                  IN THE COURT OF APPEALS OF IOWA

                                No. 14-1862
                             Filed April 6, 2016


RONALD C. BROWNLEE, GLENDA F.
BROWNLEE, DANIEL R. BROWNLEE,
MEGAN L. BROWNLEE, d/b/a
BROWNLEE FARM PARTNERSHIP,
    Plaintiffs-Appellees,

vs.

JAMES D. JAMISON, Individually, JEFF
JAMISON, Individually and Jointly, d/b/a
JAMISON & SONS, a/k/a JAMISON &
SONS AG SERVICES, a/k/a J&S AG
SERVICES, and MARVIN MITCHELL,
a/k/a RUSS MITCHELL d/b/a MITCHELL
CONSULTING, a/k/a MARK HENDRICHS,
and JAMES D. JAMISON IRREVOCABLE
TRUST, RONALD GALE MCDOWELL,
Trustee of the James D. Jamison Irrevocable Trust,
       Defendants-Appellants.
________________________________________________________________

      Appeal from the Iowa District Court for Clarke County, Sherman W.

Phipps, Judge.



      Defendants appeal from an adverse grant of summary judgment on the

plaintiffs’ claim for equitable mortgage. REVERSED AND REMANDED.

      John P. Roehrick of Gaudineer & George, L.L.P., West Des Moines, for

appellants.

      Jeff W. Wright and Joel D. Vos of Heidman Law Firm, L.L.P., Sioux City,

for appellees.

      Heard by Danilson, C.J., and Mullins and McDonald, JJ.
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MCDONALD, Judge.

       The defendants appeal from an adverse grant of summary judgment in

this action involving the equitable mortgage doctrine. The district court held the

plaintiffs had established an equitable mortgage as a matter of law. We conclude

there is a triable issue of fact regarding whether the parties intended a sale of

real property of only an equitable mortgage. We thus reverse and remand for

further proceedings.

                                           I.

       The summary judgment record establishes the following. Ronald, Glenda,

Daniel, and Megan Brownlee d/b/a Brownlee Farm Partnership owned and

operated a family farm. By 2009-2010, the farming operation was in financial

straits. Between November 25, 2009, and March 2, 2010, Ronald and Daniel

forged the endorsement of Farmer’s Trust and Savings Bank (hereinafter

“FTSB”) on certain checks made payable jointly to the bank and the Brownlees

and deposited the checks into the farm’s accounts. FTSB was a creditor of the

farming operation.

       In July of 2010, FTSB commenced foreclosure proceedings on the farm.

Around the same time, the Brownlees saw an advertisement in the Des Moines

Register offering “refinancing/operating lending help.” The advertisement was

placed in the Des Moines Register by Marvin Mitchell. The Brownlees met with

Mitchell to discuss their financial situation.

       On March 28, 2011, the Brownlees entered into a Consulting Agreement

with Mitchell through Jamison & Sons Ag Services. The agreement provided
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Mitchell would provide consultation and other services to the Brownlees,

including advice on reorganization, efforts to renegotiate and restructure the

debt, efforts to obtain new financing, and efforts to obtain loan approval. The

agreement also required the Brownlees to purchase their seed, herbicide,

fungicide, and insecticide from Jamison & Sons Ag Services. The agreement

also provided the “Client shall pay Consultant . . . an additional sum of 2% of the

gross loan amount or amount of credit applied for/restructured amount/reduced

amount arranged for, obtained by or obtained from efforts of the Consultant for

Client.” All late fees incurred a 1.5 percent late charge. The agreement also

stated “unpaid fees . . . attach as 1st secured party to loans to be dispersed to

Client and property of Client used to receive the loan(s) or restructuring.” On

March 28, 2011, the Brownlees signed an information release to give Jamison &

Sons Ag Services access to the Brownlees’ financial information.

       The decrees of foreclosure were entered on April 4, 2011. On April 19,

2011, FTSB sent Mitchell the Brownlees’ current payoff schedule in the mail. By

this time, the bank was aware the Brownlees had forged FTSB’s endorsements

on certain checks and misappropriated the funds.           In the payoff schedule

provided to Mitchell, there was a line item documenting the amount still owed to

satisfy the claim of the insurance company that compensated the bank on the

forgery loss. It was identified in the schedule as “Forgery Ins.”

       On April 27, 2011, the Brownlees entered into a Repurchase Agreement.

