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Stieneke v. United Bank of Iowa

Court of Appeal of Iowa

October 2, 2013

SUSAN STIENEKE and DARREL TODD, Plaintiffs-Appellants,
v.
UNITED BANK OF IOWA, Defendant-Appellee.

Appeal from the Iowa District Court for Ida County, Jeffrey A. Neary, Judge.

The plaintiffs appeal the ruling of the district court entering summary judgment in favor of the defendant.

Ilisja J. Moreland, Sioux City, for appellant.

Donald H. Molstad of Molstad Law Firm, Sioux City, for appellee.

Considered by Vaitheswaran, P.J., and Doyle, J., and Goodhue, S.J. [*]

DOYLE, J.

Susan Stieneke and Darrel Todd appeal the ruling of the district court entering summary judgment in favor of United Bank of Iowa. They contend the district court erred in finding the parties' 1996 agreement was not supported by consideration and therefore could not be the basis for their breach of contract action against the bank. Finding no error, we affirm.

I. Background Facts and Proceedings

For purposes of our review of this summary judgment ruling, we find the relevant undisputed facts to be as follows.

In 1996, Susan Stieneke, Jeff Stieneke, Pauline Schoer, and Carl Schoer were the stockholders and principals of Stieneke Ford, Inc. in Holstein. Around March of that year, Heritage Bank informed the stockholders it would no longer finance their dealership. Jeff Stieneke and Darrel Todd (Susan and Pauline's father) met with Robert Butcher (president of United Bank of Iowa) to discuss whether United Bank of Iowa would finance the dealership.[1] At some point Jeff left the meeting, leaving Darrel and Robert to discuss potential financing for the dealership.

Robert told Darrel the bank would be willing to refinance the Heritage Bank loans if Darrel contributed $50, 000 in capital to the dealership. Darrel wrote a check to the bank in the amount of $50, 000 and gave it to Robert that day. According to Darrel, he did not expect to be repaid the $50, 000.

The bank accepted the dealership as a customer, and a few days after Darrel and Robert's meeting, the stockholders signed an agreement with the bank (the lending agreement). Per the lending agreement, the stockholders pledged certain collateral for the bank's extension of credit to the dealership, including a blanket security agreement, personal guaranties, real estate, and an assignment of the proceeds of a $250, 000 life insurance policy owned by Jeff. The dealership also pledged certain collateral to the bank as part of the same transaction.

Approximately one month after the lending agreement was entered, Robert told Susan the shareholders "need[ed] to do something to protect [Darrel's $50, 000 contribution]." Robert told Susan to draft a stipulation concerning how the bank should dispose of the life insurance policy's proceeds.[2] Robert suggested the language of the stipulation and Susan typed it on Stieneke Ford letterhead. The stipulation ("the 1996 agreement") provided:

In the event that when we receive [sic] life insurance check from life insurance policy No. [ ] on Jeff Stieneke ...

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