Virgil Johnson and Virgil Johnson Trucking v. Associated Milk Producers, Inc. ( 2016 )


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  •                 IN THE SUPREME COURT OF IOWA
                                    No. 15–0105
    
                               Filed October 14, 2016
    
    
    VIRGIL JOHNSON and VIRGIL JOHNSON TRUCKING,
    
          Appellants,
    
    vs.
    
    ASSOCIATED MILK PRODUCERS, INC.,
    
          Appellee.
    
    
    
          On review from the Iowa Court of Appeals.
    
    
    
          Appeal from the Iowa District Court for Allamakee County,
    
    Margaret L. Lingreen, Judge.
    
    
    
          Dairy cooperative seeks further review of decision of court of
    
    appeals that reversed summary judgment on the terms of a milk-hauling
    
    contract.     DECISION OF COURT OF APPEALS VACATED; DISTRICT
    
    COURT SUMMARY JUDGMENT AFFIRMED.
    
    
    
          John S. Anderson and Stephen J. Belay of Anderson, Wilmarth,
    
    Van Der Maaten, Belay, Fretheim, Gipp & Zahasky, Decorah, for
    
    appellants.
    
    
    
          Matthew     C.   Berger   of   Gislason   &   Hunter   LLP,   New Ulm,
    
    Minnesota, for appellee.
                                          2
    
    WATERMAN, Justice.
    
            In this appeal, we must decide which rule of contract law applies to
    
    resolve a standoff over a change in hauling fees paid by a dairy
    
    cooperative to an independent contractor who transported milk from
    
    farms to the co-op’s facilities. The parties agree their oral contract could
    
    be terminated at will by either side upon reasonable notice. The co-op
    
    notified the hauler it would be phasing out a $100 trip fee it had been
    
    paying to the hauler in addition to agreed hauling rate.        The hauler
    
    objected, but continued to transport milk and bill the co-op for the trip
    
    fees.   The co-op continued receiving shipments and paid the agreed
    
    hauling rate without the trip fees. Months later, the hauler sued for the
    
    unpaid trip fees, and the co-op declared the contract terminated.
    
            The co-op moved for summary judgment, asserting it could modify
    
    the terms of the at-will contract upon reasonable notice and the hauler
    
    accepted the modification by continued performance.             The hauler
    
    resisted and, without contesting the reasonableness of notice, argued the
    
    co-op improperly had attempted to modify an existing contract without
    
    consideration or consent. The district court granted summary judgment
    
    for the co-op, concluding, based on the undisputed facts, that the change
    
    in payment terms was a new offer the hauler accepted by performance.
    
    The court of appeals reversed, concluding questions of fact as to
    
    acceptance precluded summary judgment.            We granted the co-op’s
    
    application for further review.
    
            For the reasons explained below, we hold that in this at-will
    
    contract, the co-op could alter payment terms prospectively upon
    
    reasonable notice. The co-op made it clear that it would pay according to
    
    a new schedule. The hauler understood this. The hauler faced a choice
    
    of accepting the new terms or ceasing performance. The hauler accepted
                                        3
    
    by performance notwithstanding its protests. Accordingly, we vacate the
    
    decision of the court of appeals and affirm the district court’s summary
    
    judgment dismissing the hauler’s claims.
    
          I. Background Facts and Proceedings.
    
          The record establishes the following facts as undisputed.        On
    
    September 1, 2000, Associated Milk Producers, Inc. (AMPI) entered into
    
    an oral agreement with Virgil Johnson, the sole proprietor of Virgil
    
    Johnson Trucking. AMPI is a cooperative of dairy farmers that receives
    
    milk produced by its members, processes the milk into butter and
    
    cheese, and sells the dairy products. AMPI contracts with independent
    
    haulers to transport milk from the farms to its facilities.   Haulers are
    
    paid directly by AMPI, which in turn passes through those costs to its
    
    members. Johnson was hired as an independent contractor to deliver
    
    milk from the dairy farms to a station in Fredericksburg, Iowa, where the
    
    milk was transferred from the hauler trucks to a semi-tanker for
    
    transport to AMPI’s processing facilities. For this service, AMPI agreed to
    
    pay Johnson a “hauling rate” of $0.50 per one hundred pounds of milk
    
    delivered, a rate based on the distance between the various farms and
    
    Fredericksburg.
    
