Case Brief

Case Brief

Court of Appeals of Utah. Peter K. DEMENTAS, Plaintiff and Appellant,

v. The ESTATE OF Jack TALLAS, By and Through FIRST SECURITY BANK, Personal Representat-

ive, Defendant and Respondent.

No. 860351–CA. Nov. 17, 1988.

Claim was filed against decedent’s estate to re- cover on written agreement to make claimant an heir. The Third District Court, Salt Lake County, David B. Dee, J., held for estate, and appeal was taken. The Court of Appeals, Orme, J., held that agreement was not enforceable contract in that it constituted promise for past services performed gratuitously.

Affirmed.

West Headnotes

[1] Executors and Administrators 162 227(1)

162 Executors and Administrators 162VI Claims Against Estate

162VI(B) Presentation 162k227 Statement and Verification of

Claim 162k227(1) k. Form, Requisites, and

Sufficiency of Claim. Most Cited Cases

Executors and Administrators 162 227(2)

162 Executors and Administrators 162VI Claims Against Estate

162VI(B) Presentation 162k227 Statement and Verification of

Claim 162k227(2) k. Filing or Attaching In-

strument or Account on Which Claim Is Based.

Most Cited Cases Claim asserted against estate, reciting that es-

tate was in debt to claimant for $50,000, based upon services rendered and acknowledgment by de- ceased, to which was attached a memorandum by deceased promising to pay money to claimant, gave sufficient notice to estate of claimant’s “account stated” claim, as well as his claim premised on quantum meruit theory; personal representative had all information it needed to investigate claim and decide whether to pay it, and it was inconsequential that claim did not articulate particular legal theory upon which payment of claim would most appropri- ately be premised. U.C.A.1953, 75–1–102(1), (2)(b), 75–3–804(1)(a, b).

[2] Evidence 157 419(11)

157 Evidence 157XI Parol or Extrinsic Evidence Affecting

Writings 157XI(A) Contradicting, Varying, or Adding

to Terms of Written Instrument 157k419 Nature of Consideration

157k419(11) k. Contracts in General. Most Cited Cases

Extrinsic evidence was admissible to prove whether there was consideration for promise, even if parties had reduced their agreement to writing which appeared to be completely integrated agree- ment.

[3] Contracts 95 61

95 Contracts 95I Requisites and Validity

95I(D) Consideration 95k61 k. Services. Most Cited Cases

Any detriment no matter how economically in- adequate will constitute sufficient consideration to support personal service contract.

[4] Contracts 95 79

95 Contracts

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95I Requisites and Validity 95I(D) Consideration

95k79 k. Past Consideration. Most Cited Cases

Written agreement to make claimant an heir in light of his past services to testator did not give rise to personal services contract enforceable by claimant against testator’s estate where promise to pay was for past services performed gratuitously.

[5] Account Stated 11 1

11 Account Stated 11k1 k. Nature and Subject-Matter in General.

Most Cited Cases “Account stated” is agreement between parties

who have had previous transactions of monetary character that all items of account representing such transactions, and balance struck, are correct, togeth- er with promise, express or implied, for payment of such balance.

[6] Account Stated 11 3

11 Account Stated 11k3 k. Previous Indebtedness and Transactions.

Most Cited Cases Testator’s written agreement with claimant, to

make claimant an heir for services performed by claimant on testator’s behalf in the past, did not give rise to claim against testator’s estate for ac- count stated, in that written agreement was not en- forceable contract; “past services performed gratu- itously” did not constitute consideration for testat- or’s promise.

*629 Peter L. Flangas (Argued), Las Vegas, Nev., for plaintiff and appellant.

Mark S. Miner, Salt Lake City, for plaintiff and ap- pellant.

John W. Lowe (Argued), Lowe and Arnold, Salt Lake City, for defendant and respondent.

Bill Thomas Peters (Argued), Bernard L. Rose, Salt Lake City, for defendant and respondent.

Before ORME, BENCH and DAVIDSON, JJ.

