Case Name: Judy v. Louderman
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1891-11-17
Citations: 48 Ohio St. 562
Docket Number: 
Parties: Judy v. Louderman.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 48
Pages: 562–576

Head Matter:
Judy v. Louderman.
Sealed instrument — Adequacy of consideration.
1. In an action by the payee upon a specialty, the defendant, may, under section 5071 of the Revised Statutes, allege the want or failure of consideration, and such allegation will constitute a good ground of defense.
2. While it is necessary that the consideration of a promise should be of some value, it is sufficient if it be such as could be valuable to the party promising ; and the law will not enter into an inquiry as to the adequacy of the consideration, but will leave the parties to be the sole judges of the benefits to be derived from their contracts, unless the inadequacy of consideration is so gross as of itself to prove fraud or imposition. 3. The plaintiff was the owner and holder of a promissory note for $269.52, signed by J., dated January 18, 1873, payable to the plaintiff or order, in six months after date, for value received, with interest. On the 5th day of October, 1882 — J. then being dead — the plaintiff surrendered the note to’H., the father of J., who, in consideration of such surrender, by a written obligation bearing date of that day, agreed that the plaintiff should be paid from his personal estate, at his decease, the amount of the note, and the sum to be paid was by the terms of the obligation made a charge and advancement to the heirs of J. By reason of the insolvency of the estate of J., the note at the time it was surrendered to H. was deemed uncollectible. .
Held: That the surrender of the note was a sufficient consideration for the execution and delivery of the written obligation.
(Decided November 17, 1891.)
Error to the Circuit Court of Fayette county.
The original action was commenced by Henry Judy, the plaintiff in error, against the defendant in error, Nathan Louderman, executor of the last will and testament of Henry Louderman, deceased. The following is a copy of the petition filed in the Court of Common Pleas of Fayette county.
“ Plaintiff says: On the 5th day of October, 1882, he was the owner and holder of a certain promissory note, signed by one J esse Louderman, for the sum of $269.52, dated January 18,1873, due six months after date, with eight per cent, interest from date. On said 5th day of October, 1882, he turned over and surrendered to said Henry Louderman, then in full life, said promissory note, and in consideration therefor, said Henry Louderman executed and delivered to plaintiff, an agreement of which tbe following is a copy, viz. :
“ New Holland, O., Oct. 5,1882.
“In consideration of the following described note of my son Jesse Louderman, being turned over to me by Henry Judy, the owner and holder thereof, this day, I agree to pay to the said Henry Judy, from my personal estate at my decease, the sum of $269.52, to be paid by my executor or administrator, as the case may he, and I hereby make this a charge, and advancement, to the heirs of my son, the said Jesse Louderman.
“ The following is a copy of said note:
“ ‘ $269.52. Six months after date, I promise to pay to Henry Judy or order, the just and .full sum of two hundred and sixty-nine dollars and fifty-two cents, for value received, this 18th day of January, A. D. 1873, bearing eight per cent, interest from date.
“ ‘Jesse Louderman.
“ ‘In witness whereof, I have hereunto set'my hand and seal this 5th day of October, A. D. 1882.
“ ‘ Henry Louderman. [seal.]
“ ‘Signed and sealed in our presence this 5th day of October, 1882.
“ ‘ Witness:
“‘John Louderman,
“ ‘ Nathan Louderman.’ ”
“ Plaintiff further says that the said Henry Louderman died on the-day of-, 188-, and that the said Nathan Louderman is his duly appointed and qualified executor.
“ That on the-day of-,1885, he presented to the said Nathan Louderman as such executor, the said claim of this plaintiff, on said agreement of Henry Louderman, duly certified as required by law, and asked to have the same allowed, as a valid claim against the estate of said Henry Louderman, deceased. But the said Nathan Louderman, as executor, refused to allow the same, and on the 4th day of April, A. D. 1885, indorsed thereon, his rejection thereof.
“ There is due to plaintiff by reason of the premises, from the estate of said Henry Louderman, deceased, the sum of $269.52, with interest at six per cent, from April 4, 1885.
“ Plaintiff therefore asks judgment against said defendant that his said claim be allowed and paid out of the estate of said Henry Louderman, deceased.”
To this petition there was a general demurrer, which was overruled.
