WOLLMAN, Circuit Judge.
The appellants entered into agreements with the United States Department of Agriculture (USDA) whereby the USDA agreed to write-down a portion of their debt in exchange for part of the appreciation in the value of their farms or ranches during the term of the agreement. Appellants initiated this declaratory judgment action, arguing that their obligation to pay ended with the term of the agreement and challenging the USDA's determination of the maximum amount collectible under the agreements. The district court
The Agricultural Credit Act of 1987, 101 Stat. 1679 (1988), allowed farmers and ranchers who were delinquent in payments on various agricultural loans to restructure their debts. The Act provided for write-down of secured debt to reflect the market value of the land securing the loan. In exchange for the write-down, the USDA required each of the appellants to sign a Shared Appreciation Agreement (Agreement). The Agreement provided in part:
Appellants submitted affidavits asserting that the USDA county supervisors with
Appellants filed a declaratory judgment action, seeking a determination that they owed no money to the USDA under the Agreement or, alternatively, that they owed at most an amount specified on an exhibit attached to the Agreement. The district court granted the USDA's motion to dismiss for failure to state a claim on which relief could be granted. On appeal, appellants contend that the district court erred by considering matters outside the pleadings in resolving the USDA's motion to dismiss. In addition, the appellants contend that several issues of law cannot be resolved in the USDA's favor on the existing record.
We review de novo the district court's grant of a motion to dismiss, affirming only if, accepting all allegations as true, it appears that the plaintiff can prove no set of facts that would entitle him to relief. Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 740 (8th Cir.2002). If the district court considered "matters outside the pleading" in deciding a motion to dismiss, Rule 12(b)(6) requires that the motion "be treated as one for summary judgment." Fed.R.Civ.P. 12(b)(6); Casazza v. Kiser, 313 F.3d 414, 417-18 (8th Cir.2002).
Appellants contend that the district court erred by considering matters outside the pleadings and by refusing to convert the motion to one for summary judgment, thereby denying the appellants an opportunity to conduct discovery or present evidence. The government's Rule 12(b)(6) motion to dismiss was accompanied by a Rule 12(b)(1) motion to dismiss for lack of jurisdiction and six documentary exhibits. Exhibits 1 and 5 were the Agreement and the "Exhibit B" form, both of which were also attached to the appellants' complaint. In a case involving a contract, the court may examine the contract documents in deciding a motion to dismiss. See In re K-tel Int'l, Inc. Sec. Litig., 300 F.3d 881, 889 (8th Cir.2002); Rosenblum v. Travelbyus.com. Ltd., 299 F.3d 657, 661 (7th Cir.2002). Exhibit 2 was a copy of instructions to farmers regarding the Agreements that had been published in the Code of Federal Regulations. 7 C.F.R. Part 1951, Subpart S, Exh. A (1989). Exhibit 4 was a copy of a Department of Agriculture regulation. The district court may take judicial notice of public records and may thus consider them on a motion to dismiss. Faibisch v. Univ. of Minn., 304 F.3d 797, 802-03 (8th Cir.2002). Exhibit 6, an Administrative Notice issued by the USDA in June 1989, is a public record and was referenced by appellants' complaint. Accordingly, each of these exhibits properly could be considered by the district court in ruling on a motion to dismiss. See Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999).
Exhibit 3 was the affidavit of Arthur Hall, Director of Farm Loan Servicing and Property Management Division of the USDA's Farm Service Agency. Although primarily relevant to the USDA's Rule 12(b)(1) motion to dismiss for failure to exhaust administrative remedies, the affidavit contained a statement that recapture "is triggered by certain events including expiration of the [Agreement]." In addition, the USDA presented to the district court a 1989 Internal Revenue Service advisory letter concerning the tax treatment of the Agreement and suggesting that the borrower would owe the amount of write-down
"When the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals." Mobil Oil Exploration & Producing Southeast, Inc. v. United States, 530 U.S. 604, 607, 120 S.Ct. 2423, 147 L.Ed.2d 528 (2000) (citation omitted). The rule of construction that ambiguities are to be construed against the drafter applies with equal, if not greater, force against the United States. United States v. Seckinger, 397 U.S. 203, 209-10, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970). Under no circumstances, however, may we construe a contract in a manner that would violate conditions that Congress has placed on funds appropriated for the program. See Office of Personnel Mgmt. v. Richmond, 496 U.S. 414, 424-25, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990) (citing the Appropriations Clause, U.S. Const. art. I, § 9, cl. 7). Accordingly, we construe the Agreement in light of the statutes and regulations authorizing the USDA to enter into such agreements.
