Jack J. Moran v. Kenai Towing and Salvage

In 1968 Kenai Towing and Salvage, Inc., was the owner of certain improved real property in the vicinity of Kenai, Alaska. On the property was a building which had been erected by Kenai Towing & Salvage, Inc., at its own expense. The company was in financial difficulty. It approached Jack Moran for a loan. The parties agreed that as security for the loan Kenai would convey title to the real property to Moran, and Moran would then lease the property to Kenai with an option to purchase. This arrangement would enable Kenai to reobtain the property when the lease obligations had been fulfilled. The initial loan occurred in September of 1968. Including closing costs, it was in the amount of $11,586.38. Kenai executed a warranty deed conveying title to Moran. Moran executed a lease with an option to purchase in favor of Kenai; the monthly payments were to be $300, with each payment fully credited to the purchase price. The lease was dated September 4, 1968; the warranty deed was dated September 20, 1968.