          Johnson also later offered to haul milk from Fredericksburg to
    
    AMPI’s facilities in Arlington and Des Moines, Iowa. AMPI agreed to pay
    
    Johnson the standard hauling rate, plus an additional “trip fee” for that
    
    service.   The trip fee was based on the amount that AMPI had been
    
    paying another semi-driver ($1.00 per mile) and the distance from
    
    Fredericksburg to the facilities. Johnson and AMPI negotiated the trip
    
    fee to be $100 for deliveries to Arlington and $340 for deliveries to
    
    Des Moines.
                                        4
    
          The duration of the contract was unstated. Johnson understood
    
    the agreement to be “for the indefinite future.” Johnson acknowledged
    
    this was typical of hauling contracts in the milk industry because the
    
    dairy farmers remained free to move on and sell their milk to competing
    
    processors at any time. Neither party asserts there were any assurances
    
    given about the duration of the contract, and Johnson stated he believed
    
    he had the right to “retire” or “to stop[] performance under the contract”
    
    at any time.
    
          The parties continued working together for twelve years.       They
    
    modified their oral agreement several times as circumstances changed.
    
    For example, in 2005 or 2006, the station in Fredericksburg closed, and
    
    Johnson began delivering milk directly from the farms to AMPI’s facilities
    
    in Arlington and Des Moines. AMPI agreed to increase Johnson’s base
    
    hauling rate three times, from $0.50 per hundred pounds in 2000 to
    
    $0.51 per hundred in 2006, $0.545 in 2008, and $0.565 in 2009.
    
    Johnson purchased three more delivery routes from AMPI and other
    
    haulers.   AMPI made no representations regarding how long Johnson
    
    could perform hauling services on these routes.     Johnson understood
    
    when he purchased the routes that “those patrons had the right and
    
    were free to leave at any time.”
    
          On June 19, 2012, Don DeVelder, senior vice president of AMPI,
    
    notified Johnson by letter that AMPI was commencing a study “regarding
    
    the inconsistency of hauler payment programs” to rectify discrepancies in
    
    how milk haulers were paid for comparable work.          Under the new
    
    program, AMPI sought to “pay every hauler in the same way by using the
    
    same formula, which will be based on miles driven, stops made and
    
    pounds of milk picked up.” AMPI stated that the study might result in
    
    “pay rate adjustments” for haulers and invited them to offer input on the
                                        5
    
    new program.      Johnson, through his attorney, sent a letter back to
    
    DeVelder stating Johnson was unwilling to renegotiate the terms of their
    
    oral agreement.
    
          Over a year later, on July 31, 2013, the division manager of AMPI
    
    wrote Johnson to inform him that AMPI had completed the study and
    
    would be implementing changes to rates in several steps over the next
    
    few months. Specifically, the $100 trip fee Johnson had been paid for
    
    deliveries to Arlington was to be phased out: the fee would be reduced to
    
    $75 in September, to $50 in October, to $25 in November, and
    
    eliminated in December. Johnson responded by letter that he did not
    
    agree to the reductions, but later admitted he understood AMPI would no
    
    longer pay the trip fees.
    
          In September, AMPI began paying Johnson under the program
    
    announced weeks earlier, thereby reducing the trip fee to $75 for
    
    deliveries that month. On October 7, Johnson submitted an invoice to
    
    AMPI charging $100 for trip fees and stating that he had received
    
    insufficient payment for his September hauls. AMPI’s manager returned
    
    the invoice with a handwritten note at the bottom, stating, “Virgil, [b]ill
    
    paid according to the attached notice dated July 31, 2013.”       Johnson
    
    continued to bill AMPI at $100 for the trip fees. AMPI did not return the
    
    next several invoices with comments, but paid only the base hauling rate
    
    and reduced trip fees as set forth on the July 31 schedule.       Johnson
    
    understood AMPI would not pay his $100 trip charges but nevertheless
    
    continued hauling milk from the farms to AMPI.
    
          On December 17, AMPI’s manager sent another letter to Johnson,
    
    reiterating the payment policy implemented months earlier.      The letter
    
    stated that after November, Johnson would be paid at his current
    
    hauling rate of $0.565 per one hundred pounds delivered, but would no
                                         6
    
    longer be receiving any trip fee. The letter concluded by stating, “If this
    
    is not acceptable with you let me know so we can make other
    
    arrangements to haul AMPI member’s milk.”
    
          On January 9, 2014, Johnson filed a civil action against AMPI in
    
    the Iowa District Court for Allamakee County, alleging claims for breach
    
    of contract, promissory estoppel, and unjust enrichment.           Johnson
    
    claimed that AMPI unilaterally attempted to modify the oral agreement by
    
    its July 31, 2013 letter and did so without consideration or acceptance.
    
    AMPI denied liability in its answer and alleged as an affirmative defense
    
    that the July 31, 2013 modification was effective or, alternatively, that a
    
    new contract had been formed without the $100 trip fee.
    
