                IN THE SUPREME COURT OF IOWA
                           No. 86 / 06–1541

                       Filed September 19, 2008


JANICE A. MEINCKE,

      Appellant,

vs.

NORTHWEST BANK & TRUST COMPANY,

      Appellee.



      On review from the Iowa Court of Appeals.



      Appeal from the Iowa District Court for Scott County, Mark D.

Cleve, Judge.



      A bank asks for further review of a court of appeals decision.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT

JUDGMENT AFFIRMED.


      Christopher L. Surls, William B. Norton and Timothy L. Baumann

of William B. Norton Law Firm, P.C., Lowden, for appellant.



      Michael J. McCarthy of McCarthy, Lammers & Hines, Davenport,

for appellee.
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WIGGINS, Justice.

      Janice Meincke loaned her daughter and nephew $90,000.        The

loan was secured by a mortgage on property owned by the daughter and

nephew’s business. A bank also held mortgages on the same property;

however, Janice’s mortgage had priority. For the daughter and nephew

to obtain more financing, the bank required Janice to subordinate her

mortgage to the bank’s by signing a subordination agreement.     Janice
signed the agreement, but challenged its enforcement by arguing it

lacked consideration. Janice appealed a district court judgment finding

of consideration.   Our court of appeals reversed the district court by

finding substantial evidence did not support the judgment.     However,

upon further review, we find substantial evidence does support the

judgment, and we affirm the judgment of the district court.

      I. Background Facts and Procedure.

      Sandra Marti and Craig Meincke operated two businesses,

SCRAMM Enterprises, L.C., and C.A. Meincke Plumbing, Inc. (plumbing

business). Both Sandra and Craig owned shares of SCRAMM. In 1997

and 1998 the plumbing business received two loans from Rock Island

State Bank, each secured by a mortgage on the building owned by
SCRAMM. In February of 2001, the plumbing business signed several

notes with Northwest Bank & Trust. These notes were not secured by

mortgages.

      In July of 2002, Janice, Sandra’s mother and Craig’s aunt, issued

SCRAMM three checks totaling $90,000.       This loan was reflected in a

promissory note dated September 15.        The note was secured by a

mortgage on the building owned by SCRAMM.

      On May 23, 2003, Northwest Bank issued three more notes to the

plumbing business. These notes were issued to restructure a preexisting
                                    3

Northwest Bank debt and were secured by a mortgage on the SCRAMM

building.

      On March 3, 2004, Northwest Bank offered to issue the plumbing

business another loan to restructure the existing Northwest Bank debt

and refinance the Rock Island State Bank debt. This loan was also to be

secured by a mortgage on the SCRAMM building. Before granting the

loan, Northwest Bank informed Craig it would not refinance the Rock
Island State Bank debt if Janice did not subordinate her mortgage to its

own. To comply with this condition, it was necessary for Janice to sign a

subordination agreement. James Legare, the vice president commercial

loan manager for Northwest Bank, testified the bank would not have

made the loan if Janice had refused to sign the subordination agreement.

Neither Legare nor anyone else from Northwest Bank spoke to Janice

about the subordination agreement.      Rather, Craig spoke with Janice

about the agreement.      Although the details of that conversation are

unclear, Janice understood after signing the agreement she would be

“second in line.”

      In May of 2004, approximately two and a half months after the

restructuring of the plumbing business, Craig notified Legare he was
closing the plumbing business.     The plumbing business agreed to a

voluntary foreclosure on the mortgages held by Northwest Bank.       The

building was sold, and the proceeds were applied to the two remaining

Northwest Bank loans, but debt remained. Janice did not receive any

proceeds from the sale.

      Janice filed a petition asking the court to find the subordination

agreement null and void for lack of consideration. Janice amended her

petition to add a count for intentional interference with an existing

contract. At trial, Janice motioned the court to amend her petition to
                                      4

add a count of fraud, which the district court denied. Also at trial the

court heard testimony on whether the subordination agreement was

properly acknowledged. The court held defective acknowledgement of the

subordination agreement is not a defense where the controversy involves

the original parties to the agreement.

      The district court found the agreement was supported by

consideration. The court found Northwest Bank suffered a detriment by
loaning the plumbing business additional funds in response to Janice

signing the subordination agreement.

      The district court also found Northwest Bank’s interference with

the contract between Janice and SCRAMM was not improper because

Janice signed the subordination agreement in part to help her family,

and Northwest Bank had a good-faith belief the plumbing business was

financially secure when it restructured its loans.

      Janice appealed and the case was routed to our court of appeals,

who found the consideration for the subordination agreement was not

bargained for. Northwest Bank petitioned for further review, which we

granted.

