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IN THE COURT OF APPEALS OF IOWA No. 9-661 / 09-0357 Filed September 2, 2009

Upon the Petition of EDWARD CEILLEY ESTATE, Plaintiff-Appellant, vs. RICHARD A. ANDERSEN, MERCY T. ANDERSEN and RICHARD LEE, Defendants-Appellees. ________________________________________________________________

Appeal from the Iowa District Court for Black Hawk County, Kellyann M. Lekar, Judge.

The Executor of the Edward Ceilley Estate appeals from the district court's denial of its forcible entry and detainer action. REVERSED AND REMANDED.

Joseph R. Sevcik of Snow, Knock, Sevcik & Hinze, Cedar Falls, for appellant. Bradley M. Strouse of Redfern, Mason, Larsen & Moore, P.L.C., Cedar Falls, for appellees.

Considered by Vogel, P.J., and Potterfield, J., and Miller, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2009).

2 POTTERFIELD, J. The Executor of the Edward Ceilley Estate and Yvonne Ceilley personally (referred to as the Estate in our opinion) appeal the district court's denial of its petition for forcible entry and detainer. The district court found for the

defendants, Richard and Mercy Andersen,1 on their asserted defenses that the notice of forfeiture of the real estate sales contract was fatally defective and that the equities weighed in their favor. We reverse and remand. I. Background Facts and Proceedings. The following facts are not in dispute. In 2001, the defendants, Richard and Mercy Andersen, entered into a sales contract with Edward and Yvonne Ceilley for the purchase of commercial real estate. Monthly payments in the amount of $1042.64 were due on the first of each month. The Andersens made timely payments only for the first two months--payments thereafter were late. The Andersens also failed to pay real estate taxes in September 2004 and in March and September 2007. Edward Ceilley dealt with these defaults informally. Though entitled to interest for late payments under the contract, the Ceilleys did not demand interest from the Andersens through 2007. The Ceilleys also paid the property taxes. Edward Ceilley died in January 2008. The Andersens did not make

contract payments in January, February, and March of 2008. Yvonne, now the executor of the Estate of Edward Ceilley, sought legal help on behalf of the Estate and for her personal interest in the property. The Estate served notice of forfeiture to the Andersens on March 1, 2008, listing as defaults the amounts due
1

The defendant Richard Lee has not appeared in any of the proceedings.

3 for contract payments, additional interest, and reimbursement of property taxes paid by the Ceilleys. The notice stated that the contract "shall stand forfeited unless the parties in default, within 30 days after completed service of this notice, shall perform the terms and conditions in default, and in addition pay the reasonable costs of serving this notice." The Andersens cured the defaults. The Andersens did not pay real estate taxes in March 2008 and were late with the April 2008 payment on the contract. The Estate again served notice of forfeiture. The Andersens cured the defaults. On November 13, 2008, the Estate served notice of forfeiture for nonpayment of the November 1, 2008 contract payment. The Andersens cured the default. After each of these three notices of forfeiture, the Andersens cured the default by payment on the last day of the time period for doing so. After each notice of forfeiture and each payment curing the default, the Andersens then were late in their payment for the following month. After curing the November 2008 default and notice of forfeiture, the Andersens did not timely pay the December 2008 contract payment. On

December 11, 2008, the Estate served a fourth notice of forfeiture stating the sales contract had not been complied with in the following particulars: a. Non-payment of December 1, 2008, contract payment b. Cost of Service Total $1042.64 $45.00 $1187.64

On Wednesday, January 14, 2009, after the 30-day time limit for curing the default expired, Mr. Andersen delivered a check in the amount of $1087.64 to counsel for the Estate. Counsel refused to accept the check.

4 On January 16, 2009, the Andersens were served with notice to quit, stating "the contract for the purchase of the real estate was forfeited on January 13, 2009." On January 29, 2009, the Estate filed this action for forcible entry and detainer. Trial was held on February 4, 2009. The Andersens had not paid the January or February installment. At trial, the Andersens did not contest that they were in default on the sales contract. Mr. Andersen testified that the property was leased to a tenant, who operated a restaurant on the premises. The tenant was in arrears on rent for various reasons. With respect to the check for $1087.64 he attempted to deliver on Wednesday, January 14, Mr. Andersen testified he "got sidetracked from the deadline." Mr. Andersen testified he had given to his own attorney a cashier's check for the January 2009 payment and that he had in his possession a cashier's check for the February 2009 payment. The district court entered a ruling denying the forcible entry and detainer. The court found the notice of forfeiture "contained a typographical error for the total in default" though the "individual items listed as being in default were correctly stated." The court found that the Andersens "have a history of making late payments on the real estate contract . . . however, the Defendants have always cured the forfeiture prior to the necessary date." The court wrote: This Court has seriously considered this matter from every angle. The Court could make an argument on behalf of either side which would support a judgment in this matter. On the one hand, the Notice of Forfeiture is defective from the standpoint of the total amount stated as being in default but it is not inaccurate as to the itemized amounts of default. The Notice of Forfeiture was validly served and [the Andersens] appear to have been aware of the

5 inaccuracy in the Notice of Forfeiture as the amount tendered by the [Andersens] was for the correct amount and not the incorrect amount stated in the Notice of Forfeiture. However, other than the amounts in default, there are no independent grounds stated in the Notice of Forfeiture which would allow the forfeiture to proceed. The Notice of Forfeiture is defective in that it incorrectly states the amount in default. Further, there are equitable reasons on the [Andersens'] behalf which support denying this forfeiture and forcible entry and detainer proceeding. As the [Andersens] have cited, the law does not favor forfeiture. The Estate appeals, contending the court erred in determining the notice of forfeiture was fatally defective and in granting equitable relief to the defendants under the circumstances presented. II. Scope and Standard of Review. Because an action for forcible entry and detainer is triable in equity, our review is de novo. Powell v. Grewing, 562 N.W.2d 761, 762 (Iowa 1997). "We are obliged to consider both the facts and the law and then determine--based on the credible evidence--rights anew on those propositions properly presented." Id. (citation omitted). III. Analysis. Under Iowa law, "a contract for the purchase of real estate works an equitable conversion. The contract vendee becomes the equitable owner; the contract vendor holds title as trustee for his purchaser." Fellmer v. Gruber, 261 N.W.2d 173, 174 (Iowa 1978). When a notice of forfeiture has been served on the contract vendee, the rights of the contract vendor are identical to those before service of the notice of forfeiture. See generally Jensen v. Schreck, 275 N.W.2d 374, 384 (Iowa 1979) (noting that "[t]he purpose of this chapter is to limit the rights of a forfeiting vendor who might otherwise summarily remove a vendee

6 upon default" and not to grant any additional power to the vendor). A forfeiture for nonperformance cannot be declared until the cure period has run. See Allen v. Adams, 162 Iowa 300, 303, 143 N.W. 1092, 1093 (1913). In Iowa, forfeiture is completed by compliance with Chapter 656 and the passage of thirty days after service of notice. Iowa Code

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