The Repurchase Agreement provided the Brownlees would sell their farm

property to James Dean Jamison in exchange for him “settling all current debts
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and/or current fees due [FTSB]” The settlement amount was not to “exceed the

amounts as represented in attachments N, O & P or $1,800,000.00 whichever is

less.” The agreement stated:

      This amount will be paid by buyer as follows. $10,000.00 paid upon
      execution of this agreement to the David Leitner Law Firm Trust
      account, $121,522.76 paid upon agreement between buyer and
      Farmer’s Trust & Savings Bank of clear lien free possession of the
      above named property to farm by the buyer in 2011, balance to be
      paid in full upon Farmer’s Bank & Trust and sellers providing
      agreeable payoffs and clear and merchantable title free of any and
      all liens or claims to buyer and transferring any 1st mortgage rights
      to buyer along with all satisfaction of buyer’s closing request
      including but not limited to buyers due diligence addendum
      Attachment Q and requested closing information.

The Repurchase Agreement stated, “Sellers agree to offer to repurchase the

above named property on or before December 31, 2011 from the buyer for all of

the amounts paid in regards to the above property by the buyer, plus 1% per

month interest on all monies paid by buyer.” The repurchase agreement also

gave Jamison & Sons Ag Services a “1st secured interest in favor of the buyer

from the sellers on the above named property for all crops, crop insurance or

proceeds of crops grown or intended to be grown on the above property in 2011.”

The agreement allowed the Brownlees to remain on the property as renters until

December 2011, with rent of $135,000 due on November 15, 2011.

      On August 16, 2011, Mitchell sent the Brownlees an invoice for debt

restructuring services in the amount of $36,102.47 due by August 19, 2011. On

August 19, 2011, the Brownlees executed warranty deeds conveying their

property to the James D. Jamison Irrevocable Trust. On November 26, 2011,

Mitchell sent the Brownlees a letter stating the money due to J&S Ag Services
                                          5



was past due. In the letter Mitchell stated: “You are way delinquent with J & S Ag

Services (Jamison).        Be aware that another foreclosure will more likely be

coming from Jamison should your debts to him be let go much longer. Mr.

Jamison has been more patient and accommodating to you people than any of

your past creditors.” The Brownlees did not satisfy the debt or make an offer to

repurchase the property.         On February 3, 2012, the James D. Jamison

Irrevocable Trust sold the farmland to a third party for $3.25 million.

       As the Brownlees were attempting to resolve their financial situation, the

federal government was investigating the Brownlees’ check forgeries. Daniel

was indicted on March 21, 2012. In September 2012, Daniel pleaded guilty to

bank fraud. In October 2012, Ronald pleaded guilty to bank fraud. He deceased

prior to his sentencing.

       The plaintiffs filed their petition on July 30, 2012, against James D.

Jamison, Jeff Jamison, Jamison & Sons, Jamison & Sons Ag Services, Marvin

Mitchell, Mitchell Consulting, the James D. Jamison Irrevocable Trust, and

Ronald Gale McDowell, Trustee of the James D. Jamison Irrevocable Trust. The

plaintiffs’ petition was in two counts: (1) equitable mortgage; and (2) fraudulent

inducement and misrepresentation. The parties filed cross motions for summary

judgment. The plaintiffs contended they had established an equitable mortgage

as a matter of law. The defendants contended there was an issue of fact on the

equitable mortgage claim or that they were entitled to judgment as a matter of

law because the Brownlees acted with unclean hands.                 Specifically, the

Brownlees had misled the defendants regarding the forgeries. The district court
                                         6



denied summary judgment on the defendants’ motion.           The court concluded

“there is a material fact as to whether or not the forgeries in any way impacted or

influenced the parties in entering into the Repurchase Agreement.” The district

court granted the plaintiffs’ motion for summary judgment on count one, holding

the Brownlees established an equitable mortgage as a matter of law. This is a

timely interlocutory appeal from the district court’s ruling on the parties’ motions

for summary judgment.

                                         II.

       We review the district court’s summary judgment ruling for the correction

of legal error. See Osmic v. Nationwide Agribusiness Ins. Co., 841 N.W.2d 853,

858 (Iowa 2014). Summary judgment should be granted only “if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.” Iowa R. Civ.

P. 1.981(3).    The party seeking summary judgment has the burden of

establishing that the facts are undisputed and that the party is entitled to a

judgment as a matter of law. See Estate of Harris v. Papa John’s Pizza, 679

N.W.2d 673, 677 (Iowa 2004). The party resisting the motion “cannot rely on the

mere assertions in his pleadings but must come forward with evidence to

demonstrate that a genuine issue of fact is presented.”          Stevens v. Iowa

Newspapers, Inc., 728 N.W.2d 823, 827 (Iowa 2007).

