Opinion ID: 1366771
Heading Depth: 1
Heading Rank: 6

Heading: The Doctrine of Merger

Text: Swenson challenges the district court's finding that her failure to convey 5.88 acres of land to the Hannemans was a breach of contract. Swenson argues that no legal or factual bases exist to support the court's finding because no written contract for the sale of real property was introduced at trial. Swenson cites NRS 111.210, the statute of frauds respecting real property, to support her argument. That section provides in relevant part: 1. Every contract ... for the sale of any lands, or any interest in lands, shall be void unless the contract, or some note or memorandum thereof, expressing the consideration, be in writing, and be subscribed by the party by whom the lease or sale is to be made. NRS 111.210(1). Swenson's reliance upon the foregoing statute is misplaced. The statute of frauds does not require the existence of a formal written contract to validate a land sale transaction as long as some note or memorandum memorializing the transaction exists. See Ray Motor Lodge v. Shatz, 80 Nev. 114, 119, 390 P.2d 42, 44 (1964) (stating that separate writings considered together may satisfy statute of frauds even if neither is a sufficient memorandum in itself). In the instant case, the district court concluded that the property description in the sales listing, together with the surrounding circumstances of the land sale transaction, created a contract for the sale of 5.88 acres. The legal description contained in the grant, bargain and sale deed refers to the Record of Survey which Downer filed in 1966 and which shows Parcel H (the subject parcel) as consisting of 5.88 acres. Additionally, the promissory note between Swenson and the Hannemans corroborates the sale of 5.88 acres. These writings, when considered together, satisfy the statute of frauds and evidence a contract for the sale of the subject property. Swenson further argues that even if a contract did exist, its terms merged into the deed as a matter of law. She contends, therefore, that under the doctrine of merger, any obligations she owed to the Hannemans derived solely from the deed. Since the property was conveyed to the Hannemans by grant, bargain and sale deed, Swenson claims to have warranted only that she had not conveyed the same real property to another and that the property was free from encumbrances. [5] Swenson also insists that if, after delivery and acceptance of a deed containing no express or implied warranties, the title proves defective, a buyer generally has no remedy for failure of consideration unless elements of fraud or rescission are present. Swenson claims that there was no showing that she breached the special warranties contained in the grant, bargain and sale deed, and that the Hannemans failed to plead either fraud or rescission in any event. Swenson's argument is overly simplistic and fails to take into account the exceptions to which the doctrine of merger by deed is subject. The merger by deed doctrine has been described as follows: The general rule concerning a contract made to convey the property is that once a deed has been executed and delivered, the contract becomes merged into the deed, because it has accomplished the purpose for which it was created. The terms in the deed which follows the contract of sale become the sole memorial of the agreement which was once contained in the contract of sale. This does not mean that a contract no longer exists, just that the deed controls as the contract, rather than the terms of the prior sales contract. Clark v. Cypress Shores Develop. Co., 516 So.2d 622, 626 (Ala.1987) (citations omitted; emphasis added). Stated differently, when the terms of the deed cover the same subject matter as the earlier contract and the two are at variance, the deed controls. Dobrusky v. Isbell, 740 P.2d 1325, 1326 (Utah 1987). Whether merger is applicable depends upon the intention of the parties, and intention in such cases is a question of fact to be determined by an examination of the instruments and from the facts and circumstances surrounding their execution. Webb v. Graham, 212 Kan. 364, 510 P.2d 1195, 1197 (1973); see also Szabo v. Superior Court, 84 Cal.App.3d 839, 148 Cal.Rptr. 837, 840 (1978) (courts have looked to the intention of the parties to determine whether or not the deed was intended as the complete and final embodiment of the agreement); Kartheiser v. Hawkins, 98 Nev. 237, 239, 645 P.2d 967, 968 (1982) (stating that parties' intentions are determined from all the circumstances surrounding the transaction). Consonant with the foregoing authorities, Swenson's attempt to avoid her contractual obligations to the Hannemans by resort to the doctrine of merger by deed is without merit for several reasons. First, although a grant, bargain and sale deed contains only two express warranties, the Swenson deed expressly conveyed to the Hannemans the land shown on Parcel `H' on that certain Record of Survey recorded November 25, 1966, as File No. 34665, Official Records of Douglas County, Nevada. As indicated previously, the Record of Survey shows that Parcel H contains 5.88 acres. Second, the terms of the deed and contract are not at variance. The deed and the documents that compose the contract all purport to convey 5.88 acres to the Hannemans. Finally, the record reflects that the Hannemans expected to receive, and Swenson intended to convey, 5.88 acres of land, upon which was situated a fixer-upper house. Indeed, Swenson admitted that she believed she was selling the Hannemans 5.88 acres and that no one would have paid $35,000.00 for only 1.5 acres. For the reasons noted above, we conclude that the district court correctly determined that Swenson breached her agreement to convey 5.88 acres to the Hannemans.