ORME, Judge: Plaintiff Peter Dementas appeals from a judg-

ment dismissing his claim against the Estate of Jack Tallas. Dementas seeks reversal of the trial court’s decision and the entry of judgment in his favor. We affirm.

FACTS Jack Tallas came to the United States, as an im-

migrant from Greece, in 1914. He lived in Salt Lake City for nearly seventy years, residing at Little America Hotel during the last years of his life. Tallas achieved considerable success in busi- ness, primarily as an insurance agent and landlord. Over a period of fourteen years, Peter Dementas, who was a close personal friend of Tallas, rendered at least some assistance to Tallas.

On December 18, 1982, Tallas met with De- mentas and dictated a memorandum to him, in Greek, stating that he owed Dementas $50,000 for his help over the years for such things as picking up his mail, driving him to the grocery store, and as- sisting with the management of Tallas’s rental prop- erties. Tallas also indicated in the memorandum that he would change his will to make Dementas an “heir for the sum of $50,000.”

Tallas kept the Greek document, retyped it in English, notarized the English version with his own notary seal, and, three days later, delivered the doc- uments to Dementas. Tallas died on February 4, 1983, without changing his will to include De- mentas as an “heir.” He left a substantial estate.

Dementas filed a timely claim for $50,000 with Tallas’s estate, pursuant to Utah Code Ann. § 75–3–803 (1978). A copy of the memorandum giv- en to him by Tallas was attached to the claim. The estate denied the claim and Dementas brought this action to recover $50,000.

In its pretrial order, the trial court disposed of the issues of quantum meruit; a contract to make,

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change or modify a will; and gift causa mortis. The court found, as a matter of law, that the memor- andum was at best “an acknowledgment of a previ- ously existing debt resulting from the performance of a previously existing oral contract,” and the case proceeded to trial.

Following trial, in which the court heard ex- tensive testimony from witnesses and received nu- merous exhibits, the court concluded that the memorandum was executed by Tallas free from fraud, duress, or undue influence. However, the court did not find the memorandum to constitute an enforceable contract. Rather, the court found that the memorandum was an expression of Tallas’s ap- preciation for services gratuitously performed by Dementas. The court concluded that the memor- andum, both in its Greek and English versions, showed that Tallas intended—at some time in the future*630 —to include demeNtas in his will or to otherwise compensate him, but that Tallas failed to complete the transaction prior to his death.FN1 The court also ruled that Dementas’s “account stated” theory was barred since no such claim was articu- lated in the notice of claim filed with the estate. Al- ternatively, the court concluded no “account stated” had been proven.

FN1. Contracts to include persons in a will have been upheld. See, e.g., Matter of Es- tate of Haywood, 43 Colo.App. 127, 599 P.2d 976 (1979) (written contract); In re Estate of Billinger, 208 Kan. 327, 491 P.2d 924 (1971) (oral contract). See also Utah Code Ann. § 75–2–701 (1978) (requirements for establishing a contract to include person in will). Dementas was pre- cluded by the pretrial order from arguing that the memorandum evidenced an en- forceable contract entitling him to addi- tional benefits under Tallas’s will. This theory would have been unavailing in any event for lack of consideration, as hereafter more fully explained.

ADEQUACY OF NOTICE OF CLAIM

[1] Following Tallas’s death, Dementas filed a timely notice of claim with First Security Bank, personal representative of Tallas’s estate. The estate denied the claim. Dementas then commenced this action. It is the estate’s contention, accepted by the trial court, that the claim adequately gave notice of a claim against the estate premised on a quantum meruit theory but did not give notice of an “account stated” claim. This position reflects an unduly re- strictive view of the requirements for validly mak- ing claims on personal representatives in Utah.

The applicable statute sets forth the require- ments for presenting claims against a decedent’s es- tate, and provides in pertinent part that “[t]he claimant may deliver or mail to the personal repres- entative a written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed….” Utah Code Ann. § 75–3–804(1)(a) (1978) (emphasis added). The stat- ute disavows undue precision in the framing of such claims by concluding with the statement that “[f]ailure to describe correctly the security, the nature of any uncertainty, and the due date of a claim not yet due does not invalidate the presenta- tion made.” Id.