      II. Issues.
      Janice originally appealed, claiming the district court erred: (1) in

finding the subordination agreement was supported by consideration;

(2) by failing to find the subordination agreement lacked proper

acknowledgement; (3) by failing to find improper interference with an

existing contract; and (4) by denying her motion to amend the petition to

add a claim for fraud.       The court of appeals found the first issue

dispositive; therefore, it did not consider the others.

      Northwest Bank petitioned for further review, which we granted.

Because we find substantial evidence supported the district court’s
                                     5

determination that the subordination agreement was supported by

proper, bargained for consideration, we will address Janice’s other claims

on our further review.

      III. Discussion.

      A. Consideration. Claims based on a contract that are tried at

law are reviewed for correction of errors at law.     Iowa R. App. P. 6.4;

Harrington v. Univ. of N. Iowa, 726 N.W.2d 363, 365 (Iowa 2007). The
district court’s findings of fact are binding on the court if they are

supported by substantial evidence. Iowa R. App. P. 6.14(6)(a); Fischer v.

City of Sioux City, 695 N.W.2d 31, 33 (Iowa 2005). We view the evidence

in the light most favorable to the judgment when a party argues the trial

court’s ruling is not supported by substantial evidence.       Fischer, 695

N.W.2d at 33. Evidence is substantial when reasonable minds accept the

evidence as adequate to reach a conclusion.          Id.   “Evidence is not

insubstantial merely because we may draw different conclusions from it;

the ultimate question is whether it supports the finding actually made,

not whether the evidence would support a different finding.” Raper v.

State, 688 N.W.2d 29, 36 (Iowa 2004) (citations omitted).         However,

appellate courts are not bound to a district court’s conclusion of law or
that court’s application of legal conclusions. Id.

      It is presumed that an agreement, which has been written and

signed, is supported by consideration. Kristerin Dev. Co. v. Granson Inv.,

394 N.W.2d 325, 331 (Iowa 1986). A failure of consideration is a defense

to enforcing the contract that must be proven by the party asserting the

defense. Hubbard Milling Co. v. Citizens State Bank, 385 N.W.2d 255,

259 (Iowa 1986). We determine whether there is consideration from what

is stated in the instrument or by what the parties contemplated at the
                                      6

time the instrument was executed.          Id.   A party can use want of

consideration as a defense to a subordination agreement. Id.

       Consideration can be either a legal benefit to the promisor, or a

legal detriment to the promisee. Magnusson Agency v. Pub. Entity Nat’l

Company-Midwest, 560 N.W.2d 20, 27 (Iowa 1997). The district court

found the bank suffered a detriment by loaning the plumbing business

additional funding. The detriment to the bank is adequate consideration
for the subordination agreement. See 55 Am. Jur. 2d Mortgages § 320,

at 66 (2007) (stating the extension of future credit can serve as

consideration for a subordination agreement).        However, the question

here is not whether this detriment was sufficient to constitute

consideration; it is whether the benefit or the detriment was bargained

for.   Magnusson, 560 N.W.2d at 27.         According to the Restatement

(Second) of Contracts:

       (1)   To constitute consideration, a performance or a return
             promise must be bargained for.

       (2)   A performance or return promise is bargained for if it
             is sought by the promisor in exchange for his promise
             and is given by the promisee in exchange for that
             promise.

§ 71, at 172 (1981); see also id. § 72, at 177 (stating “[e]xcept as stated in

§§ 73 and 74, any performance which is bargained for is consideration”).

For consideration to be “bargained for,” the consideration must “induce”

the making of the promise. Id. § 71 cmt. b, at 173.

       A sufficient legal detriment to the promisee exists if the promisee

“promises or performs any act, regardless of how slight or inconvenient,

which he is not obligated to promise or perform so long as he does so at

the request of the promisor and in exchange for the promise.” 3 Samuel

Williston & Richard A. Lord, A Treatise on the Law of Contracts § 7:4, at
                                      7

41 (4th ed. 1992).       There is substantial evidence in the record the

detriment suffered by the bank was bargained for.

         Janice admitted that Craig and Sandra would receive a benefit if

she signed the subordination agreement by stating the following:

         Question: Okay. And Craig and Sandy received a benefit
         also because they asked you to do this and this would help
         their business, correct?

         Janice: I suppose, yes.

“[I]t must appear that the disadvantage was suffered at the request of the

promisor, expressed or implied.”      Heggen v. Clover Leaf Coal & Mining

Co., 217 Iowa 820, 824, 253 N.W. 140, 142 (1934) (citing Handrahan v.

O’Regan, 45 Iowa 298, 300 (1876)) (emphasis added). Janice’s statement

implies she understood the bank would lend more money to Craig and

Sandra if she signed the subordination agreement.         By signing the

subordination agreement, Janice impliedly requested Northwest Bank to

refinance Craig and Sandra’s loans, thus she requested the bank suffer a

detriment.

         Because there is substantial evidence the consideration was

bargained for, we affirm the district court ruling on the consideration

issue.