          After filing this lawsuit, Johnson continued to deliver milk for AMPI
    
    throughout 2014, submitting monthly invoices to AMPI that included the
    
    $100 trip fee. Early that year, Johnson added language to his invoice
    
    stating, “A 15% interest charge will be added on all unpaid balances
    
    beginning January 1, 2014.”     Johnson had not charged AMPI interest
    
    previously, nor had AMPI agreed to pay interest. Johnson continued to
    
    submit invoices to AMPI for the $100 trip fees plus interest. Johnson
    
    billed AMPI in this fashion until AMPI terminated the arrangement in
    
    December.
    
          Meanwhile, on September 26, AMPI filed a motion for summary
    
    judgment.     AMPI argued its July 31, 2013 memorandum effectively
    
    operated as a notice of termination of the parties’ at-will oral agreement
    
    and a proposal for a new contract with trip fees phased out.             By
    
    continuing to deliver milk, AMPI argued, Johnson consented to the terms
    
    of the new agreement.     Additionally, AMPI asserted the existence of a
    
    contract    precluded   Johnson’s   claims   for   unjust   enrichment   and
    
    promissory estoppel.
                                        7
    
          Johnson filed a resistance to the motion on October 22. Johnson
    
    argued that AMPI failed to terminate the existing agreement and that
    
    summary judgment was precluded by factual disputes as to whether
    
    AMPI’s attempted unilateral modification altered the agreement’s terms.
    
    Johnson never argued he was not given reasonable notice of the change
    
    in terms.   On November 12, Steven Faust, division manager of AMPI,
    
    sent Johnson a letter terminating his employment. AMPI explained the
    
    termination was because “in the course of [the] lawsuit, [Johnson] ha[d]
    
    attempted to spin [his] continued deliveries to AMPI as evidence that
    
    AMPI agreed to continue paying [him] the $100.00 ‘trip charge.’ ” The
    
    letter stated,
    
          AMPI’s communications to you have been clear that we were
          unwilling to continue paying the “trip charge” beginning on
          December 1, 2013. In order to avoid any confusion regarding
          these issues, however, please be advised that the contractual
          relationship between AMPI and you is hereby TERMINATED
          effective (30) days from the date of this letter.
    
    The division manager sent a similar letter to Johnson on December 10,
    
    2014, again stating the contractual relationship between AMPI and
    
    Johnson was “TERMINATED.”           Johnson’s final invoice to AMPI in
    December asserted AMPI owed a total of $121,375 for hauling charges
    
    plus interest of $14,775 for the past seventeen months of deliveries.
    
          AMPI deposed Johnson about his understanding of the July 31,
    
    2013 communication phasing out the trip fees. He testified as follows:
    
                 Q. Now, would you agree with me that in this letter
          AMPI is informing you that it is no longer going to pay the
          trip charge beginning December 1st, 2013? A. I can see
          that, yes.
               Q. You agree that’s what the letter was telling you?
          A. Yes.
                 Q. And then AMPI was going to phase that out over a
          series of months leading up to that? A. Yes.
                                          8
                 ....
                Q. Now, at the time you received this letter, you
          understood that AMPI was not going to pay the trip charge,
          correct? A. Yes.
                 Q. Did you tell AMPI that, “If you are not going to pay
          the trip charge, I’m no longer going to deliver milk?” A. No, I
          did not.
                 Q. Did you continue to deliver milk after you received
          this letter? A. I did.
                 Q. When you continued delivering milk, you
          understood that AMPI was not going to pay the trip charge,
          is that correct? A. That’s correct.
    
    Johnson also testified about his reaction to AMPI’s December 17, 2013
    
    letter reiterating its unwillingness to pay the trip charge:
    
               Q. You understood, when receiving this letter, that
          AMPI was not willing to pay the trip charge, correct? A. Yes.
                Q. And that if you were going to insist on the trip
          charge, that your relationship with AMPI was going to be
          terminated? A. Yes.
                Q. Did you contact AMPI, after receiving this letter,
          and tell them that this arrangement was not acceptable?
          A. Um, we drafted two letters, and I can’t remember when
          we drafted them. I think it was before this. I don’t think we
          drafted anything after this. No.
                 Q. Okay. You continued to deliver milk? A. Yes.
               Q. And you delivered that milk, knowing that AMPI
          was not going to pay the trip charge? A. Yes.
    