In addition, the statement of purpose prefacing Utah’s Probate Code provides that “the code shall be liberally construed and applied to promote its underlying purposes and policies,” which include “[t]o discover and make effective the interest of a decedent in distribution of his property….” Utah Code Ann. § 75–1–102(1), (2)(b) (1978).

Finally, § 75–3–804 provides that instead of presenting a claim to a personal representative, a claimant may commence an action against the es- tate. Utah Code Ann. § 75–3–804(1)(b) (1978). Such an action would be commenced by filing a complaint, which complaint would only need to be sufficiently definite and precise to comply with the liberal requirements of notice pleading. See Utah R.Civ.P. 8(a). It would be anomalous to conclude that a claimant who opts for the less formal method of asserting a claim pursuant to § 75–3–804 must

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give more detailed notice than would be required in an adequate complaint.

We conclude that the claim tendered by De- mentas met this notice-pleading standard for an “account stated” theory as well as, no doubt, others. The claim recited that “the estate of the above named decedent is indebted to the claimant in the amount of $50,000. Such indebtedness is based upon services rendered and acknowledgment by de- ceased, that the $50,000.00 is due and owing dated December 18, 1982.” Moreover, a complete copy of the memorandum, in both Greek and English, was attached to and incorporated by reference in the claim.

If a claim acquaints a personal representative with a specific amount allegedly due and the gener- al nature of the obligation, the purpose of the stat- ute has been satisfied. Here, the claim was for $50,000 pursuant to a document executed by the deceased, which document was appended to the claim. The personal representative had all the in- formation it needed to investigate the claim and de- cide whether to pay it, fight it, or settle it. It is in- consequential that the claim did not articulate par- ticular legal theories upon which payment of the *631 claim would most appropriately be premised.

Having determined that Dementas presented an adequate claim to the personal representative of Tallas’s estate, we turn to a consideration of the merits of that claim. We will consider these issues: First, whether the court erred in considering certain testimony extrinsic to the written agreement; second, whether Tallas’s promise to pay Dementas $50,000 was supported by any consideration; third, whether “past consideration” is adequate to support a contract; and finally, whether Dementas is en- titled to recover on an “account stated” theory.

EFFECT OF MEMORANDUM AND RECEIPT OF EXTRINSIC EVIDENCE

The English version of the memorandum, as translated and revised by Tallas, reads exactly as follows:

PETER K. DEMENTAS, is my best frient I have in this country and since he came to the United States he treats me like a father and I think of him as my own son.

I visit his house and have dinner with his family twice a week. He takes me in his car grocery shopping. He drives me to the doctor and has also takes me every week to Bingham to pick up my mail, collect the rents and manage my properties.

For all the services Peter hos given me all these years, for the use of his automobile, for the money he spent on gasoline and his time, I owe to him the amount of $50,000 (Fifty Thousand Dollars.) I have already mentioned Peter in my will for all the services and love he has offered me during all these years and I will shortly change my will to include him as my heir.

Salt Lake City, Utah

December 18, 1982

Jack G. Tallas

The memorandum appears to do three things: (1) It acknowledges that Dementas is already men- tioned in the will in consideration of the various services rendered by him; FN2 (2) it recites that Tallas owes Dementas $50,000 in consideration of the services rendered; and (3) it expresses an inten- tion on the part of Tallas to change his will and make Dementas an “heir.” FN3 Dementas’s strongest claim on appeal is that the memorandum evidences a contract under the plain terms of which he is entitled to recover $50,000.

FN2. In Tallas’s will, Dementas is one of two persons who are said to be familiar with Tallas’s properties and who Tallas re- quested be engaged “to collect the rents of my properties and to look after and man- age the same, and that they be reasonably compensated for such services.”

FN3. It is only in this regard that the Greek

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version differs materially from the English version. The Greek version states that Tal- las will change his will to name Dementas an “heir for the sum of $50,000,” whereas the English version simply states that Tal- las will change his will to include De- mentas as an “heir.” The difference is in- consequential given the posture of this case.

