The Sale and the Bill of Sale
November 19, 2019 § 1 Comment
Dan McIntosh, IV (Dan) transferred his extensive gun collection to his father, Dan McIntosh, III (Mac), after he faced criminal charges in federal court. Dan gave Mac a bill of sale for the property. Mac, an attorney, represented Dan and eventually succeeded in getting the young man a favorable plea deal, although under its terms he was a convicted felon.
Dan later decided he wanted his guns back. Mac and Dan’s friend explained that he could not have them in his possession under state and federal law.
Unconvinced, Dan firebombed Mac’s home and rammed it with his Lexus; when he was arrested, he had a loaded shotgun in his vehicle. He had told his mother that he was in the middle of his suicide and he “had one thing to do before [his] life [ended.” In jail, Dan hanged himself.
Dan’d mother Beverly opened his estate and sued Mac for return of the gun collection. She claimed, among other things, that there was no consideration for the transfer, and a special chancellor was assigned the case. He found that the bill of sale and transfer were proper. Beverly appealed.
In Quick, Executrix of the Estate of McIntosh v. McIntosh, decided October 22, 2019, the COA affirmed. You can read the entire opinion with its more complete recitation of facts. I thought you might find the court’s explication of the law of bill of sale and contracts useful. Here is how judge Westbrooks addressed it:
¶12. The chancellor found as a matter of law “that the April 2010, Bill of Sale from Mac to Dan was valid and that Dan became the owner of all of the items included in the Bill of Sale at that time and, further, that at the time of his demise, the assets included in the Bill of Sale were not assets of Mac’s estate.” There need not be any further iteration of his legal finding.
¶13. A “bill of sale” is defined as “an instrument for conveying title to personal property, absolutely or by way of security.” Black’s Law Dictionary (10th ed. 2014). “A transfer may be either an absolute assignment by way of gift or sale, or an assignment by way of mortgage or security only; but in either case when a written document of any sort is used to effect the transfer, the document is called technically a ‘bill of sale.’” Albert Gibson, Arthur Weldon & H. Gibson Rivington, Gibson’s Conveyancing 302 (14th ed. 1933). Mississippi has long recognized that “the acknowledgment of payment contained in the ‘bill of sale’ is merely a receipt which may be contradicted by parol evidence.” Smith v. Stevens, 299 So. 2d 690, 691 (Miss. 1974) (citing Fowlkes v. Lea, 84 Miss. 509, 36 So. 1036 (1904)). A bill of sale is an instrument that is evidence of a contract. Historically the Mississippi Supreme Court has used the two terms interchangeably. See Mitts v. Price, 129 Miss. 554, 163-65 (1922) (illustrating the supreme court employing the terms “bill of sale” and “contract” interchangeably in its analysis to determine the reasonable performance period under the bill of sale at issue and discussing the bill of sale as a written contract for the sale of property); see also Hercules
Powder Co. v. Westmoreland, 249 Miss. 849, 164 So. 2d 471, 474 (1964) (using the phrase “bill of sale or contract” when finding that a valid contract of employment existed between co-defendants).
¶14. In order to form a valid contract, the laws of this State require the following: “(1) two or more contracting parties; (2) consideration; (3) an agreement that is sufficiently definite; (4) parties with the legal capacity to make a contract; (5) mutual assent; and (6) no legal prohibition precluding contract formation.” Gandy v. Estate of Ford, 17 So. 3d 189, 193 (¶7) (Miss. Ct. App. 2009). A valid contract has to be supported by consideration. Id.
Consideration is, of course, one of the six elements required for the existence of a valid contract. The Mississippi Supreme Court has defined consideration for a promise as (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification or destruction of a legal relation, or (d) a return promise, bargained for and given in exchange for the promise.
Marshall Durbin Food Corp., 909 So. 2d at 1273 (¶14) (citation and internal quotation marks omitted).
Where the instrument in controversy contains a statement or recital of consideration, it creates a rebuttable presumption that consideration actually existed. The general rule is that this presumption is established even by such expressions as “for value,” “for good and sufficient consideration,” “for value received” or, as in the present case, “for valuable consideration.”
Daniel v. Snowdoun Ass’n, 513 So. 2d 946, 950 (Miss. 1987) (citations omitted). “While the presumption does not preclude the defendant from putting on proof designed to show that the consideration was not actually paid, his ‘rebuttal must be made by a clear preponderance of the evidence.’” Marshall Durbin Food Corp., 909 So. 2d at 1274 (¶15) (quoting Daniel, 513 So. 2d at 950).
¶15. In Daniel, a nonprofit corporation (Snowdoun) was established in a codicil of the will of the testatrix, Elizabeth Garth, conveying the title to her childhood home to be opened as a museum. Daniel, 513 So. 2d at 948. Other bequeaths [sic] were made to the Mississippi University for Women and St. Paul’s Episcopal Church. Id. The widower sued, seeking to renounce the will, take his legal share, and have the bequests to MUW and St. Paul declared void. Id. The nonprofit corporation was not named as a party to the will contest, and its participation in settlement negotiations was not clear. Id. Regardless, a settlement was reached, leaving Snowdoun with about $100,000 as a result. Id. Daniel also executed a memorandum of understanding (MOU) in which he agreed to set up an inter vivos trust as a depository for the money. Id. Snowdoun was named the beneficiary of the trust. Id. Daniel failed to set up the trust fund, and Snowdoun sued for specific performance. Id. The MOU became the subject of litigation. Id. The nonprofit sued Daniel for specific performance. Id. In response Daniel claimed the agreement failed for lack of consideration. Id. He claimed that he only offered encouragement and appreciation, which is not consideration. Id at 949. The court was left to weigh whether the MOU was supported by consideration. Id. The case cited bedrock canons for the element of consideration in agreements: “[M]ere sentiments such as affection, love and the like, cannot in themselves furnish adequate consideration for an enforceable contract . . . considerations must come from the parties to the agreement.” Id. at 949. Further explaining that “[c]onsideration means something which is of some value in the eye of the law, moving from the plaintiff; it may be some benefit to the defendant or some detriment to the plaintiff; but in all events it must be moving from the plaintiff.” Id.
¶16. While Daniel tried to claim that Snowdoun had no inducement because their interests were aligned during the settlement that led to the MOU, Snowdoun claimed that it intervened in the negotiations because of Daniel’s encouragement. The Mississippi Supreme Court found that the record could support both and held it “will not overturn a chancellor’s finding of fact unless he is manifestly wrong.” Id. at 951.
The court went on to find various ways that the chancellor’s findings of consideration were supported by evidence, and went on to conclude that Beverly had failed to rebut the presumption of valid consideration by clear and convincing evidence.
I’m appeal counsel representing Mrs. Quick. The primary issue was the admitted fact that McIntosh III was a fiduciary for his son/client, which raised the issue of undue influence, shifting the burden to McIntosh III to overcome the presumption by clear and convincing evidence. 23 of 43 pages of Appellant’s brief was dedicated to this controlling issue, yet, as recognized by the dissenting opinion, neither the trial judge nor the majority even acknowledged the controlling issue of law and supporting authorities. A Motion for Rehearing was filed October 23. Stay tuned.