333 Ga. App. 454
Ga. Ct. App.2015Background
- Hall sued Prosero, Inc. on a promissory note; Prosero moved for summary judgment on partial failure of consideration defense.
- Hall joined Prosero in 2001, became CEO, and received a stock grant and a promissory note for $625,000 to purchase 500,000 Prosero shares at $1.25 each.
- May 2004 separation agreement extended the note maturity to January 15, 2010 and deleted acceleration; Hall acknowledged due date in an amendment.
- January 2007 ownership change occurred; in 2010 Prosero pursued collection; suit for breach of contract filed March 17, 2010.
- Trial court granted summary judgment in June 2014; Hall appealed, arguing genuine issues exist about partial failure of consideration.
- Georgia courts review summary judgments de novo; the appellate court affirmatively held there was full consideration and no partial failure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether partial failure of consideration is a defense to enforcement of the note | Hall contends partial failure exists | Prosero asserts no partial failure | No partial failure; full consideration found |
| Whether stock-value evidence creates a partial failure of consideration | Expert says stock worth $0.01, not $1.25 | Some value exists; not wholly valueless | Insufficient to show partial failure; evidence shows some value |
| Whether inadequacy of consideration alone defeats the contract | Inadequacy could excuse performance | Inadequacy alone is not a defense | Inadequacy alone does not void the contract; burden remains on defendant for partial failure |
| Burden of proof for partial or total failure of consideration | Defense should relieve obligation if failure proven | Defendant must prove extent of any failure with particularity | Burden on defendant; must prove extent of any partial failure |
Key Cases Cited
- Merritt v. Marlin Outdoor Advertising, Ltd., 298 Ga. App. 87 (Ga. App. 2009) (partial/failure of consideration defenses recognized in contract actions)
- Coast Scopitone, Inc. v. Self, 127 Ga. App. 124 (Ga. App. 1972) (partial vs total failure considerations; need proof of extent)
- Anchor Sign Co. of Ga., Inc. v. PS Heating & Air Conditioning Co., 125 Ga. App. 207 (Ga. App. 1971) (proof must substantiate extent of failure for partial defense)
- Herrmann & Henican v. De La Perriere, 47 Ga. App. 541 (Ga. App. 1933) (stock had market value; total failure requires no value at tender)
- Littlegreen v. Gardner, 208 Ga. 523 (Ga. 1951) (mere inadequacy of consideration generally not a defense)