- Ag Docket
Last year, many of us were surprised by an Iowa Court of Appeals decision that held that a single grazing horse was sufficient to establish a farm tenancy. Why did this matter? Because under the court’s ruling, the owners of the horse (and arguably anyone with backyard chickens or a pet emu) were entitled to the protection of the Iowa farm tenancy termination statute. Under Iowa Code § 562.6, if written notice is not sent via certified mail before September 1,[i] the lease automatically renews for another year, beginning the following March 1. In other words, on September 2, this statute can make the difference between a 30-day wait to terminate an at-will tenant and a near 18-month wait to terminate a farm tenant.
Today, the Iowa Supreme Court issued an opinion walking back this result. In developing a new "primary purpose" test, the Court held that "land which is not devoted primarily to the production of crops or the care and feeding of livestock cannot be the foundation of an Iowa Code chapter 562 farm tenancy." This is a helpful opinion, but more should be done to clarify the reach of the termination notice requirements.
The key facts before the court were fairly straightforward. The landlords sought to evict long-term tenants of a six-acre rural parcel. The tenants lived on the property and grazed a single, 38-year-old horse out back. The attempted eviction arose after the tenants lost a court battle over whether they had an oral agreement with the landlords to purchase the property. When the landlords served their 30-day notice to terminate the at-will rental agreement, the tenants argued they were entitled to statutory notice under the farm tenancy termination statute. The district court ruled that “one 38-year-old horse does not make this a farm tenancy,” but the Iowa Court of Appeals disagreed.
Admitting that “it may seem absurd to deem this tenancy a farm tenancy,” the Court of Appeals found that it was constrained to follow the unambiguous letter of the law. "Farm tenancy" is defined under Iowa Code § 562.1A(1) as "a leasehold interest in land held by a person who produces crops or provides for the care and feeding of livestock on the land, including by grazing or supplying feed to the livestock." “Livestock,” under the definition required by Iowa Code § 562.1A(2)[ii], “means an animal belonging to the bovine, caprine, equine, ovine, or porcine species, ostriches, rheas, emus, farm deer…, or poultry.” The Court of Appeals found that it was “left with the unambiguous statutory language rendering this acreage a ‘farm tenancy.’”
The Iowa Supreme Court vacated the decision and affirmed that of the district court. The Court applied a common-sense approach to find that “reading the statute as a whole,” “land which is not devoted primarily to the production of crops or the care and feeding of livestock cannot be the foundation of a[n] [Iowa Code] chapter 562 farm tenancy." The Court read into the statute a “primary purpose test.” In other words, land must be “mostly or primarily devoted to crops or livestock” before a farm tenancy can be created under the statute. This interpretation, the Court ruled, would avoid two unreasonable endpoints: (1) that a farm tenancy would not exist unless every acre were turned over to agricultural use or (2) that devoting a tiny portion of the property to agricultural use would bring about a farm tenancy. The Court reasoned that it would not conclude that someone with a small vegetable garden would qualify as someone who “produces crops on the land,” so as to qualify as a farm tenant.
The Court then ruled that the “an” in front of “animal” in the statutory list of species falling within the definition of livestock did “not establish a no-exceptions, single animal rule of qualification.” The Court suggested, however, that there may be a time when the raising of a single animal could be deemed a farm tenancy. It reasoned that the lease of a plot of land devoted to maintaining a championship stallion could, under the Court’s new test, result in a farm tenancy if that was the primary purpose for which the tenant occupied the land.
Justice Wiggins, the single dissenting justice, wrote that the majority had gone too far. He argued that the majority was “manipulating the plain language chosen by the general assembly to reach what it feels is a just result.” Such manipulation, Justice Wiggins suggested, wrongly places judges in the position of policymakers. Justice Wiggins noted that it is unclear how the “primary purpose” test will work. How would it apply to the family that works in the city but lives in the country, growing some crops or raising some livestock for personal use? Such questions, Justice Wiggins suggested, will cause needless litigation.
Despite the result of this case, it seems advisable for the Iowa Legislature to take another look at the wording of this statute. Likely no legislator anticipated the “38-year-old horse” scenario. Yet, a patchwork of amendments led to the plain language interpretation from the Iowa Court of Appeals. Would the legislature really want the "championship stallion" scenario posited by the majority to be covered by the farm tenancy statute? Or should the strict, often burdensome, farm tenancy termination requirements apply only to a more traditional definition of a farm tenancy? Would the non-traditional definition even pass contitutional muster? In light of this opinion, ambiguities remain. It will be for the Iowa Legislature to clear things up. We'll keep you posted!
[i] Iowa Code § 562.7 allows landlords to terminate a farm tenancy in several ways, but the most popular is to mail “the notice before September 1 by certified mail.”
[ii] Iowa Code § 717.1(4).
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