Opinion
No. CV99-0154220S
November 24, 2003
MEMORANDUM OF DECISION
The plaintiff, Lisa Gay, has brought this action for money damages, interest and attorneys fees on two promissory notes dated March 10, 1997 whereby in each note the defendant, Michael Gay, her father, agreed to pay the plaintiff the principal of Seventeen Thousand Dollars on or before May 1, 1999 and May 1, 1998, respectively, together with interest at the rate of 1.5% per month after said date. The plaintiff alleges that the defendant has tailed to pay each sum of Seventeen Thousand Dollars due on the notes and now owes the plaintiff such amounts with interest thereon, together with attorneys fees and court costs, as provided for in the notes. By way of his answer, the defendant has asserted several special defenses including that there was no consideration for the notes, that the notes were discharged in Family Court divorce proceedings in Massachusetts, and that the notes were the result of fraudulent inducement and duress.
The court heard testimony on October 21, 2003. In addition, the court had the benefit of the parties' post-trial memoranda of law.
I. FACTS
The more credible evidence leads to the following factual findings. In 1997, the defendant and his then wife, Carol Gay, were discussing divorce. They had been married in 1965, living separately since approximately 1989 and had one child, Lisa, the plaintiff. Both the defendant and his wife were employed professionals. At the time of the divorce, the plaintiff was in her twenties. As the tool to resolve their lengthy and acrimonious divorce discussions, enabling the defendant to move securely into another relationship he had been pursuing, it was proposed, by the plaintiff and her mother, that the defendant sign ten promissory notes, each in the amount of $17,000, for a total of $170,000, roughly representing the one-half of the equity in the marriage that the defendant would be receiving in an agreed upon divorce judgment. There was no alimony sought by either party. By agreeing to this scheme, and therefore signing the ten promissory notes totaling $170,000 on 3/10/97, the defendant was able to obtain his ex-wife's signature on a Separation Agreement dated 3/14/97, and thus he could move on with another relationship. Neither the defendant, nor his ex-wife disclosed to the Massachusetts Family Court judge, at the time of the final divorce hearing, the existence of the $170,000 in promissory notes. Both parties to the divorce also neglected to disclose this information on their respective financial affidavits submitted to the judge at the time of the divorce.
The plaintiff is currently 30 years old, living with her mother, employable but not employed, with her last employment on a part-time basis during 2000-01. She has a college degree from Brown University and a post graduate degree from the University of Chicago. The first promissory note, due 5/1/97, was paid. The second note, due 5/1/98, was paid in August 1998. While the notes call for interest at one and one-half percent per month for late payment, no interest was paid on the latter note.
II. DISCUSSION
The legal issues in dispute in this case arise solely from the special defenses. "The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." Grant v. Bassman, 221 Conn. 465, 472-73, 604 A.2d 814 (1992). The first special defense, as to the plaintiff's allegations, is that "the instruments complained of are unenforceable because they were not issued for consideration."
Where no consideration exists, and is required, the lack of consideration results in no contract being formed in the absence of a substitute for consideration such as a writing under seal or an estoppel (Williston on Contracts 4th Ed. § 7:11). To constitute consideration, a performance or a return promise must be bargained for. A performance or return promise is bargained for if it is sought by the promissor in exchange for his promise and is given by the promisee in exchange for that promise. (Restatement of Contracts 2d, Vol. 2, § 71.)
There is nothing moving from the plaintiff to the defendant in this second transaction. Under a simple contract theory of a note, lack of consideration can be raised as a valid defense. See Appliances, Inc. v. Yost, 186 Conn. 673, 679, 443 A.2d 486 (1982). The burden of proof to show lack of consideration is upon the defendant, Michael Gay. Kessler v. Valerio, 102 Conn. 620, 623, 125 A. 788 (1925).
The plaintiff admits that there was no consideration given by the plaintiff for the notes. The plaintiff's assertion is that, while she did not give her father any consideration for the notes, consideration does exist by the fact that her mother agreed not to pursue alimony in the divorce. Both parties, and the former Mrs. Gay acknowledge that this scheme, involving promissory notes in exchange for alimony, to benefit their adult daughter, and in the exact amount of the defendant's share of the marital estate, was not disclosed to the judge at any time during the divorce hearing.
In their memorandum, plaintiff states:
In this case there was no consideration directly given by the plaintiff to the defendant for the notes. Rather, the testimony clearly demonstrated that the plaintiff was a third-party donee beneficiary of the agreement between Carol Globiana and Michael Gay. It is undisputed that the promissory notes were signed by the defendant as the result of an agreement with Carol Globiana. Michael Gay and Carol Globiana agreed that if he would sign the promissory notes Carol Globiana would agree to an immediate uncontested divorce under terms and circumstances he proposed. Michael Gay testified that he wanted the divorce as soon as possible so that he could move on, and that he just wanted to get it over. Carol Globiana testified and Michael Gay agreed, that she would not agree to the terms of the divorce agreement, but would have insisted on alimony or a greater property settlement, if he had not signed the promissory notes.
The actions of the plaintiff, the defendant, and the former Mrs. Gay are inconsistent with the nature of a marital dissolution case and with the rights and obligations arising out of the marital relationship that it legally terminates. Well-established judicial procedures in marital dissolution matters have long required that at the time a dissolution of marriage action is claimed for a hearing, the moving party shall file a sworn statement of current income, expenses, assets and liabilities, and pertinent records of employment, gross earnings, gross wages and all other income. And, the opposing party is required to file a similar affidavit a reasonable period of time before the date of the hearing.
As observed by the Supreme Court, our cases have uniformly emphasized the need for full and frank disclosure in that affidavit. "A court is entitled to rely upon the truth and accuracy of sworn statements required by 380 [now 463] of the Practice Book, and a misrepresentation of assets and income is a serious and intolerable dereliction on the part of the affiant which goes to the very heart of the judicial proceeding." Casanova v. Casanova, 166 Conn. 304, 305, 348 A.2d 668 (1974) Billington v. Billington, 220 Conn. 212 (1991) 595 A.2d 1377. Page 222
It is this court's determination that these facts clearly represent a situation falling within the concept of fraud on the court, were there to be a timely motion to reopen the divorce proceeding. Both parties to the divorce joined to conceal material information from the trial court. One or both of those parties cannot now rely on their admittedly deceptive behavior to pursue an equitable solution, even to benefit a third party. In Baker v. Baker, 187 Conn. 315, 445 A.2d 912 (1982), both parties to a marital dissolution entered into an agreement that "by its own terms specifically provided that it be concealed from the trial court." The court determined that such an agreement was contrary to public policy and unenforceable; because its concealment deprived the court of the means to discharge its statutory obligation "to determine whether a settlement agreement is `fair and equitable under all the circumstances.'" General Statutes § 46b-66. The Baker case is often cited for the standard of "honest disclosure between the litigating parties and the court." Billington at 221.
III. CONCLUSION
The court finds that the promissory notes are void for lack of consideration. Judgment shall enter in favor of the defendant, pursuant to the First Defense. In his counterclaim, the defendant alleges fraudulent and negligent misrepresentation. It is this court's determination, after careful assessment of the credible testimony, that these two payments made by Michael Gay to his daughter should be treated, for purposes of this legal matter, as gifts, there being no testimony that the moneys were loans that were intended to be repaid. Thus, no repayment will be ordered.
Judgment may enter for the defendant on the allegations in the complaint, and for the plaintiff on the allegations in the counterclaims.
ALVORD, JUDGE