Carolyn Ann Lewis v. Paul B. Ikner

SECOND DIVISION
MILLER, P. J.,
BROWN and GOSS, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
March 1, 2019
In the Court of Appeals of Georgia
A18A1602. LEWIS v. IKNER.
MILLER, Presiding Judge.
Carolyn Ann Lewis, the plaintiff in this action to collect on a promissory note,
appeals from the trial court’s grant of partial summary judgment to her son, Paul
Ikner, based on its finding that the note failed for want of consideration. We affirm
because we agree with this finding.
Summary judgment is proper when there is no genuine issue of
material fact and the movant is entitled to judgment as a matter of law.
A de novo standard of review applies to an appeal from a grant or denial
of summary judgment, and we view the evidence, and all reasonable
conclusions and inferences drawn from it, in the light most favorable to
the nonmovant.
(Citation omitted.) L.D.F. Family Farm, Inc. v. Charterbank, 326 Ga. App. 361, 361
(756 SE2d 593) (2014).
So viewed, the evidence shows that in April 2012, Lewis and her husband gave
Ikner approximately $80,000 to use as a down payment on a house, with Lewis
personally giving $27,457.39. For purposes of the mortgage and taxes, Lewis and her
husband each signed gift letters indicating that they were making a gift. The gift
letters stated that there were no terms or conditions associated with the gift, and the
gift was “given freely with the understanding that [Ikner] has no obligation to pay it
back either in money, in future services or otherwise.”1 Ikner also signed the letters.
Lewis and her husband filed gift tax returns with the IRS and paid taxes on the money
given. Lewis also contributed approximately $6,600 toward termite repairs around the
time Ikner closed on the house in May 2012.
Lewis and Ikner both expected that Lewis and her husband would live in the
house with Ikner following the purchase. Lewis expected that she would be added to
the mortgage and the deed, but when the mortgage company refused to allow her to
be added to the mortgage, she insisted that her name be added to the deed after the
1
While being deposed, Lewis stated that the statements in the letters were “a
little bit false.”
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closing. After the closing, Lewis moved in with Ikner, but her husband did not, and
she and her husband eventually separated. Due to a clause in the mortgage
documents, Ikner was not able to add Lewis to the deed without accelerating the debt
and making the mortgage due in full immediately.
On December 17, 2013, about 19 months after the closing and 20 months after
the gift letters, Ikner signed a promissory note in which he promised to pay Lewis
$100,000 “payable on demand.” The note stated:
This promissory note is supported by good and valuable consideration
in that my mother, extended to me, sufficient money, to make a
handsome down payment, and certain alterations to my home place . . .
. Additionally, simultaneously, I have prepared a Last Will and
Testament, which shall make reference to this obligation, and is proof
certain that in the event of my death, prior to the death of my mother, I
have a true obligation to my mother on and above any obligation to my
children, or any other person . . . . As referenced in the note, Ikner also
signed a will leaving Lewis $100,000 if the debt remained outstanding
upon his death. Shortly thereafter, Ikner changed the locks on the doors
and did not allow Lewis to return to the house.
In 2016, Lewis sent Ikner a demand letter, seeking payment on the note within
30 days as well as the return of her personal property still in the house. In response
to the list of items Lewis sought, Ikner handwrote the following note: “I’m working
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to get the house ready for sale. I would like to work to get the money as soon as I can.
If I can have a extension on this matter til Sept. 1[,] 2017 . . . If I cann’t [sic] sale by
this time. I will take whatever loans out to pay what is owed.” When Ikner did not pay
Lewis, Lewis filed the underlying suit against him to collect on the note.2
Ikner testified in his deposition that the money Lewis gave him for the down
payment and the termite repairs was a gift, and while he did not believe he had any
obligation to repay Lewis, he signed the note intending she would get money from the
sale of the house from his estate after he died.
Lewis testified in her deposition that the money she put toward the house was
an “investment,” allowing her to live with Ikner and be named on the mortgage and
the deed, and she and Ikner “understood” his obligations under this arrangement or
agreement from the time she expended the money. Lewis claimed that Ikner signed
the promissory note because she and Ikner had “an understanding all along” that the
money she put toward the house belonged to her. However, as illustrated by the
2
In addition to her complaint on the note, Lewis raised claims of trover and
conversion, based on Thompson’s alleged refusal to allow her to return to the house
and remove personal property. Those claims remain pending. Lewis’s direct appeal
from the trial court’s grant of partial summary judgment to Ikner is proper, however,
because “[a]n order granting summary judgment on any issue . . . shall be subject to
review by appeal.” OCGA § 9-11-56 (h).
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following exchange, Lewis admitted that she and Ikner never discussed this
understanding and the money was “considered a gift”:
Q: . . . Is it your testimony today that there was, in fact, a term and
condition connected to the gift and that was that [Ikner] put your name
on the deed?
A: I’m saying that all the money that has been transferred to him
probably everything that I’ve ever given him has been considered a gift.
He has never even mentioned the fact, and neither have I, that he owed
me. Never. I was so concerned that the promissory note was written
because I was afraid I would be out of a house with him dead and that
is why. . . . I was not thinking you owe me because he’s my son. I loved
him.