          On November 24, the district court granted AMPI’s motion for
    
    summary judgment. The district court ruled that an at-will contract may
    
    be terminated or modified at any time as a condition of further
    
    performance.     Accordingly, the court concluded that Johnson, by
    
    “continu[ing] to haul milk to AMPI’s plant in Arlington, Iowa, after having
    
    been notified of the change in the trip charge payment and without any
    
    other agreement having been reached with AMPI,” thereby accepted the
    
    new terms as a matter of law. The district court also granted summary
    
    judgment dismissing Johnson’s unjust enrichment and promissory
                                         9
    
    estoppel claims on grounds that the law will not imply a contract when
    
    an express contract exists. See Chariton Feed & Grain, Inc. v. Harder,
    
    
    369 N.W.2d 777
    , 791 (Iowa 1985).
    
          On December 14, 2015, Johnson filed a motion to amend and
    
    enlarge the district court’s summary judgment ruling, which the district
    
    court denied.    Johnson appealed the summary judgment, and we
    
    transferred the case to the court of appeals.       The court of appeals
    
    reversed, concluding the oral agreement between AMPI and Johnson
    
    constituted a bilateral contract that could not be modified without
    
    mutual assent and consideration.         The court of appeals noted the
    
    contract was at-will, but it distinguished our employment-at-will
    
    precedent because Johnson was an independent contractor, not an
    
    employee of AMPI. The court of appeals stated, “Although the facts are
    
    primarily undisputed, those facts do not support Johnson’s acceptance
    
    of [AMPI’s] proposed modification as the only, or probable, conclusion
    
    that can be drawn from those facts.”      Thus, the court of appeals held
    
    that questions of fact as to Johnson’s consent precluded summary
    
    judgment. We granted AMPI’s application for further review.
    
          II. Standard of Review.
    
          Our review of an order granting summary judgment is for
    
    correction of errors at law. Peak v. Adams, 
    799 N.W.2d 535
    , 542 (Iowa
    
    2011).   “Summary judgment is appropriate when there is no genuine
    
    issue of material fact and the moving party is entitled to judgment as a
    
    matter of law.” United Suppliers, Inc. v. Hanson, 
    876 N.W.2d 765
    , 772
    
    (Iowa 2016) (quoting Robinson v. Allied Prop. & Cas. Ins. Co., 
    816 N.W.2d 398
    , 401 (Iowa 2012)). An issue of fact is material “only if ‘the dispute is
    
    over facts that might affect the outcome of the suit.’ ” Peak, 799 N.W.2d
    
    at 542 (quoting Phillips v. Covenant Clinic, 
    625 N.W.2d 714
    , 717 (Iowa
                                            10
    
    2001)).   “Summary judgment is proper if the only issue is the legal
    
    consequences flowing from undisputed facts.”             Id. (quoting Huber v.
    
    Hovey, 
    501 N.W.2d 53
    , 55 (Iowa 1993)). “We examine the record in the
    
    light most favorable to the nonmoving party.”            United Suppliers, 876
    
    N.W.2d at 772.
    
          III. Analysis.
    
          We must decide which rule of contract law governs this dispute
    
    over one party’s change in the terms of an ongoing commercial
    
    relationship and the other party’s objection and continued performance. 1
    
    The district court granted summary judgment for AMPI based on the rule
    
    that an at-will contract is terminable or modifiable by either party upon
    
    reasonable notice. The district court concluded that Johnson accepted
    
    AMPI’s new terms of the agreement by continuing to haul milk.                 The
    
    court of appeals reversed, applying a different rule that modification of
    
    an existing contract requires mutual assent and consideration.                 We
    
    conclude the district court correctly applied the governing rule.
    
          Johnson and the court of appeals relied on caselaw involving
    
    contracts that were not terminable at will. In one such case, we said
    
    that a contract may be modified by one party only “with the consent of
    
    the other.” Davenport Osteopathic Hosp. Ass’n v. Hosp. Serv., Inc., 
    261 Iowa 247
    , 253, 
    154 N.W.2d 153
    , 157 (1967) (“Stated conversely one party
    
    to a contract cannot alter its terms unilaterally or without assent of the
    
    other party.”). “[T]he requisite consent may be either express or implied
    
    from acts and conduct.” Id. “[W]hether a contract has been modified by
    
    the parties thereto is ordinarily a question of fact.”        Id.   In Davenport
    
    
           1Johnson does not challenge the district court’s summary judgment dismissing
    
    his promissory estoppel or implied contract claims.
                                             11
    