         B. Acknowledgment. Janice argues the district court erred when

it refused to render the subordination agreement null and void due to an

insufficient acknowledgement. Specifically, Janice argues the document

was not properly notarized. At trial both Janice and Legare testified the

subordination agreement was not notarized in Janice’s presence, but

rather on a later date at the bank.

         We have determined improper acknowledgment is not a valid

defense in a controversy between original parties. Brose v. Int’l Milling
                                     8

Co., 256 Iowa 875, 880, 129 N.W.2d 672, 675 (1964). We only overturn

a rule “ ‘after it has been duly tested by experience, [and it] has been

found to be inconsistent with the sense of justice or with the social

welfare.’ ” McElroy v. State, 703 N.W.2d 385, 395 (Iowa 2005) (quoting

Benjamin N. Cardozo, The Nature of the Judicial Process 150 (1921)). We

cannot say the rule disallowing the inadequate acknowledgement defense

between original parties has been found to be inconsistent with the sense
of justice or social welfare.   To the contrary, it is generally held the

defense has no merit among original parties. See Joyce Palomar, Patton

and Palomar on Land Titles § 356, at 187−88 (3d ed. 2003) (stating

“unless required by statute, the certificate of acknowledgement is not a

part of a deed, and is unnecessary as against the grantor, her heirs and

all others as to whom a conveyance is operative without being of record”).

      The acknowledgement is an official instrument used to show the

promisor executed an instrument voluntarily. Id. In the case at hand,

Janice does not argue she involuntarily signed the subordination

agreement, or that she was under coercion or duress when she signed

the agreement.    Therefore, this case does not present a situation that

demonstrates     our   long-standing     rule   regarding   the   improper
acknowledgment defense is “ ‘inconsistent with the sense of justice or

with social welfare.’ ” McElroy, 703 N.W.2d at 395 (citation omitted).

      C. Intentional Interference with a Contract.          To establish a

claim of intentional interference with a contract, Janice needed to prove

Northwest Bank intentionally and improperly interfered with the contract

involving Craig, Sandra, and herself. See Nesler v. Fisher & Co., Inc., 452

N.W.2d 191, 198 (Iowa 1990). We have held “a party does not improperly

interfere with another’s contract by exercising its own legal rights in

protection of its own financial interests.” Berger v. Cas’ Feed Store, Inc.,
                                    9

543 N.W.2d 597, 599 (Iowa 1996). It was not improper for Northwest

Bank to ask Janice whether she would subordinate her interest to its

own.

       D. Amended Petition. At the end of trial Janice moved to amend

her original petition to include a claim for fraud.    Iowa Rule of Civil

Procedure 1.457 allows a party to amend the pleadings to conform to the

evidence presented at trial. Iowa R. Civ. P. 1.457. The issues to be tried
are established either by the initial pleadings or by the consent of the

parties, either expressly or impliedly.    Allison-Kesley AG Ctr., Inc. v.

Hildebrand, 485 N.W.2d 841, 846 (Iowa 1992). Janice argued the issue

of fraud was tried by implied consent of the parties; however, the district

court found otherwise. We have held:

             “Allowance of an amendment to a pleading is the rule
       and denial the exception, although an amendment is not
       permissible which will substantially change the issue.
       Additionally, a trial court has considerable discretion as to
       whether an appropriate request for leave to amend should be
       granted or denied and we will reverse only where a clear
       abuse of discretion is shown.”

Id. at 845 (quoting M-Z Enters., Inc. v. Hawkeye-Sec. Ins. Co., 318 N.W.2d

408, 411 (Iowa 1982)). To give appropriate deference to the trial court,

when a movant seeks to amend a petition based on trial testimony the

movant knew or should have known prior to trial, the amendment is

more properly denied than one that might have been otherwise allowed

earlier in the proceedings.   Id. at 846; see also Mora v. Savereid, 222

N.W.2d 417, 422–23 (Iowa 1974) (upholding denial of a motion to amend

where testimony presented “no surprise” to moving party).

       Janice knew, or should have known, the testimony that supported

her fraud claim before trial because Legare offered similar testimony

during his deposition; therefore, the district court did not abuse its
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discretion in denying Janice’s motion to amend her petition. See Allison-

Kesley AG Ctr., Inc., 485 N.W.2d at 846 (holding where plaintiff knew or

should have known at the inception of the suit of the testimony the

defendants offered at trial, the district court properly denied the

plaintiff’s motion to amend).

      IV. Disposition.

      Because we find substantial evidence to support the district court’s
judgment on the issues of consideration, defective acknowledgment, and

intentional interference with a contract and because the court did not

abuse its discretion when it denied Janice’s motion to amend her

petition, we vacate the decision of the court of appeals, and affirm the

judgment of the district court.

      DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT JUDGMENT AFFIRMED.

      All justices concur except Baker, J., who takes no part.
