Steel Farms, Inc. v. Croft & Reed, Inc.
154 Idaho 259
Idaho2012Background
- Croft & Reed leased property to Steel Farms with an Option A to purchase (April 22, 2004–March 1, 2008) for a specified price.
- Steel Farms installed a pivot irrigation system and later a new pump, with equipment linked to Croft & Reed via prior financing arrangements.
- In 2006, interlineation changed the lease termination date from 2008 to 2009, allegedly authorized by Croft & Reed’s secretary; disputed authority exists.
- Walker Land, Inc. obtained an option (Option B) from Steel Farms in 2006, while Walker Land subleased the property in 2006–2007.
- Steel Farms exercised Option A in 2008; Croft & Reed refused, leading to litigation on validity of modifications, Option A, and ownership of irrigation equipment.
- District court granted partial summary judgment and 54(b) certification; appellate court vacated and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Steel Farms’ grant of Walker Land’s Option B terminat e Option A? | Steel Farms argues Option B does not transfer Option A rights. | Croft & Reed contends any transfer violates non-assignment clause, terminating Option A. | Option B did not terminate Option A; two distinct interests exist. |
| Did Virginia Mathews’ interlineation modify the Lease and Option? | Interlineation valid; initials show authority to modify. | Merger clause requires instrument in writing signed by both parties; interlineation ineffective. | Remand to determine Mathews’ actual/apparent authority to modify. |
| Is parol evidence admissible to resolve duration ambiguity of Lease and Option? | Ambiguity exists; parol evidence should be allowed to determine intent. | Lease and Option unambiguous; parol evidence not allowed. | Ambiguity exists; remand to consider parol evidence on intended term. |
| Should irrigation equipment be treated as a fixture or personal property? | Equipment not clearly described as fixture; factual question remains. | Rayl v. Shull controls; irrigation system is a fixture as a matter of law. | Fact question remains; remand to consider parol evidence on intended character. |
Key Cases Cited
- Pinehaven Planning Bd. v. Brooks, 138 Idaho 826 (2003) (plain language governs contract interpretation)
- George W. Watkins Family v. Messenger, 115 Idaho 386 (Ct. App. 1988) (inscription of initials can satisfy writing requirement)
- Rayl v. Shull Enterprises, Inc., 108 Idaho 524 (1984) (fixture analysis for irrigation systems; three-factor test)
- Duff v. Draper, 98 Idaho 379 (1977) (separate components of irrigation systems may be fixtures or personal property)
- Rowan v. Riley, 139 Idaho 49 (2003) (some irrigation components may be fixtures, others not)
- Valley Bank v. Christensen, 119 Idaho 496 (1991) (parol evidence rules for integrated contracts)
- Howard v. Perry, 141 Idaho 139 (2005) (integration and parol evidence limitations)