Masterson v. Sine

Dallas Masterson and his wife, Rebecca Masterson (plaintiff), owned a ranch as tenants in common. On February 25, 1958, they conveyed the ranch to Medora and Lu Sine (defendants) through a grant deed that reserved the option for the grantors to purchase the property back within 10 years of the date of conveyance. The deed stated that the Mastersons could exercise this option by paying the same amount of consideration as was provided by the Sines, minus any depreciation in the value of the property. Medora Sine was Dallas Masterson’s sister and the wife of Lu Sine. After the conveyance, Dallas declared bankruptcy, and a bankruptcy trustee took over his estate. The trustee and Rebecca Masterson brought a declaratory-relief action to establish their right to enforce the option to repurchase the property conveyed to the Sines. 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 the Sines that the parties intended the property to be kept within the Masterson family and thus that the option was personal to the Mastersons and could not be exercised by the bankruptcy trustee. Both parties appealed.