    Osteopathic Hospital Association, a hospital contracted with a health
    
    insurer     to     treat   the   insurer’s    subscribers       under   an     agreed
    
    reimbursement schedule. Id. at 251, 154 N.W.2d at 156. Their written
    
    contract included a provision allowing either party to terminate the
    
    agreement “on 90 days written notice.”            Id.        After paying under the
    
    agreed schedule for several years, the insurer, without invoking the
    
    termination        provision,    announced     that     it     was   changing      the
    
    reimbursement formula, effective seventeen months later.                     Id.   The
    
    hospital continued to provide services to the insurer’s subscribers at the
    
    lower rate, but protested the reduction and filed suit for breach of
    
    contract.    Id.    The district court ruled that the hospital, by failing to
    
    terminate the contract and “by continuing to accept [the lower]
    
    compensation . . . impliedly acquiesced in the modification.” Id. at 252,
    
    154 N.W.2d at 156. We reversed, concluding that the hospital, which
    
    had “openly and repeatedly voiced objection to the change,” did not
    
    assent to the modification. Id. at 254, 154 N.W.2d at 158. We held the
    
    hospital could continue to perform, accept payments under protest, and
    
    sue for breach to recover the difference. Id.
    
          Johnson also refers to Tindell v. Apple Lines, Inc., 
    478 N.W.2d 428
    
    (Iowa Ct. App. 1991). There, Joseph Tindell entered into an operating
    
    lease to haul freight for Apple Lines. Id. at 429. Their contract “provided
    
    it was subject to cancellation by either party upon thirty days’ written
    
    notice.” Id. at 429–30. A year later, Apple Lines attempted to reduce the
    
    compensation rate without canceling the contract. Id. at 430. Tindell
    
    refused to sign an addendum and told Apple Lines he would not agree to
    
    the lower rate, but he continued to “accept loads and cash paychecks
    
    calculated at the [lower] rate.” Id. at 430. Tindell sued for breach, and
    
    the district court ruled in his favor, awarding damages at the original
                                              12
    
    contract rate. Id. at 430. The court of appeals affirmed, holding that
    
    “[b]y accepting payments under protest and continued performance on
    
    his part, Tindell reserved the right to recover for breach.” Id. Tindell and
    
    Davenport Osteopathic Hospital Association are good law for the
    
    modification of an existing contract with a termination provision neither
    
    party elects to exercise.        When neither side invokes the termination
    
    clause, mutual consent is required to modify the contract. See Tindell,
    
    478 N.W.2d at 430.
    
           We have a different rule for modifying at-will contracts. An at-will
    
    contractual “relationship is terminable by either party at any time, for
    
    any reason, or for no reason at all.” Jones v. Univ. of Iowa, 
    836 N.W.2d 127
    , 144 (Iowa 2013) (quoting Berry v. Liberty Holdings, Inc., 
    803 N.W.2d 106
    , 109 (Iowa 2011)).         Contracts at will can be terminated by either
    
    party upon reasonable notice.           C.C. Hauff Hardware, Inc. v. Long Mfg.
    
    Co., 
    257 Iowa 1127
    , 1131, 
    136 N.W.2d 276
    , 279 (1965). A contract for
    
    services is “terminable at will only if we cannot ascertain a durational
    
    term.”    Shelby Cty. Cookers, L.L.C. v. Util. Consultants Int’l, Inc., 
    857 N.W.2d 186
    , 192 (Iowa 2014). 2             Johnson and AMPI agree that their
    
    
    
            2We find the Restatement (Second) of Contracts instructive.           Shelby Cty.
    Cookers, 857 N.W.2d at 192. “When the contract calls for successive performances but
    is indefinite in duration, it is commonly terminable by either party, with or without a
    requirement of reasonable notice.” Restatement (Second) of Contracts § 33 cmt. d, at
    94 (Am. Law Inst. 1981). We may also look to Iowa’s Uniform Commercial Code (U.C.C.)
    for guidance, even though the U.C.C. does not apply to contracts for services. Semler v.
    Knowling, 
    325 N.W.2d 395
    , 399 (Iowa 1982) (“Exclusion from Article 2, however, does
    not foreclose the application of its policies and reasons. ‘[Courts] have recognized the
    policies embodied in an act as applicable in reason to subject-matter which was not
    expressly included in the language of the act.’ ”) (alteration in original) (quoting Iowa
    Code Ann. § 554.1102 cmt. 1 (1981)). “Where the contract provides for successive
    performances but is indefinite in duration it is valid for a reasonable time but unless
    otherwise agreed may be terminated at any time by either party.”               Iowa Code
    § 554.2309 (2013).
                                         13
    
    contract   was   at-will;   accordingly,   we   apply    the   rule   governing
    
    modification of at-will contracts.
    