Q: . . . [I]t was never discussed prior to you signing the gift letter and
gifting the money to him that he owed the money back to you or he
owed you to put your name on [the deed]?
A: We never discussed this. We never discussed it. . . .
Q: . . . It was then never discussed between you and your son that you
were giving him this money and in exchange he owes you the
obligation –
A: He knew the obligation. He’s not dumb.
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...
Q: And so you only gave him the money on the condition that he put
your name on the deed?
A: Sir, there was no conditions discussed. . . . It was understood. We
never s[a]t down at a table and said, You owe me this. But, yes, he
understood because he was the one that talked me into signing the – to
giving the money in closing. I didn’t have to hand them that money.
Q: Well, you say it was understood. So that’s really my question. When
you gave – when you told [Ikner] I’m going to give you this money –
A: I didn’t have to tell him. I gave him that money, sir.
Q: . . . Did you tell [Ikner], I am giving you this money on the condition
or on the promise that you then put my name on the deed? Did you ever
tell him that? Or was it just understood?
A: It was understand [sic] between the two. He knew. . . .
Q: And so it was never expressly stated then because you didn’t feel like
it needed to be expressly stated?
A: We may have talked about it. I don’t remember.
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Q: You don’t remember whether you all expressly talked about a
promise that he pay you back by putting your name –
A: I don’t know if we ever talked about a promise. . . .
Ikner moved for partial summary judgment on Lewis’s complaint on the note,
arguing that the note failed for want of consideration because the purported monetary
consideration recited in the note was past consideration and the money had been a
gift. Lewis filed a cross-motion for partial summary judgment. Following a hearing,
the trial court granted Ikner’s motion and denied Lewis’s motion, finding that the note
failed for want of consideration because the purported monetary consideration recited
in the note was both past consideration and a gift. Lewis now appeals, arguing that
the note is supported by both valuable and good consideration. We disagree, and
conclude that the trial court correctly granted partial summary judgment to Ikner
because the note fails for want of consideration.
“A promissory note is an unconditional contract whereby the maker engages
that he will pay the instrument according to its tenor.” (Citation omitted.) L.D.F.
Family Farm, Inc., supra, 326 Ga. App. at 364 (1).
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In an action on a promissory note, a claimant may establish a prima facie
right to judgment as a matter of law by producing the promissory note
and showing that it was executed. On a motion for summary judgment,
the burden then shifts to the obligor to establish an affirmative defense
to the claim, such as the lack of consideration.
(Citations and punctuation omitted.) Han v. Han, 295 Ga. App. 1, 3 (2) (670 SE2d
842) (2008). See also OCGA § 13-3-40 (a) (“A consideration is essential to a contract
which the law will enforce.”).
Considerations are distinguished into “good” and “valuable.” A good
consideration is such as is founded on natural duty and affection or on
a strong moral obligation. A valuable consideration is founded on
money or something convertible into money or having a value in money,
except marriage, which is a valuable consideration.
OCGA § 13-3-41.
1. Lewis argues that the promissory note is supported by valuable consideration
for two reasons. First, she claims that she and Ikner understood that she only
expended money for the down payment and the termite repairs because she would be
living at the house and/or be named on the deed, and, therefore, the money was not
a gift and the note simply memorialized the parties’ prior agreement. Second, she
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claims that Ikner signed the note in exchange for her agreement to rescind her request
to be named on the deed.
(a) The money for the down payment and the termite repairs does not constitute
valuable consideration to support the note. Regarding the down payment money, in
Long v. Beach, 242 Ga. App. 448 (529 SE2d 901) (2000), a mother transferred money
to her son to use as a down payment on a house, and when the house was purchased
the mother and son memorialized the transfer by signing a gift letter which stated the
son was under no obligation to repay the money. The mother subsequently filed suit
against her son, alleging she and her son had an oral understanding that he would
repay the money. Id. This Court held that (1) in light of the gift letter, any prior or
contemporaneous oral agreement that the money was a loan rather than a gift would
not be admissible to contradict the letter under the parol evidence rule; and (2) any
agreement to repay entered into after the letter would not be enforceable due to the
absence of other consideration in support of such an agreement. Id. at 449. Here, the
transfer of the down payment money was memorialized in the gift letter, which both
Lewis and Ikner signed, and which stated that Ikner was under no obligation to repay
Lewis and that the gift was subject to no terms or conditions. Therefore, like the
plaintiff in Long, Lewis may not rely on any prior or contemporaneous oral agreement
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that the down payment money was subject to certain conditions. Further, any
subsequent agreement for Ikner to repay Lewis would require its own consideration,
but as discussed below, there is none.
The termite repairs money also cannot be deemed valuable consideration to
support the note because it was past consideration. Lewis paid this money in May
2012, and Ikner did not execute the note until December 2013. “[I]t is well-settled
that past consideration will not support a subsequent promise.” (Citations and
punctuation omitted.) Lee v. Choi, 323 Ga. App. 370, 374 (1) (754 SE2d 371) (2013).
