In re Greene

District Court, S. D. New York
45 F.2d 428 (1930)

ELI5:

Rule of Law:

A promise to pay for past illicit cohabitation is unenforceable for want of consideration because past consideration is not valid consideration to support an executory contract.

Facts:

For several years, a married man (the bankrupt) and a woman (the claimant) were engaged in an illicit relationship, during which he gave her substantial sums of money and purchased a house for her.
The claimant was aware that the bankrupt was married throughout their relationship.
In April 1926, the parties ended their intimate relationship.
After the relationship ended, the parties executed a written instrument under seal.
In the agreement, the bankrupt promised to pay the claimant $1,000 per month for their joint lives, maintain a $100,000 life insurance policy for her benefit, and pay her apartment rent for four years.
In return, the claimant released the bankrupt from all claims she had against him, and the agreement recited consideration of one dollar and 'other good and valuable considerations.'
The bankrupt made payments pursuant to the agreement until August 1928, after which he ceased all payments.

Procedural Posture:

The man who made the promise filed for bankruptcy.
The claimant filed a proof of claim for $375,700 against the bankrupt's estate in bankruptcy court.
The trustee in bankruptcy objected to the claimant's claim.
Following a hearing, the referee in bankruptcy held the claim was valid and overruled the trustee's objections.
The trustee filed a petition with the U.S. District Court to review the referee's order.

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Issue:

Is a written promise to make future payments, motivated by a past illicit relationship, legally enforceable when the purported consideration consists of nominal payments, release of invalid claims, and the termination of voluntary gift-giving?

Opinions:

Majority - Woolsey, District Judge

No. A promise to pay money motivated by past illicit cohabitation is void for lack of consideration. For a contract to be enforceable, it must be supported by valid, present consideration, not a past relationship or moral obligation. Here, the agreement fails because none of the purported considerations are legally sufficient. The past cohabitation is past consideration, which is legally equivalent to no consideration. The claimant's arguments for other forms of consideration are without merit: the recited one dollar is purely nominal; the phrase 'other good and valuable considerations' is meaningless without proof of actual value exchanged; and the claimant's release of claims is worthless because she had no legally valid claims to release, as a promise to marry by an already married person is void. Finally, while a seal once made a promise enforceable, under New York law it now only creates a rebuttable presumption of consideration, which was amply overcome by the evidence showing no actual consideration was given.

Analysis:

This case illustrates the critical distinction between motive and consideration in contract law. The court emphasizes that while the bankrupt's motive for the promise was clearly the past relationship, motive cannot substitute for the legal requirement of a bargained-for exchange. The decision reinforces the common law principle that past consideration and moral obligations are generally insufficient to support a new promise. It also demonstrates the modern, diminished legal significance of a seal on a contract in jurisdictions like New York, shifting the inquiry from the formality of the instrument to the substance of the bargain.

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