Hartig Drug Company v. Hartig

Hartig Drug Company (Hartig Drug) (plaintiff), a family business, operated retail-pharmacy stores in Iowa. After Kenneth Hartig (defendant) acquired ownership of the properties that housed the stores from his brother, he leased the buildings to Hartig Drug. The lease for one store located in Dubuque provided for a base rent of $3,208.33, which could be increased to 2.75 percent of the store’s gross sales. The percentage lease provision’s purpose was to give Hartig a stake in Hartig Drug’s success. After the lease term began, Hartig Drug contracted with the United States Postal Service to sell stamps to customers as a convenience. Hartig Drug received an annual compensation of $5,000 from 1985 through 1993, and then $9,000 from 1994 onward, on total stamp sales of more than $2.3 million. Hartig Drug also began selling lottery tickets in return for commissions from the Iowa state government. In total, Hartig Drug received $42,435.29 in commissions for total lottery sales of $634,714. In 1996, Hartig Drug filed a petition for declaratory judgment, asking a court to compel Hartig to perform maintenance and repairs at the Dubuque store. Hartig counterclaimed, alleging that Hartig Drug owed additional rent, because it had failed to account for lottery and stamp sales in its gross sales. The trial court ruled that the percentage rent should have included the sale of lottery tickets and stamps, and the court ordered Hartig Drug to pay an additional $128,075.95 in rent to Hartig. Hartig Drug appealed.