Bernkrant v. Fowler

360 P.2d 906 (1961)

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Nature of the Case

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Facts

Ps purchased the Granrud Garden Apartments in Las Vegas, Nevada. The property was encumbered by a first deed of trust given to secure an installment note payable to third parties and a second deed of trust given to secure an installment note payable to Granrud at $200 per month plus interest. Ps purchased the Granrud Garden Apartments in Las Vegas, Nevada. The property was encumbered by a first deed of trust given to secure an installment note payable to third parties and a second deed of trust given to secure an installment note payable to Granrud at $200 per month plus interest. Granrud needed money to buy a trailer park and asked Ps to refinance their obligations and pay a substantial part of their indebtedness to him. At a meeting in Las Vegas he stated that if Ps would do so, he would provide by will that any debt that remained on the purchase price at the time of his death would be canceled and forgiven. Ps arranged a new loan of $25,000, the most they could obtain on the property, secured by a new first deed of trust. This paid off $13,114.20 of their indebtedness to Granrud. They executed a new note for the balance of $9,227 owing Granrud, payable in installments of $175 per month secured by a new second deed of trust. This deed of trust contained no subordination provision. Ps incurred expenses of $ 800.90 in refinancing their obligations. Granrud died testate on March 4, 1956, a resident of Los Angeles County. His will made no provision for canceling the balance of $6,425 due on the note at the time of his death. Ps sued D to have the note canceled and discharged and the property reconveyed to them and to recover the amounts paid D after Granrud's death. The court held that the action was barred by both the Nevada and California statute of frauds; that to remove the bar of the statutes, the action must be one for quasi-specific performance in which an heir or beneficiary under the will would be an indispensable party; and that D was not estopped to rely on the statutes of frauds. Under California law, such an oral contract is not valid. Under Nevada law, an oral agreement providing for the discharge of an obligation to pay money secured by an interest in real property is not within the real property provision of the statute of frauds, on the ground that the termination of the security interest is merely incidental to and follows by operation of law from the discharge of the principal obligation.