[2] The parties disagree on whether the memor- andum is ambiguous, necessitating the receipt of extrinsic evidence to determine what was intended, or unambiguous, requiring it to be construed as a matter of law. See generally Kimball v. Campbell, 699 P.2d 714, 716 (Utah 1985); Seashore’s, Inc. v. Hancey, 738 P.2d 645 (Utah Ct.App.1987). They likewise disagree on whether the agreement is an integrated one, triggering the parol evidence rule and precluding testimony for the purpose of varying the terms of the agreement. See generally Union Bank v. Swenson, 707 P.2d 663, 665 (Utah 1985). However, these usually pivotal issues need not be resolved in this case since extrinsic evidence was properly admitted in any event “to prove whether or not there is consideration for a promise, even though the parties have reduced their agreement to a writing which appears to be a completely integ- rated agreement.” Restatement (Second) of Con- tracts § 218(2) (1981). See also Soukop v. Snyder, 709 P.2d 109, 113 (Hawaii Ct.App.1985). Moreover, the burden of proving consideration is on the party seeking to recover on the contract. Miller v. Miller, 664 P.2d 39, 40 (Wyo.1983). If plaintiff fails to show there *632 is consideration to support the contract, that party has failed to meet its burden and the contract will be held invalid by the court. Id. In a contract action in this state, consider- ation or a legally sufficient substitute for considera- tion must be established as part of plaintiff’s prima facie case.FN4 General Ins. Co. v. Carnicero Dyn- asty Corp., 545 P.2d 502, 505 (Utah 1976). But see Alexander v. DeLaCruz, 545 P.2d 518, 519 (Utah 1976) (under Utah Code Ann. § 70A–3–307(2), dif- ferent rule applies in case of negotiable instruments

“when signatures are admitted or established”).

FN4. It has been held that a presumption arises from the existence of a signed writ- ten agreement—such as the memorandum in this case—that the agreement is suppor- ted by adequate consideration, but the “presumption exists only so long as there is no evidence of lack of consideration.” Grant v. Oten, 626 P.2d 764, 766 (Colo.Ct.App.1981). Under this view, “when evidence tending to prove lack of consideration is introduced, the issue of whether there was valid consideration be- comes a question of fact for the trier of fact.” Id.

It is important to distinguish between “lack” of consideration and “failure” of consideration. When “consideration is lacking, as in this case, there is no con- tract. When consideration fails, there was a contract when the agreement was made, but because of some supervening cause, the promised performance fails.” General Ins. Co. v. Carnicero Dynasty Corp., 545 P.2d 502, 504 (Utah 1976). In addition, failure of consideration is an affirmative defense under Utah R.Civ.P. 8(c), whereas “[t]he defense of lack of consideration, a negative, is properly pleaded under Rule 8(b).” Id. at 505.

CONSIDERATION “A generally accepted definition of considera-

tion is that a legal detriment has been bargained for and exchanged for a promise.” Miller v. Miller, 664 P.2d 39, 40–41 (Wyo.1983). “The mere fact that one man promises something to another creates no legal duty and makes no legal remedy available in case of non-performance.” 1 A. Corbin, Corbin on Contracts § 110 (1963). “[A] performance or a re- turned promise must be bargained for.” Miller v. Miller, 664 P.2d at 41 (citing Restatement (Second) of Contracts § 71 at 172 (1981)).

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[3] In determining whether consideration to support a personal service contract exists, the focus is not whether the amount promised represents the fair market value for the services rendered. On the contrary, “[a]s a general rule it is settled that any detriment no matter how economically inadequate will support a promise.” J. Calamari & J. Perillo, Contracts § 55 at 107 (1970). See Gasser v. Horne, 557 P.2d 154, 155 (Utah 1976) (“It has further been held that there is consideration whenever a prom- isor receives a benefit or where promisee suffers a detriment, however slight.”). Thus, while the estate introduced extensive testimony as to whether the services Dementas claimed to have rendered were actually performed,FN5 the court expressly admit- ted this testimony only insofar as it bore on De- mentas’s credibility and not to prove that the ser- vices were worth less than the amount Tallas prom- ised to pay. While the testimony suggested that De- mentas did not actually perform all the services he claimed to have rendered, this testimony had no rel- evance to the question of whether there was consid- eration for Tallas’s promise since the testimony suggested Dementas did at least some work. In this regard, the court correctly stated: “If Tallas thought it was worth 50,000 bucks to get one ride to Bing- ham, that’s Tallas’ decision…. The only thing you can’t do is take it with you.” FN6