The defendant thereupon filed the following answer :
“And. now comes the defendant and answering the plaintiff’s petition, says:
“ That for many years prior to the date of said pretended written obligation set forth in the petition, the said Jesse Louderman had been dead. That his estate was insolvent, and had long before the making of said pretended agreement, been fully settled, and said note of said Jesse Louderman wras on said 5th of October, 1882, and for years before, had been wholly worthless, all of which was then fully known to said plaintiff. That there was no person who was liable to be or could have been sued thereon, or against whom a judgment could have been rendered thereon, which plaintiff then well knew. That said pretended written obligation was not an instrument required by the laws of Ohio to be sealed. That the alleged and pretended seal attached thereto was simply a pen scrawl which the defendant denies was a seal, or that the said pretended written obligation was a sealed instrument. That gaid Henry Louderman was in no way connected with or liable in any way on said promissory note of said Jesse Louderman either morally, legally or equitably. That said pretended written obligation was and is wholly without consideration, and created no obligation or liability on said Henry Louderman, or his estate. The defendant denies any indebtedness or liability of said estate to pay the same.
“ The defendant further answering, says: That there is no personal property of said estate which can be applied to the payment of said written obligation. That the just and legal debts of said estate are more than all the personal property. That all the real estate of deceased was specifically devised, and there is no estate or property belonging to said estate with which to pay said written obligation, if it should be held to be a valid instrument.
“ Wherefore defendant asks to go hence and recover his costs.”
There was a general demurrer to this answer which was sustained, and the defendant excepted. ' The defendant having failed to make any amendment to his answer, it was adjudged, that the plaintiff, Henry Judy, recover of the defendant the sum of. $278 and costs, to be levied upon the property of the estate coming into his hands as such executor. The circuit court, on petition in error, held that the court of common pleas erred in sustaining the demurrer to the defendant’s answer, reversed the judgment of that court, and remanded the cause for further proceedings.
To reverse the judgment of the circuit court the present petition in error is filed.
llidy Patton, for plaintiff in error.
The consideration alleged in the petition for the execution of the instrument sued on, is the same as that set out in the instrument itself. The facts set forth in the answer, and which in the opinion of the circuit court show a total want of consideration, are not a denial of the allegations of the petition in regard to the consideration, but are pleaded by way of confession and avoidance — that the note of Jesse Louderman which was turned over to said Henry Louder-man was wholly uncollectible. We say that this is immaterial ; that a reply denying these allegations would raise an immaterial issue. The thing Henry Louderman contracted for, and for which he agreed to pay, was the note of Jesse Louderman being turned over to him. This consideration he is conceded by the pleadings to have received. The thing he stipulated for he got. The court cannot be asked to contract for him. He has made his own contract, and if he has received what he contracted for the court will enforce the contract he made. 1 Addison on Contracts, secs. 8, 16.
Coming now to consider the effect of the seal, we are willing to accept the statement of this question made by the circuit court as a fair one. The opinion concedes that at common law a seal imported, conclusively, a consideration, and at law a party could not dispute it; and that this was the law in Ohio down to February 24, 1884. But it is insisted, as we understand, that the act of that date (1 Curwen, 124) puts specialties on the same footing as simple contracts, in courts of law, and that sec. 93 of the code (Revised Statutes, sec. 5071), has the same effect in this regard as the act of 1834. We might be willing to concede the latter half of the proposition — that sec. 93 of the code has the same effect as the act of 1834, — if we were assured that we agree with the court as to what that effect was. But if it is claimed that the act of 1834 puts specialties on the same footing as to consideration as simple contracts, in courts of law, we deny that effect, both for that act and the code. That the act of 1834 did not, and was not intended to, abrogate all voluntary contracts, and to abolish all distinction between specialties and simple contracts, we think is evident from later Ohio decisions, which recognize their different character. Avery v. Latimer, 14 Ohio 542; Osborn v. Kisler, 35 Ohio St. 99; Revised Statutes, sec. 4.
As we regard the act of 1834, it was not intended to put sealed instruments on the same footing as simple contracts, as to the requirement of a consideration to support them, but to break down the barrier between legal and equitable defenses, and permit that as a legal defense, which had before been a good equitable defense, to a specialty; not to change the character and effect of the instrument in the least, but to change the course of procedure, and give the same relief in a new form. Allen v. Allen, 40 N. J. L. 446.
