## Facts

- Eugene Severson owned and managed a grain company that operated several country grain elevators in Iowa.
- Elberon Elevator, Inc. (EE) owned and operated a grain elevator in Elberon, Iowa. EE’s sole shareholders were Robert C. Blythe and Larry F. Mosebach.
- Severson had shown interest in acquiring the Elberon elevator for years; earlier negotiations did not result in a sale, largely due to disagreements over price.
- On Sunday, March 4, 1973, Mosebach contacted Severson about a reduced price for EE’s corporate stock. Severson and a companion went to Elberon to inspect the facilities and talk with Mosebach.
- The discussions shifted from a stock purchase to a purchase of EE’s physical assets. The assets discussed were tied to a working elevator operation and consisted of real and personal property, including buildings and equipment, along with grain-related items, on land EE owned and land it rented.
- Severson contended that, on March 4, the parties reached an oral agreement for Severson to buy EE’s physical assets for $50,000, exclusive of inventory; EE denied that a final agreement was reached and asserted that no deal existed unless and until a written contract was signed.
- The trial court found Severson proved these oral terms: (1) price of $50,000 for EE’s physical assets, exclusive of inventory; (2) EE’s stock was not part of the sale; (3) an April 1, 1973 possession date was discussed but was not of the essence; (4) EE represented its insurance coverage was adequate and agreed to maintain it until transfer of possession; and (5) property taxes would be apportioned.
- On March 5, 1973, a fire destroyed some elevator assets and some stored grain.
- After the fire, the parties agreed to postpone closing while EE pursued insurance claims, with an understanding that Severson would receive the benefit of insurance proceeds attributable to the assets he was purchasing.
- A later dispute developed over completing the sale and allocating insurance proceeds. EE refused to perform.
- Severson filed an equity action seeking specific performance of the oral contract rather than money damages.
- The district court ordered specific performance and addressed an offset connected to insurance proceeds. EE appealed to the Iowa Supreme Court.

## Issues

1. Did Severson prove the existence and terms of the alleged oral contract by clear, satisfactory, and convincing evidence, and were the terms definite enough to enforce?
2. Did the parties intend to be bound by the oral agreement even though they expected a later written instrument?
3. After the fire and resulting delay, did Severson rescind or abandon the contract, or was he estopped from enforcing it?
4. Did Severson prove he lacked an adequate remedy at law so that specific performance was proper?
5. Did the trial court commit reversible error by making incomplete findings and conclusions or by reducing the amount of an offset allowed to EE?

## Decision

- The Iowa Supreme Court affirmed the decree granting specific performance.
- The court held Severson met his burden to prove the contract and its material terms by clear, satisfactory, and convincing evidence, and the terms were sufficiently definite to enforce.
- The court concluded the parties intended to be bound by the oral agreement even though they contemplated reducing it to writing later.
- The court rejected EE’s defenses of rescission, abandonment, and estoppel, treating the post-fire dealings as a delay and adjustment in performance rather than a termination of the agreement.
- The court held Severson proved he had no adequate remedy at law and that specific performance was an appropriate equitable remedy.
- The court found no reversible error in the trial court’s findings and conclusions and upheld the trial court’s handling of the offset related to insurance proceeds.

## Legal Principles

- Specific performance of an oral agreement affecting real estate requires proof of the contract and its terms by clear, satisfactory, and convincing evidence.
- Contract terms are sufficiently definite when a court can determine with reasonable certainty each party’s duties and the conditions for performance.
- An oral contract may be enforceable even if the parties expect a later writing, when the evidence shows the parties intended to be bound and the writing was meant as a memorial of an already-formed agreement rather than a condition to contract formation.
- A party seeking specific performance must show that a legal remedy (money damages) is not adequate; equity may order performance where the subject matter is unique or not readily valued, such as a particular operating facility and its connected assets.
- Post-agreement conduct following a casualty loss, including postponing closing while insurance claims are processed, does not by itself establish rescission, abandonment, or estoppel.
- On appellate review of an equity decree, the court will affirm when the record supports the trial court’s essential findings and any challenged offsets or accounting adjustments have record support.

## Conclusion

The Iowa Supreme Court affirmed specific performance of an oral agreement for Severson to buy Elberon Elevator’s physical assets for $50,000 (exclusive of inventory), holding that Severson proved definite contract terms and an intent to be bound despite plans for a later writing, that post-fire delay did not amount to rescission or abandonment, and that specific performance was proper because money damages were not an adequate substitute.


Severson v. Elberon Elevator, Inc., 250 N.W.2d 417 (1977)