Lewis’s claim that the note simply memorialized the parties’ prior agreement, under
which Lewis would put money toward the house and Ikner would allow her to live
there and/or name her on the deed, is not supported by any evidence. Ikner testified
that the money Lewis put toward the house was a gift and not to be re-paid. While
Lewis testified that the parties had an implicit understanding that she was to receive
something in exchange for the money, she admitted that Ikner made no promises to
her at the time the money was paid, that the money was “considered a gift,” that she
was not thinking he owed her, and that neither party had mentioned the fact that he
owed her. See Whitmire v. Watkins, 245 Ga. 713, 714 (267 SE2d 6) (1980) (where the
plaintiff had fully performed the services that he claimed constituted consideration
10
for the defendants’ promise to devise him land before the promise was made, the
agreement was based on past consideration). Compare Boot v. Beelen, 224 Ga. App.
384, 385-386 (1) (480 SE2d 267) (1997) (consideration was not past consideration
where the defendant told the plaintiff at the time the money was spent that he would
repay her, and this promise was later memorialized in writing).
“A contract is unenforceable where there is no meeting of the minds between
the parties regarding a material element thereof. And all essential elements, including
the element of consideration, must be certain.” (Citation and punctuation omitted.)
STC Two, LLC v. Shulman-Weiner, 325 Ga. App. 245, 249 (1) (750 SE2d 730)
(2013). See also OCGA § 13-3-42 (a) (“To constitute consideration, a performance
or a return promise must be bargained for by the parties to a contract.”); Alexander
v. Watson, 271 Ga. App. 816, 819 (2) (611 SE2d 110) (2005) (“Georgia contract law
requires a meeting of the minds of the parties, and mutuality, and in order for the
contract to be valid the agreement must ordinarily be expressed plainly and explicitly
enough to show what the parties agreed upon.”) (citation and punctuation omitted.)
Here, Lewis extended the termite repair money 19 months before Ikner executed the
promissory note, and there is no evidence to support Lewis’s claim that the parties
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had a meeting of the minds at the time she extended the money. Accordingly, this
money constituted past consideration.
(b) Lewis’s purported agreement to rescind her request to be named on the deed
does not constitute valuable consideration to support the note. Lewis testified that it
was merely her “supposition” that Ikner agreed with her attorney to sign the note
instead of naming her on the deed, and “a motion for summary judgment cannot be
denied based upon speculation and conjecture.” (Citation omitted.) Willingham Loan
& Realty Co. v. Washington, 311 Ga. App. 535, 536 (716 SE2d 585) (2011). Further,
the note specifically purports to establish that the consideration is the money Lewis
gave Ikner for the down payment and the repairs. “It is well established that a
promissory note may not be modified by the imposition of conditions not apparent on
its face. The note being an unconditional promise, the contract is complete as written.
Parol evidence may not be used to impose conditions which are not apparent from the
face of the note.” L.D.F. Family Farm, Inc., supra, 326 Ga. App. at 364 (1). See also
Lee, supra, 323 Ga. App. at 372-375 (1) (where an agreement provided that the
consideration for payment was work the plaintiff previously did for the defendant, the
plaintiff’s agreement to give up the right to other lawsuits or any prior action could
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not constitute consideration). Therefore, any consideration for the note is limited to
the purported monetary consideration recited in the note.
2. Lewis also argues that the note is supported by good consideration, because
when she expended money on the house the parties intended for it to be her residence,
and Ikner has a natural duty and moral obligation to provide her, his elderly mother,
a residence at the house or repay her the money to help her buy a house of her own.
We disagree, as the note is not supported by good consideration.
While the note stated that it was “supported by a good and valuable
consideration,” it then specified that this consideration consisted of the money Lewis
extended to Ikner for the down payment and repairs. In Head v. Head, 232 Ga. 373,
375 (1) (207 SE2d 15) (1974), the Supreme Court of Georgia held that where the
consideration recited in a deed was monetary, parol evidence was not admissible to
show additional consideration. As the note here specifies a monetary or valuable
consideration, Lewis may not rely on a good consideration that is founded on natural
duty and affection or on a strong moral obligation. See Lee, supra, 323 Ga. App. at
374 (1). See also Dodson v. Phagan, 227 Ga. 480, 480-482 (181 SE2d 366) (1971)
(where a deed recited that the consideration was natural love and affection, parol
evidence was not admissible to show that the consideration was actually the grantee’s
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promise to pay expenses of the grantor and his wife). Compare Smith v. Thigpen, 298
Ga. App. 572, 573 (680 SE2d 604) (2009) (parol evidence was admissible to resolve
an ambiguity as to the specific nature of consideration supporting a promissory note
given “for value received” without specifying the consideration).
3. Finally, Lewis’s claim that Ikner is improperly attempting to vary the terms
of the note by refusing to pay her the money until his death is unavailing, as the note
fails entirely for want of consideration. See OCGA § 13-3-40 (a).
In conclusion, the trial court’s grant of partial summary judgment to Ikner was
proper. Therefore, we affirm.
Judgment affirmed. Brown and Goss, JJ., concur.
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