This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. sec. 480A.08, subd. 3 (1994).

STATE OF MINNESOTA
IN COURT OF APPEALS
C3-95-2698

Dairy Farm Leasing Company, a Delaware Corporation,
Appellant,

vs.

James C. Sticha, et al.,
Respondent.

Filed July 30, 1996
Reversed in part, affirmed in part, and modified in part.
Randall, Judge

Scott County District Court
File No. 94-10590

Valdis A. Silins, Peterson, Tews, & Squires, 4800 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellant).

Robert A. Nicklaus, Nicklaus Law Firm, 103 West Second Street, P.O. Box 116, Chaska, MN 55318 (for respondent).

Considered and decided by Parker, Presiding Judge, Randall, Judge, and Kalitowski, Judge.

U N P U B L I S H E D O P I N I O N

RANDALL, Judge

Appellant brought suit in Scott County District Court seeking to recover unpaid rent due under various dairy leases and for an order for the return of the property covered under the leases. The trial court found appellant's claim to be barred by the statute of limitations and in the alternative that the parties' letter agreement was usurious. We reverse in part, affirm in part, and modify in part.

FACTS

Appellant Dairy Farm Leasing Company (Dairy Farm) is engaged in the business of leasing dairy cattle and equipment to dairy farmers in Minnesota and Wisconsin. Respondents James and Bernadine Sticha are farmers in rural Scott County. Appellant began leasing dairy cattle to respondents in the mid to late 1970's. The business relationship continued until the commencement of this lawsuit on August 25, 1994.

Beginning in June 1982, appellant entered into five "Dairy Cow Lease Agreements" whereby respondents leased certain dairy cattle and farm equipment from appellant. The leases are dated June 9, 1982; January 7, 1983; July 27, 1983; July 27, 1983; and October 7, 1983. The leases are identical except for the type of property leased, the monthly rental amount, the price established for the option to purchase, and the monthly rental amount upon renewal. Each lease was for a 36-month term, with respondents having the option either to purchase the leased property or to renew the lease at the end of that time. The option to purchase required respondents to notify appellant in writing 60 days prior to the end of the original 36-month lease term. If respondents chose to renew the lease, written notice was to be given to appellant 90 days prior to the end of the original 36-month lease term. The lease agreements provided that upon expiration or termination of the lease, the burden of repossession was on appellant.

Respondents made no payments on either of the July 27, 1983, leases. They made either partial or sporadic payments on the other three leases. Appellant was due approximately $88,290 under the five leases. Respondents paid only $19,895.04 as rental payments, leaving respondents approximately $68,394.96 in arrears. Respondents do not dispute the fact that they were in default and it is undisputed that they failed to provide appellant with notice, either in writing or orally, of their intent to renew the leases.

On February 29, 1988, appellant mailed respondents what is known as the letter agreement. The letter agreement stated that it was an addendum amending paragraph 4 of the original five lease agreements, but concluded by stating that it "shall constitute a promissory note" between the parties. Pursuant to the letter, respondents promised to pay appellant $107,000, with an APR of 16 percent. Interest was to accrue from October 27, 1987, with monthly payments in the amount of $2,000 commencing on November 27, 1987, and continuing each month until the principal and interest were paid in full.

Finally, on August 25, 1994, appellant commenced this action to recover the balance due under the five lease agreements, plus the cattle and farm equipment covered by the leases. Following a one-day bench trial, the trial court ruled that appellant's suit was barred by the six-year statute of limitations and that the parties' letter agreement was in violation of the Minnesota usury laws. Appellant moved for and was denied a new trial. This appeal followed.

D E C I S I O N

I.

Appellant argues that the trial court erred in concluding as a matter of law that its claim to recover the unpaid rental balance due under the leases and the leased property was barred by the six-year statute of limitations. Appellant argues, and we agree, that the February 28, 1988, letter agreement constituted an amendment to the original leases thereby resetting the first date for the statute of limitations to begin running.

The statute of limitations for bringing an action on a contract is six years except where the running of the statute of has been tolled by the actions of the parties. Minn. Stat. ' 541.05, subd. 1(1) (1994); Bernloehr v. Fredrickson, 213 Minn. 505, 507, 7 N.W.2d 328, 329 (1942). An acknowledgment or promise to pay that is signed by the party charged, or the partial payment of a debt already owed, may act to toll the statute of limitations. Minn. Stat. ' 541.17 (1994); Bernloehr, 213 Minn. at 507, 7 N.W.2d at 329.

Here, the stipulated facts are that the parties entered into a letter agreement whereby respondents agreed to pay appellant $107,000 payable in monthly installments of $2,000. This figure represents the amount due and owing under the original lease agreements. The trial court found the letter agreement to be ambiguous because it states that it was both an addendum to the original leases and that when properly executed, constituted a promissory note between the parties. After reviewing the letter agreement's language, the trial court concluded it to be a promissory note, rather than an amendment to the original leases. The trial court then held that because the letter agreement did not amend the original leases, the six year statute of limitations precluded appellant from bringing an action on the original lease agreements.

