The plaintiff, Thelma Agnes Smith, lived with the defendant out of wedlock for several years. When the relationship ended, she sued the defendant, seeking to enforce two written agreements with him regarding the sale and assignment of property to her. The trial court enforced the agreements and divided the parties’
property. The defendant appealed, arguing the agreements lacked consideration and were void as against public policy.
JUDGE CHARLES D. SUSANO Thelma Agnes Smith and David Phillip Riley, both of whom then resided in Florida, separated from their respective spouses in 1997 and began a romantic relationship. In early 1998, the two moved to Tennessee and began cohabitating…. Smith and Riley opened a joint checking account in March, 1998. Over time, Smith deposited into that account \($9,500—the\) proceeds from an insurance settlement and monies received when her divorce later became final; she also deposited her monthly social security check of \($337\) into the same account. Smith continued to deposit her social security check in the joint account until December, 1998, when she opened her own checking account. Riley also contributed to the joint account. He placed a settlement of \($84,000\) from the Veteran’s Administration into the account. In addition, he deposited his monthly pension check of \($2,036\) into the same account….
On July 31, 1998, Riley entered into a lease with Jerry Strickland and Wanda Strickland with respect to a residence owned by them; the lease was accompanied by an option to purchase. Almost four months later, on November 20, 1998, Smith and Riley returned to their attorney’s office, at which time the attorney prepared a bill of sale and an assignment. In the bill of sale, Riley transferred [to Smith] a one-half undivided interest in seven items of personal property…. Riley also assigned to Smith a one-half undivided interest in the lease and option to purchase with the Stricklands, which interest included a right of survivorship in the one-half interest retained by Riley as well. The property Riley sold and assigned to Smith in the two agreements was stated in each to be “for and in consideration of the sum of One Dollar (\($1.00)\) and other and good and valuable consideration, the sufficiency of which is hereby acknowledged….”
When Smith and Riley separated in April, 1999, Smith filed suit against Riley in the trial court, seeking the dissolution of their “domestic partnership.” Smith alleged that she and Riley had been living together for several years without the benefit of marriage and had acquired both real and personal property, some of which Riley had assigned to her. As a result, she asked the court to award her 50 percent of the “partnership” assets, leaving the other 50 percent to Riley…. [The trial court ruled in favor of Smith and Riley appealed.]
Riley first argues that the trial court erred in finding that the bill of sale and assignment are supported by valid consideration. Specifically, Riley relies on Smith’s statements at trial that she considered their pending engagement and the funds she deposited into their joint account to be consideration for their agreements.
It is a well-settled principle of contract law that in order for a contract to be binding, it must, among other things, be supported by sufficient consideration.
[Citations omitted.] In expounding on the adequacy of consideration, the Tennessee Supreme Court has stated that it is not necessary that the benefit conferred or the detriment suffered by the promisee shall be equal to the responsibility assumed. Any consideration, however small, will support a promise. In the absence of fraud, the courts will not undertake to regulate the amount of the consideration. The parties are left to contract for themselves, taking for granted that the consideration is one valuable in the eyes of the law….
Quoting the United States Supreme Court, the Tennessee Supreme Court went on to state that “[a] stipulation in consideration of \($1\) is just as effectual and valuable a consideration as a larger sum stipulated for or paid.” [Citations omitted.] Indeed, the consideration of love and affection has been deemed sufficient to support a conveyance….
Both the bill of sale and the assignment recite that they are undertaken “for and in consideration of the sum of One Dollar (\($1.00)\) and other and good and valuable consideration, the sufficiency of which is hereby acknowledged….” Facially, the documents are therefore supported by sufficient consideration, as clearly recognized by the Supreme Court…. Moreover, Smith’s “society and consortium”—a concept comparable to the love and affection … is further evidence of sufficient consideration to support these conveyances.
Riley calls our attention to Smith’s statement at trial that she considered the funds she deposited into their joint account to be consideration for the conveyances. If this were the only consideration involved in this case, Riley’s argument regarding past consideration supporting a present transaction might have some merit. However, the recitals of nominal consideration that are present in both agreements, as well as the consideration of Smith’s love and affection, are adequate consideration and will support the conveyances represented by the assignment and bill of sale….
Judgment AFFIRMED in favor of Plaintiff.
CRITICAL THINKING:
What is the reasoning of the appellant in terms of why the consideration was not adequate to cause the contracts to be enforceable? What key rule of law did this reasoning overlook?
ETHICAL DECISION MAKING:
What values are being advanced by the logic of the relevant rule of law in this case? In other words, what values prevent the rule of law from being that “consideration must be in an amount similar in value to the item or services being transferred in order for the contract to be enforceable”?