Masterson v. Sine

Facts

Dallas Masterson and his wife Rebecca owned a ranch as tenants in common. On February 25, 1958, they conveyed it to Medora and Lu Sine by a grant deed reserving to the grantors an option to repurchase the property on or before February 25, 1968, for the “same consideration as being paid heretofore plus their depreciation value of any improvements” the grantees might add after two and a half years. Medora was Dallas’s sister and Lu’s wife. Dallas was later adjudged bankrupt. His trustee in bankruptcy and Rebecca sued for declaratory relief to establish their right to enforce the option. At a bench trial, over the Sines’ objection, the court admitted extrinsic evidence that “the same consideration” meant the sum of $50,000 and that “depreciation value” meant capital expenditures minus the depreciation allowable under federal income tax regulations. But the court determined that the parol evidence rule barred the Sines’ extrinsic evidence offered to show that the parties wanted to keep the property in the Masterson family and that the option was therefore personal to the grantors and could not be exercised by the trustee in bankruptcy.

Issues

1. Did the trial court properly admit extrinsic evidence of what the parties meant by “the same consideration” and “depreciation value” in the deed?
2. Did the parol evidence rule require excluding the defendants’ extrinsic evidence that the option was agreed to be personal to the grantors and nonassignable?

Holding

The trial court properly admitted extrinsic evidence to explain the deed’s uncertain price terms, but it erred in excluding evidence that the parties agreed the option was personal and nonassignable. The deed was silent on assignability, and such a collateral agreement might naturally be made separately, so the parol evidence rule did not bar it.