Fischer v. Union Trust Co.
138 Mich. 612, 101 N.W. 852 (Mich. 1904)
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.
$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
the $1 make this an enforceable contract, or is it still just a gift?
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.
death, the bank foreclosed on the house for non-payment of the $3k
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.
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.
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.
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
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 phonyconsideration done solely to make a naked promise binding.