The purpose and effect of the act of 1834, as we interpret it, is fully preserved in section 93 of the code. But the matter set forth must be such as would heretofore have constituted a defense, either at law or in equity; and its sufficiency as a defense is in no measure increased or changed by this section. Dixon v. Caldwell, 15 Ohio St. 412, 415.
It is a grossly inaccurate statement of the law to say “ that equity always required an actual consideration, and permits .the want of it to be shown notwithstanding the seal.” The truth is that equity recognized the failure of consideration as a defense to a sealed instrument, but never so recognized the want of consideration. 1 Smith’s Leading Case, 749 (8th ed.); Yard v. Patton, 13 Pa. St. 285; Candor's Appeal, 27 Pa. St. 119; Harris v. Harris, 23 Gratt. 737; Shirk v. Endress, 3 W. & S. (Pa.) 255; Allen v. Allen, 40 N. J. L., 446; Carter v. King, 11 S. Car. 125; Harrell v. Watson, 63 N. Car. 454; Walker v. Walker, 13 Ired. (N. Car.) 335; Wing v. Chase, 35 Me. 260; Kennedy v. Howell, 20 Conn. 349.
We might go still farther than the pleadings in this case require, and say that failure of the consideration for an obligation like the one sued on would not constitute a defense in equity. This is a single obligation for the payment of money, and such have not been regarded as coming within the principles upon which equity grants relief for failure of consideration. Kennedy v. Howell, 20 Conn. 349; Richardson v. Bates, 8 Ohio St. 257.
Mills Gardner, for defendant in-error.
I. The petition does not aver or claim a purchase of the promissory note of Jesse Louderman, described in the petition, nor that the same was assigned to Henry Louderman, but that “ being turned over to me by Henry Judy, the owner and holder thereof, I agree,” etc. There was no change of the relation of the parties to the note made, nor of the ownership of the note. Henry Louderman acquired no legal rights in the note. The legal title thereto still remains in Henry Judy. The promise of Henry Louderman to pay at his death was entirely voluntary and in the future. The pretended writing obligatory shows on its face the death of Jesse Louderman, in that he makes the amount “a charge and advancement to the heirs of my son, Jesse Louderman.” The obligation is to advance, at his death, to Henry Judy the amount, to be charged in the settlement of his estate, to the heirs of Jesse. An executory agreement to give to another cannot be enforced, nor an agreement that in the future he will give by way of advancement, cannot be enforced. Such-agreements are void, for want of consideration. 1 Parsons on Contracts, 358, and note h, and cases there cited. Cook v. Bradford, 7 Conn. 57; Mills v. Wyman, 3 Pick. 207; Loomis v. Newhall, 15 Pick. 159; Parker v. Carter, Munf. 273; Hamor v. Moores, Admr., 8 Ohio St. 239; Phipps v. Hope, 16 Ohio St. 586.
There was no consideration moving from Judy to Louder- - man. It was, if anything, an agreement to pay at his death, by way of advancement to his grandchildren, the debt of their deceased father, for which the estate they might receive from Henry Louderman could not be liable, and for which Henry Louderman was not liable. It is conceded that as a simple contract this would be void, but it is claimed that it is a sealed instrument, a specialty — and therefore so solemn in character that the question of consideration cannot be made — and the estate is estopped by the' seal. A seal does not make a contract valid if it is void without one. 3 Parsons on Contracts, 356 ; 2 Parsons on Contracts, 721; Truett v. Wainwright, 4 Gillman, 411.
This contract is wholly executory on the part of Henry Louderman. Nothing of value passed from Judy. Nothing by the contract was - vested in him. The contract itself clearly states its terms and conditions. 2 Harmon on Estoppel and Res. Judicata, sec. 576, p. 709; Rhine v. Ellen, 36 Cal. 362; 2 Harmon on Estoppel and Res. Judicata, sec. 580, p. 714; lb., sec. 588, p. 722; Pargetter v. Harris, 7 Q. B. 708; Wheelock v. Henshaw, 19 Pick. 341; Pelletreaw v. Jackson, 11 Wend. 110.
