Opinion ID: 1210826
Heading Depth: 1
Heading Rank: 2

Heading: estes' breach of contract claim is barred by the doctrine of merger.

Text: This Court in Jolley v. Idaho Securities, Inc., 90 Idaho 373, 414 P.2d 879 (1966) explained the doctrine of merger as follows: It is a well established rule of law that prior stipulations are merged in the final and formal contract executed by the parties, and this rule applies to a deed or a mortgage based upon a contract to convey. When a deed is delivered and accepted as performance of the contract to convey, the contract is merged in the deed. Though the terms of the deed may vary from those contained in the contract, the deed alone must be looked to to determine the rights of the parties.... .... There is an exception to the rule stated, which is that the contract of conveyance is not merged upon execution of a deed where under the contract the rights are conferred collaterally and independent of the deed; there being no presumption that the party in accepting the deed intends to give up the covenants of which the deed is not a performance or satisfaction. Where the right claimed under the contract would vary, change, or alter the agreement in the deed itself, or inheres in the very subject-matter with which the deed deals, a prior contract covering the same subject-matter cannot be shown as against the provisions of the deed. Id. at 382-83, 414 P.2d at 884 (emphasis in the original) (quoting Continental Life Ins. Co. v. Smith, 41 N.M. 82, 64 P.2d 377, 380 (1936)). As to the question of intent, the Jolley court noted: [W]here there are stipulations in such preliminary contract of which the delivery and acceptance of the deed is not a performance, the question to be determined is whether the parties have intentionally surrendered or waived such stipulations. If such intention appears in the deed, it is decisive; if not, then resort may be had to other evidence. Id. at 383, 414 P.2d at 884-85 (quoting Continental Life Ins. Co., 64 P.2d at 381). The express terms of the warranty deed indicate that conveyance of title is subject to a deed of trust indebtedness in the amount of $47,500 and a recapture obligation which obligates the homeowner to repay, upon the happening of two specific events, all mortgage assistance payments made on behalf of that homeowner and on the behalf of any preceding homeowner, or fifty percent (50%) of the net appreciation of the property, whichever is less. The question in applying Jolley is whether Estes' right to assume only the $45,600 indebtedness, as expressed in the purchase agreement, is a right which would vary, change, or alter the agreement in the warranty deed. In other words, is the Barrys' promise in the purchase agreement to convey title free and clear of any and all liens, except the $45,600, inconsistent with the parties' agreement reflected in the warranty deed? Estes argues that the right to assume a limited amount of indebtedness is a right commonly not addressed in a deed and is, therefore, a collateral and independent right which survived merger. The Barry's promise in the purchase agreement to convey title free and clear of all liens and encumbrances, other than the $45,600, is inconsistent with the agreement in the warranty deed. The language in the warranty deed states that conveyance of title is subject to a deed of trust, dated February 4, 1983, which secures an indebtedness of $47,500 and certain § 235 recapture obligations described in an addendum to the February 4, 1983, deed of trust. The express language in the addendum is that [t]he debt secured by this instrument shall include not only the Note recited above but also any assistance paid by the Secretary in accordance with Section 235 of the National Housing Act on behalf of any party to the deed of trust (including any party who takes title to the property subject to the said Deed of Trust or assumes said Deed of Trust ) (Emphasis added). An agreement that Estes would assume only an indebtedness of $47,500 is inconsistent with the agreement in the warranty deed. Accordingly, the doctrine of merger applies, and Estes' breach of contract claim is barred. By affirming the district court's entry of summary judgment in favor of the Barrys with regard to Estes' contract claim, it is not necessary for us to address the issue of whether Estes' alleged damages are too speculative to support a breach of contract claim.