Masterson v. Sine

Facts

Plaintiffs owned a ranch as tenants in common. On February 25, 1958, they conveyed the ranch to Defendants through a grant deed which reserved the option for the grantors to purchase the property back within ten years of the date of conveyance. The deed stated that Plaintiffs could exercise this option by paying the same amount of consideration as was provided by Defendants, minus any depreciation in the value of the property. After the conveyance, Plaintiff Dallas declared bankruptcy, and a bankruptcy trustee took over his estate. The trustee and Plaintiff Rebecca brought a declaratory relief action to establish their right to enforce the option to repurchase the property conveyed to Defendants. At trial, the trial court admitted extrinsic evidence showing that the “consideration” mentioned in the agreement was $50,000, and that any “deprecation in value” referred to depreciation allowable under income tax laws. However, the trial court also held that the parol evidence rule prohibited introduction of evidence offered by Defendants that the parties intended the property to be kept within the Masterson family and thus that the option was personal to Plaintiffs and could not be exercised by the bankruptcy trustee. Both parties appealed.