Davis-Delcambre Motors, Inc. v. Simon
163 So.2d 553, 246 La. 105, 1964 La. LEXIS 2501 (1964)
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Rule of Law:
A third party's promise to pay the pre-existing debt of another constitutes valid consideration for a promissory note. An agreement to forbear from criminal prosecution does not constitute illegal consideration if the elements of the underlying crime, such as intent to defraud, are not established.
Facts:
- Wilmer Mitchel purchased a 1952 Chevrolet from Davis-Delcambre Motors, Inc.
- Mitchel paid for the car with two checks, totaling $300, which were subsequently dishonored because he had no account at the bank.
- Earl Joseph Davis, President of Davis-Delcambre Motors, threatened to have Mitchel arrested for issuing bad checks.
- Martin Simon, who employed Mitchel as a farmhand, stated he needed Mitchel to help save his cane crop.
- On June 14, 1957, Simon went to the plaintiff's office and executed a promissory note for $300 to cover Mitchel's debt.
- Upon receiving the note from Simon, Davis-Delcambre Motors ceased all further action against Mitchel regarding the bad checks.
Procedural Posture:
- Davis-Delcambre Motors, Inc. sued Martin Simon in a Louisiana trial court to enforce the promissory note.
- The trial court rendered judgment in favor of the plaintiff, Davis-Delcambre Motors, Inc.
- The defendant, Simon, appealed to the Court of Appeal, Third Circuit.
- The Court of Appeal reversed the trial court, holding the note invalid for lack of legal consideration.
- The plaintiff, Davis-Delcambre Motors, Inc., petitioned for and was granted a writ of certiorari by the Supreme Court of Louisiana to review the appellate court's decision.
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Issue:
Does a promissory note given by an employer to cover an employee's debt, which was created by writing bad checks, lack valid consideration because it was motivated by the creditor's threat to pursue criminal charges against the employee?
Opinions:
Majority - Hamlin, Justice
No. A promissory note given by a third party to cover another's pre-existing debt is supported by valid consideration. The court reasoned that for the consideration to be illegal (as a promise to suppress criminal prosecution), the underlying act must be a proven crime. The offense of issuing worthless checks requires proof of an 'intent to defraud,' which the plaintiff failed to establish on Mitchel's part. Without proof of the underlying crime, there can be no illegal agreement to compound a felony. Therefore, the court found the consideration was not the forbearance from prosecution, but rather the pre-existing debt owed by Mitchel for the car, which is a legally sufficient consideration to support Simon's promise to pay.
Analysis:
This decision clarifies the boundary between valid consideration based on forbearance and an illegal agreement to suppress a criminal prosecution. It establishes that for a contract to be voided on grounds of illegal consideration involving forbearance from prosecution, the elements of the underlying crime must be proven. This prevents parties from easily escaping contractual obligations by merely alleging that a threat of criminal action was part of the bargain. The ruling reinforces the established principle that a pre-existing debt owed by one party is sufficient consideration for a third party's promise to pay it.