We conclude, rather, that taking into account the intent of the parties and prior course of dealings, the letter amendment was not ambiguous. Where the parties to an agreement agree on the meaning of what otherwise might be considered ambiguous terms, that agreement is conclusive where no questions of public policy, morality, or violations of law are at issue. See Kastner v. Dalton Development, Inc. 265 Minn. 511, 517, 122 N.W.2d 183, 187 (1963) ("[T]he interpretation placed on the contract by the parties themselves * * * is entitled to great, if not controlling, influence in ascertaining their understanding of its terms"). The prior dealings and conduct of the parties is relevant in construing what otherwise may be ambiguous terms in a contract. Medtronic, Inc. v. Catalyst Research Corp., 664 F.2d 660, 664 (8th Cir. 1981); see also Donnay v. Boulware, 275 Minn. 37, 44, 144 N.W.2d 711, 716 (1966) (the construction that the parties in their dealings and by their conduct place on the terms of otherwise ambiguous contract language will furnish the court with persuasive evidence of their meaning).

Here, although respondents did not formally renew the lease agreements, the evidence is overwhelming that the parties sought by mutual acquiescence to informally resolve the matter of respondent's huge arrearages. The evidence is clear that following the signing of the letter agreement, appellant creditor neither tried to repossess the collateral, nor did respondent debtor make any indication that he did not want the leased property. Respondent remained in full possession and control of the cattle and continued to be responsible for their upkeep.

The statute of limitations is not meant to ambush a party who is trying to maintain an informal contractual relationship with a debtor, thereby avoiding the laborious process of rewriting new leases or contracts every time one is extended by the parties' mutual acquiescence. In light of the benefit to respondents, the parties' prior course of conduct, appellant's deliberate decision not to repossess the collateral, and respondent debtor's full use of the leased property during the period in question, we conclude the letter agreement constituted a signed acknowledgment by respondents of their indebtedness to appellant, thereby tolling the six-year statute of limitations. Accordingly, appellant's claim is not time barred.

II.

Having determined that the letter agreement tolled the statute of limitations, we next determine whether the trial court erred in concluding it to be usurious and void as matter of law.

The question of usury is generally one of fact. Midland Loan Finance Co. v. Lorentz, 209 Minn. 278, 283, 296 N.W. 911, 914 (1941). Minn. Stat. ' 334.03 (1994) provides that any note where there is taken a greater sum for the loan or forbearance of money than prescribed, shall be void. Four elements must be proven to establish a violation of the usury law:

(1) a loan of money or forbearance of debt, (2) an agreement between the parties that the principal shall be repayable absolutely, (3) the exaction of a greater amount of interest or profit than is allowed by law, and (4) the presence of an intention to evade the law at the inception of the transaction.

Miller v. Colortyme, Inc., 518 N.W.2d 544, 549 (Minn. 1994). The absence of any one requirement precludes a finding of usury. In Re Estate of Fauskee, 497 N.W.2d 324, 328 (Minn. App. 1993), review denied (Minn. May 18, 1993).

The trial court found, and we agree, the first two elements of Miller satisfied without need for discussion. As to the third element, the trial court found that as of October 27, 1987, the actual amount owed by respondents was $68,394.96. The trial court arrived at this figure by taking the amount respondents would have paid had they made every lease payment during the original 36-month term, a total of $88,290, and subtracting the payments they actually did make, $19,895.04, leaving a balance of $68,394.96. The trial court concluded that appellant's use of the $107,000 rather than the $68,394.96 actually owed constituted prima facie evidence of the exaction of a greater amount of profit than originally prescribed.

The trial court also found that because appellant drafted the letter agreement and was responsible for calculating the amount due, appellant had the requisite intent to evade the usury law from the inception of this transaction. A violation of the usury laws does not require specific intent as long as the party intended to collect the amount of money stated on the face of the contract and that amount is usurious. Miller, 518 N.W.2d at 550. The evidence presented at trial establishes that appellant drafted the letter agreement and included amounts in the $107,000 figure that were not owed by respondents under the terms of the lease agreements. Thus, appellant intended to collect this amount under the terms of the letter agreement.

Although the evidence of usury is thin, we conclude that, giving deference to the trial court on the credibility of witnesses, the trial court's calculation of the $68,394.96 was not clearly erroneous and was not contrary to the evidence presented at trial. The trial court did not err in finding the February 29, 1988, letter agreement to be usurious. Having concluded the letter agreement to be usurious, we must now determine the appropriate remedy. "Where a creditor extends a usurious business or agricultural loan for less than $100,000, the debtor's exclusive usury remedy is under Minn. Stat. ' 334.011, subd. 2." Trapp v. Hancuh, 530 N.W.2d 879, 886 (Minn. App. 1995). Pursuant to Minn. Stat. ' 334.011, subd. 2, the entire interest due on the letter agreement is forfeited, and respondent may be entitled to recover twice the amount of the interest actually paid. Under the statute, however, respondent is still responsible for the principal amount owed. Citizen's Nat'l. Bank of Willmar v. Taylor, 368 N.W.2d 913, 920 (Minn. 1985) (where the interest charged on a promissory note is found to be usurious, debtor is still responsible for payment of the principal). Accordingly, we modify the trial court's award of damages by directing judgment in favor of appellant in the amount of $68,394.96, the principal amount owed under the original lease agreements.

III.

Having ruled for appellant on other grounds, we do not address the remaining issues raised by appellant.

Reversed in part, affirmed in part, and modified herein.