FN5. Much of this testimony was from em- ployees of the postal service in Bingham and involved whether they ever saw De- mentas sitting in Tallas’s car when Tallas would enter the post office to get his mail. Testimony was also elicited from persons living near apartments and houses where Dementas claimed to have mowed lawns and trimmed trees.

FN6. The trial judge in this case, Judge David B. Dee, retired in 1987 after serving some ten years on the Third District Court. Judge Dee was known for his rather color- ful, if occasionally irreverent, comments from the bench. The trial transcript in this

difficult and protracted case includes these other glimpses of the style which endeared Judge Dee to many:

The Court (in response to objection by counsel): “It’s kind of like the old judge’s statement. ‘It’s hearsay, I agree, but its damn good hearsay, and I want to hear it.’ ”

The Court: Go on to your next question. This witness—who is supposed to be one witness for 15 minutes—is now into the second day, and we’ve still got the same witness…. [A]t the rate we’re going, I will have long retired and been happily fishing in Wyoming.

The Court (in response to an objection by counsel): You have now entered the Guin- ness Book of Records for the longest ob- jection ever entered in the Third District Court … ever, going back to 1896 when there wasn’t any Third District Court. And the objection is taken in this light by the Court.

The Court (in response to testimony by witness): Wait a minute. Wait. Wait. Wait. Now, the fact-finder has finally got a fact. He said, “I did it alot of times.” I’ve identi- fied a fact in a day and a half. Let’s go to the next witness and see if we can find an- other one in this case.

*633 PAST CONSIDERATION [4] Even though the testimony showed that De-

mentas rendered at least some services for Tallas, the subsequent promise by Tallas to pay $50,000 for services already performed by Dementas is not a promise supported by legal consideration. Events which occur prior to the making of the promise and

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not with the purpose of inducing the promise in ex- change are viewed as “past consideration” and are the legal equivalent of “no consideration.” 1 A. Corbin, Corbin On Contracts § 210 (1963). This is so because “[t]he promisor is making his promise because those events occurred, but he is not making his promise in order to get them. There is no ‘bargaining’; no saying that if you will do this for me I will do that for you.” Id. See also County of Clark v. Bonanza No. 1, 96 Nev. 643, 615 P.2d 939, 943 (1980) (“A benefit conferred or detriment in- curred in the past is not adequate consideration for a present bargain.”).

This rule can surely work unfair results and has accordingly been criticized FN7 and the object of legislation. See J. Calamari and J. Perillo, Contracts §§ 54, 96 (1970). Some courts have sought to en- force promises supported only by past considera- tion by invoking a “moral obligation” notion to make at least some of these promises enforceable. See Manwill v. Oyler, 11 Utah 2d 433, 361 P.2d 177, 178–79 (1961). Although the “moral obliga- tion” exception has not been embraced in Utah, see id. 361 P.2d at 178–79,FN8 other courts apply the exception in cases where services rendered in the past were rendered with the expectation of payment rather than gratuitously.FN9 Id. at 179.

FN7. “One may question the adequacy of a legal system which refuses to enforce a promise such as this: ‘In consideration of your forty years of faithful service, you will be paid a pension of $200.00 per month.’ ” J. Calamari & J. Perillo, Con- tracts § 54 at 106 (1970).