          Contracts terminable at will are modifiable at will. Cannon v. Nat’l
    
    By-Prods., Inc., 
    422 N.W.2d 638
    , 641 (Iowa 1988).               A party that
    
    unilaterally modifies an at-will contract effectively terminates the old
    
    agreement and offers new terms for acceptance. See id. For example, in
    
    Cannon, James Cannon sued his former employer for wrongful
    
    termination, relying on a personnel policy adopted after he started work
    
    that permitted termination only for cause. Id. at 639–41. The employer
    
    asserted that the policy did not modify Cannon’s preexisting contract of
    
    employment because the modification was not supported by independent
    
    consideration. Id. at 641. We disagreed, noting “the power of the parties
    
    to a contract to rescind their agreement and enter into a new one in
    
    many instances obviates the need for additional consideration.” Id. We
    
    stated,
    
          We find it to be particularly inappropriate to require an
          independent consideration for modification of an agreement
          which is conceded to have been a mere contract at will by
          defendant. In such situations, we believe the preferable
          approach is to view the issue as if an entirely new contract is
          being formed at the time of the alleged modification.
    
    Id. (citing Moody v. Bogue, 
    310 N.W.2d 655
    , 660–61 (Iowa Ct. App. 1981)
    
    (per curiam)).    We    held   the   modified   policy   requiring    for-cause
    
    termination became part of Cannon’s employment contract and, on that
    
    basis, affirmed the judgment for wrongful termination. Id. at 641–42.
    
          When one party modifies an at-will contract, the other party may
    
    choose to accept the new terms or discontinue the relationship:
    
          [A]n employment contract terminable at will is subject to
          modification at anytime by either party as a condition of its
          continuance. The employee’s only alternative is to accept the
          new conditions or quit; an employee’s decision to continue to
                                         14
          work, knowing the newly proposed terms, results in the
          employee’s acceptance as a matter of law.
    
    Moody, 310 N.W.2d at 660–61 (citations omitted). The court of appeals
    applied that principle in Moody.      Id.   Gary Moody’s employer advised
    
    Moody that he was overpaid and would be denied a bonus if he refused
    
    to take on additional management responsibilities. Id. at 657. Moody
    
    refused extra duties and filed suit after he was denied the bonus. Id.
    
    The court of appeals held that by continuing employment after being
    
    notified the bonus was contingent upon extra duties, Moody accepted the
    
    modification.    Id. at 661; see also Clasing v. Hormel Corp., 
    993 F. Supp. 2d 960
    , 977 n.8 (N.D. Iowa 2014) (recognizing that parties may
    
    modify at-will contract upon reasonable notice); Viafield v. Engels, No.
    
    15–1663, 
    2016 WL 4054175
    , at *2 (Iowa Ct. App. July 27, 2016) (“Given
    
    the at-will employment relationship, Viafield could modify [its personnel
    
    policies] at any time . . . .”); Willets v. City of Creston, 
    433 N.W.2d 58
    , 62
    
    (Iowa Ct. App. 1988) (concluding the employer had right to change sick
    
    leave benefits in an at-will employment contract and the “employee’s
    
    decision to continue to work, knowing the newly proposed terms, results
    
    in the employee’s acceptance as a matter of law”).
    
          We do not require formalistic language terminating an at-will
    
    contract before a change in terms will be effective going forward.        See
    
    Moody, 310 N.W.2d at 660 (determining that statements informing
    
    Moody his bonus would be eliminated if he refused management
    
    responsibilities “effectively notified” Moody of the modification); see also
    
    DiGiacinto v. Ameriko-Omserv Corp., 
    69 Cal. Rptr. 2d 300
    , 305 (App.
    
    1997) (noting an approach that required formalistic assent to modify at-
    
    will agreements would “encourage[] employers to fire employees” that did
    
    not accept the modification and hire them back immediately under
                                          15
    
    modified terms) (quoting Stieber v. Journal Publ’g Co., 
    901 P.2d 201
    , 204
    
    (N.M. Ct. App. 1994)). In an at-will contract, a party who gives notice of
    
    a changed term effectively offers a new contract in place of the existing
    
    one, which the other party may accept by continued performance. See
    
    Cannon, 422 N.W.2d at 641.
    
          Johnson and the court of appeals distinguish the foregoing cases
    
    as applying to at-will contracts with employees but not independent
    
    contractors.   They rely on Harvey v. Care Initiatives, Inc., in which we
    
    recognized “a long-standing distinction in the law between employees
    
    and independent contractors.”      
    634 N.W.2d 681
    , 683 (Iowa 2001).     In
    
    Harvey, we declined to extend the tort of wrongful discharge to
    
    independent contractors. Id. at 686. We noted the tort was recognized to
    
    address the “inequity of the bargaining position in a typical at-will
    
    employer-employee     relationship”   and   concluded   that   independent
    
    contractors, who “have greater control and flexibility in their work and in
    
    the hiring process,” did not need the protection of a wrongful-discharge
    
    tort. Id. at 684. We elaborated,
    
          The distinct differences in the nature of the relationship
          between independent contractors and at-will employees not
          only suggest a greater need to protect at-will employees, but
          existing principles of contract law provide independent
          contractors with remedies not available to employees. Thus,
          an independent contractor can not only negotiate the
          circumstances governing termination of a contract, but has
          contract remedies to enforce all expressed or implied terms
          of a contract.
    