       The court reviews the summary judgment record in the light most

favorable to the party resisting the motion for summary judgment and “indulge[s]
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in every legitimate inference that the evidence will bear in an effort to ascertain

the existence” of a genuine issue of material fact. See Crippen v. City of Cedar

Rapids, 618 N.W.2d 562, 565 (Iowa 2000). If the summary judgment record

shows that the “resisting party has no evidence to factually support an outcome

determinative element of that party’s claim, the moving party will prevail on

summary judgment.” Wilson v. Darr, 553 N.W.2d 579, 582 (Iowa 1996). Our

court “can resolve a matter on summary judgment if the record reveals a conflict

concerning only the legal consequences of undisputed facts.”          Boelman v.

Grinnell Mut. Reins. Co., 826 N.W.2d 494, 501 (Iowa 2013).

                                        III.

      We turn to the merits of the issue. An equitable mortgage is a lien on

property to secure the payment of money that lacks the essential features of a

legal mortgage.    Our courts “have always recognized that ‘a conveyance

absolute on its face may, by proper evidence, be shown to be but a mortgage.’”

Steckelberg v. Randolph, 404 N.W.2d 144, 148 (Iowa 1987) (alterations omitted)

(quoting Trucks v. Lindsey, 18 Iowa 504, 504 (Iowa 1865)); see also Lovlie v.

Plumb, 250 N.W.2d 56, 59 (Iowa 1977) (“It is well settled a transfer of title

absolute on its face, if intended as security alone, will be deemed a mortgage.

And such intent may be shown by parol.”). In determining whether a conveyance

or mortgage was intended, each case must be decided “on the totality of its own

facts.” Koch v. Wasson, 161 N.W.2d 173, 178, 178 (Iowa 1968). The court may

look beyond the instrument itself and at the relationship between the parties.

Steckelberg, 404 N.W.2d at 149; Koch, 161 N.W.2d at 178; Brown v. Hermance,
                                        8



10 N.W.2d 66, 68 (Iowa 1943). Parol evidence may be reviewed to determine

the intent of the parties. See Steckelberg, 404 N.W.2d at 149. The reason the

court admits parol evidence is to “show that an absolute deed is in reality . . . a

mortgage . . . [so] that a court of equity will not construe a statute designed to

prevent fraud in such a manner as to produce fraud.” Bigler v. Jack, 87 N.W.

700, 701 (Iowa 1901). The ultimate question is “whether [the parties] intended

for the deed to serve as security for some obligation; if they did, the courts will

convert the transaction into a mortgage by operation of law.”         Restatement

(Third) of Mortgages § 3.2 cmt. a (Am. Law Inst. 1996).

       The grantor “carries the burden to show by clear and convincing evidence

that the deed was intended to be something other than what it purports to be.”

Koch, 161 N.W.2d at 178. See, e.g., Steckelberg, 404 N.W.2d at 148-49 (“If,

however, a deed is to be construed as a security instrument, ‘the supportive

evidence must be clear, satisfactory, and convincing.’” (quoting Lovlie, 250

N.W.2d at 59)); Collins v. Isaacson, 158 N.W.2d 14, 18 (Iowa 1968) (“In order

that a deed be held a mortgage the evidence must be clear, satisfactory and

convincing.”).

       The summary judgment record reveals several facts that could show the

parties intended only a security arrangement. First, inadequate consideration

tends to show the “transaction was intended to be a mortgage.”          Koch, 161

N.W.2d at 178; Bigler, 87 N.W. 702 (“If such inadequacy appeared, it would, no

doubt, be strong evidence in support of [a] contention.”); Hughes v. Sheaff, 19

Iowa 335, 341 (Iowa 1865) (stating it is strong evidence a security was intended
                                         9



when “the consideration for the conveyance was much less than the value of the

property”). In this case, the Brownlees transferred their property to the James D.

Jamison Irrevocable trust for $1.8 million in exchange for settling their debts.

Shortly thereafter, the Jamison Trust sold the property to a third party for $3.25

million.    This could be evidence of inadequate consideration, but given the

Brownlees’ issues with the bank and financial distress, it may also be evidence of

a purchaser taking a risk in a messy real estate transaction. Regardless, the

“mere inadequacy of consideration is not sufficient to justify the conclusion that a

deed absolute in form is intended as a mortgage.” Fort v. Colby, 144 N.W. 393,

403 (Iowa 1913). Inadequacy of consideration is a material fact that should be

considered along with other circumstances. Id.