The seal is not the contract. The stipulations in the paper contain the contract if there is any. If the terms of the paper itself.show no binding contract on the parties, the seal cannot supply the defect. Nor can the seal import any consideration other than is named in the writing. If it is apparent on the face of the paper that there is no valid consideration for the agreement, or that the pretended consideration is not legal, the seal will not prevent a party from taking advantage of it. The agreement of Henry Louderman written in the contract is at most a “ naked possibility,” a future advancement if he left personal estate, without consideration from him or to him, and not enforceable, and void. This the paper itself discloses. The seal gives it no higher character. Nelson v. Bonnhast, Am. Law Reg., old series, vol. 6, 151.
There is no averment in the petition that Henry Louder-man at his death had personal estate with which to pay said obligation. This defect of the petition the circuit court says was cured by the answer. While not conceding that, we insist that the other defects of the petition were not, and without this, for the reasons before stated, the petition was bad. The petition setting forth the written agreement, stated the consideration, which on its face is not sufficient. The denial of personal property in the answer, or the admission of sufficient property, does not make the otherwise want of averments sufficient.
II. The policy of the law in Ohio, since as early as 1834, has been to favor any defense, for want of consideration or otherwise, against 'sealed instruments to the same extent as simple contracts. Act of February 24,1834,1 Curwen, 124.
This act was repealed by the Code of Civil Procedure, for the evident and manifest reason that the same thing was provided for by the code. Sec. 5071, Revised Statutes, which is sec. 93 of the code. 1 Pomeroy, Eq. Jur., sec. 370; Ibid, sec. 383; Blackstone, Com., 2 vol., page 308.
There is no case to be found that holds want of consideration is not a good defense in equity to a specialty, whatever may be said of legal defenses. The code commissioners never intended to revive “ the times of ignorance ” the law once “ winked at,” which made seals as the signature of illiterate persons so sacred. Dobson v. Pearce, 12 N. Y. 156, 168; Louderman v. Judy, 2 Circuit Court R. of Ohio 358; Case v. Broughton, 11 Wend. 106, 108.
III. The answer denies that there was any personal property of the estate of Henry Louderman with which to pay said pretended obligation. This obligation, if good at all, is only good to the extent contracted by the maker, nameljq “ from my personal estate.” That was the full extent of the obligation. Judy can ask at most, but “ his pound of flesh.” It cannot be construed into a general debt against the estate, real and personal. If at his death he had no personal estate, there was no obligation to pay. In the administration of estates, the debts of the- decedent are primarily charged to the personal property; never to the real estate unless the personal property is insufficient.
The personal estate, then, is that which remains after the payment of his debts. And this was the evident intention and understanding of both Louderman and Judy, when the paper was executed, as is manifest by tbe statement in the paper, “ to be paid by my executor and administrator, as the case may be; and I hereby make this a charge and advancement to the heirs of my son, the said Jesse Louderman.” Yery clearly indicating, that.of his personal estate which could go to said heirs on their distributive share, this obligation was to be paid. Nothing could be distributed to them except from such personal property as would remain after the payment of the debts. What was to be paid to Judy, was that to which otherwise the heirs would be entitled. Therefore, the general debts of' the estate were preferred debts to this. This, if paid at all, could only be paid by the terms of' the agreement out of any personal property that might remain for distribution to the heirs, and we think to these particular heirs only. The answer is therefore a complete bar to the recovery of the plaintiff, for it avers there is no personal property with which to pay.

Opinion:
D iceman, J.
If there was no actual consideration for the obligation executed and delivered to the plaintiff in error, it was competent to prove the want or failure of such consideration notwithstanding a " scrawl seal " was attached to the instrument.