FN8. The logical flaw in the “moral oblig- ation” concept was accurately summarized by Justice Crockett in Manwill:

The difficulty we see with the doctrine is that if a mere moral, as distinguished from a legal, obligation were recognized as valid consideration for a contract, that would practically erode to the vanishing

point the necessity for finding a consid- eration. This is so, first because in nearly all circumstances where a promise is made there is some moral aspect of the situation which provides the motivation for making the promise even if it is to make an outright gift. And second, if we are dealing with moral concepts, the making of a promise itself creates a mor- al obligation to perform it. It seems ob- vious that if a contract to be legally en- forceable need be anything other than a naked promise, something more than mere moral consideration is necessary.

361 P.2d at 178.

FN9. As noted in Manwill, if services were rendered with the expectation of payment, an implied contract was probably created, 361 P.2d at 179, making resort to the “moral obligation” idea less urgent. As also noted in Manwill, statute of limitation problems often make reliance on a straight implied contract theory unhelpful to plaintiffs in cases like these, see id., al- though in the instant case the written memoranda would obviate the limitation problem. See Utah Code Ann. § 78–12–44 (1987).

Even if the “moral obligation” doctrine applied in Utah, Dementas would not prevail. The trial court found that the services rendered by Dementas to Tallas were not rendered with the expectation of being compensated, but were performed gratuit- ously. That finding has not been shown to be erro- neous.

ACCOUNT STATED [5] Dementas argues that even if the agreement

does not constitute an enforceable contract, it nev- ertheless constitutes an *634 “account stated” upon which he is entitled to recover. An account stated has been defined as “an agreement between parties who have had previous transactions of a monetary

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character that all the items of the account represent- ing such transactions, and the balance struck, are correct, together with a promise, express or im- plied, for the payment of such balance.” 1A C.J.S. Account Stated § 2 (1985). Consequently, the es- sential elements of an account stated include “previous transactions between the parties giving rise to an indebtedness from one to the other, an agreement between the parties as to the amount due and the correctness of that amount, and an express or implied promise by the debtor to pay the creditor the amount owing.” Id. at 68.

The trial court found that at the time the docu- ments were executed, there were no previous mon- etary accounts then due and payable to be settled between Dementas and Tallas, nor were there any liquidated debts then due from Tallas to Dementas. Likewise, there was no enforceable promise by Tal- las to pay Dementas.

[6] Dementas’s account stated claim fails for essentially the same reasons as his contract claim. “An account stated is a contract.” Mahaffey v. So- dero, 38 N.C.App. 349, 247 S.E.2d 772, 774 (Ct.App.1978). Accord, Andrews Electric Co. v. Farm Automation, Inc., 188 Neb. 669, 198 N.W.2d 463, 465 (1972) (“An account stated is a contract to pay the stated sum.”). Therefore, the underlying claims on which an account stated is based must contain the basic elements of a contract, including consideration. As previously discussed, the contract premised on Tallas’s promise to pay fails for lack of consideration. Nor were the individual services rendered by Dementas performed with the expecta- tion of payment. It follows that his account stated claim fails as well. “Because accounts stated are ‘intended to preserve and protect legitimate de- mands but not to create obligations independent of prior indebtedness,’ the rendering of an account does not create a liability where no liability existed before the rendering.” Davis & Cox v. Summa Corp., 751 F.2d 1507, 1516 (9th Cir.1985). Thus, we agree that Dementas is not entitled to recover on an “account stated” theory.

CONCLUSION Dementas failed to prove there was any valid

consideration for Tallas’s promise to pay $50,000. Even if the “moral obligation” exception applied in Utah, the court found that the services Dementas performed were rendered without the expectation of payment. The “account stated” argument is likewise unavailing. We acknowledge, as have other courts in disregarding contracts for lack of consideration, that “[a]ppell[ant] will probably remain convinced [he] should be paid. Nevertheless, [he] failed to meet [his] burden of proof” and “this court will not find a contract where one has not been proved to exist.” Miller v. Miller, 664 P.2d 39, 43 (Wyo.1983).

The judgment appealed from is affirmed. The parties shall bear their own costs of appeal.

BENCH and DAVIDSON, JJ., concur.

Utah App.,1988. DeMentas v. Estate of Tallas, By and Through First Sec. Bank 764 P.2d 628

END OF DOCUMENT

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