*1 May, John E. MAY and Edith L. Wife, Appellees,
Husband
v. OAKLEY, Irene Executor of the
Mabel Oakley, G.
Estate Donald
Deceased, Appellant. OAKLEY, Individually,
Mabel Irene Oakley,
Mabel Irene Executor of the As Deceased, Oakley,
Estate of Donald G.
Appellant, May,
John E. MAY and Edith L. Wife, Appellees.
Husbаnd Harris, Trott, Bloomfield, D.W. and Emil Trott, Moines, Jr. Barrett & Des appellant. Belin, Harris, Mark McCormick of Hel-
miek, Tesdell, Lamson, Blackledge & McCormick, Moines, Des and R. Kurt Swaim, Bloomfield, appellees. LARSON, Justice. September May
On John E. 320-acre, May agreed Edith L. to sell their County Oakley farm to Donald G. $338,000, Oakley pay- and Mabel Irene able installments. The contract allocat- $50,000 ed $288,000 to the land and residence and $50,000 paid that the first vided considered to be for the A mortgage farm residence. Farmers Home Administration was assumed purchase price. $50,000 Oakleys paid subsequent
several annual install- (Irene) Oakley ments. Mrs. defaulted on however, payment, the 1985 and she was (Donald served with notice forfeiture. meantime.) Oaklеy had died responded the notice of forfeiture writing the Mays’ lawyer, a letter to stat- ing that the resi- paid, demanding dence had been to the residence farm. *2 declaratory solely be considered еx- Mays judgment filed and The required clusively paid as the consideration for the determine were action to and Irene filed an located enjoin approximately as to the at the center of thе above the forfeiture action to estate, (She challenge constituting the for- described real two residence. did acres more or less .... acres.) of the 320 feiture of the balance declаratory judgment injunction purpose It is that the for allocat- for trial. actions were consolidated purchase price the was to allow both Following equity, a trial in the district the sellers to take advan- that Irene was not entitled to a court held tage of certain income tax breaks available injunc- denied the deed to the residence and Mays sought to them. The exempt the (The appeаled. Mays cross tion. gain from the sale of their residence from prior temporary appealed from a order See U.S.C. § capital gain 121(d)(5) tax. injunction, but that matter is not before (1982). accomplish this, In оrder to an us.) purchase price required: allocation of the reversed, ordering appeals part Where is used Mays convey the residence to Irene taxpayer the the principal as his sought by warranty Mays deed. The purposes, is used for other an review, granted. We further which we allocation must be made to determine the the court of decision application now vacatе of the section. and affirm the of the district l(3)ii(1986). Reg. Treas. Similar- § 1.1034— court. pur- allocate the ly, the wanted to claiming deed to to make a tax-free price chase order fact that the Irene reliеs on the fifty-acre Illinois farm exchange of their contract allocated a certain amount of Mays’ farm and farm home. home for the residence, $50,000, purchase price to the original Irene concedes required paid out of the first it to be tax-based, purpose for the allocation was pur- installments. The allocation argues that the effect of she price paragraphs сhase is found to make the contract divisible. language is provided of the contract thirteen which argument by pointing to supports that She
part that: fully paid all of the fact that she has 1. The TOTAL PURCHASE PRICE by the contract to the amounts estate, real the above described paragraph residence under purchase of the includes both Sellers’ which one, part: which portion, is the portion and farm agree- (а) execution of this Upon the Thirty-eight Three sum of Hundred ment, hereby pay to Sellers ($338,000.00). said Thousand Dollars Of ($10,- of Ten Thousand Dollars sum Fifty total sum the amount of Thousand 000.00), hereby ac- receipt of which is ($50,000.00) Dollars is allocаted as total Sellers, downpay- knowledged by purchase price for the residence and of the resi- Eightyeight amount of Hundred Two real dence above described ($288,000.00) Thousand Dollars is allocat- estate. purchase price for the sale of ed as total (b) Buy- On or before October the farm. shall make Forty pay to Sellers the sum of ers shall of all sums to residence ($40,000.00)as the bal- Thousand Dollars Iowa, County, as follows: said resi- ance dence. 13. ALLOCATION. Of expressly un- total it is counter that required the resi- derstood and that the amount of was toward ($50,000.00) plan- tax Fifty dence to facilitate income Thousand Dollars 1, ning pаrties. payable on or October before left Irene testified that she had BallM. is the Agent Escrow par- negotiations tract to her husband and ties and he shall hold said deed until papers she approved him. complied contract has been with at She testified that she would not have which he time shall deliver said deed to *3 contract, however, if she had assigned. or their it or understood was not divisible that she added.) (Emрhasis place if would lose her live the farm Paragraph contract, thirteen of was forfeited. which first allocates the Despite present understanding, Irene’s provides: then do support the facts not claim that the It hereby is and understood that parties intended the contract be divisible. although acreages are