       Another indicator the parties intended a mortgage is the grantor retains

possession of the property. Koch, 161 N.W.2d at 178. This “is considered a

circumstance consistent with the claim of creditor-debtor relationship and

inconsistent with the theory of absolute conveyance.” Id. Here, the Brownlees

retained possession of the deeded property.            As with the prior factor,

relinquishment of the property, however, is not conclusive. Id. “‘[I]t is not at all

an unusual circumstance that a deed given as a mortgage is accompanied or

followed by a surrender of possession or by a lease to the grantor.’” Id. (citation

omitted).

       Another circumstance evidencing a security interest rather than a

conveyance is the creation or existence of a debtor-creditor relationship. See

Steckelberg, 404 N.W.2d at 149 (“A telltale sign that a deed, absolute on its face,
                                        10



amounts only to an equitable mortgage appears where the transaction of which it

is a part operates to create or continue as between the parties the relation of

obligor and obligee.”). Here, the Jamisons had a creditor-debtor relationship with

the Brownlees.    For example, in the collection letter sent to the Brownlees,

Mitchell stated “Mr. Jamison has been more patient and accommodating to you

people than any of your past creditors.” As with the other factors, however, this

fact is just one of many relevant considerations.

      The right to redeem the property is another circumstance that shows the

parties intended a mortgage. “If the deed was intended as security, the settled

policy of the law accords [the mortgagor] the right to redeem.” Brown, 10 N.W.2d

at 68. When a “mortgagor deeds the property to the mortgagee, the deed is

presumed to be but a continuation of the security and the right of redemption is

presumed to continue.” Koch, 161 N.W.2d at 176 (citation omitted). Here, the

Brownlees had the right to repurchase the property on certain conditions. The

repurchase agreement stated the “Sellers agree to offer to repurchase the above

named property on or before December 31, 2011 from the buyer for all of the

amounts paid in regards to the above property by the buyer, plus 1% per month

interest on all monies paid by buyer.” It is not disputed the Brownlees did not

repurchase the property or make an offer to repurchase the property on the

terms and conditions provided.

      There is also evidence, the defendants argue, the parties intended an

absolute conveyance. First, the Jamison Trust was a third party and was not a

party to the prior agreements.      Second, the Jamisons argue there was no
                                        11



landlord-tenant relationship. The defendants contend the rent referenced in the

parties’ repurchase agreement was repayment for the rent advanced by Jim

Jamison to FTSB for the Brownlee’s farming operation in 2011. The defendants

argue there was no debtor-creditor relationship between the Brownlees and the

Jamison Trust.

       The ultimate inquiry in determining whether the parties intended a

mortgage or conveyance is the parties’ intent.       “The conduct of the parties

leading up to the making of a deed from mortgagor to mortgagee is frequently of

great weight in determining whether the intent was to buy and sell or merely give

security in a new form.” Davis v. Wilson, 21 N.W.2d 553, 557 (Iowa 1946).

“Likewise their subsequent conduct frequently throws light upon their

understanding and intent in entering into the transaction.” Id. Given the rather

unique circumstances of this case, including the complicated transactional

history, the interconnectedness of the defendants and their business operations,

and the convictions of the Brownlees for forgery related to the financing of the

farming operation, we cannot conclude the Brownlees established the existence

of an equitable mortgage as a matter of law. See Harper v. Kaczor, No. 10-1833,

2011 WL 3925435, at *6 (Iowa Ct. App. Sep. 8, 2011) (“When, as here, the

interpretation of a contract depends upon the credibility of extrinsic evidence, the

question of interpretation should be determined by the finder of fact.”); see also

Robinson v. Builders Supply & Lumber Co., 586 N.E.2d 316, 323 (Ill. Ct. App.

1991) (reversing summary judgment and remanding for trial on equitable

mortgage claim); New York TRW Title Ins. v. Wade's Canadian Inn & Cocktail
                                         12



Lounge, Inc., 605 N.Y.S.2d 139, 141 (N.Y. App. Div. 1993) (“While an equitable

mortgage thus cannot be ruled out as a matter of law, we cannot say on this

record that it is warranted as a matter of law either. Rather, we discern the

presence of factual issues with regard to the parties' intent.”); Pearson v. Gray,

954 P.2d 343, 346 (Wash. Ct. App. 1998) (summarizing evidence tending to

support the existence of an equitable mortgage but reversing grant of summary

judgment where the “issue of the parties’ intent is sufficiently presented” to create

a triable issue of fact).

                                         IV.

       For the foregoing reasons, we reverse the district court’s grant of

summary judgment and remand this matter for further proceedings.

       REVERSED AND REMANDED.