By the act of Februarjr 24, 1834, (1 Curwin, 124,) it was provided, " That in any action founded upon any specialty or written contract for the payment of money or delivery of property, the defendant by special plea, or by notice attached to and filed with the general issue, may allege the want or failure of consideration in the whole or any part thereof." This act was repealed by the act establishing a Code of Civil Procedure, but section 93 of the code, which is continued in section 5071 of the Revised Statutes, provided that, " The defendant may set forth in his answer as many grounds of defense, counter-claim and set-off as he may have, whether they be such as have been heretofore denominated legal or equitable, or both." As against a strictly legal cause of action, a defendant, therefore, may now set up an equitable defense, and thereby not only bar the plaintiffs' action, but obtain the proper affirmative equitable relief connected with the subject-matter. And although the common law, in requiring a valuable consideration in order to render an agreement valid and binding, declared, in its strictness, that a seal was conclusive evidence of such a consideration, yet, in determining the rights of parties upon equitable principles, a seal has been divested of the apparent sacredness with which it was clothed by the common law, and equity, looking rather to reality than form, does not permit a seal to supply the place of a real consideration, and notwithstanding the seal, will allow the want or failure of such consideration to be shown in the enforcement of executory contracts of every description. In Richardson v. Bates, 8 Ohio St. 264, it was said by Sutliee, J.: " Under the statute of February 24, 1834, allowing the failure or part failure, of consideration to be given in evidence, in a suit upon a specialty, the facts stated in the answer would have constituted a perfect defense. And the provision of the code, allowing a defendant to set forth in his answer equitable as well as legal grounds of defense, permitted the same defense to be made in this case; and therefore the failure of consideration, stated in the answer, constituted a good defense."
Conceding then that it was competent to set up a want or failure of consideration as a defense to the original action, the decisive question in the case before us is, whether the written obligation entered into by Henry Louderman was wholly without consideration, or was not founded upon sufficient consideration to support the plaintiff's action. It is alleged in the answer, that for many years prior to the date of the written obligation described in the petition, Jesse Louderman had been dead; that his estate was insolvent, and long before the making of the obligation, had been fully settled ; and that the note of Jesse Louderman was, on the 5th day of October, 1882, and for years before, had been wholly worthless, all of which, it is alleged, was then fully known to the plaintiff. It is evident, however, that the father did not treat the note of his son as without value, for he stipulated for the payment to the plaintiff out of his per sonal estate at his decease, of a sum equal to the full amount called for by the note. The motive or inducement operating upon the father seems to have been so controlling, that he was determined upon paying his son's outstanding nóte, ' though postponing payment until his decease, when it was to be paid out of his personal estate, and the sum paid to be a charge and advancement to the son's heirs. For aught that appears, there may have been circumstances, best known to the father, which in his estimation rendered his possession of the note a valuable acquisition. And the manifest wish and design of the father to acquire the ownership and possession of the note, obviously tended to enhance the value of the instrument while in the hands of the plaintiff. It cannot well be said, we think, that the chose in action surrendered by the plaintiff was valueless, or was inadequate as a consideration for the execution and delivery of the written obligation, the adequacy or inadequacy of consideration having been left to the free exercise of the judgment of the contracting parties.
It is an elementary principle, that the law will not enter into an inquiry as to the adequacy of the consideration, but will leave the parties to judge of that for themselves. The reason of the rule is succinctly expressed by Alderson, B., in Pilkington v. Scott, 15 M. & W. 657: " Before the decision in Hitchcock v. Coker," he says, " a notion prevailed that the consideration must be adequate to the restraint; that was, in truth, the law making the bargain, instead of leaving the -parties to make' it, and seeing only that it is a reasonable and proper bargain." It is considered unwise to interfere with the facility of contracting, and the free exercise of the judgment and will of the parties, by not allowing them to be sole judges of the benefits to be derived from their bargains. "It is, indeed, necessary that the consideration should be of some value; but it is suffcient, if it be of slight value only; or even if it be such as could be valuable to the party promising." 1 Chit. Con., 11th Am. ed., 29, and cases cited.
"When a contract is founded on a transfer of an article of property, the authorities are numerous in illustration of the doctrine, that in determining adequacy of.consideration, the extent of benefit derivable from it is not considered; a value, however small or nominal, if given or stipulated for in good faith, is, in the absence of fraud, sufficient to support an action oñ the contract or promise. " Thus, the mere surrender and delivery of a letter or other written document which the promisee has a right to beep and retain in his possession, is a sufficient consideration for the promise, although the possession of it may turn out eventually to be of no value in a pecuniary point of view, or no benefit may have resulted to the one party, nor prejudice to the other, from the surrender and delivery of the document." 1 Ad. Con., 6, 8th ed.