    Id. (footnote omitted) (citations omitted). But these differences between
    
    employees and independent contractors cut against Johnson. He seeks
    
    greater protection as an independent contractor, yet we reached the
    
    opposite conclusion in Harvey favoring greater protection for employees.
    
    Employers may modify contracts with at-will employees prospectively.
                                              16
    
    Nothing in Harvey supports treating independent contractors more
    
    favorably than employees.
    
          Moreover,     there       is    ample    authority   allowing   unilateral
    
    modifications to at-will service contracts with independent contractors as
    
    well as employees.     The United States Court of Appeals for the Fifth
    
    Circuit applied this principle to a milk-hauling contract involving similar
    
    facts in W.G. Pettigrew Co. v. Borden, Inc., in which an independent
    
    contractor worked as a distributor for a dairy and was paid for delivering
    
    milk to its customers. No. 97–40010, 
    1997 WL 589344
    , at *1 (5th Cir.
    
    Sept. 8, 1997).     The dairy changed its compensation terms over the
    
    hauler’s objection. Id. at *2. The hauler continued performing but later
    
    sued for breach of contract. Id. The federal district court granted the
    
    dairy’s motion for summary judgment. Id. The Fifth Circuit affirmed,
    
    stating,
    
          As an at-will contract, the distributorship could be modified
          by either party as a condition to the continuation of the
          relationship. In general, when a party to an at-will contract
          notifies the other of changes in the contract terms, the other
          must either accept the terms or terminate the contract. If
          the party continues to perform under the contract with
          knowledge of the changes made by the other party, the
          former is deemed, as a matter of law, to have accepted the
          changes.
    
    Id. at *3 (citation omitted).
    
          This principle was utilized in Cascade Auto Glass, Inc. v.
    
    Progressive Casualty Insurance Co., when an insurance company
    
    contracted with a vendor to repair its insured vehicles. 
    145 P.3d 1253
    ,
    
    1254 (Wash. Ct. App. 2006).            The contract was terminable at will by
    
    either party.   Id. at 1255.         When the insurer initiated a new pricing
    
    policy, the vendor argued the unilateral modification was ineffective. Id.
                                        17
    
    at 1257.     The Washington Court of Appeals allowed the unilateral
    
    change:
    
          [A] terminable-at-will contract may be unilaterally modified.
          The same rule applies in at-will employment agreements,
          where an employer may unilaterally change policies and
          procedures set forth in an employee handbook so long as the
          employee receives reasonable notice of the change. In such
          cases, a new contract is formed when the employer
          communicates the new terms (offer), the employee works
          after receiving the notice (acceptance), and the employee
          continues in employment although free to terminate
          (consideration).
    
    Id. (citations omitted).
    
          Other courts agree, holding at-will contracts with independent
    
    contractors can be unilaterally modified. See, e.g., Moholt v. Dooney &
    
    Bourke, Inc., 
    63 F. Supp. 3d 1289
    , 1300–01 (D. Or. 2014) (concluding
    
    independent sales representative’s contract could be modified at any time
    
    because it was terminable at will); Builders Supply Corp. v. Shipley, 
    341 P.2d 940
    , 941 (Ariz. 1959) (holding at-will contract between independent
    
    hauler and brick manufacturer unilaterally modifiable); Bass v. Prime
    
    Cable of Chi., Inc., 
    674 N.E.2d 43
    , 50–51 (Ill. App. Ct. 1996) (determining
    
    contract between cable company and customers was terminable at will,
    
    and therefore, cable company could unilaterally modify terms by
    
    discontinuing free cable guide); Garber v. Harris Trust & Sav. Bank, 
    432 N.E.2d 1309
    , 1314 (Ill. App. Ct. 1982) (holding that cardholder
    
    agreements between issuers and cardholders were terminable at will, and
    
    therefore, issuers could modify terms); Associated Petroleum Prods., Inc.
    
    v. Nw. Cascade, Inc., 
    203 P.3d 1077
    , 1080 (Wash. Ct. App. 2009)
    
    (concluding contract between diesel fuel supplier and construction
    
    company was modifiable at will with reasonable notice). Johnson cites
    
    no authority to the contrary.
                                              18
    
           We hold that the principle of contract law allowing unilateral
    
    changes       to   at-will   contracts   upon     reasonable     notice    applies    to
    
    independent contractors as well as employees. When AMPI announced
    
    in July 2013 it was phasing out the $100 trip fees, Johnson could
    
    “accept the new conditions or quit.”                Willets, 433 N.W.2d at 62.
    
