Caseflicks

Supreme Judicial Court of Maine • 1987

Whitten v. Greeley-Shaw

520 A.2d 1307 | 1987 Me. LEXIS 637

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Takeaway

In short, this case confirms that a party ordinarily cannot escape signed loan documents by claiming she did not read them, and that even a signed writing is not a contract unless each side’s promised exchange was actually bargained for.

Background

George D. Whitten, as assignee of a promissory note secured by a mortgage on Shirley C. Greeley-Shaw’s Harpswell home, brought a statutory foreclosure action after she failed to make payments on the $64,000 note. Greeley-Shaw admitted signing the note and mortgage but claimed Whitten had given her the home as part of their former romantic relationship and that neither Whitten nor his attorney adequately explained the documents or her repayment obligation.

Greeley-Shaw also counterclaimed to enforce a separate one-page writing that Whitten signed while she was visiting him in Bermuda. The writing, which she drafted, required Whitten to make monthly payments, pay for major home repairs and medical needs, take a trip with her, provide annual jewelry, and maintain specified contact. Its only provision arguably benefiting Whitten stated that she would not call his homes or offices without his prior permission.

The Superior Court entered judgment for Whitten in the foreclosure action and ruled that the Bermuda writing was not an enforceable contract. Greeley-Shaw appealed. The Supreme Judicial Court of Maine affirmed.

Issues

Issue #1

Whether the Superior Court erred in enforcing the promissory note and mortgage through foreclosure despite Greeley-Shaw’s claim that she did not understand the documents she signed.

Holding

No. The evidence supported the finding that Greeley-Shaw knew the nature of the note and mortgage, understood her obligations, and signed voluntarily.

Reasoning

Greeley-Shaw admitted that she executed both the note and the mortgage. Although she claimed that the documents were not explained to her and that she did not appreciate their significance until later, the trial evidence—including the deposition of the attorney who conducted the closing—amply supported the trial court’s contrary finding that she understood the transaction and her legal responsibilities.

A party cannot avoid a contract merely because she failed to read it carefully when she had the opportunity, and even encouragement, to do so. Greeley-Shaw conceded that she had barely looked at the documents before signing them; her later dissatisfaction with their terms did not invalidate her voluntary assent.

The facts she alleged might conceivably have supported theories such as misrepresentation or breach of fiduciary duty, but she did not expressly assert either theory as a ground for relief. The Court therefore upheld the judgment on the note and mortgage.

Issue #2

Whether the Bermuda writing signed by Whitten was an enforceable bilateral contract supported by consideration.

Holding

No. The writing lacked consideration because Greeley-Shaw’s purported promise not to call Whitten without permission was not bargained for or sought by Whitten in exchange for his promises.

Reasoning

A legally enforceable contract requires consideration. A promise to refrain from conduct that one has a legal right to undertake can sometimes constitute consideration for the other party’s promise, but only if that forbearance was requested and exchanged as part of the bargain.

The document imposed numerous obligations on Whitten, including monthly payments, repair and medical expenses, travel, jewelry, and regular contact. Greeley-Shaw identified only one reciprocal obligation: her agreement not to call Whitten’s homes or offices without prior permission.

There was no evidence that Whitten sought this forbearance as the price of his promises. Rather, Greeley-Shaw testified that she inserted the provision because she believed Whitten should receive something in return. Because the purported benefit to Whitten was not bargained for and given in exchange for his commitments, it could not serve as consideration. The Superior Court correctly declined to enforce the writing.