Title 7 U.S.C. § 2001 directs the Secretary of Agriculture to "modify delinquent farmer program loans ... to avoid losses to the Secretary on such loans." The Secretary is to give "priority consideration" to "writing-down the loan principal and interest (subject to subsections (d) and (e)), and debt set-aside (subject to subsection (e)), whenever these procedures would facilitate keeping the borrower on the farm or ranch." Id. § 2001(a)(1). In addition to avoiding losses to the government, loan adjustments under § 2001 are intended "to ensure that borrowers are able to continue farming or ranching operations." Id. § 2001(a)(2). Eligibility for the program is conditioned on, among other things, a net recovery to the government at least as large as the recovery that would result from a "foreclosure on the property securing the loan." Id. § 2001(b)(4). Subsection (e) provides in part:
7 U.S.C. § 2001(e)(1)-(4).
Appellants contend that no recapture is due under the Agreement if the expiration date is reached and none of the three triggering events listed in § 2001(e)(4)(A)-(C) has occurred. We accord deference to an agency's interpretation of ambiguous provisions in the statutes it is charged with administering. Gunn v. USDA, 118 F.3d 1233, 1236-38 (8th Cir.1997) (citing Chevron, U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). Although we agree with the USDA's construction of the statute, on this point we find it unambiguous. Subsection (e)(4) states that "[r]ecapture shall take place at the end of the term of the agreement." Although Congress afforded the Secretary deference in determining whether to require the borrower to enter into a shared appreciation agreement, 7 U.S.C. § 2001(e)(1) (Agreement "may be required"), the terms governing recapture are mandatory, id. § 2001(e)(2)-(4) (Agreement "shall provide for recapture"). To the extent that the Agreement is ambiguous or that representations made by the USDA county supervisors suggest that no recapture is due at the end of the term, the mandatory provisions of the statute control. See Israel v. USDA, 282 F.3d 521, 527-28 (7th Cir.2002) (stating that § 2001 "strongly supported" construction of Agreement requiring recapture at the expiration date of the agreement); Parmenter v. FDIC, 925 F.2d 1088, 1095 (8th Cir.1991) ("[A]nyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority." (quoting FDIC v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 92 L.Ed. 10 (1947))).
Appellants also contend that the amount of any recapture due under the Agreement is limited to a value labeled the "Equity Recapture Account Amount" in Exhibit B, which was attached to the Agreement and a copy of which was given to the borrower. Again, however, § 2001(e)(3) unambiguously specifies the amount of recapture that is required. Seventy-five percent of the appreciated value of the property is due if recapture occurs within four years of the write-down, and fifty percent is due thereafter. 7 U.S.C. § 2001(e)(3). Nowhere in the Agreement or in Exhibit B is there any indication that recapture is limited to the Equity Recapture Account Amount. Rather, the Agreement is consistent with the requirements of § 2001. "[The Agreement] requires the repayment of amounts written off or set aside." Id. § 2001(e)(1). Read as a whole, § 2001(e) requires recapture of the amount written down, up to fifty percent (or seventy-five percent if triggered within four years) of the increased property value over the term of the agreement.
Appellants suggest that the Agreement's term "either the expiration date of this Agreement or ...", which appears in both the paragraph specifying seventy-five percent appreciation and the paragraph specifying fifty percent appreciation, compels
We find appellants' remaining arguments to be without merit.
The judgment is affirmed.