Duncan signed a contact to buy
some land from a guy named Black. One of the terms of the contract was
that Duncan receive an allotment from the county government to grow 65
acres of cotton.
Allotments are a quota
system to guard against overproduction.
Duncan only received 49.6
acres of allotment from the county that year, and Black made up for it by
giving Duncan an extra 15.6 acre allotment out of his own personal
allotments. The 2nd year though, Duncan again asked Black to make up the
difference and Black refused. Duncan sued for breach of contract.
Black attempted to settle out
of court by promising to give Duncan $1500.
This was a settlement of
a claim.
Duncan sued when Black didn't
give him the $1500.
The Trial Court found for
Black. Duncan appealed.
The Appellate Court affirmed
the Trial Court's decision.
The Appellate Court found
that allotments run with the land, it is not a separate property of the
individual, and is not subject to be sold, bartered, or removed.
The Court found that neither
party owned the allotment, and would be unable to predict future
allotments, because they change every year. Therefore, it was not
something that they could have contracted for.
The Court found that
allotment transfers were technically illegal, and Black could not
transfer his allotment to Duncan, therefore the provision in the contract
is void.
The settlement of a claim
based on a contract which is against public morals, or public policy, or
which is inherently illegal, or which is in direct violation of a Statute
cannot form the basis of consideration for a valid compromise
settlement.
Basically, Black could not
have sold the allotment, so he couldn't settle a lawsuit for not giving
away an allotment. Therefore, the $1500 was never part of a legal
contract. Bargaining away a claim that is in fact invalid or unfounded is
not a consideration.
Although Black settled a
claim for unliquidated damages the
settlement was not upheld. This is because Black could never sell
allotment, and therefore Duncan could never sue, since the contract was
inherently unenforceable. Settled claims for unliquidated
damages for unenforceable contracts are not upheld.
However, these settlements
are sometimes upheld if both
parties believe that the
contract was enforceable, even if it turns out to not be enforceable.
Not in this case though.