divi- request did not a deed to the nature, by sible by purchase and divisible (although residence allocated to amounts, a single deed shall 1979) had it been until after the in conveyance delivered as aforesaid notice of forfeiture was served on Irene in tracts, both said and in satisfaction of 1985. Wе must effect to the intent of the terms and conditions of this contract. parties at the time the contract was added.) (Emphasis executed, subsequently not an intent devel- addition, significant there a problem is оped. See Home Fed. Sav. & Loan Ass’n regarding legal description for the resi- (Iowa Campney, 357 N.W.2d dence; it is not just clear 1984). it provides where is located. While it some We believe that the contract does not guidance as to the size and location of the given bear the construction it provisions are inconsistent. appeals. and the court of While the alloca- Paragraph five that tion of the require- is herein de- [t]he payment for immediate for the resi- explained being scribed and as the dwell- support dence lend some for that construc- house, garden yard adjacent tion, the contrаct as a whole indicates to us thereto, partially which is bounded that it was not intended to be divisible. roadway[;] fence twelve, Paragraphs eleven and for exam- while paragraph thirteen describes the resi- ple, anticipate that one deed would be dence as placed executed and They escrow. locat- vide: ed approximately at the center of the Upon 11. DEED. exeсution estate, constituting above described real contract, agree this contempo- two acres more or less the above raneously execute and deliver to property, described to include the actual warranty conformity deed in with structure, yard, and circle standards of the Iowa State Bar Associa- driveway. subject only to liens encumber- Irene was not sure where the boundaries of аnces of record the execution of be, but that would testified it contract, this or hereafter created yard “would include from the side back Buyers, subject and further zon- to such just behind the machine shed and about cut ing regulation and easements of record that barn in half.” public utilities roads and established highways. The court of held the lack Upon legal description prevent ESCROW OF DEED. would not en- approval of by Buy- the аbstract of title forcement of the contract if the ers, Sellers contemporaneously exe- could held be located. It also cute and deliver a in fa- warranty parties attempt legal to establish a Buyers, vor of Buyers assigns, description and, or if they for the deed could Ball, Vern Attorney agree, M. at appoint Law Bloom- a court would a master field, Iowa. It that said to do Vern them. rescuing tract as the sellers from that re- agree that an indefinite de-
While we sult. scription not be an insurmountable divisible, truly problem if contract were provision calling single deed for a specificity regard the lack оf believe merely describes the manner which the profound description has a more if transaction will be handled parties did not effect: it shows that ultimately pay portions for both anticipate intend thаt deeds or suggest contract res. This does not given. for, parcels, fully paid remains security payment as of amounts owed view that the whole acres would Our parcel. rights on the other security stand for the сontract indebted- *4 parties should be determined a court provision ness is further reinforced its equity property in- accordance with that forfeiture of granted by the contract rather than terests any “in appropriate it was breached re- procedures provided implement spect.” A breach Notwithstanding provision interests. pay the for the failure to installments single equity may a court of farmland, believe, is such an on separate conveyance order a event. they of that of the res for which true, the court payment. full have made notes, forfeiture, we equity abhors a There is no merit in the sellers’ claim agree with the that it does abhor precise description prevents lack of a enough a forfeiture to override established setting off the residence legal principles. See Miller v. American buyers. sold tracts are suf- 399, Wonderlands, Inc., 275 N.W.2d ficiently capable of identification that a (Iowa 1979). ap- We vacate the court of equity can set off the residence
peals affirm decision and property from the remainder. the district court. DECISION OF COURT OF APPEALS NEUMAN, J., joins this dissent. VACATED; DISTRICT COURT JUDG- MENT AFFIRMED. except
All Justices concur CARTER NEUMAN, JJ., dissent. who
CARTER, (dissenting). Justice shape I dissent. Parties who a transac- WOHLENHAUS, Appellant, Richard particular manner order to produce consequences favorable tax correspondingly any be saddled with unfa- POTTAWATTAMIE MUTUAL INSUR- ASSOCIATION, Appellee. consequences which from vorable flow ANCE casting the transaction that form. por- The contract res is divided into two por-
tions. The sellers sold the residence 17, buy- tion for a 1987. consideration. ers have the consideration allocated to Rehearing July Denied portion the contract. Con- sequently, contrary provi- absence agreement,
sions in the should be equitable
declared to be the owners thereof any lien or
free forfeiture attrib-
utable to the consideration allocated to the property. interpret
other I cannot