Passehl Estate v. Passehl

Facts

At the time of her death, Doris Passehl owned approximately 160 acres of farmland. Doris’s son, Jerry Passehl, and his wife, Volnetta Passehl (Defendants), had occupied and rented from Doris a five-acre portion of the farmland on which they operated an auto-salvage business. Defendants’ business was enclosed by a fence. Doris’s estate (Plaintiff) filed two lawsuits against Defendants, alleging various grievances. The parties negotiated a written settlement agreement, which provided in part that Plaintiff would sell to Defendants the five-acre tract for $50,000, with the legal description conforming to the existing fence boundary. Defendants were required to make a down payment of $20,000. However, the down payment would be forfeited by Defendants if Plaintiff provided marketable title prior to closing and Defendants failed to perform their obligations. The parties never closed the transaction, because a survey determined that the fence enclosing Defendants’ business did not conform to local zoning boundaries. Plaintiff refused to return the down payment to Defendants, claiming that a subsequent oral agreement required Defendants to remove junk cars from the area as a prerequisite to regaining the down payment. Defendants filed a motion to enforce the terms of the settlement agreement. Plaintiff filed a cross-motion seeking the same relief. The trial court held that the parties had contemplated that the property to be conveyed to Defendants should conform to the existing fence. Nevertheless, the trial court upheld the down-payment forfeiture because Defendants had failed to remove the junk cars from the area pursuant to the agreed-upon contingency required prior to closing. Defendants appealed, arguing that the supposed contingency was not included in the written settlement agreement. The court of appeals affirmed. The Supreme Court of Iowa granted certiorari to review.