Fischer v. Union Trust Co.
138 Mich. 612, 101 N.W. 852 (Mich. 1904)
- Mr. Fischer lived with his diabled daughter in a house he owned. At some point he gave the deed to the house to the daughter, who gave him $1 in return. They continued to live at the house until the father’s death. There were two mortgages, $3k and $5k, which the father continued to make payments on until his death.
- The $1 given is known as nominal consideration. It can count as consideration because, “when a thing is to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action.”
- Does the $1 make this an enforceable contract, or is it still just a gift?
- The gift of the house is perfectly legal, as there was intent and delivery. However, future payments on the mortgage were never delivered, so those payments aren’t enforceable if they are considered to be a gift.
- After death, the bank foreclosed on the house for non-payment of the $3k mortgage.
- Ms. Fischer sued her father’s estate (Union Trust Co.) for damages resulting from breach of a covenant in a deed. Trial Court found for Ms. Fischer. Union Trust appealed.
- Appellate Court reversed the decision.
- The Appellate Court found that the consideration was meritorious, but not sufficient to compel the performance of a purely executory contract.
- According to this case, there needs to be a bargained for exchange for there to be a consideration. The $1 was just a formality in order to make a naked promise binding. In that way, it was like putting the promise under seal.
- Therefore, the deed was a gift, not a contract. Under the terms of a gift, the father can only give what he had, he could not ‘give’ the part of the house that the bank owned.
- The Court doesn’t care if it’s a good deal or a bad deal, but they do need some assurance that there was an actual deal and not just phony consideration done solely to make a naked promise binding.