Question about the facts in Fischer : LUSENET : Lessig's Contracts : One Thread

I think I'm a little bit confused about the facts and the holding in Fischer v. Union Trust. The deed, as I understand it, was not part of the contract. The contract was the father's promise to the bank to repay the mortgages, one of which he failed to repay. So the bank tries to foreclose on the property owned by Ms. Fischer in order to get the money owed it for the mortgage. But why is Fischer suing? Is she suing to retain the property without the obligation of repaying the bank? And is the holding of the court that she does not have to repay the mortgage? Or does the court hold that she is not entitled to the property? Also, is there a difference between a title and a deed in this case?

Sorry about all the questions. Any corrections on the facts that I listed would be greatly appreciated, as well.

-- Anonymous, September 22, 1998


Fischer Reply

I'm not sure, but I think Fischer was trying to argue that she had a contract with her father whereby he promised not only to turn over the deed but also to pay off the mortgages. I think her claim was against the estate of her dead father to exact compensation for the land she lost when the bank foreclosed. Essentially, the court seems to have ruled that there was no consideration and that the transfer of the deed was therefore a gift--with no enforceable obligation on the part of the father to pay off the mortgage. At least, I think that's how it worked...

cheers, aw

-- Anonymous, September 22, 1998

Quick question: is Fischer suing for compensation from her father's estate, or is she arguing that the bank did not have the right to even foreclose on the property? In other words, assuming that the contract was enforceable, did the unencumbered title of the property become Fischer's as soon as the deed with the attendant promise was delivered, or does it only become hers if and when the mortgage is paid by her father/father's estate? (I guess I was thinking about who--Bertha or the bank--would have to bear a loss if William's estate was bankrupt, assuming Bertha's contract with William was enforceable.)

Of course, this question is probably completely irrelevant since the court found the contract unenforceable....


-- Anonymous, September 22, 1998

My understanding of the case is fairly in line with Andrew's. Bertha felt that she had entered into a valid contract with her father whereby he turned over the deed to the property and in return, she gave him $1. The court said that this was not sufficient consideration so the contract was not enforceable. Instead this transaction was a gift from father to daughter. The court at the end, I thought, then said that one can only give what one owns or in which one has unencumbered interest. Since the father had not paid off the mortgage, the bank had an interest in the property. Therefore, the property was not "owned" by the father and could not be given away by him to his daughter. Do others agree?

-- Anonymous, September 22, 1998

some more on fischer

my understanding of the facts is the following, but i started doubting it as i read through the postings, so i just throw it out as an opinion:

father gave the deed to the daughter. the consideration for it was paternal love, which is sufficient in this kind of contract. however, they tried to attach a promise to repay to that deed, which was encumbered by debts. that promise is what was not enforceable for want of consideration--paternal love is not sufficient for an executory contract such as this--it's as if he had promised to repay one of her loans, in sum, a vacuous promise. so part of the gift he conveyed, absent a valid promise as to the mortgage repayments, did not belong to him. as such, he could not transfer it in the form of a gift (which was otherwise valid and validly delivered in all respects). this left the land subject to foreclosure, which was enforced for nonpayment, and thus the property was appropriated. she sued the administrator of the estate to recover. was ultimately reversed by the supreme court of Mich, and that's the end of the story. but again, i may have gotten it all wrong.


-- Anonymous, September 22, 1998

It sounds like there is a conflict between what Andrew and Ayn are saying. If Andrew is right, then the promise to repay the mortgage is not transferable, but the land is. Thus, the daughter gets the land and the bank gets nothing. If, on the other hand, Ayn is right, then the failure to repay the mortgage puts the father's ownership of the land in question, and renders him unable to transfer the land. Thus, the bank gets the land (in satisfaction of the mortgage) and the daughter gets nothing. My hunch is that Andrew is correct, because of the constant reference to the fact that the deed was consummated upon delivery, whereas the promise to repay, "therein contained" in the deed, was without sufficient consideration, and thus void. But I'm not positive, so if anyone has other ideas, let me know.

-- Anonymous, September 22, 1998

I think both Andrew and Ayn are right. As I understand it, the court separates the father's transfer of the land to his daughter from his promise to pay the outstanding mortgages on that land. As Andrew noted, the father did transfer the land to his daughter during his lifetime and the court considered this transfer valid as a gift. The father, however, did not pay the mortgages on the land before his death(he broke his promise). Thus after his death, the bank sold part of the land (now the daughter's) to pay off the debt. I think only part of the property was sold; I am pretty sure the daughter did not lose everything. Then, the daughter sued the father's estate to recover the amount the bank had appropriated from the (her)property in order to pay off the mortgages. The daughter argued that the court should consider her father's promise to pay off the mortgages an executory contract. The court decided that the promise was not an executory promise (for lack of consideration, as Ayn pointed out), but if it had decided the promise was such a contract, then the father's estate would have had to pay off the mortgages (or the daughter's property interest which had already been sold to pay them off)or at least have taken the responsibility for doing so. In other words, if the promise had been enforceable, the daughter could have shifted the burden of paying the father's debts from her property to his estate. The court goes on to say though, as Ayn also pointed out, that not only was the father's promise not an executory contract, but the mortgages on the property were specifically tied to that property even though the father had given the property away. The father, the court argued, had incumbered his own property with mortgages and, as unpaid, they essentially became part of the gift.

As I read this case, I think the answer to your question, Tim, is that the father could tranfer the land, but that all unpaid attachments to the land had to transfer with it.

-- Anonymous, September 22, 1998

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