    Johnson’s decision to continue hauling milk, “knowing the newly
    
    proposed terms, results in [his] acceptance as a matter of law.” Id. 3
    
           Johnson’s protests to AMPI’s modification phasing out the trip fee
    
    were ineffective in light of his continued performance. In Schoppert v.
    
    CCTC International, Inc., the plaintiff “objected continually” to an
    
    employer’s unilateral modification of his commission. 
    972 F. Supp. 444
    ,
    
    447 (N.D. Ill. 1997). Yet the court found his actions spoke louder than
    
    his words:
    
           Even crediting Schoppert’s version that he “objected
           continually” to the Modification, as we must on a motion for
           summary judgment, his actions in continuing to work for
           over two and a half years, without any demonstration that
           CCTC might reconsider its ultimatum to him, belie those
           verbal objections. Schoppert has not indicated that he ever
           told anyone at CCTC that he would only work under the pre-
    
           3See   also Care Travel Co. v. Pan Am. World Airways, Inc., 
    944 F.2d 983
    , 990 (2d
    Cir. 1991) (recognizing that if one party imposes a unilateral modification and the other
    party continues to perform, recovery for breach is precluded); Martin v. Airborne
    Express, 
    16 F. Supp. 2d 623
    , 632 (E.D.N.C. 1996) (“At any rate, Martin’s decision to
    remain in AMR Distribution’s employ after notification of the restructuring negates any
    related breach of contract claim.”); Kauffman v. Int’l Bhd. of Teamsters, 
    950 A.2d 44
    , 48
    (D.C. 2008) (“[N]either party to at-will employment is bound to continue performance,
    and thus courts properly view future performance by each as valid consideration for the
    change in terms.”); Geary v. Telular Corp., 
    793 N.E.2d 128
    , 133 (Ill. App. Ct. 2003)
    (“Plaintiff accepted the April 1996 modifications to the compensation plan when he
    accepted payment of commissions under the April 1996 plan and continued
    employment.”); Brett v. City of Eugene, 
    880 P.2d 937
    , 939 (Or. Ct. App. 1994) (“By
    continuing to work for an employer after the employee is aware of a change in the
    employer’s policies, the employee impliedly accepts the change in his or her
    employment contract.”); Hathaway v. Gen. Mills, Inc., 
    711 S.W.2d 227
    , 229 (Tex. 1986)
    (“If the employee continues working with knowledge of the changes, he has accepted the
    changes as a matter of law.”).
                                         19
          1991 terms, or that his continued performance was in any
          way conditioned on the retention of his earlier commission
          structure.    Nor is there any evidence that the 1991
          Modification remained open to further negotiation after the
          December 1991 meeting.           In these circumstances,
          Schoppert’s continuing to work for over two and a half years
          while receiving commissions under the new structure must
          be seen in legal terms as an acceptance of the 1991
          Modification, grudging and protest-filled as that acceptance
          may have been. The old saw “actions speak louder than
          words” has more than a grain of truth to it, and we adhere to
          it where, as here, a party’s words are contradicted by his
          actions.
    
    Id.; see also Gebhard v. Royce Aluminum Corp., 
    296 F.2d 17
    , 19 (1st Cir.
    
    1961) (rejecting “Plaintiff’s explanation . . . that thereafter ‘he accepted
    
    the checks because he had to,’ but that he never agreed to any change”).
    
          We reach the same conclusion.            Johnson admitted in his
    
    deposition that he knew AMPI would refuse to pay the trip fees he
    
    continued to bill. He understood that under the new payment program,
    
    he would only be paid the base hauling rate. As a matter of law Johnson
    
    accepted AMPI’s new terms by his conduct in continuing to haul milk
    
    and accept payments, notwithstanding his protests. The district court
    
    correctly ruled that Johnson’s continued performance accepted AMPI’s
    
    modification to their at-will contract as a matter of law.
    
          IV. Disposition.
    
          For these reasons, we vacate the decision of the court of appeals
    
    and affirm the district court’s summary judgment dismissing Johnson’s
    
    action.
    
          DECISION OF COURT OF APPEALS VACATED; DISTRICT
    
    COURT SUMMARY JUDGMENT AFFIRMED.