Passehl Estate v. Passehl

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