section 554A.1(1) "requires more than just a facial assertion by the seller for compliance." Id. at 350.
The provision also requires sellers to disclose they are the present owners of the cattle and have been the owners for at least thirty days. Iowa Code § 554A.1(1)(b)(1). The Vander Veens do not dispute that the Ruths complied with this disclosure requirement.
The district court determined that the Ruths complied with both prongs of this disclosure provision. The Vander Veens take issue with this determination. First, they contend section 554A.1(1)(a) as interpreted by our highest court required the Ruths to provide a written certification that the herd had been inspected in accordance with "existing federal and state animal health regulations." Iowa Code § 554A.1(1)(a). However, they cite no state or federal laws governing inspection and certification of private, intrastate cattle sales. See Iowa Code § 163.2 (not mentioning Johne's disease as "infectious and contagious disease" governed by statute); Iowa Admin. Code r. 21-65.1(163) et. seq. (containing no added designations of infectious and contagious diseases as authorized by Iowa Code section 163.2). Cf. Iowa Code § 163.11 (requiring testing of dairy cattle before they are brought into the state); 163.14 (requiring inspection of intrastate public stockyard sales of cattle). Additionally, at least one veterinarian testified Iowa had no such thing as a "Johne's free certificate." As a certificate of inspection confirming compliance with "existing federal and state animal health regulations" was apparently not required by law, the Ruths' failure to obtain such a certificate did not defeat their disclosure defense.
Our conclusion is supported by language in section 554A.1(1)(a) that places the onus of obtaining written confirmation of the disclosure on the buyer or buyer's agent. Iowa Code § 554A.1(1)(a). Cf. Brown, 576 N.W.2d at 350 (noting that failure to request confirmation in writing does not preclude buyer from receiving protection afforded by the disclosure provision). Additionally, the evidence concerning the provision of a certificate as a matter of industry practice was at best disputed, with Dykshorn testifying that a certificate was not needed and another individual stating it was standard practice to obtain one. Finally, it is undisputed that the Ruths scheduled monthly inspections of their herd which included a general health check by a veterinarian and it is further undisputed that they made the veterinarians available to the buyers for discussion about the herd's health. Under these circumstances, we agree with the district court that the Ruths effectively complied with the inspection requirement of section 554A.1(1)(a).
The next question is whether the Ruths disclosed that the cattle had been "found apparently free from any infectious, contagious, or communicable disease," as provided in section 554A.1(1)(a). There is substantial evidence that they did. Walter Ruth told the Vander Veens and their agent that the herd was healthy to the best of his knowledge. The Ruths also allowed the Vander Veens and Dykshorn to review their registration, pregnancy, and vaccination records, which Robert Vander Veen conceded he did for the better part of a night. The Ruths additionally permitted a visual inspection of the herd. Robert Vander Veen testified he availed himself of this opportunity and spent about four hours observing the cattle being milked. Finally, as noted, the Ruths offered to let the Vander Veens and their agent contact their veterinarians, an offer which both declined. These steps amounted to more than a "facial assertion" of compliance with section 554A.1(1)(a). This is particularly true where neither the buyers nor their agent asked the Ruths about Johne's disease or requested a specific test for the disease, as was customary in the industry.
Our affirmance of the district court's findings that the disclosure requirements were satisfied means the Ruths are exempt from certain implied warranties identified in the Uniform Commercial Code. See Iowa Code §§ 554.2314, 554.2315. Therefore, we need not address the Vander Veens' arguments concerning those warranties.
III. Express Warranty
The Vander Veens finally contend that the oral contract contained an express warranty that the cattle would be disease-free. An express warranty is created when a seller affirms a fact or makes a promise relating to the goods to be sold which becomes a part of "the basis of the bargain." Iowa Code § 554.2313(1)(a). A statement "purporting to be merely the seller's opinion or commendation of the goods does not create a warranty." Id., 554.2323(2).
The district court found that the parties' oral agreement did not contain an express warranty that the herd was free of Johne's disease. We find substantial evidence to support this finding. See Ertl Co. v. Lange Plastics Co., 158 N.W.2d 93, 98 (Iowa 1968) (stating question of whether there was a breach of warranty "is largely a question of fact").
Walter Ruth told the buyers that "as far as he knew" the herd was healthy. Neither he nor his wife categorically represented that the cattle were disease free and, more particularly, Johne's disease free. Contrast Reed v. Bunger, 255 Iowa 322, 332-33, 122 N.W.2d 290, 297 (1963) (affirming finding of express warranty where seller represented cattle "would be good, clean Holstein heifers."). Additionally, Walter Ruth invited the Vander Veens to test his qualified statement through an examination of the animals and their registration and health records and through a discussion with their veterinarians. Finally, the Ruths testified that they did not know prior to the sale that the cattle had Johne's disease, despite the fact one pre-sale veterinary record indicated a cow might have contracted the disease. The district court gave credence to their testimony. For these reasons, we affirm the district court's finding that there was no express warranty concerning the herd's health.
The Ruths testified they were unaware of this record.
AFFIRMED.