In Haigh v. Brooks, 10 A. & E., 309, 320, the declaration in assumpsit stated that the defendant promised to see certain bills accepted by L. paid at maturity, in consideration that the plaintiffs, at his request, would give up to him a certain guaranty on behalf of L., then held by plaintiffs. It was averred that the. plaintiffs gave up the guaranty, but that the defendant did not perform his promise. There was a plea that the guaranty was a promise to answer for the debt of another, and that there was no agreement in writing, wherein any sufficient consideration was stated according to Stat. 29, Car. 2. It was held, that it appeared on the pleadings that the plaintiffs had delivered something to the defendant, on the faith of his promise, which he at the time considered valuable, and this being so, and no fraud imputed, he could not afterwards excuse a breach of the promise, by alleging that the thing given up was not of the value he had supposed.
Lord Denman, C. J., in delivering the judgment of the court, said: "We are by no means prepared to say that any circumstances short of the imputation of fraud in fact could entitle us to hold that a party was not bound by a promise made upon any consideration which could be valuable; while of its being so, the promise by which it was obtained from the holder of it must always afford some proof.
"Here, whether or not the guaranty could have been available within the doctrine of Wain v. Warlters, (5 East. 10,) the plaintiffs were induced by the defendant's promise to part with something which they might have kept, and the defendant obtained what he desired by means of that promise. Both being free and able to judge for themselves, how can the defendant be justified in breaking this promise, by discovering afterwards that the thing in consideration of which he gave it did not possess that value which he supposed to belong to it ? It cannot be ascertained that that value was what he most regarded. He may have had other objects and motives; and of their weight he was the only judge."
As alleged in the original petition, and as stated in the written obligation upon which the action is founded, the consideration of Henry Louderman's executing and delivering the obligation was the surrendering and turning over to him of the note of his son. The facts constituting the cause of action were admitted by the demurrer to the petition; and in the answer thereto subsequently filed, there was no denial of the allegations in the petition as to the consideration of the written obligation. The answer, in the nature of a confession and avoidance, avers substantially, that the note of Jesse Louderman was, at the time it was surrendered, and for years before had been uncollectible, and that therefore the written obligation was wholly without consideration, and created no valid claim against Henry Louderman or his estate. If, before and at the time the note was surrendered, it was not collectible out of Jesse Louderman's estate, it would not follpw — for reasons before assigned — that the written obligation was necessarily without consideration. Henry Louderman received from the plaintiff that for which he contracted, and obtained that which, by the terms of the contract, was evidently deemed by the contracting parties an object of value. In contemplation of law, there was, in our view, no want or failure of consideration for the written obligation of Henry Louderman.
It is alleged in the answer of the defendant, " that the just and legal debts of said estate — of Henry Louderman — are more than all the personal property," and, " that all the real estate of the deceased was specifically devised." Henry Louderman, by his written obligation made the claim of Henry Judy a debt against his estate. It was to be paid out of his personal estate at his decease, by his executor or administrator, as the case might be. What was his personal estate ? Not, as contended, that which would remain after the payment of his debts, and out of which a distributive share would go to the heirs of Jesse Louderman, but, the body of his personal property existing at the time of his death. Tire personal estate is the regular and primary fund for the payment of debts, and this will be first applied until exhausted. And, " as soon as the executor or administrator shall ascertain that the personal estate in his hands will be insufficient to pay all the debts of the deceased," it is made his duty, by statute, to apply to the probate court or the court of common pleas for authority to sell the real estate of the deceased. Sec. 6186, Revised Statutes. Where, for a valuable consideration, one promises to pay a debt out of his personal estate at his decease, without a specific limitation to that estate alone, if, at his decease, the personal estate is insufficient to pay the debt, the creditor will not be precluded from resorting to the real estate of the debtor, if any there be. Otherwise, it might be in the power of the debtor, in his lifetime, to convert his personal into real estate, and thus evade his obligations by simply changing the form of his property. Under his written obligation, the personal property of Henry Louderman was made the primary fund for the payment of the plaintiff's claim; but, if, at his death, his just and lega^ debts exceeded all his personal property, the residue of his estate, if any, was not thereby discharged from the payment of his debt to the plaintiff.
The demurrer to the answer was rightly sustained; and the judgment of the circuit court should be reversed, and that of the court of common pleas affirmed.
Judgment accordingly.